Roadblocks - Clarintelligence | Discover What Drives Businesses into the Future

Why is it so hard to adapt?

Why is it so difficult to flow with the times?

Why, when all scientists agree on the implications of climate change, aren’t we able to take fierce action? Why did traditional media companies fail to adapt their business models in time, why do automotive OEM’s think they can build electric, connected cars by applying their knowledge of building combustion engines? Why is it a problem for some people to wear masks?

BEING ABLE TO ADAPT REQUIRES FREEDOM. THE FREEDOM OF CHOICE. EXTERNAL CHOICE AND INTERNAL CHOICE.

EXTERNAL CHOICE

By external choice I mean having actual options, courses of action available. We will provide you with a short roadmap on how to develop strategic and operational options in the face of crisis in the last module. This will soon be followed by an in-depth programme that helps you develop strategic options for your business. You will get plenty of this if you stay tuned. This is the core of what I do. But before we get there, let’s first explore the internal choice.

INTERNAL CHOICE

By ‘internal’ choice I mean having an open mind that lets you see and pursue the existing options.

To make choices we also need awareness to see what is going on. Then we need ‘agency’, we need free choice. Our agency is limited by the mental models that we base our perception on. There are misperceptions that keep us from seeing reality as it is or from being able to choose the right paths of action.

There is a wide variety on interesting literature on awareness and mental models. George Mumford’s book “The Mindful Athlete” is one of the best books on Awareness and Mindfulness. Daniel Kahneman’s book “Thinking, Fast and Slow” is one of the most prominent books, explaining our mind’s pathways.I will provide further reading references at the end.

However, here we will focus on one issue that stands out, that has become increasingly important in our society. I invite you to think about the conflict between freedom and security.

AGENCY versus SECURITY

As humans we have different needs that need to be catered to. These needs can be in conflict with one another.

One person who explored the relationships of these needs was psychologist Abraham Maslow. His famous pyramid of needs describes the order our needs. Maslow explains that we have needs, which are staged by order. The essence of Maslow’s pyramid is that needs at the bottom of the hierarchy must be satisfied before we can develop a true interest in the needs higher up. Our activities to satisfy the lower level needs then become a habit, enabling us to move up the pyramid.

We start with the basic needs like for example food, followed by the need for security to then get to the psychological needs, which include belonging and self-esteem. Only when those needs are fulfilled will we be able to focus on our self-fulfilment needs, or what is generally considered as personal growth.

These self-fulfilment needs are what the healthy personality can focus on, and they include exploring, experiencing, being interested, choosing, delighting, enjoying new things. In the workspace, according to Maslow this includes, being a prime mover, self-determination, having control over one’s own fate, being able to plan and carry out to succeed.

We have an inherent conflict between freedom to choose, the agency on the one side and our security on the other side. This is an internal battle, as described by Abraham Maslow, but it is also created by the trade-off's of the real world, which rarely let us have the cake while eating it.

AN INTERNAL CONFLICT

As humans we have different needs that need to be catered to. These needs can be in conflict with one another.

One person who explored the relationships of these needs was Abraham Maslow. The order our needs he described in his pyramid of needs. According to Abraham Maslow’s theory, we have needs that are staged by order. The essence of Maslow’s pyramid is that needs at the bottom of the hierarchy must be satisfied before we can develop a true interest in the needs higher up. Our activities to satisfy the lower level needs then become a habit, enabling us to move up the pyramid.

We start with the basic needs, followed by security to get to the psychological needs. Only when those needs are fulfilled will we be able to focus on our self-fulfilment needs, or what is generally considered as personal growth.

These self-fulfilment needs are the ultimate goal of the healthy personality, and they include exploring, experiencing, being interested, choosing, delighting, enjoying new things. In the workspace, according to Maslow this includes, being a prime mover, self-determination, having control over one’s own fate, being able to plan and carry out to succeed.

If we need to find food or a place to live, our mind won’t be open to this wonderful self-help seminar, that will open up our true creative-self. Or when we work for an organisation that does not fulfil our social needs, then we may not be able to reach our full creativity.

The never-ending battle between Security and Freedom

In our context, when we can focus on ungratified wishes for safety, then we will face difficulty fulfilling our esteem needs such as freedom and independence as well as self-actualisation, that helps us develop our full potential.

Read what Maslow said on the basic conflict between our defensive forces and growth trends:

EXTERNAL: THE TRADE-OFF

Now Maslow’s findings wouldn’t be so impactful if we could have the cake while eating it. If we can have freedom while having security, Maslow’s conflict might not become relevant too frequently.

Yet, they are highly relevant, because real life mostly forces us to make a trade-off between security and freedom.

Freedom to decide is crucial for us as independent human beings. But it also means being accountability for our actions if things goes south. We are accountable, we not only gain the returns, we also pay the price for our actions.

To pursue new options in times of change, to have ‘external’ choice, we need to expose ourselves. We need to take some risks. If the world is changing, or if we build something new, we don’t know the result yet. We don’t know where the path will lead us and whether this path may be an utter failure.

In addition, change puts at stake what we have achieved so far, triggering our need for security. It may become as obsolete, as mainframe computers, blackberry phones, traditional media business models, and combustion engines face obsolescence.

In this way, our freedom to choose the right option is limited by our needs for security. That’s the trade-off we have to deal with. To have security in life we have to give up parts of your freedom, and vice versa. Only seldom can we have full freedom and security at the same time

To illustrate this through a metaphor, in investing we also speak about risk adjusted returns. This means that the higher the returns you want to gain, the more risk you have to take. Another technical term for this is “there is no free lunch”. If you invest in a startup for example, let’s say you invest into “The Next Apple Inc”, then you have the prospect of extraordinary returns. But you also face a high risk. The chances that these prospects materialises are very low. We were being sold quite some Next Apples, Next Facebooks, Next Googles, and only few of them have become successes. If, on the other hand, you invest in bonds, your risk tends to be lower, you will get steady returns, which however are much lower than the returns from the startup investment.

The Past Decades Have Turned Us Into Stability Adicts

This is the basic human situation.

But this trade-off relationship between security and freedom has changed over the past decade. A whole new entitlement to security has entered our societies.

Why?

Over the years, the risks we face as a society have decreased. We don’t have to hunt for survival. Polio is not a threat to our health anymore. Neither is the plaque.

We have been given steady incomes and perceived job guarantees.

The cold war has been over for a while.

Over the past decades, we were fortunate to experience a long streak of stability. Economies in the Western World were booming, and the tempting offer was that in exchange for a college education and your dedicated time, you would get a fixed salary with the prospect of buying a house, getting married and having children, and entering into safe retirement.

A generation of corporate executives grew up and were educated in a time when job opportunities were plentiful and once in, then jobs were protected through strong market entry barriers, the economic moats of their employers. Banks cashed in the upsides from highly risky transactions, and when the sh*t hit the fan, government bailed them out. Many lost their jobs, in particular the younger ones had to rethink what their careers were about. But then there were the older ones who had amassed enough wealth to continue a highly comfortable live in the safety zone. Risk was transferred to society, the ultimate insurance company.

Over these past decades we have been provided with a distorted image. These decades of continuous growth and stability have provided us with the impression that we can have the cake while eating it. We were told that we have a right to the upsides without the risk. We have lost a unified measure for accountability.

This deal has created a false sense of entitlement to the status quo.

What we see now, is a misperception of these risk adjusted returns. To conclude the metaphor, people have been told the illusion that they can have guaranteed returns by investing in startups. They have been given the impression that there are free lunches available. Free lunches and free refills. So why leave the restaurant then?

Coming from this stable environment into the rougher seas, it is tempting to try to retain that perceived stability from the past by whatever means necessary.

Political and Corporate

On a political level, attempts to retain stability can include voting for whomever promises this stability and goes against the perceived threats.

Currently we can see this played when people argue and demonstrate for their “freedom”, but fail to take into account that constitutions of democratic countries put a limit to individual freedom. The limit comes when others get harmed. This is probably the most essential part of our social contract, and it is barely never mentioned by those who claim their ‘freedom’. This comes back to accountability.

We can see this play out when people have problems wearing masks on certain occasions in order to protect others. Hey, after all we have managed to evolve from running around naked to wearing clothes, actually producing a whole industry that tells us each season which clothes we have to wear for the next six months. Most people don’t wear the same type of style that they wore in the 80’s anymore, which is widely considered a good thing.

These attempts to preserve the status quo can also include trying to use lobby interests to preserve the status quo. We have seen that, haven’t we?

We can see this when German media companies sue google instead of adapting their business models. We could see this played out in the Tesla dealership association disputes, which not necessarily were meant to help customers.

We can see this also played out, when citizens, journalists, and even politicians criticise medical experts because they have adapted their recommendations during the corona pandemic. They conclude that the expert is not reliable. This is based on the premise that science is a science where all the information is available. Yet in reality medical experts, like all scientists keep learning from new insights. In this case, as we all learned more about the behaviour of the virus, the experts included new insights parameters into their decision-making. There is a misperception that science is about certainty. It isn’t. It’s about learning. It’s about a hypothesis that get thoroughly tested. As new data or insights emerges it gets adapted.

Every Day Live

In everyday live, we can see this played out when we want experience without leaving our comfort zone. We want stimulation without risk.

Holiday is one field where we have a chance leave our comfort zones and experience something new. This is why people travel after all. Travel broadens the mind, as they say. Sometimes it can be a bit too much change of course. For dissatisfied customers, who complained to Thomas Cook Holidays, having local taxi drivers in their holiday resort was already too much. So was the problem that local food was served in restaurant. Or too much sand at the beach. Or convenience stores who fail to sell ‘proper biscuits’, like the ones they get at home.

I have just seen a travel app, which shall remain unnamed, who offers us to work 1-1 with an expert concierge to design a trip, 100% customised to our travel preferences and priorities. They will take care of all the hotel and activity bookings. This also comes with insider recommendations from “influencers and local experts”, so that there is no room for error left. Basically there will be less room for randomness than on our daily commute to work. Everything has to be worry-free. They even have cities matched with your job function. Hey, why not, let’s stick to what an art director is supposed to do.

Just juxtapose this with Guy Debort’s dérive. The Situationists around Debort, did unplanned journey’s, walking randomly through cities so that they could become aware of new attractions and encounters. Quite daring, isn’t it?

“The tremendous leisure industry that has arisen in the last few generations has been designed to help fill free time with enjoyable experiences. Nevertheless, instead of using our physical and mental resources to experience flow, most of us spend many hours each week watching celebrated athletes playing in enormous stadiums. Instead of making music, we listen to platinum records cut by millionaire musicians. Instead of making art, we go to admire paintings that brought in the highest bids at the latest auction. We do not run risks acting on our beliefs, but occupy hours each day watching actors who pretend to have adventures, engaged in mock-meaningful action.”

Mihaly Csikszentmihalyi, Flow

Climbing Mount Everest is still a big feat and chapeau to those who succeed. But would today’s Everest tourism industry really be as big as it is, if the Sherpa’s had more alternative means of earning an income than to carry urban thrill- and fame-seekers up the mountain?

And for all of us who do experiences in any form, once we start recording it for Youtube or Facebook, how much can we then actually still enjoy the moment?

Innovation as Entertainment

Innovation used to be a verb, an action. Today it has become a lifestyle.

On a meet up, I heard the head of an incubator of a media company rationalize their activity of helping startups for a few months, because they “found it sexy”. It does stay sexy as long as you have a regular pay check coming. Startup conferences, workshop providers, make it look like it’s the easiest thing, if you just have the right motivation. They offer recommendations to be bold, to dare to fail. Mostly these recommendations come from people who have a steady income though.

Engineered Strategies

In the innovation field, we can see a certain ‘recipe’ mentality. “Want to innovate a new product? Here are three steps how to do it without failing” “And if you fail, fail safe, because your corporate employer now accepts failure and keeps paying you salary. Well at long as business goes well of course.” “Want to see which company does innovation right? Here is the ‘Next Apple.’ Just copy what they have done.”

Let’s go to conferences and hear it from people who have done it. It’s actually safer to listen to motivational speakers than to listen to real customers. In real life, however there is no shortcut to understanding customers. Customer needs are intangible and often layered. They require empathy, and we actually may get it wrong.

In contrast, there can’t go much wrong if you repeat what has been done before. And if it goes wrong, at least you can say you followed the right steps. Nobody was ever fired for buying IBM, as they say.

What this leads to is feel good innovation. It provides a feeling of security, but it also leads to incremental improvements and likeable products, at worst simply repeatable products, but it’s hard to create novelty and originality by repeating a recipe.

“The mistake that championship teams often make is to try to repeat their winning formula. But that rarely works because by the time the next season starts, your opponents have studied all the videos and figured out how to counter every move you made. The key to sustained success is to keep growing as a team. Winning is about moving into the unknown and creating something new. That’s how I view leadership. It’s an act of controlled improvisation, a Thelonious Monk finger exercise, from one moment to the next.”

Phil Jackson

Back To The Old Rythm

As we have explored, now the volume of change has been turned up again. For those who come from the smooth riding era of stability, experiencing the triplet of digitization, climate change and corona may seem a bit overwhelming from time to time.

Unfortunately fear can have an impact on our behavior, from consumption patterns to voting behavior.

The media can even reinforce that fear of change by reporting on perceived dangers that derive from this changing world. When they move statistically insignificant incidents to significance through prime time televisions, they create a feeling of imminent danger for people.

Change, Disruption and Crisis tends to be positioned as something evil, something that harms us. Media headlines tend to be focused on how we can preserve the status quo, and on the threat that the crisis provides. From politicians, we hear that “this is a new situation”, when they have problems finding the right path of action. For corporates, the term “disruption” has become the go-to term, when it comes to justifying that competitors are taking the lead.

Thinking of it, the term “Disruption” is quite a negative term. Your train can get disrupted. There is no value in this, is there? Traffic can get disrupted. “No, not another traffic jam please.”

So our terminology has replaced the proactive, positive term “innovation” by the defensive, negative term “disruption.” I guess Clayton Christensen did not write his book with a smiley face on his desk.

Lesson: it’s not you, it’s me

The lesson is that the need for security and fear of change is a powerful force for us human beings.

But then there is something else.

The problem is not disruption, the problem is how we react to it.

Change and Disruption is not a thing that just happens, and that we can’t do anything about. Quite the contrary, we have agency, we can react to change, we can develop new options.

Fear vs Fear

Fear can be a helpful survival mechanism. Climbers do worry before they climb a free solo, leaving the rope at home. Founders have sleepless nights. Athletes worry before their matches. And that is just natural. It helps us be alert of what can happen. That doesn’t mean however that we should not challenge ourselves to cross that line to the unknown.

But fear is not necessarily a bad thing. There is an irrational fear and there is a rational fear. If you are in Europe and you are afraid of a spider, that’s quite irrational. If you are in Australia, and you are afraid of spiders, that’s rational.

In private equity, when developing plans for the future, we focused on those elements that we or the management teams of our portfolio companies could control, versus those that we had no control over. Focusing on the initiatives that you can control, and keeping alternative scenarios in mind can take you a long way.

In a more extreme fashion, Alex Honnold, one of the most famous climber's of these days, said in an interview that he intuitively separated fear between rational fear, where his body reacts to a danger and the perceived fear. In the Interview, what he does intuitively is linked to psychological research by researcher Armita Golkar.

View extreme climber Alex Honnold explain this with psychology researcher Armita Golkar

Watch the two and a half minutes of the interview, or more to hear them explain.

Focus on the options

The important element in times of change to see and develop options for action. This helps us eliminate the irrational fear and lets the rational fear prevent us from making mistakes.

When extreme climber Alexander Huber faces a key passage of the wall, he focuses on how the route will continue after this passage. This takes the focus away from this key section.

For us as well, we can focus on our goals and then find the paths to arrive there. What we also did in private equity, is that we created 100 day plans to see where we needed to go. We even have one big advantage over climbers. Often we have different alternatives to arrive at our destination. We can adapt on route.

It’s time we re-learn the choice-security equation. It’s time to focus on the options for action that we have.

Unlearn

In times of change and disruption we need to free ourselves from the restrictions of our assumptions and habits. Once we let go of a presumed outcome, then we can respond adaptively. This not only enables us to properly respond to the reality of our current environment, but it also offers us a richer variety of options to choose from.

One way to do this is to get into “play” and exploration mode. In his book ‘Free Play’, Stephen Nachmanovitch makes the distinction between ‘play’, in the form of improvisation on the one side and ‘game’ on the other side. He explains that “Play is the free spirit of exploration, doing and being for its own pure joy. Game is an activity defined by a set of rules.”
He writes “A creature that plays is more readily adaptable to changing contexts and conditions. Play as free improvisation sharpens our capacity to deal with a changing world.”

Why did nature equip dogs with this joy of play? Play helps dogs learn motor skills and prepare them for unexpected things to happen. Likewise it helps us explore new outcomes from our activities.

To play, we have to forget the preconceived outcomes. Everything around us becomes new and fresh. It becomes about the process of discovery instead of the goal. We start anew.

What helps to get into this mode of play is to understand our preconceptions and assumptions, and to focus on the situation, and act less than more.

There is an ancient and proven tool that comes to help when we want to become aware of our hindering thinking pattern. The tool, of course, is mindfulness. Mindfulness helps us pay attention to our thoughts without attachment. It helps us become aware.

One mindfulness exercise is to sit quietly and notice your thoughts. You don’t force any particular topic, you just let them flow and notice them. When thoughts arise, you can take a mental note, not of the content of the thought, but of the fact that thoughts arise. The important thing about this exercise is that you do not try to control or judge the thoughts, you just notice them.

At it’s core this provides us with agency. When we are aware of how we operate, what thoughts influence us then we are better able to choose options of action without preconceptions and unhindered by external stimuli.

So when you feel that change is not going your way then try to make mental notes when you try to play by some rules from the past. Try to identify the moments when try to start with beginner eyes. Wondering whether Tesla or automotive OEM’s will win the race? Just forget what you think a car is, and explore what current and future user needs this ‘device’ has to satisfy. We have to change our concept of what a car is in the future.

hink that wearing a mask is too much of a burden for restaurant employees? Why not take a step back and think about all the things required to make your guests’ visit an valuable and safe experience for them? We wouldn’t question as to whether a clean kitchen is part of the offer, would we? Just because we haven’t used masks before doesn’t mean that they don’t serve the same function as a clean kitchen. We have to adjust our concept what a good service offer is during the current times.

Breaking these habits and enabling play is also what creativity and innovation are about.

GO BACK AND SEE WHICH STEPS YOU CAN TAKE

References:

Abraham Maslow; Toward a Psychology of Being: Maslow’s classic, going into the details of what we discussed above.
Abraham Maslow; Maslow on Management: A fantastic book by Maslow, applying his thinking on organisational structures and culture.
Daniel Kahneman; Thinking Fast and Slow: this is the classic, telling us about the ‘tricks’ our mind plays.
Richard Thaler and Cass Sunstein; Nudge: this is along the same lines as Kahneman’s book, explaining how we make choices.
Hampden-Turner; Maps of the Mind: a hidden germ, highlighting various models of our consciousness.
Michael Graziano; Rethinking Consciousness: this book brilliantly explained how our consciousness evolved, showing the different levels of consciousness of different species. Who would have thought hat neuroscience could be that exciting.
Goerge Mumfort; The Mindful Athlete: in my view one of the best book on mindfulness and mediation from the meditation coach of the Chicago Bulls, L.A. Lakers and many others. Provides great insights into how awareness works.
Stephen Nachmanovitch; Free Play: an amazing book about improvisation. It is written by a Jazz musician, but it is targeted at all creative fields. If you operate in a field where 'play' is important, then this is a must read.