Maturity in complexity and consistency

Escape from S-catraz

879

909297103115121123

RAPTER 6 DiversityThe AEM-Cube®: Making diversity measurableWorkingwith theAEM-Cube®: lndividual typesWorking with the AEM-Cube®: Team typesValuing both ends of the maturity-in-complexity axisValuing and using diversity: Building effective teams

Escape from S-catraz

HAPTER 7 Conditions for a Changeable OrganizationThe salmon as a metaphor for changeabilityomplex organizational change is a process not a project

Operating the levers for change and changeability

The five levers: A summary

125125127133144

Notes 146Bibliography 148

Introduetion

We are right in the middle of an exceptionally important process thatwill onceagain put this company firmly on the map as an e-commerce company with amagnificent soul.

Carly Fiorina, former president and CEO of Hewlett -Packard'

T HIS book investigates the boundaries within which people in organi-zations are prepared to explore and change, and the implications for

management. It is all about a choice that you make yourself. lf you are con-vineed that leadership based on values and trust can and should go handin hand with financial and social profit, then you will find many thingshcrc that will help you further develop and irnplement such avision. lf youII re of a different opinion, you will find little here that tries to convince you10 change your mind.'l'hc Russian author Fyodor Dostoevsky (1821-1881) is reported to havelid Ihu I somebody should not write a book until they have tried every-

11111111 pos~ible to prevent it being written. This is another in a long line of1IIIIIkl1 I lint attempts to make a contribution to the leadership and man-111'1111'111 of an organization that, because of information technology, isIIddl'III)1 I"oced with rapid acceleration. Why have I not prevented thisIII"d 111'1111\ written?

I 11111.1 Y hccause others have convineed me that virtually nothing has yet11111'11 about applying concepts from ethology to the management

I !iI !\,IIII 11Iions. That is strange to say the least. You will have to decide forI!!lH.:lf Wild her Ishould have prevented the publication of this book.I'{lIII/IW!' Is also known as comparative behavioral studies. This scienceIrpi·1 1IIIIllncJ Ior more than 100 years and, after World War Il, received

la ~1'llld rccognition thanks to Nobel Prize winners such as KonradIJllnl.ltls Tinbcrgcn, and Karl von Frisch. My own definition of

111111 il is "thc scicncc (hat, using the perspective of evolution,lurw nlld why u spcciûc hchnvior dcvclops and what drives that11", NOIII'ly 111 wltkh wt.' live IO(\lIY hns, [rorn tin cvolutionaryIIldy IH'I'II 111'0111111 I(H' 1I VI'I Y Nhml time IIiHI differs mnrkcdly

"lid ,11 11111111111111111111 Yl'IIIH 111',11111 whk h 0111 hl'hllvlol' 01'111111111('(\,

Our genet ic make-up takes much longer to chtlng~'111111111111MW kl Y: Muchof our behavior can be better understood if wc Iry 10 dIIHIIVI'I' Ilw logic ofit viewed from the situation in which it has, over 1I11111y1111111011ycars,made a contribution to the development ofthc hU1ll1l11/lIH'( 1(','1, When welook at things from this perspective, ethology can pl'()vldl' 1\01l1t.'extrcmelyinteresting insights that bring unexpected depth 10 thc 1\1llll1lgemcnt ofo rganizations.

There is a wide range ofliterature devoted to ethology; unyhody doinga search on the Internet using the term ethology or the rclutcd term socio-biology will find more than enough information. Much of thc inforrna-tion, however, concerns the animal kingdom and gives details that fewmanagers will need to know for their jobs. I have restrictcd myself togeneralliterature, and mainly to literature that translates ethology to thehuman situation.'

Within ethology, concepts have been developed that deal with howpeople form human bonds (attachment) and how people are attracted tothe unknown (exploration). Organizations derive their intern al strength[rorn a combination of teamwork, loyalty, and the courage to undergoonstant change. Using the concepts of attachment and exploration, theya n understand the emotional intelligence that is required for constantharige. For this reason, it is strange that so little has been written aboutapplying ethology to organizations. And so - after yet another abortivescarch on the Internet - I decided not to prevent the writing of this book.

Nevertheless, the interest in ethology is growing. A number of leadingdot.corn bookse11ers have recently added several titles catalogued underti I tachment or ethology to their selections. The interest has also been pickedup by the press, as is shown in a long artiele by M. Talbot that appeared a(cw years ago in the New York Times:' There is also a gradual interest beingshown by business. The Harvard Business Review recently published ana1'1iele cntitled "How hardwired is human behavior?'" about evolutionarypsychology; it includes, for the first time, the word attachment used in its.thological sense.I sornctirncs think that the lack of interest in ethology may be due to the

Inct Ihat, somc 100 years ago, Sigmund Freud refused to accept the conceptof cvolution. Even though l'rcud said that Darwin's concept of evolutionIll1d slimlllnlcd him 10 study mcdicinc, he rcrnaincd, until his dcarh in11)\1), 11 di.~d pk ol' llH' PI'~'llçh ~ool()gisl JI't! n- nll pl iSlv de l.umurcl(1711'1 UWI); 1111'1.1I11'I'/lIh('()Iy 10111\,~II1(I' di/lll'l·dll('d IIIHI ol1ly ol'IIiNIl1111'11111111'1('111Nllitl 1111111111'(11111'11I11'IIMIIcIldl'VI'lOPI'" hy u Ilvlu]

organism during its life are passed on to its descendants.' Many of thesocial behavioral directions that emerged in psychology during the lastcentury arose from, or were connected to, the psychoanalytical approachlaid down by Freud. Perhaps this is one reason why there was less of anappetite for implementing concepts from evolution in this area than in, forexample, the fields of biology or biochemistry. 1believe managers shouldbe slightly concerned about this, since the behavioral scientific input intoareas such as human resources - recruitment, diagnosis, selection, assess-ment, and training of staff - is based, directly or indirectly, on a psychologythat still partly lacks any input from the study of evolution. Managersshould ask themselves whether the behavioral tools they use are "state ofthe art."

The British psychiatrist Iohn Bowlby (1907-1990) is one of the fewto have tried - in his heroic trilogy Attachment and LOSS6 - to integrateethology into human psychology. In this trilogy, Bowlby not only showshow ethological concepts can fundamentaily contribute to an explanationof human behavior, but also how they fundamentaUy differ from behav-ioral and psychoanalytical concepts. I cannot avoid the impression that theestablishment did not look favorably on ail this. The cool reception givento his work in the established psychoanalytic circles may possibly explainwhy ethology has taken such a long time to reach the field of organizationalmanagement.

As I said above, this book investigates the boundaries within whichpeople in organizations are prepared to explore and change. I have notapproached this investigation from one single perspective. During mymany years of study, 1have also strayed into other areas such as cybernetics,information science, chaos and complexity theory, and neurophysiology.Yet despite a11these varying perspectives, one has always remained central:thology. It is impossible to imagine that any single person could evenbcgin to master all those branches of science that I mentioned. But I am.crtain of two things. First, that many of the things I suggest are simplifi-ntions, and second, that they often do not give a full idea of the current

stutc of affairs and may even, on occasion, not be completely correct.Ncvcrthcless, simplification is essen ti al when trying to create a synthesis.Whilc I W<lS writing this book, many people encouraged me to stress theipplicabiliry of thc model and to accept any imperfections for what they are.1\11lliis, howcvcr, does nor imply rhat 1 have sirnply written the first

11""111IIIIt runu- illio Itly hend. My idc(lS (111(/cxplanations are bascd onlilt IH, hIli, 1i1IIH' (lliIlll' 1)1 IhOlll' 1111111nnr] IIH' woy in which I inl uil ivcly

simplity and combine them, I have allowed myself to adopt a very personalview. Even if the model that is constructed in this book proves to be unten-able and if I am attacked for overplaying my hand, I would still expect themodel to - or rather, I am convineed the model will- contribute to a newview of people, organizations, and change processes.

Ethologists will quite possibly not be pleased with the choices made inthis book to define terms. This book is not written for them, though.Instead, it is written for the uninitiated in the field of ethology, such asmanagers and leaders of organizations. An example to explain what Imean: Set goal, a term used by Bowlby in his description of the attachmentsystern. is used in this book to mean "focus of security and attachment." Ido not want to be superficial, but nor do I want to fa11into the trap of usinginflated language and fashionable terms that litter so many managementbooks; I hope the choices I have made in terminology are useful.

Some of those who read the first concepts for this book warned me notto compare too frequently the relationships in an organization with thosebetween a child and its parents. That, they said, could backfire and give thebook an undesirably pedagogie character. I have done my best to listen tothem and have tried to avoid any"damaging exaggeration" in the text. Onrhc other hand, managers have repeatedly told me how they use examplesfrom the way they bring up their children to manage multinationals.Admittedly,such examples do not reflect the run-of-the-mill managementbock, but they are too significant to ignore. Take, for example, this remark,whicb comes from a senior manager of a large international retail companywith whom we have worked closely for many years.

Wc'reall bigboys in the board of management and don't easily share things-but tbisworks weil. The closer you get to the top, the easier the world becomesaS far asvaluesare concerned.lt is as ifyou are backwith your family. Honesty,larilY,trust, consistency, being strict and fair, sticking to agreements, self-knoWlcdge,humor, acceptance, success, and failure ... these sorts of things maybc givcn an elegant wrapping by management, but essentially it all comes

IOWlllO bcing a good parent.

111 Ihis lwok, you will find na tricks, tips, or quick fixes for running an(lI'fll\i1I~,l\li()llj insrcad, J have tried to make the underlying principlcs (IS

cll'lll' IIN posHihk. I will try to show why peoplefeel safe or nor, nnd why Ilwy11'1' IIIIIllvilll'd, t'I'('alivl', dcpressivc, loyal, and open 1'0 clllllllW Ol IIII!.

'1'ltiN IHllllllplllldHllc hook, ()llring Illy illv<!sligalioli 111I1I111I·ltlld~ 111 lilti!lllIlIll! I !1J1l1llIy lOl' 111111\'11111\'111 IlIld \'Xplorlilioll, I IHlVI' 111'\ .illit tll!llll!ud

111!I

that integrity and ethical - in other words, decent - leadership ultimatelyprovide the center of rest that people in organizations need if they are tocontinue functioning and exploring in times of increasing turbulence.In Chapter 1, we discuss the S-curve and the treacherous rigidity it can

cause. In Chapter 2, we discuss the nature and the functioning of theattachment and exploration systems, both of which show how we canescape from the rigidity that arises within the S-curve. Chapter 3 dealswith consistency as the most natural way of influencing attachment andexploration. Chapter 4 makes a detour and deals with attachment to peopleand attachment to matter. This acts as an introduetion to Chapter 5, inwhich we discuss growth in maturity, within the framework of dealingwith complexity. Chapter 6 focuses on diversity and makes it a concretesuccess factor for change. Chapter 7 shows the importance of internal com-munication for maintaining extern al consistency.I look back with considerable pleasure and gratitude on a11the help that

I have received from so many people. First of a11,to Ann and Richard, whohave always forgiven my "unforgivable" sin of simultaneously starting abook, the research for a management tool (the AEM-Cube®), and a con-sultancy business. I am particularly grateful to those who fina11ymade thispublication possible: Hans Ritman, Raymond Gijsen, and Jonathan E11is.Hans has always had the patience to press ahead despite the sin I have justmentioned. The book should have been finished a lot sooner. Many havegiven me valuable feedback. I cannot mention everybody, but I should liketo name a few: Gert Jan de Kruyff, Ernst Horwitz, Bob Sadler, NiekSniekers, Fiona Henderson, David Lewis, Riek Price, Annika Ratcliffe,. Maarten Kouwenhoven, Mitch Kotula, Sheila Cox, Jantien Fennema,Mirjam letswaart, Michel Evers, Philip Idenburg, Peter van den Akker,Mike Jeans, Peter Woltman, Iim Arena, Barbara Braun, David Thomson,and Drew Watson.

1. Success Is a Sleeping Pill

T HIS chapter deals first with change as a prerequisite for survival. I thendiscuss the "rhythm" of growth and decline in everything - from

nature through the life of people to the life of organizations - as sketchedby the well-known S-curve. Using the idea of the S-curve, in combinationwith the ideas of feedforward and feedback, we can understand how thefuture always allows itself to be overtaken, as it were, by the past. But also,how managers can arm themselves with the feedforward hierarchy againstthe "assassin" known as the past, and use it to give their organizations theability to start new innovations ahead of time ... and thus escape from the"prison" of the S-curve, to escape, indeed, from S-catraz.

CHANGE AS A PREREQUISITE FOR SURVIVAL

"Continuous change;' "the need for a company to be constantly alert toprofit from movements in the market" - we've heard these phrases so manytimes that they have become clichés. Yet if we take a good look around us,we will acknowledge how difficult it is to put these clichés into practice. Weall have examples of companies getting stuck - where rules, procedures,and intern al power politics have become more important in day-to-dayoperations than looking for new ways of serving customers and keepingcosts to a minimum.The following example shows that even an organization such as

Hewlett-Packard (HP) can find itself trapped in amental ''Alcatraz.'' Wewill regularly refer to Hewlett -Packard in this chapter, because it not onlyhas examples of rigidity in its history, but also is an example ofhow a com-pany can constantly regenerate itself. In their best seller Built to Last, [amesCollins and Ierry Porras describe the results of their research into comp a-nies that have the ability continually to reinvent themselves. Hewlett-Packard, thcy conclude, belongs to the "best of the hes!'," I Whcn Carlyl'inrinu took over thc helm frorn Lew Platt in thc summr-r or 1')\)<), rhcIII(h()rlln(jv~' Al1lvrklll1 hWIII1L'sll mngnzine JllIsil/l'S,~ w",'A Willt h~H/t 1111111

enthusiastic.' Hewlett-Packard, according to Business Week, had developedinto an organization of 130 different product groups with a "suffocating"bureaucracy. A former member of the board illustrated the company'sincreasing bureaucracy with an anecdote about four managers of the retailchain Best Buy Co. They wanted to purchase a few computer productsfrom Hewlett-Packard and were bombarded by no less than 50 (1) employees,each praising the products of their various divisions. The culture of con-sensus that had developed over the years within Hewlett -Packard had alsoundermined the innovation potential of the company, according toBusiness Week, which stated: "HP hasn't had a mega-breakthrough productsince the inkjet printer was introduced in 1984." The managers did notdare to invest in new ideas, because they were scared that they would thennot reach their targets for the next quarter, according to the magazine.A particularly good example of this is provided by a former research

employee at Hewlett -Packard, Ira P.Goldstein. In the early 1990s Goldsteindeveloped a prototype for a Web browser, and in 1993 he showed it to thethen top man, Platt. Platt was enthusiastic and told Goldstein to show hisdevelopment to the computer division. After that, the idea died a silentdeath. "They didn't see how it could help them sell more computers;' wroteGoldstein some time later. Two years later, Netscape became the firstInternet superstar with its Navigator browser.A tale such as this about Goldstein and his browser that died a silent death

speaks volumes about the situation of the company and its management. Theenthusiasm that Platt showed for Goldstein's invention was quite simply nomatch for the rigidity that had taken hold of the organization. Perhaps Plattwas fully aware of where Hewlett -Packard stood and where he would like totake the company. But it seems that he, in common with much of the orga-nization, had become trapped in the quagmire into which the company hadfallen. Platt, who had been with the company for 33 years, had no idea howto handle the situation, according to Business Week. Despite the lack of newproducts, the magazine suggested, he was still unable to develop a policy thatwould entice people to leave their cubbyholes. The then new top woman,Fiorina, had a heavy task ahead of her, wrote the magazine; she would have torevitalize the heavy culture of HP in the first fewmonths and show them howto develop the sort of speed that was required in the Internet era.Thc dcparting CBO had become part of the system. A new CEO was

nceeled - OI1C who could net as a breath offresh air within the organization.Hl/I whut rould huvc b<:<"11donc 10prevent Piorina bccorning, in tbe coursenl' 11111\'\ 11111'101'IIH' 11(,wll'll Plldqll'd Ily/llvm? She is, otter 011, only hurnan.

1.\

Aren't people always inelined to relax their mental defenses when thingsare going weIl, as if enjoying asummer's day? Aren't people inelined tostick to a "success formula" and therefore lapse into rigidity? What causesthis process of relaxing mental defenses and lapsing into rigidity? And if wecan find an answer to this, can we free ourselves from them, or are we in amental Alcatraz from which escape is impossible? We will first take a lookat this last question. Then we willlook at what effects those beautiful sum-mer days of success have on a company's ability to change.

There is, indeed, amental Alcatraz where we a11,regardless of who weare, keep finding ourselves trapped. It is almost as if the wages of successare paid in the currency of rigidity. It is as if, in our struggle for success, weare constantly ambushed by an invisible enemy, who lulls us to sleep beforewe are aware of it. When we wake up, the world has changed and our suc-cess has evaporated.

THE S-CURVE: THE RHYTHM OF GROWTH

AND DECLINE

A practical way of applying the we11-known concept of renewal, growth, anddecay to management practices is the S-curve. The S-curve plots the processof deeline and resurrection; it is the rhythm of the seasons that can be iden-tified in everything that grows. This book is about people and organiza-tions, but they do not have a monopoly on the S-curve. Whether we talkabout the rise and fall of societies or Mafia godfathers; rabbit colonies; loverelationships; the life cyele of Desklet printers; our own career; or the courseof epidemics: S-curves reveal the dynamics (Figure 1.1 - the vertical axisindicates the growth, the horizontal axis the time from left to right).

The S-curve has appeared increasingly in management books over thelast few years. Theodore Modis describes the S-curve for companies in hisbook Conquering Uncertainty. He uses the cyele of seasons: winter, spring,summer, fall, winter, spring, and so on.

Winter. In the winter, companies have time to develop new ideas, but prof-itability is poor. There is chaos and uncertainty. Death lies in wait. This gives a

nsc of urgency to keep on looking for so\utions and finally to make choiccs.S",.i/l>\. 'l'hc ndvantngc of spring is cnthusiasrn. The disndvnuuuu- iNllilll il

d(11l1l11Id/! high kvçls or invcstrncnt. 111110v~,tive eOI)('('(lI'1 1111' 1111111,11hilll

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FallWinter Spring Summer Fall Winter Spring Summer

Figure 1.1 The S-curve

Summer. This is the time of production. Logistics, technique, and commerce allsupport the chosen direction. Investments are less important; profitabilityassumes center stage. The innovative people who were around at the start havedisappeared; controllers and bureaucrats have taken their place. This is the stagethat sees the increase in rules and procedures aimed at increasing efficiency.Pall. In this stage, the first signs of decline become apparent. The companymay, for example, start losing market share. Initia11y,decline is repudiated andreasons are giveri.from a11sides to explain why things are going wrong. Buteventua11y,fear and anxiety can no longer be ignored and this can even give riseto panic. The solutions are downsizing, tightening the belt, pressing the last bitof profit from products, "back to basics," and so on.'

Nobel Prize winners such as Jacques Monod and Ilya Prigogine have shownin their work how, in light of the relationships described in the S-curve,order can emerge from chaos.' This concept has been translated formanagement by an increasing number of writers, particularly in the 1990s.Authors such as Kenneth Blanchard, Terry Waghorn, Charles Handy, andTheodore Modis have demonstrated how the S-curve is and should be partof the armory of every leader, manager, and strategist." Marc van der Ervehas described how values and norms shift within the Svcurve." Jeffrey P.hay and Frank T. Rothaermel sketch in an artiele how the S-curve pro-

vides a basic SI ructurc that allows existing models for strategy-formingincludill!', Ih(' l\I'owlh nnd markct-share matrix of the Boston Consulring

(;1(11111) 111111'IIldlCd 1lIlIllllITIIL~llIlIijtl in ti 101111111'11111111111'more dynamic11\()d,·111I1 Nllilll'll,k 1111111"

1101'WI'lIt'I '1'111'11111111'f\ 11H1111,1IIIIIIIliilly ti physicist, it is an excellent mea-surillg loolillill I"IIIW,~ 1111'1IIIIIIIdtlliül1 ofcxceptionallyreliableprognoses:",(,his 1:11I'Vl' cuu IH' IIHl't! quuntitatively to achieve predictability and de epinsighis. ()I\C snvcd muny millions in 1985 by accurately predicting howmuch tUIï10VCI' could be generated from servicing an old product .. .In1992, the British government, to give another example, could have spareditself the pain of attempting to close down two-thirds of the coal mines."Theodore Modis also applies similar mathematical calculations to thecareers of individuals, such as Hemingway, Hitchcock, and Mozart. Usingthe S-curve for the works of Mozart, Modis calculates that the first 18 com-positions were probably never written down due to "technical" problems:The young Mozart could not write well enough, nor speak well enough todictate them to his father. Most authors, however, do not approach theS-curve in such a strict mathematical way, but make use of a "qualitativeand subjective approach:' In this book, we, too, use a conceptual approach tothe S-curve rather than the strict mathematical approach adopted by Modis.

S-CURVES AND PEOPLE

The S-curve also applies to the lives of people. Take the S-curve of a rela-tionship (perhaps a caricature, but certainly nothing out of the ordinary):We fall in love, maybe emerging from a winter of solitude, and find our-selves in the spring of happiness. We dream about a future that ends "Theylived happily ever after." We develop from being a couple in love, move intogether, and become partners for life. And all the time we are getting toknow each other better and better. We learn about irritations and weak-nesses, and about the areas where interests conflict and where polarizationis possible. Initially these are dismissed; they do not fit into our perception.After a while, the novelty wears off and the many advantages are taken ~orgranted. Perhaps the next move is a marriage, children, a mortgage, twocareers - and our days are filled with things that we had never imagined.

Is th is all th ere is? Is this the way it was supposed to be? A pattern of dis-agreement, stress, dissatisfaction, and frustration shakes us awake, and forthe first time we look around at a world we had never discussed, neverdreamed about - and yet apparently we had worked towards it. Wc werehappy with OUI' rnarriagc, happy with our children, happy wilh 0111' nIOI·I·

g:1l\t', happy with OUf' cnrccrs. nlll cvcrything thnt uscd lil pilWIl' II~ IIOW

111

appears to have areverse side, and all those reverses together feel like astraitjacket. He was pleased with her ambition, but now she refuses to giveup her job, and that causes a dilemma: Do you take that international pro-motion or not? She was pleased with his ideas about emancipation, butwhen push comes to shove, he refuses to accept responsibility. The rela-tionship has moved through an S-curve. How it continu es remains to beseen: Either it comes to an end, or a new S-curve begins.

During our lives, we pass through dozens of such S-curves. The S-curveof our infancy, elementary school, high school, relationships with friends,study, first job, second job, third job, marriage ...

S-CURVES IN ORGANIZATIONS

There are enough recent examples of companies having become too rigidto react to important technological change that they found themselvesplaying catch-up in a race they could probably never win. Merrill Lynchresisted share-trading over the Internet for four years. And aH the while,new and existing companies, such as E-Trade, Charles Schwab, and smallerdiscount brokers had captured market share with an efficient and cheapformula for buying and selling shares. Merrill Lynch was so hostile to theInternet that vice president and head of share-trading Iohn "Launny"Steffens publicly announced in August 1998 that share-trading over theInternet "should be seen as a serious threat to the financial position of theAmerican citizen." The paralysis at Merrill Lynch was not, however, causedby any concern for the public good, but was a result of the internal corpo-rate culture. The contingent of 15,000 powerful traders was petrified thatshare-trading over the Internet would erode its income from commissions,which made up 30% of its total earnings; it resisted such a development bytooth and nail.

Merrill Lynch is by no means the only reputable company that has beenheld back by its own culture. When Amazon.com opened its Internettrading in 1995, Barnes & Noble refused to take this new form of "e-tailing"seriously. This leading chain of bookstores had just experienced a period offevered growth. Barnes & Noble had, for example, just started innovativecafés and music shops in its large stores. Internally, so much attention wasdirecrcd at expanding the physical chains that people were totally blind1'0 thc possibility of an altcruare supply chain, It took two years for Barnes& Nuhlc hl'silttntly ro 011('11 (he doors of irs OWI1 virtual srorIlill'II"HIIIHll1llhk',t()lll. 'l'his d,'IIIY IIIIN proveel dnl1l:1gillg to 1\:lIïl~'S & Nohlc."

IIn'I'I' Hl! M M HitS 'l'HAT NEVER END

"'h'IINIIIIN" 1II'l' not Ihc biggest challenge facing US,either in companies or in0111' llvcs. lt isn't about how we can proteet the existing against deeline -dccline can't be stopped - but, rather, about how we handle the rhythm ofthe seasons.

If we just allow the rise and fall to take its own course, then the curvewill go downwards at approximately the same rate that it went upwards. Thetotal curve will follow the bell-shaped movement of the elassic product lifecyele (Figure 1.2).

Now we return to our previous question: Why is it so difficuIt to remainflexible, to escape from the mental Alcatraz? The answer is found in theidea that many people have that summer will never end and in their incli-nation to keep a firm grasp on success. People construct their own mentalAlcatraz. As the line of the S-curve rises, when success comes to completefruition, then you step into Alcatraz - or more appropriately in this con-text - S-eatraz. At the end of the rising S-curve, success smiles on you, andnothing indicates the possibility of deeline. The fact that the high of successmakes itself felt is actually the first signal that deeline is imminent.Bernardo Bertolucci describes this poetically thus: "deeline of which youare not aware, the deeline of those that look but do not see, who listen butdo not hear, of those who do not know how to judge themselves or others.?"

Richard D'Aveni, author of the management best sellerHypereompetition: Managing the Dynamies of Strategie Maneuvering,recounted during a lecture in 1996 that Peter Drucker had, after readinghis book, invited him to dinner. On that occasion, Drucker is said to haveremarked, "If the gods wish to destroy you, they give you twenty years of

There seem to be only two directions: up or down

If people stay on the oldS-curve, then inevitablythey wili go down

Pigul'c 1.2 The.pathofthe:::>-curv

111

success,"!' In other words, the summer of success can lull people to sleep.And success is what it is all about in the second or upper part of theS-curve. All efforts in the fust half of the curve (the bottom part) are directedat harvesting in the second half (the upper part). Even at the very momentthat the growth curve - which describes the life cyele of a product, anorganization, or anything else - is about to flatten out, everything stillseems to be in-order. Success still seems assured.

Gary Hamel, C. K. Prahalad, and many others suggest, in relationship tostrategie renewal, that success is one of the major threats to true organiza- .tional change." Their vision can easily be coup led to the S-curve. Hameland Prahalad concentrate on two aspects. First, that people experiencingsuccess have little appetite for distancing themselves from a successful past,and second, that people continue to concentrate on repeating and continuingsuccess into the future. This makes them more focused on (the success of)yesterday than on the demands of tomorrow.

In itself, the observation that success lulls people to sleep is a letdown.The problem is well known. This rational knowledge seems insufficient toprevent rigidity, the sleep at the end of the S-curve. This is due to the deviousway in which the process works. Nob?dy is aware of the exact momentthey fall asleep. It's the same with an organization: When renewal isrequired, there is the danger that it will simply faHasleep without noticing.imilarly, a company can suddenly wake up disoriented and rub its eyes as

il takes in the unknown surroundings in which it finds itself.

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111 I'VI I '111"1 11 1111 11)',1 111 d('VI'llIllIlIllIl: I1 ""IV dl'

IH'llgllt, ('11,', I V('III' ,11I1t 111', ('( IIIIIYI qlndlly, IIld 1'1('(\ (1lIlIilly,

,'OIllVWh 'I' ililh/ 1'"1\ (' 'IIIIIW('V('I, 1IIIt 1IIII,Iw (\111•• ,I huuk-n; ('11111'1)1('

11'UI'S IlIld SIl' hIlisi. 1II111 IIln ollllOIll'l's und hili' 'iHI '1'011<,SOII1l'wlll'n' In IhiH

pro' '$$,<'lId nobo Iy lil I say wilh certainty al what tirnc 01'011 what dny ilhupp .ns, th whit h l'S s sudd .nly Iurn bla k. Th I' ar still a lOL of I' 'S( UI' 'S

ivailable, fun tion ar ca ily thought up, and on rul 111 re r I ss won'tmake all that much difference - even though it may low down th cl ision-making process. Everything, it seems, is possible, and then all at n ' ilb omes too much, everything boils over, and it takes ages to reach d isi ns,

In other words, suddenly and without warning, those initial advo al ofhange turn into forces that oppose change with every means at their dis-

posal. This also happens within the people in the organization itself: Th'process is largely amental one and is reflected in the way people think aboutand look at the world around them. People become lazy; the structur s lhulhave arisen around them make things all too easy for them. What's mor "success feeds vanity, The reward of success has become a sleeping pill, Ilwbefuddled senses that follow a bottie of good wine. The hangover comcs Ilwnext day, when you wake up and find yourself in a strange room.

To summarize: During the course of the S-curve, those factors tha I w 'I' •

critical and essential for initial success become an impediment to hanuc.What is so treacherous about all this is that it takes place as slowly and asimperceptibly as the transformation of Escher's horses. Friends who t okcare of structures and procedures, and thus helped words to become de ds,change into enemies of change because they consider those structures andprocedures as ends in themselves.

I j IlIlv('d W 1II II( I (' 'j IIIId 1l('IIIWH' lil ti • 111l I" N luwlv llill 1111 h, IV 11

1111'1111'11111.( thv or ',lIlli\l,lIlioll, 'I'h· sillillion les .ribcd hl'll' (t( lil 11111I dly

shown in Fi JUl" I. ) is I vcrly apturcd in the w rk of thc I 111h 1',1iphi 'arti t M. C. Escher; one of his works shows the subtle and impcr cptibletransformation of white horses into black ones (Figure 1.4).

In this work by Escher, a group of white knights on white horses ridesacross the page from left to right and about halfway up seems to evaporateinto black knights on black horses riding in the opposite direction. Thisimage of a "white" force changing almost imperceptibly into a "black" forceperfectly symbolizes how initial proponents of change - at the bottom ofthe S-curve when an organization is still in its infancy - imperceptiblychange into a force that opposes change.

The image by Escher is a11the more appropriate because the momentof change is so intangible. The same happens in organizations. Initia11y(atthe start of the S-curve), factors such as structure and procedure are thea11iesof growth for the emerging organization. At the start of the S-curve,the "spring;' there is a need for enthusiasm and optimism but, at the sametime, a considerable need for the right investments in structures. It seemsas if everything has to happen at once, each aspect intertwined with theother: marketing, production, sales, service, aftersales, planning, logistics,

FEEDFORWARD AND FEEDBACK, OR HOW THE

FUTURE ALLOWS lTSELF TO BE OVERTAKEN

BY THE PAST

Life is a moment in space, when the dream has gone, it's alonelier place ...Barbra Streisand"

The course of the S-curve in organizations can become more tangible -and thus better manageable - if we look at it with two ideas in the back ofFigure 1.4 Escher's trap (M. C. Escher, Regularl ;V;S;O/l Oflllc 1'11I1Il' 111)

20 21

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1111111)1'11111111\lil 11.111 t'. bf'(I('dH I) Hl1'('HU (('H,; 1111"". (' OIul111IPt 01111·'I 1111VI',lud 111'1111\I,· 'dh rek (ukcs ov 'I', )lOl'('XIIIII"I' Wlllpl'lltOI'S Ilwy h IV'111\·1t·tI Ilw IIH,,'k 'l, ind 'V .rybocly in thc IIHlrkN is k \ 'plll!lllll'il' (y( IJ 011I'VI'Iyhody 'Is', If 011' link l'Swith rh . pr] ) th I' 'st follow Illlil.

IIllly "111111\1111\ 1111\\'1'1 11111111111'111111I1111'.11111111.111ti 1111"11\ 11111lid"1I0ld 111111011'.\111v. 11011111111,1'1'11\(' IJHk,'I(lil ti tlHIVl, W, 11111111111111"110 rh -sc id ':IS in 111·cominu hupt 'I'S wil '11Wi' dlNt 11 lilt, WI' 11wit 11"pcoplc have han 11 I hangc and thc f ar of th \ unknowu 101 1IIIIIIoliSot'years, Feedforward and feedback are terrns derived from syst ms th .öry.

FEEDBACK: TAKE A SHOWER IN AN OLD HOTEL

Everybody knows feedback systems. The systems for controlling the refrig-erator and the central heating are both good examples, The human body isfu11of feedback systems, which control such things as blood pressure, theheart rate, and blood sugar levels, The fo11owing illustration - one that hasbeen used on many occasions - shows clearly how a feedback system works,

You are a guest in an ancient British castle that has been redeveloped asa hotel. The cavernous bathroom has a large bath in it, and above that bathare two taps. Somewhere deep down in the bowels of the hotel is a boileror gas water heater that provides the building with hot water. You turn onthe taps, and the shower starts pouring down cold water - exactly what youwould expect. You wait for some time and then decide to turn up the hottap and/or turn down the cold tap. Suddenly, the water is scalding hot, andyou quickly turn down the hot tap. Then the water turns ice-cold. You turnup the hot tap. If your stay is short, then you'll probably never get the hangof the system. If you're fortunate enough to spend some time there, thenyou'Il probably get to know how long it takes for the system to react to aturn of the tap.

This example shows how preoccupied you are with the past. The tem-perature of the water in the shower is not the same as the temperature ofthe water that leaves the boiler at that moment. If you don't know howmuch delay there is in the system, then you can't rea11ycontrol the process.An additional factor is that the greater the delay in the system, the moredifficult it is to control that system.

The essence of feedback is that the action is directed at achieving(again) a situation that existed in the past or that meets a standard set inthe past (in this case, a comfortable shower temperature of 38°C). Feedbackmeans "control using information from the past." There are two forms offeedback: reinforcing feedback and balancing feedback. Reinforcing feedbackis "feedback that strengthens itself" A product is a hit, people starting talkingabout it to each other, more people buy it, more people talk to each other

11I1,II.1)1I0RWARD: FROM AMSTERDAM 1'0 PARI'

1i,'{ldlllrWard is another form of control, whi h aris soul of 0111'nbilily 10Ilitkipni the future.It is as if the future is pulled ba k in order 10 'onll'Oltlt~, I I' 's nt. Feedback is a11about control based on inf rmulion fJ'()1I111H'PIst;}" 'dforward is control based on the expe tations, hop 'S, dl' '111IN,Ilidwil h 'S people want to achieve in the future. An xarnplc will 111Ik~' lid, k· Ir, L t's imagine a driver - and, admittedly, this is nn cxtrcuu- cxut 11pk'who onstantly drives his car around a traffic ir I (]ligtIl' , l.ri, 1('/1), 'l'hhdriver bases his actions purely on feedbacl. II pays ntl'lIlioli 101111'111\'on the road and makes use ofthe accelerator usin J ~'l'dhlCk 1111111111ti 1111(Trom the speedometer on the dashboard and th ' posi! iOI) or IIH' I 111111l!t,road) about the existing requirements (the 111a il11L1111 Hpl'pd Illd 11,,'wit 1\lines on the road).

In a feedforward situation (Figure 1.5, right), thc driv 'I ,~IIIII 1\\1"1\around a traffic circle, but has decided to drive from Amlll 'I' 1.1111II1 I' 11Feedforward bases control on information it receives frorn I"l' 11111111'.111Ifeedback situation, actions are directed at reestablishine a silWlllt)l1 I" I1

~- - -~ - - - - BHt

Figure 1.5 Peedforward and feedback control

22 23

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informatior about thc hi ih 'I' aim an I ti' print 'lltioll 1)1 lilt h 1',ItIWth,

and without any additional information about the COII! I of tld,~ 11i111,thcsame as the white line on the road: a rule that has to be foll w d.

The power of the feedforward direction expresses itself in self-fulfillingprophecies: If we start our day thinking that things will go weIl, they gen-erally will; if, however, we start the day thinking that things will go badly,then again, they generally will. Pribram 14 has pointed out the fundamentaldifference between feedback and feedforward. He says that feedback haslittle to do with information: The driver who goes around the traffic circleonly needs information about his position on the road in relation to thewhite lines. He could even drive blindfold, with a passenger who givesinstructions such as "a little to the left" and "a little to the right." Somemanagers think that when they are controlling budgets they are dealingwith information. This is not true. All they are doing is judging figuresagainst a norm that has already been set. The essential difference is thatfeedback-oriented work is directed by a signal Cadeviation in the budget),while feedforward-oriented work is directed at the content, about the whyof the budget and about the context in which that budget is placed.

Feedforward is based on our ability to imagine the future and to anticipateit. This can have negative results - think, for example, about the fear offailure: We see failure looming up in front of us, and that makes things go

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VII( ihulnry: stralny, norm , vislou, dteams, pro '5, stru ture, itlens, tnrtlrs,lil tluus, pro dur s, mission. Whcn I ask rnana .rs to list th s t 'rl11S inIlid'rrromfcedforwardt [eedba k,th yg ncrallypr lu . a list mu h likcIh 'Ol) shown in Figure 1.6.

'l'his fcedforward hierarchy describes the $-curve,rrom th b (tOIl1

upwards. The feedforward hierarchy gives managers a lever they an u (1ll0V thcir company, department, or project further up the S-curve, and thuspromoto development. When a project is in the early stages of developrn .nt,th ' manager has to apply downward pressure on the lever: from valu s totir am to vision and so on. The more feedback the manager receives, the mor'tangible the project becomes for the organization. Once the proj t hu,bccome concrete, top management will increasingly delegate the leader hip of

the project to middle-management levels lower down in the organization. Inther words, the organization will move step by step from feedforward l

Start of S-curve: Feedforward impulses

Accents at the beginning and end ofthe S-curve

End of S-curve: Feedback impulses

ValuesVision

MissionStrategy

TacticsProcess

5tructureProcedures

Norms

Impulses are based on the future, on something th at isnot yet present

Cause little or no delay in eithertime or spaceDeal with something that is still to come but doesn't

yet existStart and finishChange a conditionAredependent on information that gives a "direction"

or "goal"; without specific contextual informationabout the direction, there can be no feedforward

Impulses are based on the past, through feedback withsomething th at has taken place

Cause delay since the feedback always takes timeDeal with concrete and tangible matters

Can continue endlesslyMaintain an existing conditionAredependent on a signal th at indicates a "difference"

or "deviation"; as long as th at takes place, no furtherinformation about the type or nature of theinformation is essential

In the first stage of the S-curve,the accent lies on questionssuch as: Who are we? What dowe do? Why do we do it?

ValuesVision

MissionStrategy

Tactics »>"Process ...------

StructureProcedures

Norms

ValuesVision

MissionStrategy

TacticsProcess

StructureProcedures

Norms

Table 1.1 The differences between feedback and fc clforwal'd Figure 1.6 The feedforward hierarchy as a way of mapping the S-curve

24

In the consolidation stage, the accentshifts to the question: How can webest tackle our plans given the currentcircumstances?

25

In the efficiency stage, the accentshifts to the question: How can wedo what we do cheaper, faster, andbetter?

26 27

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Values and normsAny discussion with management about the order of the individual termsgenerally turns into a heated debate about the proper position of the termvalues. This is hardly surprising, since generally (and certainly in theNetherlands) values and norms are lumped together - almost as if they weresynonyms. Yet when I demonstrate things with real examples, we generallyreach the conclusion that values should be at the top of the list. For example,respect or honesty says something about the way you should act - and forthis reason they seem to set a norm (in short, the highest form of feedback),But values have a "thou shalt" character, while norms have a "thou shalt not"character, Values give direction (information about the future, even if this israther abstract), but say little about the way in which the direction isachieved. Norms provide a boundary, and are gene rally concrete in the waythey mark this boundary. Norms are always derived from values: "Don't lie"(a norm) is derived from "integrity" and "showing respect for each other"(values). On the other hand, somebody with values such as "integrity" and"showing respect for each other" may well occasionaIly lie - there are situa-tions in which this is appropriate. The classic example is hiding Iews duringWorld War 11: In such a situation there is justification, taking into accountvalues, for breaking the norm about not telling lies. Anybody who rigidlysticks to the norm and by doing so betrays the [ews would no longer be con-sidered a person of "integrity" or somebody who shows respect for others.

This sort of discussion usually results in managers reaching the conclu-sion that values should top the list in the feedforward hicrarchy. Norms, onthe other hand, can be compared with traffic sign , or with the white lineson the raad, They show what can and cannot bc don, Valu s, to continuethe traffic metaphor, are the reason you are on th ' rond, thc destinationyou wish to reach.

At the top, the feedforward hierarchy is con rn 'd with 11' fut ure and isabstract (values, vision). At the bottom, it is on '1'11,(\ wirh th past; it isconcrete by nature and control-driven (pro dur 'S, 1101'1I1S),A (in practical

V hll

"III'INil\ltl'da',,'ol ompony.ltistt omptlnYlllllllhw'lldl11il"df'I'ol11 dil1',I ylltl will, röl' l11f1nyycar . It is a rnpany thnt I hav ti lmir I lor its vnlu ...'l'II\'VlIhl'soflrusl,inlcgrity,l amw rk, ntributi n.And it isu ompany thn!IlidIllil" ir arly for its invcntiv apability ... Asw rcinv nt urs Iv '$ W' lil",

1111,I,inmanyr always,drawingfr m our hi I: ryand urtraditions to hclpIINin that rcinvention.l believe that Hewlett-Packard has a uniqu .opponuult yio bc om whatlwouldcall,whatmanyofusatHPnowcall,an '- ornpnny

with a shining soul.i.We are blessed with a cornpany that was iv 1111 v "'ySiron soul and spirit and character by Bill Hewlett and Dave Pa lord, Anti 1IIs Ih nature of that soul that helps us now in our reinventioo ...

" 0 l'dlike first to start by sharing with you the rules ofthc gara I ',liS werullthcm at Hl-now ... OurphraseforthatinsideHPtodayis'Pre crv thc h 'sl uu]I' invent the rest.' And ifyou look at these rules 1thinkyou wilt 'that ull olthem come from the great legacy that Bill and Dave left us. W. talk h 'r" 111NIabout an environment in which every employee believes that th ir ntrlbution can make a real difference. And so our first rule, as you see hcrc, is b ·Ii 'v 'you can change the world ...

"And coupled with that, believe you can change the world, is another ruI atthe end which saysthat believe togetherwe can do anything. Because of cours ,teamwork is at the heart of all great reinvention ... You will also see that wthink speed is essential ... Trust is important, aswe talk about keeping the toolsunlocked ... Trust in sharing with our colleagues. And of course, a customerdefines a job well done. And throughout it allwe remember, for ourselves, forour customers, and for our share owners, that this is a company foundedby inventors. And that it is fundamentally our inventive capacity whichdistinguishes us from our competitors. Which continues to allow us to make acontribution to our share owners and to our customers."

Vision"Aswemove forward in this reinvention phase, we are constantly aware of the

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with .it a scrvi C p rsonaliz ti n ws... ln 1'1, whut L h IPIH'II IIH 10 lny isproductsaremore and more valuable to the cxt ntthat t h .y 11" n 'Iwork .d andto the extent that theyare included in a package of services. And s it's vital forus, as a company, to not only continue in our strong tradition of productgeneration, but also to put those products together with services. E-services is,we believe, the next great movement in the networked economy ... So thechallenge for us in HP is to play uniquely in driving this e-services world."

111 1111111'11kI'l I 11111 WI IlilVI 1111II1 ti 11V1l1111ldllllllll" 111111111111)'.'1111111111111

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Operatlonal matters (process, structure, procedures)uS th sc al' th .. , fundamenlal buildin bi ks n w wil hin 11P. WOl'ld I )S~1'1' du t gen rati n, w rld las ustorner xp ri n c.An I r UI' ,11 IJ Lolis at the center of aUof this. HP Labs i the place where our invcntiv apabilit y

bcgins and is perhap best personified. And we're focused vcry mu h now ontaking the technology and the capability of HP Labs and moving it m I'

quickly into the businesses and out into the marketplace. I mentioned our d alwith KodakandI wantto focus on this justforamoment ... Another importantdeal that we announced relatively recentlywas with Ford Motor Company."

Mission"We believe HP is uniquely positioned at the intersection of these services,these assets or processes that can be turned into services, to deliver over a net-work. The infrastructure that supports those services, and the appliances, theinformation appliances. Whether those are PCs or cell phones or wrist watches,or a microchip so tiny that it can be embedded in literally every device. It is ourprivilege and our competitive advantage to play at the intersection of thoseservices. The infrastructure that supports it and the information appliancesthat deliver those services. So it is our job to use that privileged position todrive revenue opportunities and pro fit opportunities aswe help transform ourcustomers' businesses."

Norms"And finallyto updateyou on howwe have performed over this first quarter in2000, I will say that we have committed to our share owners for 2000 that wwill provide revenue and profit growth in the 12-15% range ... We believwe've made good progress in our first quarter against that goal. Asyou can sec,overall reven ues were up 14%... From an operating income perspective, we a I'

two cents above analysts' expectations at 80 cents. Our reported earnings were77 cents ... And I might just add that our stock closed today at $134.8."

[Applause]Strategy"So we are really focused on six strategie priori ties today. First, I would saythat we are focused on increasing the performance from our current corebusinesses ... Second strategie priority is to eliminate a lot of replication andredundancy and inefficiency that has grown up in our business ... Third, wemust refocus our energies on providing a total customer experience thatcompetitively advantages us ... Fourth, we have a very efficient business inmanyways, in terms ofinventory management as an example ... And prioritiesfive and six really come back to the notions I was talking about earlier. ..

"So these are the strategie priorities that we are focused on as a business.These are the priorities that allow us to both reinvent the company andproduce superior competitive results in the year 2000 and bevond,"

THE PROFES SION OF LEADER FROM THE PERSPECTIVE

OF THE S-CURVE

I have sat and watched the chairman of a great company speek to his assembIedbarons. "I have two messages for you today," he said. "Pitst; I want to remind youthat we are a very successful business, perhaps more successful today than we haveever been. Second, Imust teIl you that if we want to continue to be successful weshall have to change, fundamentally, the way we are working now."

Charles Handy"

In practice, management is all about juggling measures directed at eitherfeedforward or feedback. Results-oriented managers and leaders willalways fed a certain pressure to make things concrete and tangible.Feedforward indicates the reason for action and the direction it takes; feed-

lactics"One ofthethingsthatwe'vedoneis fairlyfundam ntully r ali '11 lil' business.And we've realigned our business so that we are bot h world- InS$ providers of

28 29

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I' scrv r bul' 'au ral '.At the start of the $-curve, very littlc is tan rihlc -, 111 ,,, • frn dl' '::1rly

stages of the growth curve, people who can "see" wha t i n't th 'I' yet (liter-ally, people with vision) are worth their weight in gold. The future has tobe brought back to the present. Once the ideas have been given some sortof reality, the visionaries have done their job, and operators take over theresponsibilities of production. Visionaries think in terms of feedforward,that is, about things that are yet to happen. Operators think in terms offeedback, that is, about controlling and checking that everything works asit should.Actual management takes place on a sliding scale that shifts from feed-

forward to feedback, from fantasy to reality. The paradox is that with eachnew piece of reality and each new success in achieving that ideal vision,people accept a slight increase in feedback - people want to maintain thesuccess, to "freeze" it in rules - and so allow events to be increasinglydirected by the past. You can't escape it. In reality, success is bought in con-trol terms with a little feedback, a little rigidity. Every further step along thescale, that sliding scale from feedforward to feedback, demands sacrificinga little bit of future-oriented behavior, increases slightly the rigidity, andmakes people more self-satisfied because they have reached a milestone.Perhaps this is superfluous: For an individual product, this process is

unavoidable. There comes a moment when the product is (more or less)fully developed, and the "engine" is humming along nicely in the market.For that specific product the following holds true: Make the production asefficient as possible, increase profitability, and (finally) decide when thecurtain has to fall as the product life cycle draws to an end. For an ergani-zation as a whole, this does not mean the final curtain must fall, as long asit makes sure there are other products and services in various stages ofdevelopment. (This idea is as old as the famous matrix of the BostonConsulting Group.) If management does not pay attention to this, then theentire organization will move too far up the curve and could find itself ina life-threatening situation.It is advisable to take steps to ensure that a new $-curve has started

before the existing one has reached the top of its profitability. There aremeans (in an organization) and spirit (in a marriage) to upport such anew development. Each $-curve passes the baton on to the next one

30

IJnw!"

Pigure 1.7 Growth (Theodo re Modis, Concuering Uncertainiy)

(PII'lll' 1.7).A proactive agenda for change and growth has the following ~ ur

pl'iorities.

Crcate an image of a new future direction.Profit for as long and as much as possible from the advantages of the Id

$-curve.Oemolish what should be removed and retain what is valuable.

11, Manage the transformation.

These points are shown in Figure 1.8. The "harvest-invest" axis, which runsdown the right-hand side of Figure 1.8, shows that investments must bmade at the beginning of an $-curve. At the start of the sharply perpen-dicular line - if things go well - the first encouraging reports will filter in;during periods of transformation, profit is seldom made. At the end of the$-curve, profits will begin to decline.If management does not pay constant attention to this agenda of con-

struction, transformation, and destruction of different $-curves in theorganization, if management does not - before the decay process sets in -start building up the next $-curve, then the existing projects, products,organizational units, and so on will die, but no new $-curves will enter thepipeline. If products and programs are not destroyed at the end of theirlifetime, then they will generally remain: They do not contribute verymuch, but they do keep employees at work, demand attention from man-agement, and cost money. And the result is a situation in which all theproducts of a company are at the top of the $-curve simultaneously. This

3 1

1 Ih'\I(j1ltiIUllI!l'2 Up al n w bu In3 Operate the business4 Squeezeprofit out of the existing curve5 Downsize creatively6 Transform7 Think in time about the next curve

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IlIt'l h us about how we as ornpanics rnust adapt to th n w nct nOI11Y,lO1It' IJ 'W Millennium, to all of the challcngcs, thc prorni s and yes tb thr ots111'Ih . wonderful technology that we are aJI here to talk about.

1:('(11'. Fear can be a good emotion. Fear can help us be more pragmari . Pcar,111hold us in check. Fear can allow us to think clearly about the strategies thatw ' 111Listuse to be successful. But fear as well can hold us back. Fear of failure. PenI'ol' rna king amistake. Fear of the unknown. Fear of taking risks. This kind offca I'111paralyze us. Can cause companies to stop when they shouJd go forward.

I esire. Desire can be a wonderful motivator to act. It can cause us to doth ings boldly, with imagination, with courage. It can cause us to make choiccIhat we would otherwise not be prepared to make. And yet, there are somIh ings about desire that also one must be careful of. And frankJy, we see somcof the downside of desire today in many dot.com companies. Too much desirean turn into destructive greed. Too much desire can blind us to strategy, topragmatism, to reality. Because without the tempering of reality, desire canmake us too impuJsive. And in this impuJsiveness, we can risk alienating our

partners. We can exhaust our employees. We can disappoint our shareowners.Too much fear and companies become paralyzed byuncertaintyand doubt.

Toa much desire and they flame out. And so I believe how we choose betweenfear and desire will motivate us and will help determine our success in this neweconomy.

The best course of action, I believe, is to have an ho nest assessment ofbath our deepest fears and our most fervent desires. The most successful com-panies, Ibelieve, will harness the power of both their fear and their desire. Tofuel our best thinking, to energize our ranks and to leapfrog the competition.

Which brings us back, perhaps, to the spirit of inventiveness. Truly inven-tive business es will use the power of both fear and desire as a motivation tohow they approach the net economy. Inventive companies will embrace their

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Figure 1.8 The agenda of the leader

brings the whole organization into mortal danger.This book, however, is not about portfolio management. This book is

about the elements that determine an organization's ability to spring fromone (nearly) completed S-curve to the start of another S-curve, and thusescape from S-catraz, the prison of mental rigidity that seems inevitablyconnected with success.

The management of this escape from S-catraz, this struggle againstEscher's black knights, is a top priority for leaders of any organization. If theyare to escape from S-catraz, managers and employees need to let go of theold, with all the fear that this entails, and at the same time set off towards anew future, in which fear and hope of a new success both play a role. Givingpeople the power to finish their own S-curve, let go, and start again is a corecompetency in the struggle against the black knights of organizationalrigidity. The following speech by Carly Fiorina serves as a good example.

lt is a great pleasure to be with you today, our valued partners alld our inven-tive colleagues. What I'd like to do today is talk with you about the spirit ofÏllvention. A spirit that I believe is necessary for a11of LISto thrive and prosperin this new net economy. A spirit that is necessary to help LISadjust to all thechanges in the net economy.And I thinkit's fitting in a way that we shouJd takeour inspiration this morning from the place in whi h we sit, the Louvre,arguably the most extraordinary collection, tbe cxt raordi nary celebration ofhuman ingenuity and creativity and inventivcn ss in th w rld. And as wereflect on this market as we reflect on the dynarni s of th net economy, thepromise of e-services, we can learn from on r th \ rr 'til st inventors ever,

Leonardo da Vinci.

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desire to further human progress, the desirc to mal c m I1'Y in 11 'W W Iys. 'lbset the course for the nextwave of business in the new econorny.'"

ESCAPE FROM S-CATRAZ

Now that we have become acquainted with the black knights - the friendsof success and at the same time the enemies of renewal- it is time to leamabout the weapons we can use in our battle against them. These weaponsare closely related to the themes discussed by Fiorina: fear and desire. TheS-curves are older than humanity. It is thus hardly surprising that we allhave weapons in our nature that can prevent us hanging on to a dyingS-curve. These weapons are our own survival instincts. These survivalinstincts, attachment and exploration, govem to a large degree how weapproach the conservation of the "now" - or renewal and the explorationof the unknown future. The evolution and nature of these instincts is thesubject of the next chapter, in which we explain the way they work. In thechapters following, we look at what is required to help these omnipresenthuman powers come into flower within an organization.

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