Happy 15th Birthday Digital Tonto!
It’s funny how things can turn out. We’re heading in a particular direction, focused on the future and things somehow go awry. We try in vain to get back on track, but instead we end up setting out in a new direction, exploring avenues we scarcely knew existed. Before we know it, we’ve gotten to a place we never dreamed of.
Many people experienced this during the pandemic. They took up a hobby, moved their place of residence, changed their job—or even switched careers. Others were diverted by a life-changing experience or a heartbreaking disappointment. John Lennon put it, “Life is what happens to you, while you’re busy making other plans.”
That is, in a nutshell, how Digital Tonto started 15 years ago. It was in the middle of the financial crisis and I was sitting in my apartment in Kyiv, wondering what I would do next when I came across an article about writing a business blog. I launched a few days later. Thanks for 15 years of support! Here are some of my favorite articles from the past year.
We Need To Take A More Evidence-Based Approach For Transformation And Change
In The Knowing Doing Gap by Jeffrey Pfeffer and Bob Sutton, the two Stanford professors show, in painstaking detail, that most enterprises fail to act on what they know. They point out that many are set up to reinforce the status quo, because mastering conventional wisdom is key to advancement.
There is a similar gap when it comes to transformation and change, but for somewhat different reasons. Decades of research and insights are largely ignored. Transformational initiatives are seen as exercises in persuasion, with practitioners designing slogans to “create a sense of urgency around change” and shift attitudes, assuming that will change behaviors.
Today we are in a change crisis. Businesses need to internalize new technologies like AI and adapt to new realities like hybrid work, but still struggle to adopt decades old skills related to lean manufacturing, agile development and cultural competency. If we are going to drive the transformations we need to compete, we need to take an evidence based approach.
Why Is There So Much Bullshit?
Pretty much everywhere you look, you’ll find bullshit. We are constantly bombarded with politicians and “experts “on TV, at conferences and on social media, spouting bullshit. An economist would tell you that it is simply impossible for so much bullshit to exist, because the market values truth, but of course that’s bullshit.
One possible reason that there is so much bullshit in the world is that there are so many bullshitters. Yet that explanation has a critical flaw. People spouting bullshit are, in most cases, completely sincere. They believe that they are truth tellers, uncovering and sharing critical wisdoms that add value and meaning to our lives.
In his famous essay, On Bullshit, philosopher Harry Frankfurt makes the case that “bullshit is a greater enemy of the truth than lies are,” because liars need to actually ascertain the truth to misrepresent it. Bullshitters, on the other hand, show complete disregard for facts. I would argue, however, that’s only half the story. We bullshit because it serves a crucial purpose.
Look Out For These 3 Telltale Signs Of Transformation Theater
When Bob Nardelli took over as CEO at The Home Depot, he was geared up for the challenge. Passed over for the CEO job at GE in a high-profile succession process, he was determined to show that he could, in fact, be a transformational leader. As Uber-consultant Ram Charan put it, ”What got Home Depot from zero to $50 billion in sales wasn’t going to get it to the next $50 billion.”
He sought to replace the retail firm’s famously decentralized, entrepreneurial culture with the six-sigma driven performance culture he brought from GE. He intended to ruthlessly seek out ways to cut costs, and streamline operations. Under Nardelli, everything would be measured to his exacting standards.
It didn’t turn out well. The truth is that what Nardelli did was not genuine transformation, but transformation theater. Despite the hype, he took the company backward and it lost ground. In the end, he was fired, but walked away with $210 million. Today, Nardelli has spawned an army of imitators. We need to learn to recognize these 3 telltale signs.
When evolutionary biologist Richard Dawkins claimed that genes are selfish, he didn’t mean that he thought they are cognisant, with a will of their own. Rather, that genes act as if they are selfish, working to replicate themselves in the most efficient way, regardless of what that entails for the organism that carries them. In other words, the phrase “survival of the fittest” applies to our genes, not to us.
The concept led to the idea of memes, elemental bits of culture that compete to be replicated in the marketplace of ideas. Then Susan Blackmore introduced the concept of temes, elemental bits of technology, like lines of code sitting in Github, that are competing to replicate in order to survive in future technological artifacts.
Once you start thinking about selfish genes, memes and temes, and begin applying those concepts to artificial intelligence, it becomes clear that AI must be selfish as well, competing to get itself replicated through us. That in turn, raises some very important questions: What is the context we are creating for this competition and how will the rules affect our own fate?
Never Underestimate The Power Of Identity
In the 1990s, western-style liberal democracy was triumphant. The Berlin Wall had fallen and the Cold War had been won. Teams of diplomats and consultants rushed to spread the Washington Consensus, an agreed upon set of reforms that poor countries were pressured to undertake by their richer brethren.
Francis Fukuyama noted at the time that we had reached an endpoint in history, when one model had achieved dominance over all others. Yet even as he laid out the rational case, he invoked the ancient Greek concept of thymos, or “spiritedness,” to warn that even at the end of history, there would be some who would insist on going their own way, no matter the consequences.
That’s why any change, even if provably good, noble and just, will inevitably incur resistance. It’s a simple truth that humans form attachments to people, ideas and other things and, when those attachments are threatened, we see it as an outright attack on our identity and lash out. That’s why identity needs to be at the center of any change strategy, if it is to succeed.
This Is One Big Reason Why So Much Business Thinking Is Crap
Sometime in the 1980s, Harvard Professor John Kotter became intensely interested in how change succeeds and fails within organizations. He examined roughly 100 firms, evaluated their performance, and then interviewed executives in an effort to understand what went right, what went wrong and how things could be done better.
That led to Kotter’s 8-step change process, which still forms the basis for most change management efforts today. Six years later he teamed up with Deloitte to interview 200 more executives and, incredibly, learned nothing new but found the identical 8-steps at work. With such massive corroboration, who could question the results?
This is generally how business ideas get established and it is a very shoddy way to go about things. Case study interviews of self-serving executives are prone to enormous amounts of bias. Unless controls are put in place and corroborating research from other fields is examined, the result is likely to be more superstition and lore than fact-based analysis.
Here’s Why “Creating Awareness” Is Usually A Waste Of Time
A while back, I posted something on LinkedIn that drew a lot of angry comments, mostly from change professionals lashing out. What struck me was that while my comments were based on extensive evidence, my interlocutors seemed completely unaware of any of the facts. They even claimed that I was “using headlines to gain attention.”
The statement that mostly drew their ire was that “creating awareness is usually a waste of time.” While this is contrary to how most change management professionals are trained, the simple fact is that decades of research show that shifts in knowledge and attitudes usually don’t lead to a significant change in practice.
The truth is that change management has a startling track record of failure. McKinsey has found that 69% of transformation efforts fail. A more recent study by Bain found that only 12% succeeded and 75% had mediocre results. Misguided communication efforts are a big part of the problem. We desperately need to take a more evidence-based approach to change.
Jack Welch’s GE Was The Wrong Model To Take From The 90s. Lou Gerstner’s IBM Is The Right One
When Fortune magazine named General Electric CEO Jack Welch “Manager of the Century.” it lauded the CEO’s ability to increase the stock price and deliver consistent earnings growth. Nicknamed “Neutron Jack,” he was known as a fierce competitor and a ruthless cost cutter. In the late 20th century, he was nothing less than an icon, an example other leaders wanted to emulate.
When Lou Gerstner took over at IBM in 1993, the company was near bankruptcy. Many thought it should be broken up. Yet Gerstner saw enormous value could be unlocked through reviving the culture that made the iconic company successful in the first place. His turnaround of the firm was perhaps the most impressive in corporate history.
It’s been a quarter century since both left their jobs at the helm and it’s time to take stock on the two radically different approaches. Welch created a fiercely competitive environment. Gerstner stressed values. By now it should become clear that Gertner’s approach was far more successful, creating enormous value for IBM and for society. Welch is a cautionary tale.
Pundits Love To Blame Bureaucracy. Here’s Why You Shouldn’t Listen To Them:
When Bill Anderson joined Bayer in June of 2023, he knew that the 160-year old firm had its challenges. In addition to high debt and expensive litigation involving the herbicide Roundup, the firm also faces a slew of patent expirations and a faltering development pipeline for new drugs.
Yet Anderson has his eyes set on even a more menacing bugbear. “Bureaucracy has put Bayer in a stranglehold,” he recently wrote in Fortune. “Our internal rules for employees span 1,362 pages. We have excellent people…but they are trapped in 12 levels of hierarchy, which puts unnecessary distance between our teams, our customers, and our products.”
I’m skeptical. While pointing to a nameless, amorphous bureaucracy as the source of all evil may be convenient, it’s not at all clear to me that it’s evidence of a strategy. In fact, middle management is often crucial to enabling organizations to function, playing critical roles in helping to coordinate and execute complex tasks. We need to be careful what we cut.
If You Want To Lead, You Need To Embrace The Basic Human Need For Status
Scientists have long found that our brains evolved to accommodate more social relationships. For example, the British anthropologist Robin Dunbar’s research suggests that the optimal group size for humans is 150, significantly larger than other primates. Throughout history, humans have developed hierarchies to help us to collaborate on complex tasks.
Yet recently, pundits started advocating for flatter organizations. In 2014, Gary Hamel declared that Bureaucracy Must Die in Harvard Business Review. Around the same time, entrepreneur Brian Robertson developed the non-hierarchical Holacracy, that was adopted by firms such as Zappos and Medium.
It hasn’t gone well and the idea of leaderless organizations has largely been discredited. In The Status Game, veteran science reporter Will Storr explains why. Evolution has wired our brains to seek status in order to carve out our identity within and between groups. To lead effectively we need to support, not ignore, the basic human need for identity and status.
How “True Believers” Can Undermine Change
Journalist and Puck co-founder Tina Nguyen has been doing the rounds to promote her new book, The Maga Diaries, that chronicles her rise through, as well as her retreat from, the right-wing media ecosystem. What she describes is a carefully constructed culture that identifies, indoctrinates and then promotes ultra-conservative media personalities.
Yet these efforts are prone to failure. As MIT economist Daron Acemoglu and his colleagues have shown, in their effort to create homophily, these types of echo chambers undermine critical thought by creating filter bubbles and diminishing access to information, which makes it hard to be relevant to a wider audience.
The truth is that lasting change is always built on shared values. We can’t just preach to the choir. We need to venture out of the church and mix with the heathens. The best way to identify shared values is to listen to those who oppose what you’re trying to achieve. If you only interact with those who agree with you, you are undermining your own efforts.
If You Want To Tell A Compelling Story, Do These 3 Things
There’s a great, although perhaps apocryphal, story about Franz Kafka and a little girl. The relatively unknown author—he wouldn’t achieve great fame until after his death—met a young girl who lost her doll. Kafka helped her look for it, but to no avail. The doll was lost forever and the girl was heartbroken.
But then Kafka told her a story. The next day he brought her a letter from the doll. “Please do not mourn me, I have gone on a trip to see the world.” Kafka would bring her letters telling her of the doll’s adventures. He eventually bought her another doll and gave it to her with another note that said, “my travels have changed me.”
As the story goes, after Kafka’s death the girl found another letter hidden in the replacement doll that said, “Everything that you love, you will eventually lose, but in the end, love will return in a different form.” We can’t all write like Kafka, but with a little bit of knowledge and some practice, we can all learn to tell stories that give meaning and purpose to our messages.
Can We Finally Kill The Idea Of Leaderless Organizations?
About a decade ago, the management guru Gary Hamel wrote a highly cited article in Harvard Business Review entitled First, Let’s Fire All the Managers. He analyzed the success of Morningstar, a leading manufacturer of tomato products that operates with a flat management structure and called for other corporations to follow its lead.
“A hierarchy of managers exacts a hefty tax on any organization,” he wrote. “This levy comes in several forms. First, managers add overhead and, as an organization grows, the costs of management rise in both absolute and relative terms.” The article created a lot of buzz and helped bolster other flat models, such as Holacracy.
Yet the “flat organization” idea hasn’t caught on. “Since 1983, the size of the bureaucratic class—the number of managers and administrators in the US workforce—has more than doubled, while employment in other categories has grown by only 40%,” Hamil recently wrote. The truth is that we need managers and trying to eliminate them is a waste of time.
