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Homa Taj In Conversation with John Hagel III (part II)


World of Warcraft, Courtesy Blizzard Entertainment, 2004-present

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Homa Taj – Speaking of collaborations (& guild work), tell us how on earth does participating in the World of Warcraft help individuals with their managerial skills? …This, by the way, reminds me that the day after the release of The Power of Pull, a new Museum of Video Games (Musée du Jeu Vidéo) opened in Paris, on April 14th.

John Hagel – World of Warcraft is an environment with significant uncertainty and growing performance challenges – you never know when a quest will lead in an unexpected – and often very threatening – direction. The 12 million players in this online game come from extraordinarily diverse backgrounds across the world and yet somehow they must be forged into high performing teams – called “guilds” that take on ever-increasing challenges. Sound familiar? This describes many aspects of our daily lives.

I have a friend whom I met ten years ago when he was just out of college and basically providing computer help desk support for a very small startup in Silicon Valley. Eight years later he was named the CIO of Starbucks – the youngest CIO ever of a Fortune 500 company. When asked how he accounts for such a rapid rise, he responds that as a guild leader in World of Warcraft he learned how to mobilize and motivate very diverse participants to take on increasing performance challenges and, in the process, generating productive friction that spawned highly creative new approaches to business.

HT – Your most successful books discuss ways in which the Internet can be used to connect to the world beyond & that “virtual communities are the marketplaces of the future.” Yet, now, you are echoing Richard Florida’s idea of geographical ‘spikes’…

JH – A consistent theme throughout all of my books has been the way that the Internet and information technology can help to transform and scale social relationships. It amplifies and enriches, but does not replace, more conventional face to face relationships. In fact, almost inevitably when a group of people meet online, they end up seeking ways to meet “in real life”.

One key paradox is that in the flat world so eloquently described by Tom Friedman, the world is also becoming increasingly spiky – people are moving at an ever more rapid rate into geographic concentrations of talent like Silicon Valley, Bangalore and Shanghai. Richard Florida continues to explore this trend in his latest book The Great Reset. It is a powerful testimony to the need we all have to connect and learn from each other more rapidly in physical space as well as virtual space. Geographic spikes become even more attractive as we discover that we can learn even faster by connecting with others in geographic spikes around the world.

HT – At the heart of The Power of Pull lies the challenge to the old model of ‘push’ economy which was about innovation through predictability. This, you claim, is no longer a valid paradigm in our rapidly changing world. What does a ‘pull’ economy ‘do’ that is different?

JH – The great institutions of the twentieth century all emerged and evolved around push models – accurately predicting demand and then organizing people and resources to be in the right place and the right time to meet that demand. Because the push model depended critically on predictability, it actually discouraged creativity – our mission was to adopt and pursue routines defined well in advance for us.

As the world becomes more unpredictable and uncertainty increases, this push model creates increasing stress. We need to move from a world of push programs to a world of scalable pull platforms where we can draw out people and resources when we need them and where we need them.

In the art world, we created great art and then relied on push institutions – established art galleries and media – to reach out and target collectors who might be interested in our work. These art galleries and media were push silos that rarely interacted with each other to leverage each other’s efforts. In a world of pull platforms, as you have so frequently emphasized, we are likely to see the art world become much more connected, forming rich networks of relationships among collectors as well as art institutions to help all participants become more effective in their quest to support art while reaping rewards from their contributions. Increasingly, the opportunity will be not just connecting participants globally and more efficiently, but creating environments where they can learn more rapidly by collaborating with each other.

Ht – Your concept of ‘flow’ has a Zen-like quality to it which may make some executives resistant to its potentially or seemingly blithe spirit. What type of assurance can you offer them that they won’t be dealing with emotional chaos when they are supposed to be focusing on production? This, by the way is equally challenging for those of us who work in creative fields. More often than not, our focus is to introduce some degree of discipline to our already highly passionate work force… This could be something as seemingly straight forward as training museum volunteers whose contributions provide invaluable financial support for cultural institutions.

JH – The key is to focus on significant and sustained performance improvement. This requires developing the talent of all participants. While training programs can help in this effort, they pale into insignificance relative to the ability to inspire passion in people to develop their full potential by pursuing increasingly challenging performance goals. If you look at any organization or group of people delivering extreme performance improvement, you will find deep passion and a strong desire to connect with others who share their passion, both inside and outside their organization, to help them get to new levels of performance faster. You may be able to get extreme performance improvement out of people through other means, for example squeezing them to work harder for longer hours, but that will not be sustainable.

HN – Serendipity! How did you come up with the idea of shaping (or shape-shifting?) serendipity?

There were two catalysts for this idea. First, I live in Silicon Valley and stories of serendipitous encounters abound among techies here. Two parents attending their children’s soccer game will start up a conversation on the side lines and discover they are working on similar software problems and help each other out while their children play. At one level, these are totally unexpected encounters but, if you are a software engineer, you are much more likely to have them here in Silicon Valley than if you lived in Dubuque, Iowa. People are shaping serendipity by moving to geographic spikes that increase the quality and quantity of unexpected encounters.

Second, I got to know a successful Israeli entrepreneur, ‘Yossi Vardi, who goes to many, many tech conferences every year but he almost never goes into a formal session. Instead, he finds a comfortable sofa in a hallway near the conference meeting room and just randomly intercepts people walking by and starts up a conversation. He has forged many valuable relationships with this technique. As he told me, serendipity doesn’t just happen in a serendipitous way,” says ‘Yossi Vardi. “You have to work for it.”

These experiences led me to believe that there are in fact techniques that we can all master to shape serendipity – the choices we make about where we spend our time in both physical and virtual environments as well as how we spend our time can significantly increase the quality and quantity of unexpected encounters. Our book systematically explores these techniques.

• Make you passion your profession
• Harness your ecosystem
• Maximize return on attention

Ht – I have read a great number of books, case studies and articles on the ways collectors pursue their passions for acquisition. I have also met numerous scholars who cross continents to gain access to that single sheet of document at, for example, The National Library of the Czech Republic. These are all extremely disciplined and successful individuals who are committed to acquiring and ultimately producing a collection of Ming Dynasty Pottery or a critical scholarly text on Rudolf II’s Kunstkammer. However, I have never read a business book that deals with the concept of ‘passion. …

JH – Actually there are quite a few business books that talk about passion in passing, but they rarely explore what it really means. In most cases, it means that the employer wants employees to passionately pursue their assigned tasks and work longer hours without question. We have something quite different in mind. We discuss the passion of the explorer – someone who is dedicated to more fully achieving their potential by exploring a domain and rapidly improving their performance in that domain over a long period of time. We found that very few people in companies are really passionate about their work in this sense. Those who are passionate are often deeply frustrated because they see all the possibilities and potential but are upset about all the institutional barriers that have been put in their way. From an employer’s perspective, these people are often a big headache because they challenge the routines of the company and are constantly bending the policies to test out new approaches. Passionate people are unpredictable – they seek out challenges and improvise to find ways to address these challenges more effectively. For companies organized around push programs with set routines, these people can be highly disruptive.

Yet, we found that a key determinant of extreme performance improvement is the presence of passion. If the participants are not passionate about their work, they will experience growing pressure in the world around us as stress and ultimately burn out or risk marginalization in an ever more competitive world. If and when they connect with their passion, they actively seek out new challenges to test themselves and develop faster. They also reach out much more actively to connect with others who can help them develop even faster.

HT – For more than two decades, different business prototypes(s) have infiltrated the world of educational and cultural institutions to varying degrees of success, and failure. I believe that it is time for businesses to employ the arts & their institutions as the most powerful tools and resources for creativity, cultural connectivity and, yes, economic productivity. If this theme were the sequel to The Power of Pull… how would you go about tackling it?

JH – Ah, a sequel? Not sure I am ready for that quite yet. Having said that, I can see many ways that businesses might find productive ways to collaborate with the arts and their institutions. If we take to heart the message that diverse knowledge flows will increasingly become essential to create new knowledge at ever faster rates, we must break down traditional institutional boundaries and connect with highly creative and talented people wherever they reside. Businesses will increasingly need to learn from, and tap into, the creative processes that drive artists and their institutions. On a more substantive level, the desire to attract attention, rather than intercepting attention (the dominant mode of the push economy with advertising messages even placed above men’s urinals and on the sides of cows) will drive businesses to become far more creative and engaging in terms of their presence – everything from story-telling to emotionally engage audiences to the design of products and services. Art and business will become far more integrated.

The key in all of this, though, is not to talk about it in the abstract, but to identify very specific business performance challenges where more effective collaboration might be desirable. Teams then need to be assembled from across these traditional boundaries to demonstrate the kind of impact that can be achieved when diverse perspectives and skill bases are mobilized to come up with creative solutions to performance issues. At first, this will likely be on the edge of larger corporations, helping them to address new growth opportunities. As impact becomes apparent here, we will see these new forms of knowledge flows embraced in the core of organizations as well.

WHO’s saying WHAT about The Power of Pull :

The Power of Pull highlights “fascinating new ways in which passionate thinking, creative solutions, and committed action can—and will—make it possible for us to seize opportunities and remain in step with change.”
William Jefferson Clinton, 42nd President of the United States of America

The Power of Pull “begins to create a body of learnable principles that will revolutionize our ability to access and work with knowledge flows.”
Newt Gingrich, former Speaker of the U.S. House of Representatives

“If you want to meet the challenges of working and living in the 21st century, this book should be your guide.”
Eric Schmidt, Chairman and CEO of Google

“Connecting many important threads through beautiful metaphors and wonderful narratives, the authors provide both a mind-expanding view of how the world is changing and a solid framework and context to approach the future for anyone interested in surviving and enjoying it.”
Joichi Ito, CEO of Creative Commons and Internet venture investor

“In times of unprecedented change, we as individuals and institutions can have extraordinary leverage and influence if we marshal the passion, knowledge and resources necessary to achieve great things.”
John Naisbitt, author of Megatrends

“This brilliant and exciting book shows how to pursue your passions by harnessing the power of networks. Success no longer comes from possessing knowledge; instead, you have to participate with others in creating a flow of knowledge. The power of ‘pull’—the ability to draw out people and resources for each endeavor—can transform both individuals and institutions.”
Walter Isaacson, President and CEO, the Aspen Institute, and author of Einstein: His Life and Universe

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Homa Taj In Conversation with John Hagel III (part I)

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How three distinguished business strategists had the audacity to write a book about: passion, seduction, tease & serendipity!

What do extreme surfers in Maui; green revolutionary youth in Tehran; an internet entrepreneur in Tel Aviv; and a manufacturing giant in China have in common? They all embody paradigms of success that are used by business gurus John Hagel, John Seely Brown & Lang Davison in their latest collaborative work The Power of Pull: How Small Moves, Smartly Made, Can Set Big Things in Motion, Basic Books, 2010

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Actually the book could have been titled The Audacity of Pull. Or, how about The Power of Seduction? But, of course, the latter would have been the kiss of death for a business book. Except that The Power of Pull is not your typical business book. According to the 42nd President of the United States, William Jefferson Clinton, The Power of Pull highlights “fascinating new ways in which passionate thinking, creative solutions, and committed action can—and will—make it possible for us to seize opportunities and remain in step with change.”

John Hagel III is the Founder and President of Deloitte Centre for Edge Innovation and the author of a series of hugely successful strategy books including The Only Sustainable Edge, Out of the Box, Net Worth and Net Gain. A renowned technology theorist, John Seely Brown is the former head of Xerox’s legendary PARC (Palo Alto Research Centre) and a Trustee of the MacArthur Foundation. JSB (as he is known to friends & colleagues) is, also, the co-author of The Only Sustainable Edge and The Social Life of Information. Along with Lang Davison, the authors present a wholly original culturally responsive business model of management based on such unconventional themes as: passion, seduction, productive friction, creative destruction, tease, serendipity …and the virtues of playing World of Warcraft!

After reading The Power of Pull, I was convinced that my colleagues in the art world who are highly intelligent, creative & passionate individuals can benefit from the ideas that are outlined by its authors. These are men who collectively have more than eighty years of experience in managing a string of multi-billion dollar endeavours. After all, passion, aesthetic seduction and creativity are the themes on which our worlds are built.

As a curator & museologist who works with public and private collectors to forge mutually beneficial relationships, I am constantly asked by artists: “How can I introduce my work to public museums and private collectors?” Arts & educational institutions (especially museums), antique dealers and auction houses want to know: “How can we connect with new patrons – public & private collectors?” Then, there are fellow scholars and art historians whose inquiries may include: “Who are the most cooperative archivists (or institutions) that can facilitate my ongoing research on… say: The Tombs of the Norman Rulers of Sicily, or Brice Marden’s Early Works , or …a Biography on Pier Paolo Pasolini?” In other words, everyone wants to get connected to everyone else in – and out of – the art world but they just don’t know where or how to begin. This is especially true for those who don’t live in major centres like NYC, London, Berlin, or even, Beijing, Tel Aviv & Moscow.

About three weeks ago, I caught up with John Hagel to discuss some of the themes in the most aesthetically inspired business book that I have ever read.

Homa Taj – We, in the art world, have (supposedly) figured out where ‘edges’ are and what ‘edges’ do. But, business people aren’t supposed to do edgy things. Three years ago, you founded the Deloitte Center for Edge Innovation. What exactly do you mean by working on ‘the edge’?

John Hagel – Edges can take on many meanings. Basically, we focus on edges where unmet needs intersect with unexploited capabilities. They could be geographic edges (e.g., emerging economies), demographic edges (for example, younger generations coming into the marketplace and workforce), technological edges (e.g., new generations of technology) or cultural edges (e.g., the growing focus on “maker” do-it-yourself cultures). These edges attract creative and passionate risk-takers and are fertile seedbeds for innovation and opportunities to create new forms of value. Executives tend to ignore them because they are peripheral, highly uncertain and require new approaches – but that is also their great strength: they encourage, in fact even demand, experimentation and improvisation..

HT – I am interested in learning more about geographic edges. For example, this makes me think of emerging art markets like Brazil, Russia, India and China (acronym BRIC) which were the subject of a recent (Friday, April 23rd) auction at Phillips de Pury & Company. These are mainly developing countries which in the past several years have claimed their place as major centres of power, innovation and production.

JH – We often ignore geographic edges at our peril. In the business world, the focus for institutional innovation has now clearly shifted from the United States to China and India. Entrepreneurial companies in these countries are now at the leading edge of building and managing global business networks that embrace growing numbers of diverse participants and engage them in complex and performance sensitive business activities. For Western executives focused narrowly on product and technology innovation, this is an “invisible” form of innovation, likely to give rise to “innovation blowback” where new entrants gaining ground in these emerging economies end up attacking incumbent positions in developed economies. Participants in the art world may have a similar vulnerability as new art forms and new art collectors arise on the edge and, over time, drive changes in the core. Of course, we must always distinguish between edges that have the potential to scale and transform the core and fringes that will always remain marginal.

HT – Having worked on projects in Asia, I can attest that, too often, dealing with these types of cultural spaces can be quite frustrating for those of us living in the West. This is true since their rules are different from ours – and, I would even say that they are quite arbitrarily defined as new challenges arise. So these cultures (geographic edges), exactly as you said, “demand experimentation and improvisation.” And, yes, I do think that because of this very (however unsettling) quality, they can serve as curiously liberating experimental grounds where we can try out new ideas and methodologies for innovation…

JH – In the case of business innovation, entrepreneurial companies in these emerging economies are taking key barriers and turning them into opportunities through a process of improvisation and experimentation. For example, Western executives for a long time dismissed China because it did not have a well-developed financial system that was geared to supporting entrepreneurial companies. Facing this challenge, the entrepreneurial companies spawned vast networks of participants to help them deliver more and more value to customers while minimizing their own short-term financing needs. Similarly, these companies responded to the lack of intellectual property protection by developing sophisticated management approaches to rapid incremental innovation that allows them to stay ahead of anyone seeking to copy them. Challenges can become powerful catalysts for experimentation, improvisation and innovation.

HT – Another powerful catalyst for innovation which you talk about is “productive friction.” What I understand of this concept is that it is not the same as (excuse the cliché) “problematizing” an issue in order to deconstruct it but to take (fruitful) advantage of existing conflicts and convert them into opportunities for creative production…

JH – Productive friction represents a contrarian view relative to most business literature which celebrates the advent of a “frictionless economy”. Friction in the sense of inefficiency is certainly not desirable. But some forms of friction are actually very valuable and even necessary. Really creative ideas and approaches rarely come out of a vacuum. They often are generated in the course of heated debates among people from very diverse backgrounds who are wrestling with unexpected and new performance challenges. This kind of friction can be enormously productive and a significant catalyst for innovation and creativity. We believe that productive friction can be encouraged and shaped by understanding the conditions where it flourishes. Our book explores these conditions and helps people to better understand how to foster productive friction.

[youtube=http://www.youtube.com/watch?v=cyvDUVdsOKE&hl=en_US&fs=1&]

John Seely Brown & John Hagel of Deloitte Centre for Edge Innovation discuss “Innovation at the Institutional Level”

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HT – And, how is that different from your concept of “creative destruction”?!

Where there is no productive friction, creative destruction generally follows. Creative destruction is a concept first articulated by the Austrian economist, Joseph Schumpeter, in describing how markets spawn innovative new companies that rise up and challenge and often destroy entrenched companies who find it difficult to embrace new techniques and approaches to creating value. This destruction is creative because it delivers new value to customers that previous generations of companies were not able to provide and, in the process, destroys the incumbents who failed to keep up. We believe that these incumbents are destroyed because their leadership teams do not encourage productive friction and instead leave key assumptions about the business unchallenged. We all must continue to challenge our assumptions about the conditions for success by engaging on edges that require more aggressive innovation.

HT – The dramatic, and I dare say the overwhelming, gap between culture (& its institutions), academia and business (if not the masses) is pretty disconcerting. How do you think these gaps can be narrowed if not eliminated all together?

JH – We grew up in an age where all of our institutions were designed and managed to develop and protect proprietary knowledge stocks – knowledge that was not shared. This institutional architecture encouraged the deepening of “silos” that discouraged interaction and collaboration across institutional boundaries. In a more rapidly changing world, knowledge stocks – what we know at any point in time – depreciate in value at an accelerating rate. In this kind of world, we need to develop approaches that allow us to more effectively participate in a larger number of more diverse knowledge flows, so that we can refresh those knowledge stocks more rapidly. As our institutions evolve to address this unmet need, we will find that sharp boundaries that separated many of the domains in our lives crashing down under the growing force of proliferating knowledge flows.

HT – I have always believed that one of the best ways to facilitate this proliferation of knowledge flows is to promote inter-institutional collaboration. I am particularly interested in your proposition that “companies have to find new ways to interact with others within networks, rather than operating on their own.” But, how do you convince large – either for or non profit – institutions to yield their guarded impulse and open up to potential competitors, etc?

JH – This is very difficult. It is what I call the “curse of the deep pocket”. Institutions with a lot of resources are often tempted to do everything themselves. This tendency is compounded by a natural psychological response to growing pressure and challenge – our first reaction is to close down and tighten control in an effort to reduce risk. But as pressure mounts and little if any relief appears to be in sight, people subtly shift to more openness – they are more willing to question basic assumptions and to seek help from others. At the same time, it is possible to accelerate this process by focusing leadership on the broader opportunities that could be addressed if more resources were freed up. Even the largest institutions are ultimately limited by scarce resources and many opportunities are left unaddressed unless these institutions become more creative in leveraging the resources of others.

HT – Speaking of collaborations (& guild work), tell us how on earth does participating in the World of Warcraft help individuals with their managerial skills? …This, by the way, reminds me that the day after the release of The Power of Pull, a new Museum of Video Games (Musée du Jeu Vidéo) opened in Paris, on April 14th.

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Later this week, I will continue our conversation with John Hagel on The Power of Pull, World of Warcraft, passion, serendipity and Richard Florida’s forthcoming The Great Reset.

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