Successful digital business transformation is a shift in mindset and heartset
John Hagel has more than 40 years of experience as a management consultant, author, speaker, and entrepreneur, and has helped companies improve their performance by effectively applying new generations of technology to reshape business strategies.
Hagel currently serves as co-chairman of the Silicon Valley-based Deloitte Center for the Edge, which conducts original research into emerging business opportunities that should be on the CEO’s agenda but they’re not yet on their agenda. Before joining Deloitte, Hagel was an independent consultant and author. From 1984 to 2000, he was a principal at McKinsey & Co., where he was a leader of the Strategy Practice. Hagel is the founder of two Silicon Valley startups Hagel is also the author of a series of best-selling business books, including his most recent book, The Power of Pull. Hagel is on the faculty of Singularity University in the Corporate Innovation department.
To help us better understand the future of business model innovation, the importance of trust, and the psychology of a growth mindset, Ray Wang, CEO and founder of a Silicon Valley-based advisory firm Constellation Research, and I invited John Hagel to join our weekly show DisrupTV. Here are my 10 main takeaways of our conversation with John Hagel.
The return of Infomediary – John Hagel created the term ‘Infomediary’ 20 years ago — short for ‘information intermediary’. Customers would increasingly need a trust third party or personal agent to act on their behalf to help get more value from data about themselves. Three factors are shaping the infomediary opportunity according to Hagel: 1. customers are gaining power and visibility into options and becoming more demanding of services from companies, 2. digital technology is making it easier to capture and share information, and 3. customers are facing more choices of new products and services. The growth of the Internet and digital networks led to the need of having trusted data brokers. Hagel reminded us that artificial intelligence is quite stupid without data. If AI doesn’t have data, it is useless. The problem is not scarcity of data, but scarcity of trust. Trust is eroding in our institutions. In the absence of trust, you are not willing to share your data. Hagel believes that companies that will prevail in this world, and create the most value, are the ones who manage to rebuild trust with customers. People will share their data with companies that they trust most, when the companies demonstrate that they can develop value for their stakeholders. The more you can demonstrate tangible value based on the data that you provide, the more likely to establish long-lasting relationships – a virtuous cycle of creating value with mutual benefits to all.
Trust is about people and we need to treat trust holistically. Hagel reminds us that trust is about people. Hagel also talked about the shift in the nature of trust. In the past, trust was about skill. Today, the focus of trust shifts from skill to will. The changing needs and evolution of skills is now about your ability to stay teachable – your willingness to learn and adapt. Hagel uses a pyramid model to describe the layers of trust. “To build deep trust with others, we’re going to have cultivate multiple layers of trust, with each layer building on the layer(s) underneath it,” Hagel. The trust pyramid has four layers:
- Humility. At the base of the trust pyramid is humility. It’s the acknowledgment by the person or institution that they will never have all the skills and resources required to address an expanding array of unanticipated challenges and obstacles.
- Values and integrity. The next level of the pyramid focuses on intentions and values. Looking ahead, does the person or institution have a core set of values that will provide appropriate guard-rails for its actions, ensuring that it will act with integrity and a commitment to avoiding harm to others, regardless of the unexpected situations that emerge.
- Commitment to impact. That leads to the next level of the pyramid — is the person or institution committed to delivering impact that matters to me? That commitment has multiple dimensions. Since my needs and aspirations are unique to me — is there a commitment to understanding what my individual needs and aspirations really are? Equally important, since we live in a rapidly changing world, is there a commitment to anticipating how my individual needs and aspirations are likely to evolve?
- Excitement about impact. Commitment is important, but it’s not sufficient. To really trust someone or some group in terms of their ability to deliver impact that matters to us, it’s important to reach the next level of the trust pyramid — we need to see genuine excitement about addressing unexpected challenges in delivering the impact that matters to us.
“Rebuilding trust in our institutions is an imperative. To succeed in this challenge, we need to address trust holistically. We need to recognize that the foundations of trust are shifting and that many layers of trust will need to be cultivated. We also need to address the opportunity to strengthen trust by connecting people into impact groups, so that they can become even more excited about the opportunity to deliver impact that matters to others. It’s ultimately all about people, finding ways to move beyond short-term transactions and instead build deeper and enduring relationships that can help all to achieve more of their potential.” — John Hagel
There are no experts of tomorrow. The label of expert is more suspect in a world of constant and accelerating change. The erosion of trust is also based on experts struggling themselves in terms of guiding us towards the future. Expertise is based on skill and experience from the past. What matters is excitement and passion for exploring, while maintaining humility and a beginner’s mindset.
The bigger question is not ‘how do we drive mindset?’ but rather ‘how do we drive the heartset?’ We have to focus on the emotions of what is driving people, behaviors, and actions. Hagel emphasizes the importance of focusing less on credentials and skills and more about what motivates and excites people to achieve more.
Cultivate the passion of the explorer. Growth of fear is now the dominant emotion around the world. How can leaders help move us from fear to hope and excitement? Hagel talks about the growing need to find and cultivate the passion of the explorer to achieve far more of our potential. Hagel advises executives to look inwards and go to the level of emotions. The mark of a strong leader is to get things done. But remarkable leaders are willing to show vulnerability and recognize the real presence of fear or uncertainty. Hagel studies extreme performance and found common elements in those environments. All the high performing leaders had passion about their work. They also had real fears. But because of their passion, they were able to overcome their fears, moving from mounting pressures to expanding opportunities.
The three elements of passion for an explorer: Long-term commitment to a specific domain and impact, questing disposition, and connecting dispositions. ” Explorers can realize their full potential in their chosen domain and contribute more value to the enterprise,” said Hagel. What are the key attributes of passion? “Passion is all about commitment to personal improvement. Passion is all about connecting with and developing, one’s own capabilities. Passion and engagement are not the same things.
The two key dispositions, or orientations towards action, define the domain of passion:
- Questing disposition: A constant desire to challenge and test oneself to see if we can achieve higher levels of performance and draw out more of our potential
- Connecting disposition: An orientation towards connecting with others who share our passion or who can be helpful to us in addressing the challenges that we’re pursuing
The best teachers are lifelong students. I agree with Hagel, the smartest people that I know all share a passion of an explorer. Hagel also talked about companies focused on worker engagement. But how many companies are measuring and cultivating worker passion? Engagement means do you like what you do, do you like the people you work with and do you like your company. A passionate worker is thrilled about facing opportunities to change and grow.
A shift from scalable efficiency to scalable learning is the key to relevance and growth. Automation has to be more than just reducing the workforce and reducing costs. Automation is about scalable efficiency. Hagel believes we must change the jobs of the worker to create more value. The routine tasks can be automated. Passionate workers in the right environment can create value but this requires a change in institutional models. The key is to shift from scalable efficiency to scalable learning. In a rapidly changing world, institutions must further invest in training and upskilling their existing employees. The most powerful learning is the creation of new knowledge – not learning in training programs that are sharing existing knowledge – in the working environment, through action, addressing unseen problems and opportunities. The models of efficiency and learning are at odds with each other.
The lifeblood of your business is based on flows, not silos. Silo mentality is about capturing resources, protecting resources, and then extracting as much value from said resources (knowledge, budgets, headcount, market share, etc). In a rapidly changing world, it is all about how do you participate in a greater set of knowledge flows so that you can learn faster. I believe speed to value defines relevance which leads to growth. I also believe that to achieve optimal speed and minimum friction, institutions, and people must design an environment for optimal movement.
How we respond to mounting pressure will determine our path to success. Hagel said that one way to face mounting pressure is to reduce our time horizon. When we shrink our time horizons we begin to adopt a fixed view of the world. The battle for resources leads to a win-lose mindset. The scarcity versus abundance mindset leads to loss of trust. This is the main reason we need to move from a fear mindset to one that is driven by purpose, passion, and the love of exploration.
Focus is not about doing less. Focus is about doing more of what matters most. Hagel reminds us that when you find work that brings you joy, it is easier to respond to mounting pressures. Hagel is working on his 8th book right now. The book is about Hagel’s research over the past 40 years and the notion that business success is less about strategy and more about psychology. How do we move from fear to hope and excitement? What is the journey and the tools that we need to find the passion of the explorer?
I highly recommend you watch the entire video conversation with John Hagel. Hagel is a brilliant thought leader and he shares incredible insights throughout our conversation.