Kim C. Korn & Human Centric Management: Regenerative Managing for a digitalizing world 23.4.2015
The digitalizing world requires constant focus on creative destruction and exploration – in other words, enterprise regeneration. The newly created Regenerative Managing framework enables organizations to seize this opportunity. Kim C. Korn’s take on regenerative managing takes a very humane view:
”Management needs to adhere human values, something it traditionally doesn’t do. An enterprise is about people and activities (external and internal to the enterprise) working together. People and enterprise should have their abilities, intention and goals aligned. A meaningful purpose is the key for sense of direction.”
Create Advantage Inc. (USA) and Urban Mill (Finland) offered an experimental workshop for pioneering organizations interested in learning about becoming regenerative and self-sustaining themselves. We had a group of 20+ multi-talented pioneers co-creating the managing and workshop concept further with Kim.
Later on the week we visited some of our stakeholders and started managament development dialogue with them, including PolarsSol Oy Executive Group dialogue at 23.4.2015
Next autumn we’ll open up outcomes of this week to a wider audience. Stay tuned!
Joseph Schumpeter tells us that Creative Destruction is the essential fact about capitalism – that is, any market economy. “…an organic process”, the natural state of the economy. Capitalism never is and never can be stationary. What keeps the capitalist engine healthy and moving ahead is the constant creation of - new consumer goods, - new methods of production, - transportation, - new markets, and - new forms of organization … all created by capitalist enterprise.
Then he goes on to tell us that Managing “must be seen in its role in the perennial gale of creative destruction.” The perennial gales of creative destruction IS the standard against which to judge managing. So what do we do with this as we look to reinvent managing?
Segue: So I suggest we think of creative destruction not as a threat but as our opportunity and means to thrive in the globalized market economies.
-----Quote Notes----------- “The fundamental impulse that sets and keeps the capitalist engine in motion comes from the new consumer goods, the new methods of production or transportation, the new markets, the new forms of industrial organization that capitalist enterprise creates.” “business strategy only acquires its true significance against the background of that [organic] process and within the situation created by it.” Managing “must be seen in its role in the perennial gale of creative destruction.” “It must be seen in its role in the perennial gale of creative destruction; it cannot be understood irrespective of it or, in fact, on the hypothesis that there is a perennial lull.”
In rethinking managing, let’s first off understand that Creative destruction is Regeneration. And realize that when it comes to creating value for our customers, we all live in a regenerative world. So Creative Destruction cannot be ignored , resisted, or even tempered, but must be embrace.
And it takes a regenerative enterprise to embrace creative destruction in order to thrive. Creating regenerative enterprises stands as the predominant challenge of managing.
And I suggest that the shift to regenerative enterprises is inevitable because the enterprises that master creative destruction will wipe away those that do not.
The ultimate challenge of managing: Create Regenerative Enterprises.
…making objective observations of the world around us, and from those observations, and only those observations, build an understanding of the true possibility of managing and enterprises to create value.
Newton observed natural phenomena in order to discover laws of nature. Likewise, we observed managing phenomena in order to discover the laws of managing.
The enterprise has two fundamental elements. There are the people of the enterprise, those engaged in some manner with its value creation. There are the activities they carryout with their engagement. And these two elements are inseparable, with the people carrying out the activities and the activities compelling the people to act. So, at least for now, this is where we will leave our exposition of the enterprise.
The law of potential addresses (click) the individual domain of value creation. (click) Managing's objective for this domain is to Offer Work to the Individual in order to Induce Engagement (click) The whole person first principle came from Peter Drucker's insights into people as human resources as opposed to machine-like resources. (click) The Innate Needs first principle come from Deci and Ryan’s identification of specifically what’s required to open up people’s intrinsic motivation in the work they do. (click) With the first principles and the law, we derive the managing imperative: “Managing must unleash potential within workers, engendering intrinsic motivation by fulfilling their innate needs. This brings forth the full possibility of each person and, therefore, the enterprise as a whole.
Segue: Next up, the law of meaning.
---------------Notes---------------- 1st First Principle: Peter F. Drucker (American management consultant, educator, and author. 1954 book The Practice of Management) called for management to view people as human resources rather than as human resources. He identified the need for enterprises to employ the “whole man not an economic subsection thereof.” Conventional managing has a mechanistic view of people while regenerative managing has a holistic view. Drucker understood that a mechanistic view places great limitations on human potential.
Douglas McGregor’s (MIT Sloan School management professor, 1960 book The Human Side of Enterprise) Theory X management parallels conventional managing with its close supervision and comprehensive system of controls due to its mechanistic view of people; while his Theory Y management assumes employees to be ambitious, creative, self-motivated, and exercise self-control.
2nd First Principle: Edward L. Deci and Richard M. Ryan determined that all people have three innate needs: (1) competence, growing personal effectiveness in a rewarding pursuit; (2) relatedness, a sense of belonging with security in one’s interrelationships, and (3) autonomy, the freedom of self-regulated action. These “Innate psychological needs for competence, relatedness, and autonomy… refer to innate and life-span tendencies toward achieving effectiveness, connectedness, and coherence.”
Satisfying people’s innate need for autonomy stands out as the most antithetical to conventional managing. On the other hand, in the case of regenerative managing, the exercise of volition to self-organize by each person becomes a key factor in producing a regenerative enterprise.
People whose innate needs are fulfilled become intrinsically motivated and therefore fully engage in their own self-realization with their work.
Conventional managing imposes extrinsic motivation, the result of which decreases performance towards the broader mission of an enterprise.
Edward L. Deci: Professor of Psychology and Gowen Professor in the Social Sciences at the University of Rochester, and director of its human motivation program. Richard M. Ryan: American professor of psychology, psychiatry and education at the University of Rochester. Along with professor Edward L. Deci, he is the co-creator of self-determination theory, one of the most influential theories of human motivation. Self-determination theory is a macro theory of human motivation that differentiates between autonomous and controlled forms of motivation
The law of meaning addresses (click) the self-interest domain of value creation. (click) Managing's objective for this domain is to Effect Alignment of Self-Interest in order to Bring About Organization (click) The personal meaning first principle came from Victor E. Frankl's insights into personal meaning as humanity’s main concern. (click) Whereas the personal meaning means just that, personal, the meaningful purpose first principle refers to the enterprise as a whole. It’s enterprise leaders’ duty to ascertain this meaningful purpose for the use of every person of the enterprise. (click) With the first principles and the law, we derive the managing imperative: “Managing must infuse meaning through a sense of purpose shared across all workers. This aligns their thinking, behaving, and acting with the meaningful purpose of the enterprise.
Segue: Next up, the law of creativity
---------------Notes---------------- 1st First Principle: Victor E. Frankl (Austrian neurologist and psychiatrist as well as a Holocaust survivor) described humanity’s main concern as discovering and pursuing personal meaning in life. Alfie Kohn (American author and lecturer) and Mihaly Csikszentmihalyi (Distinguished Professor of Psychology and Management) further recognize meaningful work – doing something that makes a difference – as essential to having a good job. “The essence of our humanity centers on taking personal responsibility, regardless of circumstances, to discover and pursue meaning in life. – Victor E Frankl People want consequential jobs… one that provides meaning. Key question: “Are we making a difference?” – Mihaly Csikszentmihalyi
2nd First Principle: Kim C. Korn & B. Joseph Pine II identify meaningful purpose as essential to aligning intrinsically motivated workers. Intrinsic motivation goes hand-in-hand with pursuit of a meaningful purpose. And to have a group of intrinsically motivated people collaborating in a common pursuit means ensuring the have a shared sense of meaningful purpose.
The meaningful purpose is the guiding star on the horizon for all people involved with the enterprise. Unlike visions, it is never achieved, while vision after vision, even 30 year visions, eventually become reality, but the meaningful purpose persists indefinitely.
Definition of a Meaningful Purpose Enriches greater humanity; Simultaneously enriches the workers within the enterprise; Aligns all employees, partners, and stakeholders in the direction and movement of the enterprise; Functions as a two-edged sword, determining what is in and what is out (including who is in and who is out, as every employee must ascend to the proposition it makes); Works for the people who choose to be in (whether or not those who do not so choose view it as silly, trite, or unworkable); and Is concise, evocative, and timeless.
The law of creativity addresses (click) the economies domain of value creation. (click) Managing's objective for this domain is to Discover Opportunities in Economies in order to Mold Ecosystems (click) The indigenous innovation first principle comes from Nobel Laureate Edmund Phelps economic research that explains that flourishing comes from within, and not from outside of, economic systems. (click) The surprise innovation first principle comes from the American Economist, George Gilder, who finds the true nature and result of effective innovation… - ”comes through “learning and discovery,” where “surprises that arise from the exercise of free will and human creativity” - is by its very nature unknown beforehand, and therefore - remains everywhere and always unpredictable. (click) With the first principles and the law, we derive the managing imperative: Managing must liberate creativity by applying intuition and exercising the free will of workers. This allows the enterprise to discover surprising ecosystem-molding and wealth-producing opportunities that lie ahead.
Segue: Next up, the law of learning
1st First Principle: Edmund Phelps (Nobel Laureate in Economics) explains that the mass flourishing arises from "the structuring of. . . economies for the exercise of indigenous creativity and pathways from there to innovation.” This “indigenous innovation” draws on “the creativity and intuition that lay inside” the various ecosystems within economies, rather than from outside forces and discoveries, as conventionally thought. Mass flourishing arises from “the exercise of indigenous creativity and pathways from there to innovation.” The true source of innovation resides within… enterprises, not from external forces.
2nd First Principle: George F. Gilder (American economist) proposed that “expansion of wealth” comes through “learning and discovery,” where “surprises that arise from the exercise of free will and human creativity” create greater value than pursuing monetary rewards. [In 2013 he published Knowledge and Power: The Information Theory of Capitalism and How It is Revolutionizing Our World, which reformulated economics in terms of the information theory of Alan Turing and Claude Shannon.] The true nature and result of effective innovation is by its very nature unknown beforehand, and therefore remains everywhere and always unpredictable. The element of surprise sets the ultimate standard for enterprise innovation, referring to that which goes beyond predictable incremental improvements, learning curves, and returns to scale to rival that of the ecosystems in which the enterprise participates.
The law of learning addresses (click) the resources domain of value creation. (click) Managing's objective for this domain is to Generate Knowledge from Resources in order to Develop Capabilities (click) The Exploration & Exploitation first principle comes from the preeminent organization scientist James G. March who discovered that enterprises must simultaneously and continually employ two types of learning: one, exploit old certainties to gain knowledge for creating greater immediate value, and two, explore uncertainties to gain knowledge for creating even greater new value farther into the future. (click) The orchestration first principle comes from our observation that enterprises must orchestrate exploration and exploitation. This is due to their inherently conflicting nature, a paradox to be embraced through orchestrating the exploring and exploiting learning of the enterprise. (click) With the first principles and the law, we derive the managing imperative: Managing must invigorate learning through the ongoing orchestration of exploration and exploitation. It must explore to discover the unknown, exploit the known, and orchestrate all learning to realize value in operation.
Segue: Next up, the law of humanity
1st First Principle: James G. March (preeminent organization scientist) discovered that enterprises must simultaneously and continually employ two types of learning: one, exploit old certainties to gain knowledge for creating greater immediate value, and two, explore uncertainties to gain knowledge for creating even greater new value farther into the future. Exploration vs Exploitation for new possibilities vs. of old certainties experimentation and new alternatives vs. refinement and extension of existing competencies, technologies, and paradigms returns are uncertain, distant, and often negative vs. returns are positive, proximate, and predictable
But exploration and exploitation are inherently in conflict, a conflict which most companies do not deal with well.
2nd First Principle: Kim C. Korn & B. Joseph Pine II establish that enterprises must orchestrate exploration and exploitation. This third type of learning fosters, balances, and integrates the inherently conflicting activities of exploration and exploitation. Without it, knowledge formation, and therefore capability development, eventually degenerates.
The law of humanity addresses (click) the offerings domain of value creation. (click) Managing's objective for this domain is to Establish Businesses providing Offerings in order to Create Customers (click) The Economic Values first principle comes from Peter Drucker who declared business to be a “process that converts an outside resource, namely knowledge, into outside results, namely economic values.” And in conjunction with this, “There is only one valid definition of business purpose: to create a customer.” (click) The human values first principle comes from our assertion that the best way to create and sustain economic value is by upholding human values. Business leaders must come to embrace the notion that enriching humanity is not in conflict with creating profits and that they have a moral obligation to do so as well. (click) With the first principles and the law, we derive the managing imperative: Managing must enrich humanity with compelling economic offerings. This creates the value both desired and deserved by not only customers but workers and society at large.
Segue: Next up, the law of vitality
1st First Principle: Peter F. Drucker declared business to be a “process that converts an outside resource, namely knowledge, into outside results, namely economic values.” And in conjunction with this, “There is only one valid definition of business purpose: to create a customer.”
2nd First Principle: Kim C. Korn & B. Joseph Pine II assert that the best way to create and sustain economic value is by upholding human values.
The Law of Humanity: Only the enterprise that enriches humanity, through the knowledge embedded in its business activities, creates offerings of unquestionable economic value.
Business leaders must come to embrace the notion that enriching humanity is not in conflict with creating profits and that they have a moral obligation to do so as well.
The law of vitality addresses (click) the operation domain of value creation. (click) Managing's objective for this domain is to Execute Actions in Operation in order to Sustain Wealth (click) The Creative Destruction first principle comes from Joseph Schumpeter who declared that economies evolve due to the creative destruction that “incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.” (click) The Destructive Recreation first principle comes from our insight that that withstanding “the perennial gale of creative destruction” requires that an enterprise's own operation be destroyed and recreated incessantly. (click) With the first principles and the law, we derive the managing imperative: Managing must attain vitality by destructively recreating the enterprise over and over again. This creates a trajectory of endless potential, new-to-the-world offerings, and continual enterprise transformation, which sustains the wealth necessary to survive.
Segue: Next up, the law of Coherence
1st First Principle: Joseph A. Schumpeter (economist and political scientist) noted that economies evolve due to the creative destruction that “incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.” Economies evolve, Sustain Wealth, and remain vital when the process of ever-changing markets, offerings, and enterprises “incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism.
2nd First Principle: Kim C. Korn & B. Joseph Pine II observe that withstanding “the perennial gale of creative destruction” requires that an enterprise's own operation be destroyed and recreated incessantly. Destructive recreation – what any enterprise must do to withstand the Schumpeterian gale, destructively recreating itself over and over again by innovating within the enterprise at least as much as is going on in its ecosystems. Anything less and the enterprise will eventually get blown over by others moving faster, operating better, and creating greater value.
The law of coherence addresses (click) the enterprise domain of value creation. (click) Managing's objective for this domain is to Integrate Value Creation of the Enterprise in order to Unify the Whole (click) Its singular Coherence first principle recognizes the need for managing to ensure coherence throughout the enterprise. (click) With this first principle and the law, we derive the managing imperative: Managing must gain coherence by fostering, balancing, and integrating the domains of value creation with its practices. This perpetually unifies the enterprise to regenerate itself, and thereby thrive forever.
Only First Principle: We proclaim that only by gaining coherence among all of the domains of value creation, while adhering to the laws of managing, does the enterprise regenerate itself to thrive forever.
Coherence: Dynamic Alignment & Integration Value Creation & Managing In a Fractal Manner Pro-Active & Post-Active Orchestration
Backwards around the circle: Workers regenerate the enterprise… when they vitalize it with continual re-creation to sustain wealth (law of vitality)… in accord with economic value creation & human Values to create customers (law of humanity)… with knowledge generated to develop capabilities (law of learning)… recognizing the appropriate possibility space and discover value-creation opportunities (law of creativity)… aligning all activities with a meaningful purpose (law of meaning)… finding intrinsic motivation in self-realization (law of potential)
The completed Managing By Domain framework gives us a comprehensive definition of regenerative managing. In fact, it is likely the first ever comprehensive definition of managing ever produced, but for sure the first one based on objective observation.
It may be a bit of an eye chart, but its scope of what it represents is massive.
Segue: Well now you have seen it all, the whole picture of regenerative managing.
Kim C. Korn & Human Centric Management: Regenerative Managing for a digitalizing world 23.4.2015