A profound shift is underway - described by Deloitte as ‘The Big Shift’ - which sees a marked decline in the perception of the ‘world as a machine’. This contains far-reaching opportunities for leaders who can embrace the new paradigm (a concept, value and set of techniques to approach challenges) and potentially disastrous consequences for those who can’t or won’t
Despite the best attempts of very smart people we continually see that interference in the affairs of sovereign nations fails to create stable democracies with western values (see: The Middle-East). We should also notice that massive interventions in the global economy (in the form of QE and austerity) fail to reduce volatility or stimulate growth (see: Greece and the European economy). And at the micro-level organisations are producing decreasing returns on net assets due to falling labour productivity (despite 50 years of technological advance), and declining customer loyalty (in the face of increased choice).
The problem for modern leaders is that a dominant narrative clouds decision-making - the ‘organisation is a machine’. This extension of Cartesian reductionism - where everything is explainable be reducing the whole to its parts and analysing their arrangement and movement - is being increasingly exposed in today’s more complex world (listed above). For example, Michael Porter - known as the father of modern strategic analysis - saw his own consultancy (the Monitor Group) collapse in 2012, showed that while rigorous analysis can explain past success it’s very poor at predicting it.
The world we operate in is not a machine. It is, as we are, organic - and this contains a profound insight. An organic world cannot be understood by a careful analysis alone of its component parts as the whole is more than the sum of its parts. Human consciousness emerges from the interaction of neurones, not the neurones themselves. This exemplifies how key properties emerge in a living system - like innovations from happy accidents, or nasty accidents from seemingly logical decisions. For example, following the sinking of the Titanic the US government mandated all ships to carry enough lifeboats for all passengers - a seemingly logical decision. But in retro-fitting the SS Eastland to comply with this new law made the ship dangerously unsteady. When passengers boarded it on the Chicago river one crisp autumn morning the ship tipped over, killing 900 people. Instead of improving the whole, tweaking the parts in a living system can unleash unintended and unforeseeable consequences.
Likewise, the great breakthroughs in innovation often do not come from purposeful design or from large companies. Everything from the computer to the helicopter, the fridge, and the x-ray were invented outside of the big organisation and often, like the microwave oven, the post-it sticker, plastic, rubber, penicillin and viagra were invented by accident - completely serendipitously. The reason therefore that big organisations don't innovate is that viewing the organisation as a machine forces variation out of the system. Non-conformance to specification is anomalous and needs to be eradicated.
This power relationship - with the chief engineer sitting atop his/her gigantic machine, managed through a hierarchy to compel conformance through aligned identities (we are X people) values and behaviour - is strangling innovation, adaptability and growth in organisations. But while alternatives exist and are well known they exacerbate the present and very real fear many leaders have: losing control. The next stage of your organisations evolution will come from having the courage - and wisdom - to treat it like the powerful living thing it really is, rather than the mechanical toy you wish it was.
Shape the Future
Don't just adapt to it