Corporate Survival


co_cover_0208.jpgCLO, February 2008

Business firms evolve or die. The network era is crowding out the industrial era. Some organizations will not survive the journey.

Until a few hundred years ago, most people lived in the countryside, farming the land with their families. Then the industrial revolution created the greatest accumulation of wealth the world had ever seen. Farmers became factory workers.

Machines took over the physical work, and managers improved efficiency, eventually creating enough value to improve the circumstances of workers and dominate the First World’s economies. This is what most of us are accustomed to.

Nowadays, though, networks are replacing industry. We are in the midst of a great transition to an era of networks and service. Einstein’s relativity has replaced Newton’s clockwork universe, not just in physics, but in the way we regard the world. Reality emerges from the interaction of complex adaptive systems.

As a result, organizations are more like living organisms than machines. Knowledge workers have replaced factory workers. Ideas and relationships are more valuable than tangible assets. Shareholders owned the factories, but workers own their minds. Information spreading through network connections empowers workers to make decisions and take responsibility for them.

As Jan Carlzon wrote in Moments of Truth, “An individual without information can’t take responsibility. An individual with information can’t help but take responsibility.”

Why would a manager want to give up control? Carlzon again: “Problems are solved on the spot, as soon as they arise. No front-line employee has to wait for a supervisor’s permission.” Managers will give up control because it speeds up service to customers.

Today’s executives grew up in a business world managed by industrial-age rules. Deeply ingrained beliefs are difficult, if not impossible to unlearn. Many managers pay unquestioned allegiance to the vestiges of the industrial paradigm. They believe in hierarchical organizational structures, top-down control, information hoarding, rigidity, formality, competition and undervaluing intangibles.

In the opposite corner, most network-age businesspeople support flat organizations, shared responsibility, information sharing, extreme collaboration, flexibility, informality, cooperation and the importance of social capital and reputation.

Few people have a foot in both camps. The industrial-agers see the network folk as undisciplined techno-optimists. The network-agers think of the industry people as clueless reactionaries. The conflict between the two groups is building.

As people accustomed to the Internet join the workforce, they bring with them an appreciation of technologies such as instant messaging and social networks. Imagine an old-school organization where new hires in the local ranks swap information with colleagues in other silos and with customers. They will be better informed. As the saying goes, “Networks subvert hierarchy.”

This is not to say that networks will replace all hierarchies, for that leads to chaos. Someone has to sign the paychecks and mediate among the stakeholders. The challenge is to achieve the right balance, applying command-and-control as appropriate for stability and networks when they improve performance.

Traditional learning is bursting at the seams because there is always more to learn and unlearn. The amount of knowledge in the world doubles every three years. New discoveries invalidate former truths.

What is learning when knowledge is liquid and any curriculum dies in infancy? We used to learn in order to get along in the environments we take part in. Familiarity with how things worked enabled us to adapt, and adapting to one’s surroundings is still the goal of learning.

My early warning system is flashing, signaling that it’s time for business people to play a new game or take early retirement. Why the urgency? Because The object of the game is survival, and that requires crossing the great divide between where we are now and where we need to be a year from now.

We’ve lived on the left side of the divide for centuries. Enormous successes have lulled us into a complacent rhythm. We have wrought miracles: electrification, electronics, bio-tech, computers, television, mass production, biotech, trains, planes, and automobiles: you name it. I sent a letter by FedEx yesterday; scan – blip – look-up – and it will be on the other side of the country tomorrow; I shook my head and said to no one in particular, “I’m amazed that this works.”

Nonetheless, it’s time to move on. Everything is going faster, swinging further out of normal limits, and behaving erratically. We’re ripping along so fast that the wheels are about to fall off. Think demise of the planet, using up irreplaceable resources, turning up the heat, weapons of mass destruction (unlike Iraq, we have real ones), tribal and religious hatred, etc., etc., etc. This is entropy.

Metamorphosis of human consciousness

It’s quiet in the center of a hurricane, and we are feeling the gentle breezes of a swirling, earth-shaking phase change in nature of human consciousness.

Shifting from the machine-age worldview to the age of connections is not revolutionary, for revolutions are rebellions from the past. This is more than just crazed intellectuals, new laws, and blood in the streets. This is a phase change, a break from the past to a new way of being. We are at an inflection point in human history.

Ten thousand years ago, humans were preoccupied with subsistence. We rarely thought for ourselves; our behavior was largely autonomic, like that of our fellow mammals. Eat, drink, stay warm, procreate.

In ancient Greece, people thought gods controlled what went on in their minds. Several thousands years thereafter, gods continued to dominate culture, but people had fully gained self-awareness.

Four to five hundred years ago, rational thought began to crowd out divine inspiration. Descartes, Newton, Luther, and others fostered belief in a material world, governed by the laws of science. Heaven and earth were thought to be mechanical. God became a divine watchmaker; people went to work in factories.

As if life were a machine, human consciousness pictured the world as physical, not spiritual; predictable, not chaotic; on or off; right or wrong. We are leaving that world behind.

Machine-age consciousness no longer fits reality. Physical matter is not a cornerstone; matter changes when you look at it. Invisible, intangible things are more valuable than things you can touch. Quarks and the cosmos flaunt Newton‘s „Laws.“ Time is relative. Complex adaptive systems insure that nothing is certain. Everything is connected. (Various authors)

The unconnected, mechanical world had finality; things ended. In the connected world, everything is a perpetual work-in-progress. WYSIWYG is giving way to individual perspectives.

Our consciousness told us we were independent nodes; cogito ergo sum. We transmogrifying into interdependent connectors; dead meat if unhooked from our ecosystems.

Push and pull

Push is a metaphor for imposing things on people; it’s top-down. Pull is a metaphor for free choice; it’s bottom-up.

Push learning is mandated, formal, and curriculum-bounded. Pull learning is self-service, collaborative, driven by immediate need or curiosity, and unbounded.

At the point of being overwhelmed by repeated shotgun blasts of infobits, learners are turning the gun around to hunt down what they want.

They are selecting what mail, email, television programs, phone calls, and reports they want in their lives. They are accustomed to taking whatever is delivered; in the future, they will take what they choose. Media, software, training, and telephones will give them the ability to filter what sneaks under their personal firewalls. (Cross)

People will rely on systems and on other people for guidance in selecting what they want in this self-service environment.

Human editors are vital, too. RSS may be a cool way to plough through information faster, but there are more interesting RSS feeds out there than anyone could even skim. David Weinberger, Jon Udell, Tom Stewart, Irving Wladawsky-Berger, Esther Dyson, Stephen Downes, Robin Good, and others I trust are my personal guides to what’s worth investigating further. (Cross 2)

An unpredictable world has no absolutes. Knowledge management thought leader Denham Gray writes, “Pull is good up to a point, but I suspect the really useful stuff, the key discoveries, will continue to come from the edges and beyond, from outside your strong links, from the periphery. What will be key is maintaining a fine balance between self-driven inquiry, network recommendations, individual foraging, deep ‘listening’, awareness and critical review.”

From programs to platforms

Educators have traditionally focused on teaching students in a particular discipline. They sought to impart the wisdom in their curriculum. Their goal was to bring order out of chaos. Their program of instruction was determined in advance of its delivery.

In a connected world, disciplines are blinders. Unpredictability makes it futile to plan for every contingency in advance. Rigid rules and scientific laws are too brittle to flex with change.
From now on, the role of education is to provide, maintain, and improve a context that enables students to learn content among themselves. Helping students prepare to adapt to the future is more important than focusing on what has already happened. Students need to learn how to learn. In the words of this conference, they need to become effective self-directed learners.

The medium is the message

People learn best in a context of common understanding, moral conviction, emotional intelligence, and standards of conduct. Wise educators help build platforms for learning that incorporate these qualities. They delegate the control of learning to students and concentrate on nurturing platforms that enable people to exercise their new-found discretionary learning power wisely.

Crossing over

How can we make it from where we are now to where we need to be?

Collectively and individually, we need to lift our anchors to the past. Planting one foot in the future while keeping the other in the past is not feasible. We’re accustomed to living atop a foundation of beliefs, assumptions, and values that we perceived as reality. Leaving that reality behind requires us to accept that there are multiple realities. The foundation we each tie ourselves to is not some solid object that glues us to the earth. Rather, what seemed to be a foundation is more like a personal ship. We’re irrevocably tied to the ship (it’s what keeps us afloat) but the ship is free to move around.

The belief that our ships are immobile, as if moored in concrete, is learned helplessness. We see what we expect to see and are blind to possibilities beyond our expectations.

Years ago I had the pleasure of sharing lunch with Baba Ram Dass. He was preparing for a grueling book tour: twenty cities in twenty-three days. Asked if that wouldn’t be entirely disorienting, he replied that no, he would always be right here. (Here was a man who traveled on a higher plane.)

We are so deeply attached to the old world that we’re not going to think our way out of it with logic. This business of multiple realities is inaccessible to rational understanding, yet may be accessible to intuition. Contemplating the irrational can shock the mind into awareness. For example, imagine what stuff is made of. Atoms? Is matter a wave or a particle? Both? Depends on how I look at it? Bear with me: most of what you “see” comes from within your mind, not through your eyes. There’s no there there.

What’s on the other side of the divide? We won’t know the answer until we get there but we need an image in our mind’s eye or some vibrations of the new symphony so set sail. It’s hard enough to escape the gravitational pull of reality; we’ll never make it if the future is a void.

The new world I have in mind is collective; we’re all in it together, sharing thoughts, feelings, and emotions. Everything is relative; relationships are all. Nobody’s in charge. Everything is beta.

The world we are breaking free of is a simplistic story we tell our egos. It’s an over-simplification riddled with bad science, unnecessary constraints, and either/or absolutism. Its culture believes in absolute time and physical certainties, isolated events and eternal verities.

The old world is a mass delusion that humans are above plants, animals, and the rest of nature. People think they are the only thing that matters and everything else is there to serve them. We prove we’re king of the hill by reading our own press notices. “Cogito ergo sum.” I think therefore I am. Says who? Your senses? Your trust your senses? This is nonsense.

Second nature is knee-jerk, mindless activity. Mindfulness is the alert…


Starting sketch

Related: management innovation, Denial

earlier fragment on this:
The industrial revolution is over. Brains create more value than machines. Einstein’s relativity has replaced Newton’s clockwork universe, not just in physics, but in the way we regard the world.

As in nature, everything is connected to everything else. Nothing is ever finished: the world is in perpetual beta, always evolving. The future is unpredictable; nothing is certain. Ideas and relationships have become more valuable than tangible assets. Shareholders owned the factories; workers own their minds. Information spreading through network connections compels workers to take responsibility for their own decisions. Corporate leadership is in denial, thinking that change can wait a spell.

Most of today’s executives manage with industrial-age rules. They support hierarchical organizations, top-down control, information hoarding, lack of collaboration, formality, competition, and not fixing what’s not broken. In the opposite corner, network age business people support flat organizations, shared responsibility, information transparency, extreme collaboration, flexibility, informality, cooperation, and the importance of social capital and reputation. The industrial-agers see the network folk as undisciplined techno-optimists. The network-agers consider the industry people as clueless reactionaries.

The transition will ramp up in 2008. Time is accelerating. Markets are mushrooming. Connections are multiplying. People are the new decision-makers, not their managers. Volatiity requires unprecedented innovation. Net-savvy new hires will route around rigid bureaucracy. Networkers will stunningly outperform mechanical approaches.

Time for a collective swig of gin

The message from the stage at the Web 2.0 Expo: We are at an inflection point in human history. Doug Engelbart’s vision of harnessing our collective intelligence is unfolding. We’ve only just begun. The turning tide is frightening or wonderful; that’s a matter of perspective.

Tim O’Reilly told us Web 2.0 is becoming the platform for everything. It’s an amazing tool for harnessing collective intelligence. It is turning the enterprise inside out. It is the platform beneath a new way of living. We are at a turning point — a huge change in the way the world works.

Tim retold a great story from Clay Shirky. IBM’s Thomas Watson predicted the world would need about five computers. Clay points out Watson was wrong. Not in the direction you think. Watson overstated the number of computers by four. It’s all one cloud. Web 2.0 is evolving into cloud computing and the internet operating system. Ambient computing is on the way but it rides on mobile phones and sensors, not computers. It converging into one platform for the world.

Participatory is too uninspiring a word to describe what’s going on. Since the middle of the last century, we’ve received a gift: discretionary time. Confused, we didn’t make good use of it. When we weren’t taking instructions (at what we call “work”), we became accustomed to doing nothing: sitting back and letting the world go by. Watching the idiot box. From now on, we have to make better use of this gift of time. We must build and share; we must co-create the world we live in. This is a mind-blower on the order of the Industrial Revolution.

In that revolution, abandoning country life to live in cities and working in factories instead of farms put people into a state of perpetual disorientation. One thing enabled them to cope with the crisis: gin. People escaped mental chaos by becoming blotto. Gin pushcarts rolled down the streets. Swilling gin by the tankard blocks out everything.

Clay Shirky told us about one about a four-year old girl searching for something around and behind the family television. Her father asked what she was doing. She asked, “Where is the mouse?” To a four-year old, a television without a mouse is broken. If something doesn’t include you, it may not be worth sitting still for.

What are we doing collectively? Instead of drinking gin. We’re looking for the mouse.

The Blogopolis room here accommodates about a hundred people. As I write this, three or four huddles of them are recording interviews. I am sitting on the floor, beside a large screen. Three people in front of me are waving their arms in the air; they are air-bowling with Wii handhelds; the screen is their virtual bowling alley.

This is the blogging room, a freebie for people who self-identify as bloggers. You want to do something besides sit in a chair listening? This is the place. To the right, several 1′ high robotic dinosaurs are shmoozing. To my left, two people are slumped over the backs of chairs, receiving massages. Scoble’s here. Stowe Boyd is here. Dan Farber sits on the other side of the screen writing a story. A Finnish guy tells me about a web service that warns you of dangerous websites while you are on the net. I mention that for most corporate leaders, this room looks like an outtake from a science fiction flick.

As the keynotes conclude, the Blogopolis is shoulder to shoulder. Soon, people will be fanning out to continue the Expo 2.0 Expo conversation in bars and restaurants. A mash-up of Twitter, Upcoming, and an interactive map will enable them to locate friends via cell phone. They can also get a map — and a report on how big a crowd is at the bar. That’s part of the message: the formal event closes down for the day but the conversation continues on. Care for a pint of gin?

Dorothy Parker:

I like to have a martini
Two at the very most
After three I’m under the table
After four I’m under the host.

Gin is not my drink of choice. I wandered through the one-time wasteland that is now Yerba Buena Gardens reflecting on the day. Serendipity kicked in. Two guys were walking along Mission Street, next to Yerba Buena. Clay and Tim. I re-introduced myself and told them their presentations were awesome. I wasn’t buttering them up: jointly, they had delivered a wake-up call.