New Rules in Business

Leading in the Digital Economy: Sensing and Seizing Emerging Opportunities by Joseph Jaworski ad C. Otto Scharmer

The New Rules in Business

Imagine you are milling about in a large casino with the top figures in high tech – the Gates, Gerstners, and Groves of their industries. Over at one table, a game is starting called Multimedia. Over at another is a game called Web Services. In the corner is Electronic Banking. There are many such tables. You sit at one.

“How much to play?” you ask.

“Three billion,” the croupier replies.

“Who’ll be playing?” you ask.

“We won’t know until they show up,” he replies.

“What are the rules?”

“Those will emerge as the game unfolds,” says the croupier.

“What are my odds of winning?” you wonder.

“We can’t say,” responds the house. “Do you still want to play?”

– W. Brian Arthur

What distinguishes great leaders from average ones? Brian Arthur, economist, author and professor at the Santa Fe Institute, says it is their ability to perceive the emerging nature and rules of a game as they are playing it. In today’s economy, the name of the game, who’s playing, and how they’re winning is changing at a dizzying pace – and not just for technology companies. The globalization of markets and market forces, the predominance of networking and connectedness, the increased speed of all types of communication, and the valuation of knowledge over products mean more complexity, more competition, and more change happening faster and faster. In a world of increasing returns – where early success breeds more success – a marginal lead-time can spell the difference between big gains or failure.

Companies that want to thrive in this kind of flux need to develop a critical new capacity: the ability to sense and seize opportunities as they emerge.

A New Core Capability

People who achieve industry breakthroughs or develop revolutionary ideas follow a set of five practices that we see as the heart of this new core competence. Together, they constitute one organic process.

  • observing: seeing reality with fresh eyes
  • sensing: tuning into emerging patterns that inform future possibilities
  • knowing: accessing inner sources of creativity and will
  • crystallizing: creating vision and intention
  • executing: acting in an instant to capitalize on new opportunities

Innovation, whether in the context of improving existing processes or reinventing an entire industry, is never a mechanical process. While each practice is distinct, it occurs in a fluid continuum. Two or more practices are often done in conjunction, certain practices may be repeated, and an element of each is always present in the others. The three stages of the process – what we refer to here as sensing, knowing, and executing – are common to all creative endeavors. High-performing individuals, teams, and organizations are constantly iterating through this cycle.

In summary, we found that leading in the digital economy requires sensing and recognizing emerging patterns and positioning oneself, personally and organizationally, as part of the forces of change that are continually reshaping the world. Those who are successful appear to follow practices and principles which enhance this capacity. When this capability is fully developed, leaders at every level in organizations will find that through their intentions and actions they themselves can actively participate in the unfolding of new business worlds – and the rules by which they are created.