Leading Exponential Change

by Erich R Bühler

  Alfred North Whitehead, Mathematician and Philosopher.

  When the first motorized vehicles were built in the nineteenth century, cars looked more like carriages than automobiles. This was because people imagined them as an extension of horse-drawn transport. New ideas, concepts, and words were introduced, but old ways of thinking continued to be used to analyze and solve problems (Figure 1.5). It’s possible that the same thing is happening today in companies trying to use the Lean or Agile mindset.

  FIGURE 1.5: Cars were an extension of the carriage mindset

  With the exponential mindset, you can understand that the future is uncertain while still creating a vision that helps others understand which way to go. Look at Amazon or Netflix. The first began selling books and the second renting mail-order films. They had a vision that motivated people to keep going, that gave them confidence, and that evolved as the way forward became clearer.

  The multiplying effect also occurs because products that used to be independent are now interconnected, offering an enhanced experience. Think of Google, which is no longer just a search engine but is now a solution that makes it possible to link a range of experiences, thereby multiplying knowledge creation and usefulness.

  When things go exponential, you must know how organizational social patterns and soft skills work. Patience and the ability to reframe problems are two necessary qualities here.

  Imagine you have a product in the early stages of exponential growth. Progress will seem slow, almost coming to a halt, before making the leap. How would you align the expectations of those around you so that they understand they are in a lift-off phase that could last weeks or months?

  I remember a time when it seemed that the main goal of mobile phone manufacturers was to keep making them smaller. Can you imagine what would have happened if you’d been the visionary (betting all your friends’ money) who said that in four years’ time the industry would be focused on making them more intelligent, and that size would no longer matter? You would have needed great communication skills and patience to help those around you understand the behavior of exponential products. Your friends would probably have resisted the thought, using unsuitable metrics from the linear world to measure only the size of the gadgets.

  The Exponential Company

  In the era of exponential growth, companies and strategies need to be built on the idea that there will be a high degree of uncertainty. When traditional organizations find themselves in this situation, they tend to place emphasis on increasing alignment and coordination. But this limits the ability of teams and people to self-organize. This is true because traditional companies use linear processes and forms (in contrast to exponential) to implement change and to manage its resources.

  If the company goes to the other extreme, reducing coordination, each team will choose its own course and this, when added to constant market changes, will lead to chaos. At this point, a company in the era of exponential acceleration needs to have specific habits:

  Have organizational structures that can regularly evolve by consensus (collaboratively).

  Have clients that are co-creators of products and not just consumers.

  Encourage learning and decision-making under consensus.

  Use artificial intelligence or robotics in areas where the human element cannot multiply exponentially.

  Use different ways of measuring progress.

  Use tactics that constantly reduce complexity and bureaucracy in the company.

  Understand how people’s brains work when faced with change and the need to use techniques that overcome these difficulties.

  Understand how to manage conflict in times of turbulence.

  Whereas linear organizations are necessarily constrained by limited resources, exponential organizations are governed by an assumption of abundance. As you can see, the digital era also requires making tasks collaborative from the outset. People must be able to provide feedback and ask for a change of direction in the product, and clients have to start being cocreators of the service.

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  The strategy also requires turning every process into an exercise in learning and reflection, which may include these tasks:

  Review of common objectives (what we intend to do together).

  Definition of joint commitments (the commitments we make to others).

  Use of shared resources (self-organization around scarce resources).

  Overall evaluation of risks

  Working in pairs as much as possible, with the aid of artificial intelligence when appropriate.

  But the strongest focus must remain on the human factor and making it easier for each person to change more quickly and adapt to the new situation. This requires techniques such as reframing, understanding how to create a plan for change that can adapt to exponential growth, being familiar with organizational patterns, understanding how the human brain works, having techniques for dealing with conflict, and knowing why the problems we face are now complex.

  How to Rally Organizational Health by Changing Just One Habit

  By: Carlton Nettleton, President of Look Forward Consulting and Certified Scrum TrainerTM

  Bad meetings are a sign of poor organizational health and conflict. This is a fairly common problem with many of my clients—a lot of bad meetings that eat up valuable time, break organizational focus and kill employee engagement.

  Contrary to what we all have experienced and seen in our careers, meetings do not have to be so awful. Meetings are bad because people make them bad. Yet, in my experience, nobody thinks to themselves, “Today I am going to make the next design review meeting simply unbearable for myself and everyone else in the room.” Rather, people adopt a default set of behaviors and expectations about a meeting based on how they think the ideal meeting is structured and act accordingly. In consulting-speak, we call this a “mental model.” Unfortunately, the mental model most people use for meetings when an enterprise is experiencing exponential growth is wrong.

  Mental models are useful approximations of the world created by the brain to rapidly interpret everything we experience so that we can quickly identify the relevant facts, make decisions and solve problems.

  For instance, imagine we walk into an auditorium on a college campus during the middle of the day. As we walk into the auditorium, multiple college-aged students pass by carrying books and backpacks while a woman in front of multiple whiteboards attaches a lapel microphone to her jacket. What is going to happen next? If you are like most people, your brain is anticipating a lecture from a college professor. That anticipation of a “lecture from a college professor” is an example of your brain making an interpretation based upon some simple facts that have been matched against a pre-existing mental model you have about what to expect in a university environment.

  Ideally, mental models are accurate. However, as long as they are mostly correct, the brain will use a flawed mental model until there is a very good reason to change them.

  For example, Newton’s Laws of Motion are a simple set of mental models that describe how moving objects interact with one another. Newton’s Laws work flawlessly to describe objects at the macro scale (cannonballs, comets, planets, etc.), but when scientists in the late 19th and early 20th Centuries applied the same mental model to subatomic particles, the found some problems with Newton’s Laws.

  To accurately describe the behavior of protons, neutrons and electrons, early 20th Century scientists needed a new mental model—quantum mechanics.

  For people, the common mental model about how a meeting is supposed to work is little something like this: a new idea is introduced to a meeting and it flows smoothly from one person to the next until, at last, we arrive at a rational resolution of the topic t
hat has the unanimous agreement and support of the entire group.

  Yet, as anyone who has spent any amount trying to discuss a new, complex problem in a group knows this mental model of a smoothly flowing, linear conversation that stays mostly on track is simply not accurate.

  Like our example of Newton’s Laws of Motion, this simple mental model only works for topics that are business as usual or for discussions about problems that have obvious solutions. The type of things discussed when the enterprise is experiencing linear growth.

  So, what is a more accurate mental model for a meeting? It is simple - in order for an enterprise to develop sustainable solutions for complex problems associated with exponential growth, business teams need to go through three stages. A phase of divergent thinking followed by a phase of integration, to develop shared understanding, followed by a phase of convergent thinking.

  Only after convergent thinking has been completed can the enterprise achieve closure on the topic and commit to a sustainable solution that has the enthusiastic and unanimous support of the all the key stakeholders.

  The key difference between this mental model and the simplistic mental model from earlier would the addition of a facilitator. Without a facilitator, most groups will not able to overcome the interpersonal tensions associated with divergent thinking, integration and convergent thinking. Consequently, business teams within the enterprise will revert to familiar ideas and solutions that more-or-less worked during periods of linear growth but are ineffective solutions now that the business is experiencing exponential growth.

  When people complain there are too many meetings in your organization, what they are really complaining about is that there are dysfunctionalities and bad organizational health in your company.

  So how is a facilitator any different from a typical manager running a meeting?

  A facilitator is any substantially neutral person whose have been given the authority to help a group increase their effectiveness by improving its process and structure. A facilitator understands the stages of group decision-making—divergent thinking, integration, convergent thinking and closure—and shares this knowledge with meeting participants so they can develop shared understanding. Managers use meetings to get the information they need to drive a project to completion. Meetings are a tool that managers use to extract knowledge and information from meeting participants so that they can deliver on their own personal goals and objectives.

  What does a facilitator bring to a discussion that your typical manager does not? Facilitators are well-versed in multiple, facilitative listening techniques to apply at each stage of group decision-making and make use of them to support the group in their best thinking as they work to achieve a sustainable solution.

  Unlike managers, who have a stake in the final outcome, facilitators seek to understand how the people and the work intersect with one another.

  A facilitator watches what happens in the negative space between meetings to identify recurring patterns of behavior, spot missed opportunities for collaboration and suggest ways a group can advance the quality of their work and their interpersonal relationships.

  Facilitators are patient knowing that eventually, the group will discover a sustainable solution which has the enthusiastic support of all the keys players within the enterprise.

  So apart from not having to personally endure another awful meeting, why do business leaders care about fixing the problem of bad meetings? Because fixing issues around bad meetings are one of the most visible and important ways to reduce conflict and improve the organizational health of the enterprise.

  Like a cardiac patient with a weak heart, organizations with poor organizational health are not equipped to respond to the stress of exponential change. To boost your organization’s health and to decrease the stress put on your business, I recommend designating some people from within your organization to act as meeting facilitators.

  Equip these people with new knowledge about meeting facilitation and group dynamics. Offer them opportunities to put these new skills into practice and learn from those experiences.

  If your enterprise is looking to Scrum and other Agile software development processes to help you respond to exponential change, then the best people to fill the meeting facilitator role would be your ScrumMasters and Agile coaches.

  I recommend that ScrumMasters and Agile coaches adopt a teaching stance to help the various groups within your enterprise to improve their processes and structures so that they can become self-facilitating.

  When the ScrumMasters and Agile coaches focus on teaching groups to become self-facilitating, this will bring about lasting change in people’s mental models about meetings, solve the important issues brought on by exponential growth and rally organizational health.

  What You Have Learned

  The effects of exponential acceleration on markets.

  The difference between Moore’s Law and the law of accelerating returns.

  The Six Ds of exponential growth.

  The importance of a healthy organization.

  Empirical learning as part of a modern organization.

  The exponential company.

  Do you remember the difference between Moore’s law and the theory of exponential results? How do they affect your business?

  Is there a product in your company that has followed the six Ds?

  In broad terms, what do you think a healthy organization requires?

  Which aspects of the empirical model do you think need to be strengthened in your company?

  “Simplicity does not precede complexity, but follows it.”

  Alan Perlis, Computer Scientist

  I bet your library and mine have much in common. You probably have dozens of books on Scrum, Agile, Lean, software development, Business Agility, team management, and the like. But you probably have fewer focused on the human factors for leading change in a company facing exponential markets, and you probably have few on accelerating the adoption of new habits and practices.

  Achieving new habits and practices requires a variety of skills and a basic understanding of organizational patterns, software, frameworks, neuroscience, psychology, system thinking, business, leadership, and coaching. You must also be able to alter course without causing counterproductive emotional states.

  It’s easy to find books and other media telling us what practices are needed or where we should reach. It’s harder to find information on how to confront change in the era of exponential acceleration. Effective transformation initially demands the reorganization of a company’s structures, processes, practices, and skills. You’ll also have to revisit the company’s power distribution, as well as the company’s vision and mission. You need to understand how people interact, what motivates them, and, above all, the right time to embark on a change journey.

  There are effective ways to deal with new challenges. However, they require time, may cause disruption, and might temporarily cause feelings of insecurity among the team. But there can be no real evolution, nor will you be able to face exponential growth, without undertaking your change journey.

  From the more-traditional point of view, using linear growth techniques or processes, you can employ different approaches to lead a business transformation. Some will have greater impact, unleashing a series of big events, while others will be more specific and constrained.

  FIGURE 2.1: Impact of change from a more-traditional point of view (linear growth process)

  Transformation is the new company’s weapon of choice to help it confront challenges from competition, the digital era, and artificial intelligence. Transformation is also an antidote, helping companies build structures that are strong yet remain flexible enough to withstand the fluctuations and surprises of a
globalized market.

  Nowadays, companies and independent professionals specialize in business transformation. Events, conferences, websites, and consultancies are specifically designed to help you channel organizational transformation. I’ve seen numerous presentations on the challenges arising from change, and I always end up with the same question: What is it that makes a company truly exceptional and able to confront the new exponential market rules?

  You’ve probably seen the trick where a magician makes a rabbit appear out of a hat. It appears natural, even easy. You could replay a video of the trick in slow motion and still not discover how it’s done. In the same manner, the change occurs naturally in exponential companies. Those within feel as though they are part of the initiative. They contribute, push, enjoy, and, when they least expect it, find themselves on top of the mountain.

  In more-traditional organizations, individuals invest much effort and time to urge such transformation, and they try to convince others to evolve the processes they themselves created. But there can be no real change unless there’s first an honest alteration of behaviors. It’s no longer valid to think individuals will try to improve something when up to that point they’ve been taught to follow orders from a superior.

  In the exponential organization, employees enjoy themselves as they grow and evolve. They think collaboratively and achieve shared goals. They openly share what they wish to learn from each situation, create new habits that can be expanded to the rest of the company, and reflect within the team on how to take better action. All of them want to become more experienced and perfect their practices. They offer reciprocity and help each other, and they strive to improve how they connect with other employees.