Unless we’re willing to entirely hand over decision-making to machines we still need humans to make sense of the answers they suggest to us. This is just as well. For though humans, unlike computers, are very bad at calculating large sets of data; computers (unlike us) are very bad at providing sensible answers to complex questions. Making smart decisions in a complex world therefore requires employing tools to support the human, rather than employing humans to fit the tools we have built our organisations around.
Big data may have an important role to play in our highly-connected world. But big data excels in providing answers to a very narrow range of issues: inventory replenishment, automated underwriting, dynamic online offers and other ordered processes. Yet these are not the issues keeping executives awake at night. What disturbs their sleep is uncertainty: what will customers want tomorrow, what will rivals do next, and what will key staff members expect in future? Big data - of which we already have plenty (we currently produce more data every 10 minutes than we did in the 5,000 years prior to 2003) - is less a need than big knowledge: how to make sense of the data we already have to generate breakthroughs to the organisations most pressing problems.
The complexity expert, Dave Snowden, argues that ‘technology should therefore seek to support, not undermine human capabilities.’ We less want computers to make the big decisions for us and more need them to augment our natural decision-making abilities. Millennia of evolution suggests we humans are actually pretty good at surviving and thriving in a complex world. And our ability to manipulate tools to make this task easier is unrivalled in the natural world. What we mustn't do now is abdicate from our central role in decision-making in favour of a tool we've created. Humans must be firmly placed at the beginning and the end of any technology for it to have utility.
Therefore, before going down the path of more automation, more data (and more power to your CIO) consider for a moment why might big data not be the answer for you or your organisation:
Science accepts Darwin’s theory of evolution - in nature solutions emerge from trial and error. Religion believes in creation - the world being designed and set forth by an omnipotent force. In devising strategy from on high, imposing best practice top down and maintaining a power distance from ordinary workers are modern business leaders more creationist that scientific in outlook? And what should an organisation run along Darwinian principles look like anyway?
Complexity theory is currently the closest thing we have to a guide for organisations wanting to harness nature's power for surviving and thriving - as observed by Darwin. Emerging out of the natural sciences over the last few decades complexity theory provides leaders a framework in how to unleash the coiled power of their organisations: rejecting the focus on engineering outcomes, best practice dogma, and reducing humans beings - who drive progress through creating and sharing knowledge - to mere resources.
When actors in a system freely interact they create patterns (in the form of narratives) that make sense of what’s happening around them (opportunity and threats) and what can be done about it. A Darwinian leader listens intently for these insights and provides resources to any that are coherent (i.e. ideas that appear to have a good chance of solving a specific challenge). But this is only half the story. The leader will also have to develop feedback loops - free of delay and distortion - to monitor progress regularly (e.g. every few days or weeks) to see whether the ideas have become more coherent or not (i.e. delivering on self-established targets). Those that are receive more support, those that aren’t are starved to death. This is the Darwinian principle - variation and selection - the law of evolution.
Darwinian leadership requires the wisdom of the old man in the Buddhist parable who falls into the Great Yellow River. It rapidly sweeps him downstream in its raging currents, but from a lifetime of experience he knows the river is more powerful and should he fight against it, it will tire him quickly and he'll drown. Instead he concentrates on holding his breath when the current pulls him under to ready himself to jump out when, along its swirling path, it pushes him towards the river bank. Leaders must also recognise the real limits of their power and learn to navigate currents effectively - readying for the real opportunity as it arises.
The natural world, which we are all inextricably part of, despite the earnest refutal of creationists (and increasingly business gurus), can only be harnessed and ridden, not controlled or managed. Its illusionary nature - that such complexity emerges from such simple rules as 'variation and selection' - means we devise creation myths to build meaning where randomness seems to exist. This attribution error is made by many business leaders and middle-managers who, insecure in the belief that the world is actually beyond their control, develop strategies to create the illusion of certainty; structures to perpetuate it; and reduce their biggest assets - knowledge workers - to mere (human) resources to render them easy to control, measure and motivate.
It's time for organisations to recognise the Great River they traverse isn’t subject to their own myth-making, but has a power of its own that can only be navigated by trial and error.
The Sigmoid curve is a mathematical concept which has been widely used to model the natural life cycle of many things, from biological organisms to markets. Known also as the ’S’ curve (as it resembles a stretched out S lying on its side) it visually represents life’s three critical phases: learning, growth and decline and acts as a metaphor for the rise and fall of everything. It’s a powerful mechanism for looking at the bigger picture.
The 20th century was the paradigm of the industrial age, dominated by manufacturing engineering. Car firms revolutionised business far beyond their own industry boundaries, first with Ford’s assembly line in the 1920s and then Toyota’s production system in the 1980s. These also helped previously weak nations like Japan emerge into world players and cemented the 20th century as America’s. Ford’s S curve was founded in the world of scientific management and economies of scale; Toyota’s in leveraging new computing power to deliver mass customisation along the same basic production lines. And it was computerisation that ushered the modern ‘age of information’ in the 21st century. Information today dominates organisations, nations and the global economy the way capital unilaterally did yesterday. Klaus Schwab, founder of the World Economic Forum, argues that “capital is losing its status as the most important factor of production … it is being superseded by creativity and the ability to innovate - therefore by human talents.” Does this signal the emergence of another ’S’ curve?
People are now more inter-connected than at any point previously in human history, at essentially zero cost. Barriers of geography and poverty to achieving a fully-connected world are now surmountable. Knowledge (applying information wisely) is being let loose and no individual, organisation or state can own it. Knowledge is a social construct emerging from the interplay of human interaction - this new currency only grows by spending it. Attempts to hoard it (to make profit) or restrict it (to offer protection) will relegate those to the slow lane of the 20th century paradigm while the 21st century inhabitants race by in the open knowledge fast lane.
The changes for organisations will be far-reaching as more knowledge now rests outside their four walls than can possibly be contained within them. Don Tapscott points out our new paradigm is now being driven by collaboration, transparency, sharing and empowerment - from the seminal story of Goldcorp finding $3billion of gold after publishing its data on the internet to IBM investing $1billion in Linux which generated helped generate double that in annual returns and helped save their business during challenging times. As organisations become naked in the global glare of open knowledge it’s more important than ever to be surfing the right part of the Sigmoid curve. Is it time to make the leap to the new curve for you?
Views of the forest are often obscured by the trees. This metaphor helps explain why General Electric is alone amongst the founding members of the Dow Jones to still be on that list of leading companies today. Even the biggest and best organisations fail to see the forest for the trees and throw away considerable advantages.
To stay ahead of the curve an organisation must change internally as rapidly as the world outside changes - for when the pace of external change outstrips that of internal change the organisation will struggle to adapt. In such organisations - especially very successful ones - a crystallisation forms: leaders seek to replicate success by trying to engineer defined outcomes through process optimisation; a focus on style rather than substance for initial success is often delivered by reinventing or breaking outmoded rules and processes.
‘Success’ in such organisations starts to become defined by internal measures, such as hierarchical position. Good functional specialists are promoted - often on the contribution they make to internal cohesion - to their own particular level of incompetence, replacing a much needed expert for another, far less needed, incompetent manager. Behaviour in such organisations is reinforced by “meaningless sloganising and mission statements” and the result is Kafkaesque - everyone knows the system is ineffective but are powerless to change it.
But change is a constant and organisations failing to recognise this - and adapt accordingly - risk becoming the walking dead - like the founding Dow Jones alumni of 120 years ago. Today’s increasingly rapid pace of change requires organisations to be ready to undertake change far more often. Doing so at the peak of their current development (S) curve - while resources are still abundant - enables them to act from a position of strength. Doing so only after new technologies or approaches dominate the market - which has likely already started to eat into your competitive advantage and reserves - is a strategic error. Change may not kill you straight away, but it inflicts a heavy enough blow that will eventually: leaving you a zombie organisation.
Dell developed the vacant stare of the zombie prior to its buyout last year. The computer firm hadn’t made the leap to the new ’S’ curve while they were riding high. Now, they are busily sinking money from declining PC sales to finance a belated move into services, storage and software. Time will tell whether this shuffle has enough momentum for them to survive and thrive again. Another one to watch out for is yesterday’s behemoth, Microsoft. Is your organisation next?
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