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4 Signs Your Industry Is Being Disrupted

2023 January 29
by Greg Satell

In his book, Thinking, Fast and Slow, Nobel laureate Daniel Kahneman explained that there are two modes of thinking that we use to make decisions, which he calls “System 1” and “System 2.” The first is more instinctual and automatic, the second more rational and deliberative. We need to use both to make good decisions.

Businesses also have two systems, which can sometimes conflict. One is immediate and operational. It seeks to optimize processes, gain market share and maximize profitability. The second builds capacity for the long term, by investing in employees, building trustful partnerships and creating new markets to compete for the future.

Obviously, these are not mutually exclusive. Just as we can step back and think rationally about instinctual urges, we can invest for both the short and the long term. Yet given that every business eventually matures and needs to renew itself, many end up taking the wrong path. Here are four signs that your industry might be in the process of being disrupted.

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The Eden Myth And How Demagogues, Hucksters And Con Artists Use It To Deceive Us

2023 January 22
by Greg Satell

The story of the Garden of Eden is one of the oldest in recorded history, belonging not only to the world’s three major Abrahamic faiths of Judaism, Christianity and Islam, but also having roots in Greek and Sumerian mythology. It’s the ultimate origin archetype: We were once pure, innocent and good, but then were corrupted in some way and cast out.

As Timothy Snyder points out in his excellent course on The Making of Modern Ukraine, this template of innocence, corruption and expulsion often leads us to a bad place, because it implies that anything we do to remove that corrupting influence would be good and just. When you’re fighting a holy war, the ends justify the means.

The Eden myth is a favorite of demagogues, hucksters and con artists because it is so powerful. We’re constantly inundated with scapegoats— the government, big business, tech giants, the “billionaire” class, immigrants, “woke” society—to blame for our fall from grace. We need to learn to recognize the telltale signs that someone is trying to manipulate us.

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What Will Humans Do In An Artificially Intelligent World?

2023 January 15
by Greg Satell

The Argentinian writer Jorge Borges had a fascination with a concept known as the infinite monkey theorem. The idea is that if you had an infinite amount of monkeys pecking away at an infinite amount of typewriters, they would randomly create the collected works of Tolstoy and every other masterwork ever written (or that could be written).

The theorem, which has been around for at least a century, is troubling because it calls into question what it means to be human. If we can be inspired by something that could so easily be randomly generated, then what does it mean to be meaningful? Is meaning just an illusion we construct to make ourselves happy?

In recent years, the rise of artificial intelligence has transformed this theoretical dilemma into an intensely practical issue. In a world in which machines are taking over work long thought of as intensely human, what is the role of human labor? How do we create value that is distinct from what machines can do faster and cheaper? The answers will shape our future.

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2023: Making The Shift From Disruption To Resilience

2023 January 8
by Greg Satell

In the 1990s, a newly minted professor at Harvard Business School named Clayton Christensen began studying why good companies fail. What he found was surprising. They weren’t failing because they lost their way, but rather  because they were following time-honored principles, such as listening to their customers, investing in R&D and improving their products.

As he researched further he realized that, under certain circumstances, a market becomes over-served, the basis of competition changes and firms become vulnerable to a new type of competitor. In his 1997 book, The Innovator’s Dilemma, he coined the term disruptive technology.

It was an idea whose time had come. The book became a major bestseller and Christensen the world’s top business guru. Yet many began to see disruption as more than a special case, but a mantra; an end in itself rather than a means to an end. Today, we’ve disrupted ourselves into oblivion and we desperately need to make a shift. It’s time to move toward resilience.

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Top Posts of 2022

2022 December 18
by Greg Satell

At the beginning of this year, I wrote that the theme for 2022 would be Surviving Change and I think that’s been borne out. We’ve had so many shocks to the system that all of the happy talk about disruption has become not only juvenile and naive, but downright irresponsible. If anything, we’ve learned how hard change really is.

Still, it’s undeniable that big changes are underway. Certainly, we’re in the midst of a major generational shift as the Millennials begin to take over, with the Zoomers coming up right behind them. Also the CHIPS Act and other legislation passed represent the biggest investments in our future that we’ve made for generations.

When I look back at my most popular posts over the last year, two themes begin to shine through. First, that change is hard and we need to be much more methodical in how we pursue it. Second, that we have an incredible capacity to fool ourselves that we need to be vigilant about. Take a look through for yourself and let me know what you see emerge.

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The 2022 Digital Tonto Reading List

2022 December 11
by Greg Satell

“Don’t believe everything you think” has become something of a mantra of mine. It’s a simple idea, but desperately hard to accomplish. Once we get an idea in our heads, confirmation bias kicks in and we go looking for evidence that supports it while ignoring facts which would point us in another direction.

What makes the problem even more pervasive is that we tend to get our ideas from people around us who are exposed to the same information sources we are. So our social networks reinforce our biases and increase our level of certainty. That’s how we end up going in very wrong directions and making big mistakes.

One way out of the trap is to read widely. Looking through the books I’ve read over the past year I’m struck by the contrasting points of view and how different they are from past lists. Every year is an opportunity to learn more and see farther, which is what Borges probably meant when he said, “I have always imagined that Paradise will be a kind of library.”

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Stop Expecting People To Act Rationally! Here’s Why:

2022 December 4
by Greg Satell

For decades, economists have been obsessed with the idea of “enlightened self-interest,” building elaborate models based on the assumption that people make rational choices. Business and political leaders have used these models to shape competitive strategies, compensation, tax policies and social services among other things.

It’s clear that the real world is far more complex than that. Consider the prisoner’s dilemma, a famous thought experiment in which individuals acting in their self-interest make everyone worse off. In a wide array of real world and experimental contexts, people will cooperate for the greater good rather than pursue pure self-interest.

We are wired to cooperate as well as to compete. Identity and dignity will guide our actions even more than the prospect for loss or gain. While business schools have trained generations of managers to assume that they can optimize results by designing incentives, the truth is that leaders that can forge a sense of shared identity and purpose have the advantage.

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3 Important Lessons That Monkeys Can Teach Us About Business And Life

2022 November 27
by Greg Satell

Franz Kafka was especially skeptical about parables. “Many complain that the words of the wise are always merely parables and of no use in daily life,” he wrote. “When the sage says: ‘Go over,’ he does not mean that we should cross to some actual place… he means some fabulous yonder…that he cannot designate more precisely, and therefore cannot help us here in the very least.

Business pundits, on the other hand, tend to favor parables, probably because telling simple stories allows for the opportunity to seem both folksy and wise at the same time. When Warren Buffet says “Only when the tide goes out do you discover who’s been swimming naked,” it doesn’t sound so much like an admonishment.

Over the years I’ve noticed that some of the best business parables involve monkeys. I’m not sure why that is, but I think it has something to do with taking intelligence out of the equation. We’re often prone to imagining ourselves as the clever hero of our own story and we neglect simple truths. That may be why monkey parables have so much to teach us.

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Change Is Always About Identity

2022 November 20
by Greg Satell

In an age of disruption, the only viable strategy is to adapt. Today, we are undergoing major shifts in technology, resources, migration and demography that will demand that we make changes in how we think and what we do. The last time we saw this much change afoot was during the 1920s and that didn’t end well. The stakes are high.

In a recent speech, the EU’s High Representative for Foreign Affairs and Security Policy Josep Borrell highlighted the need for Europe to change and adapt to shifts in the geopolitical climate. He also pointed out that change involves far more than interests and incentives, carrots and sticks, but even more importantly, identity.

“Remember this sentence,” he said. “’It is the identity, stupid.’ It is no longer the economy, it is the identity.” What he meant was that human beings build attachments to things they identify with and, when those are threatened, they are apt to behave in a visceral, reactive and violent way. That’s why change and identity are always inextricably intertwined.

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What You See Is How You’ll Act

2022 November 13
by Greg Satell

“Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually slaves of some defunct economist,” John Maynard Keynes, himself a long dead economist, once wrote. We are, much more than we’d like to admit, creatures of our own age, taking our cues from our environment.

That’s why we need to be on the lookout for our own biases. The truth, as we see it, is often more of a personalized manifestation of the zeitgeist than it is the product of any real insight or reflection. As Richard Feynman put it, “The first principle is that you must not fool yourself—and you are the easiest person to fool.  So you have to be very careful about that.”

We can’t believe everything we think. We often seize upon the most easily available information, rather than the most reliable sources. We then seek out information that confirms those beliefs and reject evidence that contradicts existing paradigms. That’s what leads to bad decisions. If what we see determines how we act, we need to look carefully.

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