Unintended consequences

One of the most fascinating examples of a large-scale transformation programme is the ‘great leap forward’ introduced by Mao Zedong in communist China in the late 1950s.

Mao was frustrated at the slow pace of China’s development and was determined to accelerate it. One of his key priorities was to increase grain production. To help with this, he introduced a campaign urging everyone in China to kill sparrows. 

Sparrows were thought to consume 2kg of grain a year each, so Mao reasoned that every sparrow less would mean 2kg more grain that he could export to earn valuable foreign currency.

Nests were destroyed, eggs were smashed, chicks were killed. Millions of volunteers formed into groups, banging pots and pans under sparrows’ nests so they couldn’t rest and would eventually drop dead from exhaustion.

The campaign was remarkably effective. Within a few months, sparrows had all but disappeared from the Chinese countryside.

The problem was that, as well as eating grain, the sparrows had also been eating all the locusts and other insects that would otherwise have been attacking the crops.

As the sparrow population dwindled, the insect population surged, wreaking havoc in the grain fields: instead of a surplus, China found itself struggling with a shortage.

And this is where the story gets really dark.

Because it was such a priority to increase grain production, local party officials were under pressure to deliver ever-higher quotas. The rewards for reporting the biggest increases were spectacular – including the chance to meet Mao himself – while the penalties for failure were brutal. 

As a result, officials competed with each other to report production figures that were up to ten times higher than reality. Delighted by the apparent success of his policies, Mao struck a series of deals to export grain to other countries.

In order to meet these export commitments, the officials were now required to deliver the ‘surplus’ they had reported. Grain stores all over the country were ransacked, leaving the people who had picked it to starve to death. Only when the stench of rotting corpses became too great to hide did the truth begin to emerge.

Some 30 million people are now known to have died in the Great Chinese Famine. Mao remained in power, but was edged aside from economic affairs. The reforms of the ‘great leap forward’ were quietly shut down. And 250,000 sparrows were imported from the Soviet Union to begin rebalancing China’s ecology.

What conclusion should we draw from this? That ambitious transformation projects are doomed to fail? Not necessarily – although KPMG estimates that 70% of major transformational change projects don’t work.

For me, there are two big lessons.

First: simple solutions to complex problems are always attractive, but there’s usually a reason why no-one’s tried them before. So, before you kill all the sparrows, spend a bit of time thinking about what will happen next.

Second: be honest about failure. Most change doesn’t work first time, however much you may want it to. If you incentivise people to pretend it’s working when it isn’t, you won’t be able to fix it until it’s too late.

Bolt from the blue

Back in the days before Netflix and smartphones, being bored used to be a normal part of the human experience. 

I remember hours spent gazing out of the car window as a child, counting different coloured cars, playing I-spy, making shapes out of clouds.

That doesn’t really happen any more. 

We’ve got so used to constant mental and sensory stimulation that we feel genuinely lost without it.

In fact, a recent study, led by Professor Tim Wilson at the University of Virginia, found that most people would rather give themselves a painful electric shock than sit quietly in an empty room for 15 minutes.

The study put hundreds of undergraduates in a room on their own for 15 minutes with no stimulation, to ‘entertain themselves with their own thoughts.’ Most said they found it hard to focus and at least 50% said they actively disliked the experience.

Some of the students were then put in a room where there was one thing they could do: they could give themselves an electric shock. But it was a sufficiently strong and unpleasant electric shock that all of them had earlier said they would pay to avoid it. 

Despite this, when the alternative was to sit alone with their thoughts for 15 minutes, 67% chose to shock themselves at least once (one very odd chap zapped himself 190 times: he was left out of the final analysis).

‘The untutored mind does not like being left alone with itself’, Professor Wilson concluded in his study. ‘People prefer doing to thinking, even when what they’re doing is so unpleasant that they’d normally pay to avoid it.’

This is a really important point to keep in mind if you want to improve the quality of planning and innovation in your business. 

Thinking is hard work. Most of us don’t instinctively like doing it. And, thanks to the non-stop, always-on stimulus of modern life, most of us don’t really have to: instead, we just keep ourselves busy doing other stuff.

That’s why you’ll always hear people say they have their best ideas when they’re in the shower or out walking. Because they’re doing something worthwhile (which means they’re scratching the itch of ‘being busy’). But they’re also suspending outside stimulus for long enough to engage their mind properly with a problem or idea. Which is when the magic happens.

So your challenge as a business is to help your people recreate that kind of environment during the working day. 

That’s partly about finding a way to shut out the ‘noise’ (meetings, deadlines, presentations, emails) for at least a little while. 

And partly about making it okay for people to use that space to let their minds wander – without having to worry that their colleagues will think they’re just slacking off.

Having ‘a buzzing, stimulating workplace’ is great for your employer brand.

But, if you care about the quality of thinking in that workplace, wouldn’t it be better if people could stop and smell the roses every now and then?

Viva la Resolution

Happy New Year.

And congratulations: if you’re in the 41% of adults who made a new year’s resolution, chances are you’re still on track with it.

Of course, that may not last long. Studies suggest that, on average, 22% of new year resolutions fail within the first week. 40% within the first month. And, by year end, only 8% of resolutions will still be holding.

Sorry to bring you down like that, but it’s always best to be realistic about these things.

In any case, as failure rates go, that’s not dramatically worse than most corporate transformation projects.

Consultancy KPMG says only 30% of corporate transformation programmes achieve sufficient progress to be considered a success.

And, since the Project Management Institute estimates global transformation activity this year will account for around 65 million full time workers and $15 trillion in economic activity, that’s an awful lot of wasted time and money.

So don’t feel too bad about yourself as you’re hanging laundry on your otherwise unused cross-trainer. Most of us have been there. And, by and large, the reasons why most corporate transformations don’t work are pretty much the same. 

For me, the three big ones are:

1. Lack of motivation. ‘Why?’ is always the most important question. It’s easy to give up drinking when you wake up hungover on January 1; less easy to stay on the wagon when you’re out with friends three weeks later. If you’re going to make the effort to do something difficult, there has to be a prize that makes it worthwhile. For most people in most businesses, the end goal of a transformation programme is often either something that doesn’t directly affect them (the business makes more money; the leadership team gets a bonus) or something they feel actively threatened by (they have to learn a new system; there may be fewer jobs). Change takes effort – so, unless the people in your business really want to change things, nothing will happen.

2. Lack of clarity. Most resolutions are framed in pretty vague terms (‘lose weight’, ‘learn a language’) and transformation programmes are often the same. There tends to be a lot of detail about ‘what’s wrong today’, but less detail about the steps to correct it: what will happen and when, who’s involved, what it will look and feel like for them and how progress will be measured. Without that clarity, it’s very difficult to generate and maintain momentum.

3. Lack of focus. Most resolutions run out of steam because life gets in the way (‘I’m too busy to go to the gym’, ‘The weather’s too depressing to give up chocolate now’). Transformation programmes are the same: priorities change, market conditions fluctuate, teams get shuffled, new opportunities crop up. In most cases, there isn’t a dedicated transformation team – it’s something people are doing on top of their day jobs. The more other things they’ve got to think about, the less likely they are to give it their best attention.

Of course, the good news is that all three of these points can be corrected with surprisingly little difficulty: you can make your resolution one of the 8% that sticks and your transformation programme one of the 30% that succeeds. 

All it takes is more discipline in the planning, more engaging communication; and, of course, you have to want it enough.

Do you?

Ho ho ho

Most of you have probably seen the ‘Santa brand book’ at some point over the last eight years, but it’s still (by a country mile) my favourite piece of festive promotion.

So, in case you haven’t seen it – or just fancy seeing it again – click the link below.

Happy Christmas.

https://www.quietroom.co.uk/santa_brandbook/

The next big thing

It’s just over 300 years since the infamous South Sea investment bubble burst.

It was made up of hundreds of different – and often quite bonkers – investment schemes. Here are three of them (direct quotes from the prospectus): 

‘A process for extracting silver from lead.’

‘A company for making a wheel of perpetual motion.’

And (my personal favourite) ‘A company for carrying on an undertaking of great advantage, but nobody to know what it is.’ 

What’s extraordinary is that all three of these schemes found plenty of backers.

Even the brilliant Sir Isaac Newton invested (and lost) a fortune.

Of course, it was a long time ago and our forebears simply didn’t have the knowledge and information that we have today. So it’s easy to look back with an indulgent smirk and feel confident we would never be so naïve.

And yet… 

It’s only 21 years since the dotcom bubble burst, leaving lots of people holding shares in businesses with plans almost as risible as their South Sea counterparts.

It’s only 13 years since the world’s economy imploded, when bankers realised they’d been selling each other toxic subprime mortgage debt repackaged as AAA-rated investments.

And we’re still living through a time where our greatest economic brains simply can’t decide whether Bitcoin is a bubble or not.

That’s because it’s part of human nature to be easily distracted by things that seem new and clever. We’re scared of missing out. We don’t want to be last to the party. And we love a shortcut.

Hence, the explosion of organisational communication tools over the past five years. 

It’s so tempting to believe that, if we can just get the board to sign off on the shiny new comms app, it’ll suddenly be a breeze to get everyone engaged.

The problem is that, after the initial novelty wears off, there’s nothing inherently engaging about the app itself. In the same way there’s nothing inherently engaging about Instagram or Facebook or Twitter or Pinterest.

What makes them engaging is that people are able to use them to connect with people and ideas they find interesting and cool and fun.

In other words, it’s not about the shiny new tech. It’s about what’s on it – and whether it feels relevant and interesting and useful to the people you want to use it.

It’s about the message, not the medium. Substance, not hype.

It’s about giving people the freedom to engage with each other on subjects that interest them. Not pushing out top-down, functional ‘approved messages’ that your leadership team wants them to know.

To put it another way: there’s no point investing in the shiny new tech, unless you’re also ready to embrace a much looser and more organic way of communicating.

Which is hard work. And tricky to manage. And scary for the people at the top of your business (who often don’t like the idea that they’re not in control of the narrative). 

But it’s also absolutely essential.

Because, as those South Sea investors learned the hard way, there are no shortcuts to any place worth going.

Covid, cancer and creativity

This year marks the 50^th anniversary of the National Cancer Act, Richard Nixon’s attempt to immortalise himself as the President who beat cancer.

The plan was to copy the spirit of JFK’s ‘man on the moon’ vision and throw so many resources at the problem that, within five years, nobody in the USA would die from it any more.

Unfortunately, ‘beating cancer’ turned out to be a lot more complicated and nuanced than putting a man on the moon. Which is why, 50 years later, Nixon’s legacy is rather less glorious than he’d imagined and cancer is still the second biggest cause of death worldwide. 

That’s not to say things haven’t got better. Survival rates have improved significantly for every major type of cancer. 

Except one.

While overall cancer deaths have fallen, deaths from pancreatic cancer have actually risen. It’s now the second-biggest cause of all cancer mortality, killing half a million people worldwide every year, with a survival rate of just 5% in the UK (compared to 76% for breast cancer, or 53% for bowel cancer). 

How come? Why has this particular form of cancer resisted efforts to tame it?

There are a number of reasons. It’s hard to detect. It spreads more easily. It hasn’t had the profile of other cancers – and, therefore, not as much focus or research funding.

But the biggest problem, historically, has been not so much the scale of the resources available as the way they’ve been deployed.

All the big pharmaceutical companies have invested money and expertise in researching ways to treat pancreatic cancer. But most of that research hasn’t worked, which means they’ve hushed it up (‘don’t spook the shareholders’).

Which, in turn, means that, instead of pooling resources and learning from each other’s failures, they’ve wasted time and money duplicating them. 

In the meantime, 95% of people with pancreatic cancer are still dying from it – probably even more this year, since the lockdown has made it harder to detect the disease at an early stage.

And yet, oddly, the long term impact of the pandemic may actually be far more positive for cancer sufferers. Why? Because it’s changed the way people think.

Backed by massive government funding, pharmaceutical companies have combined with research institutes and health agencies to create not one, but five, viable vaccines to combat the covid-19 pandemic. 

Less than a year after the work started, the vaccine is already in the market and protecting people – one tenth of the time it would typically take. 

Working together on the covid vaccine has built relationships and trust between competing clinical bodies. More importantly, it’s built an instinct of collaboration, where people talk openly about research that didn’t work, because it helps everybody’s thinking move on faster.

The results are already seeping into cancer research, with a more collaborative approach yielding encouraging progress in treating pancreatic symptoms.

There are important lessons in this for any business.

The most important being that, if you really want people to be innovative, you have to create a culture where they’re not too scared to tell you something didn’t work.

Where they’re motivated to help each other, not keep things to themselves.

And where they can focus on the problem, without being distracted by money.

If it ain’t broke…

Douglas Haig was the Commander of the British troops on the Western Front between 1915 and 1918.

He was also a cavalry officer. So he knew the quickest way to win a battle was with a decisive thrust by mounted troops, who could move fast, get in behind the enemy and capture ground quickly for the infantry to consolidate.

That was the prevailing military orthodoxy. That’s what he’d been taught at Sandhurst. That was the way battles had been fought and won for the last 300 years.

So, when military designers approached him in 1915 with a prototype for a ‘land ship’ – an armoured vehicle with caterpillar tracks and guns – he couldn’t see the point. The new weapon was mechanically unreliable, difficult to manoeuvre and nowhere near as fast as a galloping horse.

But, as the war on the Western front continued to be a bloody stalemate, Haig was frustrated. He needed to find a way of breaking through the well-entrenched German lines, so he could deploy his cavalry and win the battle.

So he contacted the designers and told them to send everything they had – at the time, around 50 vehicles (which, by now, were being referred to as ‘tanks’, in a bid to persuade enemy spies they were just for transporting water).

By the time they got to the front, only 32 of the 50 tanks were still working, but Haig threw them straight into battle. It was a qualified success – only nine made it as far as the German trenches. But they did some damage, so he persevered.

Over the next two years, the technology improved. The tanks got quicker and more manoeuvrable. By 1918, they were an established weapon: over 500 of them took part in the decisive battles of the hundred-day offensive that eventually broke the German lines and ended the war.

What’s interesting is the conclusion both sides drew about the tank as a weapon after the war ended.

The British still saw it as a tactical solution to a specific problem (breaking through a defensive line).

Whereas the Germans, having experienced tanks from the sharp end, realised they were a devastating new way of fighting wars – and re-designed their whole military strategy around them.

22 years later, their Panzers came back to Northern France and ran straight through the French and British armies, who didn’t know what hit them.

You see the same thing in business all the time.

Some companies embrace innovation as a way to completely transform the way they work and the experience they offer their customers.

And some see it as a way to keep doing the same things that worked last time, only a bit quicker and cheaper.

Like the British army in 1939, they’re still fighting the last war.

 

What’s that ticking noise…?

In 1958, the average lifespan of a business in the American S&P500 index was 61 years. Today, it’s 18 years. By 2028, it will be nearer 11.

In fact, according to a study by the Yale School of Management, it’s likely that around three-quarters of the companies in the S&P500 today will have disappeared from it altogether in ten years’ time.

No wonder CEOs are jumpy.

They know that, if they don’t keep reinventing their business, it won’t be one of the 25% that survives beyond the ten-year mark.

But they also know that, if they don’t hit their short-term targets, they probably won’t be around long enough to make the changes anyway.

With operating costs already cut to the bone, those targets are getting harder and harder to hit, which means there’s very little margin for error.

And that’s precisely where the problem comes.

When you’re looking for creative ways to reinvent your business, the surest path to failure is to play it safe. A little bit of incremental change here, an extra blade on your safety razor there. These are not the things that will save your business when a disruptive new competitor rips up the rule book and starts eating your lunch.

But, when your primary business focus is on delivering short-term results, you’re unlikely to have a culture where people embrace risk and failure.

It’s far more likely to be a culture where people stick rigidly to the processes and ideas that worked last time. A high-compliance culture, where contribution is measured only in numbers. And where nobody wants to admit that something hasn’t worked.

That’s not an environment where new ideas are likely to flourish. And, unless you can do something to change it, your business will inevitably suffocate and die – sooner rather than later, according to the Yale study.

So, what can you do? How do you take a workforce of people conditioned to be compliant process-followers and turn them into agile entrepreneurs?

Well, the bad news is that there’s no process for it. There’s no template to follow. No lever to pull.

The only way to do it is by changing the culture of your business. And the only way to do that is if you – and every other leader in the business – really wants to.

Everything else – launching a new purpose and values, polishing your employee value proposition, setting up a ‘creativity lab’ – is just a more or less interesting way of avoiding the issue.

You hear that ticking noise?

That’s time running out.

Loose-tight

For a period of around 20 years, from the early 70s to mid 90s, the UK was the undisputed world power in advertising. One of the great figureheads of that dominance was Steve Henry, whose London-based agency HHCL produced some of the most iconic campaigns of the time. If you lived in the UK then, you’ll remember the work they did for Britvic (You know when you’ve been Tango’d), the AA (The fourth emergency service) and Ronseal (Does exactly what it says on the tin).

One of the things that made HHCL so successful was the way they worked. As Henry explained in one of his excellent blogs: ‘You need a structure. At HHCL, we had very tight processes, because we believed in the concept of ‘loose-tight’. Tight processes meant we could explore loose – i.e. unstructured – thinking.’

The crucial point was that HHCL’s processes were designed to help produce outstanding work, rather than improve their margins by operating more efficiently.  They were all about creativity, not money.

This is in stark contrast to the model of large advertising groups, such as WPP, Omnicom and Publicis, which have grown rapidly by acquiring agencies and introducing efficiency measures – making them more profitable but, in Henry’s view, less creative and, hence, less valuable in the long term: ‘We’ve seen the ad industry become a lot more efficient – but at what cost? Nowadays, it can turn out bland, invisible work faster than at any time in history.’

It’s a familiar refrain. As advertising becomes safer, it becomes easier to ignore – and, consequently, less valuable to the brand owners who want to stand out and get people’s attention.

The underlying motivator is a fear of failure: if you have to do work twice, your profits will be damaged and your shareholders will be unhappy. Which is why nearly all advertisers and agencies now rely on focus groups to pre-test their ideas.

There are two big problems with this. The first problem is that your competitors are also testing their ideas through focus groups and getting exactly the same kind of feedback. Which means there’s a pretty good chance they’ll come up with the same ideas and solutions you do.

The second problem is that focus groups tend to be unfavourable to original thinking. It’s a truism that people feel more comfortable with things they know and understand than they do with things that are new and unfamiliar.

That same instinct for safety – the desire to avoid risk and only back dead certainties – is why most businesses are not very creative places. When looking at a problem, their first instinct is to apply a solution that worked somewhere else. Once they’ve got a solution they think won’t fail, they stop thinking and turn it into a process.

Whereas, if they carried on thinking, they might come up with a better solution.

 

Stop talking about innovation

A hundred years ago, it was a big deal when an aeroplane flew across the English Channel. Who would have believed then that we would be watching a live camera feed from the surface of Mars – and picking up data from a man-made satellite as it left our solar system?

Thirty years ago, who would have believed you could take a picture without film? Or make a phone call from the top of a mountain?

Even today, how many of us really believe you can manufacture objects in your own home with a 3D printer?

Yet it’s happening.

The pace of technological change is so fast nowadays that even visionaries like Bill Gates struggle to keep up (although he now denies making the regularly-quoted assertion that ‘640k of memory ought to be enough for anybody’). Today’s science fiction is tomorrow’s fact. And the corporate graveyards are littered with the corpses of big companies that didn’t adapt in time.

In 2009, Nokia was the world’s fifth-largest brand, worth $35bn. Two years later, it was a Microsoft footnote, swept aside by a smartphone Tsunami that it hadn’t seen coming.

In January 2008, Woolworths was one of the UK’s oldest and best-known retail names, with a swaggering Christmas advertising campaign and stores in every high street in the country. By January 2009, it had vanished.

That’s how fast fortunes turn.

An Innosight report suggests that more than 75% of the companies on today’s S&P 500 index will not be on the list 15 years from now. In most cases, this is because they will be overtaken or acquired by fleeter-footed rivals.

So it’s hardly surprising that innovation – in products, in services, in behaviour, in ways of working – is something almost every CEO regards as a priority. But recognising innovation as a priority and creating an innovative business are two very different things.

If you look around your own business (and be absolutely honest with yourself here), how much do you see that’s genuinely new?

There’s probably plenty of superficial innovation going on: an extra blade on your razor, a new flavour in your ice cream range, a one-hour delivery option.

But doesn’t it all feel a bit safe? A bit like what everyone else is doing? Where are the game-changers? Where’s the disruptive behaviour? Why do the big ideas always seem to come from somewhere else – from younger, hungrier rivals?

The depressing truth is that most companies are so scared of failure that they won’t do anything that isn’t guaranteed to succeed.

And that reluctance to make mistakes, as the Innosight research shows, is exactly why most of them won’t be here in 15 years.