Previous Century Thinking

Change is all around us, and happening at breakneck speed. This is a reality that most organizations haven’t yet acknowledged, they are stuck in Previous Century Thinking, and that leads to some very weird situations. Let’s consider a couple of points.

Do you know of a company called Docker? If you work in a company that is involved with an Internet service offering, you’ve probably heard of them.   They’ve developed and shared a technology that makes the distribution of pre-configured, Linux-based, applications, such as web servers and application servers, much easier. In just about 18 months this company went from zero to having its technology being adopted by Microsoft, Amazon and IBM, among others. Now consider that at a typical company, as a manager, you may get asked to plan and budget your projects for the forthcoming year, well in advance of the end of the current year. This is so that the projects may be discussed in committee meetings and perhaps approved. There are companies that actually ask managers to name the people who will be working on each project over a year ahead the project starting.

You don’t even know if you will be alive in a year, how can you accurately estimate who will be the best person for whatever task without knowing what is going to happen between now, and then? What if a new product or product category enters the market which makes your future project irrelevant? Or proves that it is so relevant that you should start it early and devote more resources?

This sort of attempt at futurology under the guise of planning is exactly what I call Previous Century Thinking. For a long time executives have been deluding themselves that all this planning ahead is anything but guesswork. Well, it isn’t. While change was happening at a more leisurely pace, some people managed to produce reasonably good guesses, but as change accelerated this became harder and harder. Today, this is almost an exercise in futility as reality changes around us with incredible speed.

Does this mean that there should be no planning? Of course not! It means that planning needs to be broader, less detailed and more flexible. It means that we need to be continuously reviewing and revising plans in light of new industry news and events. The entry of a new player in a market, the introduction of a new product or product category, changes in component costs… The number of things that can affect a carefully crafted plan is huge, so it must be constantly revised, updated or even cancelled, if necessary.

Canceling a project is something companies are very bad at. A lot of people see the cancelation of a project they were personally vested in, as being a bad thing. Perhaps even a sign of failure, and even now that is a very ugly word to a lot of people. In consequence companies have become very adept at throwing away good money after bad. The rationale is that if they have committed 3 million dollars to a project they can’t just let it all go to waste, so perhaps if they try a little harder and do something different they might still be able to save the project.

Saving a project might be possible. It might be the best decision, but you can’t really be sure unless you are considering all the options that must include the possibility of canceling the project before any more money is spent on it, thus cutting the company’s losses. This decision is made particularly difficult as failure to deliver a specific project, in most companies might result in a compensation loss for the person in charge of the project, thus guaranteeing that he is properly incentivized to continue with the project regardless of its long-term costs to the organization.

This conflict of interests between the person in charge of making important decisions and the organization itself is another byproduct of Previous Century Thinking. It is rooted in executives applying a method which was conceived to improve manufacturing productivity in the industrial age to occupations which bare very little resemblance to anything which existed at the time of its creation.

Today, there is a wide gap between what science has demonstrated true and what is accepted business practice, in regards to personal motivation. Businesses continue to practice incentives which scientific studies have repeatedly shown not work as expected even after decades of the first studies being published. What can positively motivate a person who is engaged in simple, mechanical work does not motivate a person whose activities are more cognitive in nature.

People working in problem solving and creative endeavors are more productive in a different kind of setting in which motivation is much more intrinsic in nature. In this sort of scenario, there less possibility for a conflict of interests between the individual making decisions and the organization’s long term goals, as the individuals compensation is not tied to a particular outcome. In this scenario there is no personal financial loss to the individual if the decision has to be made to cancel a project, as the best option for the organization.

The question of how, then, do we motivate the people that work in the organization, might just be one of the reasons why there is still such a gap between science and practice. It is simple to just repeat what everyone else is doing and has been doing for decades. While thinking differently and trying to come up with a new answer is harder. It is even harder to voice different thoughts in an environment where everyone else is happy to continue with business as usual.

These are a couple of practices that indicate that organizations are caught in Previous Century Thinking. While it is not something of which most people are even aware yet, it will increasingly grow in awareness over the next decade, as more people start to notice the change that is happening in elsewhere.

As new companies are created that embrace a more responsive mindset that makes them better prepared to adapt to change as it happens, market conditions will inevitably change. As awareness of this change grows, established companies will need to make a choice: learn how to better adapt to change, or run the risk of becoming irrelevant.

 

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This post was originally posted on LinkedIn on May 3rd, 2015.