This chapter poses the question, What constitutes a competitive advantage for the modern firm? In contrast to the popular view, it proposes that the case for information technology, big data, and advanced analytics is overstated. It argues that the costs and side-effects of the information revolution have not been sufficiently understood. As information becomes ever more ubiquitous and search costs trend to zero, their capacity to provide any modern organization with a competitive edge goes down. In a world in which attention is the scarcest resource, the winners understand both the potential and the pitfalls of information and adopt a fast/forward approach to business; they emphasize decisive action ahead of detailed analysis, and they are comfortable relying on emotional conviction alongside rational judgments.
This chapter outlines how current changes in the socioeconomic landscape give rise to paradoxes with a direct impact on business. The first paradox revolves around innovation and states that "the more we create, the more we destroy." It outlines the process of creative destruction and how this applies to the transition from one economic era to the next. The second paradox describes how knowledge on the societal level is expanding at a rate that no individual can keep up with, resulting in a situation in which "the more we know, the less I understand." The third paradox captures how increased connectivity causes complexity and uncertainty: "the more we connect, the less I can predict." The final paradox argues that in the modern world of business, knowledge is no substitute for emotional beliefs. On the contrary, it suggests that "the more we know, the more I have to believe."
The chapter outlines four dimensions that we find in all organizations: position, knowledge, action, and emotion. It links these perspectives to three distinct management models. In a traditional bureaucracy, the formal position is dominant. In a meritocracy, knowledge is privileged over formal position. The pros and cons of these two models are analyzed in the light of the paradoxes of progress, and it is argued that both risk becoming inwardly focused and slow moving. Hence the introduction of the third management model, adhocracy, in which action is privileged over formal position and knowledge; there is an emphasis on decisive action infused with emotional conviction. A central argument is that each model has its place in the modern organization, and the choice of which to use depends on the rate of knowledge increase and level of unpredictability, respectively, in the business world. The chapter also includes a self-assessment tool.
This chapter focuses on what it takes for firms find themselves on the right side of the process of creative destruction. The classic approach to strategy was to think of a cascade of decisions: what do we want to achieve, where will we play, how will we win? But in a complex, fast-changing world, this model is too slow and formulaic. In fast/forward companies, doing beats debating or deferring. The chapter outlines the features of an alternative reverse-cascade approach to strategy, building on insights from the agile revolution in software development. The new solution is based on a "sensing-responding-scaling" logic, in which early-stage experiments, based on market insights, are formulated into a point of view that, at some point, requires the firm to take decisive action. Examples are provided of firms that followed these three steps thoughtfully, and others that got it wrong.
This chapter focuses on how a guiding purpose generates emotional conviction in the strategy process. Purpose is defined by the key stakeholders the firm exists to serve, and five such stakeholders are discussed: employees, customers, suppliers, local communities, and the planet. Goal-framing theory is applied to explain why many firms struggle to maintain a clear sense of purpose over time. The chapter also provides guidelines for how executives can overcome these challenges: it introduces the notion of a "counterweight" to reinforce commitment to a purpose, and it provides advice for how to formulate and communicate a purpose that helps employees make the right choices and ensures that those choices are made with good emotional buy-in.
The chapter looks at the challenge of coordination, and in particular how the appropriate mode of coordination varies according to the activities performed. Bureaucracy means coordinating through standardized rules and procedures. In a meritocracy, coordination is achieved through mutual adjustment in debates and discussions. In an adhocracy, getting something done—trying things out, testing, experimenting—is more important than debating it or following the rules. Coordination is therefore achieved through opportunity-focused action. The focal point is the opportunity, whether it is a specific problem that needs solving or a task that needs completing.
This chapter focuses on the issue of employee motivation. In a bureaucracy, motivation is primarily extrinsic—it comes in the form of payment for services. In a meritocracy, motivation is based on the development and recognition of personal competence. In an adhocracy, motivation is based on achievement—people relish the "thrill of the chase" and value the recognition they receive for a job well done. The chapter describes how to build the right context for decisive action. Two dimensions are critical: providing both the right level of inspiration and the right level of support. Inspiration is about framing the upside and painting a compelling picture of the future. Managing the downside concerns providing support for failure by actively reflecting on feedback, setting a positive tone, and being more open when things don't work out. The chapter concludes by outlining four practical steps for how to build an achievement-oriented organization.
The chapter argues that leaders need to develop ambidextrous qualities, by shifting their style of working according to the situation they are facing. They have to get the right mix of leadership styles across the organization. This means combining bureaucratic control with the meritocratic role of being a conduit for information, while also developing new adhocratic leadership capabilities. In an adhocracy, leadership is first and foremost about "making things happen." This means knowing when to step in and take charge and when to step back. The chapter outlines three basic ways of blending the different operating styles, each one involving different levels of separation across organizational space and time. There is also a strong emotive component to the ambidextrous leadership role. It has two sides; tapping into and arousing the emotions of others, and bringing your own emotion and intuition to bear on ambiguous situations.
This chapter provides practical advice on how to succeed by being a little bit more "unreasonable" as an individual in a large firm. The chapter argues that individuals need to master three processes linked to their position, knowledge, and action in a particular setting. Experimenting revolves around translating the license to operate (the formal role) and theories about how things work (knowledge) into action. Sense-making is about interpreting what someone does and how that someone is perceived by others. Finally, legitimacy-building concerns how actions and interpretation of the world shape the individual's "license to operate." All three of these processes have a strong emotional component. Experimenting is often based on an emotionally held conviction, while sense-making and legitimacy-building rely on a high level of emotional intelligence. The chapter concludes by describing five principles for how to be more unreasonable—in a reasonable way.