We Are Not Just In A Recession.

by Jeffrey S. Deckman 19. January 2009 20:03

An Introduction to Knowledge Age Economy Thinking

We Are Not Just In A Recession. 

We Are In The Midst Of Something Much More Exciting!

Introduction:

This recession is going to be very deep, quite long and will go down in history as one that significantly changes how we think about and manage our businesses and the people in them.

While recessions are very unsettling they are also very cleansing. The pressure of a recession forces us to rethink what it is we do and how we do it in order to insure our survival. The result of this pressure are productive innovations and evolutions that are both necessary and very healthy for our organizations and the economy as a whole. These innovations and evolutions set the stage for the next phase of prosperity that always comes after a recession. (More on this later in the article.)

So a recession is really just a wake up call informing us that what we have been doing is no longer working because conditions have changed so much that we must evolve our organizations and ourselves if we are to survive and grow to the next level.

But what is so disconcerting is that we aren’t quite sure what the next level looks like. So we don’t know how or what we must change. As a result we typically find ourselves in one of three scenarios:

Deer in the Headlights

“Paralysis through Analysis”

Attempting to squeeze more blood from the same stone

But these are natural reactions in times of uncertainty. The reason we find ourselves in one or more of these situations is that we are struggling to understand the true source of the symptoms we are experiencing. Often times the “problem” we are dealing with is actually just a symptom of the real problem that is hiding several layers deeper. Once we understand the root problem we can then get traction and develop strategies and tactics that can get us moving in the right direction.


As you begin moving you then begin to surf the waves of change as opposed to being pounded by them. 

So what’s happening?

Obviously, there are many things at play during this recession. But I think that perhaps the most significant underlying cause of this particular recession is that we are facing the end of an era.

We have reached the end of the period of time in which the methods of the Industrial Revolution are effective at being the dominant driver of our economy. For the past 20 years, with the advent of the Internet and the explosion of communication networks and IT, we have begun evolving into a highly connected and networked digital world. This new world is emerging quickly and is forcing changes in how we live and work. As a result we are finding ourselves at the end of one phase in our economy and at the beginning of another. 


Perhaps the best way to explain this place we find ourselves is to introduce the Sigmoid Curve. The “S Curve” as it is often called was first used to explain the rise and fall of biological life-forms. Later on Jonas Salk, the creator of the polio vaccine, expanded its applications to explain life cycles beyond the natural world.

Salk demonstrated that the dynamics of the S Curve apply to anything that has a “life span”. Examples range from cultures and empires; to sports 

dynasties and fads; to technological innovation and, in this case, to an economic model. Each of these phenomena from the rise and the fall of the Roman Empire to the meteoric rise then fall of such fads as Cabbage Patch Dolls, Beenie Babies and Leisure Suits all have life spans that can be tracked and predicted by applying the principles of the S Curve.


Simply put, the S Curve defines the rise and fall of anything and everything. It explains a life cycle by stating that Inception and Growth is always followed by Maturity and Decline. The only way to avoid the oblivion of the Decline stage of an S Curve you are riding is to first recognize that you are at the end of a particular curve. You must then locate the new curve that represents the next evolution of things and transition your organization onto it. 

This transition period from the old curve to the new is always a bit bumpy as people will resist making the necessary changes. John O’Neil asserts in his book “The Paradox of Success,” that a key cause of companies dying with the end of a particular curve is that the thinking and actions that originally made them successful, during the Growth and Maturity stage, if unchanged, eventually result in their demise. Salk also stated that in order to survive over the long term, any entity would need to change or learn new adaptive behaviors to escape disintegration into the disappearing tail of the curve. 

What curves are in play? 

Research and studies from McKinsey, Resilient Futures and others point to the fact that our culture is currently straddling two S Curves. We find ourselves both at the middle of the “Decline” stage of the Industrial curve and simultaneously at the very early “Growth” stage of what many are calling the “Knowledge Curve”. 

This situation is causing many seismic level changes in our culture, one of which is the recession.

 

The Industrial curve brought us unprecedented mechanization, productivity and innovations in efficiency. The theories, innovations and processes of this period, ranging from Henry Ford’s assembly lines to Frederick Taylor’s work with the Efficiency Movement and his theories on Scientific Management were incredibly affective and productive. Each relied upon strict adherence to linear systems, detailed procedures and processes, centralized controls and efficiency and profits though repetitious and predictable actions.

The organizational design models created to oversee the implementation of all of this were equally regimented using management structures that firmly defined and enforced hierarchal-based command and control power structures in order to manage these processes. So management by Org Chart and departmental segregation was instituted. Virtually every organization in today’s industrialized economies use this model of organizational design.

And therein lies the problem!

We don’t live or work in an industrial age anymore. The digital age is taking everything by storm. So we find ourselves living and working in a digital age but our organizations are designed, and our people are trained, to use industrialized models and methods. So it stands to reason we are going to be experiencing some real economic gear grinding until we shift to the next level.

But make no mistake about it: The digital age is the dominant economic driver of the 21st century. And there are excellent opportunities for tremendous growth on this new curve. But in order to capture them we must understand that networks have surpassed linearity and that many of the models that made us successful on the industrial curve will strangle us on the knowledge curve. 

The successful organizational designs of the 21st century will be those that convert “intangibles” like human capital, networks, collaborations, fluidity, speed, and knowledge into highly productive assets. Industrialized thinking will still be part of the designs but it will no longer be the dominant driver in the new economy.

 

The companies that will prosper in this new world are those who can best understand and leverage the power of networks (both knowledge and resource); who can mine and mobilize their latent human capital in order to better predict and prevail; who can streamline and eliminate complex processes such that speed becomes a competitive advantage and who understand that organizational designs on all levels must serve to maximize the conversion of these “intangibles” into significant profits.

How you can adjust

While all of this may sound a bit ominous the fact of the matter is that you can begin making a shift onto this new curve by making a shift in how you see your organizations. The following are some things you can do to kick-start the process.

First: Stop seeing your organization and the people in it through the lens of an Org Chart. Instead begin seeing your organization as a knowledge network that convenes daily in your place of business. View your people as vital nodes in that network who have an impressive collective genius and who know more about the operations of your organization than you could ever hope to know.

Second: Begin working to create an environment where that knowledge network is mined and a culture of “best idea wins” prevails.  This will require an examination of how you interact with your teams because you largely determine their willingness to open up. Be prepared to examine the role your ego plays in this. (It may surprise you the extent you may be unknowingly have created a barrier to someone’s participation.) 

Third: Begin to recognize and understand the effectiveness of the employee peer networks that operate outside of the Org Chart and foster them. They are the repositories for the intellectual capital and the institutional knowledge of your organization. They also have important knowledge about your organization’s strengths and weaknesses that are invisible to you. 

Forth: Understand that strong human-to-human communication links and relationships are crucial to the successful operations of human networks. Know that interpersonal trust is the key to building open and resilient communications and work on building and maintaining this trust.

 

Fifth: Engage your personnel in conversations about how to best redesign your organization. They know what works, and who, and they can identify procedures and processes that create complexities and bottlenecks which slow down your organization or block innovation.

If you attempt to do the redesign on your own you will fail. If you engage them you will not only facilitate the process but you will also be using the knowledge network to design itself. Then your role is to insure the design operates in alignment with the company’s vision. 

Sixth: Lighten up! Nothing moves the day along faster, or increases production more, than when people are enjoying their work and their environment. And even if the work is somewhat tedious if you create the right environment people will still enjoy their work experience which means they will like their jobs more.

So in the new models I think you will see much more emphasis put on managing environments first and people second. Left to their own devices people working together will largely manage themselves if they are given clearly defined objectives and are held accountable for achieving them.

So work together to help your teams create the environment that best suits their needs and still allows for all the work to get done. Once you do that you can then focus more on managing environments and less on individual people and your management load will lighten.

And if just that thought alone doesn’t motivate us all to change a bit then perhaps we deserve to become extinct.

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