Happy 12th Birthday Digital Tonto!
I started Digital Tonto in 2009, at the height of the financial crisis. I was living in Kyiv and it felt like the world was ending. As the country descended into chaos, it would elect the hopelessly corrupt Viktor Yanukovych as President, who would shatter whatever norms of decency were left and leave the country in tatters.
The past year, with a global pandemic, a sharp economic downturn and political turmoil not seen since the 1850s, has had a similar feel. Yet that earlier experience gave me a sense of calm and hope. In the end, Ukraine made it through and is, in many ways, better off for the experience. We seem to be pulling through as well.
You never really know what’s around the next bend. Just like few saw the financial crisis coming in 2009, or the pandemic coming in 2020, I had no idea about the community that would coalesce around Digital Tonto or where it would take me. All I know is that I’m grateful and looking forward to the year ahead. Here are some of my favorite posts from the last year.
Why Change Management Has To Change
Organizational transformation projects have become notoriously unsuccessful. The fact is that the practice of change management was developed for a very different time and business environment. Trying to apply the same principles to the type of changes we need to tackle today is, perhaps not surprisingly, not very effective.
More specifically, research shows that in 1975, right before the practice of change management first arose, 83% of the average US corporation’s assets were tangible assets, such as plant, machinery and buildings, while by 2015, 84% of corporate assets were intangible, such as licenses, patents and research.
In other words, back then change usually involved some investing in some strategic asset, but today the most important changes have to do with people; what they believe, how they think and how they act. That changes things entirely, which is why change management has to change.
These 4 Paradigm Shifts Will Define The Next Decade
Humans love patterns, which is why we build mental models for everything from how we get to work in the morning to how we perceive events as they unfold. For the most part, these models serve us well, allowing us to function much more efficiently than if we had to fully think through the consequences of each and every action.
That’s why we need to be constantly on the watch for inflection points. It’s so easy to dismiss exceptions to the models we build for ourselves as random anomalies that we often miss when the world has changed and no longer conforms to what we expect. When that happens, we run the risk of getting things horribly wrong.
This article presents four such paradigm shifts that I believe to be underway. Take a look and let me know if you agree.
The Digital Era Is Over. Long Live Innovation!
Over the past 30 years or so, digital technology has become synonymous with innovation. Driven by Moore’s Law, the ability to double chip efficiency every 18 months or so, Silicon Valley created wondrous things and, much like earlier technologies like the railroads and the automobile, built great fortunes. Today nine of the ten most valuable companies in the world are digital companies.
Perhaps not surprisingly, the pace of innovation in digital technology is slowing down. In the late 90s, the combination of the personal computing revolution combined with the Internet to produce a tidal wave of exciting new technologies and a productivity boom. However, today’s “unicorns,” like Uber and Snapchat, produce little in terms of genuine impact.
Yet to only look at digital misses much, if not most, of the story. New technologies, based on atoms rather than bits, are improving exponentially. Some synthetic biology technologies, such as CRISPR and mRNA, have gotten media attention, but others, such as the revolution in materials science, have mostly flown under the radar.
Why Consensus Kills Innovation
Managers like consensus. It makes their job easier. When everybody agrees, you don’t have to expend the effort to herd all the cats to get them to go in the same direction, you just point the way and everybody files in. You can execute a strategy flawlessly, keep morale high and move forward quickly.
Unfortunately, consensus often makes it much less likely that you will have the right strategy or be going in the right direction. Decades of studies have shown the dangers of conformity and the importance of dissent for producing innovation. If everybody agrees all the time that is not evidence of a great culture, but a stagnant one.
Good leaders work hard not to simply listen to dissent, but to actively uncover it. They build a culture of trust that can handle vigorous debate, where people are willing to voice their opinions and listen to those of others without it getting personal. That is what an innovative culture looks like.
10 Principles for Transformational Change
Throughout history many have sought to create change and most have failed. Just in the last decade we’ve seen the Arab Spring rise up, only to fall back down again. #Occupy took to the streets in a massive show of civil disobedience, but dissipated within months, with little to show for it. George Floyd’s tragic death led to protests, but little tangible change.
Yet some have succeeded brilliantly. The Color Revolutions in Eastern Europe brought a better life for tens of millions of people. The LGBTQ movement overcame literally centuries of stigma, reversing attitudes about same-sex marriage in less than a decade. Elon Musk almost single handedly built a market for electric vehicles.
What I found in the research that lead to my book, Cascades, is that the ones that prevailed all ended up looking very much alike. Starting out with very different challenges, philosophies and personalities, they eventually all arrived at the same principles that led them to victory. Here are the ten most important ones.
4 Things Companies Need To Build An Innovation Ecosystem
Traditionally, firms were organized by industry. You competed with a defined set of rivals on things like price, quality and service. Strategy was seen as a game of chess, in which we would plan out moves and countermoves to gain a competitive advantage and, through strong execution, would hope to make that advantage sustainable over time.
Yet today, we compete in an ecosystem-driven world in which power no longer rests at the top of value chains, but emanates from the center of networks and we need to build collaborative ecosystems in order to compete. Strategy is no longer a game of chess, more like a MMO role-playing game, where we are constantly building relationships and forming alliances.
The truth is that we need to update our mental models. Old notions of strategy are no longer effective. In an ecosystem-driven world we need to focus less on leveraging bargaining power and more on widening and deepening connections. This article outlines the basic building blocks of an effective ecosystem strategy.
The Eerie Parallels Between the 1920s And Today Should Worry Us
Looking for historical parallels can often be problematic. History is long, so you can always find some example, somewhere to fit any argument. Combine that with the aura of authority and inevitability that historical patterns often convey and you have all the elements of delusional thinking.
Still, the parallels between the 1920s and today should not be ignored. Back then, like today, we were emerging from a financial panic and a pandemic. We were also going through a number of important shifts with regard to technology, globalization and migration. We did not handle the societal stressors well and paid the price for it in the 1930s.
Still, the past is not necessarily prologue. The 1930s were not the inevitable result of impersonal historical forces, but of choices consciously made. We could have made different ones. Today we have the opportunity to learn from the past, make different choices and, hopefully, plot a very different course.
The 2020s Will Be An Era Of Atoms, Not Bits
The most impactful technology over the last year didn’t come from Apple, Amazon, Microsoft or Google. It wasn’t hacked together from kids in their garage during a few weeks of coding. In fact, it wasn’t developed anywhere near Silicon Valley, but came from Philadelphia and took 25 years to come to fruition.
The mRNA technology that created Moderna and Pfizer vaccines is just the start. Over the next decade, we’ll see a whole range of new technologies involving atoms, and molecules, genes and proteins rather than bits and bytes and there is potential to far outstrip what was accomplished during the digital age.
The truth is that even at this late date, information technology only makes up about 6% of GDP in advanced countries. Obviously, there is a whole lot more potential in the other 94%. Still, to leverage the opportunities ahead we’ll have to learn how to collaborate and compete very differently than we did in the digital age.
4 Things Every Business Leader Should Know (But Most Don’t)
Nothing really prepares you to be a leader. Business schools are notoriously bad at teaching leadership, but even the military academies, which make leadership development a primary focus, don’t really create leaders. It is, perhaps by necessity, a “learn on the job” type of thing.
Everybody who has ever led an organization of any kind will tell you that you never really understand the burdens of responsibility until the weight has been put on your shoulders. It’s kind of like being a parent, you try to seek out the best advice that you can and learn as you go, but every organization (just like every child) is different.
Nevertheless, here are four things I’ve learned along the way. I hope you find them helpful!
Strategy In A Post-Digital World
The digital era was one that favored agility. As technology cycles outpaced planning cycles, those who moved fast and iterated, for the most part, outperformed those who moved more deliberately and thought things through. Investors tended to favor managers who sought out risk rather than those who were risk averse.
Yet the future is unlikely to look like the past. The next wave of technologies will be far too complex to simply wait to adapt. Firms are already investing in things like quantum computing years before the technology can produce anything of practical value because they know if they don’t build the skills today for the technologies of tomorrow, they could end up years behind.
Perhaps most of all, we will need to make the shift from disrupting markets to taking on grand challenges to solve problems like cancer, aging and climate change. That will take more than simply moving fast and breaking things. We will have to learn how to widen and deepen connections and build complex collaborations to compete in a post-digital world.
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So those are some of my favorite posts over the last year or so. Thank you all for your continued support. See you next year!
– Greg
Thanks. I re=read your ‘top hits’ and sent several ones to those who I thought might benefit from your insights.
As a retired executive interested in innovation, leadership and in volunteer mentoring of Post Secondary Deans of Engineering and University Vice Presidents (Research), I find your articles relevant, sometimes reinforcing my life long learning, and helpfully insightful, pointing out wisdom you have gained that I now see as important determinants of organizational (and individual) success.
Thanks again.
Stay well,
Ken
Congratulations.
What is your opinion on Blockchain technology and its future application? For example, cryptocurrencies such as Ethereum or Cardano, which proclaim to create new scalable digital platforms to be used for “Dapps” (decentralized applications), which supposedly will lead to the “Web 3.0”, where digital companies like Google and Facebook can’t monetize private people’s info.
Do you believe any of the following:
a) The cryptosphere and its technologies is over-hyped and lacks sufficient viable use cases to justify its large collective market capitalization of $1.8 Trillion?
or
b) Putting valuation aside, Blockchain technology may be in its nascent stages, but in another 10-20 years it could create lots of wealth to society due to unforeseen applications, like the Internet in 1990 or Electricity before its transformation of industrial society?
Thanks so much Ken!
John,
I’m not an expert on Blockchain, but it does seem to be a bit overhyped. One interesting thing to look at is the “risks” section of Coinbases IPO filing.
I hope that’s helpful.
Greg