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.

Sweet and sour

One thing that stands out for me in all the coverage of the Kraft takeover of Cadbury is what I see as the startling lack of ambition of the Cadbury senior leadership. Admittedly my view is UK centric, being largely informed by reports from the BBC and Financial Times. The FT is neutral in its reporting of this acquisition and yesterday’s (20th January 2010) leader is broadly supportive of the “… the UK’s openness to overseas bidders.” I am in agreement with that sentiment. On the other hand the FT’s front page headline, “Cadbury defends sell-out” is not without questioning overtones and it sits above an image of Kraft’s chief executive, Irene Rosenfeld who is smiling broadly, which suggests that Kraft are pleased with what they have achieved.

There is a section on the FT website devoted to this takeover; it includes a video interview with Roger Carr, the Cadbury chairman in which he defends the deal, and as with the headline, those words used to describe the interview are interesting in themselves. Perhaps I am reading too much into them. The interview is revealing as much for what is not said. While there is reference to achieving shareholder value, to the derisory nature of the initial offer and to the viability of an independent Cadbury, there was no indication that the senior leadership team had the stomach for continuing to lead an independent Cadbury and achieve better value for all their stakeholders than they eventually negotiated with Kraft. That is a depressing admission and calls into question whether an eventual sale was always the objective once Cadbury’s former drinks business had been split off, an option that has been the subject of press comment for some time.

In general I don’t have too many hang-ups about business ownership but I do think that something of value will be lost in this transaction. For one thing, the intangible experience of working for a company called Cadbury will soon be a thing of the past and that may matter to a significant number of people. It is an irony that many of them may well have ‘gone the extra mile’ in helping Cadbury achieve the good trading figures that sustained the company’s defence during the takeover bid. Also the confectionery world will almost inevitably become a less diverse place. No doubt the brands will remain but I will be surprised if the character of the products does not become less distinctive over time.

So why has this happened? It would seem that £8.50 per share was a more potent representation of the Cadbury leadership’s vision than a viable, global, independent confectionery business. At least in Cambridge (U.K.) we have Hotel Chocolat to fall back on for local consolation.

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.

Is this a good time to talk about trust?

Am I delusional in thinking that the general mindset of the UK population is far more upbeat today than it has been in previous periods of economic difficulty that I can remember? How do you square such a relatively positive outlook with the experience of losing a job, losing savings or seeing the value of a pension plan evaporate in front of your eyes? I don’t really know. But I wonder whether after the genuine anger that follows loss has passed, more people are looking to themselves and to each other for help in working out the way forward rather than expecting the elusive ‘them’ to come up with a solution. This could point to a greater degree of self reliance and decreasing expectations of state support. Both of these developments are probably for the better though I hope that the corresponding reduction in reliance on the state and financial institutions does not lead to a loss of trust in the community.

Perhaps there is an opportunity to catch the mood by introducing a serious attempt to decentralise power; you never know. To quote a quote, Bagehot in the Economist reports that Gordon Brown has written in the Independent, “There is no option I will not consider if it redistributes power.” Bagehot (The Economist, 30th May 2009) goes on to suggest transferring power from the executive to Parliament though he does admit, “Boosting MP’s freedom and remit might seem another strange response to their misdemeanours . But it is necessary and overdue.” Perhaps giving MPs a bigger role in government will instill a greater sense of responsibility. And why stop with Parliament? What about having another look at devolving power to the regions as well as to Scotland, Wales and Northern Ireland? It might just be the right time for the national mood to respond to loosely coupled government and that a central government orchestrating (as opposed to managing) regional activities will see increasing levels of enterprise across the country.

It is not that anyone seriously believes that local politicians as a group are any more honest than their national counterparts or even that the national politicians are particularly dishonest, in spite of the recent revelations of quite unseemly behaviour. The issue is for the state to trust its citizens more, giving them greater responsibility with the corresponding authority to manage local affairs for the betterment of local communities.

There is an interesting irony here because I think that Mrs Thatcher was instrumental in fostering this greater sense of self belief while, if I remember aright, she was also instrumental in centralising power away from regional authorities. Perhaps now is the time to build on the former change to reverse the latter.

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.