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Shaping Markets and Shaping Psychology

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

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

Shaping strategies

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

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

Three elements of shaping strategies

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

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

Shaping psychology

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

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

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

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

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

Bottom line

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


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Connectivity and Decentralization

Category:Collaboration,Connections,Context,Decentralization,Edges,Future,Learning,Opportunity,Paradox,Passion,Potential,Trust,Workgroups

We’re in the early stages of a Big Shift that is transforming our global economy and society. The Big Shift produces many paradoxes, but here’s one that I haven’t written about: it is rapidly creating global connectivity while at the same time generating a growing desire for decentralization. How can we reconcile the two?

I’ve written about the Big Shift for a long time, including here. A key driver of the Big Shift is the ability to connect more quickly and cheaply with anyone or anything around the world. Certainly, this includes our ability to send a message to anyone in the world, but it also includes our ability to monitor in real time physical goods with Internet of Things technology. And it’s not just about communicating and monitoring, but also controlling and directing activities from a distance.

So, with all these connecting capabilities, we might anticipate more and more centralization where activities are controlled and monitored by fewer and fewer large, centralized global entities (e.g., governments and corporations).

Certainly, we are already seeing some of that. But, at the same time, I anticipate that we’re going to see more and more efforts to decentralize our activities – distributing or delegating activities, especially planning and decision-making, away from a central location or group. Why is that?

Accelerating pace of change

Growing connectivity accelerates the pace of change and makes the specific changes more and more challenging to anticipate. In a more rapidly changing and unpredictable world, we need to find ways to respond more quickly to unexpected developments. The conventional approach of tightly specifying business processes in advance from a central location is becoming less and less effective. Those who are in the best position to confront the unanticipated changes quickly are those who are on the front lines, not those who are sitting in some command center, even when supported by more and more powerful computers.

Context matters

Changes don’t occur in isolation. They occur in a specific context that shapes the change and the impact that it will have. Context is complex – it can’t be reduced to numbers or images. Those who are in the best position to “read” context are those who are living in it in the moment. If we want to address change effectively, we need to rely on those who are deeply embedded in the context. Context is becoming more and more important for value creation, as I have written about here.

Learning is an imperative

In a rapidly changing world, learning becomes essential. To be clear, this isn’t about learning in the form of sharing existing knowledge which is the focus of most learning today. Existing knowledge is becoming obsolete at an accelerating rate. The learning we all need to pursue is learning in the form of creating new knowledge and that is best pursued by coming together with others and learning through action, not just conversation.

When I say “coming together with others,” I mean coming together in small groups – I call them “impact groups” – which I have written about extensively, including here and here.  These groups range between 3 to15 participants. They stay small because the need is to build deep, trust-based relationships among the participants so that they can support and challenge each other in a continuing quest to pursue increasing impact in a specific domain.

Passion is the best motivation for learning

Learning in the form of creating new knowledge through action can be very challenging and involves taking a lot of risk. What’s the motivation to do that? Based on my research, the most powerful motivation is a very specific form of passion – the passion of the explorer – which I have written about here and here. People with this kind of passion naturally come together into the impact groups that I mentioned earlier and they seek environments where they can pursue their passion without constraints. They want to be free to take initiatives that have never been done before and to rapidly iterate on those initiatives when they gain insight on how more impact can be achieved.

Customers are gaining more power

Because of all the connectivity globally, customers are becoming more and more powerful and demanding. They have more access to information about more options and the ability to quickly switch from one product or service to another. In this kind of environment, they are less and less willing to settle for mass-market, standardized products and services. Instead, they are seeking products and services tailored to their specific needs and that will evolve rapidly as their needs evolve.

Erosion of trust in large, centralized institutions

Around the world, trust is eroding in all the large, centralized institutions – companies, governments, media, universities, etc. – that are so prominent in our economy and society. There are many reasons for this, but they are driven by a growing realization that these institutions are not addressing our evolving needs and are increasingly unsuited for the rapidly changing world around us.

Tying it all together

Decentralization will be driven by the intersection of many different needs and desires. If I had to summarize, I’d say that the two key forces are our growing need as providers to learn faster and our growing desire as customers to have products and services tailored to our needs. If we’re going to learn faster, we need to come together in small groups, driven by a passion to achieve increasing impact and we need to be able to act more quickly in ways that are tailored to our local context. On the other side, as customers, we are seeking providers we can trust who will address our unique and rapidly evolving needs.

The paradox is that both of these forces are being driven by growing global connectivity. The more connected we become, the faster everything will evolve and the more rapidly we will all need to learn in the form of creating new knowledge. And the more connected we become, the more ability we will have to pick and choose the products and services that meet our specific needs.

What will emerge?

What shape will decentralization take? Of course, that’s hard to predict in detail. But, as someone who enjoys exploring the edge, I am drawn to early indicators of how this decentralization might evolve.

From a corporate (and broader) institutional point of view, I’ve written about the “unbundling of the corporation.” Without going into too much detail, we’re already starting to see fragmentation of businesses in the digital space – everything from software to music and video. That fragmentation is beginning to spill over into physical products like craft beer and chocolate. I believe that’s just the beginning – we’re going to see more and more small, but very profitable, businesses emerging to address small segments of customers.

We’re also starting to see the growth of decentralized, autonomous organizations (DAO’s) that are focusing on decentralizing decision-making within organizations. There’s also a variety of initiatives to organize front-line workers into small pods or workgroups that are given more freedom to take initiative on their own. In China, the Rendanheyi model being championed by Haier with “micro-enterprises” operating within a much large company is beginning to attract more attention from around the world.

Of course, I have to mention blockchain as a major initiative in the technology space that embraces decentralization as a key organizing principle. While there’s been a lot of speculation and “boom/bust” initiatives in the early days of blockchain, blockchain reflects a strong desire for decentralization and is likely to provide a foundation for many initiatives seeking to decentralize Internet activity.

More generally, we’re seeing the spread of initiatives within the “human potential” movement that are organized around small groups of people who share a commitment to achieving more of their potential. Social change movements are increasingly focusing on “bottom up” approaches to change that embrace a cellular structure of small, local groups rather than pursuing a top-down centralized approach to change. In facing the challenges of the pandemic, we’ve seen the growth of mutual aid groups in local neighborhoods and communities.

Admittedly, these are all still early indicators of a trend towards decentralization, but they merit attention because the forces that I described earlier are going to drive significant growth of these kinds of initiatives.

Connectivity and decentralization

To be clear, I’m suggesting that connectivity and decentralization will unfold together. I’m not suggesting that decentralization will lead to increasing isolation of small groups. On the contrary, the proliferation of small groups will become increasingly connected into broader networks that can scale their learning and impact. Decentralization will actually drive a need for greater connectivity in the same way that connectivity is driving a growing need for decentralization. That’s the paradox.

Bottom line

We are in the very early stages of a paradoxical Big Shift. Growing connectivity will foster a growing need for decentralization and decentralization will increase the need for even more connectivity. This will have profound implications for how we organize and create impact in a rapidly changing global economy and society.

Those who are consumed by the connectivity trends are likely to get blindsided as decentralization begins to gain momentum. Decentralization will create enormous opportunities for value creation and will disrupt many of our large, centralized institutions around the world. We need to evolve a profoundly different set of institutions that will embrace the twin gifts of connectivity and decentralization.


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Improving Return on Attention in the Idea Business

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

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

Return on attention

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

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

The shift in return on attention

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

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

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

Implications for idea providers

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

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

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

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

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

Early indicators of the shift ahead in return on attention

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

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

Bottom line

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


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From Adaptation to Anticipation

Category:Collaboration,Connections,Emotions,Exploration,Fear,Future,Learning,Strategy

Adapt or die. We’ve all heard this imperative. While there’s some wisdom buried in this imperative, it needs to be drawn out. Most people interpret this imperative in a way that can become deeply dysfunctional and ultimately leads to death. Adapt is not sufficient – we need to first anticipate, then adapt.

Adapting in the Big Shift

What do I mean? Let me start by setting some context. As I’ve written about extensively, we’re in the early stages of a Big Shift that is transforming our global economy and society. The Big Shift has many dimensions to it, but one key dimension is the accelerating pace of change in all aspects of our lives.

When confronted with this accelerating change, we as humans have some natural reactions. The first reaction is to go into denial – we tend to diminish or even dismiss our perception of the changes that are going on around us. We want to believe the world is actually much more stable and that we’ll return to the world we knew and relied on.

As the change accelerates, we begin to flip the switch and go to the other end of the spectrum. Now, we’re consumed by the change we see around us and we begin to see that we need to change ourselves. How do we change? We embrace the need to adapt, but the adaptation we pursue is highly reactive. We react to whatever is happening in the moment and finding ways to change to meet the new needs surfacing around us.

Here’s the problem. As the pace of change accelerates and expands, falling into a purely reactive approach can become overwhelming. There’s so much that’s changing that we end up spreading ourselves way too thinly across so many different fronts that we fail to keep up with the changes consuming us.

The need to anticipate

So, what’s the alternative? Before we adapt, we need to invest the time and effort to anticipate. We need to look ahead and try to determine how the changes around us are likely to evolve. We need to anticipate which changes will lead to new opportunities that are the most meaningful to address.

This certainly won’t be easy, but that’s why it’s important to invest the time and effort to anticipate. I’ve written about the power of a zoom out/zoom in approach to strategy for institutions and I’ve explored the techniques that can help institutions to zoom out on a 10-20 year horizon and anticipate very big emerging opportunities. Over time, I’ve come to realize that this approach to strategy also has significant value for all of us as individuals.

We need to make the effort to look ahead 10-20 years and anticipate what the world might look like then and what really big opportunities are likely to emerge to address unmet needs of others. Consistent with a zoom out/zoom in approach, we need to then focus on the next 6-12 months to identify 2-3 initiatives that we could pursue in the short-term and that could have the greatest impact in accelerating our progress to addressing the really big opportunities that are emerging.

This is where adaptation can now play a much more useful role. Once we have some focus on the changes that really matter, we can avoid being distracted by changes that are temporary or marginal. As we pursue the short-term initiatives, we’ll quickly discover what new approaches can yield the greatest impact in helping us to evolve so that we can address the opportunities that really matter. We’ll adapt much more quickly because we’re committing more time and effort to the changes that really matter, rather than getting consumed by reacting to all the changes erupting around us.

There’s another important advantage to anticipation. In a world that’s rapidly changing and creating mounting performance pressure, we have a natural human tendency to be consumed by fear. While understandable, fear is also a very limiting emotion, as I’ve discussed in my new book, The Journey Beyond Fear. If we’re afraid, we tend to shrink our time horizons, we become much more risk averse, and our trust in others erodes. Fear diminishes our ability to adapt. We just focus on very short-term changes, we become less willing to go outside our comfort zone and we are more reluctant to seek help from others.

In contrast, if we make the effort to anticipate some really meaningful opportunities what will emerge from the changes around us, we’ll begin to draw out the passion of the explorer that will help us to adapt much more effectively and rapidly. Rather than being reluctant to adapt, we’ll be excited about adaptation because it will help us to achieve the impact that is meaningful to us. As a result, we’ll also be driven to ask for help from others so that we can accelerate our progress even more.

The untapped potential of leverage

That leads to another advantage of anticipation – it can help us to leverage our efforts and to learn much more rapidly. If we look ahead and identify a really big opportunity that’s meaningful to us, it’s much more likely to be meaningful to others as well. If we share our excitement about that really big opportunity and ask for help from others, we’re much more likely to draw others who also become excited about the opportunity. We’ll begin to achieve much greater impact as we unleash the network effects that come from joining together to achieve shared objectives.

But the benefit of this kind of leverage is even bigger. If others share our excitement about the really big opportunities ahead, they will also become motivated to adapt. They will be driven to come together with us so that they can learn faster together through action and reflection on the results achieved from their actions. They will be much more motivated to collaborate and take risks that are inevitably encountered when we seek to develop new approaches in a rapidly changing environment. And, no matter how smart and talented any of us are, we’ll learn a lot faster and adapt a lot faster if we come together in small groups with deep trust-based relationships where we are all motivated to learn faster together. I call these groups “impact groups” and I’ve come to believe that they will play a key role in accelerating our adaptation – I explore this in much greater detail in The Journey Beyond Fear.

Adaptation and evolution

But, wait a minute. I can hear some real push back around this notion of anticipation as a foundation for adaptation. Many people are likely to point to the evolution of species on Earth and say that they have evolved and survived based purely on adaptation, without anticipation.

Agreed. But the evolution of species has been driven by the law of large numbers. Each being may seek to adapt, but very few are successful. The good news is that there are generally a lot of beings in a species and most of them will die off to make room for the few lucky beings that pursue the right kind of adaptation. Those lucky beings will proliferate and eventually dominate the species until the next set of changes require further adaptation and then the cycle starts over again.

What I’m seeking is a way for all of us to not just survive, but thrive. I believe that’s a realistic objective if we all move beyond adaptation and focus on anticipation. Of course, this will take some time and we’ll need to cultivate the capability of anticipation. It won’t be easy, but it can be done if we come together and make the effort.

Bottom line

Don’t get consumed by the imperative to adapt. Begin by seeking to anticipate how the world is likely to evolve and the really big opportunities that will emerge in that world, providing us with the ability to have impact that’s much more meaningful to us. Once we begin to see those opportunities, we’ll be able to focus on adaptation that really matters. We’ll also be able to come together with others who excited about these opportunities and find ways to adapt much more rapidly and effectively than if we attempt to adapt in isolation. If we get this right, we won’t just survive, we’ll thrive in ways that are difficult to imagine in a world that is rapidly changing.


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Our Future Shapes Our Present

Category:Emotions,Fear,Future,Narratives,Opportunity,Paradox

It’s obvious – what we do today shapes our future. The actions we choose to take today will determine what our future will look like.

What’s not so obvious? Our future shapes what we do today. How could that be? The future hasn’t yet happened, so how could it determine our actions today? How could this be true if we embrace the opposite view that our actions today shape our future?

As many of you know, I love paradox because it can expand our horizons and drive us to see things that have remained hidden from view. That’s what this paradox can do.

Our view of the future

We all have a view of the future, even though few of us make the effort to articulate that view, even to ourselves, much less to others.

At the risk of generalizing, I would suggest that we generally fall into two camps when it comes to our view of the future. On one side, we tend to view the future as threatening – it’s full of danger and will be much more challenging that the present. On the other side, we tend to view the future as full of opportunity – we will be able to achieve much more impact that is meaningful to us.

Of course, our view of the future can be very complex, involving a mixture of threat and opportunity but, for most of us, one or the other will tend to dominate and will shape our view of what is ahead.

That view of the future will shape our emotions today. If we look ahead and see primarily threat, we will be consumed by fear. On the other hand, if we look ahead and see primarily opportunity, we will tend to be motivated by hope and excitement.

So, our view of the future is shaping the present, in terms of the emotions that we feel today. But it does even more than that. Our emotions today shape our actions today.

If we’re driven by fear, our time horizons shrink, we become more risk averse and our trust in others erodes. As a result, we tend to become very reactive, simply responding to whatever is happening today, and we become more and more isolated, since we can’t trust others. What happens then? We enter a vicious cycle, where our reluctance to act and collaborate with others feeds our fear and our greater fear makes it even more challenging to make progress in the present.

On the other hand, if we’re driven by hope and excitement, we tend to look ahead and act boldly in the pursuit of the opportunities that we see in the future. We also are more willing to ask for help from others. This tends to create a virtuous cycle. The more motivated we are to pursue opportunities with others, the more likely those opportunities will manifest and that in turn will generate even more hope and excitement.

So, the future is shaping our present in profound ways. It’s shaping our emotions and our actions today. Of course, these emotions and actions today will shape our future as well, but let’s not ignore how our view of the future is having a profound impact on what we do today.

The role of narratives

Here’s the challenge. More and more of us in the world today are becoming consumed by fear. Why is that happening? At one level, it’s understandable because we live in a world that is in the early stages of a Big Shift, driven by long-term forces that are creating mounting performance pressure – competition is intensifying, the pace of change is accelerating, and extreme disruptive events are leaving us scrambling to figure out what to do next.

But this fear is also being fed and intensified by threat-based narratives. Those who follow me know that I have a very different definition of narratives than most. Most people view narratives and stories as the same thing. I believe an important distinction can and should be made.

For me, stories are self-contained – there’s a beginning, a middle and an end to the story. Stories are also about the story-teller or some other people, real or imagined, but they’re not about you.

In contrast, narratives the way I view them are open-ended. There is no end yet, but there’s some significant threat or opportunity out in the future and not clear how the narrative will be resolved. And the resolution of the narrative hinges on you – your choices and your actions will help to determine how this narrative resolves. Narratives have an explicit call to action.

Perhaps not surprisingly, we live in a world where threat-based narratives are increasingly prevalent. Just look at our news media and listen to our politicians – it’s all about the profound threats that are coming to consume us. Once again, there’s a vicious cycle at play. The more prevalent threat-based narratives become, the more consumed by fear we become and that in turn makes us even more receptive to threat-based narratives.

So, how do we escape this vicious cycle? We need to start by recognizing how limiting the emotion of fear is and the role that threat-based narratives are playing in feeding that fear. Then we need to make an effort to shift our view of the future and craft an opportunity-based narrative.

That requires us to reflect on what has excited us the most in our lives to date. We then need to look ahead and frame an opportunity that has the potential to draw out that excitement and keep us focused on achieving something that is really meaningful to us. As that opportunity-based narrative begins to take shape, we will start to feel the excitement that will help us to move beyond fear.

We need a view of the future to focus our actions today – a positive view of the future will lead to much greater impact today as long as we understand the obstacles and challenges that confront us. Opportunity-based narratives do not ignore obstacles and challenges – they are very clear that the opportunity will require effort and action to achieve. They motivate us to seek help from others – we need to connect with others who are also excited about the opportunity out in the future.

The future matters for business and society

This is not just about us as individuals. Our view of the future is shaping how our businesses perform and how our society evolves. We need to craft institutional, geographical and movement narratives that will help all participants to move beyond fear and take action that will help achieve much greater positive impact. If we get this right, we’ll move together into a much brighter future.

Bottom line

Let’s not be blind to how our view of the future shapes our present. The Big Shift is creating mounting performance pressure that is leading more and more of us to adopt a threat-based based view of the future. The paradox is that the same forces that a generating mounting performance pressure are also creating exponentially expanding opportunity. We can create far more value, far more quickly and with far less resources than would have been imaginable a few decades ago. The challenge is that, if we’re driven by fear today, we’ll never even see those opportunities, much less find the motivation to pursue them. How we act in the present is deeply shaped by our view of the future. Let’s come together to evolve a very different view of the future.


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Embracing Paradox

Category:Connections,Exploration,Growth,Learning,Opportunity,Paradox

We live in a world

Of either/or,

Not both/and.

This is a world

Where reason rules

And does not tolerate

Exceptions to the rules.

But that’s not the world

We really live in.

We’ll never see

The full richness of our world

And we’ll learn a lot less

If we choose not to see

Its complexity and contradiction

And its endless mystery

Hiding beneath the surface.

Paradox can help us to learn

As long as we welcome it

And explore it,

Grateful for its ability

To challenge our deeply held beliefs

And tightly enforced rules.


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The Imperative for Two Dimensions of Transformation

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

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

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

Scaling the edge

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

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

The two transformation imperatives

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

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

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

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

Let’s explore both of these dimensions more deeply.

Transforming the value delivered

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

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

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

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

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

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

Transforming the delivery of value

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

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

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

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

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

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

Bottom line

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


  • 0

Increase the Power of Your Narratives

Category:Collaboration,Community,Connections,Emotions,Fear,Movements,Narratives,Opportunity,Passion,Small moves

I’ve written a lot about the untapped power of narratives, including in my new book, The Journey Beyond Fear. But, what are the specific elements that contribute to that power? I’ve been participating in the development of quite a few narratives, and it’s led me to focus on four elements that will make or break a narrative.

Stories and narratives

Let me start, though, by reminding everyone what I mean by narrative. Those who have been following me will remember that I make an important distinction between stories and narratives, even though most people view them as the same thing.

For me, stories are self-contained – they have a beginning, a middle and an end. Stories are also about the storyteller or about some other people, real or imagined, but they’re not about the people in the audience.

In contrast, for me, narratives are open-ended. They focus on a big threat or opportunity out in the future, but the threat or opportunity has not yet been achieved. The resolution of the narrative hinges on the people in the audience – it provides a call to action that will ultimately determine the outcome of the narrative.

As I discuss in greater detail in my book, narratives can play a powerful role at multiple levels, starting with us as individuals – we all have a personal narrative. But narratives can also have significant impact at the level of institutions, geographies (cities, regions and countries) and movements. The elements that I’m going to explore below apply to narratives at all these levels.

The four elements of a powerful narrative

As I indicated, narratives can focus on either a significant threat or opportunity in the future. Since I believe we are in great need of more opportunity-based narratives, I’m going to focus here on opportunity- based narratives. Based on my experience and research, the four elements that will determine the power of an opportunity-based narrative are:

  • Framing the opportunity
  • Identifying trends enabling the opportunity
  • Identifying obstacles and challenges that stand in the way of achieving the opportunity
  • Framing the call to action

Framing the opportunity

The foundation of an opportunity-based narrative is of course the opportunity itself. This is ultimately what will motivate people to come together and act for impact. For this reason, it is important to find an opportunity that really inspires and excites the people we are trying to reach – it should not just be something that is “rational” or supported by data. Finding this kind of opportunity requires a deep understanding of the people we are trying to reach so that we find an opportunity that is aligned with their aspirations. Of course, they may not yet be aware of the opportunity, but we should explore whether this opportunity would excite them, once they become aware of it.

Effective narratives focus on a very big opportunity that will require long-term effort by many to achieve. If the opportunity can be quickly achieved by a few people, it will not become the catalyst for large-scale action by a growing number of participants. What we need are narratives that can sustain us and excite us over a long period of time. Of course, that also implies that we should be able to make progress in addressing the opportunity relatively quickly so that we will be encouraged to continue on the journey together.

The opportunity framed by a narrative also needs to be a positive-sum opportunity. This means that the opportunity will expand as the number of participants expands. If an opportunity is fixed in its size and rewards, it will discourage more people from joining and collaborating with each other.

Identifying trends enabling the opportunity

One of the big risks with framing large, long-term opportunities is that it can generate a lot of skepticism, especially from those consumed by fear. For this reason, it’s important to be able to identify some long-term trends that suggest this opportunity is achievable, and not just a fantasy.

But there’s a balance that needs to be maintained. While these trends should reinforce our belief that the opportunity is achievable, they should not be viewed as making the opportunity inevitable. If the opportunity is inevitable, we will tend to become passive. Why would we need to act and take risks if the opportunity is going to emerge anyway?

Identifying obstacles and challenges

That leads to the third element of powerful narratives. Somewhat paradoxically, the strongest narratives are those that identify and assess significant obstacles and challenges that will make the opportunity difficult to achieve. This will underscore that significant effort will be required to address the opportunity identified by the narrative. We can’t just sit back and assume that the opportunity will emerge on its own.

This will also help to prevent early participants from becoming discouraged too quickly. If they’re expecting obstacles and challenges, they’ll be motivated to forge ahead and find ways to overcome the obstacles and challenges.

Framing the call to action

A call to action is a critical pillar of powerful narratives. The people addressed by the narrative need to be clear that the outcome depends on the action they take.

For this to be effective, another balance needs to be struck. The call to action needs to be high level enough that participants can improvise and adapt the action to their specific context, especially as unexpected situations emerge. On the other hand, the call to action needs to be specific enough that it can provide tangible direction to people regarding the kind of action that will be needed to achieve the opportunity.

The call to action also needs to be framed in a way that people can initially make small moves and begin to see progress in addressing the broader opportunity. If people believe that their action will not yield any positive results for decades, they’re much less likely to maintain their excitement on continuing the journey.

This increases the importance of focusing on impact, not just action. Effective narratives have a call to action where the progress can be measured and monitored. The call to action needs to be specific enough that it can help to define metrics that matter. This will help all participants to assess how much progress is being made and to reflect on how to achieve even greater impact. It will also give them encouragement when they can see the progress that is already being made.

Bottom line

Properly framed, opportunity-based narratives can be very powerful. At their most basic level, they excite people about coming together and acting to achieve a really inspiring and meaningful opportunity. It’s ultimately about moving people beyond fear to hope and excitement.

As with most things in life, it’s ultimately about balance. We must believe that the opportunity is achievable, but also that it will not materialize without concerted action because of roadblocks and challenges that stand in the way. We need to be able to take small steps, especially at the outset, but we also need to see how those small moves can set big things in motion.


  • 5

Seek the Gift

Category:Collaboration,Community,Connections,Exploration,Growth,Opportunity,Passion,Poem,Potential

Christmas

Is a time of

Giving

And receiving.

We should be grateful

For what we have received.

But let’s not just look around.

Let’s look within.

Our greatest gift is

The energy and spirit

Residing within us,

Waiting to be discovered

And unwrapped

And brought out

For others to see

And experience.

The greatest gift

We can give to ourselves

Is to seek

That energy and spirit

And nurture it,

Drawing it out,

To help us pursue

What is really meaningful.

If we do that,

We will offer

Ever expanding gifts

To those

Who mean so much

To us.

Our gift within us

Can be the gift

That keeps on giving.

The gift to us

Can become the gift

That we share

With others.


  • 0

Is Digital Transformation Missing the Real Opportunity?

Category:Emotions,Fear,Institutional Innovation,Learning,Opportunity,Passion,Strategy

Everyone is talking about digital transformation these days, but I have to confess that I am a bit of a contrarian on this topic. I’ve spoken a lot about this in recent years, but the catalyst for writing this post was a session on digital transformation at a conference that I just attended.

I work with a lot of large companies around the world and I can guarantee that virtually every large company now has a “digital transformation” program. When I press executives for details about the program, I invariably find out that the focus of the program is to apply digital technology to do what the company has always done faster and cheaper, but the business and the company remain largely the same.

Is that really “transformation”? Definitions differ, but I use the metaphor of the caterpillar and the butterfly in assessing whether transformation is really occurring. If we’re just applying digital technology to help the caterpillar to walk faster, that may be helpful to the caterpillar, but please don’t call it “transformation” unless the result is a butterfly that would be unrecognizable relative to the caterpillar. In my experience, digital transformation programs are just helping caterpillars to walk faster.

Why does this matter? It matters, because in a rapidly changing world going through a “Big Shift,” there are exponentially expanding opportunities that can only be effectively addressed if companies and other institutions are prepared to undertake true transformation, asking the most basic questions of all: What business should we really be in? How can we expand our ability to deliver more and more value to our stakeholders? How can we motivate ourselves to take more risk?

Let’s look at three levels of transformation:

  • Pursuing fundamentally different business opportunities
  • Crafting fundamentally different institutional models
  • Cultivating fundamentally different emotional drivers

Pursuing fundamentally different business opportunities

In a rapidly changing world, there’s a strong temptation to shrink time horizons and just focus on the business we have. The paradox is that this Big Shift world is creating exponentially expanding opportunities – we can create far more value with far less resources and far more quickly than ever before.

To see these opportunities, we need to be able to look ahead, far ahead, and anticipate significant  emerging unmet needs that we could address. This requires a very different approach to strategy – a zoom out/zoom in approach to strategy, something that I have written about extensively, including here and here.

Zooming out requires us to look ahead 10 – 20 years and focus on trends that are reasonably predictable and that will give rise to opportunities far larger than anything we have addressed in the past. If we look ahead 10 – 20 years and believe we are still going to be in the same business that we are today, we don’t understand exponential change. It forces us out of our comfort zone to imagine becoming a fundamentally different business from the one we are today. We begin to see the butterfly.

As just one example of how different our businesses will become, I urge you to consider Unbundling the Corporation, a perspective that I first wrote about a couple of decades ago. We need to challenge ourselves to see how fundamentally businesses are changing and the opportunities that these changes create.

As a side note (worthy of an additional blog post), the best way to pursue this form of business transformation is by scaling the edge.

Crafting fundamentally different institutional models

As we look ahead and begin to see the magnitude of the opportunities that are emerging, we will begin to realize that our current institutional models are ill-equipped to help us on the journey to addressing those opportunities – in fact, they are becoming significant barriers.

What do I mean? I’m going to generalize, but over the past century, all large institutions around the world have embraced an institutional model that I describe as “scalable efficiency.” In that institutional model, the key to success is to become more and more efficient at scale, and the way to become more efficient is to tightly specify and highly standardize all activities in the institution so that they are done in the same efficient way everywhere.

Large and very successful institutions have emerged around the world using this institutional model. The challenge is that in a rapidly changing world this approach to efficiency is becoming less and less efficient. It also misses the key requirement for success in the future: scaling and accelerating learning.

To address the opportunities in the future, we will need to embrace a very different institutional model: scalable learning. I have written about this need for institutional innovation here.

And, let me be clear – when I talk about scalable learning, I’m not talking about learning in the form of training programs that focus on sharing existing knowledge. In a rapidly changing world, the most powerful and necessary form of learning is learning in the form of creating new knowledge. That doesn’t occur in training rooms, but requires all workers to learn through action in the workplace. It also requires coming together into impact groups and orchestrating larger and larger ecosystems of participants from many different backgrounds to learn faster together.

Scalable learning can help expand our focus beyond efficiency – doing the same things faster and cheaper – to see the potential to learn how to deliver far more value as well. When we unleash scalable learning, we have the potential to deliver exponentially expanding value to our customers and other stakeholders. We are constantly finding new ways to deliver more value in a rapidly changing world. Scalable learning can also accelerate our progress towards addressing the fundamentally different business opportunity that we see in the future.

Pursuing this kind of scalable learning requires us to re-think and redesign all aspects of how we organize and operate in our institutions. It requires us to explore what is needed to become a butterfly.

Rather than trying to transform the core of our existing institution, we will be much more likely to succeed if we scale the edge, viewing the edge as the cocoon that will give birth to the butterfly.

Cultivating fundamentally different emotional drivers

Transforming into a butterfly can be very scary. As I discuss in my new book, The Journey Beyond Fear, more and more people around the world are consumed by fear, given the mounting performance pressure that is being generated by the Big Shift in our global economy. While understandable, the emotion of fear can also be very limiting.

In this context, fear can increase our resistance to change. We simply want to hold on to what we have and continue to do what has made us successful in the past.

If we’re going to make the transformation journey, we need to add another level of transformation – emotional transformation. We need to find ways to cultivate emotions that will help us to move beyond our fear and achieve impact that is far more meaningful to us.

In this context, I believe the emotion that can help all of us to pursue the transformation we need is the passion of the explorer. It’s a very specific form of passion that I discovered when researching environments where sustained extreme performance improvement had been achieved. I have written about it extensively, including here and here. The passion of the explorer is a fundamentally different emotion from fear.

I believe we all have the potential to draw out the passion of the explorer within us – it’s not just something that is limited to the gifted few. The challenge is that we live and work in environments that are deeply suspicious of this form of passion and actively seek to suppress it. The good news is that the two other levels of transformation – business opportunities and institutional models – will help to foster environments that will help to draw out the passion of the explorer.

But if we’re serious about pursuing transformation, we need to find ways to draw out this emotion, even in environments that are still seeking to suppress it. External transformation will not succeed without internal transformation. We need to move on both fronts.

Bottom line

Pursuing genuine transformation requires evolving from the caterpillar into the butterfly. It can be hugely rewarding because it positions us to address the exponentially expanding opportunities that are created by the Big Shift. Of course, digital technology can play a significant role in helping us to address those opportunities, but the key is to focus the application of digital technology on true transformation.

But genuine transformation isn’t just an opportunity – it’s an imperative. In the Big Shift world, those who hold on to what made them successful in the past – or who simply focus on doing the same things faster and cheaper – will be increasingly marginalized. Transformation is an imperative.

Three levels of transformation need to be pursued in parallel, but we need to understand that emotional transformation is ultimately the foundation that will enable us to successfully pursue the other two levels of transformation. If we can find ways to move beyond our fear, we will soon discover the butterfly that is waiting to emerge from the cocoon and venture out to amazing new areas that have never been explored. And we will see that digital transformation is designed to limit us to the lives of caterpillars.


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(if you've read the book, click here)

My new book, The Journey Beyond Fear, starts with the observation that fear is becoming the dominant emotion for people around the world. While understandable, fear is also very limiting.

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The book explores a variety of approaches we can pursue to cultivate emotions of hope and excitement that will help us to move forward despite fear and achieve more of our potential. You can order the book at Amazon.

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