Capital vs. Consciousness: Reducing the Costs of Staying Current

Engine or anchor: holding onto legacy technology to maximize investment can cost you the future.

Let’s say you’re a leader who’s deeply committed to keeping up with the times. You’re far-sighted and know that seemingly inconsequential players at the edge of your market could be the seeds of disruption that some day will threaten your existence.

So you invest in equipping your facilities and people with cutting-edge tools — whether that’s robotic assembly lines or Blackberries. And everything’s going fine, until one day, far sooner than you imagined, there’s a new technology out there — those awesome Blackberries you bought by the hundreds in January 2007 look weak in July when the iPhone comes out; that awesome new CNC milling machine now looks ancient compared to a 3-D printer.

You know you have to upgrade, but the technology you just bought isn’t even fully depreciated. Or, worse, the old equipment has been written off, but it still works and you’re making a ton of money from it; buying new stuff will crush those cushy profit margins you’ve grown used to.

Willy C Shih calls this the “death grip of legacy technology.” In his latest Harvard Business Review article, Shih outlines the many reasons leaders are held hostage by their technology.

The basic problem: it’s expensive to upgrade technology. For the accountants – and, more importantly, the shareholders – there’s a fine line between investing in technology and wasting money. (Just look at the pounding Amazon regularly takes from the investment community for its continuous spending on the cutting edge.) Oh, and what if you get it wrong and invest in dead-end technology?

Islands of the Future

One of the problems here is that leaders get blinded by the scope of investment — modern organizations are all about scale, and bringing in new equipment on a large scale is a big and expensive bet.

So instead of considering physical plant investment in terms of waves washing through the entire enterprise, what about looking at islands of the future?

Pick units within larger pieces of the organization and use them as test pilots. This approach costs less and allows tinkering without endangering the whole enterprise.

Starting small also allows these islands of the future to go farther with their experimentation — the risk of failure is lower, so they can afford to take more risks and find the limits of and new applications for the technology.

The important thing, though, is to make sure these islands of the future are not marginalized. They must be built as useful parts of the main show. This insures everyone is committed to their success, and also makes for easier knowledge transfer from the test pilots to the main production floor.

Noodling on something interesting at the edges of the enterprise will never be more than a sideshow; forking a critical function to create an innovative alternative makes a compelling example for change.

Upgrade the Humans and the Technology

As expensive and important as technology is to business success, it’s really only game stakes in a disruptive economy.

In his HBR article, Shih talks about technological changes that are either “competency-enhancing or competency-destroying.” Shih writes:

“The latter are troublesome because the knowledge base and skills required to operate in the new realm are so fundamentally different. From the perspective of how the resources in an organization are deployed and how its processes are organized, this makes sense. The more fundamental the break from the previous technology, the greater the switching costs.”

But there’s more than just the cost of training workers to use the new technology. The fundamental issue is changing their consciousness to match the new technology, and the new reality. Putting in cutting-edge equipment and training people to use it won’t modernize the organization if the people don’t upgrade how they see themselves in the new environment.

Even after Microsoft invested billions in mobile, the company and its people still saw themselves in the PC-bound software business.

I once worked with a senior executive who just had to be one of the first to get an iPad. Our accountants were stingy, and so getting the company to issue her one was quite a feat of bureaucratic maneuvering.

Her real problem, though, was figuring out what it was for. Soon after she received the iPad, I found her at her desk poring over a thick notebook — she had ordered her assistant to find an instruction book for the thing and print it out for her; the idea of the iPad as a search and reading device had never occurred to her. Clearly this was someone who no amount of cutting-edge technology was going to transform.

What Defines You?

It’s in this realm, the place where humans meet technology, that questions of self-image, emotion and consciousness matter most. Questions like:

• Do your people feel threatened or empowered by the new technology?
• Do your production workers define themselves by the machines they operate or the things they produce? (an especially big question if you work with unions, which largely define themselves by tools instead of products)
• Does your company define itself by its products or by the way it affects its customers (do you make typewriters, or do you give people tools for expression?)
• Do front-line workers feel safe telling their bosses the truth (such as, the new tools don’t work as expected)
• Are the leaders willing to question their decisions (maybe these new tools aren’t as good as I thought)

So in addition to test piloting new technology, islands of the future are places where people can redefine themselves and their relationship with their tools and their products. This is the real work of staying ahead of the wave of change.

Tools for Transformation

For a great collection of tools to create a learning mindset for keeping up with change, check out the Conscious Leadership Group, one of the premier organizations addressing consciousness in the workplace (I’m a founding member).

Photo: Flickr

Pain Points = Disruptive Opportunity

To some it looks old and unfashionable, to others it looks like a goldmine.

Zenefits is an upstart player in the entrenched and highly complex employee benefits business. It’s a business that has been around for centuries and is dominated by gigantic insurance companies and financial firms, bedeviled by massive government regulation at all levels, and ruled by HR bureaucracy and tradition. With all of that, the employee benefits market sounds like the last place a startup would want to put its attention.

And yet, as this excellent profile of Zenefits points out, it was exactly that hidebound bureaucracy that made the opportunity for Zenefits to exploit.

Illustrating the excellent advice of Box CEO Aaron Levie, Zenefits found a hidebound corner of modern existence and upended it by reinventing the entire process. It’s been a stunningly successful strategy precisely because, while there was plenty of tradition and traction to keep the legacy players in place, it was a system that the customers were more resigned to than attached to. Once a better alternative came along, the old ways began quickly crumbling.

Adding to that pent up yet unrealized demand was the disruption presented by Obamacare, which created all sorts of new paperwork requirements (and headaches) for benefits managers. Zenefits realized that the confusion and additional pain of that disruption created an opening for a new player to gain ground – with so much change happening anyway, the pain of moving to a new benefits system was suddenly relatively less important than the promise of smoother sailing in the future.

A classic example of taking advantage of disruption to create more disruption in an industry ripe for it.

Photo: Wikipedia

Smash the Myth of Busyness

We’ve probably all seen it happen: that moment when someone moves from busy to overwhelmed, from getting a lot done to having too much to do.

Among my clients, being too busy — having so much to do that it can’t all be done and the to-do list starts eating away at personal time — is a continuing concern. It’s a concern because busyness kills productivity, undermines leadership, and ruins personal time.

This social pressure for busyness is based on the false assumption that working harder leads to more success. My experience is just the opposite.

The Pressure to Be Busy

This recent study by Boston University researcher Erin Reid shows just how bad things are. Reid looked at male employees in an unnamed consulting firm and found not only crushing workloads, but also that men who made public their desire to scale back work to more reasonable levels were seen as slackers and their careers suffered. So the pressure to keep working 60-80 hours a week and be “always on” was intense.

(Interestingly, Reid found that women were more likely to publicly say they are dialing back and were able to take advantage of different work arrangements to do that, though their careers suffered, too.)

Work Less and Accomplish More?

The fascinating part of the study, though, was a senior manager Reid called Lloyd: he worked reasonable hours, took plenty of time to be with his family, and structured work around his personal time. Importantly (and sadly), Lloyd also kept to himself just how much less he was working, even though he was accomplishing all his goals. As a result, Lloyd was widely seen within the company as a rising star and had recently been promoted to partner.

Even more fascinating was that Lloyd was part of a work team where everyone worked reasonable hours. And like Lloyd, this entire team was one of the most successful groups in the company. As one team member put it:

“We kind of have a shared agreement as to what work–life balance is on our team. We basically work really closely with each other to make sure that we can all do that. A lot of us have young kids, and we’ve designed it so we can do that. We’ve really designed the whole business [unit] around having intellectual freedom, making a lot of money, [and] having work–life balance. It’s pretty rare. And we don’t get pushback from above because we are squaring that circle—from the managing partners— ’cause we are one of the most successful parts of the company. Most of the partners have no idea our hours are that light.”

Put Yourself First, In a Good Way

There are plenty of reasons why people who live more balanced lives are more successful:

• Quality trumps quantity — well-rested and happy people come up with better, more valuable ideas.
• Happy and well-balanced workers make better team-mates, forging deeper bonds and interacting more with colleagues to coordinate work and trade vital information.
• A reasonable schedule allows people to devote attention to what is most important instead of what is most pressing.
• Un-stressed workers make fewer mistakes and connect better with clients and colleagues.

Many of these obvious but overlooked truths have been bolstered repeatedly by research, adding up to the fact that taking care of yourself, especially if you are a leader, is good business for everyone in the company.

But Change Comes Slowly

What’s most worrying is that the pattern of unremitting busyness, and its related assumption that good team members give their all to the company, is at least as rampant in the startup world as it is in the legacy business world.

So while many startups are revolutionizing the world with their products, they are relying on the same old organizational patterns and habits that have ruled western business since the industrial revolution.

This is a huge mismatch that not only leads to burnout among startup pioneers, but undermines their companies as they reach the limits of outmoded organizational models and leadership styles. You can’t play in a disruptive economy without aligning every part of your practices with the disruptive paradigm — it’s like putting a jet engine in a Wright Flyer; the mismatch will destroy you.

It’s Your Choice

So, given the huge pressure to be busy in contemporary business, it takes guts to step off the treadmill and make time for a high-quality of life at work.

Not only do we get a lot of attaboys from being the busiest person in the office, busyness also allows us to avoid all sorts of other issues we’d rather not face. (I wrote about my struggle with this for the Huffington Post recently.)

But someone’s got to call time out. Will you be the first to tip the balance?

PHOTO: Flik