Cascades

by Greg Satell

  The similarities between the situation he faced and that of Antioco and Blockbuster Video are striking. A well-led, well-resourced, and highly efficient organization was faced with a disruptive challenge by a smaller, less powerful, but far more nimble enemy. The usual metrics of success, such as the number of videos rented in Blockbuster’s case or the number of enemy combatants killed in McChrystal’s, were not only useless, but misleading. When Antioco’s successor shifted the focus back onto the traditional retail model, it killed the company. Now McChrystal’s forces were facing a similar fate, only literally instead of figuratively.

  The problem, as McChrystal came to realize, was not of resources or capability, but of agility and interoperability. The individual units were operating at a high level, but the links between them were broken. Commandos would capture valuable intelligence on a raid, but then documents and hard drives would sit in a closet for days or even weeks before they could be translated and analyzed. The intelligence officers were highly adept, but without timely material, their analyses were of limited use to the soldiers. Perhaps not surprisingly, mistrust was endemic. It seemed to the Special Forces operators that the intelligence teams were blissfully ignorant about on-the-ground realities of war, while the analysts felt that the brawny soldiers were too dim to grasp the larger picture.24

  Another problem involved how information flowed. Intelligence analysts could turn raw data into actionable insights, but by protocol they passed that information up the chain of command. Military planners would then develop strategies for the troops on the ground, which created further lags. “I began to reconsider the nature of my role as a leader,” McChrystal remembered. “The wait for my approval was not resulting in any better decisions, and our priority should be reaching the best possible decision that could be made in a time frame that allowed it to be relevant.”25

  Yet the crucial difference between Antioco and McChrystal was that the general recognized that he had to fundamentally change how his organization functioned on a visceral level. His forces could not win by utilizing conventional notions of strategy, planning, and execution. As noted above, his teams were already performing well, but the links between them ceased to function effectively. So he dedicated himself to forging them anew. “It takes a network to defeat a network,”26 he declared and set out to make his organization become one.

  So McChrystal began to forge links wherever he could. He started embedding intelligence analysts into commando teams and vice versa. Liaison officer positions, traditionally given to marginal performers or those nearing retirement, were now earmarked for the very best operators. Moves like these slowed down the individual teams—commandos in business suits placed at embassies don’t kill many terrorists—but that wasn’t the point, building networks of trust and interoperability was. “We began to make progress when we started looking at these relationships as just that: relationships—parts of a network, not cogs in a machine or outputs and inputs,” McChrystal would remember.27

  This was a radical change in culture as well as practice. Traditionally, in a military enterprise, subordinates provide information and leaders make plans and give orders. Yet he saw that had to be reversed, with leaders providing information, connectivity, and context so that subordinates could act.28 “I needed to shift my focus from moving pieces on the board to shaping the ecosystem,” he would later write.29

  Not all of his decisions were popular. In the military, people are trained to attain objectives with relentless efficiency, and creating those connections between teams could be something of an encumbrance. Commando teams need to depend on one another, and being saddled with an embedded intelligence analyst was a burden. The analysts, for their part, didn’t welcome the Special Forces personnel with their bulging biceps, either. And nobody liked losing a top operative from their team to a liaison post in some far-off embassy. Nevertheless, the diverse teams learned to trust each other and work together. They became, to paraphrase McChrystal, not a collection of teams but a “team of teams.”

  The moves paid off. Although his actions may have decreased the efficiency of the individual units, overall operational efficiency increased by a factor of seventeen.30 The tide of the war soon shifted, and the forces under his command would achieve their major objectives. The barbarians were no longer at the gate, but on the run.

  Ironically, the strategies of General McChrystal in Iraq and the Otpor activists in Serbia were surprisingly similar. Both focused on weaving networks that were resilient, adaptable, and based on shared values. Once that was achieved, the specific tactics employed, to a large extent, took care of themselves.

  As AnnaLee Saxenian explains in Regional Advantage, in the 1970s Boston was at the center of the technology industry. With some of the top research institutions in the world, such as MIT and Harvard, as well as a strong business and financial community, it had an almost unparalleled combination of brains, money, and acumen. It had also benefitted from having Vannevar Bush, a former MIT professor, as head of the Office for Scientific Research and Development (OSRD) during World War II. Perhaps not surprisingly, a disproportionate number of grants flowed to local institutions to develop radar and other key technologies for the war effort. Those funds, in turn, helped create the foundations that led to the region’s technological prowess.31

  Boston got a second boost when a number of its high-profile citizens, including Karl Compton, MIT’s president and Vannevar Bush’s former colleague at the OSRD, formed the American Research and Development Corporation (ARD). It was essentially the country’s first venture capital fund, and its focus was to invest in commercializing technologies developed at local institutions. ARD’s most successful investment was in a young company headed up by MIT graduate Ken Olsen. It was called Digital Equipment Corporation (DEC).32

  In the 1960s, DEC pioneered a new technology called minicomputers. These were far smaller than the mainframes that dominated the industry at the time, but still fast and powerful enough to be incredibly useful. Before long, DEC grew into a major enterprise and led the way for other local technology companies, such as Data General and Wang Laboratories, which began to populate along Route 128 outside Boston.

  Throughout the 1970s and 1980s, the region flourished in an economic revival often referred to as the Massachusetts Miracle. As the minicomputer industry continued to take market share from mainframes, the Route 128 companies created 100,000 new jobs33 and helped the region reduce unemployment from 12 percent to less than 3 percent.34 Yet by the 1990s, Boston’s technology giants had been surpassed by Silicon Valley. And as Route 128 descended into obscurity, the Bay Area rose to even greater heights. Today, Silicon Valley has become so unparalleled in its leadership of information technology that it has become synonymous with the industry itself.

  Much like Occupy and Otpor, to an outside observer the two regions seem so eerily similar that it’s something of a puzzle why one succeeded brilliantly and the other just seemed to peter out. Like Boston’s Route 128, Silicon Valley’s rise was fueled by local universities and military contracts. Also, much like Boston, the initial success of a few local companies, Fairchild Semiconductor and Hewlett-Packard in the case of Silicon Valley, helped form the industrial base for a regional economy based on technology.

  But look a little more closely, and the contrasts become clearer. First, while Boston’s high-tech companies were rooted in traditional Eastern establishment practices, Silicon Valley was much more freewheeling, with lots of mixing between companies. Also, while the Route 128 stalwarts like DEC and Data General focused on vertical integration to dominate their industry’s value chain, Silicon Valley firms were highly interdependent. Cooperation and competition flourished simultaneously. Another stark difference was in job mobility. In Boston, few people job-hopped, and those who did leave their company were treated as pariahs. Once an employee left there was no option of return. But in California someone leaving for greener pastures was seen as an asset who could be a valuable source of marke
t intelligence and new business opportunities.35 While the Boston firms built barriers to protect themselves, Silicon Valley thrived on connection.

  Most of all, while the Route 128 companies saw themselves as a collection of self-sufficient firms competing for the same customers, Silicon Valley firms saw themselves as an ecosystem. Much like McChrystal’s forces in Iraq, they came to see interdependencies as essential for creating shared purpose and shared consciousness. While captains of industry in Boston lobbied for tax breaks and sweetheart deals to benefit their companies, the Silicon Valley entrepreneurs worked to improve regional transportation, technical programs at community colleges, and other qualitative factors that would help the region prosper.36

  In the final analysis, what made the difference was not one of resources, but of vision and perspective. The Route 128 companies, much like McChrystal’s elite forces before he began their transformation, were so focused on winning battles that they failed to recognize that the war had changed. By insulating themselves they became incapable of understanding the forces that would lead to their downfall. As nascent technologies continued to render their products obsolete, they increasingly found themselves cut off from the changes swirling around them. In a fashion uncannily similar to the situation in Iraq, upstart companies that seemed to spring from nowhere would regularly thwart their well-laid strategic plans. Essentially, the Route 128 firms ceased to be cutting-edge firms and became champions of the dying minicomputer industry. When it ceased to exist, their own demise was just a matter of time.

  Once again, we see similar principles at work. The Boston firms, much like the Occupy protestors and John Antioco at Blockbuster, failed to manage networks and, in fact, seemed scarcely aware that networks would play a role in their success or failure. The Silicon Valley firms, on the other hand, thrived on connection as much as the Otpor activists and McChrystal did.

  THE END OF POWER?

  * * *

  Otpor, McChrystal’s forces in Iraq, and the Silicon Valley firms all created transformational change, albeit in vastly different contexts and for very different purposes, because of their ability to connect and form networks. Whether you are an activist advocating for social and political change, a manager leading an organization, or a leader looking to shape an entire society, the need to create interconnectivity and interdependence remains essential.

  These principles aren’t new. As we will see later in the book, they played a part in successful movements throughout history. Yet today, they have become far more salient because the connectivity that drives networks has become predominant. We can now initiate, build, and maintain relationships with far greater velocity and at far greater distances. That has changed the nature of power, shifting it from being a function of hierarchies to one of networks.

  Since ancient Rome, institutions have ruled the world. Throughout the march of history, hierarchies became increasingly elaborate. Better-organized societies were able to collect ample tax revenues, raise armies, and provide services more efficiently. Well-run bureaucracies could keep accurate records, organize the flow of information, and cut down on waste. Through the more efficient use of resources, societies could gain power by acquiring military assets, territory, raw materials, and other advantages that would further enhance their power.

  By the mid-nineteenth century, the industrial revolution had brought a new level of organization to private enterprise. Large factories required resources, and men like Vanderbilt, Carnegie, Rockefeller, and Ford built powerful corporations by devising methods for managing assets efficiently. In the mid-twentieth century, Alfred Sloan built the first modern corporation at General Motors and it became the largest private organization the world had ever seen.

  This principle of efficient hierarchies has held true in just about every realm and field of endeavor. In religion, charity, and labor, organizations like the Catholic Church, The United Way, and the AFL-CIO have used hierarchical organization to achieve greater efficiency, allowing for the accumulation of more resources with which an enterprise could compete on a superior basis. They then used those assets to crush or absorb rival entities and gain more power still.

  While specifics would vary, success generally followed a clear, linear path: increase efficiency, acquire more resources, and wield your ever-greater power to keep down those who would try to usurp it. The objective was always the same: the power to shape the environment and determine one’s own destiny. That’s what allowed successful organizations and institutions to influence the actions of others and define the game for themselves.

  Perhaps not surprisingly, over the years a number of scholars have attempted to define power and the correct way to use it. For example, in 1977, Ray S. Cline, a top official at the CIA during the 1960s and 1970s, defined the power of a nation as the sum of population, territory, economy, and military multiplied by strategy and will.37 Theories about power in the private sector have followed in a similar vein. Nobel prize-winning economist Ronald Coase argued that enterprises derived their power from managing two countervailing forces: transaction costs (including informational and search costs) and organizational costs.38 Harvard Business School professor Michael Porter built on Coase’s idea, explaining how firms could use scale to build sustainable competitive advantage through the optimization of value chains. By controlling more of the process by which raw materials were transformed into finished products and delivered to customers, enterprises could continually tilt the playing field in their favor.39

  Yet today, these notions have become largely obsolete. In Serbia, Milošević controlled all of the traditional levers of power, but was still unable to forestall the uprising that Otpor—a ragtag bunch of kids—engineered. John Antioco at Blockbuster was a paragon of effective strategy and planning, but was unable to bring investors and franchisees on board. He left the company in frustration and it descended into bankruptcy. The technology companies along Boston’s Route 128 were widely recognized for their good management and business acumen, but were soon surpassed by the network of freewheeling Silicon Valley upstarts.

  This phenomenon of falling giants is far from anecdotal. Moisés Naím, author of The End of Power, which was, incidentally, the first book that Facebook founder Mark Zuckerberg chose for his book club,40 argues that it is even more widespread than it would first appear. He notes that everyone from chess masters to CEOs retain their status for far shorter periods than they did a generation ago. A study by the consulting firm Innosight found that the average lifespan for a company on the S&P 500 has declined from 33 years in 1964 to a mere 24 years in 2016, and it estimates that it will shrink to just 12 years by 2027.41 Mark Perry, an economist at the University of Michigan, has calculated that of all the companies on the first Fortune 500 list in 1955, 87 percent no longer exist.42 Everywhere you look, the great and mighty are continually being upended. Armies, religions, and even charities are being thwarted by far smaller adversaries who, in turn, later face similarly disruptive challengers.43 As Naím puts it, “Power is easier to get and harder to use or keep.”44

  Yet the truth is that power itself remains, but has shifted from the top of hierarchies to the center of networks, and that’s essential to understanding how to effect change in the modern world. Today, digital technology helps connections to form with blazing speed, upending the traditional forces that drove power in the twentieth century. We no longer need bureaucracies to carry a message, or even, strictly speaking, to organize work. In fact, traditional institutions are finding that conventional hierarchies are often too slow and cumbersome to function in the world today. To paraphrase General McChrystal, in order to compete with networks, they need to become networks themselves.

  CREATING TRANSFORMATIVE CHANGE

  * * *

  This is a book about transformative change and the movements that create it. As we have seen, not all movements are successful. Some begin in a blaze of glory, make a lot of noise, and then fizzle out without achieving much at all. But others perpetuat
e and create a lasting legacy. This isn’t random or by chance. There are reasons that some movements succeed and others fail—notice how CANVAS has been able to repeat its success across the globe—and if we want to effect change in this world we need to understand them. As you will learn in the pages ahead, successful movements combine two aspects:

  The first aspect, which successful movements often share with unsuccessful ones, is network cascades. Hundreds of consumers standing in line at your local Apple store, thousands of protestors rushing to flood the streets of Cairo, Istanbul, or Washington, D.C. Countless fireflies blinking on and off in complete unison to light up entire forests. As individual entities or even small groups, each is negligible. However, when they connect and synchronize their collective behavior, they become immensely powerful cascades. An industry is remade, a country overthrown, the preceding order is no more, and the world is transformed.

  This simple formula—small groups, loosely connected, but united by a common purpose—is one we will see continually throughout the pages ahead. Anytime an idea goes viral and becomes a cascade, we will see those three components. That’s why movements tend to start slowly (sometimes taking years or even decades to gather strength) but grow as the density of connections between small clusters increases, eventually hit a critical mass, and finally explode (or percolate, to use a more technically accurate term) to create the potential for transformational change.

  Sometimes, cascades can be spontaneous, like when enthusiastic fans do “the wave” at a stadium, with little or no planning or forethought. As we have already seen, the longtime activists behind the Occupy movement had been organizing protests for years—in some cases, decades—but nothing had caught fire before quite like their takeover of Zuccotti Park. It was an unusual confluence of forces, including the financial crisis, the political environment, and social media, that made theirs the right message at the right time. Successful movements, however, don’t merely wait for lightning to strike, but develop clear strategies to gain support long before circumstances trigger a window of opportunity.