A couple of years ago I was invited to speak at TEDxCluj in Romania and I shared a concept that I called the 3Cs. Sadly there's no video available of me presenting as there was a technical glitch during the mid-morning sessions which meant that a few of us weren't recorded. However, I wanted to share the text as I think the content is still relevant and helps to explain my thinking about organisations.
Almost everything you think you know about how organisations and how the people within them work is wrong. Now, some of you in the hall already know this, but for the others I’m going to show you why. Perhaps the best way to illustrate it is to take you through some of my experiences to show you how my thinking has evolved as I unlearnt what I’d learnt and am now relearning how organisations and people actually work. Why does the stuff I’m going to talk about matter to you and to your companies? Because the world in which we all work is changing. The new world is going to be very, very different and if you don’t start thinking in a new way you’ll be left behind as the paradigm shifts.
What does this brave new world look like? It will be too unpredictable, interconnected and complex to be controlled or managed. The role of manager will be replaced by that of facilitator. Strategy will be emergent not planned. The concept of managing performance and individual financial incentives will die away to be replaced with a focus on personal growth and career development. Learning will be informal and shared constantly.
Now some companies like mine have already woken up to this new reality and begun to shift, but many have not. The source of competitive advantage won’t be the product or the process, it will be the people and the culture they work in. Those companies that don’t adapt and refocus from shareholder value to stakeholder value will be left behind as society and our expectations of responsible business evolve.
So, why is our current mode of thinking broken? Just think about how the global financial crisis shattered our illusion of control. The rigorous processes, formal structures and regular measures that told us we were in control couldn’t save us. They didn’t work because they were no longer relevant. The only way for us to progress is to see the world in a new way – essentially we need to make a ‘paradigm shift’.
Some organisations have already started on this journey and are trying to come up with a new model based on the complexity sciences or our rapidly increasing understanding of how the brain works thanks to neuroscience. However, I believe that they are missing something and it’s what I describe as the 3 ‘Cs’ – the combination of complexity, culture and cognition. It’s not about each in isolation although each of them is important, it’s about how they are brought together and applied in an organisational context that matters for future success.
Now, before I explore these in more detail I want to be open with you so I’d like to be the first to admit that the last one of the Cs, cognition, would be more properly described as neuroscience, but when you need a third ‘C’ to create a catchy phrase it’s amazing what a Thesaurus can turn up J.
So, what is Complexity? The more we think we understand about the world, the more complex it seems to become. Each generation seems to think that they’ve answered the key questions raised by the previous one or are close to an answer for everything, but while each step is a step forward, that progress just raises even more questions. Quantum mechanics, the internet, social media, the Arab Spring, the rise of ISIS, the global financial crisis – all demonstrate how what we think we understand about what’s going happening and the sense of control we have are illusory. The sheer amount of interconnectivity and pace in the world today means that it’s impossible for us to consider all of the possibilities and predict the outcome.
That interconnected, complex world brings daily exposure to more and more different nationalities and their Cultures. And I'm not talking just about national or regional cultures. I’m also talking about the different cultures in each and every organisation and the myriad personal styles and preferences present within those organisations. Steve Cockram, someone we’ve been working with closely, explains that we’ve all been shaped by three things – our nature, our nurture and our choices. These elements all contribute roughly a third each to who we are today and mean that each of us is a unique combination of all three. Fail to take all of these things into account when communicating and working with others and the result is misunderstanding, confusion or worse.
The final C is Cognition. A better way to think about this is that it’s all about the mechanics of how we think. Our understanding of the brain is being transformed thanks to fMRI and our ability to see in real-time which areas of our brain are working when we do certain things. fMRI has its drawbacks – it’s static, noisy and requires the person to stay still for long periods of time, but new tools are being developed including caps incorporating infrared technology that will allow neuroscientists to track in real-time how people think as they go about their normal business. Imagine what we’ll learn as we start to watch the different parts of the brain connecting and firing in the real world rather than a lab. Ultimately, our understanding of how the brain works is transforming how we view reward, performance, feedback, learning – essentially no part of HR or leadership will be left untouched over the next few years.
Now you know the 3 Cs, but how do those 3Cs come together to mean we must unlearn all the things we thought we knew? 8 years ago I was in the middle of my Exec MBA being taught all about economics based on the assumption that people make decisions rationally. We were told how important it was for businesses to have clarity, objectivity, long-term planning and a detailed strategy. The key to success, we were told, was to measure, track, plan, control, incentivise and reward. If you did this well, the company would be successful and you’d be successful. The prevailing view was that people don’t work because they want to, they work because they have to. Shareholder value was all important.
So, let’s look at a couple of my assumptions that came from this experience.
Assumption 1 – you get what you measure
I can’t tell you how many times I heard these words from the managers and leaders I worked with, especially in the IT Consulting and Banking worlds. They’re based on what is now a false premise that there is a linear effect – a tweak to one variable results in a measurable and directly related result on another, but the complexity of the world today means that it’s typically untrue. Something that was a natural result of this way of thinking was the annual appraisal process. This celebrates SMART objectives and strives to be as objective as possible, but is something I actually see as a form of corporate torture for both the appraiser and the appraisee. How much time gets wasted every year preparing for, delivering and then dealing with the fallout from appraisals? How many HR departments waste their time moaning about the capability of line managers rather than focusing on what really matters – how do you help people understand what they want to achieve, what their gaps are and how we can help them fill those gaps?
Assumption 2 – people don’t really want to work so they need to be incentivised to do so
When I worked in the corporate banking sector in HR, I saw bonuses increase from a typical amount of 10-20% of base salary to up to 200-300% of salary. Same job, same work, same people, same business, same performance. All that changed was the belief that to get the best from people you needed to incentivise them financially based on their individual performance. But this sort of thinking is just plain wrong and made a significant contribution to the financial crisis because it drove the wrong behaviours. Where I work now, we believe that people need to be rewarded fairly, but it’s as or even more important that they understand why the company exists and what they are a part of trying to achieve. This isn’t a typical mission statement or vision that talks about being number 1 in the industry or country, it’s about people buying into our reason for being as a company. We’ve adopted and adapted much of the thinking found in a book called ‘The Advantage’ by Patrick Lencioni. We’ve defined our core purpose as ‘we exist to create an environment and a culture that breed success by caring for our customers as individuals and enabling our people to be the best that they can be’. This isn’t just nice words, it’s a fundamental truth for us. Ultimately, we don’t go to work to do a bad job, we go to work to do our best. When our life has a sense of purpose and we believe in what we do, we can create amazing things. We need to rely on people’s innate desire to grow and be the best that they can be. We need to help people achieve their goals and do what’s right for the team, the company and for society as a whole – not just for their own selfish needs. Richard Dawkins was wrong – we aren’t selfish at all, but as Lieberman has shown, we’ve evolved not to collaborate and co-operate as truly social beings.
I’d love to share more on how my thinking has evolved and more about the changes we’ve made and are making where I work, but I know I’m the only thing standing between you and lunch. So that’s it. The 3 Cs – complexity, culture and cognition. To be successful in the new world we have to embrace them by unlearning what we thought we knew and relearning and applying a very different way of thinking. It’s challenging and difficult, but this is an incredibly exciting time and the most fun I’ve ever had at work. It’s a privilege to be part of the paradigm shift and my challenge to you is to leave here with the intention of being a part of it too. The first step is simple – when you’re back at work on Monday just spend the day actively questioning in a positive, constructive, appreciative way the assumptions you’ve always just taken for granted. And if you remember nothing else, remember this – people want to be the best that they can be, our role is to help them to achieve it! Thank you!