Tony Soprano, the heavy-handed mafia boss from the famous TV show, was a master of coercion. Through violence, extortion and bribery he rose to the top of his industry, leaving competitors in his wake. Despite the high employee turnover in his organization, he achieved attractive margins.
Yet sensing that he could benefit by exploring alternative strategies, he often sought the advice of Dr. Jennifer Melfi, who encouraged him to take a more collaborative approach. Tony thought about it for a minute and asked, “Then how do I get people to do what I want.”
Today, every manager has some version of the Tony Soprano problem. We’re used to hierarchal organizations optimized for specific tasks. Now we find that we’re competing in a networked world in which the old rules don’t apply. Rather than traditional lines of authority, we need to start thinking in terms of ecosystems, platforms and movements.
It’s no secret that big corporations aren’t what they used to be. In recent years, we’ve seen paragons such as General Motors, Kodak and Blockbuster have go bankrupt even as upstarts like Tesla, Instagram and Netflix rocket forward. The average lifespan of a company on the S&P 500 has fallen from more than 60 years to less than 20.
Throughout its history, IBM has played a special role in helping companies adapt to changes in the marketplace. It has a rare ability to not only develop advanced technology, but to design, implement and manage systems at scale. These days, however, technology is not enough and IBM’s new initiative seeks help to companies move at the speed of a lean startup.
Last spring, the Clayton Christensen, one of the world’s top management thinkers, suggested that, despite being awash in cash, corporations are “failing to invest in innovations that might foster growth.” He considers this trend so insidious and pervasive that he called it the capitalist’s dilemma in Harvard Business Review.
Others have seized on the current boom in stock buybacks as evidence that supports Christensen’s narrative—intense pressure from activist investors is creating an environment in which short-term profits trump long-term prosperity. If true, it’s a terrible indictment of our economic system.
Yet buybacks do not necessarily indicate a lack of investment (especially when capital is, as Christensen points out, superabundant). Only a lack of investment indicates a lack of investment. When I looked into it, I found that the issue does not lie in the private sector, but the public one. In effect, it’s not corporations that are the real problem, but the rest of us.
There’s no doubt that journalism in crisis. Great institutions like The New York Times and The Washington Post, once fantastically profitable, now struggle to stay afloat. News bureaus, both international and local, are being drawn down as budgets are cut to the bone.
The recent debacle at The New Republic shows the pitfalls. A well-heeled white knight comes in to save the company and decides he wants to be editor-in-chief. His handpicked CEO vows to “break shit” and build a “vertically integrated digital-media company.” Top journalists balk and leave.
It has become fashionable to say that publishers must innovate in order to survive, yet that will only take us so far. We also need to shift our mental models of how journalism operates as a business. In order for top quality journalism to survive, it needs to permeate the entire enterprise and that means killing the time honored practice of Chinese walls.
It was largely during the 20th century that corporations rose to power. Private enterprises— usually run by a cadre of professional managers rather than by entrepreneurs— came to rival the reach and influence of governments, controlling massive resources that were not bound by traditional borders.
Today, however, that dominance is on the wane. Consider the case of Ford. During the recent financial crisis, the company lobbied hard for the government to bail out its rivals. It wasn’t an act of altruism, but survival. If GM and Chrysler went down, so would the supplier networks upon which Ford depended.
In a connected world, the most important resources are no longer what you own, but what you can access and the line between competition and codependence is beginning to blur. That changes the game entirely. Successful enterprises can no longer prosper merely by deploying assets efficiently, but must effectively manage and deepen connections. read more…
It used to be said that what was good for General Motors was good for the country. The thinking was that by supporting the engines of prosperity, we’re all be better off. Yet it would also seem that, in many cases at least, what makes industry successful can also improve the public sector.
The situation is even more marked in basic science, which has become a convenient punching bag for many politicians, while at the same time firms like Microsoft are increasing their commitment to making new discoveries. If we’re going to win the future, we have to invest in it. Or, put another way, why isn’t what’s good for Microsoft good for the country?
In an age of disruption the only viable strategy is to adapt. Today things move too quickly to stick with old paradigms once their time has passed. Once outdated platforms fail to solve new problems, they will be overtaken with blazing speed and we must either make a shift or get left behind.
Yet that’s easier said than done. As I’ve pointed out before, even Albert Einstein himself was unable to accept a new model for physics, even though he was the one who first brought it about. Changing our mental model of how the world works is an exceedingly hard thing to do.
In his 1962 book The Structure of Scientific Revolutions, Thomas Kuhn called this process a paradigm shift and there’s a lot more to it than you might think. It’s not enough to learn new ideas; we need to unlearn old ones. The tried and true, for all of its charms, will eventually be disrupted and, if we are to manage for disruption, we need to master the art of the shift.
Networking is a time-honored tradition. You go to a conference or other event, mix it up, meet new people and expand your circle. Hopefully, one of these random connections will be fruitful and lead to a new opportunity that will make you a richer, more fulfilled person.
That does happen, but it’s exceedingly rare. Random connections are random for a reason. Most people we bump into have nothing to do with us. They have different jobs, different friends and different interests. People we meet on planes usually just eat their peanuts and then go their own way.
Yet network science shows that there is enormous potential much closer to home—the friends of our friends and their friends as well. There is, in fact a teeming mass—thousands of people—who are not random at all, but no more than a few social hops away and many are likely to be valuable connections. If you want to get more out of networking, start with them.
Xerox invented the core technology that made personal computing easy and fun—the mouse, the graphical user interface and the ethernet—but it was Steve Jobs who built the Macintosh and profited. By now, the story has become so well known that it’s almost a cliche.
The story resonates because it ties into two recurring themes: The wily entrepreneur outmaneuvering the bloated corporate behemoth and the primacy of business acumen over the development of core technology. Yet there’s a lot more to it than that.
PARC—Xerox’s legendary Palo Alto Research Center—was vastly more than a mere collection of tinkering eggheads. In fact, it was an investment that paid handsome returns and generated profits long after the decline of the core copier business. To see why, you only have to know the story of Gary Starkweather and the invention of the laser printer.
What do the Hydrogen bomb, the Minuteman missile and precision guided weapons all have in common? They all provided crucial financing for technology that we now carry around in our pockets. It is a curious fact of modern society that civilian life, in large part, is powered by the technology of war.
Many believe that the enormous impact the military has on technology is a moral dilemma and they may be right. Leaving that aside, however, we can also learn a great deal about innovation by studying the history of war. In War Made New, Max Boot gives us the chance to do just that and it does indeed deliver great insights for anyone interested in innovation.