When leaders are faced with uncertainty and radical market changes, they’re hardwired to call on familiar experts to help solve these disruptive problems.
But what happens when these so-called tried-and- tested experts actually contribute to failure?
What if they are part of the problem?
How do we identify the new experts pioneering the new world of work, who keep us ahead of the rapidly changing curve and contribute to sustainable success?
This is the age of radical disruption, in which the speed of change ruthlessly transforms entire industries in nano-seconds. It demands a fresh mindset and skill set, for which most organisations are unprepared.
As Cisco’s Executive Chairman, John Chambers put it: ‘If you don’t re-invent yourself and change your organisation structure – you’re going to get disrupted’. And it’ll be a brutal disruption, where the majority of companies will not exist in a meaningful way 10- 15 years from now. Companies need to re-invent themselves much faster than ever before.
Most Fortune 500 CEOs have woken up to this ‘brutal disruption’ and taken on board the following reality statement: ‘We are under siege from competitors we’ve never seen before – they are achieving unimaginable results at a fraction of our cost and ten times faster than us. We’re rapidly losing market share and great talent.’
Leaders struggle to comprehend the immensity of the change that is coming, often until it’s too late. They know it’s coming, with force, yet are unprepared. Why is this?
In order to address the situation, we need to understand the types of problem with which these leaders are dealing.
Best-selling author Nasim Taleb coined the term ‘black swan’ to describe events that comprise radical changes which impact society with force and were previously unimaginable. What if black-swan events are becoming the new normal and we’ve already entered the age of ‘super-wicked problems’?
Super-Wicked Problems Share 4 Characteristics
- The problem is incredibly complex with no single solution
- Time (to solve it) is against you
- The very experts who created the problem are currently trying to solve it
- The problem did not exist previously, so there are no experts who know how to address it; as a result, the policies created to address the problem are founded upon irrational assumptions.
Be wary of using ‘business-as-usual’ practices when faced with super-wicked problems. It turns out that conventional experts, and tried-and-tested business models, often exacerbate super-wicked problems. Your past successes lead to your future demise.
Leaders are unprepared to handle these problems because they have often misdiagnosed them – they think they can solve complex problems based on their past expertise and leadership styles.
But these super-wicked problems require an entirely different set of skills, a radical shift in perspective and experimentation, with tools that are still being developed.
These elements create the perfect storm: your tried-and-tested expertise create even worse outcomes; outdated business models are used to solve never-before-seen problems; and time is against you.
Why Are the Experts of Today So Quickly Outdated Tomorrow?
Beware experts’ past successes.
I‘m not suggesting that you throw out the baby with the bath water. There are experts who can help your organisation to re-invent itself in order to take advantage of radical changes, but if you invest time and money in the wrong experts, this approach can quickly destroy your entire organisation.
Just because experts use terms such as ‘radical disruption’ doesn’t mean they have had experience in successfully addressing super- wicked problems. Experts may be easily seduced by their past successes, becoming over-conﬁdent in their decision-making abilities and ignoring critical feedback.
Psychologist Daniel Kahneman pioneered behavioural economics and proved how irrational beliefs inﬂuence our choices and decision making. His experiments showed that knowledge and intelligence will not protect you against your irrational beliefs. He demonstrated that experts are hardwired to ‘jump to conclusions from little evidence’ based on their past successes. Their over-conﬁdent illusion of knowing, often bypassing self-scrutiny and evidence that might prove their theories wrong, can – and does – deliver catastrophic results.
In fact, the smarter you are the greater damage you can cause. For example, economists Scholes and Merton almost caused a global ﬁnancial meltdown with their 1997 Nobel Prize-winning hedge fund model. If you love mathematical formulae, this was a true masterpiece; however, it was also the very model that lead to catastrophe.
At the time, Wall Street banks wanted a piece of their ﬁrm, Long-Term Capital Management (LTCM). By 1998, LTCM had exposed America’s largest banks to more than $1trn in default risk, leading them to the brink of a global ﬁnancial crisis. The Federal Reserve stepped in and arranged a $100bn bailout in order
to prevent this.
So How Can Experts Break Free From Deceptive and Pernicious Beliefs?
By always questioning.
The solution is not about having the answers but asking the questions. The way experts ensure they are not overly attached to their cherished models is by continuously questioning their assumptions and asking themselves ‘was I open to contrary evidence? Did I consider alternative assumptions and what’s coming – super-wicked problems?’
It turns out that experts who question themselves have an important advantage: they see themselves as continuously learning and have less ego invested in their proposed models. They are always open to diverse perspectives, realising that increased evidence may bring more compelling hypotheses that factor in more of the complexity of our ever- changing markets.
The human mind seeks order when trying to make sense of chaos. Thus, our response to super-wicked problems is to create and impose models that can make sense of the chaos around us. Businesses develop global best practice to establish reliable standards and benchmarked models of excellence.
Beware Global Best Practice
What happens when these global best practices are also part of the problem? What if they are holding us back and limiting our perspectives?
Global best practice usually comprises practices or processes that have been accepted by world experts due to their consistently successful results. These practices become global standards and a benchmark of quality.
In a radically changing world, which global best practices are still relevant?
Almost all industries look for industry ‘best practice’ as their anchor and organisations measure themselves against these standards. The challenge is that most disruptive innovations come from outside traditional industries – think Uber or Airbnb.
Best practice is based on past success, because the future is undetermined. However, some of the most exciting innovation is happening at the edges of society and business– the uncharted and unknown practices still in formation.
The other challenge is that best practice doesn’t always travel well across borders, due to differing contexts and situations. For example, in Africa, languages, socio-economic conditions and cultural norms can vary drastically from country to country and even within countries.
Always questioning our business-as-usual assumptions, and embracing the uncomfortable world of ‘brutal disruption’, may lead us to question the global best practices we admired. So is there a place for best practices, models and theories if they are so quickly eroded?
The statistician George Box said: ‘All models are wrong, but some are useful’. Accepted models and best practices are built on assumptions and beliefs. Humans are hardwired pattern- recognition machines, seeking and even imposing patterns which feed our beliefs (often irrational).
In his recent book, How to Create a Mind, computer-scientist and futurologist Ray Kurzweil, who is currently pioneering artiﬁcial intelligence, explains that pattern recognition is at the core of learning. The advantage of an expert is that they are quickly able to recognise complex patterns. Kevin Ashton, the technology pioneer who coined the term ‘internet of things’, deﬁned the primary advantage of experts as their mastery of ‘selective attention: The practised brain eliminates poor solutions before they reach the conscious mind. Experts do not think less. They think more efﬁciently.’
Black swans are like super-wicked problems– no one saw them coming and there are no experts who know how to solve these problems. The new rules of the game ensure life will always offer surprises, regardless of the most sophisticated modelling, planning or machine learning.
It demands that our business models are always in ‘perpetual beta’: incomplete and uncertain. In this new world order, strategies are no longer plans, but hypotheses to be continuously tested against reality every day.
Large organisations, such as General Electric, Unilever and Procter & Gamble have begun mobilising their resources so they can act like start-ups, being entrepreneurial; highly responsive to sudden market changes; and boldly embracing diversity and complexity.
Donald Sull, Senior Lecturer at the MIT Sloan School of Management and an authority on managing in turbulent markets, says: ‘The key to success in today’s volatile markets is strategic opportunism, which allows ﬁrms to seize opportunities that are consistent with the bundle of resources and capabilities that sustain their proﬁts.’
This approach to strategy requires a state of perpetual beta: as reality changes, strategy changes.
If TedTalks had used a ﬁve-year strategic plan, it would never have encountered the exponential growth that made it what it is today. Rather, its plan was – and is – an hypothesis, continuously re-assessed. This allowed for sudden surprises and enabled TedTalks to stumble on exponential opportunities that were inconceivable within its original business model and narrow perspective.
We are continuously seeking to make sense of chaos. We cannot function without models. The truth is that some models actually help us to acquire a decent approximation of reality. All models are in perpetual beta.
So you now know that you are hardwired to default to what is familiar, but that this may derail your career or organisation.
When Faced with Super-Wicked Problems, Who Can We Call on for Advice?
Call on radical outsiders.
Radical outsiders offer unique perspectives and advantages, fuelling disruption that challenges outdated assumptions. They come from outside the very industries and markets that they disrupt. They have not been brain-washed by current industry norms, but challenge conventional assumptions and models; break conventional business models to create better systems; and succeed in ways we thought were inconceivable.
The failings of many conventional experts have been in misreading the competitive landscape, underplaying the agility needed in response to the rise of businesses such as Netﬂix, SpaceX and Uber. They viewed these misﬁt organisations as mere underdogs. They underestimated the market’s readiness to embrace these radical outsiders that have been reshaping the world in which we live.
There are different types of radical outsider, some of which may not be on your radar. If you know where to look, you may just ﬁnd them, or they will ﬁnd you.
Types of Radical Outsider
Radical outsiders come in the form of:
- Individuals who challenge established experts and reshape entire industries. Sir Richard Branson is an iconic radical outsider: in the 1960s, he failed at growing and selling Christmas trees but moved on to founding a record retailing/recording empire. Thereafter, 20 he moved into air transport, holidays, telecommunications, and most recently, healthcare provision, including NHS contracts, and dabbled in numerous other ventures along the way. Some of these ventures have been successful and some have not. He’s able to break the rules, because he wasn’t bound by them.
- Movements that inspire a shared belief to change the current status quo. General Electric embraced the Silicon Valley lean start-up method and turned it into a movement that transformed the organisation, letting go of its cherished beliefs in Six Sigma.
In the 1980s, behavioural economics was viewed as a heretical movement by established economists. These heretics were creating an unholy matrimony between economics and psychology. They proved the market is irrational, that psychological perceptions inﬂuence stock prices, that we make poor economic decisions and oversimplify, due to our limited brainpower. They were met with immense resistance from the establishment. Today, they have helped us gain a deeper understanding into how super-wicked problems should be addressed.
Entire markets – such as ‘high delta markets’, which are countries that are completely off the radar, yet suddenly enter world markets from the fringe with force – continuously experience intense volatility and radical changes. The West underestimates how quickly these emerging countries can outperform them.
One example, Mara Group in Sub-Saharan Africa, is a rapidly growing ﬁnancial services group listed on the London Stock Exchange with US $325m in investments. With few resources, the company looked for new ways to solve its challenges, unconstrained by conventional business models, which allowed it to formulate new ones. Mara used global partnerships and interdependencies across countries to change and redeﬁne the entire e-commerce industry throughout Sub-Saharan Africa.
The Trademark of Radical Outsiders
Most large organisations today are faced with super-wicked problems. The challenge is that individuals are hardwired to default to ‘business- as-usual’ behaviours and choices, as signiﬁcant changes require an uncomfortable amount of exertion before our cognitive biases kick in. If our irrational beliefs and attachment to our theories dull our ability to spot radical changes, the antidote is cognitive ﬂexibility, which is the ability to shift thoughts and behaviours to unexpected changes in the environment. Cognitive ﬂexibility is the trademark of radical outsiders who are open to unexpected surprises and seemingly impossible results. The world needs their breakthroughs more than ever, because our past successes seem to be holding us back from unlocking our future growth.
To Thrive in the Face of Disruption and Gain from Super-Wicked Problems
Leaders should be encouraged to embrace:
- Perpetual beta: reality is inﬁnitely more complex than any model
- Self-scrutiny: question the status quo. Figure out how to kill your career or company before others do
- Radical outsiders: they are not constrained by past successes and probably not on your radar
- Cognitive ﬂexibility: as reality changes, your perspective changes.
During the UK’s referendum on leaving the EU, Conservative MP Michael Gove said: ‘People in this country have had enough of experts.’ Experts have valuable knowledge when they have cognitive ﬂexibility. Perhaps UK Prime. Minister Theresa May should consider bringing in some radical outsiders to help with Brexit’s super- wicked problems. These skills can be learned, but only if you want to acquire them.
A version of this article was originally published in Ambition Magazine.