The Intelligence of Companies

Do companies demonstrate self-awareness? I contend that they do.

Companies exist as a consciousness shared among individual agents. The feelings associated with employment, and the thoughts and images that accompany those feelings, make “going to work” a very real thing, even if it means only a glance at a mobile phone.

Companies operate as political entities ordered by legal documentation. Such order creates habits of thought and action that seed and sustain a culture. That culture then reinforces habits of mind to form a mental map that circulates among individual agents, and is continuously refined so long as the company exists.

Good companies understand the limits of control for inspiring knowledge work—the dominant form of work in today’s economy—and so offer substantive wiggle room for individual agency.

In contrast, companies that prioritize structures of command and control locate the firm as the primary actor rather than the employee, and so shared consciousness becomes false in the sense that it does not necessarily reflect the reality of circumstance for the individual. False shared consciousness at its most extreme corrupts agency, distorts perception, and manifests as totalitarianism, whereby the individual disappears in the service of a delusional politic.

Organizations cannot simply will themselves into greatness by virtue of the actions of the few. Rigid structure tries to limit what biologists call emergence, a condition in which local interactions between agents reorder a complex adaptive system not unlike that of a business. To companies and leaders that want more control, things like dialogue, creativity, and innovation, which all accelerate emergence, are anathema to them because they disrupt the status quo, and make it incredibly difficult to influence what people will do.

Self-aware companies embrace this paradox. Institute too many measures of control and you lose in the modern digital economy. Institute too few and you plunge into chaos and disorder; people still want to know that someone is driving the bus.

A middle path offers what John Locke envisioned in his Two Treatises: An organization that operates in accordance with and complements human nature, both the good and the bad, and channels it in the service of collective betterment. Self-aware companies, interestingly, defy easy comparison as each embraces individually claimed threads of distinction.

Leaders looking to increase the aperture of their organizational lens, and thereby heighten the absolute level of awareness within their organizations, can promote diversity of thought and heterogeneity through their hiring practices and their reinforcing the primacy of employee contribution.

Engaging workers and investing in them as future leaders of the company generates a certain kind of momentum that fosters emergence. When employees feel like leaders, they act like leaders, and as self-aware individuals will contribute to the growing self-awareness of the organization by simple virtue of their being present.

Realism and the Workplace

A word of caution to those of you who are just entering the workforce. The work world you encounter may differ from the one described in some of the popular management literature out there that advocates lifting wholesale its lessons with nary a concern for repercussions.

Checking email only once a day, for example, is a practice that will very quickly get you fired. Your job is to take such lessons and consciously integrate them into your reality by tempering them against real-world circumstances.

And it is up to all of us to make the lessons, ambitions, hopes, and dreams of how the world ought to be come alive by confronting and questioning with honesty, integrity, and critical thought, the counter-productive inertia that so easily develops in human systems.

Consider that good intentions without power are just that: Good intentions. Power lets us get things done, and without it we are useless.

We have to acquire power in a way that is congruent with our deepest values while maintaining a situational awareness that trade-offs may occur in an environment that does not reflect our deepest values. When we do have power, the onus is upon us to change the system to reflect those values for the betterment of those who succeed us.

Apple’s Secret to Success is Not What You Think

There is brilliance in execution, but how many times have we mistaken it for innovation or creativity?

Apple’s success lies not in its ability to innovate, though it certainly does that, but in its capacity to achieve supreme alignment in the products it produces. This is execution.

Diamond Multimedia released its portable Rio MP3 player in 1998. HP and Microsoft were showcasing tablet technology as early as 2001. Sony began selling ultra-thin laptops in 2004.

Execution is the ability to focus and discipline one’s efforts into making a product or delivering a service where all elements align into an elegant, effective whole that, by virtue of its quality, provides exceptional value to the customer or client.

The iPod, the iPad, and the MacBook Air are products greater than the sum of their constituent parts.

Sure, it’s sexier to talk about how prescient Steve Jobs is, how creative and unexpected the minds at Apple are. But what if Apple simply pays obsessive, neurotic, disciplined attention to every facet of what it’s doing, afflicted with a drive to perfect that goes beyond the competition, inspired by forces outside the market to execute brilliantly because there simply is no other way?

The technologies Apple has based its growth upon are not unique to the company. What Jobs & Co. did differently was to look at these technologies not as random bells and whistles but as notes on a musical scale that could work in harmony.

The next time you’re confronted with a problem, consider execution as much as you consider innovation. You might be surprised by what you find.

Note: This post was inspired by an interview with Jim Collins that can be found here

Musings on Entrepreneurship

The internet is an agent of change, the catalyst of the 24/7 news cycle and the unprecedented capriciousness of global financial markets. Social media eliminated barriers to market entry, reduced start-up costs and gave entrepreneurs comprehensive access to their buyers. In whole, the web has provided a low-cost, low-capital platform for enterprising individuals to build the business of their dreams.

Folks who, twenty years ago, would have never thought of themselves as business people now, by virtue of these changes, must do just that. Writers can no longer just be writers. Artists can no longer just be artists. The countering forces of technology have subsumed the once critical role of PR in the media. The publishing industry, too, is struggling to maintain its purpose in an unfamiliar environment. Those not on the technology bus ignore these trends at their own peril.

It may be that we’ve reached a point where the distinction of being “online” has lost its utility. As Wall Street Journal technology columnist Walter Mossberg once told consulting guru Alan Weiss, “Just as you don’t announce you’re plugging into the electric grid when you use a hair dryer or television, we’re also going to stop saying we’re ‘going online’ because we’ll be online at all times.”

To sustain an existence in this new economy, a paradigm shift is in order. For many, the paint-by-numbers methodology of working one’s way up the corporate hierarchy is no longer a viable career path. Today, there is opportunity at every turn. The cost to break into the consciousness of potential customers has reached zero. You and your brand can be anywhere. The only cost is time.

This creative destruction has merited a shift toward irregularly distributed consumer markets, where if an enterprise can sustain “1,000 True Fans” and secure a “Long Tail” niche, the business, if managed properly, can prove remunerative.

Yet despite all this, the principles of good business remain unchanged. The guiding norms and rules of our economy have stayed largely the same. Decades of focused learning and research on best practices are, sadly, getting thrown out the window, replaced with flavor of the day thinking. Time will reward those who have learned from the ones who came before them. Master the fundamental principles of business and you will thrive.

Every industry will always be faced with new competitors, new technologies and new challenges. But it is those businesses that can maintain their core while adapting to a changing environment that will succeed. By planning ahead, by setting a strategy and working backward from that perceived future as to how the company will look, act, and feel, you can begin taking the actions today that will predispose you to success tomorrow.

Mental Models and Multidisciplinary Growth

One of the things I struggled with while in graduate school was the idea that academic disciplines were mutually exclusively, wholly incompatible frameworks for understanding the world. This concerned me deeply. Some of the world’s greatest discoveries have come about due to people taking things that, at first glance, have nothing in common and smashing them together. For example, chocolate and peanut butter. Or heck, peanut butter and jelly. That’s pure comedy right there, until you taste the result.

In today’s world, things are changing with such rapidity and force that the jobs of today likely won’t exist in ten years. If you limit your study to a single discipline you risk siloing your knowledge and becoming an ossified, outdated unit of human capital. I understand the need for disciplines within academia. It helps define intellectual borders, it keeps everyone on the “same page” so to speak, and gives a sense of orderliness and predictability to academic debate. The problem is, outside the exclusive realm of theory there’s this thing called the real world, and it tends to intervene in a damningly unforgiving way.

I think a better approach is something along the lines of what Charlie Munger of Berkshire Hathaway suggests. There’s an element of the Pareto principle in his philosophy. He advocates the broad acquisition of knowledge across numerous domains that can then be applied to any number of situations. This is similar to what Bruce Lee espoused while developing his self-defense system of Jeet Kune Do, the whole “absorb what is useful and discard the rest” approach to education. In Munger’s words:

[T]he first rule is that you can’t really know anything if you just remember isolated facts and try and bang ‘em back. If the facts don’t hang together on a latticework of theory, you don’t have them in a usable form.

You’ve got to have models in your head. And you’ve got to array your experience—both vicarious and direct—on this latticework of models. You may have noticed students who just try to remember and pound back what is remembered. Well, they fail in school and in life. You’ve got to hang experience on a latticework of models in your head.

What are the models? Well, the first rule is that you’ve got to have multiple models—because if you just have one or two that you’re using, the nature of human psychology is such that you’ll torture reality so that it fits your models, or at least you’ll think it does. You become the equivalent of a chiropractor who, of course, is the great boob in medicine.

It’s like the old saying, “To the man with only a hammer, every problem looks like a nail.” And of course, that’s the way the chiropractor goes about practicing medicine. But that’s a perfectly disastrous way to think and a perfectly disastrous way to operate in the world. So you’ve got to have multiple models.

And the models have to come from multiple disciplines—because all the wisdom of the world is not to be found in one little academic department. That’s why poetry professors, by and large, are so unwise in a worldly sense. They don’t have enough models in their heads. So you’ve got to have models across a fair array of disciplines.

You may say, “My God, this is already getting way too tough.” But, fortunately, it isn’t that tough—because 80 or 90 important models will carry about 90% of the freight in making you a worldly-wise person. And, of those, only a mere handful really carry very heavy freight.

I hadn’t been able to articulate specifically why academia bothered me until I came across Munger’s work. It seemed ridiculous to me how disciplines would ignore each other and posit frameworks that tried to answer everything when, in reality, they could only answer some things. Going back to finance and investing, anyone who believes you can predict human behavior with physics-like precision is deluding themselves. Compartmentalization doesn’t work if your system of understanding is being tested outside the realm of theory by the selection tests of the real world. Learning should be an exercise in understanding, not an exercise in hubris or ego.

Air Combat and Strategy

I just finished reading Boyd: The Fighter Pilot Who Changed the Art of War, a biography by Robert Coram. It’s a fantastic book, appealing in depth, in complexity, and in its treatment of Colonel John Boyd, one of the finest unsung heroes of contemporary military science.

In the truest sense of the word, John Boyd was a genius. Taking just a brief tour of his accomplishments, we discover he wrote the manual on air-to-air combat. Before Boyd, dog-fighting was seen as some interpretative art–like ice dancing–and beyond the realm of science.

Boyd served as an instructor at the Air Force’s Fighter Weapons School (the nomenclature and design were later copied by the Navy, hence “Top Gun,” however Boyd’s Air Force institution was the original and the real deal). At age 33, he wrote a booklet on air superiority titled “Aerial  Attack Study.” It was so revolutionary that, since the time of its release, no further advances have been made in aerial combat strategy. Boyd’s booklet was the first and last word on tactical piloting and weapons use.

Boyd later developed the Energy-Maneuverability Theory. The E-M Theory gave fighter pilots for the first time a rubric to determine the energy potential of any given maneuver at any altitude for any aircraft, whether it be their own or their enemies. Before the acceptance of Boyd’s E-M Theory, fighter jets were designed to fly fast in a straight line or fly high. The F-15 was the first to be developed with maneuverability in mind. Boyd played a critical role in its construction and design.

Later Boyd and the “Fighter Mafia,” as they were dubbed, became the most influential ad hoc group the Pentagon had ever known, and in time fathered the F-16 and the F-18. Boyd’s later works like Patterns of Conflict and The Observation-Orientation-Decision-Action Loop helped form the bedrock of the Defense Reform Movement and led to much of the strategy behind the first Gulf War.

We on occasion run into similar quandaries in our daily lives as a fighter pilot does in the sky. At times the stakes can be just as serious. So what of it? How could a fighter pilot trying to jockey a $20 million aircraft apply to such mundane matters as politics?

First, it’s important to recognize that we are all complicit in politics, whether it be the public governance type or just what happens in our family lives. Politics has come to be used as a pejorative and that proves unfortunate. If you head to Definr, my favorite online dictionary,  and search for politics, the first definition you’ll come up against is this:

politics (http://definr.com/politics)

n 1: social relations involving authority or power [syn: {political
relation}]

Read that one carefully. First, “social relations.” By design, humans are social creatures. There are macro-sociological arguments abound that titrate from our inherently social nature our improved chances for survival and hence the broader evolutionary process. The final segment of the definition, which reads “involving authority or power,” is the crux of this deceptively simple definition.

All relations involve authority or power whether we like it our not. Relations with girlfriends, boyfriends or spouses, children, parents, pets (okay, maybe the goldfish gets a pass), trolls on the internet, or the barista at Starbucks (I need my latte now!). Politics is power.

When John Boyd developed the OODA Loop, he found a means to power for the fighter pilot. Later the OODA Loop would find its way into business and government. In aerial combat, a pilot cycles through the steps of Observation, Orientation, Decision, and Action ad infinum. He scans the airspace for enemies and, upon recognizing a threat, orients the enemy into the broader context of the air battle. Based on this synthesis, the pilot decides and acts in accordance with the provided information.

The idea  is to see what your enemy sees and get inside his OODA Loop. To be able to feint and counter-attack, to anticipate, this delineates an effective usage of the OODA Loop.

For example, let’s presume Pilot A is tailing Pilot B. Pilot B, in an attempt to lose Pilot A from his six, applies hard rudder, angles to starboard and pulls high Gs in a sharp turn that orients him perpendicular to the earth. Pilot A is in a slower aircraft and won’t be able to keep up. But Pilot A, tactically, is inside Pilot B’s OODA Loop, and through a series of quick observations and decisions, he chooses to pull hard to port to intercept Pilot B’s flight line and go for the kill.

The OODA Loop has since been expanded beyond what Boyd originally intended, and has made headway into business and manufacturing circles, amongst other trades. In power conflict, the mind is critical. More specifically, the ability the mind has to adapt and maneuver in congruency with whatever structure, ambiguity, or chaos may surround it. Boyd refers to maneuvers that disorient an opponent–those acts that innervate an opponent’s OODA Loop–as fast transients. The quicker a pilot can cycle through these loops in combat, or the faster a business can recognize and act to solve problems, the more successful each will prove to be.

In life we are forever confronted with challenges, with conflict, with social relations that demand we act. The game grows more difficult as the number of variables increase. By observing and orienting ourselves to the actions of others, we can come to a better understanding of the realities that surround us, and loose ourselves from the placid and comfortable narratives that conceal truth.

And here, it’s important to note that it is action that is what matters. Not words, but actions and the results of those actions. It’s important to make this distinction and not lull oneself into complacency through a susceptibility to outward poses. When confronted with conflict, learn to take action, and decisive action at that. As Boyd said, don’t worry about your own flanks. Instead, make your opponents worry about theirs.