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Business model religion

If you’re reading this, you will probably have a veritable warehouse of expensively acquired models, schematics, heuristics and other tools that you can bring to bear on a challenge. 

I can sometimes sense my own mental “stock picker” working like an over-caffeinated Amazon warehouse worker hurtling round with their trolley to bring them to my attention before I have had time to work out the real problem.  Intellectual paracetamol that eases the pain but bypasses the cause.

In business, most of those models are grounded in the pursuit of efficiency, speed and are characterised by notions like Warren Buffet’s “circle of competence.” They have brought real financial returns to those who follow his principles – but at a price.

“What an investor needs is the ability to correctly evaluate selected businesses. Note that word “selected”: You don’t have to be an expert on every company, or even many. You only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, however, is vital.” Warren Buffet.

There is a problem with this when we assume what works financially automatically works in other areas of our lives. We end up specialising, even hyper specialising, and measure results over relatively short spaces of time. We see the trees, but not the wood, and ignore the other signals that abound – mental health, detachment, disengagement and routine low level political corruption. The result is isolated success – a booming economy achieved at the price of enormous inequality, and species, including us, on the edge of extinction.

We end up “wilfully blind” – ignoring what is essential but inconvenient. (Margaret Heffernan talks fluently about “willful blindness” and its effect on our leaders in this 7 minute summary.

As we go further down the rabbit hole of complexity that is this stage in our history, specialisation has very dangerous properties if it is the only tool we use. Today, we need breadth as well as depth, to value doubt as much as knowledge, and to honour long term effectiveness far more than short term efficiency.

“Big” leadership flounders in the face of the level of complexity we face – it is not that the people who lead us have somehow become less intelligent, or even less capable – they have just assumed that their “circle of competence” is enough, when it isn’t. Combined with hubris, it is a toxic mix. The leadership we need now is local. People we feel connected to, who we can share doubts with, and really learn from what is going wrong rather than just trot it out as tired mantra from communications departments.

When we allow our business models to become religions, with priests and rules obeyed without question, it will kill us.

It is a time for “small” leadership – and that would be you, and me, and the people next to us in conversations about what really matters.

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The Other Side of Confusion

As we watch what is happening around us right now, I think we can be forgiven for feeling bouts of confusion or even bewilderment as we see those in power bending in the storm. Whether it is the halving air passenger duty as carbon emissions rise to pre-pandemic levels or them taking refuge in legal niceties to shield one of their own from the inconvenience of being accountable to those who elected them. Seeing easy get outs from people we expect to lead is more than disappointing. Many of us feel bewildered as we see any number of what have become almost invisible minor infractions of principle that cumulatively dissolve trust in business and politics. Bewilderment is the stuff of chaos, where we have nothing to hang on to as the storm gathers around us.

The eye of the storm is an uncomfortable place to be.

On this basis, being confused is progress. Confusion requires us to make choices between things not fully understood, and that is a challenging process.  Many can be tempted to find shelter in groups where others take the lead, if not most of us. It is where populists gather their audience, pursuing power shorn of principle through promising easy solutions to complex problems they know they do not understand. All we have to do is choose our populist – to Brexit or not to Brexit? Conservative or Labour? Vax or anti-vax? Right now, we are spoilt for choice.

Confusion, though, is a responsibility. Let me divert you for a moment to the “Intermediate Disturbance Hypothesis“. In short, it is at the heart of evolution in nature. It says that diversity is maximised when disturbance to a system is neither too high nor too low—a sort of Goldilocks approach to change. In other words, where we are right now is healthy, if uncomfortable.

In nature, organisms react to this discomfort in one of three ways. At one extreme, they avoid it by getting out of the way of the forces causing the disturbance – let’s call them “the impervious’ – and seek to survive through competitive dominance. At the other end are the heroes, who seek to harness the changes to move quickly, which is fine for the very few (and temporary) winners – let’s call them “the heroes”. The bad news for them is that they are the stuff of history, and of value only to the archaeologists and anthropologists of the future.

In the middle are those who experiment with what is being brought their way. Neither impervious – they are open to change – nor heroes – they hedge their bets. Let’s call them “the confused”. In the end, it is the confused who win – with one condition. They have to make a decision at some point and commit. Those who stay confused eventually get swept away with the “impervious” and the “heroes”.

So, right now, we all have choices to make. Do we shelter, for a while, behind our preferred flavour of populist, or do we make decisions and commit with insufficient information?

When the data runs out, where do we go? Critical thinking helps, as does genuine community – people we trust who are as confused as we are. Conversation is a beautiful catalyst. Accessing our values is essential, as is asking ourselves why we are here and what we want our children to remember us for. This is a time for imortant questions.

It is not an easy time. Being confused is healthy, powerful and necessary, but staying confused is not.

We all have choices to make.

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Strip Mining Talent

The efficiency-focused, process-heavy systems we have developed during the industrial era are struggling to deal with the complexity and uncertainty we face in a world redefined by pandemics, climate change, species loss and increasingly disengaged workforces.

Several things have become apparent as I’ve worked with people seeking to orient themselves to this strange new world. Because we want efficiency, we define outputs very precisely and cost inputs accordingly. As a result, I see people with huge, untapped talent that goes to waste because it does not fit neatly into process. It feels like we are strip-mining for cheap commodities and discarding the gold we dig up as waste.

This leads people to lose confidence in the unused capabilities they do have, and not invest in them. They end up sweating the personal assets in demand from gig economy business models and letting the valuable ones decay. Whether it is people with creative skills in mundane jobs not requiring them, people with ideas ignored, to Ph.D’s working short term contracts as lecturers, we are not developing the long term assets we need. It is like high-intensity farming, exhausting the soil by applying fertiliser to achieve short term high yields.

We can see the same mindset present at COP26 – 400 private jets worth of expensive political fertiliser applied to a system they do not control. The challenge we face is that in order to optimise organisations short term profits, we are diminishing individuals long term prospects.

Technology allows us to change this if we get our priorities straight and stop letting business set our social agenda. We have the ability to create talent networks outside of the narrow confines of the short term demands of short sighted organisations.

We can seed the future ourselves, one small group at a time, if we make the effort.