Capturing the AI advantage through culture change

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Oil Review Middle East, May 30, 2025

by James Thomas, Shantanu Gautam, and Pavel Evteev



The GCC’s national oil companies (NOCs) must put AI to work if they are to keep delivering the world’s lowest cost and lowest carbon footprint barrels. To achieve this, NOCs need organisational cultures that can quickly produce many small, high-impact artificial intelligence (AI) applications.

AI-powered solutions are the next major cost and efficiency frontier in the oil and gas industry. Leading oil majors are already using them to produce oil faster, at lower cost and resource intensity. For example, AI can accelerate subsurface analysis, reduce uncertainty, and optimise capital allocation. Shell partnered with startup Avathon (formerly SparkCognition) and is using AI-powered deep learning to reduce seismic shots by 99%, maintaining image accuracy while cutting exploration time from nine months to just nine days.

Beyond exploration, AI is transforming well planning, automating drilling, predicting conditions, and streamlining workflows. ExxonMobil, collaborating with IBM, used AI to reduce well planning and design time from nine to seven months, and cut data preparation time by 40%.

Drilling optimisation is another area seeing major gains. AI can now analyse real-time downhole data, optimise rate of penetration, and predict failures. Machine learning can adjust drilling parameters dynamically, reducing non-productive time, cutting costs, and improving well economics. ConocoPhillips used three years of drilling data to develop a machine learning model that improved vertical rate of penetration by 20% and reduced premature drilling-motor failures by 65% – saving US$30,000 per well.

Environmental performance is improving too. AI can track emissions in real time, detect leaks, and increase carbon capture. Chevron deployed AI to optimise methane emissions reduction in upstream operations, helping cut methane emission intensity by 60%.

NOCs across the region are also making tangible progress in applying AI to boost performance. Aramco, for example, deployed 40,000 sensors across 500 wells, enabling AI-driven process control that increased production by 15% and halved troubleshooting time. ADNOC’s Emission X tool helped abate 1 million tonnes of CO2 in one year through AI-powered emissions prediction and optimisation. Read the rest here.

The art of the turnaround—circa 27 BC

strategy+business, July 31, 2023

by Theodore Kinni

Photograph by Viacheslav Peretiatko

The ranks of companies that have faced existential crises and succumbed are legion. When industries disappear and markets dry up, turnaround leaders who are charged with picking up the pieces and transforming for the future might find some perspective and inspiration in Virgil’s Aeneid.

“The song of the Aeneid is meant for moments when people desperately need to wrap their heads around an after that is shockingly different from the before they’d always known,” writes Andrea Marcolongo, an Italian journalist and former speechwriter for Prime Minister Matteo Renzi, in her book about the 2,000-year-old epic poem, Starting from Scratch: The Life-Changing Lessons of Aeneas (translated by Will Schutt). “In the parlance of forecasters: The Aeneid is warmly recommended reading for days when you’re in the eye of the storm without an umbrella.”

The Roman emperor Octavian commissioned Virgil to write the Aeneid at just such an unsettling moment. The Roman Republic had disintegrated into a series of civil wars, which eventually resulted in Octavian establishing himself as its first emperor in 27 BC. He wanted Virgil to create a piece of work that reinforced his claim to power and reassured the empire’s subjects about their prospects under his rule. Virgil did this by linking Octavian’s divine authority to the origin story of Rome.

The reluctant hero of this tale is Aeneas, the son of a prince and the goddess Venus, a character Virgil borrowed from Homer. In Homer’s Iliad, Aeneas fights in the Trojan War against the Greeks. In the Aeneid, Troy has fallen after a long siege (that darn horse).

As Aeneas surveys the wreckage, he steels himself for a fight to the death. At this moment, Venus appears and tells him to face reality. The gods have abandoned Troy, she says, Aeneas should salvage what he can and save his family and companions. Her son is still reluctant to give up on Troy, until the ghost of his dead wife prophesizes that in doing so, he will eventually “come to Hesperia’s land, where Lydian Tiber flows in gentle course among the farmers’ rich fields. There, happiness, kingship and a royal wife will be yours.” Finally, Aeneas gets the message. He gathers his compatriots (the Aeneads); they build a fleet of boats and set sail. Therein lies the first lesson for turnaround leaders: when your industry or the markets your company depends upon are in ruins, don’t double down. Move on. Read the rest here.

Why Digital Ability Trumps IQ

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MIT Sloan Management Review, February 24, 2023

by Kimberly A. Whitler and F.D. Wilder

In 2013, as fast-emerging digital technologies and channels were creating a sea change in consumer product marketing, A.G. Lafley, then CEO of Procter & Gamble, acted to ensure that the consumer packaged goods giant would not be left behind. He appointed F.D. Wilder, one of this article’s coauthors, as global head of e-business and tasked him with driving digital transformation across P&G’s many brands. The goal of this initiative was to develop and integrate P&G’s digital marketing abilities, e-commerce channels, and IT platforms — driving up sales, profit margins, and cash flow in the process.

As the e-business team considered this challenging mandate, it focused on the digital marketing ability of P&G’s brand and business managers as a key enabler of the transformation. Unfortunately, the team found that the literature regarding digital transformation tends to give short shrift to the capability of leaders: It focuses mainly on raising the “digital IQ” of the workforce — that is, the measurement of how much an organization can profit from digital and technological solutions.

Digital IQ has its limitations as an effective measure of ability, not the least of which is its strong emphasis on teaching and testing for generic vocabulary and knowledge. Yet digital and other transformational efforts nearly always require employees to work in new and unfamiliar ways. To ensure that they can do this new work, leaders must be able to assess employee ability by connecting it not only to knowledge and skills but also to targeted actions and performance outcomes. Only then can they identify and activate pockets of strength in the digital ability of employees and isolate and remediate pockets of weakness. Read the rest here...

Getting proactive about reactance

strategy+business, January 18, 2022

by Theodore Kinni



Photograph by Klaus Vedfelt

The COVID-19 pandemic has been a case study in human contrarianism. In staggering numbers, people refused—and still refuse—to comply with mask and vaccine mandates. Some bridled at being sent home to work and at their kids being sent home from school. When everyone was summoned back, some bridled at that, too. It’s an ongoing, large-scale lesson in reactance, a concept with which any leader charged with trying to enact change should have at least a passing acquaintance.

The theory of psychological reactance originates in the 1960s with Jack Brehm, who developed it when he was a professor at Duke University. Brehm said that humans are negatively aroused when they perceive a threat to their freedom. What constitutes a threat to freedom? That’s your call. If you think a mask mandate restricts your freedom, Brehm’s theory suggests that reactance will not only increase your desire not to wear a mask but may also prompt you to refuse to wear a mask, even to the point that you get yourself dragged off a plane.

I ran across reactance in a recently published book, The Human Element: Overcoming the Resistance That Awaits New Ideas, by Loran Nordgren, an organizational psychologist and professor at the Kellogg School of Management, and David Schonthal, a clinical professor at Kellogg and director of its venture accelerator program. Nordgren and Schonthal seek to add what they call friction theory to the discipline of change management, arguing that corporate change initiatives often fail because leaders focus their attention on attracting people to their cause, while neglecting four frictions that work against change: inertia, effort, emotion, and yes, reactance.

A lot of leaders become leaders because of their charisma and their ability to sell a vision,” Schonthal explained to me during a video interview with both authors. “But you have to balance the ability to sell a vision with a willingness to clear away some of the friction and actually help employees get started on the path to that vision.”

“Leaders aren’t thinking about the barriers to action,” Nordgren added. “Shifting your focus to friction requires moving away from the idea and thinking about the audience. Taking that perspective requires empathy, it requires understanding the context, and it requires more effort and attention.” Read the rest here.

The New Elements of Digital Transformation

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MIT Sloan Management Review, November 19, 2020

by Didier Bonnet and George Westerman




Image courtesy of Michael Glenwood Gibbs/theispot.com

Since 2014, when our article “The Nine Elements of Digital Transformation” appeared in these pages, executive awareness of the powerful and ever-evolving ways in which digital technology can create competitive advantage has become pervasive. But acting on that awareness remains a challenging prospect.

It requires that companies become what we call digital masters. Digital masters cultivate two capabilities: digital capability, which enables them to use innovative technologies to improve elements of the business, and leadership capability, which enables them to envision and drive organizational change in systematic and profitable ways. Together, these two capabilities allow a company to transform digital technology into business advantage.

Digital mastery is more important than ever because the risks of falling behind are increasing. In 10 years of research, we have seen digital transformation grow increasingly complex, with a new wave of technological and competitive possibilities arriving before many companies mastered the first. When we began our research, most large traditional enterprises were using digital technologies to incrementally improve parts of their businesses. Since then, this first phase of activity has given way to a new one. Advances in a host of technologies, such as the internet of things, artificial intelligence, virtual and augmented reality, and 5G, have opened new avenues for value creation. More important, leaders now recognize the need for — and the possibility of — truly transforming the fundamentals of how they do business. They understand that they have to move from disconnected technology experiments to a more systematic approach to strategy and execution.

Some companies have successfully graduated from the first phase of digital transformation and are diving into the second. But many are still floundering: In 2018, when we surveyed 1,300 executives in more than 750 global organizations, only 38% of them told us that their companies had the digital capability needed to become digital masters, and only 35% said they had the leadership capability to do so. This has become more worrisome than ever: As COVID-19 accelerates the shift to digital activity, digital masters are widening the gap between their capabilities and those of their competitors.

These conditions prompted us to reexamine the elements of digital transformation that we proposed in 2014. While strong leadership capability is even more essential than ever, its core elements — vision, engagement, and governance — are not fundamentally changed, though they are informed by recent innovations. The elements of digital capability, on the other hand, have been more profoundly altered by the rapid technological advances of recent years. Read the rest here.

Best Business Books 2020: Management

strategy+business, November 9, 2020

by Theodore Kinni



Illustration by Martin O’Neill; icon by Harry Campbell

This year, COVID-19 upended management-as-usual. Sure, managing is still a matter of getting things done in organizations — divvying up objectives into tasks, ensuring employees have the resources and skills to complete the tasks, overseeing their progress, and helping them when they get bogged down. But where and how people work has changed — radically and overnight in many companies and, in some, maybe permanently.

None of this year’s best business books on management were written for managers per se. But each focuses on capabilities that can help managers identify and cope with pandemic-related challenges.These developments have given rise to new needs and stresses that affect the people you are responsible for managing — needs such as going to work (or going back to work) safely, and stresses such as working while surrounded by kids instead of colleagues — and thus, they’ve also affected your performance as a manager.

In the year’s best business book on management, Tiny Habits, Stanford University professor B.J. Fogg shows how to change your behavior and help others change theirs, too — an essential skill at a time when we are all being called upon to develop new habits. In Acting with Power, Deborah Gruenfeld, also at Stanford, explains how an unconventional view of power can enable you to support people in ways that far exceed the limits of your positional authority. And in You’re Not Listening, journalist Kate Murphy offers an uncommonly insightful exploration of how to actually meet the dictates of an exhortation we’ve all heard before: “Listen!” Read the rest here.

To Cut Costs, Know Your Customer

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Sloan Management Review, November 4, 2020

by Vikas Mittal, Shrihari Sridhar, and Roger Best




Image courtesy of Robert Neubecker/theispot.com

The economic disruptions caused by the ongoing pandemic are forcing myriad decisions on CEOs of B2B companies. Often, the most pressing decisions are whether and how to cut costs.

As in business downturns past, some CEOs are implementing across-the-board salary cuts and widespread furloughs, while others are taking a more piecemeal approach — renegotiating vendor contracts; trimming underperforming products, regions, and divisions; and shifting to lower-cost sales channels. Our research shows that both of these approaches can be misguided.

A more effective cost-cutting strategy should begin — and end — with customer focus.

Customer focus tends to be overlooked during cost cutting because it is usually seen as a revenue enhancement strategy. This is a mistake: B2B companies that ignore what customers value when they are cutting costs leave a lot of money on the table.

In our benchmark assessment of 626 publicly traded B2B companies and 4,105 of their customers, we found that companies with high levels of cost cutting and low levels of customer value — as measured by customer satisfaction — had the worst gross margins, while companies with high levels of both cost cutting and customer value had the highest margins. In other words, cost cutting that is devoid of customer value sank margins.

B2B companies can pursue cost reduction with a customer focus in three ways: by reducing value-added waste to deliver more compelling customer value, by improving the effectiveness of customer acquisition and retention, and by narrowing focus to those strategic initiatives best aligned with customer value. Read the rest here.

Don’t kill bureaucracy, use it

strategy+business, September 8, 2020

by Theodore Kinni



Photograph by Darren Rowley / EyeEm

Earlier this year, an intriguing tweet from Tom Peters popped up on my phone. “Virtually all the popular improvement ideas — Continuous Improvement, 6-Sigma, MBO [management by objectives], Agile, Brainstorming, Strategic Planning, PPBS [planning, programming, budgeting systems], ZBB [zero-based budgeting] — develop hardening of the arteries, lose their youthful glow, and become one more burdensome, life-sucking bureaucratic practice,” he wrote.

This may sound glib to you. But like many of Peters’s observations, it’s got a strong foundation in reality. If you’ve been around for a while, you know that all sorts of business programs ossify after a few years. It happened with total quality management (TQM) and business process reengineering back in the 1990s. It’s happening with D&I (diversity and inclusion) and holacracy now.

One of Peters’s followers blamed leaders for this phenomenon. But Peters didn’t agree. “My experience is different,” he replied. “All ‘systems’ inevitably calcify, regardless of the leaders. [The] solution is to automatically throw out any such system after, say, 5 years.”

Many companies do exactly that. They deal with the organizational sclerosis that sets in as management programs age by abandoning them for whatever has come along in the meantime. “Forget TQM, let’s do Six Sigma; forget Six Sigma, let’s do Lean.” Often, these moves follow a change in leadership. A new CEO points everyone in a new direction and cuts the old program’s funding. That seems wasteful, at best. Presumably, there were benefits to be had from the program (and almost certainly a substantial amount of money and effort has been expended to establish and maintain it). And then there were none.

But why do improvement programs ossify? Once upon a time, I studied the reasons TQM implementations fail. They included skimpy budgets, ineffectual leaders, spotty managerial support, ill-defined strategies and objectives, poor program and performance measurement, and a lack of training. In other words, a dearth of all the things that bureaucracies are designed to provide. Looking back, I realize that for my analysis of this phenomenon, I could have written, “If you want to embed TQM in your company, you need to build a TQM bureaucracy.”

But that only holds true for implementation. The problem is that once an improvement idea or system becomes established in a large organization, the bureaucracy that successfully established it usually becomes the agent of its ossification. The “center of excellence” gets bloated and dictatorial; new layers of administrative management slow decision making; the flow of work gets jammed up with new tasks and procedures; metrics yield reports that demand managerial attention and sap employee energy... Read the rest here.

The Galvanizing Effect Of The Social Enterprise In Action

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Forbes, December 27, 2019

by Michael Gretczko



photo: GETTY

I love seeing how the blue water of the Caribbean meets the white sands of Puerto Rico from the air. In October, after landing, I didn’t go to the beach. Instead, I headed into downtown San Juan, where I joined 22 of my colleagues — all just a few years out of school and eager to make a difference not only in our organization, but also in people’s lives in the world at large.

They were in San Juan to participate in our Human Capital People to People (P2P) program; I was there to support them as an advisor and mentor. P2P is a skills-based volunteering initiative where our junior professionals undertake an intensive week-long pro bono engagement to support local nonprofit organizations. As with all of our volunteering programs, we were there to bring our greatest asset — the skills and experience of our people — to help nonprofits address their most critical issues and help drive transformational outcomes.

For me, the week in San Juan was a firsthand example of the benefits that a social enterprise can generate. At Deloitte, we define the social enterprise as a company whose mission combines revenue growth and profit-making with the need to respect and support its environment and stakeholder network. It is a business that embraces its responsibility to the community and serves as a role model to other organizations and its people.

The most obvious beneficiaries of P2P engagements are the nonprofits themselves. Many nonprofits find it challenging to muster the skills, data and resources they need to carry out their missions. They usually have very clear missions and well-articulated programs for achieving them, but they tend to struggle with how to deliver against overwhelming and competing demands with limited resources as well as operational execution challenges. Our teams quickly zeroed in on opportunities to improve back-office operations to create front-office or, more appropriately, mission-driven impacts. Read the rest here.

A disappointing progress report on diversity and inclusion

strategy+business, December 12, 2019

by Theodore Kinni


Illustration by Boris SV


Racial and ethnic minorities make up 38.8 percent of the population of the U.S. and a nearly equivalent share of its workforce. But minorities represent only 17 percent of full-time university professors and 16.6 percent of newsroom journalists. They are only 4.5 percent of Fortune 500 CEOs and 16 percent of Fortune 500 boardroom directors. They are 9 percent of law firm partners; 16 percent of museum curators, conservators, educators, and leaders; 13 percent of film directors; and 6 percent of the voting members of the Academy of Motion Picture Arts and Sciences.

These discrepancies haven’t gone unnoticed, but they also haven’t been effectively addressed. “During more than three decades of my professional life, diversity has been a national preoccupation,” writes journalist and New York University professor Pamela Newkirk in the second paragraph of the preface to her book Diversity, Inc. “Yet despite decades of handwringing, costly initiatives, and uncomfortable conversations, progress in most elite American institutions has been negligible.”

Newkirk devotes most of Diversity, Inc., which is heavily focused on racial inequality, and particularly, discrimination against African-Americans, to demonstrating this dismaying reality through a sometimes tangled mix of factoids and anecdotes drawn from the arenas of academia, media, and business. The bigger stories that emerge are all variations on the same theme: The lack of progress by minorities in America’s elite institutions is a function of a political and societal arc that has stretched across a half a century. Read the rest here.

Staying Ahead of Disruption with Workforce Sensing

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Workforce Magazine, August, 2019

By Daniel Roddy and Chris Havrilla

Plug the word “disruption” into Google Trends and you’ll get a jagged line tracking 15 years of peaks and plunges in search frequency. But for all the shortterm variation in the chart, the long-term trend is steadily rising: there are nearly three times as many “disruption” searches today as there were in 2004. 

The steady rise in searches reflects a reality that won’t surprise most leaders. They face a host of disruptions—social, demographic, environmental, economic, technological, and geopolitical. Not only is it their job to make sure that their companies don’t get blindsided by these breakpoints in the status quo, but they also must be able to respond to them quickly and agilely in order to transform these disruptions into competitive advantage.

Sensing is the foundation on which an organization’s ability to identify, pace, and respond to disruption is built. In hindsight, disruptions seem obvious. By the mid-2000s, it was clear that streaming movies would decimate the video rental industry. But to have realized that a decade earlier, when the MP3 format first emerged for audio, and acted upon it is another matter entirely.

The ability to sense disruptions in their nascent stages and predict how they are likely to affect a company and its stakeholders is crucial to success in business today. This is especially true when it comes to sensing disruptions in the workforce. Read the rest here.

Two Capabilities for Building Organizational Agility

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Boss Magazine, March 2019

by David Mallon

A few years ago, agility was considered a competitive advantage — a trait that a company could develop and nurture to get a leg up in its industry and markets. But late last year, when Forbes Insights conducted a survey of 1,000 executives across industries and geographies, 81 percent of them identified organizational agility as the most important characteristic of a successful organization. Today, agility isn’t about raising the competitive stakes; it’s an organizational trait needed to get into the game.

At its core, agility is simply the ability to change direction quickly in response to external conditions. The problem, of course, is that for the past century, people have been building companies that were anything but agile.

How can you make your company more agile? Focus your efforts on developing the two capabilities that define the trait: sense and response. Read the rest here.

How to embed data-driven decision-making into your organisational culture

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InsideHR, November 20, 2018

by Jeff Mike



Thanks to the increasing sophistication of analytics, data and algorithms can inform and improve management, business, and HR decision-making throughout companies. But, the tools of data collection and decision-support algorithms are only one element in the quest to attain the full potential of analytics.

Another is the ability of employees at all levels to use these tools, a challenge that will require a broad-based upskilling of the workforce. And, there’s an additional element – the willingness to employ analytics to make decisions. Compounding all of this is the fact that organisations today are becoming social enterprises, where the ability to manage social, environmental and governance concerns are as important as financial returns. In this environment, workers have more influence than ever. Their voices are amplified through social media and other means, meaning errors made by an organisation can have far-reaching consequences.

So, what does all of this mean? To create a willingness to use more data and unbiased decision-support algorithms, a mindset of data-driven decision-making should be embedded in the organisational culture in a way that benefits employees in their work as well as other stakeholders. The need for a data-driven culture is important and shouldn’t be underestimated.

In fact, this need is one of the top findings in Bersin’s High-Impact People Analytics research, which revealed that a company can fully utilise people analytics only if – and when – using data to make decisions becomes part of the culture, or “how we do things around here.” In fact, the research determined that organisations that have achieved the highest levels of people analytics maturity are three times more likely to have such a culture than organisations at lower maturity levels.

However, just making the decision to implement a mindset of data-driven decision-making into an organisation’s culture won’t work. In an analytics-friendly culture, data-driven decision-making isn’t an afterthought, an add-on, or a justification; rather, it is a shared mindset in which:

• Everyone recognises that data and analytics are essential to sound decision-making;
• They use data and analytics in their decision processes for all aspects of the enterprise including financial, social and environmental well-being;
• They use data and analytics to monitor – and adjust – decision outcomes to ensure desired results and to prevent bias.

Read the rest here...

The Truth About Behavioral Change

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MIT Sloan Management Review, Nov. 7, 2018 

by Damon Centola

When Twitter launched in March 2006, the earth did not move. Its founders and a few early funders were excited about the technology, but the microblogging site was not the immediate blockbuster you might imagine it was, given that it now has more than 300 million users and has become a wildly influential marketing tool for businesses, nonprofits, and even politicians. Rather, Twitter crept along in its early months, growing slowly.

So, what happened to transform it from another also-ran into one of the largest communication platforms in the world?

Twitter seems on the surface to be the kind of technology that journalist Malcolm Gladwell and Wharton School marketing professor Jonah Berger refer to as “contagious.” To jump-start Twitter’s growth, its founders decided to promote it at a South by Southwest (SXSW) Interactive conference in 2007, where it was a big hit. From there, people assume it rapidly spread across the United States through the internet, thanks to social contacts connected by what network researchers call “weak ties” and “long bridges.” Two years later, in 2009, Twitter adoptions were catapulted into a global orbit when a major opinion leader, Oprah Winfrey, sent her first tweet on her talk show.

That narrative is easy to grasp and compelling. It gives startups, and the people who invest in them, a road map for success. Unfortunately, it is also inaccurate, and the road map leads to a dead end.

In a very interesting study, Twitter’s actual growth pattern was revealed to be surprisingly geographic. Friends and neighbors adopted the technology from one another in much the same way people join a PTA fund-raiser or get excited about a candidate for town office. Twitter didn’t spread virally across the internet; it spread locally, like a grassroots social movement.

Although that explanation of Twitter’s success is less sensational than the usual “going viral” story, it is far more useful for understanding how social networks promote behavioral change. And it corresponds with a growing body of research that describes behavioral change as a complex contagion, which needs reinforcing ties and wide bridges to spread. We’ll explore those concepts here. They are key elements in a diffusion playbook for companies attempting to launch innovations and facilitate both customer and employee adoption. Read the rest here.

Best Business Books 2018: Management

strategy+business, November 5, 2018

by Theodore Kinni



Illustration by Martin León Barreto

Edgar H. Schein and Peter A. Schein, Humble Leadership: The Power of Relationships, Openness, and Trust (Berrett-Koehler, 2018)

Morten T. Hansen, Great at Work: How Top Performers Do Less, Work Better, and Achieve More (Simon & Schuster, 2018)

Heidi Grant, Reinforcements: How to Get People to Help You (Harvard Business Review Press, 2018)

Yesterday, managers were the wizards of business. They learned profitability and productivity incantations at various branches of the Hogwarts School of Business. They were privy to arcane corporate knowledge that was withheld from the mere mortals in the rank and file. They pointed their wands, and the workforce did their bidding.

Tomorrow, it’s likely that employees will manage themselves. The incantations and knowledge that were once the manager’s stock-in-trade will be at their fingertips, perhaps on their smartphones. With the help of computers imbued with artificial intelligence, they will decide their own direction.

But what should managers be doing today? The authors of this year’s best business books on management offer conflicting answers. MIT professor emeritus Edgar Schein and his son Peter, now colleagues at the Organizational Culture and Leadership Institute, see a new, relationship-based managerial culture emerging. University of California at Berkeley management professor Morten Hansen identifies practices that defined high performance in the recent past and urges contemporaries to copy them. And social psychologist Heidi Grant of the NeuroLeadership Institute offers managers a way to develop a skill that they will surely need at some point — no matter what their future holds. Read the rest here.

Leading a Bionic Transformation

Learned a lot lending an editorial hand here:

strategy+business, October 29, 2018

by Miles Everson, John Sviokla, and Kelly Barnes




Illustration by Mark Matcho

What is it about companies such as Alphabet, Amazon, Apple, and Alibaba? No matter where they turn their attention — cars, banking, groceries, healthcare, media, retail, trucking — industries quail before them. Company leaders start wondering if their moats are deep enough. Investors flee before the drawbridges rise. These companies are among the largest and richest in the world, and they use this leverage to become larger and richer still — in 2018, Apple and Amazon became the world’s first trillion-dollar companies. These powerhouses attract huge numbers of extremely talented people to work for them, and they generate one innovation after another. But none of that explains the source of their industry-disrupting power.

There are probably 100 companies around the world — including at least 40 “unicorns,” startups with a market capitalization of US$1 billion or more — with similar qualities. They are known for rapid, exponential success. Most are in the U.S. and China right now, but they will probably become more common elsewhere soon. We think of them as bionic enterprises: a name that evokes the fusion of technological and biological systems for extraordinary performance and growth. These companies compete in unprecedented ways by combining digital prowess, human ingenuity, and strategic purpose, as if they were the corporate equivalent of superhuman cyborgs such as Marvel Comics’ Iron Man.

Over the past year, as we’ve been researching and writing about the nature of bionic companies (see “The Bionic Company,” by Miles Everson and John Sviokla, s+b, Feb. 22, 2018), it’s become apparent that no company has a monopoly on this way of doing business. A few companies are out in front, but many others will follow. Some will be part of consortia; some will take advantage of highly capable platforms. You can lead your own company toward a bionic transformation if you think about changing your business in the following ways.

• From a business model based on managing the supply of your product or service to one based on providing whatever customers demand, using any means possible

• From an operational approach based on stocks of information that you hold and capture, to one based on flows of knowledge that you collaborate on and share

• From a competitive position based on a stable landscape of rivals to one based on platforms where a single winner dominates the system

Underlying these three shifts of mind is a quiet revolution in the sources of wealth that businesses deploy and create — the first such major shift since the Industrial Revolution. These new intangible (but very powerful) assets are behavior capital, the awareness and insight developed by tracking ongoing activity; cognitive capital, knowledge codified into digitally managed routines; and network capital, the human and technological connection points available to an enterprise (see “Wealth in the 21st Century”). When you deploy these three forms of capital effectively, you transform your enterprise...read the rest here

Changing the Way Your Company Thinks About Change

Learned a lot lending an editorial hand here:

Boss Magazine, November 2018

by David Mallon

In 2003, when General Stanley McChrystal assumed leadership of the covert Joint Special Operations Command (JSOC) in Iraq, his first order of business wasn’t tracking down dictator Saddam Hussein or jihadist Abu Musab al-Zarqawi, it was creating an organization capable of responding effectively to constant change.

A self-admitted “control freak” as a young officer, McChrystal quickly discovered that the complex conditions and enemy capabilities in Iraq were unique. “We realized pretty quickly that raids were not our product. People kept thinking it was the operators going through the [enemy’s] door, but, no, it was knowing where the enemy was and constantly adapting,” he explained in Deloitte Review.

The missions of most companies are not as dramatic—or dangerous—as JSOC’s mission. Nonetheless, many companies are facing disruptions and competitive challenges that require an unprecedented degree of agility and adaptability.

Every business leader knows that the ability to manage change is an organizational imperative. They also know that there can be significant people barriers to achieving change: employees don’t like change, so they resist it; and when they are forced to deal with too much change, they become fatigued.

But what if those barriers aren’t always as imposing as they seem? After all, change resistance and fatigue are psychological states, not immutable conditions. There is no reason why change can’t trigger enthusiasm and energy, instead of resistance and fatigue. In fact, such a transformation can be achieved with three shifts in your company’s change mindset...read the rest here.

The Four Building Blocks of Transformation

Learned a lot lending an editorial hand here:

strategy+business, October 22, 2018

by Al Kent, David Lancefield, and Kevin Reilly




Illustration by Miguel Montaner

If you are a business leader, you are probably thinking about radical change. New industrial platforms, geopolitical shifts, global competition, and changing consumer demand are reshaping your world. You face upstart competitors with high valuations encroaching on your business, and activist investors looking for targets. Meanwhile, you have your own aspirations for your company: to be a profitable innovator, to seize opportunities, to lead and dominate your industry, to attract highly committed talent, and to carve out a socially responsible role in which your organization makes a difference. You also probably want to clear away the deadwood in your legacy system: practices, structures, technologies, and cultural habits that hold your company back.

The conventional response is a transformation initiative — a top-down restructuring, accompanied by across-the-board cost cutting, a technological reboot, and some reengineering. Maybe you’ve been through a few such initiatives. If so, you know firsthand how difficult it is for them to succeed. These efforts tend to come in late and over budget, leaving the organization fatigued, demoralized, and not much changed. They don’t take into account the fundamentally new kinds of leverage available to businesses that have emerged in the last 10 years: new networks, new data gathering and analysis resources, and new ways of codifying knowledge.

Successful transformations may be relatively rare, but they do exist — and yours can succeed as well. A transformation, in this context, is a major shift in an organization’s capabilities and identity so that it can deliver valuable results, relevant to its purpose, that it couldn’t master before. It doesn’t necessarily involve a single major initiative (though it could); but the company develops an ongoing mastery of change, in which adaptability feels natural to leaders and employees.

An effort of this sort can take place on a large or small scale; it can involve the front, middle, or back office; it can be conducted by any type of enterprise, from a startup to a global enterprise; and it will affect every aspect of the organization’s structure, including such functions as innovation, finance, marketing, sales, human resources, and operations. At any scale, it requires a cultural shift and highly engaged leaders, who take control of the organization’s future in these four ways... read the rest here.

Physician, Disrupt Thyself

strategy+business, September 19, 2018

by Theodore Kinni

If I were a senior executive in healthcare, it would scare the hell out of me to learn that Amazon founder Jeff Bezos, Warren Buffett of Berkshire Hathaway fame, and JPMorgan Chase CEO Jamie Dimon formed an independent company “free from profit-making incentives and constraints” to provide “simplified, high-quality and transparent healthcare at a reasonable cost” to a million or so of their U.S. employees. The fact that the CEOs chose surgeon and author Atul Gawande — an outspoken critic of the healthcare industry’s practices — to lead it wouldn’t settle my nerves. The news might even be jarring enough to induce me to read Vijay Govindarajan and Ravi Ramamurti’s Reverse Innovation in Health Care. Although that might prove cold comfort indeed.

“The real reason the health-care debate hasn’t gotten anywhere is that would-be reformers are debating about the wrong things,” declare Govindarajan, Coxe Distinguished Professor of Management at Dartmouth College’s Tuck School of Business, and Ramamurti, University Distinguished Professor of International Business and Strategy at Northeastern University. “It’s not about who pays for what. Skyrocketing health insurance premiums are just a symptom of the underlying problem. The problem with American health care is that it costs too much, the quality is uneven, and too many people can’t get the care they need.”

The professors thus blame providers for the fact that the U.S. healthcare system is by far the most expensive in the world while its supposed beneficiaries rank 37th globally in average life expectancy. Healthcare delivery is the problem, they argue.

As we quibble about everything healthcare-related in the U.S., I could quibble with Govindarajan and Ramamurti about whether providers or payors or patients or the fee-for-service, free-market healthcare system itself is to blame for this mess. Clearly, the costs of the U.S. healthcare system have been rising far above the rate of inflation. And given the fact that my very healthy family’s health insurance is its biggest annual outlay, I, for one, would welcome relief from any quarter. 

Reverse Innovation in Health Care argues that the quarter that the relief is going to come from is…India, which ranks 104th in life expectancy. On the surface, this seems so outlandish that the authors had to include an appendix of questions and answers titled “India? Really?” After they spend an entire book making their case, they had to make it again! ...read the rest here

Making Change Contagious

strategy+business, September 13, 2018

by Theodore Kinni

Much of the conventional wisdom about the diffusion of new ideas, behaviors, and innovations comes from network science, where it tracks back to two sources: Mark Granovetter’s influential theory of weak ties and Albert-László Barabási’s work on network hubs. But in the past decade or so, researchers have revealed some nuances to their ideas that leaders undertaking change initiatives, especially full-scale transformations, should consider.

In 1973, the American Journal of Sociology published a much-cited article titled “The Strength of Weak Ties,” by Granovetter, then an assistant professor at Johns Hopkins University. Based on research Granovetter had done while earning his Ph.D. at Harvard, the article introduced the idea that people with whom you share few connections (your weak ties) are more conducive to the diffusion of your ideas than people with whom you share many connections (your strong ties). That’s because weak ties speed diffusion by extending your reach to more people you don’t know, while strong ties produce a kind of echo chamber in which whatever you are trying to spread reverberates among people you already know — slowing diffusion.




Illustration by mathisworks

But what if the theory of weak ties, which is now widely accepted, isn’t as universally applicable as it seems? Damon Centola, an associate professor in the Annenberg School for Communication and the School of Engineering and Applied Sciences at the University of Pennsylvania, thinks this is the case. In a new book, How Behavior Spreads, Centola describes his work — and the work of other social network researchers — over the past several years. He explains that strong ties can be better conduits for diffusion than weak ties in some situations. It all depends on what kind of diffusion (or contagion) you are trying to encourage...read the rest here