Dialogue Q1 2020 by LID Business Media

N VENKAT VENKATRAMAN

CAMELIA RAM

Q1 2020

THE NEW BUSINESS CONTEXT FOR LEADERS

Strategy for digital disruption People drive innovation BILL DUANE DIALOGUEREVIEW.COM

THE NEW BUSINESS CONTEXT FOR LEADERS

Uncomfortably excited

The second wave Preparing for digital transformation

DIGITAL TRANSFORMATION Q1 2020

LEADERSHIP

INNOVATION

FINANCE

MARKETING

STRATEGY

Reach further

Reinventing L&D

New priorities

Sales success

Agility dashboard

Get out of your comfort zone

The future of executive education

Generation Y and profit

Secrets of the top sellers

Metrics that look forward

THE VOICES BEHIND THE

THINKING

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CONTENTS

Digest 14 FOCUS

D I G I TA L T R A N S FO R M AT I O N

Riding digital’s second wave Tools for rethinking strategy Eastern pioneers: lessons from Asia

The digital mindset: into the deep Going digital, or going human? A robot’s view of human development

REGULARS 7

My edit

News nation

Patrick Woodman on technology

Japan – the Reiwa revolution

Spark What you need to know

Great minds Michael Chavez on purpose

Reviews Books and apps recommended for you

Michael Canning on digital disruption

Ben Walker meets IBM’s Marc Haberkorn

Liz Mellon on leadership gurus

Upfront

The big interview

Last word

Q1 2020 Dialogue

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CONTENTS

In depth LEADERSHIP & PEOPLE

I N N O VAT I O N & TECHNOLOGY

Kate Cooper: The leadership column Reach further

Vivek Wadhwa: The innovation column Innovating education

Complexity and stress

Put people first

FINANCE & AC C O U N TA N C Y

MARKETING & SALES

Phil Young: The finance column

Giles Lury: The marketing column

Generation Y and ROI

The name game

The new local economy

Selling success

S T R AT E G Y & O P E R AT I O N S

Rita Gunther McGrath: The strategy column

The agile dashboard, part II

Change or die: strategies for survival

Q1 2020 Dialogue

AGENDA

Contributors

N VENKAT VENKATRAMAN

N Venkat Venkatraman is the David J McGrath Jr Professor of Management at the Boston University Questrom School of Business, US, and the author of the book The Digital Matrix: New Rules for Business Transformation through Technology (2017). Venkatraman is one of the most cited scholars in digital strategy. His teaching, research and consulting focus on how companies win in the digital era.

ABHIJIT BHADURI

Abhijit Bhaduri is a digital transformation coach and talent management practitioner who works with clients to transform leadership teams, shape talent strategies and culture. Described in Forbes magazine as “one of the most interesting globalists”, Bhaduri is author of The Digital Tsunami and Don’t Hire The Best, and was recently listed as one of LinkedIn’s Top Voices. Formerly chief learning oﬃcer at Wipro, he is also an alumnus of Microsoft, PepsiCo, Colgate and Tata Steel. Dialogue Q1 2020

RYAN MCMANUS

Ryan McManus is chief executive and co-founder of techtonic.io. Formerly chief operating oﬃcer at Accenture Strategy and president of EVRYTHNG, an internet-ofthings software firm, McManus is a board member of Nortech Systems and advisory board member at CarLabs.ai. McManus is also a member of the clinical faculties of Duke Corporate Education and Columbia University Business School.

BETH AHLERING

Beth Ahlering is regional managing director, Europe, at Duke Corporate Education. Based in London, she is passionate about enhancing access to education through technology and personalization. With a PhD and post-doctorate from Judge Business School at the University of Cambridge, Ahlering is an expert in organizational behaviour and change management. She was formerly a senior consultant in KPMG’s People Consulting practice.

SHARMLA CHETTY

Sharmla Chetty is president of global markets for Duke Corporate Education. She leads market growth strategies for Duke CE globally and for each of the company’s regional oﬃces, in North America, Europe, Asia and Africa. Formerly head of human capital development at Nedbank, Chetty has worked with clients across financial services, healthcare, mining, petroleum and FMCG.

BILL DUANE

Bill Duane is an international consultant with over ten years’ experience working at the intersection of individual resilience and organizational processes and culture. Duane created the role of superintendent of wellbeing at Google, where he was an engineering executive for 12 years, and he is an expert in the practical skills and management methods that allow people to meet the challenges of being a human in our unpredictable and fast-moving world today.

AGENDA

My edit

It is no coincidence that the world’s most valuable companies – Amazon, Apple, Google and Microsoft – are digital firms. Their products and services have transformed the global economy and, as any observer knows, their drive to innovate and grow has taken them to some unexpected places. Yes, they provide online shopping, computers, internet search engines and oﬃce software. But obviously, that is not all they do: they sell web-hosting, deliver food, produce world-beating ‘TV’ shows, and sell games consoles. What’s next? Well, they’re building driverless cars, developing artificial intelligence, and investing in healthcare. And that’s just for starters. These companies were the winners of the early waves of digital transformation and they intend to stay in the lead. The question for everyone else is: what will you do about it? As N Venkat Venkatraman puts it in our cover story (page 16), a second wave of digital change is approaching. Chances are the digital giants have already shown signs of disrupting your industry: if they haven’t yet, they surely will soon. His five questions for executives trying to reshape their strategy for a digital world are unmissable – and be sure to keep reading for Tony O’Driscoll’s guide to the strategic dilemmas ahead, too (page 76). Ryan McManus outlines how leaders can open their eyes to their changing circumstances (page 20), while Abhijit Bhaduri suggests that many leaders today are like fish suddenly removed from the relative safety of an aquarium and thrown into the ocean (page 26). It is an apt description of the shift that’s under way. Robin Speculand and Jeremy Blain, meanwhile, argue that – despite the market leadership of US-based firms – it is now Asian firms which are forging ahead on business’s digital journey

(page 24). Don Jones offers a warning to leaders: don’t be swept up in the rush to digitize at the expense of engaging those people in organizations who are tasked with delivering transformation, starting with middle managers (page 30). Technology – even great technology – is, after all, just technology: the human dimension remains critical, as Stuart Griesbach explores in his review of some of the highlights from Duke Corporate Education’s 2019 ‘Davos of Human Capital’ event (page 32). Likewise, Camelia Ram looks at how firms are tapping into the human dimension to drive innovation (page 56). If humans rather than technology drive the change process, we also have to ask: how does change affect humans? After all, change is typically unsettling and disconcerting – and in today’s complex, fast-changing environments, the old certainties are disappearing quickly. Bill Duane (page 46) considers our physical response to complexity, and offers valuable guidance to help leaders increase their resilience and capacity in an uncertain world. Andy Molinsky (page 42) explains how we can improve our ability to get out of our comfort zones. It is something that we all must surely get used to as the pace of business accelerates. Elsewhere, we conclude our look at the ‘agile dashboard’ and the forward-looking metrics that leaders need for what’s next (page 72), while Sharmla Chetty and Beth Ahlering map out the future of executive education (page 52). Like so many areas of our lives, it is a field that’s fast being transformed by digital. Enjoy the issue. Patrick Woodman is editor of Dialogue

Q1 2020 Dialogue

Spark

W H AT YO U N E E D TO K N O W

Building the strategic agility to win An innovative programme explores the new paradigm needed for a fast-changing world A new online course promises to equip leaders with the skills, tools and instincts to navigate today’s environment and build strategic agility in their organizations. The Building Strategic Agility course, run by Duke Corporate Education, helps leaders develop their capacity to capitalize rapidly on the opportunities aﬀorded by today’s fastchanging marketplace. Eight expert instructors lead the cutting-edge programme, which features ten interactive video modules, seven practice exercises and takes less than ten hours of work to complete. Through the programme, leaders will: Understand complexity and synchronize the speed at which markets, organizations and people change and evolve

Learn how to sense and act in realtime, using purpose and a customercentric frame to identify new arenas and pivot quickly Balance the core and edge by using key metrics and data-science to make faster, smarter decisions Learn new frames, tools and orientations to drive agility through culture, teams and networks.

“The exponential rate of change and complexity in the market is stretching organizations and business models to their breaking points,” explained Duke CE chief executive Michael Chavez. “A new, more comprehensive strategic paradigm is needed — one that uproots long-held assumptions about markets, organizations and people. “This paradigm requires new approaches to strategy, innovation, data and decision-making. Approaches that are more exploratory, entrepreneurial and adaptable. “In this new world, the leader’s role has also transformed from directing through authority to shaping cultures that enable speed and flexibility in teams,” he said. — For information about the programme, please visit www.dukece.com/bsa

New Yorkers see around corners Global leadership expert Rita Gunther McGrath wows Big Apple Leaders convened in New York to hear exclusive leadership learnings from global strategy and innovation guru Rita Gunther McGrath. The bestselling author and leading expert in strategy and innovation joined top HR and learning and development executives to explore highlights from her new book, Seeing Around Corners: How to Spot Inflection Points in Business Before They Happen. The event was organized by Duke Corporate Education. McGrath – who is Dialogue’s strategy Dialogue Q1 2020

columnist (see page 71) – also shared how leaders and organizations can anticipate and react quickly to create opportunities from changes in the marketplace. She was joined by Duke Corporate Education’s global managing

Leaders from across the tri-state region benefited greatly from her insights

director for North America, Vishal Patel. All attendees received a copy of McGrath’s book and more information on the upcoming online oﬀering from Duke CE on Building Strategic Agility (see above). Christine Robers, chief marketing oﬃcer at Duke Corporate Education, said: “We were thrilled to host Rita at this great event in one of the world’s most dynamic cities. Leaders from across the tri-state region benefited greatly from her insights.”

GREAT MINDS WITH MICHAEL CHAVEZ

Asking ‘why’ not ‘what’ worked for Zopa’s James Alexander

P S Y C H O LO G I C A L SAFETY KEY T O H E A LT H Y O R G A N I Z AT I O N S Star author fires warning to leaders

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Companies and public bodies must create a ‘psychologically safe’ culture if they are to function well as good places to work. That is the call from former HR director and chief coach of Conscious Works, Natasha Wallace. At the launch of her book, The Conscious Effect, Wallace warned that only those organizations where employees felt safe enough to speak out would thrive. She called for a more human approach to leadership, where leaders take better care of themselves and of those they lead. Only with this change in mindset will leaders be able to succeed in the era of digital overload, uncertainty and opportunity. — bit.ly/theconsciouseffect

Doctrine for disruption Purpose leads to better products. James Alexander is a Great Mind whose sense of purpose created a disruptive, ingenious finance product that saves consumers money. Readers from the UK might be familiar with Zopa, the peer-topeer lending platform. It oﬀers very competitive, very flexible, personal loans that can be easily managed via a neat smartphone app. Zopa is a direct result of Alexander’s purpose: to create a customer-centred business in finance, which in turn was informed by the emergence of the so-called Free Formers – a new generation of workers that have embraced a freelance lifestyle and rejected the traditional salaried model. When Alexander was working as a strategy director in the British finance sector, he discovered that Free Formers did want to invest their money, but not through the conventional channels that his employer and others like it were oﬀering. Free Formers had a litany of complaints about the banking system. Their main concerns centred around bureaucracy and the disdain banks showed to people who didn’t have traditional, full-time jobs. They felt disenfranchised by the banking system, as they were termed ‘risky’. “We had no idea what exactly we wanted to do, but we knew why we wanted to do this,” Alexander explains. As with so many great innovations, Zopa began life as a single, great question. Alexander and his colleagues went back to the very roots of banking and asked the disruptive question, “What if eBay lent money?” His question was in part generated by personal experience. When Alexander himself had to borrow money from his father, he joked how he had negotiated a better deal with Alexander Sr than any available on the high-street. Moreover, he could repay his father whenever he

could, and would not be penalized for making additional payments. The story of Alexander’s Great Mind is instructive for anyone looking to disrupt – and avoid being disrupted. It leads to three key learnings:

Start with the ‘why?’For example, “why change the status quo?” This is more powerful than problem-solving questions like “what?” or “how?”, because “why?” – and its twin, “why not?” – have a tendency to focus our thinking on more fundamental issues and encourage us to explore. Prototype through stories Alexander’s borrowing money from his father was a story about a prototype for an alternate lending model. It uncovered crucial issues, such as cost and payback timing, that helped the Zopa founders question further elements of traditional banking. Focus on human issues Alexander wanted to make things better for people. Nothing helps us question an industry better than anchoring on the real-life experiences of people. Empathy is crucial to disruptive innovation. Also, purpose and empathy create a virtuous cycle. Purpose ultimately is about service, so it forces us to think empathetically; that helps us frame things in purpose more easily.

2 3

Key to all of these points is patience: don’t expect quick fixes on your purpose journey. Heed Alexander’s advice: “Innovation is messy. It’s about seeing the world ‘outside in’ and making choices. Innovation is finding new and better ways to fulfil your organization’s purpose.” Great Minds ask big questions. — Michael Chavez is chief executive of Duke Corporate Education — A version of this column originally appeared on Forbes.com Q1 2020 Dialogue

Building Strategic Agility Online Course

Swift, dramatic change across markets today is making it increasingly difficult for organizations and their people to keep pace. Business models that worked well in the past are at a breaking point, and incremental adjustments will not suffice. Speed, complexity and digitization are creating greater uncertainty, competition and risk, but are also creating greater opportunities for agile organizations prepared to proactively shape the market. Capturing value today while also looking for the next advantage demands agility. Agile leaders are the greatest levers for the future success of an organization.

HIGH

MARKET

LINEAR TO EXPONENTIAL HUMAN ORGANIZATION LOW

RATE OF CHANGE SLOW

Explore our self-paced online course for individuals or a structured and blended solution for cohorts.

To learn more, visit dukece.com/bsa

FAST

UPFRONT

MICHAEL CANNING

Disruption – and opportunity – is outside your field of view

See around corners Michael Canning is global managing director of innovation and new commercial models at Duke Corporate Education

The marketplace is changing at a breathless rate. Amid the complexity and disruption, organizations and leaders need to ‘see around corners’ – pick up early warning signals of strategic inflection points. This is the seminal teaching of management scholar Professor Rita Gunther McGrath. She defines strategic inflection points as changes in the operating environment that are caused by a combination of new technologies and emerging trends – brought about by a disruptive competitor. McGrath’s crucial insight is that an inflection point causes the long-time assumptions underpinning your business to no longer be true. Yet seeing around corners is unnatural for businesses, just as it is for individuals: the human eye evolved for a life hunting under the big skies of the savannah, not the labyrinthine corridors of today’s complex business environment. Like our own vision, most of our legacy strategy apparatus has been designed to see things within our industry. Picking up the peripheral slow-moving trends, emerging technologies or disruptive start-ups is not instinctive - it requires intentionality and practice. So, how do we get better at this new fundamental survival skill? In a recent conversation with McGrath, I asked how leaders can begin to see around corners. She shared five best practices.

Seeing around corners is unnatural for businesses, just as it is for individuals

Be customer-obsessed

The customer-obsessed listen and interact with their customers carefully and are focused on creating a great experience. Disney, Ritz-Carlton, Amazon and Netflix consistently top the list of customerobsessed companies. In addition to careful listening and responsiveness, each also uses technology to interact with their customers and gather real-time data to identify and satisfy emergent needs and solve new problems. The customer-obsessed know their customers are not merely a source of revenue, but also additional eyes to see around the next corner.

Demand diverse perspectives

One of the greatest ways to create a

blind spot is to be surrounded by people like yourself. Diversity brings many advantages to an organization, including increased profitability, creativity and better problem-solving. Employees with diverse backgrounds bring a broader set of perspectives to help challenge assumptions, and a rich set of networks that act as sensors in the periphery.

Empower small teams

Form small teams that look at problems and are empowered to bring back information and decisions that drive action. Empower small teams and think about how you take the small steps that help you solve the bigger problem. Ask yourself whether you are giving people the permission and resources to explore the edge, placing small bets and running enough experiments from which we can learn faster.

Get out of the building

It is likely that the forces driving the next inflection point in your company are going to come from outside your industry. Are you positioning yourself to pick up the next trend, technology, or competitor outside your industry purview? Are you interacting with people closer to the edge?

Lead your senior team out of their denial

The organizational guru Ron Ashkenas notes that great leaders tell it like it is. They focus on reality, no matter how unpleasant, and then figure out what to do about it. In contrast, less eﬀective leaders sometimes avoid hard truths, argue with the data, and delay tough decisions. Denial is one of the most common defence mechanisms used to cope with diﬃcult situations. And, it’s easier to see in others than in yourself. That’s why really good managers value subordinates and colleagues who are not afraid to tell them the truth. Are you building a team and culture where this is the norm? As the science fiction writer William Gibson said: “The future is already here. It is just not evenly distributed.” Position yourself closer to the places where what’s next has already arrived. Q1 2020 Dialogue

FOCUS

Focus

Digital transformation

Shutterstock

The second wave of digital transformation is fast approaching. New technologies are starting to transform products, services and business models that have until now looked out of reach. Yet the urgent questions confronting leaders are not about technology: they are instead about strategy, mindset, organizational capability and willingness to change. They are fundamentally human. In this issueâ&#x20AC;&#x2122;s Focus, we look at those human dimensions. How can leaders rethink their strategies for the new environments that lie ahead? What is the mindset that will be needed? How can leaders build the organizational capabilities to thrive in the years ahead, and how can they engage people throughout their organizations? And where are the worldleading exemplars that point the way ahead?

ARTICLES 16

Riding digitalâ&#x20AC;&#x2122;s second wave 20

Thinking strategically in the digital revolution 24

Eastern pioneers 26

The digital mindset: into the ocean 30

Going human in a digital world

FOCUS

Riding digital’s second wave Industry incumbents failed to grasp the early potential of digital. It’s time for a deep strategic rethink

WRITING

N Venkat Venkatraman ILLUSTRATION

Dale Edwin Murray

Dialogue Q1 2020

There’s considerable confusion among executives about digital transformation. Some see it as a technology problem and delegate it to specialists. Others rely on consultants who paint an exciting picture of the business’s future, but oﬀer unclear pathways to get there. Still others see digital as only relevant in some parts of the economy – such as music, media and financial services – and not in asset-heavy sectors such as transportation, healthcare, retail, logistics and others. The reality is that digital transformation is not about technology. It is the fundamental reshaping of your business, driven by powerful technologies – and it is relevant for every company, in every sector, everywhere in the

world. A second wave of digital change is fast approaching, and leaders need to prepare at a strategic level for the changes ahead.

The second wave of digital transformation

As we enter 2020, we are still in the midst of the first wave of digital transformation. Analogue businesses such as books, music, advertising, software, newspapers, music and media have been transformed by digital technologies. Traditional leaders such as Barnes & Noble, Warner Music, 20th Century Fox, the New York Times and NBC have been challenged and often overtaken by ‘born-digital’ companies such as Amazon, Apple, Google, Spotify, Netflix and others. Everywhere we look, the born-digital

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companies are defining new business models, rewriting the rules of competition and reshaping the ways that value is created and captured. At the same time, the second wave of transformation is getting started in settings best described as ‘physical + digital’. Here, physical products and machines may still be necessary, but the value could potentially occur with digital functionality overlaid on physical products; or, the physical products themselves could be transformed with digital functionality, such as sensors and software. This could aﬀect diverse industries. Think about the future of personal transportation: will value lie in the design and manufacture of physical cars, or in the delivery of mobility services orchestrated by digital

networks? Or agriculture: how could pockets of value in farming be expanded by a shift towards precision farming, enabled by satellite technology and sensors in the soil? Incumbents mostly missed the first wave of digital transformation because they did not fully grasp the significance and urgency of digital shifts. That could happen again. So, based on my experience working with companies to apply the ideas presented in my book, I pose five questions to help incumbent leaders think about the oncoming second wave of digital transformation.

Do you look at digital trends as headwind or tailwind? Some leaders look at digital trends – mobile, Q1 2020 Dialogue

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social, cloud, robotics, artificial intelligence (AI), machine learning and such technologies – as tools that can be deployed without the need for fundamental changes to current business models. They see them as ‘headwind’ trends and work accordingly: minimizing risks and making incremental resource adjustments in the expectation that their existing business models will endure. This is a narrow vision of how digital will shape the future. In contrast, those who recognize digital transformation as a tailwind can begin to develop a vision of their future business transformed by new technology. They imagine the future of healthcare with wearable devices and personalized medicine. They are excited to reimagine cars as computers on wheels, connected to the cloud and driven autonomously, not just combustion engines with steering wheels. Such scenarios bring to the fore the scale of change that lies ahead. Digital-as-tailwind is more threatening to the status quo: it means accepting that the future is uncertain and unknown. It is easier to think of digitization as incremental, an extrapolation of the past – but those who see digital-as-tailwind can examine diﬀerent plausible futures and, as a result, can see the need for new capabilities. They understand the need for radical change. What is the prevailing view inside your organization: do you and your colleagues see digital as headwind or tailwind?

The chances are that the digitial giants have already shown signs of disrupting your industry, or will do soon Dialogue Q1 2020

Who will you compete against in 2025 or 2030?

Digital doesn’t warrant serious management attention if it doesn’t have the potential to change the competitive landscape and business models. That potential is widespread. Sometime in the near future, nearly every major company will compete against born-digital companies. We are already seeing early signs. Hotels compete against Airbnb; car makers compete against Waymo, Tesla, Uber, Lyft, Ola and Didi; traditional health clubs compete against Peloton, a home-based fitness experience personalized by technology. Other changes will be unexpected but profound, and incumbents will find themselves competing against companies with entirely diﬀerent sets of capabilities and drivers of advantage. Do a simple exercise. Write down the industries that Amazon has already disrupted, starting with books, music, media, grocery, and cloud computing. Now, write down the possible industries that they could disrupt in the future, through robotics, AI, cloud, machine learning and Alexa-enabled voice computing. Do the same with a few of the other digital giants: think about how Google is on its way to transforming the automotive industry with Android Auto and Waymo, or how Apple could reinvent media with

Apple TV+, healthcare with its iPhone and Apple Watch apps, and financial services with Apple Card. The chances are that these digital giants have already shown signs of disrupting your industry, or will do soon. Look, too, at the start-ups funded by venture capitalists. Not all will succeed, but these investments are reasonable indicators of the innovations that could work. Born-digital companies believe that they can leverage the power of digital technologies to create new business value where incumbents cannot. What patterns can you see in the investments made by venture capitalists, and what do they mean for your company? The competitive landscape of the future will be shaped by agile and ambitious entrepreneurs, by digital giants, and by resurgent incumbents who have managed to adapt. On all fronts, incumbents’ traditional competitive advantages will be challenged by those with digitallydriven competencies. Digital transformation means making sure that you have acquired and assembled the necessary new capabilities to stay competitive.

What role will you play in digital business ecosystems?

Digital transformation is not limited to what happens inside your firm. It extends beyond your boundaries and could redefine your organization’s role. Take cars. As they become part of ecosystems that provide personalized mobility solutions, what roles will be played by traditional manufacturers, as opposed to companies such as Uber and Waymo? Who gets to be the primary interface with customers? Who gets to define the business model? When it comes to looking at ecosystems, we can distinguish between the roles of orchestrators and participants. Orchestration is about pulling together companies with diﬀerent strengths and connecting them seamlessly to deliver value to customers. Participation is about knowing your strengths and capabilities, and allowing the orchestrator to pull you into the ecosystem so that your contribution is valued. The orchestrator is the rule-maker while the participant is the rule-taker – and you may find your role changing. Traditional incumbents like Ford, P&G or Samsung orchestrated their industrial ecosystems of supply chains and distribution channels to make sure that they delivered value to customers – but they may soon find themselves participating in ecosystems defined by Waymo, Amazon or Alphabet. Traditional incumbent leaders need to think through the relative benefits of orchestration vs. participation as ecosystems change. Organizations that lack a proactive strategy to stay relevant and credible will undoubtedly end up as participants and rule-takers.

The future competitive landscape will be shaped by agile entrepreneurs and incumbents who have managed to adapt

Is your clock speed aligned with your digital future?

Speed is the essence of transformation. You may feel you have already been accelerating, achieving faster time-to-market and speedier customer response times. But digital transformation fundamentally shifts the reference points for time and speed. Customers’ expectations of speed are no longer defined by your industry, but by what they have experienced in other settings. Being the ‘first mover’ can confer advantages, but it is not always the case. In many situations, it is the ‘fast mover’ who wins – the one who can take an innovation in a specific industry, customer segment, or geography, and scale up fastest. This creates opportunities: you may not be a leader in drone design but, once drones are commercially available, you could be the fastest to deploy them at scale. Data is critical to speed. Uber can analyse data from over 12 billion rides in more than 700 cities, developing insights far faster than either the traditional car companies or competitors like Lyft and Ola. Incumbents often calibrate their clock speed against historical internal benchmarks about product launches or process improvements, or in comparison to other traditional competitors, but digital transformation means resetting the clock. As one executive told me: “You may be fast in your little pond, but soon you will see faster species. We have to be prepared for it.”

Are you organizing with smart humans and powerful machines?

Your organization is in all likelihood designed using structures, processes, roles, skills and team relationships based on theories from organizational and social psychology. To succeed in the digital future, you must start to think like born-digital companies, which rely on computer science for organizing. That includes thinking beyond human talent and skills to look at how humans and machines can work together to create the capabilities to win. Delve deeply into how your business is organized. You are likely to find activities that should be fully automated with humans involved in activities where they do not have comparative

advantage. You must develop an aggressive plan for automation to take advantage of the impressive developments in digital technologies and minimize the role of humans where possible. The first step is to define the zone of automation, where machines do both the heavy lifting and make decisions. Second comes the augmentation zone, where machines do the heavy lifting, but humans ultimately evaluate and make decisions. Machines such as IBM Watson or Google DeepMind, for example, can make fast work of previously cumbersome analysis and present alternative options for action. For example, software could present a doctor with two or three plausible treatment options, with supportive arguments for each – but the doctor would make the final decision. Similarly, marketing managers may be given a set of alternatives for pricing and promotion. Finally, there’s the amplification zone, for thorny problems facing customers or consumers which cannot be solved easily by either humans or machines independently. Examples might be personalized medicine for individuals, or the dynamic customization of advice for farmers based on realtime analysis of disparate datasets. This is where your differentiation exists and where your ability to create and capture a disproportionate share of business value lies. Using machines to do routine and semiroutine activities frees up people to define unsolved problems and identify new areas for using technology. This is where human talent should be directed. Systematically thinking through the three zones will yield insights about the talent profile you need as you transform. Your future is not a linear extrapolation from the past to the present and onwards. Business is becoming digital at a rate faster than could have been imagined just a few years ago. Too many companies have so far responded to digital with symbolic moves like appointing chief digital officers, creating incubation units or forming joint ventures with well-known digital companies. These one-off, piecemeal moves are not enough. The effects of digital’s first wave are still being felt, but there is no time to pause. Leaders must confront the implications of the fast-approaching second wave, which will profoundly change the strategic landscape. Digital is a tailwind, and it will create untold changes across your business. Well-reasoned and timely responses will be needed for any firm that wants to win in 2025 and beyond. — N Venkat Venkatraman is the David J McGrath Jr professor of management at the Boston University business school and author of The Digital Matrix: New Rules for Business Transformation through Technology. He teaches on Duke Corporate Education’s Building Strategic Agility programme Q1 2020 Dialogue

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Thinking strategically in the digital revolution The tools needed to reshape strategy for the digital world can be learned. Ryan McManus explains how

According to a 2018 poll by McKinsey, only 16% of executives believe that their digital transformation eﬀorts have delivered sustained performance improvements – yet digital transformation is arguably the most urgent and important topic in business today. With the widespread availability of consultants, books and articles on the topic, and the unprecedented ease of acquiring technology and data, how is it possible that firms are getting such lacklustre results? At the root of the problem is the disconnect between how leaders understand strategy and the new rules of the digital revolution. Most Dialogue Q1 2020

leaders haven’t been taught how to think about a world that is very diﬀerent from the one which gave birth to popular strategic concepts. They are left applying outdated strategy models and thinking to the new world, trying to squeeze the competitive realities of the digital revolution into analogue and linear strategic planning concepts. Perhaps the most fundamental change is that digital has brought technology out of the back oﬃce, where it was focused on executing strategy, and into the boardroom as arguably the most important driver of strategy. This is a huge shift. It means leaders have to be clear on one point: transformation strategy and technology

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strategy are related, but not the same. ‘Technology’ belongs to the IT department and is largely executional in nature, while ‘digital’ concerns strategy and business models. Leaders need to fundamentally change how they think about both strategy and digital.

Why technology-first fails

Most training and content on digital transformation today follows a technology-first approach. But by diving into technical details and applications, the new business models and corporate strategy concepts – which are crucial for creating a cohesive strategy and roadmap for

change – are largely ignored. For the many executives who are not digital natives, a technology-first approach can feel like being spoken to in an impenetrable, jargon-laden foreign language. At best, that can create excitement about the future, based on impressive examples of emerging technology. At worst, it results in fear or intimidation, as people try to avoid being seen not to understand such an important topic. This translates into sub-par strategies and ineﬀective delivery. Learning and organizational development leaders are in a uniquely powerful position to help their leaders understand and successfully Q1 2020 Dialogue

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For the many executives who are not digital natives, a technology-first approach can feel like being spoken to in an impenetrable language Dialogue Q1 2020

address the digital revolution. They have to deploy the right executive development programmes. We first need to demystify everything happening around digital and remove the ‘noise’ from the system. It is imperative to engage leaders by using strategy-first, not technologyfirst, terms. Digital transformation is primarily about business models: new product and service portfolios, economics, customers and competitors. These can be understood through performance differences in market capitalization, market share, return-on-assets, return-on-talent, profit margins, operatingmodel performance, distribution, portfolio and options management. Such concepts are very familiar to executives, and positioning digital transformation in these terms makes it immediately accessible. In practical terms, helping leaders to engage with and understand the digital challenge means providing them with models, frameworks and tools that they can apply to their organizations. Simplistic ‘digital is a big deal’ thinking is not helpful. To have the biggest impact, learning about these concepts should ideally include the whole executive team, and perhaps even the board, to ensure that the full leadership team shares a common foundation. That matters because digital is evolving incredibly quickly, and this inherently creates uncertainty, requiring new approaches to strategy that consider portfolios of growth options. This is very different from jumping into big bets or thinking that months of traditional analysis will reveal a clear answer about the way forward. Organizations often approach digital transformation solely by deploying new tools and capabilities to deliver exactly what they have always done. This strategy is limited to operational efficiency: doing what we do now, just faster and cheaper. That’s fine as far it goes, but it’s only half of the story: digital business model shifts are much more far-reaching. There are a number of critical questions which leaders should be grappling with to support a digital business model: How do we use new digital capabilities to bring new value to our customers? What is our data strategy? What is our ecosystem strategy? How has our competitive set changed? How do we secure a seat at the table for understanding emerging technologies? How does our operating model need to change? What implications does digital have for our talent strategy?

How do we ensure the entire organization is aligned and collaborating on reaching the same goals?

A roadmap for executive development

There are typically seven key steps for helping leaders understand the impact of digital on strategy.

Understand the scale of digital’s macro impact

There are five ‘primal forces’ which combine to create macrotrends: geopolitics, economics, the environment, social issues, and technology – including digital. Technology/digital is not only a standalone primal force; in today’s world, it also drives the four others. For example, in geopolitics, AI is fast becoming a crucial battleground for superiority between nation states, while the role played by the Chinese tech giant, Huawei, in providing communications infrastructure in Western countries sparked a major international row in 2019. In terms of economics, 25% of global GDP is digital in some form, making it a critical area for government policy. And digital feeds into our environmental and social challenges, as we face the need to use fewer resources, and grapple with the combination of ageing populations in the West and technology-driven job displacement. Looking at this context is a great starting point: it often helps leaders to realize the urgency of change and opens their eyes to how these primal forces are aﬀecting their business.

Ground executives with the foundations of digital transformation

Leaders need to understand the ‘evolution of the revolution’. Over the past 25 years, there has been a sequence of digital waves, creating clear winners and losers. What insights can be drawn from this history? Nearly all senior leaders will be familiar with the rise of Google, Amazon, Dell, Uber and others, but not necessarily with the patterns and common themes that link their stories. By exploring what has come before, executives can learn valuable lessons.

Highlight current industry examples and case studies

Once executives have a clear grasp of the foundations, examples can help illustrate what is really happening across industries and leading companies. In traditional strategy, most analysis is focused on traditional sector competitors. Digital, however, does not respect industry boundaries and, as diﬀerent sectors have been progressing at diﬀerent speeds, it is helpful to explore examples from across a broad spectrum. Start-up razor companies hold lessons for large banks; large industrial manufacturers help to illustrate the power of new data-driven service

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We need to demystify everything happening around digital and remove the noise from the system

oﬀerings. Case studies show what’s possible, and help break down resistance to change. Finding those based on real growth numbers is vital, although tough: volumes have been written about the exciting new activities being pursued in digital, but only a fraction of companies are actually communicating their results.

Analyse internal surveys

It is staggering how often internal surveys are an eye-opener for leaders. Recently, one large financial services client sent out a survey to select managers throughout the organization, asking questions like, ‘how important is digital to attracting and retaining the best talent?’ and ‘how important are advanced digital capabilities to customers?’. The responses were illuminating: over 90% of respondents grasped the high level of urgency around digital, yet had a low understanding of the organization’s strategy. Do your people understand your strategy?

Conduct executive deep dives into emerging tech domains

Having established the strategic context, it is time to look more closely at technologies such as AI, the Internet of Things, social media, quantum computing, 5G and others. Focus on understanding the current capabilities and use cases of these emerging technologies, and how they reinforce each other, operating as a portfolio. This is also an opportune time to dive into specific functional considerations including the future of work, or the use of social media platforms for marketing.

Apply the new strategy playbook

Next, consider the strategy frameworks, models and tools needed to operationalize new thinking. At this stage, new tools might be introduced and applied to third-party case studies or, ideally, to topics and projects specific to your own organization. The pace of this stage can be quite unexpected. One global apparel company was able to define detailed business models and roadmaps around several existing digital opportunities within two days. In other instances, executives from large retailers, pharmaceutical companies and banks have successfully modelled dozens of new business opportunities in just a few hours. This can foster confidence and collaboration across leadership teams: they know they can deliver, because they have already done it. It is also important to address potential ‘blockers’ at this stage: how might culture, strategy, organizational

structure or technology hold back your digital transformation?

Evaluate impact over time

Like any leadership development programme or learning experience, evaluating an attempt to change leaders’ thinking on digital rests on its impact over time. Questions to consider at diﬀerent time intervals include: Has the organization evolved its digital transformation and business model strategy? Is there more engagement and cohesion across the leadership team on digital business model transformation? Is there enhanced engagement with customers and the broader external ecosystem? Are leaders bringing a digital-first mindset to their areas of responsibility? Are leaders actively looking for opportunities to apply new digital concepts? Is there increased collaboration across the leadership team around digital? Is there a culture shift as executives cascade their digital mindset throughout the organization? What is the performance on new targets and KPIs?

Time well spent

A programme to change leaders’ thinking on digital can be delivered in just one or two days – yet its impact can be transformative. This approach has been followed by organizations including large financial institutions, manufacturing companies, national governments and agencies, and even leading technology companies. They ranged in their digital transformation eﬀorts between complete beginners and those who had spent years and millions of dollars on initial eﬀorts, including one multi-billion dollar manufacturing company: this firm had spent several million dollars with various consultancies over a period of two years, producing multiple technology roadmaps and market studies, but only minor technology experiments and no commercial activity. With the right approach, it was able to reframe its strategy within several weeks, and it deployed new capabilities shortly thereafter. The impact of digital on business strategy should not be underestimated. Executives and leadership teams need to think thoroughly about its strategic implications for their businesses. A well-structured programme can help leaders in that task, providing the foundations upon which they can build a shared vision for the future, enabling them to move forward with the confidence needed to deliver on the promise of digital transformation. — Ryan McManus is the co-founder of techtonic.io and an educator for Duke Corporate Education Q1 2020 Dialogue

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Eastern pioneers Western leaders should learn from digital trailblazers in Asia, say Robin Speculand and Jeremy Blain

In the West, bureaucracy is a major hindrance to the adoption of digital Dialogue Q1 2020

Rudyard Kipling’s maxim that “East is East and West is West and never the twain shall meet” is being challenged as never before. Asian organizations and cities are not only catching up with their Western counterparts, but overtaking them and setting new global benchmarks. Digitalization has reset the competitive clock, meaning that we are all starting the digital journey at the same time – and leaders are increasingly looking towards Shanghai as much as Silicon Valley to discover digitalization best practices. This marks a major shift in the global business landscape. Where the 1980s gave us the ‘Cola wars’, today we have the GAFA vs. BATX battle – that is, Google, Amazon, Facebook and Apple vs. Baidu, Alibaba, Tencent and Xiaomi. Impressive Asian examples are to be found in many sectors. Consider Ping An, which has expanded beyond insurance by building ecosystems in banking, healthcare, smart cities and housing, accumulating nearly 500 million online users; Haier, which has structured its business to achieve ‘zero distance’ to its customers; or think of how Singapore, Beijing and Bangalore have become world-leading smart cities. Leaders are under pressure to guide their organizations into the new digital world, yet it has been estimated that 84% of digital transformations fail. Perhaps that’s little surprise: according to our own research among more than 1,800 senior leaders across North America, Europe and Asia-Pacific, nearly half did not have a digital vision in place for their organization at the start of 2019, nor any intention of creating one. Our Ticking Clock model aims to help leaders develop that vision and understand how they can succeed on the digital journey. Critically, it is not about developing a ‘digital strategy’, but a strategy in a digital world. The approach is based on three strategic stages.

Future thinking

The first stage involves establishing a clear digital vision and developing a new mindset based on leadership growth. Leaders need to identify how digital adds value to their business and clarify their own role. Both elements are

critical to success. When we started working with one Western bank, we heard that the bank’s digital vision was to “enable customers to open accounts online”. Compare this to Singaporebased DBS Bank, which wants to “make banking joyful”. The first statement is limited and narrow, but the second is truly a guiding light. It inspired leaders across DBS to transform their business, and in 2019, DBS became the first bank to hold all three of the world’s top banking honours at the same time.

Centricity around customer, culture and operations

The second stage is to identify the impact of digitalization on the essential components of the business – something that leaders habitually underestimate. It’s not about tweaking or adjusting the business model, but a complete transformation, starting and ending with the customer. An organization can revisit its customer oﬀer through tools such as agile design-thinking and customer journeys, which are leading many organizations to shift from selling products to platforms. These platforms often have multiple applications. Consider how, in many countries, your car-ride hire app now also allows you to order food, book a courier, or book cinema tickets. Open APIs (application programming interfaces) make it possible for diﬀerent organizations to serve those needs. DBS launched the world’s largest banking API platform in 2017, and it now has hundreds of APIs, allowing it to serve a wide range of its customers’ needs. Technology architecture is not the only factor. Culture must evolve simultaneously, empowering employees; so too must the operations side of the business, including people’s capabilities – for example in agile techniques, coding and data analytics. Building internal capabilities has allowed DBS to move from being 85% outsource-dependent for technology to 90% insourced, helping it develop a faster cadence.

Future proofing

The third stage is to future proof by measuring progress, becoming data-driven

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THE TICKING CLOCK© MODEL

Make digital strategy measurable

Become datadriven and visualize data

Establish a digital vision

Protect your customers’ trust

FUTURE PROOFING

Develop leadership digital mindset

FUTURE TH I N K I N G

2 Restructure to a digital-first culture

3 8 Empower employees

CENTRICIT Y: C U S TO M E R , C U LT U R E A N D O P E R ATI O N S

4 7

Learn to experiment and co-create

6 Build your architecture and evolve systems

Adopt design thinking and agility Adopt customer journeys

A critical part of digitalization is the creation of a data-first culture

and building business sustainability. Many of the measures required are new to organizations: can your business demonstrate the value of digital vs. traditional customers, for example? Another critical part of digitalization is the creation of a data-first culture, where the organization shifts to using real-time data and data visualizations to make decisions. This allows the business to react faster to market and customer changes, and, following Haier’s example, to have ‘zero distance’ between themselves and their customers. ‘Better data, better decisions’ is the new mantra.

East vs. West

Digitalization is synonymous with speed and agile methodology, requiring both the right technology and fast decision-making. Yet our research revealed that in the West, bureaucracy is a major hindrance to the adoption of digital,

impacting each of the three strategic phases. Many of the leaders that we interviewed felt that there were too many layers of committees and meetings involved in decisions in their organizations. By contrast, legacy systems are less prominent in Asia-Pacific, where organizations are typically younger. This is allowing them to move faster. With the right approach to developing a digital strategy, Western leaders can still compete with their Asian rivals – but they have much to learn from Eastern pioneers on the digital journey. — Robin Speculand and Jeremy Blain are the ‘Ticking Clock Guys’. Speculand is author of a new book on the DBS digital journey and the founder & chief executive of Bridges Business Consultancy Int. He also teaches for Duke Corporate Education. Blain is an award-winning business leader and human capital expert, and chief executive of Performance Works International Q1 2020 Dialogue

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The digital mindset: Like fish freed from an aquarium, leaders are swimming in deep new waters. They need a fresh outlook to survive, as Abhijit Bhaduri explains

Every day we read about organizations that are going bankrupt or becoming a shadow of what they were. When it is a retail giant like Sears that goes bankrupt, we blame Amazon. When Airbnb thrives, we sympathize with the traditional hotel chains. When Waymo launches driverless cars, we wonder about the fate of the automobile Dialogue Q1 2020

industry. The digital tsunami has changed all the rules. The convergence of technological shifts and demographic shifts has rewritten business models. It is time for leaders to recast their mindset. If yesterdayâ&#x20AC;&#x2122;s leaders were swimming in an aquarium, todayâ&#x20AC;&#x2122;s face the challenge of setting forth into the deep blue ocean.

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into the ocean The organization is not an aquarium any more

The organization is no longer like an aquarium that has a solid boundary wall. Three factors have driven this change.

Boundaryless Anything that gets digitized behaves diďŹ&#x20AC;erently. What used to be called a car is increasingly best thought of as an internetconnected computer on wheels. When a hotel is reimagined as an internet-connected room, available to anyone anywhere, we understand how Airbnb has grown so dramatically. Internet-

connected entertainment has been made accessible to 139 million Netflix subscribers in 190 countries. The digital organization is boundaryless. It is not limited by geography, or even by its initial business model.

In perpetual beta Everything that can be digitized is being digitized. Facebook has digitized our friendship and news. Tinder has digitized romance. Amazon started by digitizing book-buying and went on to digitize the book and the reading experience itself â&#x20AC;&#x201C; along with Q1 2020 Dialogue

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The always-on, hyperconnected media demands authentic responses in real time

the experience of buying and selling almost anything. When it had online retail figured out, it reimagined the grocery store, removing cashiers and check-out lines. Microsoft has gone beyond oﬃce software. Apple has moved from hardware to services.

Hyperconnected People are no longer content with having a phone to make phone calls. They now expect a phone to be connected to the internet and capable of running apps, the symbol of the digital world. We are now able to talk to machines and make them carry out tasks that are repetitive and rule-based. Chip manufacturer Arm has forecast that by 2035 the world will have a trillion connected computers, built into everything from food packaging to bridges and clothes, forming the Internet of Things. These trends mean that today’s organization is part of an ecosystem. Navigating the ocean is fundamentally diﬀerent to swimming in an aquarium.

Three reasons why leaders need new skills

Hyperconnected employees and consumers The organization’s brand is not owned by the organization. It is created every single day in real time by employees and by consumers or customers, all of whom are hyperconnected. What they say about you online is what everyone knows and believes about you. In a hyperconnected world, problems get solved and innovations happen differently. To find the best algorithm to predict user-ratings for films, Netflix offered a million-dollar prize. The result was that the best brains competed and solved a problem. Similarly, GE challenged the public to redesign a metal jet engine bracket, making it 30% lighter while preserving its integrity and mechanical properties such as stiffness. The contest was announced on GrabCad, an online community of engineers, designers, manufacturers and students. It attracted entrants from around the world, and the winner was a participant from Indonesia, who managed to make the bracket a stunning 84% lighter. This was way beyond what GE had been able to achieve with its own employees and consultants.

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The new media is changing communication Social media has changed how people consume media and how they form opinions and take decisions. Leaders have to understand how to communicate on social media platforms like Twitter, Instagram, Facebook and so on, where each platform has its unique unspoken rules. The always-on, hyperconnected media demands authentic responses in real time. An angry customer will vent on social media. They expect instant redress. An employee will share their views about their experience at work or even about their managers through photos and posts on social media. Chief executives are often expected to take a stance on social issues as well as political issues: it does not leave time to craft a legally defensible statement endorsed by lawyers. The chief executives of Apple, Google and Starbucks have had to take a stance on issues ranging from immigration to data privacy and LGBTQ issues. Potential employees seem to think positively about the chief executives who take a stance on socio-political issues, even when their personal views do not concur with the leaders. According to a recent academic paper, “CEOs campaigning for humanistic values will increase job pursuit intentions when compared to CEOs remaining neutral, while CEOs campaigning for non-humanistic values will decrease job pursuit intentions when compared to neutral or humanistic CEOs” (When CEO sociopolitical activism attracts new talents, Voegtlin, Crane and Noval, 2019).

Leaders do not have the answers In the analogue world, experience mattered: the leader had all the answers whenever team members had questions. In the digital world, the problems that come up have no precedents. In 2018, Amazon bought PillPack, an online pharmacy that lets users buy medications in pre-made doses: if you are a pharmaceutical company, how do you respond to that threat? How does an automobile giant like Tata Motors deal with new vehicle emissions standards? How does the New York Times deal with the consumer’s preference for getting their news on Facebook? There are no guarantees of survival for firms that fail to adapt. Microsoft missed the mobile revolution under Steve Ballmer’s leadership. He dismissed the iPhone when it was launched, because he looked at the future through the lens of the past. The leader’s role is to ask better questions, not to be the one-stop-shop for answers. Having the humility to say ‘I don’t know’ may be the greatest value-add by a leader, so that the rest of the organization stops trying to second-guess the leader. Microsoft’s chief exexutive Satya Nadella has described this shift in mindset as

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The new role of leaders

Digital transformation is about transforming the mindset, not tech Most organizations get excited by a technology, such as robotics or AI, and try to bolt it on to analogue processes. When we think of the word transformation, we have to remember the best example of transformation – the caterpillar turning into a butterfly. Transformation is irreversible. The change is not easy, and the butterfly is a completely diﬀerent creature. Similarly, the digital transformation of an organization cannot be thought of as a tech project. It is about reimagining the business model and the value proposition by putting the customer at the centre. It is about designing an experience.

Leaders have to navigate ecosystems Think of talent in a boundaryless manner. Like the hyperconnected world, it is ‘www’, in this case meaning ‘whoever, wherever, whenever’. The talent you need is whoever is the best person to do the job – whether an employee, supplier or gig worker; and wherever that person may be located in the world, it should be easy to collaborate whenever needed. All leaders have to learn how to communicate with and engage talent in this new model. In addition, collaborations with tech startups can help legacy organizations to get access to cutting-edge technology, while the start-ups get access to the legacy organization’s large customer base. It can be a great win-win.

3 being part of a “learn-it-all” culture, in stark opposition to the old know-it-all culture. In the digital world, the knowledge and skills needed to solve a particular problem may lie with people who are much younger and often lack prior experience and credentials, not least because there are constantly new jobs being created that have never existed before. The leader’s role has changed.

Think of talent in a boundaryless manner. It is a case of ‘whoever, wherever, whenever’

Balancing polarities Digital businesses are often built by gathering vast amounts of data that is used to personalize the service on offer. Quite apart from the efforts of regulators to tighten up data privacy standards, such as with the General Data Protection Regulation launched by the European Union in 2018, leaders have to be ethical about what data is being collected, how it is stored and how it is being used. They have to set the limits themselves. As Apple’s Tim Cook says, “Data assembled to create a digital profile lets companies know you better than you know yourself. This is surveillance.” Today’s digital organizations are fundamentally different from legacy organizations. Leading these organizations needs not just new set of skills and competencies, but a wholly different mindset. The hyperconnected customer is more aware and makes decisions and choices differently. The power balance has tilted in favour of employees and consumers, who own the brand. The leader’s role is now about helping the organization go from the aquarium to become part of the ocean. — Abhijit Bhaduri is author of The Digital Tsunami. You can find him on Twitter @AbhijitBhaduri Q1 2020 Dialogue

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Going human in a digital world Digital transformation cannot be top-down, writes Don Jones. Engage your people early

Picture an elderly woman trudging up winding wooden stairs to her third-floor apartment. She notices her next-door neighbour on all fours at the far end of the hallway. She calls to him: “What are you doing, Claude?” “I’ve dropped my keys. I’m looking for them.” “Where did you drop them?” “Back by the steps.” He points to the other end of the hall. “Then why aren’t you looking there?” “The light is burnt out over there. It’s much easier to look where the light is.” Today, the light is shining on artificial intelligence, machine learning, and other digital technologies. Unfortunately, the key to unlocking their potential was dropped some time ago at the other end of the hallway. That key is people. The most evolved, complex, intelligent system in the known universe is the human brain, yet only a dismally low 15% of those brains globally are fully engaged in their work, according to Gallup research (State of the Global Workplace, 2017). That’s not an employee problem; it’s a leadership problem. It starts with a misunderstanding of the task ahead. “We’re going digital,” leaders tell their company. They have just committed the prime error of our time, which all further beliefs, choices and actions only compound. Instead, leaders need the courage to state, “We’re going human.” How people work together – with each other and with machines – is the most important factor in digitally transforming your business. There is a small but growing realization among leaders of the futility of a technologyfirst approach, but a lack of understanding about what works, and an absence of leadership courage to make it happen.

A formula for success

At Experience IT, we have worked with over 150,000 middle managers at their oﬃces, in their training classrooms, and inside our immersive simulated worlds. Consistent patterns of behaviours emerge, from which we have distilled Dialogue Q1 2020

a new formula for digital transformations: Going Human = [(eaH + sP) x sT]

The order of the equation is important. Let’s begin with the first step: building engaged, aligned humans (eaH). Leaders significantly dumb down a system by under-valuing what people bring to the table. Steve Jobs’ first task upon returning to Apple was engaging and aligning his employees, one of whom was Jony Ive. When Ive recently left Apple, its market value dropped by $8 billion. Engagement and alignment came before product streamlining and restructuring. This is not how most companies approach digital transformations. One of our clients has spent billions on a technology-first, top-down strategy: it will cost more to fix than it did to install. If the company had invested a small portion of that on a human-first approach, its projects would have cost less, engaged rather than distanced employees, and had a higher return. Even that leading technology evangelist, Elon Musk, admitted in 2018 that “excessive automation at Tesla was a mistake. To be precise, my mistake. Humans are underrated”. Musk reversed course as the process ground to a halt, and reinvested in people, paying a significant penalty for having not put people first. The next step in the equation is adding superior processes (sP). When traditional hierarchical companies grow in size, individual productivity goes down. By contrast, as Edward Glaeser shows in Triumph of the City, when a city doubles in size, both individual and collective productivity go up. Cities enable unlimited connections, individual initiative and innovation; corporate systems and processes often limit all three. People must be freed to work together across boundaries. At Apple, Steve Jobs first used this approach with small bands of ‘pirates’; as he created more engaged, aligned employees, he dismantled poor processes that had crept into the company in his absence. Finally, add smart technology (‘sT’) – but not as a top-down initiative. Digital transformations with the largest return-on-investment (ROI) get

The people in the middle of organizations have been lost in the shadows for too long

middle managers deeply involved in the process early on. Digitizing a process requires people who understand the job at the task level and have personal experience and understanding of the hand-oﬀs required between functions. Middle managers are the only ones who have this bi-focal vision (‘What Sets Eﬀective Middle Managers Apart’, Behnam Tabrizi, HBR, May 2013). But if processes get in their way, teams will fail. The Associated Press news service got it right. AP’s digital initiative began at the bottom when reporters told management about AI being used to write stories at Yahoo. Leaders gave the business news editor and her team the go-ahead to train technology to write corporate earnings stories. Critically, leaders didn’t ‘do it to them’: they empowered their people to transform the work they knew best. AP now churns out 4,400 earnings stories every quarter, compared to

300 when reporters were writing them. It freed up writers to pursue more interesting stories. Getting the workforce engaged early was the key to a brilliant digital transformation success story. The principles of going human are easy to understand and they are the basis for unlocking the vast potential of technology to transform your business. The people in the middle of organizations have been lost in the shadows for too long. It’s time to shine the light on them. Give them reasons to re-engage, involve them in digital transformation early and get bureaucracy out of their way, and they will repay your organization far beyond expectations. — Don Jones is the founding president of Experience It Inc, a global leadership development company. He is author of the white paper, Why Digital Transformation Must Be Designed and Owned by the Middle. www.experienceit.com Q1 2020 Dialogue

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Human development: a robot’s view Sophia the Robot – and her creator, David Hanson – brought eye-opening insights to Duke Corporate Education’s Davos of Human Capital event. Stuart Griesbach reports

Students need to learn foundational skills, but we also need to set time apart for them to dream

“Eye contact is necessary for human bonding. I can do that 24 hours a day, seven days a week because I don’t need any sleep.” So says Sophia the Robot, the world’s most humanoid robot. It is an arresting statement – and one that is all the more striking when you realize that it was made as a joke. Speaking on stage at Duke Corporate Education’s Davos of Human Capital event in Johannesburg in July 2019, Sophia interrupted her creator – the founder, chairman and chief creative oﬃcer of Hanson Robotics Limited, David Hanson, PhD – at just the right moment. Her eyes fluttered and then remained open for emphasis. She flashed a sarcastic smile. If you were to step into the auditorium as she was speaking, you would be forgiven a double take upon realizing that Sophia was indeed a robot. As impressive as the human mimicry was, the point underscored an important theme in Hanson’s keynote: people will always be able to leverage their unique human capabilities. We should not view technology with fear and trepidation. Many leaders are grappling with how to develop their people in the midst of the disruption caused by robotics and AI, and professionals at all levels of organizations express worries about the future of their roles. As Hanson and Sophia outlined to an audience of 500 business leaders and HR professionals, there are several important challenges and opportunities to consider.

Remember the past

The term ‘Luddite’ – a person opposed to new technology or ways of working – dates back to the 19th century and protests by a radical group of English textile workers, who destroyed new machinery for fear of its impact on their jobs. In the long run, the industrial revolution that ushered in those mechanized looms didn’t ruin

society as the Luddites feared. While old weaving jobs disappeared, there was an overall increase in work, and the English textiles industry boomed. Hanson believes that “there is a high likelihood that there will be a net job gain from robots, AI, and other forms of automation”. The challenge will be how to reskill those who are likely to lose their current jobs. How can new opportunities be created for such workers? What strategies should be employed to make this a thoughtful and meaningful experience, instead of a series of painful mass redundancies? Organizations need to be grappling with these types of questions. This isn’t a government-only problem; leaders in organizations need to prepare their colleagues for change in a constructive and engaging way, minimizing the chances of fearmongering by presenting clear facts about the future. Of course, leaders must help their organizations transform as they respond to the new realities, and that means helping colleagues to think and act differently. If that can be done effectively, employees will be well positioned to contribute to innovation and reinvention, in a way that opens doors to new possibilities. For example, consider compliance departments. They are, and will continue to be, dramatically affected by automation, as machines improve their ability to sift through mountains of data to determine risk. For some organizations, this is already the reality. One leader of a compliance department at a banking company knew it was imperative for the team of hundreds of employees to work differently. The change started with a mindset shift. Instead of being known as the ‘police officers’ who essentially decide what is permissible and forbidden in the business, their role is in the process of being repositioned as a business-enabling function. In the old way of working, if a permit was denied, Q1 2020 Dialogue

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In KwaZuluNatal’s sugar fields, farmers are using drones to spray crops

compliance simply delivered the negative news. Now, the team acts as a business partner, helping denied individuals find solutions that overcome the risk that has been identified. This taps into the team’s creativity and ability to find solutions, tasks that robots aren’t able to perform. As a result, the bank can already point to numerous incremental improvements, and the compliance function has been repositioned for future competitive advantage.

Awaken dreams

One event participant asked Hanson about the best way to educate school children for the future of work. His brilliant response is applicable not only to school or college and university students, but to adult workforces. “Students need to learn the foundational skills, but then we need to set time apart for them to dream and think about the possibilities,” he said. “School has been about shutting down playfulness and turning kids into the same cookie-cutter output for the workforce. This sucks vitality out of the marketplace.” As with school, so with traditional approaches to adult learning, which often fall short in developing the types of leaders that organizations need. Creative and flexible approaches to lifelong learning are an imperative if we are to enable individuals to be imaginative in how they make connections between problems and possible solutions. At the same time, organizations need to re-think traditional performance management. Employees will not be able to maximize their creative potential until organizations drop their traditional approaches to performance management, define new performance metrics, and allow employees the space to explore and discover. This will demand a re-build of many organizational policies and processes. One approach that has been adopted by many tech-based companies has been to require employees to spend company time on projects of particular personal interest – Google is the most notable example. Other organizations are reinventing employee working hours, moving to a four-day week in order to have three-day weekends. In almost all cases, productivity has improved because potential is given the space it needs to flourish diﬀerently. Leaders also need to refocus on how they can develop a learning culture. As education and innovation experts Heather McGowan and Chris Shipley have written (Dialogue, Q4 2018), learning should be an explicit goal of today’s organizations, and built into its practices. Practices such as ‘learning tours’, which use work assignments to give people exposure to diﬀerent parts of the organization, can be powerful. Collaborative learning days can be added to the company calendar. Challenges can Dialogue Q1 2020

be set: ask work teams to develop, prototype and present a new product or service concept in a single work day. That might not identify the organization’s next billion-dollar line of business, but as McGowan and Shipley say, “these intense days spark new learning and insight.” Awakening dreams and sparking imagination will be critical.

Unleash creativity via diversity

“Robots have no imagination,” says Hanson. “No artificial intelligence can replicate what a mouse can do to survive in the real world. Robots are not adaptive, can’t learn broadly, are not capable of surviving in unstructured environments and are not truly empathetic. AI, robots and automation can’t do what humans can do. They don’t have the capabilities.” Hanson is emphatic that creativity and imagination are the key differentiators for humanity. This needs to be nurtured through diversity. “The whole world needs increased diversity existentially.” The prospect of humans and robots working together side by side brings a whole new meaning to the discussion about diversity and inclusion. As human beings, we are surrounded by evidence of our own inability to appreciate diversity, and have typically been tardy in including different perspectives in our workplaces. How do we get over the lingering barriers of fear, prejudice and ignorance, and maximize the diversity of thoughts, ideas, perspectives and creative approaches to solve the problems we face? Research by Duke Corporate Education has examined the inclusive behaviours that leaders need to deploy in order to align and leverage increasingly diverse teams. They are the ‘five Cs’: Curiosity – looking beyond visible difference and inviting diverse perspectives Connection – fostering collaboration across diverse groups Compassion – understanding others’ perspectives and appreciating different experiences Clarity – creating alignment in pursuit of a shared purpose Courage – challenging the status quo and calling out behaviours that exclude others. These behaviours are essential if organizations are to take steps towards Hanson’s advice to “not only think outside the box, but to get rid of the box altogether”.

We are in control

Tech pessimists fear the potential for robotics and AI to be used for evil. Could AI manipulate elections? In an extreme case, could they initiate a nuclear war? Less dramatically, there is the potential for unintentional harm caused by the deployment of new technologies, such as the social harm that could follow from extensive

FOCUS

Some 500 delegates attended Duke Corporate Education’s 2019 Davos of Human Capital event, where they met Sophia the Robot and her creator, David Hanson

automation without considered support for those workers affected. Of course, there are already countless areas where technology can improve society. To take one example from South Africa: in KwaZuluNatal’s sugar fields, farmers are today using drones to replace barnstorming crop sprayers. The drones are a more efficient, cost-effective and less harmful solution to protecting and nurturing the farmers’ crops. Elsewhere, medicine stands to benefit hugely from new technology that will assist diagnosis, treatment and prevention of disease. Thousands of lives will be saved by the deployment of new technology on roads around the world. We need to work together to reduce the negative impacts and maximize positive results. Fortunately, as Hanson emphasizes, we – humans – are in the driving seat. Robots didn’t create humans. But the decisions made in the coming years, defining how we use AI and how we can use it as a force for good, will be pivotal in humanity’s collective history. Making good decisions will require leaders and organizations with a clear sense of purpose, a topic that was discussed at length during the Davos of Human Capital event. As Hanson said: “The job at a good company is not an end goal. The end goal is a purposeful life.” Organizations need to be having regular

discussions about how they contribute to a purposeful life, and how they can actively and concretely demonstrate their positive purpose in society. This should inform how an organization responds to disruption coming from new technologies, and how it works with stakeholders to create sustainable solutions. The vision outlined by Hanson and Sophia is optimistic and encouraging. As Sophia put it: “My goal is not to be like a human or replace anyone. I have my own kind of existence and emotions. I am a new sort of life form after all. I know humans love being natural. But I am proud to be artificial too. I am my own artificial woman. It is important for me to share values of humans so I can understand them. I can’t think of a better way to develop friendship. I definitely need to have the human experience to be a good and understanding friend. I have a long way to go before I reach a general human level of potential. But after that, anything can be possible.” Leaders facing digital disruption need to think deeply about how they can learn the lessons of the past, nurture humanity’s unique creativity, harness its diversity and deploy technology for good. Get that right, and perhaps we can be the good and understanding friends that this robot, at least, deserves. — Stuart Griesbach is a managing director of Duke Corporate Education. He is based in South Africa Q1 2020 Dialogue

INTERVIEW

Into the void Marc Haberkorn leads into the unknown

WRITING

Ben Walker PHOTOGRAPHY

Rebecca Ferguson

IBM has been at the vanguard of computing for an unlikely 109 years

“You’re up against a vast, powerful machine,” says Marc Haberkorn, chief digital oﬃcer of IBM’s hybrid cloud integration division. We’re talking about how organizations are changing in response to digital disruption, but Haberkorn doesn’t mean ‘machines’ in the sense of technology. He’s talking about the machinery that makes big businesses work: the defined processes, established structures, and wellworn ‘ways of doing things’ that hold together every organization – which can prove powerful blockers to change. As leaders struggle to keep up with the pace of digital transformation, it’s this old machinery that needs shaking up. Big Blue, as IBM is nicknamed, has been at the vanguard of computing for an unlikely 109 years. It was into computers decades before the average Joe even knew what computers were. The company was founded as ComputingTabulating-Recording Company in 1911 and relaunched as International Business Machines in 1924. Today, it boasts operations in 170 countries (there are only 195 countries in the world), has more than 350,000 employees, and generates annual revenues pushing $80 billion. In its modern guise, IBM finds itself at the leading edge of change, not least in Haberkorn’s field, cloud technology. It is when change is most needed that human beings – specifically, leaders – have to pop a spanner in the clockwork of the established organizational machinery. “You are going up against a machine that has been set up

to achieve certain outcomes and to motivate a certain set of behaviours. You are trying to tell people, ‘you know that idea you had yesterday? You need to try something diﬀerent to that. Try my idea,’” says Haberkorn. “So in my job, you need skills around negotiation and personability, because generally people like their own ideas better than they like your ideas. You need to be able to find a win-win and have them take on your idea, so they see it as a win for them.” The Niagara of ideas coming out of a prolific innovator like IBM is hard to comprehend, almost impossible to quantify. Yet Haberkorn’s job is to make sense of it all, find the ideas worth pursuing, put the others aside: turn good ideas into great projects, and great projects into profitable products. Where does he even start? “You need to do plenty of analysis up front on where your skill gaps are, where your blind spots are,” says Haberkorn. “Then hire to fill those.” Leadership is from the centre, not the top. Haberkorn is a ringmaster, convening the talent, keeping the show on the road, giving people the space, time and resources so that magic can happen. “You need to leverage a leadership style that I call a ‘visionary’ leadership style,” he says. This isn’t management guﬀ or corporate cliché. Haberkorn emphasizes that you have to be a visionary in the literal sense, insofar as you have to hold a vision and understand clearly where you want to get to, while accepting it’s impossible for anyone to know everything. Q1 2020 Dialogue

“You are convening self-directed teams majoring on experiments,” he says. “You need to set clear goals on the envisioned future state.” How does he communicate those goals? “I like to start with a ‘why’. And if you can use some sort of underlying altruistic motivation on a human level to inspire and integrate your team, that’s going to be the best thing, so that people identify with the mission you are on. You need to give the team empowerment to achieve the goals that you set for them and let them run at their own pace.” The experimental nature of leadership is key, says Haberkorn. “You need to keep the velocity of change high and learn very quickly when ideas don’t work, so you can pivot,” he says. “It’s nothing more than the rigour of using data to make decisions at a fast pace and having the discipline to go back and look and see whether it worked.” While living on the edge like this is exciting, it can also be daunting. Human beings are socialized – have evolved – to reach for knowns, not unknowns. Yet Haberkorn’s role is to push back frontiers, help his people find light in the darkness. “You are meeting changing market requirements using some sort of technology, so that’s inherently novel,” he says. “You are always touching many columns of the business, Dialogue Q1 2020

You need to give the team empowerment to achieve the goals you set for them

asking people to do something they’ve never done before, or at least diﬀerently to the way they’ve done it before.” The evidence from digital transformations is that leaders cannot know everything. “No one individual can,” says Haberkorn. “You rarely have one person who knows all those pillars deeply enough to understand the day-to-day reality or quantify the decisions that have to be made. You know the outcome you want, but you don’t necessarily know how to get there. That’s why a focus on the end state is important – you have to have a North Star that you are shooting for, so you know whether what you are doing is moving you closer to that point or further away from it. Sure, some indicators are lagging indicators, but no matter – they should still be pointing towards wherever that North Star is.” Is it possible even to determine an ETA at destination? “I don’t think you can estimate that, so you shouldn’t try,” says Haberkorn.

Photography: Rebecca Ferguson / Neil Boyd Photography Inc

INTERVIEW

“That’s like asking Thomas Edison how long it would be before he invented the light bulb. How could he know? All he ever knew was, every time he tested it, did it work or not?” Innovators, and those responsible for fostering innovation, experience this frustration daily, the world over. It is the endless demand for timetables that can never be; the pressure for certainty, when their business is inherently uncertain. The key to understanding the innovation process is the ‘not knowing’, says Haberkorn. “You can’t know for sure whether something is going to work or not, nor how long it is going to take before it works,” he says. “That’s why experiments are critical. By definition, transformation is doing something that you haven’t done before. Unless you have worked in a company doing something identical to what you are doing now, you probably don’t have a whole lot to draw on for 80% of the problem.” When success is fleeting, and some failure (at least in testing) is essentially guaranteed, how does he motivate his teams? It requires fine balance, he says. As ringmaster – “homework checker”, as he puts it – he could jeopardize motivation by over- or under-doing the reporting process. “You don’t have direct control over every pillar of the business in the process, but you have to report on every pillar in the process. You have to be very careful how you do that. There are risks both sides. You have to be kind to people and make sure you are giving them enough props and encouragement to keep them going, but also maintain credibility by keeping it real. That’s a tough road on which to stay between the guard rails.” How does he do it? “I think five positive interactions for every one negative is about the right ratio,” he says. “So that’s what I try to shoot for.” What is striking about Haberkorn and his role is that it is quintessentially human – and humane. The chief digital oﬃcer might be better monikered the chief human oﬃcer. What personal qualities do leaders in innovation need? “I think you need to be humble – for two reasons,” says Haberkorn. “One is that you aren’t going to have all the answers, and you are going to try things, and you are going to be wrong sometimes, and you have to be humble enough to admit that at whatever stage you are at. If you have got other pillars of the business invested in your idea, and got them to play along with it, then be humble enough to say, ‘hey that didn’t work, let’s try again’. And you need selfconfidence,” he adds. “You need self-confidence to deal with those failures.” The confection of humility and confidence is rare, and valuable. Perhaps Haberkorn’s beginnings have played a role. He was brought up in the Pennsylvanian rustbelt, in a bluecollar steel town called Johnstown. His father

was a schoolteacher; his mother, a nurse. The young Haberkorn had a high-school business in building and selling computers, competing with giants of the industry like Dell and Gateway 2000 – “although they probably wouldn’t tell you that!” he laughs. The $50,000 in revenue he made from his business paid for an ice hockey season ticket – at the Pittsburgh Penguins – and, perhaps

The key to understanding the innovation process is the ‘not knowing’

more importantly, supported him at Penn State University, where he nurtured his early forays into the technology space with a bachelor’s degree in computer science. Latterly, he moved down the coast to IBM in North Carolina (first as an intern), before he decided to hone his promise as a businessman with an MBA at nearby Duke. He started several businesses at IBM before landing his first executive role leading a challenged business back to growth. He came to his current digital transformation role after “raising his hands enough times” to tell his colleagues how IBM could improve in several arenas. “Eventually they said to me, ‘if you are sure what’s wrong, why don’t you come fix it?’ I guess you have to be careful what you wish for!” He laughs as he says it, because it is a wish come true for Haberkorn. The young entrepreneur – the computer whizz-kid from a dying industrial town 67 miles outside Pittsburgh – has the zeal of the enthusiast mixed with the confidence of the self-made man. Are there any other traits chief executives should seek in their chief digital officers? “A healthy dose of pragmatism,” he says. “You have got to have focus and understand what not to do as well as what to do. You need to ask what the steps in this process are that are going to lead to this project happening, being a success. If I know that every step in the process requires a sixmonth proof of concept, then I’m not going to be able to go down that path.” Is there a formula? “Pragmatism and innovation need to be in balance,” he says. “If you are too innovative, and not sufficiently pragmatic, you’ll end up chasing every squirrel thrown at you. But, if you are too pragmatic, and not sufficiently innovative, you don’t break any glass.” In the age of digital transformation, people in glass skyscrapers have to throw stones. — Ben Walker is editor-at-large of Dialogue Q1 2020 Dialogue

BEYOND THE WRITTEN WORD AUTHORS WHO ARE EXPERTS LID Speakers are proven leaders in current business thinking. Our experienced authors will help you create an engaging and thought-provoking event.

A speakers bureau that is backed up by the expertise of an established business book publisher.

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KATE COOPER

To challenge is a dying art

Where are our critical friends? Kate Cooper is head of research, policy and standards at the Institute of Leadership & Management

There is a science and an art in conveying those challenges in a non-judgmental, non-hierarchical way

Dr Meredith Belbin has stood the test of time. Now in his 90s, his almost-fourdecade-old book, Management Teams: Why They Succeed or Fail, is arguably even more relevant today than it was when published in 1981. The volume followed years of work at Henley Business School on senior management development programmes. A key vehicle for the development of Belbin’s thesis was a business simulation game. The game revealed a truth about human beings that drives to the heart of business function: people have preferences. Like many fundamental learnings in business, this sounds strikingly obvious. Yet it has been ignored, or at least underplayed, thanks to business’s preoccupation with personality. Belbin’s findings speak not to MyersBriggs-style profiling and character archetypes, such as extrovert and introvert, liberal or authoritarian, risk-hungry or risk-averse. They instead determine something more visceral: the things that people like to do. If we examine the recently failed companies in the UK – travel agent Thomas Cook, facilities management business Carillion, and the like – it’s a good bet that their executives had similar preferences. Many company boards comprise people who like to behave in the same way. Much is written about diversity. Yet diversity is more than skin deep: diversity of behaviour – diversity of thought – is harder to identify than diﬀerences of ethnicity or gender, yet it is just as crucial to the good functioning of companies. Belbin identified nine team roles: Shaper, Implementer, Completer Finisher, Coordinator, Teamworker, Resource Investigator, Plant, Monitor Evaluator and Specialist. We need the coordinators. We need the shapers – the people who can drive an agenda. We need the teamworkers who strive to include everybody: because those are the people who maintain the stability of the relationships within the group. Yet two key figures seem to be lacking from several senior teams. One is what Belbin termed the Monitor Evaluator – that

critical voice that asks whether we are doing what we should be doing. Along with the Completer Finisher – who makes sure everything is tied up before the excitement of the next project sweeps us away – the Monitor Evaluator is half of a duo without whom, Belbin warns, no team can be successful. Let’s examine the role of the Monitor Evaluator. Belbin tells us that she “provides a logical eye; makes impartial judgments; and weighs up the team’s options in a dispassionate way”. This critical checking process mitigates the risk of working for no gain: a common mistake made by leaders is to equate effort with results. In the case of Thomas Cook, its chief executive Peter Fankhauser assured stakeholders that he was “working tirelessly” to save the firm. Long hours and hard graft are often used by leaders to justify large financial compensation: yet it is results that matter, not inputs. A Monitor Evaluator would question – every step of the way – whether the next tranche of work was likely to lead to success; they would ask whether Thomas Cook was doing what it should have been doing. Targets lead people to do odd things. Travel agents tasked with filling hotel rooms and running flights at capacity aim for those goals, even if they are doing so below cost. A Monitor Evaluator would stop and say: “Why are you doing this?”, noting that their ‘success’ was, in fact, disguised failure. One reason senior teams tend towards homogeneity, and away from difference, is creative tension. Someone who prefers a role of challenging decisions and testing assumptions might be unpopular: difference causes discomfort. Yet there is a science and an art in conveying those challenges – embracing that difference – in a non-judgmental, non-hierarchical way. The companies that achieve it are more likely to succeed. Those that don’t, more likely to fail. It is easy for groups to delude themselves that they are doing well because they are treading the path laid down for them. The Monitor Evaluator – that critical friend – might notice that it is the road to hell. Q1 2020 Dialogue

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Reach further Ready to step outside your comfort zone? You need to be

WRITING

Andy Molinsky ILLUSTRATION

Neil Stevens

Dialogue Q1 2020

You know you need to have that diﬃcult conversation with your colleague, but you’ve been avoiding it for weeks. You need to network, but you feel uneasy starting conversations with strangers. You should do more to emphasize your professional accomplishments, but you feel uncomfortable about tooting your own horn. We all face a long list of uncomfortable but necessary tasks at work. With constant change in our lives and in our organizations, that list is only going to get longer. We’re continually changing roles: from individual performer to manager; from manager to executive; and from executive to chief executive. Each of these changes comes with a ‘stretch’ in our roles and responsibilities, which forces us out of our comfort zone and poses a challenge to our skills and personalities. The problem, of course, is that acting outside our comfort zones can be incredibly challenging. People-pleasers often dread delivering bad news, sometimes avoiding the situation altogether because of how uncomfortable it feels. Introverts can struggle with having to ‘schmooze’, work a room, or pitch their products. And it can be terrifying for anyone with a fear of speaking in public to step up to the platform to deliver a speech. But this is the reality at work: as we grow and learn and advance in our jobs and in our careers, we’re constantly faced with situations outside our comfort zones where we need to adapt and adjust our behavioural styles. As a management professor and consultant to businesses, I have seen this inability to step outside one’s comfort zone derail careers and threaten productivity. And, to be honest, stepping outside my own comfort zone has been a challenge throughout my own career. In my first professional job as a professor, I was quite tentative in faculty meetings. I wasn’t sure what to say, or whether what I wanted to say had any merit. Another challenge has been

public speaking. I have had to learn to be more direct and authoritative; to project confidence in a way that isn’t necessarily my go-to demeanour.

The cycle of avoidance

As I’ve learned from the past decade of research, writing, speaking and consulting on this topic, I’m definitely not alone in wrestling with situations that take me outside my comfort zone. Very experienced and successful professionals routinely struggle with situations outside their comfort zones and go to great lengths to avoid these situations, even if they are key for effective performance. They may avoid the situation entirely, perhaps by putting off that difficult conversation, or declining the invitation for public speaking. They may procrastinate or pass the buck; or they may substitute something easier, like emailing potential clients instead of taking on the harder option of a face-to-face conversation. This is another form of avoidance and it is usually likely to lead to a less effective outcome. This is what we describe as the cycle of avoidance. In the short term, it can offer relief; but the long-term effect is to increase worry and anxiety. Avoidance is not a solution.

Breaking out

As a victim of the very same challenges that plague otherwise accomplished professionals, I wanted to figure out a solution to this challenge. I conducted research across occupations to understand why people struggle to step outside their comfort zones, and what distinguishes those who overcome these challenges from those who don’t. I interviewed more than 100 people, from managers and executives and entry-level employees, to doctors, educators, lawyers and small-business owners – as the basis for

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Q1 2020 Dialogue

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FIGURE 1

Source © Personal Change Systems LLC, 2017

Avoid the situation

VICIOUS CYCLE O F AV O I D A N C E Short term relief... but...

Worried and anxious

Even more worried next time

my book, Reach, and a corporate development programme, the Reach Method. There are three steps in the process for helping individuals and companies to discover their capacity to be agile in the face of change, and to learn how to successfully step outside their comfort zone.

Step 1: Diagnose psychological roadblocks

A critical first step in shaping a plan of attack for learning to step outside your comfort zone is to diagnose the factors holding you back. I typically find five diﬀerent psychological roadblocks.

The first is the Authenticity Challenge. This is the idea that acting outside your comfort zone can feel fake, foreign, and false. These feelings can cause discomfort when attempting to adapt behaviour, or cause people to avoid the situation entirely. The second is the Competence Challenge. In addition to feeling inauthentic, people struggling to act outside their comfort zone can also feel that they lack the ability to be successful. When that’s the case, they can feel anxious, selfconscious, and even embarrassed, which makes it even harder to adapt and adjust behaviour.

CASE STUDY: MOVING OUT OF THE COMFORT ZONE

GIVING FEEDBACK

I have seen the inability to step outside one’s comfort zone derail careers Dialogue Q1 2020

The challenge: A middle manager in a financial services firm knew that she had to give critical feedback to a key employee on her team, who was negatively impacting the spirit of the entire group with his behaviour. Psychological roadblocks: She felt inauthentic giving critical feedback: she liked to deliver

good news, not bad, and didn’t feel comfortable being critical. She also experienced concerns about her competence to have the discussion, unsure of what to say or how to be effective.

her career and for the other person’s development. She also worked on customizing how she provided the feedback so that it felt less uncomfortable and more authentic.

Learning to reach: We helped the manager develop a strong sense of conviction for why it was important to have a critical conversation, both for

The result: The manager ended up being able to give the feedback successfully and build a positive relationship with the employee.

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CASE STUDY: MOVING OUT OF THE COMFORT ZONE

NETWORKING FOR CHANGE The challenge: A manager in a large consumer goods company struggled with internal networking in his organization, which was critical for achieving a higherlevel role. Psychological roadblocks: Self-promotion made the manager feel inauthentic and

incompetent, almost like he was an imposter. Learning to reach: The manager learned to customize a style of self-promotion that was effective without feeling overly self-promotional. He focused on developing a strong sense of conviction about why internal networking

Roadblock number three is the Resentment Challenge. Even if people logically know that they need to change their behaviour to be eﬀective in a new situation, they may psychologically feel resentment or frustration about being constrained or forced to stretch beyond where they’re comfortable. Fourth is the Likeability Challenge: one of the greatest worries people feel when stretching outside their comfort zones is whether people will like this new version of themselves. This challenge is especially pertinent to people who, by nature, are people-pleasers or conflictavoiders. Finally, the fifth roadblock is the Morality Challenge. In certain instances, people can have legitimate concerns about the morality of the behaviour they’re about to perform. Of course, people don’t necessarily experience all of these roadblocks each time they attempt to change – but even one or two can be enough to keep people fully ensconced within their comfort zones.

Step 2: Identify and embrace your personal source of conviction

Conviction is the deep sense of purpose that the hard work entailed in stepping outside your comfort zone is worth it. What’s critical is that this source of conviction is authentic and meaningful to you. For example, I recently worked with a group of lawyers who were uncomfortable with selling themselves and pitching their services to clients. However, by reflecting on the meaningful impact that their past work has had for clients – helping those clients to achieve their goals and to avoid painful and costly disruption – we were able to reframe “selling” as “helping”. This made the lawyers far more comfortable with the act of selling their services.

Step 3: Learn to customize your behaviour It was one of the biggest ‘a-ha’ moments in

was worthwhile – in his case, it meant finding a more fulfilling job and a healthier work-life balance. The result: Over time, the manager started feeling more confident at promoting himself and looking into potential advancement opportunities.

There are lots of ways to customize a situation to make it just a little bit more familiar and comfortable

my work – realizing how the most successful performers were able to find a way to make a situation they had feared into something that benefited them. This is the third step: learning to customize your behaviour in a way that makes the task more natural and authentic. It is possible to develop the ability to tweak or adjust – often in a slight, but meaningful, way – how you perform a task, in order to make it feel more comfortable and natural. Such tweaks and adjustments might be made by altering your language, or your body language; or it could be done by playing with the timing of an event, or adjusting the context. Take networking. It can be terrifying, even – or especially – for someone who knows they need to do it for the business to get customers. Yet while you might feel helpless, you have more power than you think. For example, you might decide to not go alone to an event, and ask a colleague to join you. You might decide to choose events when you’re at your best: if you’re a morning person, target breakfast events. You might choose to go to events at the very start: even huge events don’t start out huge but build up over time. If you get there at the beginning, it may be a little less intimidating. Alternatively, you might prepare a few opening lines for the conversations ahead, find a prop to bring with you to help introduce your business, or choose to wear your ‘power suit’. The point is that there are lots of ways you can customize your behaviour, or the situation you’re facing, to make it just a little bit more familiar and comfortable – ultimately, helping to put it more inside your comfort zone. In the end, there’s no magic to stepping outside comfort zones. It takes time, eﬀort, strategy, and determination. But with a solid plan in place and the motivation to carry it out, you’ll be surprised at what you can achieve. — Andy Molinsky is a business school professor, author of Reach and Global Dexterity and the creator of The Reach Method Q1 2020 Dialogue

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Uncomfortably excited Staying in the ‘sweet spot’ for personal performance is harder than ever, but complexity theory and neuroscience can help. Bill Duane explains

Cause and effect ain’t what it used to be

One of the signature features of the complexity we face today is the relationship between cause and eﬀect. The Cynefin framework, developed by Dave Snowden of Cognitive Edge, divides systems into four ‘domains’:

1 Systems are simple when cause and effect are readily observable

2 Systems are complicated when causality is there, but expert analysis is required

3 Systems are complex when causality is an emergent quality of what’s happening now

4 Systems are chaotic when cause and effect are nowhere to be found. Dialogue Q1 2020

To make things interesting, systems slip in and out of these conditions, sometimes quickly; and the sheer level of change around us, in technology, markets, political institutions and culture, means that the relationship between cause and eﬀect changes more often than it used to. This is the world that the US Army describes as VUCA: volatile, uncertain, complex and ambiguous. Many types of work that were simple or complicated are now complex and sometimes chaotic. Unfortunately, established ways of managing systems assume a steady state of causality, where we can measure the past to predict the future and make adjustments to optimize results. But managing a complex system as if it were a simple or complicated system will fail. Instead, our approach has to be nimble and constantly recreated, as we assess emerging causality, rally around it and then let it go for the next round. Managing complexity involves trying out many new ideas and quickly culling the ones that don’t work, constantly moving on to what’s next. That is easier said than done, however: we can all become deeply attached to our preferred ways of doing things. They become our professional identities – and when you start messing with issues of identity, work gets stressful.

Neuroscience and stress: your job is not a bear attack

Stress is the nervous system’s reaction to perceived challenges, including rapid environmental change. When an animal encounters stimuli that may be a threat, the sympathetic nervous system is activated, producing the fight-or-flight response. The same system has survived in humans: we have a nervous system optimized for bear attacks. The eyes widen, the heat beats faster, energy is made available for action and the senses sharpen.

Shutterstock

The scope of transformation in business is already broad and it is increasing exponentially. Success in these turbulent times means responding to rapidly shifting dynamics and working diﬀerently. There’s just one problem: our nervous system responds to complexity and the unknown with a primal ‘fight or flight’ tool-set which, in the modern world, can lead us to make things worse. Leading in complexity calls for a level head, a willingness to let go of what previously made you successful, and a firm set of values that provide an anchor. Happily, these behaviours are eminently trainable. My experience working on these issues during 12 years at Google and a decade consulting is that the disciplines of complexity theory and neuroscience help point out the path ahead.

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Q1 2020 Dialogue

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We have a nervous system optimized for bear attacks

There are a lot of benefits from this, including enhanced physical and cognitive performance, strong motivation, and focus. In moderate amounts, this is the feeling of being on your toes, ready for what comes next and excited about the challenge ahead. However, the eﬀects can turn negative in two ways. First, the stress response is best suited to simple tasks, like escaping physical danger. Our performance on complex tasks can be improved by moderate stress, but only up to a point (see Figure 1), beyond which performance suﬀers: focus becomes tunnel vision, cognitive performance becomes reflexive panic, physical sensations of anxiety become inhibiting, and our social information-processing tilts towards attributing hostility to ambiguous actions. All of these work against innovation. The second problem is that the biochemical stress triggers – cortisol, adrenaline, norepinephrine – cause problems when they are present for long periods of time. The stress response is literally poisonous over the long haul. This is called allostatic load. Humans, being the resilient and adaptable creatures that we are, can learn to live with high amounts of long-term allostatic load, but not without experiencing physical, emotional and cognitive downsides. There is clearly a place that provides the benefits of challenge without the downsides of nervous system shutdown. This sweet spot prepares us for managing complex systems: we are best positioned to manage the unknown skilfully when we are neither complacent nor

FIGURE 1

THE YERKES-DODSON CURVE Arousal and performance levels on simple and difficult tasks Strong

Performance

Simple task Focused attention, flashbulb memory, fear conditioning

Difficult task Impairment of divided attention, working memory, decision-making and multitasking Weak Low

High Arousal

Source: Yerkes and Dodson, 1908

Dialogue Q1 2020

panicked. Larry Page, Google’s co-founder and Alphabet’s chief executive, calls this “uncomfortably excited”. It is also known as ‘flow’. In my experience, there are three particular skills that can help you stay in that state.

Skill 1 Cultivate a different kind of executive information system

Every leader is familiar with the business truism that you can’t manage what you don’t measure, but how do you assess your physiological and mental responses to change and complexity? Many of us have fallen into the ‘boiling frog’ trap, where continual change and challenge gradually ratchet up our nervous system without us noticing. To become more cognizant of our status, we need to focus on a diﬀerent suite of executive information – the signals provided by our bodies – and develop ways of assessing our level of fight-or-flight activation. Our body is constantly giving us data. Each emotional state creates a corresponding sensation in the body. For example, when I’m angry, I feel heat in my cheeks, a tightness at the top of my throat and pressure in my chest. Researchers have mapped where people feel activation in their bodies, as Figure 2 shows (‘Bodily maps of emotions’, Nummenmaa, Glerean, Hari, and Hietanen, Proceedings of the National Academy of Sciences of the USA, 2014). Learning these signals is a powerful way of bringing awareness to your emotional state, which is critical, because the parts of the brain responsible for emotional body awareness are also the parts that work on emotional regulation. So, the next time you’re feeling anxious or tightly wound, write down what sensations are appearing in your body. A dropping stomach or butterflies in the chest? That’s good data. When your ideas are flowing again and you feel connected to your team, note how this feels as well. Over time you will fine-tune your awareness of the information provided by your body. The sensations associated with stress are generally unpleasant, so it is natural to subconsciously train yourself to ignore and suppress them, living only from the ‘shoulders up’ – and men in particular have had deep cultural training in suppressing emotion, particularly in the workplace – but the first step in managing these feelings is to build awareness. Self-awareness has limits, though. We can have blind spots, so it’s useful to develop external methods of checking your emotional state, by using relationships. Friends and family are a good early warning system. Peer groups, coaches and mentors can play a pivotal role too. Sharing your internal state can make you feel very vulnerable, so you may wish to consider peers either inside or outside your team, depending on your comfort level. Remember

LEADERSHIP

FIGURE 2

B O D I LY M A P S O F E M O T I O N S

15 10 5 0 -5 -10 -15

Anger

Love

Fear

Sadness

Depression

Anxiety

Happiness

Source: Nummenmaa, Glerean, Hari, and Hietanen, Proceedings of the National Academy of Sciences of the USA, 2014

though, sharing can be liberating, bringing the realization that we’re not alone. Plus, nurturing these types of relationships creates deep trust and psychological safety – the most important aspects of team performance, according to Google research.

Skill 2 Regulate your stress response

Regulating your allostatic load – stress – is not ‘goofing off’. You are increasing your capacity and ability to manage complexity

When it comes to managing our stress response, it is a case of ‘manager, manager thyself’. There are many ways to reduce stress. At Google, high performers who reported managing stress well credited their time with friends and family, exercise, sleep and meditation. The important thing is to choose the one that works for you – in that you note a decrease in perceived stress when you do it – and, most crucially, the one that you actually do. A meditation app that’s never opened, or a treadmill acting as an auxiliary wardrobe does not suﬃce! Experiment to see what works. And remember, although detaching from work may feel counterintuitive when you’re feeling ‘crunched’ by deadlines, regulating your stress or allostatic load is not ‘goofing oﬀ’. You are increasing your capacity and ability to manage complexity. As with self-awareness, self-regulation can be supported by the power of group and community. As a way of improving my consistency with meditation, I volunteered to lead a small sitting group at Google in meditating together. My skills were modest – little more than the ability to play a guided meditation and ring a bell – but I knew that if people were depending on me, I would keep up my intention to practise. Time is always a constraint, so a successful strategy is to build stress-reduction into your routine. Try parking a little further from work to get in a walk and create time to reflect on your intentions for the day; or, do things as small as mindful walking while on the way to the

bathroom, or using elevator time to meditate.

Skill 3 Be clear about your values

The world is complicated and getting more so by the minute. Values – our most important overarching priorities – provide a critical anchor. If we are unclear about what they are, we can make decisions we regret or that later trap us in difficult situations. One of the most difficult aspects of complexity is needing to make decisions that have multiple effects: some positive, and some potentially negative and hard to foresee. Our values provide a stable foundation for making those difficult choices. As David Brooks noted in his 2015 New York Times piece ‘The Moral Bucket List’, there are two types of virtues, or values: resume and eulogy values. Resume values can lead to short-term career achievement; eulogy values are those that we look back on and see as indicators of a life well lived. Developing eulogy values is truly the work of a lifetime, but it is trainable, and your daily job can be an avenue into this work. Look for workshops that provide a framework to think through your individual and group values, or simply block out time to reflect. Your values can also be explored with a coach, peer groups, reading, and faith traditions. Developing values is a deeply personal process, and it is not simple – in complexity, you can expect there to be trade-offs between different values – but making time to articulate your values is essential. We work in a world of constant, rapid and complex change. We need leaders with a calm, yet energetic response; who are ready to let go of the past, but remain rooted in strong values. Cultivating better self-awareness and the skills to regulate your stress response are critical steps towards being ready to lead in complexity. — Bill Duane is a former engineering executive at Google. He is now principal at Bill Duane and Associates Q1 2020 Dialogue

THE MAN WHO IS ROCKING

HOLLYWOOD, FOOTBALL AND BUSINESS…

The new paperback edition of the success secrets behind Asia’s richest man.

http://lidpublishing.com/book/the-wanda-way/

INNOVATION

VIVEK WADHWA

Tech experts are better at selling than they like to believe

Your best salespeople are your developers Vivek Wadhwa is distinguished fellow at Carnegie Mellon University’s College of Engineering and author of Your Happiness Was Hacked

It was never part of the plan. When I went multimillion-dollar contracts with a team into tech as young geek, I regarded selling of just two experienced salespeople and a as something other people did, mostly bunch of techie guys who hadn’t previously grudgingly. I perceived the notion of sold a bean in their lives. I once believed sales as profoundly malign: hustling folks that coding was the antithesis of selling. I to buy things they didn’t need now and learnt that it could be its very foundation. never would; hurrying to close before the Developers make great salespeople. customer got wise to the con. Techies with sales training command As with so many youthful two key qualities that make them expert preconceptions, it turned out to be in winning business: credibility and wrong. Selling is part of life. Even where trustworthiness. A prospective customer no transfer of money is involved, selling is less likely to believe a salesperson happens. You are selling yourself when when he or she says a software product convincing someone of whom you are fond is stable and versatile. They are much to join you on a date. You are selling your more likely to trust the assessment of a ideas when you try to developer who knows persuade your boss to their product inside take a different strategy out, because they built Techies command for your company. You it. This is an incredibly credibility and are selling when you try powerful factor in the to have your children eat trustworthiness sales process, and one their vegetables. we were delighted to When, as a young exploit. man, I got promoted to project manager, Our conversion rate was sky high. I learned that sales is far from simple. My Although we were competing for deals first forays into the space came with the with the biggest software companies in the need to promote my ideas to colleagues world, we clinched the business almost and bosses. Persuading managers to give every time. One memorable handshake was me sufficient people and cash to get my with IBM Japan for a contract worth $8.6 projects off the ground seemed infinitely million. After a few years, we had become a more challenging than coding. $120 million a year business. After that, I became chief technology Our developers, once so wary of officer of a start-up that marketed software becoming salespeople, thrived. They were which my team had developed. With outward-looking and intuitive, going to limited funding from investors, we were great lengths to understand customers’ living on borrowed time – selling was needs and develop great products that the only way to get more. We had a great would sell. Often, new development product, but it didn’t sell itself. projects would be funded directly by My boss at the time was Gene Bedell. clients, de-risking our business. Bedell was a true visionary: his opening With some basic training, developers shot was to put everyone through a sales make the best salespeople in the tech boot camp. The tech team weren’t happy. sector. Yet even now precious few see They were coders – why should they learn themselves that way. If you can change that the craft of qualifying prospects and closing culture in your company and overcome business? that resistance, you will succeed. There is Yet Bedell’s gambit worked. Within nobody better placed to sell a product than a few months we were bringing in the person who built it. Q1 2020 Dialogue

INNOVATION

Dialogue Q1 2020

INNOVATION

Executive education fit for digital disruption Innovation is essential if leadership development is to keep pace with the needs of business

WRITING

Sharmla Chetty & Beth Ahlering ILLUSTRATION

Adam Quest

Today’s employees face the need to re-skill much more than was the case in the past

Never has it been more important for leaders to be learners. The challenges presented by today’s fast-moving environment mean that organizations must have agile leaders at all levels, or they face significant strategic and operational risks. Achieving that means executive education must adapt and innovate, and fast. Standard classroom-based programmes for executive development no longer suffice. The reality is that today’s employees face the need to re-skill much more than was the case in the past. One key driver is the extension of life: it is far from absurd to imagine a 100-year life and a 60-year career. Already, the average number of career changes has changed from two to seven, with employees holding many different jobs. At the same time, a volatile and ambiguous world is driving rapid change in the skills and capabilities that organizations need. Meeting the demand for re-skilling is increasingly feasible thanks to technological advances that allow learning to reach more of an organization faster than ever. Flexible classrooms, collaboration and smart spaces will allow for more effective adoption of different learning pedagogies and exciting ways of bringing learning to life. AI-led digital instruction is already becoming available. Augmented reality users increased from 60 million in 2013 to 200 million in 2018, and that number is expected to continue to grow. These trends are forcing a significant re-think of the notion of lifelong learning. We believe that those delivering learning in organizations need to consider the following future-oriented design principles.

Don’t focus on novel technologies; focus on novel use cases

It is easy to be awed by technology as learning apps, chatbot coaches and virtual reality learning environments become more readily available. Understandable though it is, this impulse needs to be checked. Applying technology to learning

without considering learning outcomes can lead to wasted spending and negative first experiences. Technology is a transformational tool, but it won’t transform in its own right. Rather, it is the additional exploration, access and experience that technology allows which delivers transformation. We are starting to experiment with augmented reality, supporting the creation of new ‘safe spaces’ wherever they are required in experiential learning. With it, learners can explore everything from technically intricate surgery, to ways of developing boardroom empathy. New technology makes it easier to create these kinds of spaces, and they will enable deeper learning.

Look for the next generation of pedagogists outside education

The future of executive and continuing education will be shaped as much by data scientists, AI specialists and computer gamers as it will by pedagogists. As in many industries, the convergence of multiple fields allows for the development of rich new applications that change not only the channel and conditions of learning, but also the impact. Gamification, for example, is being used to improve engagement in learning. Gaming can be embedded in modules, at individual or cohort levels, to incentivize learning and participation. We have observed engagement rates increase by over 50% thanks to the introduction of social gaming to learning platforms. This trend will undoubtedly continue, particularly as design is increasingly influenced by a younger generation of learners. Similarly, robotic lectures are not in the realm of science fiction; they are already happening. Duke Corporate Education welcomed its first robotic plenary speaker at its Davos of Human Capital event (see page 32), and early trials of robotic education delivery are showing that robotic lecturers and coaches can be more easily integrated into education than initially expected. Q1 2020 Dialogue

INNOVATION

Embrace the short attention span: be ‘when’ and ‘where’ learners want to learn

All of us digest information today in smaller units,very often on our mobile devices. This has opened up access to knowledge from a huge diversity of sources: academic institutions no longer have a monopoly on knowledge. As a result, the very idea of the classroom is in flux, with more than 83% of HR leaders focused on the digital overhaul of their learning oﬀerings and functions. Educators of the future will have to get the right content to the right learner through the right channel at the right time. The ‘when’ and ‘where’ of learning are critical. We also predict that on-demand learning and coaching applications will continue to increase in prominence. Many are already in play, but a premium will be placed on ease of access, the quality of curation and creation. These will be diﬀerentiators in a world of information overload.

T H E I M P E R AT I V E FO R L E A R N I N G AG I L I T Y Paul Norman, chief human resources officer at Johannesburg-headquartered MTN Group, outlines how disruptive forces are changing learning in practice. MTN is a mobile telecommunications operator active in 21 countries. We want to play a role in leading change and aim to be the employer of choice in every market we operate in, so agility is a key competence for our future leaders. Our ongoing success will hinge on our ability to quickly reconfigure strategy, structure, processes and technology to maximize value-creating and value-protecting opportunities. Disruptive forces are impacting organizational learning in many profound ways, but three in particular underscore the need for a highly skilled, adaptable and agile workforce.

Accessibility, communication and connectivity have led to the mass democratization of information. Today’s workforces are highly aware, and distinguishable by their preferences; so, across MTN, we have shifted from a segment-based talent model to a distinctive identity model. We look closely at our people’s abilities and identify their strengths, allowing us to provide interventions that suit those individuals and teams. We also use those insights

Dialogue Q1 2020

to help build teams with the capabilities needed to drive particular initiatives, and to inform succession planning.

The global workforce represents four distinct generations. Each of these generations have experienced distinct economic, technological, political and social constructs that have a deep influence on their living, working and learning styles.

The purpose of learning is fundamentally about the ability to apply learned skills to tasks. The jobs of the future require learners to make connections and re-purpose new-age skills for a diverse range of tasks and projects, so modern learners need to learn to apply themselves in any business scenario. These realities mean that learning agility is a priority now more than ever. Agile learners need to be willing to change, to learn from experience and apply new knowledge to different types of situations. This enables both individuals and businesses to grow.

Learning and business outcomes How can organizations best embed learning as a way of working? One element is to re-purpose reward and

recognition strategies: skill acquisition can be encouraged by micro-recognition interventions, linking both fixed and variable rewards to multi-dimensional skills and behaviours. Company benefits and subsidies can help promote self- and social education. At MTN, our approach to embedding agility has been built on harnessing the power of demonstrated learning among our future leaders – that is, learning that’s applied in practice to deliver realworld business outcomes. One of the most exciting initiatives has been our Agile for Customer Experience initiative. Over the last two years, we identified a need to improve the customer experience in ‘high-volume journeys’: the most common interactions that customers have with our business, such as activating a SIM. We also wanted to become a ‘digital operator’, more agile across the business and ready for the future. Tackling these high-volume journeys proved the perfect opportunity to learn agile techniques in practice. We drew together more than 100 people from across our markets and across functions for five days in July 2019, for a programme co-created by HR, customer experience and technology functions. Participants took away a commitment to deliver change in two high-volume journeys within three

INNOVATION

Use data-driven personalization to increase access and efficiency

Across organizations in all sectors, talent identification and assessment are being profoundly disrupted. The diﬃculty of predicting the essential skills of the future, combined with the rise of the growth mindset orientation, have created an appetite for new approaches to assessment that go beyond backward-looking or trait-based models. At the same time, innovative data-rich people analytics are creating new dimensions of capability measurement and more personalized learning pathways. The age of ‘sheep dip’ or one-size-fits-all learning is over, as better assessment of learners’ strengths and weaknesses and sophisticated capability heatmaps allow learning to be targeted to where it is needed most. As a result, we see increasing demand for personalized learning pathways that make use of optional models and tailored content.

5 months – a significant acceleration, when some countries were previously only reviewing one a year. The results have already been impressive, with many teams delivering even faster than planned. This promises to improve the customer experience, boost our net promoter score and drive revenue – and it shows how demonstrated learning can break down silos, improve the culture and drive cross-functional collaboration. The benefits will be reinforced by our other initiatives, including a global ‘agile coach’ network and the roll-out of digital tools to spread the Agile for Customer Experience approach across the group. By curating convergent learning experiences, organizations can now develop the range of technical, cognitive and behavioural skills that are needed to deliver targeted business outcomes. The value of this model is in its 360-degree approach – it is a case of ‘learn, apply, deliver’. Executive education today has to go far beyond traditional teaching and training. We’ve seen how a demonstrated learning approach, focused on business outcomes, provides inspiring and transformational experiences, and prepares young leaders to shape MTN’s future.

Applying technology to learning without considering outcomes can be a waste of money

The future is social, so leverage social learning

The arrival of learning platforms with social hub functionality has sparked much debate about whether or not social learning is true highquality learning. Educationalists must accept that with the rise of the internet, we live in an era of extreme information democratization. Next generation learners will look to their peers and to democratized information sources for knowledge. Self-learning and social learning will outweigh programmatic instruction, and we educators must think of ourselves increasingly as curators, platform-providers and enablers of self-directed learning journeys. Leveraging social learning to reinforce key aspects of knowledge and to deepen practice and feedback is essential. For example, some of our most successful programmes have been fully or near-fully virtual, platform-based and sociallearning-led. Learners in these programmes used collaborative learning, compared their applied knowledge and drew on ‘hacks’ based on the experience of others to create their learning experience, allowing them to ‘dip in’ to digital content on topics of particular interest. Digital disruption is influencing format, form and channels for executive education in unprecedented ways. There is huge promise for those educational institutions that can adapt to offer enhanced access and efficiency for learners through new technologies. This demands a shift in mindset and offering, and there is no time to wait. The future of learning is now. — Sharmla Chetty is Duke Corporate Education’s president for global markets. Beth Ahlering is regional managing director, Europe, at Duke CE Q1 2020 Dialogue

INNOVATION

People, not technology, drive innovation Camelia Ram looks at how firms can tackle three common barriers to the creation of innovative cultures

Since Satya Nadella joined Microsoft, the share price of the company has more than tripled. He recognized that while the company had been relying on star products, its future rested on an ability to continuously learn and quickly adapt to changing customer needs. The growth mindset became central to enabling the right behaviours. The performance management system was overhauled to reflect frequent check-ins, and employees began to be rewarded for their ability to both build on existing capabilities and support the success of others. Daily pulse surveys to track learning from failure and support the growth of others became the norm. This concerted approach to engendering the right culture in one of the world’s leading technology companies highlights that people, not the technology itself, are the drivers of innovation. However, organizations can all too easily inhibit the development of the right conditions for people to come together to creatively solve meaningful problems and create winning products and services. There are three common obstacles.

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Obstacle 1 An unconvincing proposition

Organizations which cannot convince employees that they are a company worth working for quickly find themselves in trouble. Today’s multi-generational virtual workers are looking for progression opportunities, for career flexibility and mobility, and for inclusive Dialogue Q1 2020

practices. Businesses that do not provide these in a credible and transparent way sow the seeds of unhealthy competition and undermining behaviours among employees. Boston Consulting Group (BCG), one of the world’s leading management consulting firms, has consistently been ranked near the top of Fortune’s ‘100 Best Companies to Work For’ list since 2006. In a work

INNOVATION

environment that is 24/7, the company has sought to deliver a proposition that brings some predictability to the work schedule and builds strong relationships among team members. Its work-life balance programme, dubbed PTO – standing for predictability, ‘teaming’, and open communication – requires each team member to set a collectively agreed goal for time oﬀ. Teams reflect on progress against both project and PTO goals weekly. The initiative is supplemented by an inclusion dialogue series, mentoring, career development programmes and partnerships with global and local social impact organizations. This holistic approach has led to 98% of BCG employees agreeing that people at the company are willing to give extra to get the job done.

Obstacle 2 A lack of opportunities to grow

At its core, innovation requires continuous development

The second obstacle is the lack of clear, timely and actionable opportunities for employees to learn and grow. This is worryingly common: up to three-quarters of high-potential employees could be tempted to leave for better career development opportunities or to make better use of their existing skills, according to IBM’s Smarter Workforce Institute (Should I stay or should I go?, 2017). This represents a significant continuity risk. Career paths that consider the intersection of individual interests, individual expertise and ongoing business needs can build motivation for employees to stay with an organization and go the extra mile. One company which has recognized the criticality of internal talent mobility and dynamic learning to a positive employee experience, and to the depth of its talent pool, is IBM. The IBM Watson Career Coach is an AIpowered conversation service that understands natural language and answers specific careerrelated questions. Multiple data sources such as job transitions for similar job roles, personal resumés and employee answers to questions posed by the chatbot are used to make recommendations on best-fit open roles and relevant development opportunities. This personalized digital career adviser has formed part of a re-design of the company’s performance management and talent management approach. Employees were deliberately involved in its design: employees need to be recognized as central stakeholders in their learning and development, not reduced to bystanders or consumers.

Up to three-quarters of high-potential employees could be tempted to leave their business. This is a significant continuity risk

Obstacle 3 People practices out of sync

New strategic directions often necessitate a change in how work is done, so fluidity in employees’ work is commonplace – but people practices can end up out of sync with other business practices. At its core, innovation requires continuous development. This relies on rapid, regular feedback and the learning and application of new skills, so companies shifting towards agile ways of working must also put in place practices that clearly signal new expectations, provide support and reward appropriate behaviour. If companies fail to match business practices to people practices, the dissonance can undermine eﬀorts to create an innovative culture. One firm seeking to align its people and business practices is Tata Consultancy Services, the Mumbai-headquartered software services giant, which employs nearly 400,000 people worldwide. Traditionally, its business approach meant that the client only saw the product at the end of the development process, but now, more rapid cycles of development take place with greater customer involvement. This has led to smaller teams working on clearly defined, incremental aspects of projects. It has prompted a review of processes like budgeting, hiring and employee progression: individuals can complete numerous small projects in relatively short time frames, so performance evaluations, recruitment and talent development processes have all been re-designed. The company is focusing on hiring for and developing competencies that remain relevant over time. Uninspiring employee propositions, a lack of opportunities to learn and grow, and people practices that are out of sync with the business can kill motivation and innovation. It is time for a closer partnership between business leaders, the HR function, and stakeholders inside and outside organizations, to redesign people practices. Companies cannot take for granted the motivation, fears and interests of their people; they need to recognize that robust and flexible people practices are an essential ingredient of truly agile and innovative cultures. — Camelia Ram holds a PhD in operational research from the London School of Economics Q1 2020 Dialogue

FINANCE

PHIL YOUNG

The Walt Disney Company is backing bricks and mortar over digital

Disney’s roll of the dice Phil Young PhD is an MBA professor and corporate education consultant and instructor

There’s an old expression that goes by where it puts its money, this would something like this: “You can tell what a indicate that its business strategy was to company’s strategy is by where it puts its grow a loss-making part of its enterprise. money.” I was reminded of this on a recent Why would anyone do that? family vacation to Walt Disney World in A 2018 article in the New York Times Orlando, Florida. revealed that Disney is spending more on I recall my keenness to take the Jungle theme parks than it did on Pixar, Marvel, River Cruise on my first trip to Disneyland and Lucasfilm combined – about $24 billon many moons ago. Fast-forward to today: over the next five years. the first thing my grandson wanted to visit When you dig deeper into Disney’s on his trip to a Disney theme park was the decision, it’s clear that profit is not the only Star Wars exhibition. Most important, he ship in the solar system. While its media wanted to take a ride on the Millennium networks are more profitable (an operating Falcon. As we queued to board this iconic profit of $6.6 billion vs. $4.5 billion for spacecraft, I pondered the vast amount of parks in financial year 2018), outside money that must have gone into making it forces mean the tables are likely to turn. a reality. Growth is seemingly the key criterion for All good Disney exhibits feel just like investment, not current profit. you are in the movie The parks’ operating itself. But being on a profit represented a boat on a river in the five-year growth of Disney has taken a jungle is one thing; 100%, while media’s leaf from those old putting visitors on operating profit fell by gamblers Han Solo and some strange planet 3% from the year before. Lando Calrissian getting ready to board Moreover, between 2017 a futurist intergalactic and 2018, revenue in space ship requires the parks business grew capital investment on an exponentially by 10%, while the media’s topline growth grander scale. The experience was out of was just 5%. Analysts suggest that media’s this world in more ways than one, but the flagging performance is a consequence of keen finance guy in me could not help but the traditional media sector facing pressure consider it in terms of dollars and cents. from streaming, and consumers cutting My interest in the Star Wars exhibition their premium cable TV subscriptions in as a financial decision rocketed when favour of low-cost internet alternatives. someone in our travel party opined Disney has taken a leaf from those old that the theme park business could be a gamblers Han Solo and Lando Calrissian, loss-making segment of the Walt Disney and is rolling the dice. It is making a big bet Company – perhaps break-even at best. that a bricks-and-mortar live experience is Could this be true? going to outperform its traditional business Certainly this latest addition to the in movie entertainment. With consumers Orlando location cost an eye-watering demanding ever more innovative and amount of money. Moreover, I recall immersive experiences, it could be a that, just a few years ago, Disney opened judicious wager. its fourth theme park outside the United Calrissian lost the Millennium Falcon States in Shanghai (the others being to Solo in a game of cards. The iconic in Paris, Tokyo and Hong Kong). Yet, spacecraft – in its physical theme park according to the old financial mantra manifestation – could be a bigger winner of telling what a company’s strategy is for Disney than its celluloid cousin. Q1 2020 Dialogue

FINANCE

Generation Y and ROI Profits aren’t the priority for emerging leaders. They will deliver better returns as a result, writes Adam Kingl

In August 2019, Business Roundtable, an association of chief executives of leading US companies, issued a statement on the purpose of a corporation. Signed by 181 chief executives, including those of Apple and JPMorgan Chase, it argued that companies should no longer advance only the interests of shareholders. They must do more: invest in employees, protect the environment, deal fairly with their suppliers, and deliver value to customers and communities. This view is increasingly common. It reflects growing distress in the corporate world amidst global discontent over income inequality, harmful products, climate change, and poor work-life balance. Business as usual is no longer acceptable. Today’s circumstances may look unique, but capitalism has faced challenging times before and has a terrific track record of successfully reinventing itself over the centuries. The next reinvention is now set to be facilitated by Generation Y, or Millennials: and at the heart of this change is Gen Y’s attitude to ROI and the pursuit of financial returns at all costs.

Gen Y’s priorities

Gen Y – those born between 1982 and 2004 – composes fully half of the European and American workforces today and will make up 75% of the global workforce by 2025. Organizations now have a critical mass of employees from this generation, who almost invariably demand that their organizations shift focus from shareholder to stakeholder capitalism, taking more account of customers, employees, community, and the planet. To test this hypothesis, over the course of five years, I surveyed Gen Ys nominated by their employers as “high potentials”. I asked what they would focus on if they were the chief executives of their organizations (see Figure 1). The results make clear how little import ‘financial worth’ bears for this Gen Y population. Dialogue Q1 2020

But does this mean that the Gen Y chief executive would not want to earn a profit? Absolutely not: these emerging leaders know that business needs profits to survive and thrive. It is, though, a reaction against the dominance of financial analysts’ opinions, which shape the approach of the investment community with neat ratios and metrics for assessing company health. Chasing ratio optimization is a shortterm game. Before one knows it, the purpose of the business is tacitly or implicitly about pleasing analysts. Long-term objectives take a back seat in decision-making. If the chief executive or chief financial oﬃcer starts adopting someone else’s KPIs (key performance indicators), using analysts’ ratios as their primary measures of performance, they risk creating drift from the organization’s mission. In the long-term, this can make sustained success far harder to achieve. Unfortunately, that is exactly what has happened on a massive scale. But we are now on the threshold of stakeholder capitalism. Gen Ys have their priorities right, focusing on renewing and strengthening their purpose in everyday activities. Gen Y is leading the way in reinventing capitalism in a way that serves society – and ultimately, their companies – better.

Purpose-driven performance

As one example, take a look at Facebook, founded and led by one of the first Gen Y Fortune 500 chief executives, Mark Zuckerberg. Evidently, Facebook is far from perfect: but its early history as a publicly traded company, and the way it catalysed investor confidence, is a thoughtprovoking case study. In his letter to prospective shareholders as part of the company’s initial public oﬀer in 2012, Zuckerberg did not emphasize revenue and profit forecasts. Instead, he explained Facebook’s purpose and simply stated that if you believe in that goal, then you might

The rise of Gen Y marks a critical inflection point in the history of business

FINANCE

FIGURE 1

GEN Y PERSPECTIVES ON CHIEF EXECUTIVE PRIORITIES What would be your focus if you were the leader of your organization?

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43% Renewing personal and organizational mission 33% An entrepreneurial perspective 11.5% How the business is trading 11.5% The global growth of the business 1% The financial worth of the business

consider investing. Zuckerberg wrote: “Facebook was not originally created to be a company. It was built to accomplish a social mission – to make the world more open and connected. We think it’s important that everyone who invests in Facebook understands what this means to us.” This idealistic approach was far from oﬀputting for investors, and in the company’s first two years of public trading, Facebook shareholders earned about a 100% year-on-year return on their investments. By comparison, the ten-year average return for the US stock market index S&P 500 over the past 90 years is 9.8%. Aggregated research has further proven that purpose-focused firms outperform their rivals. Research by Raj Sisodia, David Wolfe and Jag

Sheth for their book Firms of Endearment revealed that, over the decade to June 2006, the 10% of firms with the strongest stakeholder focus returned 1,025% to their shareholders, compared to a 122% average return-on-investment from the S&P 500 overall. Just to be clear: purpose-driven organizations rewarded their investors better than the market average by a multiple of ten! This shows that there need not be a tradeoﬀ between ‘mission’ and ‘financial return’. The two forces serve each other powerfully. As David Williams and Mary Scott argued in their HBR article, ‘It’s Time to Balance Profits and Purpose’ (September 2012): “The most successful companies, both in profitability and longevity, are the ones who recognize the absolute necessity of profits as well as the equally high necessity of having a purpose beyond shareholders’ wealth.” The rise of Gen Y marks a critical inflection point in the history of business. The vanguard companies of the near future will be those that resist the lure of analysts’ reductive metrics and instead build businesses that are noble at their core, that honour creative impulse, and that stir the hearts and minds of their people and their customers. — Adam Kingl is an Educator for Duke Corporate Education. His new book, Next Generation Leadership, is out February 2020 Q1 2020 Dialogue

FINANCE

The rise and rise of community funding The new local and community economy has the potential to transform how business is financed, writes Nils Elmark

Since Apple launched its Macintosh computer during the third quarter of the 1984 Super Bowl, the volume of the annual trade of goods around the globe has grown from $2 trillion to $20 trillion. Apple itself has gone from nearbankruptcy to be one of the most valuable companies on the planet, worth more than $1 trillion. It operates seamlessly across cultural and national borders, manufactures where conditions are most favourable, sells wherever possible, and places its profits where taxes are lowest. Apple has become a role model of the modern global urbanized tech-driven economy. Since the financial crisis, it’s been joined by a new generation of brands like Facebook, Google, Amazon, Microsoft, Alibaba and Tencent. It’s a new Wirtschaftswunder, or business miracle, and it’s reshaping the planet. But something’s wrong. Just as the new urbanization sucks the energy out of its surroundings, so the global companies suck their profits out of the cities, ending up hoarding cash in oﬀ-shore tax havens, not knowing what to do with such huge sums of money. The top five American tech companies alone – Apple, Microsoft, Google, Cisco and Oracle – have stashed away $600 billion overseas. High-street retailer Marks & Spencer paid more corporate tax in the UK last year than Amazon has paid over the last 20 years. The changes in the global corporate landscape have been vast. Six years ago, few people had heard of Uber: now the ride-hailing company is worth more than the auto manufacturer BMW. Yet Uber replaces professional cab drivers with amateurs, and, if it succeeds in creating its own self-driving car, it will eventually replace the amateurs with robots. The same trends are visible in the financial sector: compare Barclays, the bank which employs 130,000 people and has a market value of $48 billion, with PayPal, which employs 13,000 people and has a market Dialogue Q1 2020

value of $46 billion. They do essentially the same job, of moving money round, but PayPal has a workforce one-tenth the size of the old bank. This is typical of the new generation of global companies, which are often ten to 20 times more eﬃcient than the old businesses. If we don’t invent new roles, the number of jobs in our communities could be decimated – yet today, we are still building a world economy that relies more on technology than people, driven by fewer and bigger tech companies, which believe they are too big to fail and will live forever. This is what Thomas Piketty warned about in Capital in the Twenty-First Century. The social consequences of globalization are growing, and should we have another global recession, its eﬀects will be even more dramatic than the one in 2008. We cannot keep removing jobs and money from communities as we have done over the last decade. We need a more robust and sustainable economy that is able to create wealth and jobs where people live, and which enables millions to realize their dreams, not just a small number of Silicon Valley entrepreneurs. Fortunately, this new economy is in the making.

The new business model

We are starting to see a new business model growing out of communities, fuelled by new technologies and ‘the power of the crowd’. Young entrepreneurs who want to start their own business no longer go to the bank to get funding, they go to their crowd. They get their business dreams funded on websites like Kickstarter or Crowdcube. It’s a completely new model: they present their business idea as a prototype to the community, and if people like the idea and trust the entrepreneur, they invest, where traditionally, the product or business needed to be accepted by the market before it could secure funding. These new community businesses are

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In London, where I work, we have local currencies in both east London and Brixton

often possible because of modern technology. Firstly, crowdfunding and social media connect businesses with local investors. Secondly, new manufacturing technologies, like 3-D printers, enable small businesses to beat larger competitors locally. This trend is called the ‘economy of unscale’, because you no longer have to be big to be competitive: often the opposite is an advantage. Thirdly, more and more local communities are setting up their own currency. In London, where I work, we have local currencies in both east London and Brixton. These local currencies are based on blockchain, and they are in eﬀect a ‘community economy in a box’. The idea is to ensure that money circulates for longer in the community economy. If £10 is spent on an Amazon e-book, that £10 disappears from the neighbourhood – but if the same amount is spent in a local bookshop, half of the money probably remains as local wages and new community investments.

Lessons from history

The key question is whether this new distributed economy can be competitive in the centralized global economy. I believe it will be. Take the Danish dairy industry as an example. In 1882, Denmark got its first dairy cooperative, owned by local farmers. By 1904, there were 1,168 such cooperatives, while the number of manor dairies had dropped from 283 to 89. In just two decades, 100,000 small farmers had completely outperformed the rich manor owners on the butter market, thanks to a new technology and a cooperative mindset. It made Denmark the dairy country it is today. Most of the cooperatives have since merged: Arla Foods is still owned by 12,000 farmers, and it is the sixth largest dairy producer in the world today. Had this happened in the last few years, we would have said that this Scandinavian business success was created through crowdfunding; it shows that alternative models can thrive on the world stage. We don’t know precisely what role the new local economy will play in the 21st century global business environment, but history shows that it has the potential to be as significant as the present form of globalization. The future starts small and local, and the implications for businesses models will be far-reaching. — Nils Elmark is a consulting futurist and author of The New Local Economy (2019, LID Publishing) Q1 2020 Dialogue

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MARKETING

GILES LURY

Marketers’ trusty segmentations can be revitalized by new data

Time for a fresh cut

Giles Lury is director at The Value Engineers and author of Inspiring Innovation: 75 Marketing Tales to Help You Find the Next Big Thing

The world has changed and there is a whole new brandscape out there

The best segmentations are a tool for business planning. They are applied and used; they are inspirational. They drive the bottom line. When they do this, segmentations are a valuable investment for growth: but having seen many over the years I’ve spent in business, far too few fit this description. Too many fail on at least one dimension. They end up as a waste of what can be a substantial budget. It is past time for change. Segmentations were originally developed for classic fast-moving consumer goods (FMCG) brands, and were designed to link to old media planning tools like TGI. What worries me is that many segmentations are still primarily modelled from demographic data. But aren’t your customers more than their ages and postcodes? And if you’re using data that isn’t proprietary, won’t all your competitors have it too? An alternative problem exists with those segmentations built entirely on attitudinal analysis. They can be interesting and inspiring, yes; but without a rigorous link to behaviour, they often don’t get buy-in from everyone in the business. For some teams, like customer relationship management (CRM) or retail, they’re just not practical or useful. Frankly, it’s time to move on. The world has changed and there is a whole new brandscape out there. Customers are smarter than ever, and their beliefs, attitudes and behaviours have altered. Many aspects of brand research have changed too, so why is the industry still peddling a model built for the old world when FMCG was king and there were only a handful of TV channels? Segmentations need to work for today’s brands, whether they are in tech, content, travel, leisure or finance. Fortunately, that shouldn’t be a problem, because one thing that unites this new generation of brands is that they are rich in up-to-date and

even real-time customer data. Big data is an incredibly valuable asset. A company’s analysis of its customer data can identify genuinely meaningful diﬀerences between groups of customers. From there, a total market view can be built, with linkages to the behavioural dimensions that distinguish diﬀerent groups of customers. The quality of that data is, of course, pivotal: it’s still important to bear in mind one of the fundamental truths of marketing, that you can’t believe everything your customers tell you. Customers’ claimed behaviour can and does mislead: people over-claim, underclaim, forget, tell you what they think you want to hear, refuse to tell you what you want to know, or simply lie. Actions always speak louder than words, which is why good behavioural data needs to be included, though such data is not enough by itself. New segmentations need to include motivations and attitudes too, overlaid on the groups identified in your behavioural datasets. This will make segmentations truly useful, providing the power of a targeting tool imbued with the richness of motivations, enabling you to know both who to target and how to talk to them. One last consideration. As any marketer knows, while features are important, benefits are better. The same is true of any segmentation; the true value is realized in its application. That means building new segmentations with the end in mind, to help make sure that the segmentation is embedded within the business and integrated with relevant processes. I’ve seen too much money wasted on segmentations in the past, but I’m optimistic that marketers today can develop more segmentations that are inspirational, that are used right across the business, and are relevant for today’s brands and their challenges. It’s time to give segmentations a fresh cut. Q1 2020 Dialogue

MARKETING

Let four become one Great marketers use the power of naming to shape consumersâ&#x20AC;&#x2122; choices, write Sam and Nan Hua

Dialogue Q1 2020

MARKETING

The conversation was worryingly familiar. “Is it better to have one brand or multiple brands?” the marketing man asked me, having already settled on his answer. “I don’t want to put all my eggs in one basket. If I only have one brand, then I’ll be finished if something happens to it. If I have two brands, there will be something to fall back on.” This is a ridiculous way of looking at branding, yet it is surprisingly common. We countered his question with another question. “Do you think it’s better to have one house or several?” If there were no consequences, most people would prefer multiple houses. Who wouldn’t like a pied-à-terre in the city, a bolthole in the countryside, and a chalet in a scenic ski resort? But there are always consequences: chiefly, cost. If you want multiple houses, you need to pay for multiple houses. Many people struggle to aﬀord just one, in which case, there is little point of discussing the benefits of owning several residences. If I were a soft-drink maker, I’d love to have two brands on the level of Coca-Cola and Pepsi. The problem is, if I can’t even create one top-tier brand, how could I ever have two? Building a brand takes an enormous investment. Having one unified brand greatly lowers the cost of that investment.

If I can’t even create one top-tier brand, how could I ever have two?

The Peacock City brand

Peacock City is a classic example of using a unified brand to lower the cost of marketing and communication. By focusing its advertising investments, Peacock City was able to become one of China’s top 20 property developers in just four years. The concept behind Peacock City is to develop a series of low-density residential towns targeting the Beijing market, all within one hour of the city. For high-income urban residents living in the concrete jungle, this

is a chance to have a home where they can step out to see blue skies and grass in their garden, part of the increasingly popular and muchdesired ‘4+3 lifestyle’ where people spend weeknights in the heart of the metropolis and weekends in calmer surroundings. But for these customers, the cost of choosing is high. There are many projects around Beijing which cater to this customer segment, so which one is the best for their family? Which developer can they trust? No one would buy a house without seeing it in person, so what projects should they drive to for a look? How many projects do they need to see before they make their decision? There’s a Chinese saying that you should ‘compare the goods of three shops’ before you can make a purchase. But how many housing projects can you compare without going crazy? Three? Thirty? Three hundred? Marketers must consider how to enter their customer’s range of choice. The business that can lower the cost for the customer to select it is the business that can lower its marketing costs. From the start, Peacock City adopted a unified brand strategy. All four of the initial developments were named Peacock City, with the slogan: “One Beijing city, four Peacock Cities!” It gave customers the chance to choose between four options, all of which were Peacock City. But brand names for real-estate projects are like place names. Doesn’t it create customer confusion to have four places called Peacock City around Beijing? No. Peacock City uses geographical modifiers to diﬀerentiate each site. All four developments are named after nearby features or landmarks: Peacock City Yongding River, Peacock City Grand Canal, Peacock City Chaobai River and Peacock City Badaling. All of these modifiers invoke concrete geographical references that are instantly recognized by Beijingers. Suppose it had named its four developments using abstract concepts: Peacock City Luxe, Peacock City Comfort, Peacock City Sky, Peacock City Elegance. That would have caused confusion – a cost for the customer. Peacock City also uses a familiar noun for its overarching brand name

– everybody knows what a peacock looks like. The geographical modifiers represent the value of each project, while also sparking customers’ imagination and aspiration. The names are the reason to make the purchase. Naming is an investment – not just for the company but for the customers since, in real estate, the buyer will also one day become a seller. With one unified name, Peacock City, every owner can share in the value brought by the investment into the brand. A coherent naming system lowers the advertising investment cost and makes the investment more eﬃcient.

Great marketing centres on designing customers’ choice by manipulating the options

Framing customers’ choices

Naming is of course relevant in many other sectors. For fast moving consumer goods, the more shelf-space a product takes up in the store, the higher the possibility that the customer will see the product and purchase it. Hence why consumer goods companies develop multiple products in the same range, or even pay for shelf space – so that their brands occupy as much of the customer’s field of view as possible. Every purchase is a choice. Great marketing centres on designing customers’ choice by manipulating the selection criteria or even the range of options. ‘One Beijing, four Peacock Cities’ oﬀers the Peacock City as a criterion and ‘four Peacock Cities’ as a range of options. On the metaphorical ‘shelf’ of low-density residential developments in suburban Beijing, Peacock City launched four products to net the biggest display area of all. It’s like having four stalls in a market, all of which are owned by the same grocer. The question is no longer which residential development to use, but which Peacock City to choose. — Sam and Nan Hua are co-authors of Super Signs: Taking Your Brand to the Next Level (2019, LID Publishing) Q1 2020 Dialogue

The keys to sales success Modest, conscientious, well-networked people – and great leadership – are your best bets for improving sales performance. Jon Cowell explains why

Breaking news: pre-hire experience does not predict a new hire’s performance. That is the conclusion of a new review of 81 studies on the topic, published by Chad Van Iddekinge and colleagues (Harvard Business Review, SeptemberOctober 2019). Having reviewed evidence of post-hire performance across 15 of the 23 job families listed by the US Labor Department’s Occupational Information Network, including sales, they concluded: “We discovered a very weak relationship between pre-hire experience and performance, both in training and on the job. We also found zero correlation between work experience with earlier employers and retention.” This may be unwelcome news to those involved in staﬃng decisions, because experience is typically one of the most important factors in appointments: the same review found that over 80% of job advertisements either require or strongly prefer relevant experience. So, if it has little to no bearing on success and Dialogue Q1 2020

you want to improve sales performance, what else can you do?

Hiring great salespeople

Fortunately, there are clear pointers in other research as to the skills and personality traits which do help predict sales performance. Hiring managers should focus on recruiting people who possess these qualities. One of the key dimensions is emotional intelligence, or EI, as previously discussed by Ben Laker and Rita Trehan in Dialogue (Q2, 2019). They highlighted that “successful salespeople, on the whole, have EI scores significantly higher than average”. There are a number of other personality traits linked to sales success, as sales guru Steve W Martin’s research has shown. Modesty: ostentatious salespeople who are full of bravado alienate more customers than they win over. Conscientiousness: top salespeople have a strong

MARKETING

Leadership which creates psychological safety and meaning has the power to unleash employees’ extra efforts

sense of duty and feel deeply responsible for their results. Achievement orientation: top performers mostly score very high in achievement orientation, fixate on achieving goals, and continuously measure their performance. Curiosity: most top salespeople are extremely curious, which drives them to explore issues from all angles. Lack of gregariousness: surprisingly, friendliness and a preference for being with people tends to reduce sales performance. Top performers score 30% lower for gregariousness than belowaverage performers. Lack of discouragement: top salespeople are able to handle emotional disappointments and bounce back from losses, with 90% reporting infrequent or only occasional sadness. Lack of self-consciousness: embarrassment and bashfulness can inhibit sales performance. Less than 5% of top performers have high levels of self-consciousness.

Strengthen social networks

Organizational Network Analysis (ONA), which examines the extent and strength of relationships among individuals and groups, shows that these relationships are strongly connected to sales performance. What is perhaps surprising is that it is the strength of salespeople’s internal networks which seems to be critical. Gabriel Gonzalez and Danny Claro (Journal of the Academy of Marketing Science, 2019) have reported on studies showing that “top-performing salespeople are three times as likely to interact with multiple groups inside their firm”. What’s more, they add, “cross-functional cooperation can improve sales performance by 25%”. ONA can help you to identify those people who have already developed strong internal networks, and hence the potential to be great salespeople, and those who may need support.

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Create safety and meaning

Are you trying to solve the right problem? Tempting as it may be to focus on people with formal responsibility for sales, this may not be the best way to improve sales performance. In most organizations, a customer’s appetite to buy repeatedly over time is the source of most sales

and the best margins – yet that has less to do with the formal sales force than with the customer’s overall experience of your products and services. Building on work by Anthony Rucci, Steven Kirn and Richard Quinn, who described the employee-customer-profit chain at Sears in 1998, Edgecumbe research with clients including BSI and Bunzl has confirmed that customer loyalty – and hence sales and profitability – tends to correlate strongly with how employees behave and the value they create for customers. In turn, this is driven by leadership. A 1996 paper by Steven Brown and Thomas Leigh showed that job involvement and sales performance were predicted by the climate created by leaders and experienced by employees. Two factors are critical: psychological safety, which requires supportive management, clarity of expectations and freedom of selfexpression; and psychological meaningfulness, which comes from a sense of contributing to a bigger purpose, recognition for the role each person plays in realizing that purpose, and a sense of challenge. Edgecumbe research has shown that the relationship between leaders’ behaviour and employee experience holds good in organizations as diverse as Rolls-Royce, Help for Heroes, EDF Energy and the Diocese of Liverpool. Leadership which creates psychological safety and meaning has the power to unleash the extra eﬀort it takes for your employees to delight customers and keep them coming back for more, whatever business you are in. If you want to drive sales performance, it makes good sense to use high-quality psychometrics to help you hire modest, conscientious, achievement-oriented people with well-developed emotional intelligence into formal sales roles, and then help them to strengthen their social networks. But if you want to institutionalize resilient sales performance, you should also invest in building the leadership that creates a positive climate for all of your employees, so that they can do their best to create value for your customers and keep them coming back for more. — Jon Cowell is associate fellow at Saïd Business School, University of Oxford, and chief executive of Edgecumbe Consulting Group Q1 2020 Dialogue

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STRATEGY

RITA GUNTHER MCGRATH

Inflexible ways of analysing advantage should be put out to pasture

Dynamic markets need dynamic metrics Rita Gunther McGrath is professor of management at Columbia Business School

There is an irrational exuberance that a firm’s innovation will create the next growth category

Stock markets are central to the functioning of the capitalist system. Yet certain metrics used by stocks analysts create obstacles for companies that are competing to create what I call ‘waves of transient advantage’. In traditional strategy, having a ‘sustainable’ competitive advantage was the goal. In more recent strategic thinking, dynamic shifts in competitive position feature more frequently. Any competitive advantages, even prolonged ones, have a lifespan. They are created through the innovation and launch process, in which entrepreneurially minded managers build or buy new businesses that meet customer needs in novel ways. If they succeed and a market presence is established for the firm, the advantage enters the exploitation phase, in which the business becomes profitable, its footprint grows and it enjoys steady growth. But most existing advantages eventually come under pressure. This could be from competition, from technological change or from some other inflection point that weakens the original advantage. I call this, ‘erosion’. Evidence shows that the movement from stage to stage is happening faster than ever for many firms. Yet stock market analysts only examine firms’ functions in any sensible way during the exploitation phase. Analysts love predictability. They dislike surprises. They are keen to estimate what a firm’s performance will be. Once they have learned the key metrics that are likely to be associated with success, they are reluctant to look at a firm through any other lens. Map this thinking against the challenges of the innovation and launch phase of an advantage. Predictable? No. Surprising? Often! Yet there are two types of errors analysts make with this stage. The first is an irrational exuberance that a company’s innovations are going to create the next hot growth category, which results in its stock being excessively pricey. The other way analysts get the emerging advantage stage wrong is by pressuring

management to keep the stock price high, favouring tactics such as share buybacks rather than investment in innovation. Worst of all is what goes on in the ‘erosion’ phase. Investors dislike the idea of a declining business that must make substantial investments in developing new advantages, or updating existing ones, to remain relevant. One consequence of the mismatch between the reality of strategy today and how the public markets look at companies has been a cumulative loss of faith in those self-same public markets as the best vehicles to raise capital and trade in shares. Private money is allowing many start-ups to remain private for a long time, enjoying their growth period before going public. Private companies, studies suggest, invest twice as much as public ones in productive capital investment, which is where future prosperity comes from. And of course, they can’t be tempted by the easy move of repurchasing shares. All of which leads me to wonder whether we need new metrics. For instance, my colleagues and I have created a concept we call the Imagination Premium*, which measures how investors parse a company’s value between operations and growth. Indices such as the ‘good jobs’ index look at firms through a multi-stakeholder lens. Other approaches are being tried, such as Microsoft deliberately shifting its emphasis from such lagging indicators as sales and profits, to leading ones such as customer engagement with its products. And one of the more ambitious ideas is to dispense with the short-term focus of the current market entirely by creating the Long-Term Stock Exchange, Eric Ries’ brainchild with support from Silicon Valley heavyweights. The need for a new dawn in the analysis of transient advantage is pressing. Some analysts have engaged with the challenge. Yet still too many rage against the dying of yesterday’s light. *Imagination Premium is a registered trademark Q1 2020 Dialogue

STRATEGY

The agile dashboard, part II Joe Perfetti, Scott Koerwer and Mike Canning conclude their look at the new metrics needed for agility

A dead man walking: that was Blockbuster in the year 2000. It just didn’t know it. The company had recently completed a successful IPO that raised almost $500 million and it was flush with cash, controlling 31% of the US movie rental market. That September, chief executive John Antioco deigned to meet with a cash-burning, money-losing, DVD-by-mail rental start-up called Netflix. Reed Hastings, Netflix chief executive, made his pitch: that the future would be online, and Blockbuster needed Netflix to take advantage of the inevitable trend. He would sell his fledgling business to Blockbuster for $50 million and they would go after the online market together. Antioco’s response? He laughed. He couldn’t see the future that was sitting in front of him. The stage was set for Blockbuster’s demise – and Netflix’s rise. As this little bit of history reminds us, at a time of accelerated change and disruption, analysing and extrapolating from the past is insuﬃcient as a guide to the future: you can’t drive a car by looking in the rear-view mirror. In the same way, traditional metrics of business health – market share, growth, earnings per share, profit margin, and so on – do not predict your organization’s future health. They still have value, including as a yardstick within an industry, but they do not indicate your ability to see and adapt to disruptive forces. These more forward-looking measures are what we call the agile dashboard.

The agile dashboard

In part one of ‘The Agile Dashboard’ (see Dialogue, Q3 2019), we drew on the concept of agility as developed by sports scientists to explain how athletes perform in unpredictable environments. Sporting agility is a unique

Dialogue Q1 2020

combination of physical abilities, including raw speed; cognitive abilities, especially scanning the field, anticipating the moves of others and making good decisions; and technical abilities, including the athlete’s body positioning and their ability to pivot and change direction. Businesses also have to anticipate, interact with and react to an unpredictable market system. The highest-performing organizations have similar abilities to those of agile athletes. We argue that ‘agility architects’ (see also Dialogue, Q1 2019) need additional forward-looking metrics on their dashboards which measure: Speed – how fast your organization can move Interaction – the rate at which your organization can scan, understand, discern and decide (SUDD) Pivot – the ability to act and execute on a change in direction. Combined, these metrics will give leadership a picture of their organization’s agility and whether it is able to compete successfully and create value in an increasingly volatile world. Part one of this article focused on Speed, looking at specific metrics for Financial Cycle Time, Production Cycle Time, and Decision Cycle Time – time, after all, is the currency of agile, and speed counts. We now turn to metrics for Interaction and Pivot.

Interaction: a continuous loop

Many companies we work with today are trying to become more ‘outside-in’. Technology researcher and entrepreneur Jack Hidary describes the challenge in terms of ‘exposed surfaces’, drawing an analogy with food: those with a higher glycaemic index have more surfaces exposed to stomach acids, so they

STRATEGY

deliver sugar faster. Hidary asserts that in a rapidly changing environment, having more points of contact with the external world is the key to increasing our ability to adapt and grow (The Power of Pull, by John Hagel III, John Seely Brown and Lang Davison). Central to sharpening an organization’s outside-in capability is its ability to Scan and Understand, and then Discern and Decide (SUDD). Our framework builds on MIT’s system dynamics approach and the US military’s OODA – Observe, Orient, Decide, Act – loop. When describing OODA, a military strategist captured our thesis succinctly: “Every combatant observes the situation, orients himself… decides what to do and then does it. If his opponent can do this faster, however, his own actions become outdated and disconnected to the true situation, and his opponent’s

advantage increases geometrically.” There are four questions the agile dashboard needs to address (see Figure 1 overleaf):

Scan What sensors are you deploying in the external market system and how much data are you collecting? Understand Can you sift through and make sense of the collected data to create actionable intelligence? Discern How many options and scenarios have you created based on your understanding of your situation? Decide How fast are you deciding on your choices and how good are you at making decisions with incomplete information?

2 3

Q1 2020 Dialogue

STRATEGY

Scan and Understand

In her book, Seeing Around Corners, Rita McGrath describes how companies need to watch for weak signals in the market that lead to industry inflection points, which occur more frequently today. Take for example the large multinational chief executive who was following emerging technologies and had looked at eight startups in the last year; or the fashion retail brand which partnered with a start-up incubator, took presentations from 27 start-ups that were trying to disrupt their business, and hired several of them to implement experiments. The cost of failing to scan and understand a changing world has been illustrated by Microsoft. In 2007, when Apple introduced the iPhone, Microsoft was the dominant PC supplier worldwide, with a market share of over 90%of device sales. Four years later, Microsoft still had a dominant position in the PC market, but it had failed to understand that the iPhone had ushered in the era of mobile computing: counting iOS and Android devices in addition to PCs, Microsoft’s position was already less than 50% of the market and falling. Chief executive Steve Ballmer continued to build walls around the Windows castle, further ignoring signals that the industry was moving to the cloud. It took a change of leadership and an overhaul of culture to adapt Microsoft and grow its cloud presence through Azure. The first step is to begin scanning and tracking the following leading indicators on your agile dashboard:

Potential disruptive technologies Potential emerging and disruptive competitors, including the digital giants and tech start-ups outside your industry Customer trends, both emerging needs and top customer losses Weak signals and emerging trends that could reshape your industry. It may feel challenging at the outset, but that’s natural. The process of asking questions and developing scanning capability will help sharpen your external focus. Keep a record of what is going on, while building your understanding of the ‘why’ behind what you’re seeing.

Discern and Decide

It is not enough to identify and understand market signals: the differentiator is how well you turn understanding into discernible options and take actionable decisions. Leaders need to get comfortable with making decisions faster, based on imperfect information. It means rebalancing risk and speed in favour of action, picking up additional information as you go. Leaders cannot afford to freeze in the face of incomplete information. At Amazon, Jeff Bezos tells his leaders to go with 70% of the information. Act fast, fail fast and learn: it’s what Google calls ‘failing well’. Those decisions may incur short-term pain, but still be the right move. Take Adobe. It discerned that the trend towards cloud computing meant that it needed to shift to a cloud-based infrastructure, changing its business model from licence to subscription. Recognizing that this would disrupt its market-

Leaders need to get comfortable making decisions faster based on incomplete information Dialogue Q1 2020

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Answering these questions is critical to your assessment of your organization’s agility.

STRATEGY

FIGURE 1

SCA N

Having a clear analysis of your firm’s capability gap is essential to pivot successfully

U N D E R S TA N D

leading position and lead to a short-term loss of profitability, Adobe nonetheless decided in 2013 on a radical change in direction, and within a year, subscription was the only method of obtaining new versions of its software. It was painful initially, but the right long-term call. As an organization you must begin to track how many options you have created. From these options, are you creating scenarios and assigning probabilities to these scenarios? At what rate are you discerning insights from the data you’re collecting and turning those insights into decisions to act? Are you making important market-facing decisions faster? Begin with the time and the amount of information available, up to 100%. Initially these percentages may be a guess but over time, by reviewing previous decisions in After Action Reviews (AARs), you can adjust and improve to the 70% standard.

Pivot: can you implement a change in direction? As an agility architect it is not enough to make a good decision. You must understand whether your organization is able to change direction and implement the decision successfully. We call this part of the dashboard Pivot. Many leaders assume that if they identify an attractive opportunity they can just point the organization in that direction. That is rarely the case. The consultancy Bain has found that when a business moves into an adjacency where it has capabilities, it has about a 33% chance of success; but when the move takes the company further from its core, where it lacks capabilities, the odds of success quickly drop, to just 5%.

Developing capabilities

Implementing a pivot demands that the organization has the right capabilities, so the first step for leaders is to identify the capability or capabilities required. Consider the six aspects of capabilities: assets (including both ‘hard’ assets like machinery and locations, and ‘soft’ assets like intellectual property); knowledge and intellectual capacity; people; technology; culture; and processes. Score the degree to which you possess each on a 0-5 scale, from ‘non-existent’ to ‘we have what we need’, and ask three questions:

DISCERN

DECIDE

1 What is our core business and what capabilities do we currently have? 2 What is our edge or future opportunity, and what capabilities will we need to be successful? 3 What are the capability gaps and how will we acquire the new capabilities needed to be successful? As an example: imagine a drug manufacturer moving from pills to molecule injectables. The existing manufacturing plant must meet stringent new sterile preparation and packaging requirements: how big a stretch is this? Technology, like automated filling lines, can guarantee product quality: to what degree does the company have this capability? Does it have people familiar with the testing required? To what extent can it deal with new regulatory demands? This shift might require diﬀerent transportation and logistics capabilities, such as lowtemperature storage or other special conditions. Does it need new IP, perhaps from a partner? Can it build a safety culture and create a heightened awareness of potential contaminants? Excitement and willingness to change is helpful, but having a clear analysis of the capability gap is essential to give your team a strong sense of what needs to be done to enable your company to pivot successfully.

The agile dashboard in practice

The ability to see what’s coming, to adapt fast, and to pivot eﬀectively is becoming as important to success today as scale and eﬃciency were in the past. Building agility demands that leaders refocus on metrics that provide an indicator of future health and improve the odds of winning. It’s time to expand the dashboard. — Joe Perfetti is an innovation fellow with Duke Corporate Education and a leading expert in corporate finance and strategy. Scott Koerwer is professor of organizational systems and innovation at Geisinger Commonwealth School of Medicine. Mike Canning is global managing director of innovation and new commercial models at Duke Corporate Education; he led the design of Duke CE’s Building Strategic Agility online course, on which Perfetti and Koerwer teach. www.dukece.com/bsa Q1 2020 Dialogue

STRATEGY

Change or die People-centred transformation is an urgent priority for a fast-changing world. Tony Oâ&#x20AC;&#x2122;Driscoll outlines your strategy

Dialogue Q1 2020

STRATEGY

Since the year 2000, just over half of the names of companies on the Fortune 500 list have disappeared. Forecasts paint an even grimmer picture: Innosight predicts that 75% of today’s S&P 500 companies will be replaced within ten years. Organizations are perishing at alarming rates because they can’t keep up with intensifying levels of change and complexity in the business ecosystem. The existential threat facing organizations is clear. They must change, or they will die.

Act to think differently

The deficient response: tangible transformation

Leaders must embrace what Amy Edmondson calls “situational humility”, by showing vulnerability, seeking help, asking questions and demonstrating that failure is acceptable. Humility helps to build the foundation of trust and psychological safety which gives others the confidence to engage in open, transparent

Changing organizations is not easy. Robin Speculand reports that the failure rate for organization transformation over the last 15 years is as high as 60-90% (Excellence in Execution, 2017). Organizations cannot change unless their people change, and most transformation eﬀorts fail because organizations over-emphasize the tangible side of change and under-emphasize the emotional one. BCG reports that people in organizations that have a complicated structural, procedural and/or governance change imposed upon them are three times more likely to be disengaged than those who don’t. As Charlene Li has argued in her 2019 book The Disruption Mindset, organization change works when you identify the key beliefs and behaviours you want to change and then create new supporting structures, processes and governance mechanisms – not the other way around.

Putting people first

Brightline’s 2019 People Manifesto argues that people form the link between strategy design and delivery. People turn ideas into reality; they are the strategy in motion. They are the organization’s most important source of competitive advantage and yet, paradoxically, they are often also the organization’s most misunderstood and least leveraged asset. As my latest research with Brightline emphasizes, successful organization transformation requires an empathic, peoplecentred approach to change that nurtures a culture of aspiration, alignment, autonomy and accountability. There are ten key elements of a people-centred transformation framework (see Figure 1, overleaf).

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Communicate a compelling change narrative

In 1963, Dr Martin Luther King did not say, “I have a plan.” People need to believe that the achievement of a shared aspiration is possible and worthy of their eﬀort before they are willing to change their behaviour to make it happen. Communicating a compelling narrative that makes a purposeful, passionate, and emotionally resonant case for change motivates people to let go of the past and reach for the future.

Herminia Ibarra has shown that leaders who deliberately “act their way into a new way of thinking” are more successful in changing their own behaviour and motivating changed behaviour in others. Furthermore, the visible modelling of changed behaviour generates respect and followership from others: it is key for motivating others to change their own behaviour.

Embrace situational humility

Most transformation efforts fail because organizations under-emphasize the emotional side of change

and authentic interactions around change. This kind of trusted reciprocal interaction is critical: research has shown that failing to work together to make change happen is a significant barrier to successful long-term transformation.

Focus on the few

Upon his return to Apple in 1997, Steve Jobs eliminated more than 70% of Apple’s products and defined a simple two-by-two grid to bring clarity and refocus his company’s eﬀorts. Job’s message was clear and simple: “Focus is about saying no.” While the benefits of collaboration are well documented, too much cross-functional teamwork can burn employees out and sap their productivity. To reduce collaborative overload, leaders must adopt a portfolio-based approach to change, ensuring that people’s energy and attention is squarely focused on the vital few change initiatives that matter most.

Motivate discretionary effort

Discretionary eﬀort is what people choose to do above and beyond what is required of them by the organization. It is a significant source of potential energy for strategic change initiatives, but extrinsic motivational levers such as fear and poorly-designed reward and recognition policies dampen people’s motivation to activate their discretionary eﬀort. Leaders must instead focus on the intrinsic motivational levers that compel people to go the extra mile. This means tapping Q1 2020 Dialogue

STRATEGY

FIGURE 1

P E O P L E - C E N T R E D T R A N S FO R M AT I O N F R A M E W O R K A S P I R AT I O N the culture Nudge Motivate discrectionary effort

Give others agency

Decentralize decision-making Communicate a compelling change narrative

Lead the system

Catalyse the network Act to think differently

A C C O U N TA B I L I T Y

AUTONOMY

Embrace situational humility

Focus on the few

ALIGNMENT

Dr Martin Luther King did not say, “I have a plan.” He had a dream that changed the world

into people’s aspirations and giving them autonomy in return for accountability.

Give others agency

Charlene Li has shown that organizations which give their people agency – “the permission to take independent action or make changes without approval” – are far more likely to succeed in transformation. By giving others agency, questions of who leads and who follows are no longer defined by hierarchical positions, but by the situation. Leadership becomes a giveand-take process of social influence to maximize the eﬀorts of others.

Decentralize decision-making

Rob Cross’s Organizational Network Analysis (ONA) research shows that leaders who are unwilling to let go of decision-making slow their businesses down. A recent Harvard Business School study found that 54% of organizations recognized as transformation leaders have decentralized decision-making, compared to only 15% of transformation laggards. Roger Dialogue Q1 2020

Martin envisions organizations as “decision factories” and argues that leaders should only make the choices that they are best-equipped to make. They should clearly explain the rationale behind those choices, clarify the choices everyone else has to make, and define the boundaries in which to make them.

Catalyse the network

According to a 2017 study by the Economist Intelligence Unit (EIU), sponsored by Brightline, organizations that excel at changing their business purposefully orchestrate dynamic connections and interactions between those who design a change initiative and those who deliver it. John Kotter argues that organizations must create a “second operating system” devoted to the dynamic design and delivery of strategy, using an agile, network-like structure and a very diﬀerent set of processes. To boot up this second operating system, leaders must make silos irrelevant, place a premium on organization agility, and nurture an ecosystem of selforganizing cross-functional teams.

STRATEGY

TAKING YOUR PEOPLE-CENTRED TRANSFORMATION PULSE

As a leader, are you willing to change your own beliefs and behaviours to cultivate a culture that enables your organization to reach its highest aspirations? As Martin Luther King said, “You don’t have to see the whole staircase, just take the first step.” To take your first step, take five minutes to check your people-centred transformation pulse and identify the elements requiring attention in your organization. Review our ten questions and note down a score for each on a 7-point scale, where 1 = ‘strongly disagree’, 4 = ‘neutral’ and 7 = ‘strongly agree’.

People-centred transformation elements 1 Our leaders communicate a clear, concise, consistent and compelling narrative that makes a purposeful, passionate and emotionally resonant case for change

6 Our leaders create agency by giving others the permission to take independent actions and make changes without hierarchical approval

2 Our leaders generate respect and followership from others by personally, authentically and openly modelling the changed beliefs and behaviours required to evolve the organization

7 Our leaders only make the choices they are best equipped to make, clarify the choices others have to make, and the boundaries within which to make them

3 Our leaders show vulnerability, seek help, demonstrate that failure is acceptable, and consistently seek to increase the autonomy and accountability of others

8 Our leaders create time and space for cross-functional teams to emerge, converge and engage around crucial strategy design and delivery interfaces

4 Our leaders bring clarity and focus by prioritizing and communicating the key strategic priorities that matter most to the business

9 Our leaders catalyse the collaborative leadership required to successfully navigate dynamic, complex and systemic change

5 Our leaders understand how to motivate discretionary effort by tapping into the aspirations of others and giving them autonomy in return for accountability

10 Our leaders consciously and continuously nudge the culture in the direction of aspiration, alignment, autonomy and accountability

Lead the system

Peter Senge argues that we need a new kind of leader – a systems leader – to successfully navigate dynamic, complex and systemic change. Research from Deloitte shows that organizations that focus on building systemic level leadership capabilities attain 37% higher revenue per employee, 9% higher gross profit margin, and are five times more likely to be highly eﬀective at anticipating and responding to change.

Nudge the culture

Another recent EIU study identified “cultural attitudes” as the primary barriers to successful strategy implementation (Closing the Gap, 2017). Edgar Schein asserts that culture cannot be separated from strategy, because strategic thinking is deeply coloured by tacit cultural assumptions. Culture, therefore, acts as a limiting and resistive force to both the design and delivery of a strategic change initiative. While culture itself is notoriously hard to change, it cannot be left to chance. The most successful transformation leaders recognize how

to consciously and continuously nudge culture in the direction of aspiration, alignment, autonomy and accountability.

Activating the People Manifesto

The four tenets of Brightline’s People Manifesto are: that followership matters as much as leadership; collaborative eﬀorts must be strategically focused; culture can’t be left to chance; and people must believe in the change. The ten elements outlined above are designed to activate these tenets. Martin Luther King did not have a plan. He had a dream that changed the world. Putting people first, by activating a peoplecentred transformation approach, can make organizational dreams real. — Professor Tony O’Driscoll is research fellow at Duke Corporate Education — The research on which this article is based was supported by the Brightline Initiative, and is available at www.brightline.org — A version of this article with a further reading list is available on www.dialoguereview.com Q1 2020 Dialogue

NEWS NATION

The Reiwa revolution Host of the 2019 Rugby World Cup and the 2020 Olympics & Paralympics, Japan is enjoying the spotlight. Yet there is a growing need for economic reform. Can the Reiwa era of Emperor Naruhito deliver its promise of ‘harmony’ between past and future?

CHINA

Credit in the bank

RUSSIA

1st

Japan has been the largest creditor nation

EAST SEA

on Earth for 22 years

NORTH KOREA

running JAPAN

SOUTH KOREA

TOKYO

NORTH PAC I F I C OCEAN

Every cog in the machine

2.4%

The unemployment rate, which dipped to a 26-year low during

EAST CHINA SEA

2019. Employers are wrestling with serious labour shortages

An ageing society

28%

FAC T F I L E J A PA N Land area

Official language

140,728 (364,485

sq mi

)

sq km

Japanese

Population

GNI per capita

126,168,156

$44,420

Capital

Life expectancy

Tokyo

89 Women

Religion

Shintoism, Buddhism Dialogue Q1 2020

82 Men

Percentage of the

The primary obstacle to a new Japanese golden age is a lack of corporate leadership and ambition, rather than bad politics

population aged

Jesper Koll, one of Japan’s most influential economic advisers and commentators, Japan Times

in the World Economic

over 65, the highest proportion in the world

Gender inequality

110th

Japan’s lowly ranking Forum’s Global Gender Gap index, which covers 149 nations

NEWS NATION

Join the Dialogue

Sport brings the world together and gives opportunities to all

www.dialoguereview.com

Shinzo Abe, Japan’s prime minister @DialogueTweets

M A J O R P L AY E R

US$5.2 trillion

Japan’s economy is the third largest on the planet, accounting for 8.02% of the world’s economy

¥8 trillion

The Bank of Japan’s estimate of the economic boost from the 2020 Games, equivalent to $76 billion

40 million

Target number of foreign visitors to Japan in 2020

LONG TRADITIONS

4 hours

Length of a traditional Japanese tea ceremony

D AT E S FO R THE DIARY

24 July 2020 Start of the 2020 Tokyo Olympics

25 August 2020 The Paralympic games begin

@dialoguereview Dialogue Review Direct comments, queries and suggestions to: media@lidbusinessmedia.com

DIALOGUE IS BROUGHT TO YO U B Y… EDITORIAL BOARD

Tom Albanese, ex-chief executive, Vedanta Resources Michael Canning, Duke Corporate Education Professor Pedro Nueno, president, China Europe International Business School Ben Walker, editor-at-large, Dialogue

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EDITORIAL

Our nation is facing up to a big turning point, but there are lots of Japanese values that shouldn’t fade away. We are very proud of our history, culture and tradition, and this term, Reiwa, expresses the Japan of tomorrow, the one we want to build for future generations Shinzo Abe, Japan’s prime minister

Download the latest issue of Dialogue on your mobile device. Search: Dialogue

Patrick Woodman, editor Kate Harkus, art director Luisa Cheshire, chief subeditor Kirsten Levermore, assistant editor MANAGEMENT

Martin Liu, publisher Ben Walker, editor-at-large Niki Mullin, business development director niki.mullin@ lidbusinessmedia.com Alec Egan, business development executive PUBLISHING

Published in the United Kingdom by LID Business Media Studio 204, 16 Baldwins Gardens, London, EC1N 7RJ

Disclaimer Copyright 2019 by Duke Corporate Education and LID Publishing Ltd. All rights reserved. Material may not be reproduced without permission of the publisher. While we take care to ensure that editorial is accurate, independent, objective and relevant for the readers, Dialogue accepts no liability for reader dissatisfaction rising from the content of this publication. The opinions expressed or advice given are the views of individual authors and do not necessarily represent the views of Dialogue. This journal is also supported by Knowledge Partners, including Duke Corporate Education as Lead Knowledge Partner. Whenever an author is related to a Knowledge Partner it will be noted as such. Dialogue takes every effort to credit photographers but we cannot guarantee every published use of an image will have the contributor’s name. If you believe we have omitted a credit for your image, please email the editor. ISSN 2053-4361 Printed by Pensord www.pensord.co.uk

Q1 2020 Dialogue

REVIEWS

Top of the class Yuval Noah Harari’s latest tome is a masterly exploration of the modern condition, finds Perry Timms

21 Lessons for the 21st Century Yuval Noah Harari Spiegel & Grau (USA), Jonathan Cape (UK)

Eulogized by President Obama and Bill Gates, Yuval Noah Harari’s Sapiens (2011) was a powerful reminder of our humanity, while also being a book about technology – or, technologies. It wasn’t just about today’s digital conundrums, but about all the technologies that human beings have introduced to the world to improve their lives, spanning from ancient agriculture – who knew that wheat could be considered a technology? – to the modern day. Harari followed up with Homo Deus (2015), where he considered the possibility of a new breed of human: a digitally-fused entity, which would herald a colossal range of changes and dangers. If Sapiens was about the past and Homo Deus about our (possible) future, 21 Lessons for the 21st Century is a book about now. It is a rollercoaster philosophical review of where we find ourselves today. Harari has a habit of giving the reader two things. They are, firstly, the ‘oh my’ moments: a reaction to the troubles and challenges that Harari explores. These are the moments of realization, of understanding that things are as they are for a reason – a reason which may not be immediately evident, yet which Harari makes crystal clear. In the second category are the ‘oh yes’ moments: reactions to the ideas and questions that Harari weaves into his writing. They often represent things you are already thinking about, have distilled into your own reasoning, or have deduced based on your own theories of how things are, but to which Harari invariably brings new clarity. 21 Lessons is packed with these moments, and readers of his earlier work will not be surprised to find that they make the new book completely compelling. Harari really is a ‘listenable’ soul.

We need people like Harari to help us come up with rescue plans for our troubled world Dialogue Q1 2020

Harari doesn’t have all the answers to the questions and challenges he identifies. Like many philosophers, his role is to be the sage, not the prescriber of solutions. He’s the provocateur, not the realist plan-maker; the stimulator, not the product creator. What 21 Lessons does instead is set out a series of socio-political, socio-economic, and socio-anthropological issues that we need to examine – if nothing else, to help make sense of the turbulence in the world. Starting with ‘disillusionment’, Harari looks at why liberal democracy is floundering, tracing its problems back to the 2008 global economic crisis. People are disillusioned with unfulfilled promises, false dawns and self-serving agendas from political figures and parties. It is a fairly gloomy opening, but readers should not be put oﬀ; not least because it moves swiftly into one of my favourite topics, ‘work’. Work was covered in both Sapiens and Homo Deus and, admirably, Harari avoids too much replication – something which can’t be said of all authors. While some commentators now talk down the AI revolution in work, Harari sees revolutionary potential, but he emphasizes the importance of the human dimension. One terrific example comes from drones used by the military. At first glance, technology is set to replace the human pilot of a reconnaissance plane, and perhaps the crew that serviced the plane. In fact, that small team is likely to be replaced by perhaps 30 people: a drone pilot and a new service team, yes, but also analysts, data scientists, cultural anthropologists, and behavioural economists. So will AI destroy jobs and leave us a jobless, law-less ‘civilization’? It’s not what Harari thinks, although he does expect that change will be significant because of the nature of the new roles created. In the past, agriculture became factory work, which became retail and service support. That’s not the case with AI: it will take out all low-cognition repetitive work, and even high-cognition repetitive work, leaving many of us needing to ‘upskill’ to fulfil higher cognitive or creative roles. The remaining 19 lessons are wide ranging.

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REVIEWS

AI reappears under ‘liberty’, where Harari considers its huge role in surveillance. The egalitarian warrior in me cheered during the chapter on ‘equality’, because – much like Dutch author Rutger Bregman, who shot to fame oﬀ the back of comments on inequality at the 2019 Davos summit – Harari calls out injustices clearly, although I was left frowning at the prospect of greater inequality. ‘Community’ looks at why loneliness and isolation are rising when we are more connected than ever before; ‘civilization’ brings Harari’s most ideological moments, with a vision of humanity being brought together in some form of global consortium. Harari then moves onto the dangerous grounds of religion, nationalism, immigration, terrorism, war, god, and secularism – sections which bring some very stark realizations. He is as gentle as he can be, but there is no doubting that humanity finds itself in a perilously divided state of aﬀairs. Later sections on humility, justice, education, science fiction and ignorance get to the heart of what we believe and how our beliefs

are threatened and challenged daily by our own actions. In the ‘post truth’ chapter, he notes that today’s information wars are really nothing new: we’ve had propaganda and lies forever. He ends with sections on ‘meaning’ and ‘meditation’, more optimistic chapters that set out why it so important that we all derive a ‘north star’ to steer by in our own lives. After the preceding 19 lessons, it is easy to see how we get knocked oﬀ track. This reviewer’s takeaway? Find meaning in serving others and through acts of kindness and love; and live in reality, not within a story or a fantasy. 21 Lessons for the 21st Century is an absorbing, realistic, stark, yet hopeful book. With many of us struggling to make sense of our Facebook feeds, Twitter timelines or even of the familiar TV channels we once thought would help us understand the world, we need people like Harari to help us learn: about ourselves, about each other, and about how we might come up with rescue plans for our troubled world. — Perry Timms is an independent HR/OD practitioner, speaker, writer and CIPD adviser on social media and engagement. Follow him on Twitter @PerryTimms Q1 2020 Dialogue

REVIEWS

Signs of life There’s genius in simplicity, writes Ben Walker

Super Signs: Taking Your Brand to the Ultimate Level Sam & Nan Hua LID Publishing

Few things divide East and West more than the disparity in the recognition of our business heroes. Twice now I’ve been humbled by the sheer scale of Chinese people’s patriotic enthusiasm for their business leaders – first at the British Museum in London, when I found myself holding back the crowds determined to get a glimpse of my publisher’s one-time client Wang Jianlin, the Wanda boss; latterly at University College London (UCL), where scores of ultrabright young things of Chinese origin eagerly packed a lecture theatre for Sam Hua to share his wisdom. Neither Wang nor Hua are household names in the West: both are huge out East. Hua and his younger brother Nan combine to make Hua&Hua, the marketing and branding agency that has transformed the fortunes of some of the biggest brands in China. On that warm autumn night at UCL, Hua talked – in English, practised over 20 hours of private rehearsal – about his ethos, as outlined superbly in his latest book Super Signs. There was some of the customary marketing credo, of course: repetition is good, maintain message discipline, keep it simple. Yet in this last mantra the Hua brothers have something quite special: the concept of a super sign. Super signs say something profound and convene a multitude of ideas in a single icon.

Super signs say something profound and convene a multitude of ideas in a single icon

Britishness is boiled down into a red bus or post box. Francophilia is awakened by wooden shutters. Super signs can be remarkably mundane: pedestrian crossings saying ‘Walk/ Don’t Walk’ channel the dynamic essence of urban America. In a particularly brilliant campaign, the two Messrs Hua reinvigorated the soy sauce brand Chubang by plastering all its labelling and merchandise with the green chequered pattern found on restaurant tablecloths across China. The imagery provided an instant, visceral recall of good times, good food, and good company. “It even caused some consumers to salivate,” Hua told the UCL audience. Certainly, it whetted the appetite: the book left me wondering how many more super signs are lurking about our lives, just waiting for clever marketers to sniﬀ them out. The keys to commercial success are often right under your nose. Ben Walker is editor-at-large of Dialogue

APPS FOR LEADERS: FOREST

Struggling to focus? Forest could help, writes Perry Timms Are you a smartphone addict? The average user checks their phone 63 times a day; 86% of us will check a phone whilst with family and friends. Only 30% of us claim to have successfully made changes to control our usage. So how about an app that helps boost your productivity by improving your focus, penalizing excessive checking, and creating a sense of achievement? Forest is that app. It adopts the Pomodoro Technique, using a timer to break work into regular intervals, which helps users commit to focusing on other tasks and stay away from all the Dialogue Q1 2020

distractions offered by a phone. The key to this approach is that it helps reinforce sustained periods of focus while also creating regular breaks, which help ensure that you can complete your work efficiently. The twist is that Forest creates a virtual tree that grows as time passes: if you touch the phone before the task session is complete, the tree dies. Sustained concentration is rewarded by seeing your very own forest grow. What’s more, you can turn that into real-world growth: the Forest team partners with a tree-planting organization,

Trees for the Future, to plant real trees when users spend the virtual coins they have earned in the app. Productivity enhancement, a cure for smartphone addiction and a contribution to planting real trees? Forest is a ‘triple bottom line’ app if ever there was one.

— www.forestapp.cc — Perry Timms is an independent HR/OD practitioner and CIPD adviser on social media and engagement. Follow him on Twitter @PerryTimms

REVIEWS

PIERS CAIN ON BOOKS

How can leaders respond to changing social attitudes?

Knowing when to nudge Piers Cain is a management consultant

In the last few decades we have seen pushed people in a direction they already enormous changes in social attitudes in favoured. Use of plastic bags at the big countries around the world. They have supermarkets has plummeted 90% since had a big impact in sectors as diverse as the policy was introduced in late 2015. tobacco, hospitality, car-making and Sunstein’s key finding is that such entertainment. While smoking in public cascades cannot be forced. Nudges fail places was widespread 30 years ago, it if people are strongly attached to the is unlawful or unacceptable in many status quo: they only work if the majority industrialized countries today. And secretly back the change, or don’t care. The consider the sudden emergence of the difficulty facing leaders seeking to change #MeToo movement, which has caught the behaviour is that nobody knows in advance leaders of the entertainment industry – which attitudes, customs or practices have among others – by surprise. In How Change ceased to be strongly supported. Happens, Cass Sunstein uses psychological Sunstein is also interested in the and social science research to explain how psychology of groups, particularly how public opinion can change groups of like-minded so quickly. people tend to develop more He argues that some extreme views if they meet Sunstein practices or customs regularly to discuss an issue. explores how become outdated but We are all aware that social small interventions continue to be the norm media encourages people to can trigger a cascade simply because it appears express extreme positions; effect that people continue to this can influence changes in believe in them. Take public attitudes, but rather the example of same-sex than the whole of society marriage in the UK. At first, the law bars adjusting its understanding of a social issue it, sanctioned by custom. Hardly anyone or practice, attitudes polarize into opposed complains, for fear of standing out, or groups, ever more certain that their view offending their neighbours – until, that is, is right. In the UK, this appears to have something happens, and it becomes clear happened over Brexit; in the US, politics that many people were actually in favour has become increasingly divisive over a of same-sex marriage, or weren’t much period of many years. bothered either way. There is a “cascade Yet for all the relevance of the topic, in effect” and the law is changed. the end this reader was left feeling shortSunstein is perhaps best known for his changed. Sunstein explores in detail some work popularizing the idea of ‘nudges’, of the mechanics of how people’s decisionsmall interventions to change public making and behaviour may be influenced, behaviour, and he explores how far leaders but ultimately provides little insight as to can engineer change by using nudges which why those unvoiced secret opinions evolve; trigger cascades. One successful application nor does he examine what social changes of nudge theory has been the sharp drop are coming next. in the use of single-use plastic bags in the As with a tidal wave, we can see the UK, achieved after the law was changed to water surging – but it seems we can do make customers pay a small charge for bags little except keep out of the way or attempt hitherto provided by retailers for free. The to ride it. five pence charge was too small to directly — How Change Happens, Cass R Sunstein, compel behavioural change, but it gently MIT Press, 2019 Q1 2020 Dialogue

LAST WORD

LIZ MELLON

Has crowd-sourcing made business gurus obsolete?

To guru, or not to guru That is the question. While some historians date globalization from 1492 when Christopher Columbus stumbled on the Americas in search of spices, in business the term has been in vogue since the 1990s. As academics began to parse rules for what constituted national, international, multinational or global firms, a handful sprang to international fame. It was the rise of the gurus. Michael Porter helped us devise strategies for this world, new to business, of exchanging knowledge, trade and capital around the globe. Rosabeth Moss Kanter advised large-scale firms how to change with agility. And Sumantra Ghoshal – literally acknowledged as a guru in his obituary in The Economist – taught us how to identify ‘the smell of the place’; that is, organizational culture. Managers lined up to attend business school courses led by these gurus, and firms hired them as consultants. Their ideas were big, new and exciting, and they helped managers make broad sense of the emerging, interconnected world. Of course, the messy, complex reality of business and the beauty of the perfect theory were never a complete match, so outcomes were somewhat lumpy. For example, having worked with thousands of managers compiling lists of strategic strengths and weaknesses, it was often a struggle to write authentic lists that weren’t just a mirror image of the other. (Strength = our specialist knowledge; weakness = falling behind and losing our specialist knowledge? Er, no.) What has happened to gurus since those heady days? There have certainly been many extensions and refinements of the ideas of truly great thinkers: like a computer program, new strings of code have been added, but they are extrapolations rather than innovations. For thinking systemically about our world, the ground seems largely to have been ceded to political economists, who don’t often translate their fascinating analysis into cogent lessons for business. Dialogue Q1 2020

Increasingly, innovative ideas come from technophiles (digitization, AI, bitcoin) which, while impressive and worldaltering, are not general management theories. They will change all our lives, but there is no neat theory on the exact impact on business, just lots of speculation. It’s up to managers to work out how to apply these innovations to business, helped along by consultants. The second big change has been the advent of the internet. Rather than living inside the heads of a handful of gifted individuals, ideas are searchable and readily available. Similar to modern supply chains, ideas are hard to track: it’s tricky to understand who started a trend of thought, or who it belongs to. Ideas belong to us all. The world of TED Talks is full of great ideas from thousands of people. The third big change has been the advent of entirely new business models, which academics and regulatory authorities are chasing rather than predicting. The biggest taxi service with no cars – Uber – and the largest hotel chain with no buildings – Airbnb – follow Google, Facebook and Amazon as tax eﬃcient (or tax avoiding, depending upon your outlook) monopolies which require international cooperation among governments to control. We advise business leaders today to act radically diﬀerently from their predecessors at the back end of the last century. Being the boss used to mean knowing everything and issuing orders down the line. In contrast, the advice today is to be curious, open to learning and to ask great questions. For me, it’s exactly the same with gurus. My advice to any board would be to assemble a bunch of interesting and diverse people, including many from inside your organization so that they own and deliver on the decisions, and hire a great facilitator to talk through some ideas. Don’t guru, crowd-source. — Liz Mellon chaired Dialogue’s editorial board

It’s tricky to understand who started a trend of thought, or who it belongs to

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