CHAPTER 3:
SLEEPWALKING ALONG THE LINEAR DELUSION
SLEEPWALKING ALONG THE LINEAR DELUSION
The danger of ‘horse thinking'
At the end of the nineteenth century, London was the largest,
richest, most advanced city in the world. More than 100,000 horses kept people
and goods moving around the city via hansom cabs, horse-based buses and other vehicles.
The city’s bold ambitions for further growth and
expansion poised London’s horse population to grow significantly.
The problem was, collectively those horses
produced about 2,300 tonnes of manure every single day. The Times
newspaper predicted: “In 50 years, every street in London will be buried under
nine feet of manure.” Urine and decomposing horse corpses augmented this
situation. London was beginning to poison its people.
With manure at the top of the concerns list, in
1898 London sent its brightest urban planners to attend the first International
Urban Planning Conference, organised over 10 days in New York. The manure
crisis was the centre of all conversations. After the third day of debate,
frustrated and resigned, the attendants quit the conference, and went home
without any solutions.
Within two decades, however, horses were no
longer the primary mode of transport in London. A technology called ‘motor cars’
– which had existed in humble numbers when the manure debate raged – completely
disrupted thousands of years of dependency on horses. The most prepared minds
of the time were victims of linear thinking, unable to see the disruption to
occur, though it was right in front of their noses. (Although let’s not forget
that their noses were overwhelmed by the stench of manure.)
Our poor linear brains
We cannot blame the Londoners of that time; we humans are essentialy linear machines. When exposed to situations of a non-linear nature, we tend to
overestimate what can be achieved in the short term while vastly underestimating
what can be achieved in the long term. Humans are not well equipped to process
exponential growth.
When we were hunters, our lives depended on our
capacity to predict where the prey would be a few seconds later. Those with the
capacity to do a quick linear projection were able to pass their genes to the
next generation. Proper linear projection was a matter of survival; as a
result, that response is deeply rooted in our DNA.
That is why, when we are confronted with
something that doesn’t behave in a linear fashion, often we simply don't see
it. It is too difficult for our poor brains to process.
The exponential mindset
Exponentially
is a core megatrend of our time. It refers to the ability of innovative
business models to escalate at an accelerated pace, following the shape of the exponential
function (f(x) = bx).
We have seen several cases of exponential
business models in the last few years: Airbnb, Netflix and Uber for example. Their
stories make evident that exponentially in business is intrinsically supported
by the exponential capacity and ubiquity of technology.
Exponentially
is an incredible opportunity for disruptors, but at the same time it's a
terrible challenge for incumbents being disrupted, because there is no time for
a 'reactive' response.
The
rise of motor cars in London from 1900 is one of the earliest cases of
exponential technologies reshaping businesses and testing human exponential
blindness, but the business world has abundant examples.
In
1975, young Kodak engineer Steve Sasson invented the digital camera and
presented it to all company division heads. They all hated the idea. In 2012 Kodak
filed for bankruptcy, disrupted by the rise of digital photography.
In
1981, Xerox PARC Research developed the Computer Graphical Interface (GUI) and
the computer mouse, but the Xerox executives never paid attention. Bill Gates
and Steve Jobs visited the labs and each created their empires using Xerox PARC’s
creation.
And
in 1998, Larry Page and Sergey Brin offered to sell their new PageRank system
to Yahoo for the bargain price of $1 million. Yahoo was not interested, so
Larry and Sergey founded Google. Twenty years later, Google (or its parent
company Alphabet) is valued at over $750 billion.
Though
all these events were exponential in nature, their stories were unique in the
business landscapes at the time. The situation is very different now: the frequency
of such events is also growing at an exponential rate. Convergence of new
technologies and the appearance of new business paradigms are producing an
explosion of opportunities and risks.
Ray Kurzweil, futurist and
acclaimed innovator (and recipient of 20 honorary doctorates) illustrates the
concept of exponentiality very nicely: "We won’t experience 100 years of
progress in the 21st century – it will be more like 20,000 years of progress
(at today’s rate)".
The anticipation game
The strategic planning rules that ensured success in the
industrial age are, unfortunately, intrinsically linear: businesses plan the
future as a linear projection of the past. They can multiply the past by 2, 3
or 10, but it is still linear. This way of planning is no longer effective and will
quickly become fatal.
In
this new context, we need to think well ahead and differently; if we look only
at our current business domain, we are not going to be prepared. We must test
the periphery of our business domain, and try to detect weak signals that
provide some hints of the next potential exponential surge. Then we must act
with boldness under uncertain conditions.
This
method isn’t infallible, however: in some cases, we will find that we
overreacted and the signal didn't translate into a business disruptor. But if
we do adopt such an approach, we will be in position to ride the next
exponential wave.
Walter
Gretzky once gave his son Wayne advice that transformed the young Canadian boy
into the legendary hockey player we know today: 'A good hockey player skates to
where the puck is. A great hockey player skates to where the puck is going'. In
exponential business environments, good players don’t survive, and even great
players can at times underestimate the proverbial ‘puck’.
It
takes extraordinary effort to avoid sleepwalking on linear delusions. It’s the
way we’ve evolved, and linearity often performs better in the short
term.
However
we must formulate our vision about the future, conscious of its likely exponential
nature, and start preparing for it. Because
our only chance of survival is to be at the right position, fully prepared,
when the future arrives.
Context first
The
Fluid Transformation Playbook is a call to all organisations to embark on a
deep transformation journey to be able to thrive in the new, still-forming
business landscape of the 2020s. But what are the drivers behind this tectonic
shift?
In
Chapter 2, I discussed one of several components of this required
transformation: the workforce. In doing so, I considered one of the emerging megatrends
for businesses: 'the rise of smart virtual agents and robots'. In this chapter I continue
with megatrends, discussing 'exponentiality'.
Before
delving into how to prepare organisations for the new landscape, I will explore
the rest of the megatrends that we must pay attention to. To design an organisation
responsive to contextual challenges, it is essential to have a sound understanding
of the context first.
#FluidTransformation
#BusinessMegatrends
#AvoidHorseThinking
#Exponentiality
#GoForTheFuture
Summary of Chapter 3:
- To prepare organisations for the new business landscape, it is necessary to understand the megatrends affecting that landscape.
- Exponentiality is one of those megatrends, and represents a big challenge to humans as linear machines.
- The only way to respond to exponentiality is to prepare for an exponential future with ambition and boldness, well before that future arrives.
No comments:
Post a Comment