In 2014, when Silicon Valley was still largely seen as purely a force for good, George Packer wrote in The New Yorker how tech entrepreneurs tended to see politics through the lens of an engineering mindset. Their first instinct was to treat every problem as if it could be reduced down to discrete variables and solved like an equation.
Despite its romantic illusions, the digital zeitgeist merely echoed more than a century of failed attempts to generalize engineering approaches, such as scientific management, financial engineering, six sigma and shareholder value. All showed initial promise and then disappointed, in some cases catastrophically.
Proponents of the engineering mindset tend to blame its failures on poor execution. Surely, logic would suggest that as long as a set of principles are internally consistent they should be externally relevant. Yet the problem is that reality is not simple and clear-cut, but complex and nonlinear, which is why we need be ready to adapt to the unexpected and nonsensical.
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There’s no doubt that capitalism in America is in bad shape. Higher market share concentration in industry is leading to higher profits for corporate giants, but also to higher prices and lower wages along with decreased innovation and productivity growth as well as a long-term decline in entrepreneurship.
You would think that the rise of progressive politicians like Bernie Sanders and Alexandria Ocasio-Cortez would be responsible for the decline in the power of capitalism and the demise of free markets. However, a new book by NYU finance professor Thomas Philippon, called The Great Reversal, argues exactly the opposite.
In fact, he shows through meticulous research how capitalists themselves are killing capitalism. Through the charade of “pro-business” policies, industry leaders have been increasing regulation and limiting competition over the past 20 years. We need to right the ship and return to an embrace of free markets, entrepreneurship and innovation.
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The industrial revolution of the 18th century was a major turning point. Steam power, along with other advances in areas like machine tools and chemistry transformed industry from the work of craftsmen and physical labor to that of managing machines. For the first time in world history, living standards grew consistently.
Yet during the 20th century, all of that technology needed to be rethought. Steam engines gave way to electric motors and internal combustion engines. The green revolution and antibiotics transformed agriculture and medicine. In the latter part of the century digital technology created a new economy based on information.
Today, we are on the brink of a new era of innovation in which we will need to rethink technology once again. Much like a century ago, we are developing new, far more powerful technologies that will change how we organize work, identify problems and collaborate to solve them. We will have to change how we compete and even redefine prosperity itself.
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I first became interested in transformation in the fall of 2004. I was managing a leading news organization in Kyiv, Ukraine when the Orange Revolution broke out. It was an amazing thing to witness and experience. Seemingly overnight, a habitually dormant populace suddenly rose up and demanded change.
One of the things that struck me at the time is how no one really knew what was going on or what would happen next—not the journalists I spoke to in the newsroom everyday, not the other business leaders and certainly not the political leaders. Anyone with any conventional form of power seemed to have completely lost their ability to shape events.
That’s what started me on my 15 year-long journey to understand how transformation works that led to my book, Cascades. What I found was that many traditional notions about change management are not only wrong, they can actually kill a transformational effort even before it really starts. Here are five myths that you need to avoid if you want to bring change about.
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16 year-old girl Gracie Cunningham created a firestorm recently when she posted a video to TikTok asking “is math real?” More specifically, she wanted to know why ancient mathematicians came up with algebraic concepts such as “y=mx+b.” “What would you need it for?” she asked, when they didn’t even have plumbing.
The video went viral on twitter, gathering millions of views and the social media universe immediately pounced, with many ridiculing how stupid it was. Mathematicians and scientists, however, felt otherwise and remarked how profound her questions were. Cornell’s Steve Strogatz even sent her a thoughtful answer to her question
We often overlook the value of simple questions, because we think intelligence has something to do with ability to recite rote facts. Yet intellect is not about knowing all the answers, but in asking better questions. That’s how we expand knowledge and gain deeper understanding. In fact, the most profound answers often come from seemingly silly questions.
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The world today just seems to move faster and faster all the time. From artificial intelligence and self-driving cars to gene editing and blockchain, it seems like every time you turn around, there’s some newfangled thing that promises to transform our lives and disrupt our businesses.
Yet a paper published by a team of researchers in Harvard Business Review argues that things aren’t as they appear. They point out that total factor productivity growth has been depressed since 1970 and that recent innovations, despite all the hype surrounding them, haven’t produced nearly the impact of those earlier in the 20th century.
The truth is that the digital revolution has been a big disappointment and, more broadly, technology and globalization have failed us. However, the answer won’t be found in snazzier gadgets or some fabulous “Golden Era” of innovation of years long past. Rather we need to continually innovate how we innovate to solve problems that are relevant to our future.
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“I hate consensus,” legendary Silicon Valley coach Bill Campbell used to growl. The problem, as the authors explain in the book, Trillion Dollar Coach, wasn’t that he didn’t want people to get along, but that an easy consensus often leads to groupthink and inferior decisions. It’s often just easier to fall in line than to engage in vigorous debate.
Research bears this out. In one study where college students were asked to solve a murder mystery, homogenous groups that formed an easy consensus felt more successful, but actually performed worse than more diverse teams that argued and voiced different viewpoints. When everybody agrees, nobody questions.
Make no mistake. If an idea is big enough, some people aren’t going to like it. Some will argue against it passionately and others may even try and actively undermine it. Yet rather than working to silence those voices, we need to learn to bring them to the fore. That’s how we can test our assumptions, consider other alternatives and, ultimately, come up with better ideas.
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For decades, the dominant view of strategy was based on Michael Porter’s ideas about competitive advantage. In essence, he argued that the key to long-term success was to dominate the value chain by maximizing bargaining power among suppliers, customers, new market entrants and substitute goods.
Yet digital technology blew apart old assumptions. As technology cycles began to outpace planning cycles, traditional firms were often outfoxed by smaller competitors that were faster and more agile. Risk averse corporate cultures needed to learn how to “fail fast” or simply couldn’t compete.
Today, as the digital revolution is coming to an end, we will need to rethink strategy once again. Increasingly, we can no longer just move fast and break things, but will have to learn how to prepare, rather than just adapt, build deep collaborations and drive skills-based transformations. Make no mistake, those who fail to make the shift will struggle to survive.
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The March on Washington, in which Martin Luther King Jr. delivered his famous “I Have a Dream” speech, is one of the most iconic events in American history. So it shouldn’t be surprising that when anybody wants to drive change in the United States, they often begin with trying to duplicate that success.
Yet that’s a gross misunderstanding of why the march was successful. As I explain in Cascades, the civil rights movement didn’t become powerful because of the March on Washington, the March on Washington took place because the civil rights movement became powerful. It was part of the end game, not an opening shot.
Unfortunately, many corporate transformations make the same mistake. They try to drive change without preparing the ground first. So it shouldn’t be surprising that McKinsey has found that only about a quarter of transformational efforts succeed. Make no mistake, transformation is a journey, not a destination, and you start by preparing the ground first.
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In many ways, 2009 seems like a prelude to 2020. A global economy that many thought to be roaring just a year before, all of the sudden just went up in flames. It appeared that the world–or at least the world as we knew it—was ending and, in some sense, it was. Nothing would ever be the same after 2009.
2009 was just as much a turning point for me personally. The founder and chief shareholder of our media company in Ukraine had decided to sell it to a chocolate tycoon named Petro Poroshenko and I decided to leave my position as Co-CEO. Without much else to do, I started a blog in my Kyiv apartment and Digital Tonto was born!
That seems like a lifetime ago. In 2009, the mobile web really wasn’t a thing yet and artificial intelligence wasn’t even on the radar screen. I had no idea that my little blog would turn into a new career, complete with two books and over 50 articles in Harvard Business Review, but that all happened! As in past years, I’m celebrating with some of my favorite articles.
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