A Culture of Alternatives

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Some times transitions can be smooth, sometimes difficult. As a global economic community, we are in a difficult transition from the modern industrial age to what will follow. 

Modern organizations share a common assumption. This is true if you are General Motors or the old Soviet Union. Efficiency is the route to an economy of scale and scope.

The problem with efficiency is not what it gives us, the ability to do more with fewer resources. The problem is what it takes from us.

Robust, sustainable cultures are those that have many competing alternatives.

I'm not here writing to advocate for the free market as many conservatives and business people do.  The free market is an ideal, while inviting, it cannot exist while there are powerful institutional structures that can dictate the terms of the market. This is where we are now with the relationship that exists between Washington and Wall Street.

I'm also not here to simply denigrate governments as the overseer of efficiency on a global scale. Governments are important institutions for providing a basis for alternatives to grow and develop.

We are at a transition point because with the elevation of efficiency to its preeminent role, control over the economic and organizational systems of society must also grow.

Over the course of my lifetime, close to 60 years, I've seen the control of society grow to the point where virtually everyone of us is breaking some rule of efficiency every day.

I have been persuaded by Joseph Tainter's thesis that societies collapse when the diversity of alternatives diminish and a one-size fits all culture develops. This is the course our society has been moving along for the past 50 years.

I'm not making a political statement to say the course that the Soviet Union took should be instructive for us today. In many respects, their economy failed because they lacked alternatives. Central planning did not create a robust, sustainable society. It created one of fear, not just fear of impoverishment, but fear of those who control the institutions of society.

The United States is not the Soviet Union. Our histories and founding values are different.

What we do share is a belief in large, supra-national, global institutions guiding the course of society by persons selected by some criteria of elite status.

Whether that control is by law, or political coercion or moral condemnation, the effect is to create a culture of efficiency by removing alternatives that may fail, inconvenience some person or be financially costly.

Our society is no longer robust and sustainable because we are quickly squeezing alternative ways of doing things out of our economic system. As it has done so, it has also squeezed out the benefits of efficiency.

Is there an alternative course?

If Tainter is correct, then we are headed towards an economic collapse. If so, then alternative ways of sustaining society must be developed in parallel with our current system.

I see this, for example, in the rise of local buying initiatives. When farmers are connected personally to those who buy their produce, the relational conditions for an alternative economic culture grow. I hear more and more about bartering between people who have services to provide. And possibly, most importantly, I see it in local efforts to develop cultures of entrepreneurism that create both for-profit and non-profit organizations that provide alternative ways for local economies to function.

The Conditions for a Culture of Alternatives

For an alternative culture to develop three things are needed.

First, individual initiative.

This is what I saw a decade ago as the starting point for all leadership. Individual initiative focused upon creating impact. This initiative is about how people take personal responsibility for their lives and of their families and communities.

Second, community collaboration. 

Consulting with a wide spectrum of organizations over the years I see how institutions force collaboration upon people. It is often seen as a way the old institutional barriers are being brought down. Collaboration can certainly do that, but it must come from the collaborators themselves.

Third, open culture of ideas.

All alternative approaches begin as an idea that needs to be tried. Openness to new ideas, and a willingness to test and fail with those ideas is essential in creating a culture of alternatives.

The End of an Era and The Beginning of a New One

For the past 18 months, I've been writing about the end of an era of industrial capitalism and utopian progressivism. Each was born out of the Enlightenment hope for a better world. Each was a product of, or, reaction to the industrial culture that elevated efficiency as a core societal value.

That efficiency demanded institution control by those who were designated the leaders of the system. It worked as long as the means of production was limited to the industrial plant; as long as advanced education was limited to the few who could afford it; and, as long as the means of communication consisted of the distribution of the information that leaders wanted people to know.

Today, all that has changed. In many ways, the opportunities that we have today are like a return to a pre-industrial era, or as some would call it a pre-modern time. In the past, cultures of alternatives always existed. Today, they are found where people recognized that they must develop new ways of living and working to provide for their families and community. Then, it was understood as the culture of the frontier, today, as sustainable, local cultures. 

The frontier that confronts us now is a world of failing institutions. If we take the perspective of alternatives as a guide, then we'll see that all approaches have a life span. They begin, grow to maturity, and then devolve to extinction of irrelevance. We are in that third stage with the institutions of the modern age.

What will the next stage look like at maturity? It is anyone's guess. I am fairly certain, however, that we will see greater individual initiative, more collaboration and a renaissance of ideas. This is what a Culture of Alternatives will look like.


The Initiative Generation

On top of Max Patch

Leadership is a product of personal initiative.  

It is a decision, a thought process, an act of the will, and an expression of identity and personality.

However, for initiative to constitute leadership, it also demands that it produce change, a change that matters, a change that makes a difference, a change that advances toward a goal.

The context for change is almost always some group of people socially connected around an idea that matters to them.

This is a basic understanding of what leadership is becoming in the 21st century. It is different than in the past because it is not based on wealth, social class, educational credentials, national origin, religious preference, geographic location or organizational title, position or rank.  

This new sort of leadership is based on personal initiative, social connection and the desire to make a difference. As a result, it is a kind of leadership that anyone can do.

Therefore, I think it is safe to say that, 

Passive followership is over; Personal initiative for impact is in. 

The implications of this shift are significant. If you are the senior executive leader of an organization, it means that the game of recruiting talent is changing.

This is an ongoing conversation that I'm having with Gretchen Zucker, Executive Director of Ashoka's Youth Venture. Recently, she gave a presentation on Talent for the 21st Century. She, graciously, shared her presentation with me for this blog post.

Gretchen points out that

"8 million jobs have been lost since 2008 in the US; nonetheless, employers are still having difficulty filling jobs with the right talent." 

She quotes Robert Litan of the Kauffman Foundation.

Between 1980 and 2005, virtually all net new jobs created in the U.S.were created by firms that were 5 years old or less. That is about 40 million jobs.

Who is creating these new businesses and the jobs that follow?

People who take initiative, are socially connected, and have a clear purpose that drives their desires to make a difference.  The difference though is in the numbers.

While there may be a long history of small business in the US, entrepreneurism did not become the world changing movement that it is until about 30 years ago. 

This came clearly to mind recently as I sat across a work table in the office of a web designer, colleague and friend who is in his mid-20s. As he took a call and left the room for a moment, the difference hit me that when I was his age in the late 1970s, I did not have a single friend or acquaintance, in my age group, who had started their own business. I know entrepreneurs existed, but I didn't know any. Sitting in my friend's office, I realized that his circle of friends were creating a new culture of entrepreneurism in our community.  

According to Paul Reynolds, entrepreneurship scholar and creator of the Global Entrepreneurship Monitor,

"by the time they reach their retirement years, half of all working men in the United States probably have a period of self-employment of one or more years; one in four may have engaged in self-employment for six or more years. Participating in a new business creation is a common activity among U.S. workers over the course of their careers."*

My own path to entrepreneurship began in the mid-1980's with the reading of Peter Drucker's Innovation and Entrepreneurship. My contact with people who had started their own businesses was very small. Not so today.

What this indicates to me is that there is a growing class of initiators whose leadership is changing not only the landscape of business, but of communities and nations worldwide.  

This is the point that Gretchen Zucker presents.

Gretchen's organization, Youth Venture is part of Ashoka, created by Bill Drayton, who coined the term social entrepreneur.  Ashoka and Youth Venture invest in people who are changemakers.  

Ashoka and Youth Venture are shaping an Everyone A Changemaker™ society: every individual will take initiative, develop solutions to social needs and drive positive impact.Every part of society will benefit from having more changemakers, from a company to a school to an entire country.

Ashoka and YV help ensure the success of any entity, region or field by finding the best new ideas, by cultivating the changemaker talent to act on those ideas, and by designing new ways to allow major change to happen.

Ashoka and Youth Venture are helping to nurture the people I describe above. Currently Ashoka is supporting 2,500 Changemakers in 60 countries. So you can see that as this trend continues, it not only changes the world within the proximity of each person who is a changemaker, but it also sets a standard by which their peers begin to understand themselves.  

This standard is appealing because it isn't based on someone else's idea about who they are, but their own. It is out of their passion and commitment that these Changemakers venture forward to change the world within their reach.

This is the world that is coming to schools, congregations, scout troops,  and businesses everywhere.  This is a societal change that is being led by children and young people. This is a grassroots, entrepreneurial movement that begins at an age young enough to care for the needs of the world that they can identify, even at six or eight years old.

Recently I asked Gretchen Zucker to respond to two questions.

What is the single greatest misperception that businesses have about the current generation of young people as employees?

Businesses need to realize that the current generation of young employees (Millennials) is very different from the last generation (GenX) or the generation before that (Baby Boomers).  Times have changed dramatically and Millennials reflect that accelerating change in a new information era.  Millennials are very purpose-driven, tech and information savvy, globally aware, highly engaged (volunteer at twice the rate as their parents), and struggling to come out from under the very broad wings of their parents.

The best thing a manager can do to maximize the productivity of young employees is to encourage and enable them to be changemakers.  They are craving this!  Don’t be threatened.  They will amaze you with their creativity, drive and ability to mobilize teams to get things done.  

I've seen this trend grow over the past twenty years. A tipping point is approaching that will mark a shift that is of historic proportions. This point will be when a critical mass of people worldwide decides that they are going to take personal initiative to make a difference, and do so within a social context of shared responsibility and commitment.  When they do, they will no longer look to institutions to take care of them, as in the past. They will join together to take care of each other and their communities. 

I asked Gretchen, 

"Where do businesses go to find people like Ashoka’s Changemakers?"

Any employer (businesses included) needs to look upstream to figure out how to get far more changemaker talent (entrepreneurial problem-solvers with strong team, leadership and empathy skills), as the proportion of our society who are changemakers today is only 2-3 percent, making the “war for talent” as fierce as it’s ever been.  By enabling and supporting dramatically more people – in particular at a young, formative age – become changemakers through actually experiencing taking initiative to address a social need and leading change. 

Once a young person experiences the power of entrepreneurship, teamwork, empathy and leadership, he/she will forever carry the mindset and skill set with him/her in all aspects of life.  As change accelerates and employers must stay ahead of that change, the single greatest factor of success will be the proportion of their community (staff, stakeholders) who are changemakers.  

So, you can see how monumental is this shift for organizations.

No more passive followers who care little about their company. No more disgruntled employees who only care about how well the company compensates them for the sacrifice of personal time and the personal inconvenience they must go through to be away from the things they do care about. Strangely, it means that owners and managers will have to respond to a higher form of expectation for how their organizations function.

The cause of poor morale in the workplace isn't the external realities that affect the business. Rather, the internal ones. Morale is not some mysterious human social phenomenon, but rather an outcome of organizational design and management. It is an indicator of uncertainty, and produces a passive aggressive followership which is antithetical to the genuine leadership of personal initiative. The talented and self-motivated will leave or force change.

Regardless, organizational leaders have a choice to make. To resist the emergence of a generation of leadership initiators and watch their organizations decline, or to embrace them as a beneficial movement by accommodating their energy, ideas and influence to create new opportunities.

What, then, must a business person do to create an environment that is most conducive to attracting the young men and women that Ashoka and Youth Venture support?

First, envision the possible.

See it in this illustration from Gretchen Zucker.

What if this was your typical employee?

"I saw a problem with our operations and so I got our team together to devise a solution, which we’re now working on implementing with the involvement of other colleagues. I just wanted to make sure with you that I’m moving in the right direction. Is this okay?"

Second, invest in people.

Read my post Return on Initiative: ROI for the 21st Century. You can take a regressive cost/benefit approach to the development of people. It isn't a zero-sum game. Instead, it is a game of survival. Every business' survival is dependent upon creating an environment that accommodates and nurtures the kind of social entrepreneurial initiative that Ashoka and Youth Venture are developing in people worldwide.

This shift changes the talent recruitment game from a race to hire the best credentialed person to the one who has demonstrated that they are a Changemaker.  

Third, understand what motivates people to take initiative to make a difference that matters. 

No one asks people to initiate. It comes from an inner desire to make the world a better place. Ancient philosopher Aristotle saw this motivation as a function of the purpose of every individual. Something inside points to something outside that connects the two together and creates what the ancient Greeks called eudaimonia which is happiness or human flourishing.

In simple terms, this desire for happiness, that is a kind of completeness, can be seen in three goals that I observe in people.  These goals are active reflections of their inner purpose. This is what people want from their life and work.

Life that is Personally Meaningful

Relationships that are Socially Fulfilling

Work that Makes a Difference that Matters

The children and young people that come to RandomKid** have these goals, as do those who work with Youth Venture. The people with whom you work, play golf, and share the subway have these goals. Each person's expression of them is unique. Yet, we are the same at a very fundamental level.

We look for social and organizational settings where these goals may be pursued. This is why children and young people are coming to RandomKid.

RandomKid's mission is to provide staff and services to youth, of all backgrounds and abilities, for the development, management and accomplishment of their goals to help others.

We educate, mobilize, unify and empower youth to directly impact local and global needs. By helping kids to become innovative and successful world problem-solvers, we are securing a better fate for our world now, and into the future. We don’t ask you to be a part of us; we become a part of you (emphasis mine).

In this sense, RandomKid provides an organizational structure for these young leaders to take initiative by creating projects that make a difference that matters to them. As Anne Ginther, RandomKid Co-Founder recently commented,

"What is most important to remember is that our mission is to help KIDS help others. It’s about empowering youth to make a difference. It’s about building the change-makers of tomorrow."

Dana Leman, Co-Founder and Executive Vice President tells me that they have learned that kids want ownership, fun and measurable impact from their projects.

There is a parallelism between what I observe in people and what RandomKid has identified in their project leaders.

Personally Meaningful = Ownership

Socially Fulfilling = Fun

Make a Difference that Matters = Measurable Impact

There is no dividing line between the child and the adult in this regard. Their goals are one and the same, just expressed differently.

This is the environment that initiators and Changemakers want. This is not the business environment of the 20th century. It is of the 21st century. 

Dana Leman commented to me recently about what she sees in the kids who take on a RandomKid project. 

Today's kids are not about trying to fit their ideas into standard business models. They are trying to develop business models that fit their ideas. They think about process as an afterthought and tend to engage in a more organic and responsive approach to today's emerging markets.

This is why so many young people in their 20s and 30s are starting their own businesses. Because they don't see themselves fitting in the institutional setting of the last century. And what organizational leaders must understand is that their competition for talent is not within their industry, but rather between the business structures of the past and the future. Either accomodate or become irrelevant is the reality that we face.

I started this post with the following manifesto.

Leadership is a product of personal initiative. 

It is a decision, a thought process, an act of the will, and an expression of identity and personality.

However, for initiative to constitute leadership, it also demands that it produce change, a change that matters, a change that makes a difference, a change the advances toward a goal.

The context for change is almost always some group of people socially connected around an idea that matters to them.

This is the future of leadership. And its future can be seen in the 10 year olds, the 14 year olds, the 18 year olds and the twenty and thirty somethings who are taking initiative to follow their passion to make a difference in the world.

Sixteen year old RandomKid Co-Founder and CEO Talia Leman speaks of her organization's mission as 

Leveraging the power of kids worldwide to drive an economy of positive change.

This is the purpose they share with Ashoka's Changemakers and Youth Venturers. This is the 21st century talent pool that stands apart from the rest. 

If you want these young people to work for you, then you must become like them. You must become an agent of change by encouraging and equipping the people in your business to take initiative to create an environment that can make the difference that matters. 

This may seem to be one of many options for the course of organizations and businesses. I'm convinced that this is the future that is fast approaching.  It isn't an option.  

When Ori Brafman and Rod Beckstrom in their book The Starfish and the Spider write about "leaderless" organizations, they are advocating for a leader-filled organization.

In a traditional sense, it could be said that organizations like Ashoka, Youth Venture and RandomKid are developing the next generation of organizational leaders.  In reality, these kids are already leading random organizations of social connection that are making a difference in local communities across the globe. The future is now, not tomorrow or next year.

This new future may seem filled with ambiguity and doubt. The reality is that as you accommodate your organizations to the ingenuity and 21st century leadership skills of these young people, a level of impact that your organization has never known will emerge. I'm convince that our best years are ahead of us, and they are going to be fun.  Because the children who are leading us today would not have it any other way. 

The Initiative Generation is here. Welcome them with openness, support their initiatives, and celebrate the difference they are making now.

*Wikipedia: Entrepreneurship-http://en.wikipedia.org/wiki/Entrepreneurship

** Disclaimer: I am the Board Chair of RandomKid.


The Picture of the Future in a Box - Update

Update: Ross Dawson writes about the importance of 3D printing in his post - How 3D printing will transform the retail industry: the opportunities.

This post is a continuation of the ideas presented in The End and The Beginning. In this one, I want to focus on three culture shifts that impact what leadership means in the 21st century.

A picture of the future in a box

Let me begin with this picture. 3dsystems-RapMan-Students-6

Here is a student using a three-dimensional printer. The blue object in the middle of the picture is being printed. This is a kit that individuals can buy for around $1,300.

All you need is a basic CAD program to begin to create prototypes of your ideas. 

I recently saw this model, RapMan 3.1, and the BFB-300 3D printer demonstrated at Hatchfest in Asheville. Rajeev Kulkarni, Vice President of Global Engineering for 3D Systems spoke on the uses of 3D printing.  His presentation described a extremely wide spectrum of application for this technology. The most impressive use of 3D printing is to create human organs from the cells of the recipient. See Antony Atala's TED2011 presentation to grasp the magnitude of this innovation in medicine.

This picture of innovative technology points to the social change that is occurring because of the advance of technology. Besides lowering the cost of prototyping and manufacturing new products, people can now take their ideas from conception to market in a shorter period of time.  Kulkarni spoke about what used to take months to produce that now can be done in a matter hours or days.

Three Shifts

As I listened to Rajeev Kulkarni's Hatch presentation, I realized that in these printers I saw three significant social shifts. When the cost of manufacturing and production time are reduced, and the technology becomes affordable for individual use, then we are moving through a transition period from one era to the next.   The shifts that I see taking place are:

1. From consumers to creators / producers

2. From mass market to mass customization

3. From a mass culture to a local culture

 Let me describe each.

1. From consumers to creators / producers

With the use of basic design software and the RapMan 3d printer, any individual can become a producer of products for sale. The materials that can be used in the printing process are extensive. So, no longer will people have to depend on the marketplace to provide the products that he or she needs. With some ingenuity and business sense, they can make a shift from being a consumer of products to being the creator and producer of them.

Of course, six billion people will not automatically shift from being consumers to creators / producers. And every producer needs consumers to buy her product. Yet, it does not take many people embracing this shift in culture to dramatically impact it. The picture above is of an school girl in England using the RapMan printer.

Imagine every school in your school district having a 3d printer to complete a learning process of idea creation to product completion. Imagine the change of mind that comes to the students in that school when they can create, and not just consume.  Imagine a generation of men and women who think of themselves as creators and producers, as leaders, rather than just consumers of other peoples' creative output. 

One of the first realizations I had about 21st century leadership was that it was about personal initiative, not about roles. Leadership begins with personal initiative. Tools like these 3D printers place into the hands of people the opportunity to initiate, to create, and to produce products and solutions that can make a difference. 

2. From mass market to mass customization

The nature of product development cycles used to be months, even years, necessary to bring a product to market. As a result, it required that product to have as wide an appeal and as long a shelf life as possible. With the advent of technologies, like 3D printers, this is changing. Now in a matter of a few hours, a specialize part can be designed and produced for a customer.

There are a couple implications for this shift.

First, it changes how a company relates to the marketplace. In a one-size fits all world, the marketplace is the lowest common denominator. In a mass customized world, the individual is the market. Marketing to individuals is different than to a mass culture. This is the insight that Chris Anderson wrote about in his book The Long Tail.

Second, it makes the relationship between manufacturer and consumer more important. I've learned this as a consultant. I cannot approach any project as if there is a formula that applies to every other organization in their industry. I have to build a relationship of interest, inquiry and adaptive response to meet not only their expectations, but their needs. I enter into their organizational setting with a set of tools, not unlike a 3D printer, though I don't have one, and use my tools to address the needs that they have.

In a mass customized world, relationships matter, and that is a key to managing the shifts that I'm identifying here.

3. From mass culture to local culture

Prior to the 20th century, life for most people from the beginning of time was experienced in small towns. I remember my grandfather telling me near the end of his long life that the most significant invention in his life time was the radio. When asked why, he said, "Because it showed us what life was like in other places."

The 20th century was a century lived on a global scale, with World Wars and multi-national corporations, and, with institutions that were designed for a mass culture. It was a perspective where one size fits all, and that all people are to be treated a like. Individuality was rebellious and conventionality was the norm.

Those days are slipping away as innovations, like 3D Systems printers, make it possible to create a business that serves customers globally from an office in a small town with an internet connection.  It is the twin developments of innovation for individual productivity and the failure of large organizations to function in a one-size fits all world.

As a result, the meaning of global and local is changing. It is less about a mass market culture of sameness, and more about a culture of relationship where I can serve you, regardless of where you or I live. We can be connected. We can communicate, collaborate and coordinate our projects from wherever we sit today.

It isn't just that we live in a time of the long tail, or that technological innovation provides a basis for mass customization or a better foundation for individual initiative. Each is true. At a deeper level, it means that any individual with a minimum investment can pursue their own sense of calling as a person, and do it in a social context of others who share their vision and commitment. This is an emerging reality that will seriously impact the nature of leadership and organizational design in the future.

One way of understanding this development is to see this as the ascendency of the local. I've written about it here, here and here.

The key to making a local orientation work is openness. For many people, local is just another word for provincial, or closed. However, if local is less physical place, and more a relational space, then we can begin to see that my local can include colleagues in Japan, Pakistan, England, Canada, and my neighbors nearby in Asheville.

In a local community, you share a concern for people, for families, for education systems, the business community and for those less fortunate. It is a concern for the whole person, not just for the transaction.

For example, I can share a concern that my friends in California have for the economic and social conditions of their small coastal town, and feel that as their community grows, that I contribute to their growth.

A local community orientation can function in any social or organizational structure. It is the heart of team work. It brings personal initiative, shared responsibility, and common goals and values together.

Leading Through These Shifts

The implications of these shifts for organizational leaders is fairly simple. It means that instead of being organizational process managers, we must become culture creators. The culture that forms from our leadership provides an open environment for individual initiative, relationship building, and shared responsibility.

The local in this sense is like the ancient Greek polis as described by Victor Davis Hanson in his fascinating book, The Other Greeks: The Family Farm and the Agrarian Roots of Western Civilization. He writes in the introduction,

The early Greek polis has often been called a nexus for exchange, consumption, or acquisition, but it is better to define it as an "agro-service center." Surplus food was brought in from the countryside to be consumed or traded in a forum that concurrently advanced the material, political, social, and cultural agenda of its agrarian members. The buildings and circult walls of a city-state were a testament to the accumulated bounty of generations, its democratic membership a formal acknowledgment of the unique triad of small landowner, infantry soldier, and voting citizen. The "other" Greeks, therefore, were not the dispossessed but the possessors of power and influence. Nor is their story a popular account of slaves, the poor, foreigners, and the numerous other "outsiders" of the ancient Greek city-state. The real Greeks are the farmers and infantrymen, the men and women outside the city, who were the insiders of Greek life and culture.

The rise of independent farmers who owned and worked without encumbrance their small plots at the end of the Greek Dark Ages was an entirely new phenomenon in history. This rougly homogeneous agrarian class was previously unseen in Greece, or anywhere else in Europe and the surrounding Mediterranean area. Their efforts to create a great community of agrarian equals resulted, I believe, in the system of independent but interconnected Greek city-states (poleis) which characterized Western cutlure.

The shifts indentified in this post, to me, point to a similar opportunity that the early Greek farmers had. Through their collaborative relationship of shared responsibility, together they created the Greek polis that remains as the model for what cities and communities are in the West.

The ascendency of the local will come as a result of these shifts. And with it a new conception of leadership as more personal, more collaborative, more focused on impact, will emerge to provide it descriptive power that inspires innovation.


The Israeli Example

In the fall of 1981, I saw George Gilder, author of Wealth and Poverty, debate Lester Thurow, author of the Zero-Sum Society. Their discussion was about whether supply-side economics popularized during the Reagan years or Keynesian economics popularized during the Roosevelt years and now again in the Bush/Obama years were the route to economic growth and the alleviation of poverty. I left that evening convinced that Gilder was right and Thurow wrong; convinced that economics is not just about numbers but also about our philosophies about human nature and society. Nothing in the intervening 28 years has changed my mind.

Reading Gilder's essay - Silicon Israel - on the Israeli capitalist resurgence takes me back three decades. As a young guy in his twenties during the 1970s, I remember race, Vietnam and Watergate being the defining issues of my college years. I remember the lack of opportunity as high inflation made it difficult to find jobs. I remember the Carter years as lacking opportunity, of hope and a reason to believe that better years are ahead. Our time, now, reminds me of those days.

Some Context

Recently, I reflected on this with a friend in his mid-twenties. He started a business at the age of 18. He is in the process of selling it to another company, and is preparing the next chapter in his life. I have other friends in their twenties and thirties who have their own businesses. When I was their age I didn't know anyone in my peer group who had their own business. They were either still in school, worked for the family business or gone to work in a corporation. What changed this?

I attribute it to Ronald Reagan. His optimism and the embracing of supply-side economics raised the small business entrepreneur to a status equal to the large corporations. Then in the mid-80s, Peter Drucker published his influential Innovation and Entrepreneurship, and the personal computer revolution began to take root, and the world changed. Large corporations like Microsoft, Intel, IBM and General Electric created products and services that elevated the ability of a small business owner to create a successful, sustainable business. Add to this the rise of venture capitalism, and an economic revolution took place that made the Clinton years the mirror opposite of the Nixon/Carter years.

Was there "irrational exuberance" and the creation economic bubbles that eventually burst? Yes, of course. But just as in the 1950s when the economy grew dramatically in large part because of the impact the G.I. bill that made it possible for World War II veterans to get a college education that previously many could not afford. So, took the 1990s were a time where to be an entrepreneur meant a world of opportunity at your doorstep.

Today, we have returned to the questions of the late 1970s. The debate between Gilder and Thurow still raises the questions that we must answer. What kind of society do we want. What is the nature of freedom, and the role of government in our lives?

Reflections

In reflecting on Gilder's article and the years since I heard him, here are some of my conclusions.

1. Our current financial crisis is not a failure of capitalism, but of the corrupting influence of politics into business. Where capitalism has been allowed to be practiced without government intrusion, it has been highly successful in transforming lives and communities for the good.

2. Government has a role in business, but a minimal one of creating trust, not insuring the financial survival on individual businesses. The actions of both the Bush and Obama administrations display a certain lack of faith in the system, a lack of clarity about the boundaries between business and government and is producing a delaying effect on recovery. People don't see economic recovery as represented by government action. What they see as recovery is new shops opening. New buildings going up. There family and friends getting new jobs. These are not developments that can be lead from Washington, but more from the state and the local level.  Specific micro-loans make a difference in creating the conditions for wealth to be created.  It is virtually impossible for this to be done at the macro-level of the nation.  

3. The lessons from the Reagan years are simple. Low taxes increase tax revenues through a growing economy. Higher government costs suppress economic growth because it removes capital from the system. This especially true in the relation between federal and state governments to local governments.

For example, the federal stimulus package is being used where I live to repair roads. Maybe the roads needed repair, maybe they didn't. The point is that this is a temporary stimulus. Once the roads are paved. It is back to where things were. The stimulus isn't building new roads to create new centers of economic life.

4. Small, entrepreneurial businesses are the life-blood of any healthy economy. It isn't because there are more of them. It is because these are the people who are taking risks to meet new market needs.  New ideas get tested in small businesses because the risks are lower. Governments discourage the creation of small businesses through higher taxes and intrusive regulations. 

The course we are on is a return to the 1970s, and not the future that Gilder outlines in his article on Israel. Real hope and change came to that nation. Read all of Gilder's article. It is an instructive study for how a nation can change. It should give us all hope that the same can happen here again as it once did.


Devolution of the Industrial Age

If the industrial age is over, then how is this impacting government and politics?

An interesting Wall Street Journal article, Divided We Stand by Paul Starobin, addresses the phenomenon of devolution of national and state entities.

Picture an America that is run not, as now, by a top-heavy Washington autocracy but, in freewheeling style, by an assemblage of largely autonomous regional republics reflecting the eclectic economic and cultural character of the society.

There might be an austere Republic of New England, with a natural strength in higher education and technology; a Caribbean-flavored city-state Republic of Greater Miami, with an anchor in the Latin American economy; and maybe even a Republic of Las Vegas with unfettered license to pursue its ambitions as a global gambling, entertainment and conventioneer destination. California? America’s broke, ill-governed and way-too-big nation-like state might be saved, truly saved, not by an emergency federal bailout, but by a merciful carve-up into a trio of republics that would rely on their own ingenuity in making their connections to the wider world. And while we’re at it, let’s make this project bi-national—economic logic suggests a natural multilingual combination between Greater San Diego and Mexico’s Northern Baja, and, to the Pacific north, between Seattle and Vancouver in a megaregion already dubbed “Cascadia” by economic cartographers.

Gives one pause to consider a Disunited States of America. Before we cast the thought off as silly or impractical, consider the follow trends that are taking place in other arenas.

  • The rise of social media, Facebook and Twitter, as new virtual communities that unite people around common interests and commitments.
  • The globalization of business so that national boundaries are less a consideration for how business is conducted and the culture and work-ethic of the people is.
  • The growth of entrepreneurial businesses in the under-developed world through the many agencies like the Jacqueline Novogratz's Acumen Fund and Muhammad Yunus' Grameen Bank.

What we see is a shift away from large, impersonal institutions to small networks of people who work together for a common goal. In many respects this is a throw back to an early time. Starobin makes this point.

Devolved America is a vision faithful both to certain postindustrial realities as well as to the pluralistic heart of the American political tradition—a tradition that has been betrayed by the creeping centralization of power in Washington over the decades but may yet reassert itself as an animating spirit for the future. Consider this proposition: America of the 21st century, propelled by currents of modernity that tend to favor the little over the big, may trace a long circle back to the original small-government ideas of the American experiment. The present-day American Goliath may turn out to be a freak of a waning age of politics and economics as conducted on a super-sized scale—too large to make any rational sense in an emerging age of personal empowerment that harks back to the era of the yeoman farmer of America’s early days. The society may find blessed new life, as paradoxical as this may sound, in a return to a smaller form.

While I don't see state political boundaries changing, I do those boundaries having less significance in the future. It is what I mean when I see local communities gaining strength because state and federal governments are unable to provide what they claim.

From this perspective, I'd say that the Barack Obama phenomenon is a transitory one, much like the post-Brezhev era in the Soviet Union. There was a belief by smart, forward thinking people that they could make the system work. As we see in the 1980's Soviet system, we may be seeing the beginning of the same decline in our own federal system.The nation's real counterbalance is the local entrepreneur, small business.

My hope is the same as Starobin's.

The most hopeful prospect for the USA, should the decentralization impulse prove irresistible, is for Americans to draw on their natural inventiveness and democratic tradition by patenting a formula for getting the job done in a gradual and cooperative way. In so doing, geopolitical history, and perhaps even a path for others, might be made, for the problem of bigness vexes political leviathans everywhere.

However, if this to happen, we need to see a people who join together at the local level to address local needs, and not merely protest. Advocacy highlights the need, but it is entrepreneurial action which creates the change and builds the strength that we will need.


How Entrepreneurs Think

Bill Taylor, one of my favorite idea guys, writes about the difference between MBA thinking and entrepreneurial thinking.

... as the economy experiences the most deep-seated changes in decades, maybe it's time to change our minds about what kinds of people are best-equipped to become business leaders. Is our fascination with the comings and goings of MBAs as obsolete as our lionization of investment bankers and hedge-fund managers? Is it time to look elsewhere for the "best and the brightest" of what business has to offer?

My answer is an emphatic Yes! As a linear, sequential thinking, I know that nothing is like that any more. We are more like the Octopus ride at the amusement part with four arms and three tentacles per arm all whirling around never quite knowing who's in charge or where we are going. It is enough to make one nauseous.

Taylor's perspective is supported by the work of Saras Sarasvathy research into how entrepreneurs think, called "effectuation."

Effectual reasoning, however, does not begin with a specific goal. Instead, it begins with a given set of means and allows goals to emerge contingently over time from the varied imagination and diverse aspirations of the founders and the people they interact with.

I find this such a relief, because I've found that over the years, my planning process have changed to become more effectuation-like.

It is one thing to have a vision for the future. To have some sense of where you are going is good. The reality is that most visions are incomplete, moving targets. They are all based on current data or past experience. What Sarasvathy is showing us in her research is that the future is gain through adaptation. We take what we have to work with, and adapt to find the best possible outcome. This is effectual thinking.

Bill Taylor describes the difference that Sarasvathy sees between entrepreneurial thinking and the kind developed in business schools.

The difference in mindset, Sarasvathy concludes, boils down to a different take on the future. "Causal reasoning is based on the logic, To the extent that we can predict the future, we can control it," she writes. That's why MBAs and big companies spend so much time on focus groups, market research, and statistical models. "Effectual reasoning, however, is based on the logic, To the extent that we can control the future, we do not need to predict it." How do you control the future? By inventing it yourself — marshaling scarce resources, understanding that surprises are to be expected rather than avoided, reacting to them fast.

This way of thinking is much more concrete and present-centered. It is opportunistic and willing to take risks, and overcome them when they fail. I encourage you to read Sarasvathy's article, What makes entrepreneurs entrepreneurial? Share it with colleagues and friends and start to talk about how to think effectually right now.


Quick Takes: Jim Collins on Thriving in 2009

Jim Collins is one of a handful of business writers that every leader should read. His two books Built To Last (written with Jerry Porras) and Good To Great are insightful perspectives on how to build a great company. And if you work or volunteer in the community-based or non-profit organization, you should read also Collins' Good To Great and the Social Sectors.

In celebration of Inc. magazine's 30 anniversary, Bo Burlingham, the magazine's editor-at-large, interviewed Jim Collins. Here are a couple of portions worth noting.

How do you define entrepreneurship?

I take a broad view of it. The traditional definition -- founding an entity designed to make money -- is too narrow for me. I see entrepreneurship as more of a life concept. We all make choices about how we live our lives. You can take a paint-by-numbers approach, or you can start with a blank canvas. When you paint by numbers, the end result is guaranteed. You know what it's going to be, and it might be good, but it will never be a masterpiece. Starting with a blank canvas is the only way to get a masterpiece, but you could also blow up. So, are you going to pick the paint-by-numbers kit or the blank canvas? That's a life question, not a business question.

It has to do with your ability to handle risk, no?

Not risk. Ambiguity. People confuse the two. My students used to come to me at Stanford and say, "I'd really like to do something on my own, but I'm just not ready to take that much risk. So I took the job with IBM." And I would say, "You're not ready for risk? What's the first thing you learn about investing? Never put all your eggs in one basket. You've just put all your eggs in one basket that is held by somebody else." As an entrepreneur, you know what the risks are. You see them. You understand them. You manage them. If you join someone else's company, you may not know those risks, and not because they don't exist. You just can't see them, and so you can't manage them. That's a much more exposed position than the entrepreneur faces. But there's lower ambiguity on the paint-by-numbers path: very clear but more risky. The entrepreneurial path: very ambiguous but less risk. Of course, the truth is that it's all ambiguous, anyway. If you think you can predict the future, you're crazy.

I think he is correct. You work for someone else, you are at their mercy. I know three people who recently lost their jobs. Each were strong producers, and they were unceremoniously let go. For me as the owner of my own business, the only person who can fire me is me. Yet, ambiguity describes my daily existence. Is there risk, sure, but there is less than what my associates have experienced.

We are now, I think, having to adjust to dealing with a world that is going to be ferocious. We don't have any practice with that. People like me who grew up in the postwar period are not practiced at the volatilities, the turbulence, the uncertainties of the world that will probably define the second half of my life.

You sound pessimistic.

No. It is only in times like these that you get a chance to show your strength. In the end, I think we need to have absolute faith in our ability to deal with whatever is thrown at us. And we need to have a complete, realistic paranoia that a lot can be thrown at us. It's our ability to put those two contradictory ideas together: We need to be prepared for what we can't predict and, at the same time, have this total, unwavering faith that we will find a way to deal with all of it. And I believe we will. I don't believe the world will treat us well, but we will figure out how to do very well.

What's the source of your optimism?

A lot of it has to do with the young generation. A general at West Point told me, "This is the most inspired and inspiring generation to come through West Point since 1945." I see the same thing with the young people who come to work for me. They have a sense of responsibility and service and a lack of cynicism that is remarkable and wonderful. It's an ethos, and it's collective. That's what's really powerful. It's connected technologically. It's not grandiose, but there is a fundamental assumption of being part of a much larger world and a much larger set of aspirations. The world can be a really awful, brutal, turbulent place. And yet I'm hopeful precisely because of this generation of kids. I really think we ought to just give them the keys as soon as we can. Let them run it.

 I agree on both counts. The time we live in is ferocious and the Millennial generation is up to the task of leading it.

Read the whole article and pass it along to friends and colleagues.


The future is local

I've been talking to people. Here's what I'm hearing about how they are handling the recession.

Fear, desperation and hunkering down are typical descriptions.  No confidence about the future. I've yet to talk to a person who either runs a business or owns one that believes the government's stimulus efforts will do much good.

Heard about a guy who bought rental property as a retirement investment. He's had to take a second job to pay the mortgage because his tenants have lost their jobs.

Heard a guy tell another about a long career with a company that started early in his life. He retired well and young, and now is having to think about going back to work because his investments are in such bad shape.

Read in a Tom Peters' post the other day a quote from Peggy Noonan. She first speaks about spread of pessimism.

This isn't like the stock market crash of 1987 or the collapse of the dot-com bubble in 2001. People are not feeling passing anger or disappointment, they're feeling truly frightened.

The reasons:

This isn't stock market heebie-jeebies, it's systemic collapse.

It's not just here, it's global.

It's not only economic, but political. It wasn't only mortgage companies that acted up and acted out, so did our government, all the governments of the West, spending what they didn't have, for a decade at least.

And at the center of the drama is your house—its worth, or its ability to see you through retirement, or your ability to hold onto it. An extra added angst bonus: Those thinking now about retirement are just old enough to remember America before the abundance, before everyone was rich, rich being defined as plenty to eat, a stable place to live, and some left over for fun and pleasure. For them, the crash has released old memories. And it's spooking people.

...

Perhaps the biggest factor behind the new pessimism is the knowledge that the crisis is not only economic but political, that we'll have to change both cultures, economic and political, to turn the mess around. That's a tall order, and won't happen quickly. One thing for sure: Our political leaders for at least a decade, really more, have by and large been men and women who had fortunate lives, who always seemed to expect nice things to happen and happiness to occur. And so they could overspend, overcommit and overextend the military, and it would all turn out fine. They claimed to be quintessentially optimistic, but it was a cheap optimism, based more on sunny personal experience than any particular faith, and void of an understanding of how dark and gritty life can be, and has been for most of human history.

The crisis isn't just global, but local. It isn't just about the ability of large institutions, business and governmental ones, to foster trust and confidence. She is right this isn't a simple burp along the path towards prosperity. We are experiencing the first great systemic failure or collapse (as Kevin Kelly calls it) of the connected era. 

The Noonan quote that Peters selected. 

I end with a hunch that is not an unhappy one. Dynamism has been leached from our system for now, but not from the human brain or heart. Just as our political regeneration will happen locally, in counties and states that learn how to control themselves and demonstrate how to govern effectively in a time of limits, so will our economic regeneration. That will begin in someone's garage, somebody's kitchen, as it did in the case of Messrs. Jobs and Wozniak. The comeback will be from the ground up and will start with innovation. No one trusts big anymore. In the future everything will be local. That's where the magic will be. And no amount of pessimism will stop it once it starts.

My experience of working with people and their organizations they make the transitions of organizational change has shown me that attitude is an important factor in dealing with a crisis. Fear and desperation need to be replace with trust and confidence. Hunkering down isn't survival. It is burial. The future is local and it is collaborative.

The challenge we each face together is the recreation of a local business environment that supports innovation, entrepreneurship and collaboration. It doesn't start in Washington, or on Wall Street or at your state capital. It starts right where you are.

I end, as Noonan ended her column, believing that opportunities abound right now. They are not easy or simple, but they are there for people and business who are willing to put aside territorial privilege, act collaboratively and practice innovation and entrepreneurialism in their businesses and community organizations. 

There is great strength in every community waiting to be released. It is up to us. Let's begin the conversation that makes this happen.


A Conversation about Constant Change - 3

Here is my response to Steven Devijver's questions (below) author of the free ebook, The Strategy of Constant Change

Q1: You’re this amazing guy with a really special view on leadership and human relationships. What’s your view then - with all this background - on the three human universals? I ask this because you’ve only just recently written on your blog about The Golden Rule. I would like to understand why you think these tree human universals are novel.

Steven, I'm not sure that these universals are novel. I think your identification of them is insightful. They are what I observe in my dealings with people. They want to be treated with respect, kindness and given the opportunity to grow. Yet, at the same time, as people, we make mistakes.

There are two aspects of this worth identifying. There are mistakes that come from a lack of knowledge or ability. These can be corrected by instruction and training. The other kind of mistakes are ones of character.  These are more serious because they are not so easily subject to being changed by training, but by disciplined action. If what I say sounds like Aristotle, you'd be correct. I believe of all the ancient philosophers, his perspective on how we are to live is the closest to what people raised within an institutional context need today.  The parallel insight is of the management philosophers (Say and Schumpeter, especially) of the past couple hundred years who described entrepreneurialism in similar ways. From Aristotle through to Peter Drucker, the virtuous, happy person is the one who acts and creates new things.

I see in your identification of these human universals an ancient truth that is emerging in discussions about organizations and institutions in our day. I point most specifically to my good friend Tom Morris who has been writing and speaking on the value of ancient wisdom in the context of modern corporate institutions for almost twenty years. His perspective informs much of my own.

To be human is to create, and this comes from action, from taking initiative to transform abstract ideas into concrete realities. I believe that this is why God made us, and is God's most indelible mark upon us.

Q2: You mention the human point-of-view on organizational change. How important are human beings and relationships in organizations according to you, and what else should we pay attention to to help organizations thrive?

What I wrote above is about the individual person. Every person, however, exists within a social context, or, rather, many social contexts. There is our family, our neighborhood, our associations whether they are religous, political, or interest based, and then, of course, our work context. What I find is that social organization leads in one direction without intentional human intervention. I find that most organizations grow towards minimizing ambiguity, resist change, exclude outside influence, and become uniform,closed systems of relationships that squeeze out human initiative in favor of social compliance. One of the unintended consequences of universal education is to remove human initiative in favor of comformity. We treat education as a management exercise where efficiency is valued over effectiveness. This is true in every institution that I have had contact with during my lifetime. I do not think that this is intentional, but rather a logical result of how we think.

We think like managers who do not own the work we do. We simply have organzed our lives around the performance of certain activities. Ask people what their purpose is, and rarely does it have anything to do with the work they perform. We think like managers instead of as leaders because we have been taught to work within an institutional environment. I heard yesterday that a million people have lost their jobs in the United States over the past year. Those businesses that lost those people are now more efficient, but are they more effective. Are they capable of taking advantage of opportunities that still exist? I don't think so. Now, imagine, all those million people starting new businesses. Imagine the creative energy that will be released into world as a result.

From my perspective, I see a need to reconceptualize not only what it means to live an authentic, happy, virtuous human life, but also what this means within a social and insititutional environment. As a result, I'm interested in the nature of human relationships. Let me give one example of what I see.

Over the past decade there has been an explosion in the level of social interaction that takes place on line. You and I met through our involvement in the Triiibes online social network. I see in the growth of social media an expression of the basic human need for companionship.  However, I don't see all this social interaction as necessarily their purpose. Instead, taking my lead from Aristotle, I believe that our human interaction should lead to collaborative human action. Through these social media tools, we should be forming relationships where we work together to achieve some impact. If all they are is a place to talk, they will not be sustainable. They will degenerate into a narrow clique built around a few strong, influential voices, and a circle of people who compliantly go along. It is a picture of all social institutions in microcosim.

What is the solution? I return to Aristotle and entrepreneurism. We must become virtuous people who act to create new ways of meeting needs and opportunities. My personal responsibility is to be a person that others can trust. This trust is built upon not only personal integrity, but openness, honesty, humility and the recognition that we each have a role to play within every social context. Sometimes it is to lead, others times to follow, some moments to give and others to receive.  It is from this philosophical perspective that was born my Johnny Bunko 7th lesson - Say Thanks, Every Day. Giving thanks in this perspective is an act of creative openness that affirms the connection that exists between us.

Q3: What’s your view of change is bad, and should be avoided?

I don't see change as either bad or good. I simply see it as the context of how we live. Every change has within it some good that can be identified. For example, suffering is a kind of change. We can view suffering as something to be avoided or we can see in it the opportunity to gain strength.  We have a choice in how we deal with change. We either see it as an opportunity or as an inconvenience. The choice we make determines whether we will find happiness.

We need to develop our capacity to adapt to change. Returning to Aristotle, I believe that this is what he writes about as becoming habituated to doing virtuous acts.

Okay, my next question for you.

Q. Why is it important for human beings to experience discovery? How can we do this on a daily basis? And how do businesses and organizations develop ways to discover?


Titles Don't Matter

Ever notice how registration applications require you to name a title for yourself. I am not a title. I don't take my identify from some organizational or sociological description like that.

I am a person who is defined by my values, my relationships and my actions as a person.  It is why I'm moving away from calling myself a consultant, and instead using the terms mentor and catalyst. They more precisely describe what I do.

Last week during a workshop, a discussion about the need for more entrepreneurs in our community was had. I asked who thought of themselves as an entrepreneur. About 40% raised their hands. then a woman raised an interesting question. She said that she didn't start her father's company, even though she now runs it. She does not see herself as an entrepreneur. 

My response was that entrepreneur is one of those words like leadership. A lot of people don't like it as a title. I've had a lot of people tell me they aren't leaders. When I describe the behaviors and actions of leadership, they'll end up agreeing that they are leaders. The same is true for entrepreneurs. So, I ask the woman if she practiced entrepreneur behavior. She said yes.  I, then, asked the audience, who practiced entrepreneurial behavior, and most of the room raised their hands.

Identity based on organizational role or institutional membership is no longer workable. Think instead of your identity being established by what you do.

Here are some examples.

I give thanks.
I write.
I converse
I listen
I create
I connect people together through introductions.
I mentor.
I am a catalytic influence.
I love my family.
I work hard.


You get the idea. Be what you do. Do what you want to become. By being what you do, you transcend the title, and expand your impact. In the long run, that is the best situation to be in.