Game Changers: Playing To Win The Future
 

Game Changers: Playing To Win The Future

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By Julian Birkinshaw, and Jonas Ridderstråle ...

By Julian Birkinshaw, and Jonas Ridderstråle

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Enjoy the following preview of Game Changers – Chapter One: Game On Compliments of ADP

Change is inevitable. Businesses need to rethink delivering human capital management services with a complete solution. Technology is only part of the answer. Combining the right people with the right processes and technology is the way to gain a competitive edge and focus on what really matters—the strategy of the business.

Repeating the past won’t bring about change. Don’t be afraid to challenge the status quo. Change the game.

This first chapter of the soon-to-be-published book will show you how to power your organization shift and effectively manage your #1 asset—your people—to fuel your business success.

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Game Changers: Playing To Win The Future Game Changers: Playing To Win The Future Document Transcript

  • GAME CHANGERS Playing TO WIN THE FUTURE Julian Birkinshaw Jonas Ridderstråle Enjoy the following preview of GAME CHANGERS – Chapter One: Game On COMPLIMENTS OF
  • : Delivering Human Capital Management Change is inevitable. Businesses need to rethink delivering human capital management services with a complete solution. Technology is only part of the answer. Combining the right people with the right processes and technology is the way to gain a competitive edge and focus on what really matters—the strategy of the business. Repeating the past won’t bring about change. Don’t be afraid to challenge the status quo. Change the game. This first chapter of the soon-to-be-published book will show you how to power your organization shift and effectively manage your #1 asset—your people—to fuel your business success. Enjoy the following preview of GAME CHANGERS – Chapter One: Game On COMPLIMENTS OF ADP - ReThink Human Capital
  • Chapter ONE: GAME ON “His wealth was based on controlling important trade routes and commodities such as salt and gold.” Mansa Musa was born the son of Kankou, the grandson of Abu-Bakr and the brother of Sundiata Keita. He led what has been described as a quiet and pious life. In all likelihood, you’ve never heard of Mr. Musa. Yet, Mansa is the richest person to ever have walked the face of our planet. In fact, he was so rich that his wealth makes the fortune of no less a sage than Bill Gates seem quite paltry. It is estimated that Mansa Musa controlled assets worth about 318 billion Euros. Compare that to the meager 57 billion Euros that recently qualified our old friend Mr. Gates as the richest person in the world. From 1312 to 1337, Mansa Musa, aka the Emir of Melle and the Lord of the Mines of Wangara, ruled the Malian Empire – stretching from present day Mali to the African west coast, including territories now forming parts of Senegal, Gambia, Niger and Mauretania. His wealth was based on controlling important trade routes and commodities such as salt and gold. At times, the prospering Malian Empire accounted for as much as half of worldwide production of gold from its mines in the Bambuk area in what is now Senegal. Toward the end of his life, being a devout Muslim, Mansa went on a pilgrimage to Mecca. He was accompanied by 60,000 men, 12,000 slaves, who each carried 4-lb. gold bars, heralds, horses, and 80 camels that, according to varying reports, carried anything from 50 to 300 pounds of gold dust each. Returning from Mecca, Mansa Musa embarked on a final series of major building projects, raising the mosques in Timbuktu and Gao. He sponsored advanced research in the fields of mathematics, astronomy, literature and arts, initiating an economic and intellectual expansion that continued into the later Middle Ages. Mansa Musa managed to establish Mali as a global economic super-power and one of the intellectual capitals of the world. He was a game changer. Then, the game changed.
  • Chapter ONE: GAME ON 4 Today, the Republic of Mali is plagued by a violent religious civil war. It is among the 20 poorest countries in the world. In the United Nations Development Programme (UNDP) human development index, Mali ranks as number six – from the bottom. Shifts happen! Seasons come and go, and the same is true of riches and glory. Mali was one of the wealthiest countries in the world, and today its one of the poorest. And look at a list of the biggest and most influential cities in the world in the year 1000 – it included Cordoba, Kaifeng, and Baghdad. Not exactly the places that today’s power brokers and billionaires choose as their home cities. “Eastman Kodak had all the intellectual capital in the world, but still failed to realize that from digitization follows that access to stuff often becomes more important than ownership of stuff. ” The same phenomenon gets played out in the corporate world, and indeed the cycle time is a whole lot shorter. Of the companies that made up the original Dow Jones industrial average a century ago, only one (GE) is still in the index. Of the top 100 firms in the UK in 1907, only three were traded independently a century later. The same story, by the way, is true in Asia and beyond. Permanence has no place to rest. Think about Eastman Kodak. Once it was the Google of its day – a cool, innovative and funky firm that completely dominated the early days of photography – but it was unable to respond effectively to the digital revolution and declared bankruptcy in 2012. Kodak went for a strategy focused on individual printing rather than virtual sharing of photos on the web. “You press the button, we do the rest.” said their famous 1888 slogan. It’s just that in recent years the meaning of “the rest” really changed while Kodak didn’t. 125 years after the catchphrase, “we” did them in. Eastman Kodak had all the intellectual capital in the world, but still failed to realize that from digitization follows that access to stuff often becomes more important than ownership of stuff. A few months after Kodak’s bankruptcy, Facebook acquired the popular photo-sharing application company Instagram for a billion dollars – an organization with a mere 13 employees. The photo-sharing program had been launched in October 2010. Kodak is not alone. The average life span of a listed corporation is now about 40 years. It used to be that organizations outlived the people working for them. Today, the opposite is true. While we live longer and more prosperous lives, most corporations pass away before reaching adolescence, if they even reach their teens. Places like Silicon Valley and other creative clusters are not only marked by their ability to create wealth, but also by extremely high levels of corporate mortality. Like it or not, corporations seemed to be around forever. Now, they are more disposable than ever.
  • Chapter ONE: GAME ON 5 The average life span of a listed corporation ToDAY 10 20 30 40 YeaRS YeaRS YeaRS YeaRS “While we live longer and more prosperous lives, most corporations pass away before reaching adolescence, if they even reach their teens. ” Or consider individual careers in business and elsewhere. The average tenure of a CEO is down to around three years. Ditto in Music: look at the Billboard 200, the weekly ranking of the 200 best selling albums in the US. The list of artists with most top-ten albums is topped by acts such as The Rolling Stones, Frank Sinatra, Barbara Streisand, The Beatles and Elvis – artists that all peaked in the 50s, 60s and 70s. The list of most weeks at number one features only two albums from the 1990s or later – The Bodyguard Soundtrack with Whitney Houston, and the absolutely unforgettable Please Hammer, Don’t Hurt ‘Em by MC Hammer from 1990. But, while you cannot control the seasons, you can actually do something about your ability to create wealth and sustain success. For every ten Timbuktus and Baghdads, there is a London or a Beijing – cities that have been resilient to changes in economic fortunes over centuries. For every one hundred Kodaks or Nokias, there is a company like GE that has shown a remarkable resilience and ability to reinvent itself time and time again. And while hammer time certainly came for MC Hammer, every once in awhile there is a Bob Dylan who has continued to make a series of unexpected come backs since his game-changing move to go electric back in 1965. Becoming a serial game changer is not like learning to fly. It is not an impossible dream. This observation is at the core of our book. Economic progress – for cities, firms, and individuals – has winners and losers. But progress doesn’t happen in a random fashion. Yes, the forces of change are complex and hard to evaluate. But they also have predictable elements, and by learning the lessons of history, as it is often said, we can avoid repeating them.
  • Chapter ONE: GAME ON “ little man A called Albert Einstein published his theory of relativity and shattered hundreds of years of research in the field of physics.” 6 Creative destruction – the first paradox of progress At the very core of a market economy we find entrepreneurship, innovation, change and turmoil. Stability and permanence are completely anathema to turbo capitalism. If we could take the modern global economy and put it under a huge electron microscope, in the nucleus of it we would find a force that legendary Austrian economist Josef Schumpeter once called ‘creative destruction’. Creative destruction drives all progress – individual and organizational. And creative destruction is paradoxical. Per definition, every act of creation is also an act of destruction. Every bad idea, and let’s face it, most ideas are exactly that, is of course just destructive. Great ones, however, happen to be both. When you create something, you also destroy some things. Is it any coincidence that Shiva – in the Hindu tradition - is the creator as well as the destroyer? Obliteration begets innovation; and innovation begets obliteration. Yin and yang. Examples of creative destruction can be found in all walks of life. A little man called Albert Einstein published his theory of relativity and shattered hundreds of years of research in the field of physics. All the professors’ books and lecture notes relegated to dusty history by one idea. The rise of creative cities like London, Geneva and Boston spurred the decline of industrial cities like Manchester, Marseilles and Detroit. Apple launched the iPhone and almost destroyed former manufacturer of rubber boots and toilet paper Nokia. The principle is the same in music, architecture, warfare, and politics. It is omnipresent.
  • Chapter ONE: GAME ON 7 The establishment The Game Changer NEW Order “ never thought I I’d be asking Cher to hold my meat purse.” - Lady Gaga The creative destruction paradox – the more we create, the more we destroy – is central to our story. Indeed, it is perhaps the ultimate paradox of progress. It has three key components. First, there is the game changer, the individual or organization with the heretical idea that radically transforms the outcome of a situation or indeed redirects our future. Second, there is the establishment, who initially resists and then seeks to adapt to the game changer’s new world view. Third, there is the creation of a new order, and the transformation of the game changer into a member of the establishment he or she sought to destroy. And the cycle begins again. Let’s look at each element in turn. The Gaga Game Changer September 13, 2010, a young American woman aged 24 was allegedly seen shocking the world. The scene was the MTV Video Music Awards at the Nokia Theater in LA. The young woman’s name is Stefani Joanne Angelina Germanotta. You probably know her better by her stage name: Lady Gaga. Game changers are predictably unpredictable. The dress, hat, shoes and purse Gaga decided to wear for the occasion were all made out of cuts of meat. After she had picked up seven awards for the single “Bad Romance” (bringing it to an historical tie with Ah-a’s 1986 hit “Take on me” – for those of you a bit older), she slyly noted, “I never thought I’d be asking Cher to hold my meat purse”. Game changers rarely work alone. These days, and as will be discussed at some detail later on, they come with a “posse” – they know how to combine know-how with know-who. Gaga’s dress was made in collaboration with Argentine artist and designer Franc Fernandez. “Bad Romance” was written together with Swedish/Moroccan producer Nadir Kayat, a.k.a. RedOne. The song was Stefani’s way of processing some time in Germany and Eastern Europe where she tried to find new inspiration for dealing with her “love monsters”.
  • Chapter ONE: GAME ON 8 Creative destruction increasingly happens everywhere, anytime and can be triggered by just about anyone. Witness the current rise of aggressively independent and technologically savvy female game changers. From the fictional likes of Lisbeth Salander of the best-selling novel The Girl with the Dragon Tattoo, to the factual ones of Germany’s Angela Merkel, this is the Gaga Saga – the tale of modern life on our planet. Think of Buddha, Muhammad and Jesus – the iconic persons we associate with the world religions. Think Newton, Darwin and Curie – the geniuses of science. Think Zheng He, Columbus and Armstrong – the great explorers. Think Picasso, Mozart and Maria Callas – artists extraordinaire. These are but a few of the game-changing individuals who have sparked revolutions in their fields of endeavor. In business, game-changers are equally profound in their impact on economic progress. Behind most of the big success stories of recent years – Ikea, Apple, Southwest Airlines, Google, Virgin, Fedex, Zara – was a revolutionary move that took competition by surprise and provided the game changer with a “temporary monopoly” – the Holy Grail of commerce. And the process of creative destruction is occurring before our eyes as we write: Netflix is changing the way we consume video content; Spotify is transforming how we access and enjoy music; Tesla is challenging the hundred year dominance of the internal combustion engine; and the Khan Academy and Udacity are promising to revolutionize education. The establishment fails to react How then does the establishment – the people and the institutions holding power – respond to game changers? It’s the usual cycle – shock and disbelief, followed by anger and negotiation, and then finally acceptance. Consider the exhibition held at 35 Boulevard de Capucines, Paris, from April 15 to May 15, 1874. It was the first showing of impressionist paintings, and it featured 165 works by artists such as Degas, Renoir, Monet and Cézanne – those who were not allowed by the establishment to display their paintings at the famous Salon. The press slaughtered them - especially the two latter artists. Inspired by Monet’s painting Impression: Sunrise, the renowned critic, Louis Leroy, called his satirical review “The Exhibition of Impressionists” – implying that what was on display were merely sketches. By discrediting their work, however, he also gave this radical movement its name. And gradually these artists came to be accepted by the establishment. April 10, 2011, the Royal Family of Qatar bought The Card Players by Paul Cézanne, for approximately 260 million dollars, making it the most expensive painting ever.
  • Chapter ONE: GAME ON I t is rumored that Nokia’s only comment to the launch of the original iPhone was; “This is not a mobile phone”. 9 Similar stories are played out in the business world. You may not remember Digital Equipment Corporation (DEC), but in the 1980s and early 1990s it was one of the hottest companies in the world. At its peak DEC was number two in the computer industry, and employed in the excess of 100,000 people. Its legendary CEO Ken Olsen famously rebutted the vision of Bill Gates about a computer on every desk with the phrase “a computer in every closet” and argued that; “there is no reason for any individual to have a computer in his house”. The company enjoyed enormous success with its VAX/VMS minicomputers. But DEC was so successful that it became completely blind to the changes occurring as an effect of rapidly improving microprocessors. Moving beyond the traditional focus on VAX/VMS products would have meant travelling down a new and unknown learning curve, developing new expertise, new routines, and changing the business model. Now why would one of the most successful companies in the world do that? Of course it didn’t, and it missed the entire PC industry. In 1998, Compaq acquired what remained of DEC. It is rumored that Nokia’s only comment to the launch of the original iPhone was; “This is not a mobile phone”. It certainly wasn’t, but not in the way conceived by the leaders of the pride of Finnish industry. Why then do incumbents, and other parts of the establishment, struggle to react? What are the sources of inertia that make it so hard for companies, sports teams, or artists to respond in a positive way to game-changers? Here are some of the key factors: Power: Those at the top of the hierarchy ended up there because they were experts at what was important yesterday. Their implicit priority is to protect their legacy, and that makes them cautious and conservative. Psychology: Human beings are programmed to avoid uncertainty. Business as usual may be tedious and it may offer diminishing returns, but it feels safer than branching off down an uncharted and potentially dangerous track. We go for surviving rather than potentially thriving. Performance: Success gives rise to rigidities. Human beings are good learners, and the more positive feedback we receive around one course of action, the more we repeat that action. Over time, exploitation of givens crowds out creation of novelty. Academics call this a “competency trap”. Promises: Organizations get trapped in a web of commitments to suppliers, customers, employees and other stakeholders (think of GM and Ford’s union and healthcare obligations). Even when they want to change direction, these promises are very hard to break. Permanence: Breaking up is hard to do. Even if the raison d’etre of the organization no longer exists, most of us experience separation anxiety. Existence is, for most of us, preferable to non-existence, life is better than death.
  • Chapter ONE: GAME ON “ y the end B of George Orwell’s Animal Farm, the victorious pigs were almost indistinguishable from the humans they had sought to overthrow.” 10 1984 These are the reasons why incumbents typically fail to react, and they are pretty powerful. But they aren’t unstoppable, and we can all think of exceptions to the general rule: DEC missed the PC industry, but IBM did not; Kodak was blind-sided by digital imaging but Fuji was not. We will have a lot more to say about these exceptional cases later: in some ways, their stories are what this entire book is about. The game changer becomes part of the establishment By the end of George Orwell’s Animal Farm, the victorious pigs were almost indistinguishable from the humans they had sought to overthrow. And so it goes in real life – Live Aid’s Bob Geldof, Paul Weller of the Jam, Bruce Springsteen and Madonna were all game-changers in their time, and now they are just part of the establishment. In 2003, Mick Jagger of the Stones became a Knight of the realm. In the world of business, Microsoft was the revolutionary par excellence in the 1980s, and now it is the big beast that is doing everything it can to protect its turf. And before Microsoft came Hewlett Packard – the original Silicon Valley start-up, and now a 330,000-employee behemoth that spans the globe, and struggles to stay relevant. Who’s next? This is also the main reason why you don’t need to worry about your kids ever getting a tattoo, at least not if they are still in their teens. Way back in history, a tattoo was a sign of deviance. No more. Let’s look at the sequence – Sailors – Hell’s Angels – Rock Stars – Footballers – Blokes partying on Ibiza – Your parents! Game changing is typically a revolutionary move and a reaction against the establishment. Then it becomes part of it. These days, if your kids decide to get a tattoo, you’d really better worry.
  • Chapter ONE: GAME ON 11 “Or as Dylan put it; “if you’re not busy being born, you’re busy dying”. Evolve, move on, refine or die. Your choice. This, in a nutshell, is the cycle of creative destruction, and it gets played out in all spheres of human endeavor. Some regions, organizations and individuals create and destroy, while the others are merely destroyed. Or as Dylan put it; “if you’re not busy being born, you’re busy dying”. Evolve, move on, refine or die. Your choice. Creative destruction – learning the right lessons from history So far, so good. Recognizing these dynamics is important. But learning the lessons of history is a perilous game - we don’t want to risk fighting the last war over and over. The problem is, while we’re experts at analyzing success and failure in retrospect, we’re novices when it comes to determining how and why some companies are able to sustain their success, while others end up “one-hit wonders” – why some become Springsteen and others Vanilla Ice. You don’t need a PhD in Business Administration to know that over the last few years Apple has been one of the sexiest companies in the world. Neither is it necessary to spend hours and hours in the economic library to arrive at the conclusion that for many years Dell had the fittest business model in the computer industry. Most of us have the ability to spot a great strategy when we see it. The problem is that we’re looking in a rear view mirror. In the bright light of hindsight, we can all pick a winner, but the true challenge we’re all facing is the one of leading our organizations and teams into a pretty uncertain future. And one consequence of our unpredictable times is of course that history can be a really lousy teacher. So it’s not enough just to observe the patterns of creative destruction. We have to also develop a point of view on how creative destruction itself is evolving. And, as we’ll argue, it is changing several respects.
  • Chapter ONE: GAME ON “Number one, the speed of creative destruction is increasing.” 12 Ice cubes in a desert Number one, the speed of creative destruction is increasing. Consider transportation. Some 8000 years ago, the camel caravan was the fastest way to travel – it took you from point a to b at about eight miles per hour. Then for thousands of years nothing much happened. For instance, in 1785 a stagecoach travelled at 10 miles an hour. The first real game changer was the George Stephenson’s Locomotion No 1, a steam engine locomotive that ran from Stockton to Darlington at a top speed of 12-15 miles per hour. About a century later airplanes were doing more than 100 miles per hour and from the early 1960s or so missiles travelled at speeds 18 times higher than that. Ditto with the diffusion of communications technology. It took about 70 years for the telephone to find its way into more than 90% of American homes; the color TV reached this milestone in 30 years, and the mobile phone took 15 years. And the speed of diffusion of new technologies appears to be getting quicker. Psy’s Gangnam Style video reached 1 billion downloads in just 6 months. What does this mean for the business world? The waves of creative destruction are hitting the shore more frequently than they used to. This means that every contemporary game-changing move comes with an extremely limited shelf life. The window of opportunity to exploit any move or wave is shrinking. The best of times is becoming shorter by the minute. Around every corner there seems to be a potential copy-cat or copy-and-improver. In fact, the concept of competitive advantage these days has a lot more in common with ice cubes than diamonds.
  • Chapter ONE: GAME ON “Diamonds are the hardest naturally occurring material; ice-cubes are unstable and prone to melt away.” 13 Diamonds are the hardest naturally occurring material; ice-cubes are unstable and prone to melt away. And the increasing competitive intensity most companies are facing today is akin to protecting your ice-cube from melting in a desert. Welcome to corporate Kalahari. Do nothing, or the wrong thing, and in an instant you are left with wet sand – like Sony, Chrysler, Blockbuster and so many others have been forced to realize. As we will argue later on, the world of business and beyond is becoming increasingly liquid – everything is floating, nothing is solid. Yesterday’s monopolies were temporary. Today they are liquid. In effect, the only advantage worth having is an evolutionary one – the ability to constantly re-invent and re-delight your customers. The challenge we all face is one of becoming a serial game-changer; to constantly and continuously make new ice cubes in the dessert – to move from 1.0 to 2.0 to 3.0 ad infinitum. Ponder this for a moment. We like to celebrate success, but there is only so much we can learn from a one-hit wonder. Why was Psy’s Gangnam Style the big hit of 2012? Was it the Asian renaissance? Why did Angry Birds become the hottest mobile game? The revenge of Pigs in Space? The correct answer: A combination of skill, careful management, and then a massive dose of good luck – being in the right place at the right time. There is no shame in being lucky, but we can’t infer a lot of meaningful lessons from these stories. The real learning comes from understanding the artists, sports teams and businesses that succeed time after time, and in very different circumstances.
  • Chapter ONE: GAME ON “carus being the I guy in the Greek legend who attached feathers to his arms with wax, flew too close to the sun, and fell to his death. ” 14 For example, Madonna used to be a serial game changer - constantly reinventing herself. And in the business world it’s Amazon – once just an online book retailer, now a digital entertainment powerhouse – that we should be trying to make sense of, not Facebook or Google. Google may be a very cool company, but it still makes some 97% of its profits from sponsored advertising on search. It hasn’t yet made the transition from one-hit wonder to serial game changer. So in a world where creative destruction happens more frequently, there is an important shift in mindset needed for all of us – competitiveness isn’t about defending our current assets, it is about agility, the capacity to stay abreast of the changes in the environment around us. We will spend quite a bit of time below, and in the next two chapters, looking at these changes. Self-destructing paradigms The second important point about creative destruction is that, in business, each big wave of creative destruction carries with it the seeds of its own destruction. This is a variant of what is sometimes called the Icarus Paradox – Icarus being the guy in the Greek legend who attached feathers to his arms with wax, flew too close to the sun, and fell to his death. In the world of business, many companies –from Enron to Sun Microsystems (no pun intended) to DEC to Vivendi – have fallen prey to the Icarus Paradox, by pushing what made them successful to such an extreme that it became the seeds of their subsequent downturn. But the Icarus Paradox doesn’t just apply at the level of individuals or companies – we believe it plays itself out on a much broader scale as well – at the level of management paradigms. Here’s the argument. Go back in time to the industrial era, starting in the mid-nineteenth century and going through to roughly the Second World War - the era when physical and financial capital were the most critical resources. Back then the preferred organizational model was based on the principles of an ideal bureaucracy. The combination or a relatively stable environment, at least by today’s standard, and having strategic knowledge concentrated with a few key players – professional managers – meant that the situation could be handled by putting in place a complex structure based on simplification of tasks and specialization of labor. This was a firm of thinkers and doers. The logic was vertical. Tasks were broken down and divided into subtasks that could be handled by relatively unskilled labor overseen by the next layer of the organization, and so on.
  • Chapter ONE: GAME ON 15 “In ‘Nerdworld’ it was knowledge, rather than labor or capital, that was the scarce resource.” But this model had its limits – employees became disengaged, creativity and discretionary effort were squandered, and investment became focused on the opportunities with the most secure short-term returns. By focusing on the efficiency of labor and capital, industrial companies not only became soulless and lacking in purpose, they also limited the responsibility for re-invention to those that had the most to protect. Which led to the inexorable, though gradual, emergence of knowledge companies – where the workers are in control of the means of production themselves. One of us wrote Funky Business a decade or so ago, to shed light on this new model of management – one in which creativity, innovation and collaboration were encouraged, and where the most influential people were the ones with the most valuable knowledge and insights. In ‘Nerdworld’ it was knowledge, rather than labor or capital, that was the scarce resource. And this shift in the basis of competitiveness led to a shift in the dominant management model. The preeminence of knowledge gave rise to increasingly meritocratic structures. In this competence based management model power rested with talent rather than titles. The managerial challenge was more about attracting the right talent and giving it the opportunity to dance, rather than squeezing the most outputs out of a given set of inputs. But what happens next? If every wave of creative destruction holds the seeds of its own destruction, we need to develop a point of view on the limitations of the knowledge economy. The current model is not immune to the first paradox of progress. It may not self-destruct within the next five seconds, like in a Mission Impossible episode, but even for super models, like bureaucracy and meritocracy, eternal life is a mission not possible. Our view, which we will play out in much greater detail in the second half of this book, is that too much focus on knowledge brings with it a couple of serious challenges. One is that creates an attention deficit. We are constantly bombarded with new stimuli, and often from multiple media at the same time. Information about any issue we care about is available at our fingertips. In such a fast-paced and information-rich world, the scarce resource is no longer knowledge – it is our capacity to focus our attention on what matters, and our ability to secure worthwhile relationships that don’t get lost in our everyday busyness.
  • Chapter ONE: GAME ON 16 WECOME TO PARADOX CITY This transition away from knowledge as the primary source of competitive advantage is a bit scary. Most of us have just about got used to the idea that knowledge is what matters, and now we have to start thinking about the next big thing – and the one after that. This then is the consequence of the great paradox of progress. There are no sustainable sources of competitive advantage any more. Smart companies are the ones that develop the agility to move quickly from one opportunity to the next. They also have an eye on the bigger trends underway in society – the gradual shift from a world where knowledge is the scarce resource to one built on relationships and focused attention. Welcome to Paradox City A paradox is a seemingly self-contradictory statement, but one which often makes sense on further reflection. We have already talked about one major paradox – the more we create, the more we destroy. We now want to introduce two more that lie at the heart of the changes underway in the business landscape. One refers to the increasing gap between individual and collective knowledge: the more we know, the less you understand. There is a growing gap between what ‘you’ know and what ‘we’ know. Knowledge on the societal level is expanding at a rate that no single person can keep up with. The other refers to the increasing gap between the complexity of the business world and our capacity to manage it: the more we connect, the less we can predict. In effect, the era of forecasting and planning is coming to an end. In the next two chapters, we explore these two paradoxes in great detail. We discuss the explosion of knowledge and our inability to keep up with it, and we explore the increasing complexity of the world we live in and our incapacity to plan effectively in this ambiguous world. “ paradox is a A seemingly selfcontradictory statement, but one which often makes sense on further reflection. ”