Last summer, John Seely Brown (JSB), John Hagel and Lang Davison published the results of a major research project they have been conducting at Deloitte’s Center for the Edge. The Big Shift, as they called the project, refers to the long-term transformations in the global business environment over the past several decades that have been primarily, but not exclusively, caused by the remarkable advances in digital technologies over that period.Their research uncovered a number of major, somewhat paradoxical findings. For example, the return on assets (ROA) of US companies, - a general indicator of profitability, - has been progressively falling and is now almost one quarter its 1965 levels. But, labor productivity has been steadily rising, and is now nearly double what it was in 1965. Where have the benefits of these productivity gains gone? Certainly not the bottom line of companies which have seen their profitability drop so much during the same period.
To help them make sense of their various findings, the Deloitte research team came up with 25 different metrics which taken together helped them understand the rate and magnitude of the long-term changes they kept uncovering. The result is The Shift Index, an extensive report that explains each of the 25 metrics, as well as their overall ideas and methodologies.
Now they have turned their attention from analysis to prescription. What should we be doing to cope with the growing performance pressures being experienced by individuals and institutions? To answer this question, JSB, Hagel and Davison have written The Power of Pull: how small moves, smartly made, can set big things in motion, which is being published this coming week.
By pull they mean “the ability to draw out people and resources as needed to address opportunities and challenges.” “Pull,” they add, “gives us unprecedented access to what we need, when we need it, even if we’re not quite sure what ‘it’ is. . . The power of pull provides a key to how all of us - individually and collectively - can turn challenge and stress into opportunity and reward as digital technology remakes our lives.”
To best appreciate what the pull economy is all about, it is best to contrast it with the push economy that has so permeated our lives over the past hundred years:
“Push approaches begin by forecasting needs and then designing the most efficient systems to ensure that the right people and resources are available at the right time and the right place using carefully scripted and standardized processes. . . Push programs have dominated our lives from our very earliest years.”
“We are literally pushed into educational systems designed to anticipate our needs over twelve or more years of schooling and our key needs for skills over the rest of our lives. As we successfully complete this push program, we graduate into firms and other institutions that are organized around push approaches to resource mobilization. Detailed demand forecasts, operational plans, and operational process manuals carefully script the actions and specify the resources required to meet anticipated demand.”
“We consume media that have been packaged, programmed, and pushed to us based on our anticipated needs. We encounter push programs in other parts of our lives as well, whether in the form of churches that anticipate what is required for salvation and define detailed programs for reaching this goal, gyms that promise a sculpted body for those who pursue tightly defined fitness regimens, or diet gurus who promise we will lose weight if we follow a certain menu or choose from particular foods.
“Push knows better than you do, and it’s not afraid to say, ‘Do this, not that!’”
Push was the right way to organize the fast growing industrial-age companies and economies in the past century. While all kinds of public and private institutions were experiencing major changes as a result of the Industrial Revolution, those changes were relatively incremental and predictable. The key challenge was to manage the growing means of production in the most efficient way possible. The hierarchically organized enterprise was the management model adopted by businesses to help them scale their production of goods and services.
This push economy served us well in a relatively deterministic world where the same actions yielded (more or less) the same results, and models could make (relatively) accurate predictions. It was a remarkable achievement of management and engineering.
But, the push economy is fading fast. The kinds of changes so well articulated and quantified in The Big Shift have led to a much more complex, integrated and fast changing world. Such a world, - with its large number and variety of components along with their intricate interrelationships, - exhibits all the properties of dynamic, complex systems, including unpredictable, counter-intuitive and emergent behaviors. The accurate forecasts and models of the push world are being replaced by seemingly bizarre new concepts like Black Swan Theory and Freakonomics.
This is the market and societal environment underpinning The Power of Pull.
“Companies are discovering that their best employees leave in dissatisfaction if the company is not in tune with the changes taking place; their customers prove ever less loyal to their brands as new brands emerge with exciting new features. Our educational institutions are grappling with the need to move from being institutions of learning to learning institutions that rapidly evolve in response to the quickly changing learning needs of students and that find ways to extend the learning process well beyond the walls and semesters that define courses today. Our governments are racing to adapt to a world where social and economic changes far outstrip the ability of legislatures and even dictators to maintain control.”
“It’s a different game now, and many of us have yet to learn to play it. Those who fail to do so will, as individuals, feel increasing stress. Institutions will see their current performance declines deepen and become more difficult to reverse.”
So, what should you do to not only cope with, but succeed in such a brave new world? Pull works at three primary levels, each of which builds on the others.
It starts with access, which is the ability to find people and resources when we need them. This is particularly important because our stocks of knowledge are diminishing in value more rapidly than ever before as a result of the rapid technological advances as well as the intensity of global competition.
“In more stable times, we could sit back and relax once we had learned something valuable, secure that we could generate value from that knowledge for an indefinite period. Not anymore. To succeed now, we have to continually refresh our stocks of knowledge by participating in relevant “flows” of knowledge - interactions that create knowledge or transfer it across individuals. These flows occur in any social, fluid environment that allows firms and individuals to get better faster by working with others.”
“Unfortunately, this represents a significant challenge for our existing institutions, since they have been organized around the proposition that economic value comes from protecting existing stocks of knowledge and efficiently extracting the value that these stocks of knowledge represent. It’s not always easy for us as individuals, either, to acknowledge that all those years of education may not be as helpful as we had hoped. We discover that we must compete for employment with talented individuals halfway around the world, in places we may never have heard of before.”
The second level of pull is attraction, that is, the ability to surround yourself with people and resources that are relevant and valuable, even before you are aware of their existence. Think of the serendipity of stumbling into something really valuable, rather than the search for something we have already identified as valuable.
“We can be systematic in our search techniques and scenario planning, but often we’re at a loss for what questions to ask, much less what to look for. In this kind of world, access and search have important, but increasingly limited, utility. . . . Our success in finding new information and sources of inspiration increasingly depends upon serendipity - the chance encounter with someone or something that we did not even know existed, much less had value, but that proves to be extraordinarily relevant and helpful once we find out about it. . . . What if it is possible to shape those unexpected encounters so that we could increase the probability and quality of the encounters?”
“Serendipity is also one of the secret ingredients explaining the continued growth of “spikes” - geographic concentrations of talent around the world. The Silicon Valley engineer attends his daughter’s soccer match and happens to meet another engineer on the sidelines. In the course of their conversation, the engineer stumbles upon an interesting solution to a design problem he had been wrestling with for months. And so on.”
“Serendipity also generates congregations of complementary talent in virtual communities of like interests, from mothering to survivalism. Online communities are perfect for bringing together far-flung people who have common interests. If you want to find out what it is you don’t know that you don’t know, you need to hang out with other people who might already know it.”
The third and final level of pull is achieve - “the ability to pull from within ourselves the insight and performance required to more effectively achieve our potential.” Individuals and institutions can use the techniques of access to find what they need, and can then use the techniques of attraction to surround themselves with the right talent, ideas and information. These are necessary, but not sufficient conditions to differentiate yourself from everyone else out there and pull ahead. For that, you need extraordinary achievements. And, it is in their description of what it takes to achieve at these levels that The Power of Pull itself comes to life and moves to its own next level.
Their advice is both right on target but quite subtle. Extraordinary performance generally comes not from people at the core, but from those at the edge, “ . . . because it is exactly at the edge that the need to get better faster has the most urgency. Incumbents at the core - which is the place where most of the resources, especially people and money, are concentrated, and where old ways of thinking and acting still hold sway - have many fewer incentives to figure out the world, or to discover new ways of doing things, or to find new information. They’re on top, and they’re ready to keep doing what got them there.”
They define the concept of creation spaces, - “environments that effectively integrate teams within a broader learning ecology so that performance improvement accelerates as more participants join.” These creation spaces “ . . . allow large numbers of participants, often in the millions, to come together to test and refine the practices required to master this third level of pull - achieving their potential more effectively.”
“Although from a distance it may look like they are emerging spontaneously, self-organizing in response to the needs of the participants, a closer look reveals that creation spaces are carefully crafted by their organizers, especially in the early stages, to engage the right kinds of participants and foster specific types of interactions, all within environments that unleash the potential for increasing returns.”
Finally, the book focuses on the critical need for passionate individuals as the leaders in this world of pull.
“When people chase what they love, they will inevitably seek out and immerse themselves in knowledge flows, drinking deeply from new creative wells even as they contribute their own experiences and insights along the way. . . A powerful virtuous cycle begins playing out as more and more people enter creation spaces in their quest to learn faster.”
“It is no accident that most of these early examples of creation spaces are initially attracting individuals rather than institutions. Passionate individuals (that’s you) naturally seek out these creation spaces to get better faster, while most institutions are still deeply concerned about protection of knowledge stocks and do not yet see the growing importance of knowledge flows in driving performance improvement. As passionate individuals engage and experience the performance benefits of participation, they will help to drag institutions more broadly into relevant creation spaces, becoming catalysts for the institutional innovations required for effective participation.”
Mass production was one of the major achievements of the 20th century, bringing us a plethora of goods and services at affordable prices and helping to raise the standard of living around the world. But, in our emerging 21st century economy, mass production is being replaced by the mass collaboration which brings together the talented people and innovative ideas needed to address the very complex challenges, as well as the extraordinary opportunities all around us. This transition will be quite difficult for most individuals and institutions. I believe that The Power of Pull is one of the best travel guides around to help us navigate this tough but exciting journey.