Half full – optimism or complacency?

Change is relentless and the impact of change has no pity for those who are its victims. It has always been so and history is full of the miseries of those caught up in periods of significant social, political or economic transformation. We appear to suffer collectively from an innate urge to improve our lot on the one hand and a paradoxical attachment to the status quo on the other. One of the illogical consequences of this inner tension is a strange and often unsupportable belief that ‘things’ were better in the past.

Given the many strands of change that appear to be weaving themselves into our destiny, is this generation heading unerringly for victimhood? These strands of change include globalisation, urbanisation, technological development, de-industrialisation of the developed world, industrialisation of the developing world, climate change, greater competition for natural resources, shifts of political and economic power. Will they provide the means for emerging power hubs to dominate and control the world population at large? Possibly but not necessarily so. While recognising that there are too many places in the world where the cost of change is still paid in blood and destruction, there are enough signs of creative stamina and resilience to persist in hope. We must grab hold of those aspects of the strands of change that liberate, inspire and enable individuals to participate fully in the societies and economies within which they live, pulling them into place as a global web of mutual interdependence. OK, so that is just some high-flown rhetoric but it is also possible to do …… only not in a blog.

This is not to say that writing does not help. The work of science fiction writers and futurologists has been invaluable in stimulating our thinking by framing possible futures; individuals such as Ray Bradbury, Isaac Asimov, Terry Pratchett, Raymond Kurzweil and Peter Schwartz come to mind as leaders in this regard and no doubt there are many others whose names should be added to this list. I expect that I will come back to this mishmash of a subject area and try to make more sense of it for myself.

The glass is half full; I am an optimist and enjoy the bounty with which I have been blessed but I am also aware that a glass supped from will in time be empty and that it is already time to give some thought to replenishment.

Thoughts on ‘The Big Shift’

Have you heard of the ‘Big Shift’? If not. You could do worse than cast your eye over these blogs (The Big Shift and Irving Wladawsky-Berger) for an introduction. The Big Shift is a phrase coined by John Seely Brown, John Hagel III and Lang Davison to describe a transformation of the business environment which they assert is working out around us right now. The transformation they describe is from the Industrial Age to the Information Age and is driven along by technological development. I don’t think I can improve on Irving Wladawsky-Berger’s summary of the thinking behind the Big Shift so do follow the link above and read his review. I also agree wholeheartedly with his concluding paragraph which I reproduce here: “ The Big Shift is a very innovative, difficult and important project. I strongly urge you to look at the full report to learn more about their objectives, methodologies and conclusions. You may not agree with all the measures chosen by the Center for the Edge team, but that is to be expected. Like any complex initiative, getting going is what counts. The Big Shift project will undoubtedly keep getting better and sharpening its results over time, especially, as it practices the spirit of learning and collaboration that it so strongly advocates. (from Irving Wladawsky-Berger’s blog)”.

Seely Brown, Hagel and Lang identify three waves of change which they call foundational, flow and impact. The foundational wave reflects the development of information technology and the almost contagious nature of its penetration into all the nooks and crannies of our society and, in one form or another, into the majority of social groupings on the planet. The second wave of change reflects their perception of the temporal nature of value, particularly in the context of knowledge; they believe there is more value in the flow of knowledge than in the stock of knowledge which changes in the foundational wave are rapidly making obsolete. The flow wave can be quantified in terms of the flow of knowledge and the movement of talent – it is interesting that the former seems to spread and the latter to concentrate. Seely Brown, Hagel and Lang’s third wave describes the impact of the two preceding waves on performance in the context of firms, markets, consumers and creative talent. One telling statistic they quote is that the average return on assets for US companies is now 25% of what it was in 1965. Another interesting observation is that value seems to be migrating from corporations to individuals, in terms of better deals for individual consumers and better compensation for individual ‘creative’ talents.

The study was performed at the Deloitte Center for the Edge of which Seely Brown and Hagel are co-chairmen and Lang Davison is the Executive Director. Their work represents a substantial advance in our ability to describe and therefore to discuss the economic environment of today. It raises a number of questions in my mind, which I hope will contribute to the dialogue:

1. The authors appear to imply a correspondence between the three waves of change as measured by the Foundational Index, the Flow Index and the Impact Index; as far as I can see, there is no fundamental reason for any correspondence. Am I missing something?
2. The authors appear to expect the rate of foundational change as measured by the Foundational Index to moderate; this may well be the case but given the demands of achieving a sustainable post industrial economy I don’t see it happening any time soon. Do they have a timescale in mind?
3. The concept of consumer disloyalty seems to reflect a corporate-centric perspective. This almost implies that customer disloyalty is bad; I would rather start from the position that customer loyalty is something to be earned.  Is this project corporate centric in its approach or is it more generic?
4. The authors describe a transition from scalable efficiency to scalable learning. I am concerned that learning is not enough; it has to lead to action and for want of a better word, I can only come up with the idea of scalable adaptation. Does this make any sense to you or to the authors?

The authors have pitched a significant contribution into what was a void – I had begun to wonder why John Hagel’s blog was less active than it had been. Now I know  and what they have written is well worth the wait. Stimulating stuff – so many thanks for the brain food.

The 3Rs of change

Even change changes. Why even Barack Obama’s official transition site has transitioned from change.gov to www.whitehouse.gov as a consequence of his winning the election. Groups from Luddites to NIMBYs have shown us how to resist change but it seems far more difficult to influence change in a positive direction; it is usually a voyage into the unknown. Here follow some ideas of patterns of behaviour for successfully negotiating change, called for the sake of argument the 3Rs of change. From the outset I will say I don’t think that any of these is an exact science, at least not in the dynamic world of rapid change.

There is no surprise with the first R which is for Reading. While this may involve words on paper or screen, it is certainly about reading the situation. What is the start point, can you visualise the desired end point, what are the obstacles, what will help or hinder you, who else is going to be in the change with you, how well equipped are you and how ready are you as an individual? Imagine yourself in a canoe and about to navigate difficult and unknown rapids; if you are wise you will get out of your boat and study the rapid before starting down it; identify the way the water is flowing, where the dangers and possible escape routes are and if in a group arrange to provide mutual support for each other en route. Reading change is an acquired skill, requiring knowledge and experience; I would argue that this skill is not given to everyone.

The second R is for Riding. Once you are committed, you are …. well, committed. You might as well enjoy the ride, if you can. There will be a flow and to continue with the whitewater analogy at any instant you will be busy dealing with the consequences of how you negotiated the features upstream, navigating the boat through the feature you are in and positioning yourself as well as possible to enter the downstream stretch. You are in what Boyd, an American fighter pilot ace called the OODA loop, that is Observe, Orient, Decide, Act. These are skills that you need to develop to Ride change successfully.

The third and final R is for Reckoning. Hopefully in your reading of the rapid you will have noticed an eddy or two where you can escape from the main flow in order to gather your breath and reassess the situation. Are you still on course to complete the rapid, is the group together, does anyone need help, have you learned anything that changes the route for the remainder of the rapid or what you will do when you get through it? You have gone through this change for a purpose; did you achieve it? One technique you can use for the Reckoning is the After Action Review; there is nothing magic in it at all but having a technique helps you to be rigorous.

So there you are. It looks simple but it isn’t. There is nothing new; it has all been said many times before in many different ways. But if this encourages anyone, it has been worth writing. Just because you have failed once does not mean you are not capable; you are only not capable if you are not capable of learning.

Notes:

1. If you have time and particularly if you have an interest in the Theory of Constraints, have a look at the OODA link; it takes you to a treasure trove of interesting material.
2. This link takes you to the USAID guide for planning, preparing and conducting After Action Reviews; follow the prinicple and adapt (simplify) the practice to meet your own needs.

Technology landscapes

Are there times when the ground rules of our businesses seem to be changing around us yet we do not seem able to anticipate the nature of the change? Anything that can help us to understand the situation is useful and here is one model for you to consider.

Most of us are born with a set of capabilities and we spend much of our lives using those capabilities to interact with our fellows, sometimes collaboratively and sometimes competitively. Almost always we are seeking to use our capabilities to the best effect and mankind has a long tradition of discovering and developing tools to give us some sort of edge. Useful tools are widely and rapidly copied so we develop the capacity to produce the tools in greater numbers.Typically we will set up some sort of system for production, supply and distribution; historically these have often been fairly informal but as the pressure of demand has increased they have become more and more formal. Experience has shown that once capacity has been established and the consumer community becomes used to products or services they begin to demand the ability to customise them – the ability to meet this demand has led to the development of customisation . But there are instances where the consumer wants to exercise greater control of his or her own destiny and this has been shown to be possible where the necessary networks can be put in place to provide direct support to the consumer. There seems to be a progression; we use tools to add capability, then we apply a system to achieve capacity, then we develop logistical skills to meet the demand for choice and finally we use networks to gain control of the resource we have developed.

Basic landscape concept

Take for a simple example our ability to walk; how do we overcome the limitations of speed and range that our physical bodies impose? In the first instance, we began to exploit an animal which was physically capable of carrying us further and faster than we could walk or even run. Even so there are limitations as riding requires skill and is physically demanding. In due course a number of us opted for travel by carriage – but here economics steps in because by this time such an option was only open to the wealthy. The introduction of cabs in cities extended access and a gradual increase in demand led to the establishment of stage coaches that operated between urban centres.

Jump now to another, more recent development track. In the late 19th century the motor car came onto the scene. This promised great mobility to anyone who could afford one, subject to the availability of fuel and the reliability of the machine. It rapidly followed the evolutionary progress of the horse enabled movement, with motorised cabs and omnibuses quickly replacing their horse-drawn predecessors. What the motor car (or more properly the internal combustion engine) offered over the horse was the potential for series production and this over the course of the 20th century has reduced the cost of ownership so that car are available to almost any person in a developed economy who wants to own one.

Mobility/transport landscape

If there is a development track for the aids to movement there is also a development track for the production of such aids and for the complementary capabilities that make the widespread use of such aids possible – in the case of cars these include production lines, dealers, service stations, repair and service shops, roads, tyre depots, loans and insurance companies, etc.

What is interesting here is that in a developed industrial and urbanised economy, the universal ownership of a horse as a means to mobility never materialised – possibly because a network for supplying, feeding, maintaining (blacksmiths, vets, etc), housing and managing waste was not economically sustainable. However there is virtually universal access to car ownership in such economies and established a new basic skill level – we learn to drive almost as automatically as we learn to walk. I will add a couple of observations, for what they are worth. From a cultural perspective walking, owner ridden horses and owner driven cars all offer mobility whereas the omnibuses and cabs (and trains, planes, etc) offer transport – so they result in a very different user experience. Secondly, another interesting element of the landscapes is that established capabilities in one area may become a key enabler of the emergence of another – so mass production has become a key enabler of, for instance mass ownership of cars that gave individuals back control over their movements at a greater level; likewise the mass production of electronics has brought computing power and communications capability to individuals – and the model does not apply only to manufacture but also to service industries.

So why is this of any interest or of anything more than passing interest?

Where is your product? Where are your products? Are they mass produced? If so, are your customers about to demand choice, customisation? Are you able to respond to such a demand? Can you anticipate it and drive it to gain a competitive edge? What might it cost to do so? Is the time right? Are you providing a service that supports a product or products? If you changed the way that the service is offered, what might happen? Where are you on the capability, capacity, choice, control continuum? Is the infrastructure in place to support a move from one corner of the square to another? If you don’t know, how can you be sure what impact any changes you make to your business model will have?

Please let me know if you find the model useful or if you think it is worth improving, extending or both and would like to discuss ideas of how to do this.