Complexity and technology

This is an insightful piece from the NY Times about the rise of American tech giants, but it also touches on an issue which increases the VUCA score of the world (my emphasis in bold below):

“What’s happening right now is the nation-state is losing its grip,” said Jane K. Winn, also a professor at the University of Washington School of Law, who studies international business transactions. “One of the hallmarks of modernity is that you have a nation-state that claims they are the exclusive source of a universal legal system that addresses all legal issues. But now people in one jurisdiction are subject to rules that come from outside the government — and often it’s companies that run these huge networks that are pushing their own rules.”

Ms. Winn pointed to Amazon as an example. The e-commerce giant sells both its own goods and those from other merchants through its marketplace. In this way, it imposes a universal set of rules on many merchants in countries in which it operates. The larger Amazon gets, the more its rules — rather than any particular nation’s — can come to be regarded as the most important regulations governing commerce.

Source: Why the World Is Drawing Battle Lines Against American Tech Giants

Working on strategy? Use paper…

If you are working in a strategy team, or trying to grasp abstract and complex relationships, it’s hard to beat the use of paper as a communication method.  While I have three screens on my desk, I still prefer large sheets of paper for the really hard thinking.

Some recent research has supported why this is the case:

In all three tasks, the paper users were significantly more “abstract” in thinking. Digital participants reported preferring concrete rather than abstract descriptions of a behavior–for example, “making a list” would be associated with “writing things down,” rather than the “getting organized” description preferred by those taking the survey on paper.

Digital participants scored higher than the paper participants, on average, in recalling details of both the story and the car data table. But they scored lower on questions of inferred relationships and meaning…

Next time your colleagues suggest writing a strategy using PowerPoint, pull out a pencil…

Source: Screen Reading Worse for Grasping Big Picture, Researchers Find

Strategy, disruption and scanning

This is a long but worthwhile post from a VC taking aim at the overuse of the word ‘disruption’ when it’s linked to strategy.  About half way down the piece is a quote which is worth repeating. It’s from an HBR article written by the former president of PepsiCo:

…most of PepsiCo’s major strategic successes are ideas we borrowed from the marketplace–often from small regional or local competitors.

For large companies that find it hard to innovate internally, it’s worth keeping an eye on smaller ones that are more nimble.

Constantly scanning innovation both in your sector, and in adjacent sectors, is a valuable capability but one that very few organisations invest in. I recall that Texas Instruments used to employ a guy called Gene Frantz who described his role as looking for lunatics within TI with ideas that could spark new directions for the company.

Back to the article that sparked this post – it goes on to close with another great original quote:

Without a strategy you might predict the market and the technology exactly and still lose to someone who does have a strategy.

Source: Disruption is not a strategy | Reaction Wheel

Breaking paradigms – a science story

This article from The Guardian is a long, but excellent read about the health impacts of sugar.  However the story also examines something fascinating – how paradigms change in science:

In a 2015 paper titled Does Science Advance One Funeral at a Time?, a team of scholars at the National Bureau of Economic Research sought an empirical basis for a remark made by the physicist Max Planck: “A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it.”

 The researchers identified more than 12,000 “elite” scientists from different fields. The criteria for elite status included funding, number of publications, and whether they were members of the National Academies of Science or the Institute of Medicine. Searching obituaries, the team found 452 who had died before retirement. They then looked to see what happened to the fields from which these celebrated scientists had unexpectedly departed, by analysing publishing patterns.

What they found confirmed the truth of Planck’s maxim. Junior researchers who had worked closely with the elite scientists, authoring papers with them, published less. At the same time, there was a marked increase in papers by newcomers to the field, who were less likely to cite the work of the deceased eminence. The articles by these newcomers were substantive and influential, attracting a high number of citations. They moved the whole field along.

In organisations – large or small, formal or informal – it’s easy to get caught in paradigms.  New thinkers, young people and contrarians are essential in challenging accepted assumptions, and for the development of robust thinking that doesn’t fall into the trap of delivering the same outcomes.

Even when confronted with clear evidence that the paradigm is wrong, experts have trouble accepting this, and refute their own work, as evidenced by this other gem from the same article:

The National Heart, Lung and Blood Institute decided to go all in, commissioning the largest controlled trial of diets ever undertaken. As well as addressing the other half of the population, the Women’s Health Initiative was expected to obliterate any lingering doubts about the ill-effects of fat.

It did nothing of the sort. At the end of the trial, it was found that women on the low-fat diet were no less likely than the control group to contract cancer or heart disease. This caused much consternation. The study’s principal researcher, unwilling to accept the implications of his own findings, remarked: “We are scratching our heads over some of these results.” A consensus quickly formed that the study – meticulously planned, lavishly funded, overseen by impressively credentialed researchers – must have been so flawed as to be meaningless.

Just to emphasise this again: The study’s principal researcher was unwilling to accept the implications of his own findings.

This case study should make it into the leadership manual of every CEO when working with their strategy teams.

Source: The sugar conspiracy | Ian Leslie

Strategy from machines and people

The HBR online has published an intriguing piece about the formation of strategy from a combination of information synthesised by people and machines.  In essence, it’s saying that some parts of strategy formulation should be informed by rules (i.e. data) and others by intuition (i.e. people).  the concept is nicely encapsulated in the graphic below.

An integrated strategy machine is the collection of resources, both technological and human, that act in concert to develop and execute business strategies. It comprises a range of conceptual and analytical operations, including problem definition, signal processing, pattern recognition, abstraction and conceptualization, analysis, and prediction. One of its critical functions is reframing, which is repeatedly redefining the problem to enable deeper insights. Within this machine, people and technology must each play their particular roles in an integrated fashion.

 

1 W160331_REEVES_INTEGRATEDSTRATEGY_final-850x634

Source: Designing the Machines That Will Design Strategy

The value of sleep – McKinsey article

With a young family and a sometimes-heavy travel schedule, I’ve always been mindful of the value of sleep.  I’m a fan of an afternoon power-nap rather than a coffee, and believe in the power of uninterrupted sleep.
McKinsey has published a great article on this that outlines some of the research behind the need for sleep.  Among other things the article highlights that:
Scientists have found that sleep deprivation impairs this ability to focus attention selectively. Research shows that after roughly 17 to 19 hours of wakefulness (let’s say at 11 PM or 1 AM for someone who got up at 6 AM), individual performance on a range of tasks is equivalent to that of a person with a blood-alcohol level of 0.05 percent. That’s the legal drinking limit in many countries. After roughly 20 hours of wakefulness (2 AM), this same person’s performance equals that of someone with a blood-alcohol level of 0.1 percent, which meets the legal definition of drunkenness in the United States
The infographic below is useful:
You can read the full article here: http://www.mckinsey.com/business-functions/organization/our-insights/the-organizational-cost-of-insufficient-sleep

The implication for macro scale innovation cycles

This is a fascinating and long read about where the world is going to in regards to the next wave of innovation.  It’s also insightful when considering where innovation will focus in the coming years:

Intrapreneurship and skunkworks are replaced by internal innovation processes which, while ineffective at producing radical innovations, allow controllable and measurable sustaining innovation. Money that would have been spent financing external innovation is redirected back to corporate development and, perhaps, even corporate controlled research labs.

These sorts of controllable and measurable innovation processes are already taking hold, both inside and outside the corporate world. It’s no coincidence that the buzzwords in innovation the last few years have been ‘lean’ and ‘customer development.’ While these both claim to be new discoveries, they are actually old practices that fell out of favor during the installation period because they aren’t suited to radical, fast-moving innovation; they only work when innovation is slower and more predictable: Steve Jobs could not have used customer development to create the Apple computer; Henry Ford’s quip that if he asked his customers what they wanted they would have said “a faster horse” are both acknowledgements of this.

The hallmark of a new technological revolution is that the innovation trajectory is unknown: lean doesn’t work on early adopters because they will use anything novel (i.e. the Altair as an MVP was pretty well useless in predicting what mainstream customers would want in a personal computer); customer development doesn’t work when you’re developing a general purpose technology. In general, you can’t iterate your way to radical innovations, almost by definition.

Source: The Deployment Age | Reaction Wheel

Cities, companies and innovation

Geoffrey West is a physicist by training, but has crossed over into theories of biology, and then to theories about cities.  More recently he has started to look at companies, and some of his research is illuminating with respect to the need for innovation in organisations.

His observation about cities is that they need diversity in order to grow, and companies need similar:

“…in what way can you make a company more like a city?” West asks. “You allow at least part of it to be a little more organic, to grow in a natural way, and let it be much more open to having mavericks, naysayers, and people with odd ideas hanging around. Allow a little bit more room for bullshit. You need some mechanism to somehow break this straitjacket that big companies take on as they grow.”

You can get further context from the full article here:  The Fortune 500 Teller

VUCA – volatile, uncertain, complex, and ambiguous

One of the themes emerging from a range of sources in the foresight arena around the world is that it’s increasingly hard to understand where the world is going.  An acronym that helps describe this is VUCA:

It’s an acronym developed by the U.S. military after the collapse of the Soviet Union to describe a multipolar world: volatile, uncertain, complex, and ambiguous. Volatility reflects the speed and turbulence of change. Uncertainty means that outcomes, even from familiar actions, are less predictable. Complexity indicates the vastness of interdependencies in globally connected economies and societies. And ambiguity conveys the multitude of options and potential outcomes resulting from them. Where once we could count on the seeming certainty and predictability of binary choices — capitalism versus communism, democracy versus autocracy, Corn Flakes versus kasha — choices and consequences are now far less clear.

Source: Leading in an Increasingly VUCA World

Economist on the relevance of the blockchain

 

 

 

 

If you are not familiar with the BlockChain, the Economist has an excellent primer on it which goes beyond the simple first-mover of BitCoin.

The graphic below is a good explanation about how the chain is built, and how it’s kept unique.

Towards the end of the article is a section that nails why it’s important beyond currency:

One of the areas where such ideas could have radical effects is in the “internet of things”—a network of billions of previously mute everyday objects such as fridges, doorstops and lawn sprinklers. A recent report from IBM entitled “Device Democracy” argues that it would be impossible to keep track of and manage these billions of devices centrally, and unwise to to try; such attempts would make them vulnerable to hacking attacks and government surveillance. Distributed registers seem a good alternative.

The sort of programmability Ethereum offers does not just allow people’s property to be tracked and registered. It allows it to be used in new sorts of ways. Thus a car-key embedded in the Ethereum blockchain could be sold or rented out in all manner of rule-based ways, enabling new peer-to-peer schemes for renting or sharing cars. Further out, some talk of using the technology to make by-then-self-driving cars self-owning, to boot. Such vehicles could stash away some of the digital money they make from renting out their keys to pay for fuel, repairs and parking spaces, all according to preprogrammed rules.

 

Source: The great chain of being sure about things