Powered By Change

Failure – the gateway drug of success

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One of my crowning moments of glory in business was when I trusted the wrong person and ended up penniless with two kids and an extraordinarily angry wife. I say that’s one of my crowning moments as it played a huge part in shaping the rest of my career. I remember a range of feelings I had at the time, primarily negative. Of all the emotions running through me, the one that stands out upon reflection was the feeling that “I can’t get through this”. This is such a powerful thing to say to oneself as it pretty much guarantees that yes, you’re right, you can’t.

I’ve found the word “can’t” is a nightmare to deal with in general. When we look at what we can or can’t do, the truth is there are few things we can’t do and a majority of things we could possibly do if we altered some factors at play – mainly in terms of mindset. If or when we fail at something, it is the way we think that enables that moment to be a gateway to better things…but more commonly we create a negative barrier and don’t allow success to escalate. Failure itself isn’t the trigger, it’s how we respond to failure that does it. Every time.

In my recent book Powered By Change (http://poweredbychange.com), which has miraculously landed in the Sunday Times Bestseller list recently, I look at the power of our thinking about change in some detail and the conclusion is; we have an ongoing choice as to how we respond to events, including our own opinion that we simply can’t get through this, or can’t be a success in general. In the past, I’ve also written about “Business Poisons” within which the word “can’t” is a celebrity in its own right. Allow me to draw on those resources for you and look a bit deeper.

The fact is, we can’t breathe underwater, unaided. We can’t fly either. In fact, there are a number of things we simply cannot do. However, I suspect that most of our usage of the word ‘can’t’ isn’t actually related to things we literally cannot do. This presents the inaccurate use of the word can’t as a poison, a misconception based on incorrect reasoning. The main problem is that when we say, “Oh I can’t do that”, the thing we are speaking about gets compartmentalised in our brain, adjacent to being able to breathe underwater, unaided. Happy bedfellows, languishing in the vortex of the un-doable. Our mental filing system then requires extraordinary effort to switch folders from ‘things I can’t do’ to ‘things I possibly can do’, which is why, after being told by someone that they can’t do something, the work is so tremendously difficult in changing their opinion.

Our attachment to failure equalling an inability is one that has the most extreme effect on progress, development and innovation. Stuff that makes people and organisations grow. However, “can’t” is built into our language so deeply that we say it without realising and then the poisonous gremlin takes over. It sits waiting for you to say things like “I can’t” or “We can’t”, then simply opens a mental drawer and plops the thing that you are talking about into it. Job done. It takes a nanosecond to do, and sometimes a lifetime to undo, if at all. If you’re lucky, the folder system you have in your head has weak locks, meaning it’s easier to re-file. But remember, weak locks are bad at keeping things in or out of anywhere, so you may be more susceptible to self-doubt.

In my opening story of being totally and utterly screwed over in business, losing pretty much everything in the process, I was in the mindset of, “I can’t fix this. I can’t make things better.” But, over an arduous five-year period, I realised that I could. And I did. So how can one move from a can’t to a can? Here’s a quick and dirty checklist to enable the gateway to success that failure allows.

  1. You need to define exactly what the thing is that you may or may not be able to do. Define it in exact terms. For me it was, on a human level, to be able to house, feed and support my family whilst not losing my mind in anxiety, stress and/or depression in the process. On a business level, it was to create an even better organisation than I had ever done before. On a moralistic level, it was to enable others to also reach their own potential.
  2. Forget the tactics, forget the ways and means – first address a cold, hard question: “Is it humanly possible to do this thing?”. If the answer is no, your challenge changes from one of struggle to one of acceptance and adaptation. If the answer is yes, your journey begins, but it may be a 2000 or 20,000-day journey.
  3. Now you’ve established what the thing is and whether it is possible, it’s now time to map out the separate steps you would need to take so you can start your journey. These steps should be achievable but you may find there are several sub-steps or dependencies. Then, you just have to get busy. If you have a barrier, refresh your answers to the points above. Remember, provided what you are trying to achieve is literally possible, it is down to you how successful you are.

For me, the above process dug me out of a very dark hole and into what could arguably be termed as success in business and life. Since then, I’ve encountered many more challenges. Even as I’m writing this, I’m facing a theoretically difficult challenge involving someone in my business environment. I could (as the other person would so desperately wish), struggle and collapse – however I’m far from reacting in that way.

My choice of response is based on the possible. The possibility of justice, the possibility of progress and the possibility of what is right.

Life is too short to eliminate the possible.

The Paradox Of Exploitation Versus Exploration

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Plato wrote about a paradox that some call “Meno’s Problem” in which Socrates and Meno are engaged in a conversation about the nature of virtue. Meno offers a series of suggestions, each of which Socrates shows to be inadequate. Socrates says he doesn’t actually know what virtue is. How then, asks Meno, would you recognise it, if you ever encounter it? How would you see that a certain answer to the question “What is virtue?” is correct unless you already knew the correct answer? Socrates’suggests that basic elements of knowledge, enough to recognise a correct answer, can be “recollected” from a previous life, given the right kind of encouragement – and Recollection Theory was born.

Unfortunately, as very few philosophers believe in reincarnation, the theory died (never to return), yet Socrates’ assertion that knowledge is latent in each individual is now widely (though not universally) accepted, at least for some kinds of knowledge. Even Noam Chomsky in the 1950s said, famously, that the basic elements of the grammars of all human languages are innate, ultimately a genetic endowment reflecting the cognitive evolution of the human species.

Shifting from life in general into the corporate world, could it be the case that businesses who struggle to innovate and pro-actively grow, actually have the innate capability to do so; they just don’t have the right kind of encouragement? I believe so. However, they face a paradox. On one hand they should be concentrating on exploiting the existing assets, yet on the other hand they need to be exploring the horizon of opportunities. I call this the Paradox Of Exploitation Versus Exploration.

In my latest book, Powered By Change, I tackle this paradox in detail. Here I’ll use a few of the concepts to give you a general overview.

Many businesses are like an oil tanker. They move slowly and make the most of all the existing assets and resources that are already in place. Organisations have a requirement to make what they normally make, sell what they normally sell, but yet at the same time need to be thinking in a more agile and change-driven way. These companies need to simultaneously be exploring new ideas and territories in a faster way, just like launching a speedboat.

Paradoxes are different from problems. A problem has a solution or an answer, whereas a paradox can’t be solved in a binary way, so therefore needs balance. If this tension between exploitation and exploration were a problem, then you could say something like: “Sink the oil tanker!” Yet what you might then end up with is a potentially unprofitable speedboat with none of the experience and benefit that the oil tanker brings. Another answer could be: “Drown the speedboat!”, but then you find yourself in a prime position just waiting to be disrupted by the perpetual winds of change, while comfortable on your comfortable tanker—which in reality is exactly the same as building a wall to resist change. Instead what we have here is a paradox that requires balance. We need to balance these two requirements and find the most effective way to exploit what we already have and do, while exploring the new.

There are very few companies that have done this really well. One great example of a business that has created an amazing balance of exploitation and exploration is W. L. Gore and Associates. This Delaware company, best known for its invention of the Gore-Tex waterproof breathable fabric membrane used in all-weather clothing, is a sizeable organisation, but somehow it balances the paradox so well that it launches frequent speedboats while the oil tanker chugs along. It uses little innovation teams that act fast, exploring new innovations and approaches. The teams achieve this by establishing a number of enabling structures. The first one is that information-sharing and peer-review are the norm. There’s no hierarchical review; the main review is from your colleagues. Also, there’s no protectionism of information, so everybody shares all information at once. There’s no mention of: “Well you’re not going to see what I’m working on because you’ll take the credit for it,” which I’m sure is an attitude we’ve all seen in many companies.

It’s all about a strong focus on getting the environment right. The teams spend a lot of time in the best physical spaces that allow their staff to work together. They have team coaches rather than bosses. These coaches are people who have experienced more, not chosen because they’re more senior, or they earn more money; they’ve just experienced more about the particular problem they are trying to solve. This organisation has the belief that giving people the tools and the knowledge will bring out their best. Everyone is given the best tools to do the job. They trust people to do the right thing, and the culture creates the opportunity for everyone to make a meaningful contribution.

I go far deeper into this case study in Powered By Change, but the conclusion is that Gore is a great example of balancing the paradox of exploitation versus exploration.

For those struggling to achieve such lofty heights as Gore, I have two pieces of advice that I would strongly encourage you to put into place as soon as humanly possible so that you can begin to balance this paradox yourself.

First, it is absolutely vital to have senior stakeholder buy-in, because if you’re going to build a speedboat, you need to have a senior stakeholder in the oil tanker who can campaign for not sinking the speedboat. Otherwise, the speedboat always gets run over and sunk. This happens all the time when the people in charge of the oil tanker don’t believe in, or buy into, the idea of the speedboat.

Second, you need financial redesign. You need to decouple the profit-and-loss sheet used for the oil tanker’s business as usual, from the profit-and-loss sheet for the new, innovative approaches of the speedboat. If you don’t unlink these sheets, the new business exploration looks too costly and expensive, and the existing business looks as if it’s losing focus due to the investment in these new experiments. Remember, you can’t actually do the financial redesign unless you have senior stakeholder buy-in. Ultimately then, these two pieces of advice are in strict order.

In summary, and to tip my hat again to Chomsky, I genuinely believe that the plurality of oil tankers and speedboats is something innate within business knowledge. It is up to every single one of us in business to remind leaders that one of their primary responsibilities is to continue the exploration even (and most importantly) when the share price is growing out of the exploitation endeavours. Balancing the paradox is the only way of leveraging the vast opportunities on the horizon.

On The Illusion Of Change

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The Eleatics were an interesting bunch. They were a pre-Socratic school of philosophy founded by a guy called Parmenides in the early fifth century BC in the ancient town of Elea. They debated many things, some of which would blow your mind in terms of metaphysical concepts. One of the most mind-bending conclusions they arrived at was that change was impossible and reality was one and unchanging. Their view was that any form of movement was nothing but an illusion. This may seem like a pretty crazy viewpoint, but it isn’t hard to find a business executive that acts as such.

The very first chapter of my new book Powered By Change is entitled “The Reality of Perpetual Change”. The reason I titled it as such is that I still, to this day, find Eleatics in every corner of the business world. I see leaders who announce grand plans about change to teams of followers, eagerly imagining a brighter future, but eventually realising that the leader was only announcing plans rather than planning to execute anything different. I see proud CEOs showing graphs of static growth, claiming that this is somehow proof that competition isn’t having an effect, meanwhile, the competitive landscape repositions itself and the company falls to pieces. I’ve been in meetings where new ideas have been shot down because the requirement to change is seen as “too hard”. One of the most senior execs of one of the largest brands in the world literally said to me “OK, I know what we should be doing, but let’s concentrate on what I could get voted through the board.” This exec wasn’t accepting change, this exec was wanting nothing to change, other than board approval – even if it meant presenting something that denied any change was needed. Utter madness, and utterly common.

This is why the first chapter is fairly robust in terms of stating facts and offering the reader a stark choice as to whether to respond positively or negatively to change. Powered By Change isn’t just a book title, it’s an option.

My premise is simple when discussing the realities of change:

  1. A greater degree of change is on the way than has occurred in the past.
  2. The rate of ongoing change is going to be a lot faster than we have previously experienced.
  3. And history shows that companies are poor at coping with and responding effectively to change.

Deeper in the chapter I release some eye-wateringly ‘anti-Eleatic’ stats provided by AEI research. I mention the fact that 88% of the companies that were on the Fortune 500 list of the world’s largest corporations in 1965 are not on that list today. I then follow that with an observation that over an even shorter sample period of time, corporate resilience is not much better, with 74% of the Fortune 100 list having disappeared since 1980. But even with hundreds of additional statistics and dozens upon dozens of real-life case studies, why is change still seen as something that a) doesn’t exist, b) won’t impact that person or company or c) will either disappear or gradually lessen?

I think it isn’t about change itself, I think it’s about the mindset about change. The word is emotive isn’t it? Maybe you remember dealing with a colleague but the context changed over time? That wasn’t a good feeling. Change = bad. Maybe there was a business decision you made but then the market shifted, leaving you with egg on your face. Change = bad. Outside of business, maybe you packed for a sunny trip abroad only to find it’s a sub-zero nightmare. Change = bad. To be honest, it’s sometimes hard to get a result where ‘Change = good’.

If we look closer though, every event in your business and personal life that has added to your growth, was because something changed. Every time a successful product launch happened, change took place that glued customers to your P&L. So, it would seem there is evidence that change can be positive.

This is why I give the choice to be Powered By Change or not. You may feel that change is an illusion or an irrelevance, and that’s OK, it’s your choice. You may alternatively feel that change is the most empowering fuelling mechanism you could ever apply to your business or personal life, and that’s OK too, still your choice. There isn’t necessarily a right or wrong answer…but what there is, are thousands of years of evidence showing the impact of not accepting or not using change, versus accepting and growing from change.

It is this epistemology, this knowledge, that secures my belief that today is the slowest pace of change we’ll ever experience – and how we respond to it, is the single most important factor of success on earth. Sorry Eleatics.

Dealing with change and why we tend not to

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In my book ‘Powered By Change‘ I reference a fascinating piece of research that was conducted by the Association of Insolvency and Restructuring Advisors. The Association calculated that, out of a cross-section of companies of all shapes and sizes, 52% of businesses go bankrupt primarily because of “internal triggers” — meaning those in-house issues that the management has decided in favour of or against; and tried to execute accordingly. Another 15% go bust due to “external triggers” — those things that happen outside the company that management doesn’t do anything about. 24% of firms sink due to a combination of those internal and external factors that management don’t do anything about, 8% fail because of events beyond their control, and only 1% die simply due to what could only be attributed to pure bad luck.

The conclusions are stark. 91% of the reasons that these companies went out of business is down to the way that people inside an organisation have reacted or failed to respond to the various stimuli that ended up destroying their firms. Looking deeper at cases of failure, there tends to be events that take place that change the landscape, market, internal dynamic, product viability, or something else. Either way, things changed. One level deeper, at the core of the issue, we can observe that the fundamental component in this failure is how people handle things changing.

The findings may be of a business nature, but I’d attest to the data is about humans rather than just humans inside companies. Many of us have heard that today is the slowest pace of change we’ll ever experience. Others have got to grips with the fact that the only thing we can truly predict is that change happens. Nonetheless, evidence shows us that in the face of perpetual change, the majority of people tend to resist it. In contrast, if we were to internally process these concepts in a productive and opportunistic manner, we would be able to maximise the advantage that change brings. This, of course, would require changing the way things are done.

A valid question would be: why? Why is it so hard for us to see change as a positive concept? Why do we resist change even if we could equally decide to be powered by it? The entirety of ‘Powered By Change’ is about this topic, but taking it from a purely human angle, as I deeply investigate in the second chapter called “People”; I explore the various factors and potential solutions. For now, as a snapshot, I’d like to cover a few of the salient points.

My general view is that the benefit of changing has to outweigh the cost of changing, but also, very importantly, the cost of not changing – in other words, the cost of staying the same.

This cost/benefit analysis is something that seems remarkably simple but when it’s applied practically, we often make huge errors of judgement in terms of:

  1. What the benefit of change would/could be.
  2. What the cost of that change would/could be.
  3. What the cost of not changing would/could be.

Errors of judgement in those three areas increase the chances of failure exponentially. Our human biases are so well structured that our answers tend to be as follows:

  1. Not a great deal of benefit, at least not in the short-term where my targets are.
  2. As it’s unknown, probably massive…not least due to the chance of failure.
  3. Relatively low. Everything is pretty much fine right now so it’s best to stick.

As you can see, the likelihood of any positive change being made is exceptionally low – meaning that the likelihood of negative impact is seriously high.

In ‘Powered By Change’ I present numerous toolkits that can address this risk. One I’m fond of is a process that assists people through six stages of uncertainty, resulting in facts that we can know to be true. The six stages are:

  1. Speculations – starting with sheer guess-work without prejudice.
  2. Explorations – choosing some areas to explore, but still without prejudice.
  3. Scenarios – running some potential stories in an imaginary, yet relevant context.
  4. Projections – plotting a few aspirations against the scenarios.
  5. Predictions – placing some targets against the aspirations that have been projected.
  6. Facts – gaining the data points that prove or disprove the predictions.

The ultimate output of this approach is learning. It’s critical that there isn’t an immediate casting of blame if what we thought would happen, didn’t. The vital thing is to gain the learning as fast as possible so that the process can happen again with even more insight. This is where I disagree with the slogan “fail fast, fail often”. I prefer “learn fast, learn often”. This mindset is a change-positive one. A mindset that sees opportunities in the change and chooses to play with what’s possible. A mindset that is truly powered by change.

Stay tuned for my next blog next week that examines why things change, what is the impact and what does it feel like and look like for individuals and businesses. You can unlock additional insights and bonus content by pre-ordering your copy of Powered By Change. When you pre-order on March 15th or 16th, and you will be registered for one of four “Blade” webinars — extra book insights and a deep dive with me in an online interactive Q&A format —  on how to harness perpetual change to enable long-lasting success.