In 1997, when Clayton Christensen first published The Innovator’s Dilemma and introduced the term “disruptive innovation,” it was a clarion call. Business leaders were put on notice: It is no longer enough to simply get better at what you already do, you need to watch out for a change in the basis of competition that will open the door for a disruptive competitor.
Today, it’s become fashionable for business pundits to say that we live in a VUCA era, one that is volatile, uncertain, complex and ambiguous, but the evidence says otherwise. Increasingly researchers are finding that businesses are enjoying a period that is less disruptive, less competitive and less dynamic.
The truth is that we don’t really disrupt businesses anymore, we disrupt people and that’s truly becoming a problem. As businesses are increasingly protected from competition, they are becoming less innovative and less productive. Americans, meanwhile, are earning less and paying more. It’s time we stop doubling down on failed ideas and begin to right the ship.
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.
Every era contains a prism of multitudes. World War I gave way to the “Roaring 20s” and a 50-year boom in productivity. The Treaty of Versailles sowed the seeds to the second World War, which gave way to the peace and prosperity post-war era. Vietnam and the rise of the Baby Boomers unlocked a cultural revolution that created new freedoms for women and people of color.
Our current era began with the 80s, the rise of Ronald Reagan and a new confidence in the power of markets. Genuine achievements of the Chicago School of economics led by Milton Friedman, along with the weakness Soviet system, led to an enthusiasm for market fundamentalism that dominated policy circles.
So it it shouldn’t be that surprising that veteran Republican strategist Stuart Stevens wrote a book denouncing that orthodoxy as a lie. The truth is he has a point. But politicians can only convince us of things we already want to believe. The truth is that we were fundamentally mistaken in our understanding of how the world works. It’s time that we own up to it.
In 1993, when asked about his vision for the failing company he was chosen to lead, Lou Gerstner famously said, “The last thing IBM needs right now is a vision.” What he meant was that if IBM couldn’t figure out how to improve operations to the point where it could start making money again, no vision would matter.
The truth is that anyone can have a vision. Look at any successful organization, distill its approach down to a vision statement and you will easily be able to find an equal or greater success that does things very differently. There is no silver bullet. Successful leaders are not the ones with the most compelling vision, but those who build the skills to make it a reality.
The Covid-19 pandemic demanded we transform across multiple planes. Businesses had to abruptly shift to empower remote work. Professionals were suddenly trading commutes and in-person meetings for home schooling and “Zoom fatigue.” Leaders needed to reimagine every system, from storefronts to supply chains to educational institutions.
It was a brutal awakening, but we can now see the light at the end of the tunnel. In fact, a recent McKinsey Global Survey found that 73% of executives believed that conditions will be moderately or substantially better in the next year. Globally, the World Bank predicts 4% growth in 2021, a marked improvement over 2020’s 4.3% drop.
Still, while the crisis may be ending, the need for fundamental change has not. Today leaders must reinvent their organizations on multiple fronts, including technological, environmental, social and skills-based transformations. These pose challenges for any organization and research suggests that traditional approaches are unlikely to succeed. Here’s what will:
Since the early days of the Industrial Age, there have been competing visions about the effects of technology. Mary Shelley’s Frankenstein monster has been the model for technology gone awry while, ironically, Karl Marx’s vision of techno-utopianism has been adopted by avid capitalists and Silicon Valley libertarians.
At the heart of the debate lies automation. When we use machines to perform tasks formerly done by humans we unlock multiple effects. The most obvious, of course, is that somebody is out of a job, less obvious are how technology affects productivity and creates new industries, which we hope will create more and better jobs.
Yet there’s no guarantee that technology will raise all boats. Markets are complex ecosystems and things can’t always be broken down into simple, linear relationships. What we can do, however, is get a better understanding of how automation affects our society. Only then can we build a consensus about what we want outcomes to look like and work toward them.
One of the things I’ve learned over the years is just how hard it is to get things right. As a CEO just about every decision I made was one that couldn’t have been made lower down. They were the tough calls with no easy answers. As an author, I spent countless hours fact checking along with my publisher. We corrected hundreds of errors.
Yet read through the business press and you’ll find no shortage of simple rules and slogans that supposedly unlock success. We’re told to “innovate or die,” to fight a “war for talent” and to “find our why.” Yet as Philip M. Rosenzweig points out in The Halo Effect, many of these notions break down under more rigorous analysis.
The truth is that leadership is the art of managing the ambiguous, or as Stanley McChrystal has put it, “a complex system of relationships between leaders and followers, in a particular context, that provides meaning to its members.” In other words, things are never simple., but here are some things I wish someone had told me a long time ago. I hope they help.
Never has the need for transformation been so dire or so clear. Still, that’s no guarantee that we will muster the wisdom to make the changes we need to. After all, President Bush warned us about the risks of a global pandemic way back in 2005 and, in the end, we were left wholly vulnerable and exposed.
It’s not like pandemics are the only thing to worry about either. A 2018 climate assessment warns of major economic impacts unless we make some serious shifts. Public debt, already high before the current crisis, is now exploding upwards. Our electricity grid is insecure and vulnerable to cyberattack. The list goes on.
All too often, we assume that mere necessity can drive change forward, yet history has shown that not to be the case. There’s a reason why nations fail and businesses go bankrupt. The truth is that if a change is important, some people won’t like it and they will work to undermine it in underhanded and insidious ways. That’s what we need to overcome.
Scientists studying data from Mars recently found that the red planet may have oceans worth of water embedded in its crust in addition to the ice caps at its poles. The finding is significant because, if we are ever to build a colony there, we will need access to water to sustain life and, eventually, to terraform the planet.
While it’s become fashionable for people to lament short-term thinking and “quarterly capitalism,” it’s worth noting that there are a lot of people working on—and a not insignificant amount of money invested in—colonizing another world. Many dedicate entire careers to a goal they do not expect to be achieved in their lifetime.
The truth is that there is no shortage of organizations that are willing to invest for the long-term. In fact, nascent technologies which are unlikely to pay off for years are still able to attract significant investment. The challenge is to come up with a vision that is compelling enough to inspire others, while still being practical enough that you can still make it happen.
Every new era seems to start with turmoil. World War I gave way to the “Roaring 20s” and a 50-year boom in productivity. However, the Treaty of Versailles sowed the seeds of a second World War and the post-war era. Vietnam and the rise of the Baby Boomers unlocked a cultural revolution that created new freedoms for women and people of color.
Our current era started with the 80s, the rise of Ronald Reagan and a new confidence in the power of markets. Genuine achievements of the Chicago School of economics led by Milton Friedman, along with the weakness Soviet System, led to an enthusiasm for market fundamentalism that dominated policy circles.
So it is surprising, to say the least, that veteran Republican strategist Stuart Stevens recently wrote a book saying that it was all a lie. Since 2000, in his telling, much of what we’ve been told has been basically a con job. The truth is he has a point. But even more important than the lies politicians tell us are the lies we’ve been telling ourselves. Here are the three biggest:
Or install manually
Copy and paste the following Google tag code onto every page of your website, immediately after the element. Don’t add more than one Google tag to each page.
