Culture Change: Overcoming Innovation Deathtraps

Posted on March 03, 2020 by Barry Borgerson, One of Thousands of Executive Coaches on Noomii.

Auto-Contexts: Involuntary Contextual Frameworks

We all operate in two distinct modes – we have two “selfs”: a thinking self that creates our intentions, which consumes most of our awareness, and an automatic self (our “auto-self”) that is elusive (we normally don’t notice its activities) and illusive (it often deceives us). Just as it does for reconstructing undesirable automatic behaviors (“auto-behaviors”), 2Selfs Theory also provides the mechanism to transform involuntary contextual frameworks (“auto-contexts”). These auto-contexts (which you may recognize in the form of paradigms or mental models or cultures or worldviews) are assumptions and beliefs (they even produce an untethered form of “truth”) that reside in the auto-self part of our mind, which, among other attributes, frames how we understand and solve crucial problems in the world about us. Providing a detailed model of auto-contexts is the biggest breakthrough of 2Selfs Theory and it creates a major advance in how we understand and manage many types of human activities including problem-solving worldviews and business cultures. 2Selfs Theory identifies four distinct types of auto-self activities and models how they interact with each other and with thinking-self intentions and problem solving. However, two types, auto-behaviors and auto-contexts, have now become so critical to businesses achieving repeated successes that we must immediately start understanding and managing them explicitly. Auto-contexts are similar to habits in that they reside in the auto-self, but instead of controlling individual auto-behaviors, they control how we (i.e., our thinking-self) can understand and solve complex and important problems including when we share them with others in a community such as with professional worldviews and company cultures.

The deep illusiveness of auto-contexts comes from their property of creating untethered certainties; that is, they make us feel certain about many of our realities including our assumptions, assertions, beliefs, and theories, independent of whether those certainties correspond with anything outside of our mind or align with our success needs. We can verify such correspondence through thinking-self-based investigations including the use of science, formal logic, documentary evidence, and the materialization of claimed results. When we have not, do not, or cannot verify correspondence of our auto-context-based realities with facts in the world outside of internal mental states, we refer to these realities as certainty illusions. When our auto-context-based certainties verifiably do not correspond with realities outside of our involuntary mental states (which unfortunately occurs more often than you likely think and increasingly happens as we move into the area of widespread technology-enhanced manipulations, especially through disinformation and branding/propaganda), we refer to them as certainty delusions. Generically, we refer to both types of internal, auto-context-based certainties as certainty illusions. Our business-model and operating-processes cultural elements that initially correspond with our success needs often (normally!) become out of alignment because the business environment changes, which now often happens quickly with the onrush of new technologies. When this happens, our auto-context-based beliefs about the viability of our current path migrates from a certainty illusion, which by its nature we have no interest in challenging or even seriously examining, to become a certainty delusion. This is the main mental mechanism that creates the innovation deathtrap.

With 2Selfs Theory, we can now understand at the mental level why it is so difficult to infuse new concepts and technologies into businesses. The primary underlying cause of cultural rigor mortis, which we sometimes refer to as culture lock or using the metaphor “status quo,” is the certainty illusion. That is, repeated successes of the current business model, along with the strong positive feelings these successes produce, automatically and imperceptibly construct shared auto-contexts within the leaders of a company, and that constitutes a business culture. Therefore, widespread certainty illusions in the form of shared auto-contexts create innovation deathtraps because the power players in a business become involuntarily and profoundly certain that the nature of their business model is “true,” “correct,” “the way we should (must!) do business,” or the many other ways their auto-contexts cause them to believe deeply they are on the right path.

An Empowering Distinction: Revolutionary vs. Evolutionary Change

This section will give you insights into the enormous importance of recognizing, understanding, and managing many forms of auto-contexts, with particular focus on problem-solving worldviews in this case. I consider the best previous work on worldviews to be Thomas Kuhn’s book, The Structure of Scientific Revolutions, written a half-century ago. Kuhn’s term was “paradigms” and he confined his potent insights into what he labeled “revolutionary” science progress, which in 2Selfs Theory terms means reconstructing an existing worldview in a particular science discipline. 2Selfs Theory extends Kuhn’s work beyond science to other types of human activities and situates worldviews within a previously opaque part of the human mind – the auto-self and specifically within the auto-context type of auto-self activities. Worldviews (paradigms) operate behind-the-scenes to frame the way we (i.e., our thinking-self) can understand and solve problems. This includes science, as per Kuhn, but 2Selfs Theory also addresses worldview impacts (control!) on other types of human activities including, politics, religion, economics, and values. We will focus in this article on auto-context effects on business and in this section particularly on how worldview foundations affect business successes. We can construct a powerful worldview to understand and solve problems regarding automatic human activities in our social systems (including business) and in our personal responsibilities (such as the ability to resist political manipulations and to avoid drug addictions). We will refer to that internal problem-solving auto-context for human activities as “2Selfs Worldview.” Constructing 2Selfs Worldview into business people is the same process as with other worldviews (including political branding/propaganda); in our case, it requires repeatedly using 2Selfs Theory along with experiencing feelings (positive ones through successfully solving real-world, previously intractable, business problems).

Now that we have a new theory of human nature (i.e., about the automatic part of the human mind) with 2Selfs Theory and we know how to inculcate 2Selfs Worldview, we can address the revolutionary vs. normal progress distinction in a new and more powerful way. The science worldview is extremely potent at maximizing the effectiveness of our thinking-self to solve many types of problems especially those in the physical world (science, technologies, products) and many in the mental world. However, this problem-solving worldview that provided the foundation for most of our progress in the Modern West is not adequate to solve our most pressing (and growing) problems in the mental world – those involved with the auto-self (and particularly with auto-contexts). “Normal science” (in Kuhnian terms) is a thinking-self activity operating within an existing worldview for each science discipline. “Revolutionary science” (again, in Kuhnian terms) is an auto-self, and more specifically an auto-context, and even more precisely a problem-solving worldview reconstruction activity. We can benefit by seeing Kuhn’s term “revolutionary” (for a mysterious type of discontinuous progress) as a metaphor that points toward something fundamental that we should name and explain explicitly – to a worldview reconstruction, which is a specific type of auto-self transformation activity. When we view Kuhn’s penetrating insight like that, we can generalize it in three ways. First, when we understand “revolutionary” as an auto-context transformation, there’s no reason to limit it to science; worldview transformations are human (auto-context, mental-world) activities that occur in many professions and aspects of life including business. Second, auto-context transformations don’t just occur through replacement of existing worldviews (a reconstruction process that Kuhn identified for revolutionary science advances); they also occur through expanding current worldviews (a construction process), such as adding 2Selfs Worldview to the empirical “soft” (another metaphor for which we now must create an explicit understanding) success-factors processes in business. That will allow us finally to be able to solve automatic human activities problems at the root-cause mental level. Third, auto-context transformations (revolutionary changes) don’t just occur for problem-solving worldviews; they can occur for other types of human activities and crucially for values definition and maintenance.

The Technology Tsunami: The Fourth Industrial Revolution

Professor Klaus Schwab, founder and chair of the World Economic Forum wrote a prescient book, The Fourth Industrial Revolution; however, he mainly focuses on the technology side of this revolution and identifies major problems (but not solutions) we will encounter in our human activities. While we can segment technology progress in many different ways, I follow here the sequence described by the World Economic Forum
First Industrial Revolution: 1785 – steam technologies
Second Industrial Revolution: 1870 – electricity technologies
Third Industrial Revolution: 1969 – digital technologies
Fourth Industrial Revolution: 202x – cyber-physical technologies

For roughly the first two centuries of the Modern West, the technologies and products we developed during the first two industrial revolutions produced changes of a magnitude and rate that we could manage their human-activities (auto-context) ramifications adequately. All of that started to change approximately four decades ago (about a decade into the Third Industrial Revolution) when unprecedented (year after year and decade after decade of increasing performance and lowering costs) progress occurred through the advent of integrated semiconductor circuits, which, along with increasingly effective software, began driving technological changes at accelerating rates. That was when escalating intractable problems started arising from the mismatch between how we manage problems in the physical world and how we manage the mental-world (human-activities) ramifications of this technology progress. This abilities-mismatch created disappointing productivity gains in business (starting the growing angst of widespread inadequate improvements to standards of living) and growing dysfunction in our political systems. We need to focus explicit attention on this intersection between the abilities mismatch and the runaway progress in computing and communications technologies because these physical-world advances have created mental-world (social systems, including businesses and governing systems plus personal responsibilities) ramifications that we cannot solve adequately within our current (thinking-self empowering) worldview foundations. Finally, the inevitable tipping point happened. The series of annoying problems that we in the West noticed, but were not moved enough to take decisive actions, finally reached the tipping point in in the political arena, which has shaken the very foundations of the greatness of the West. From a business perspective, have now passed the crucial culture-change speed threshold where technologies are coming at businesses faster than they can accommodate them without learning to understand and manage automatic human activities explicitly, which is where the relentless stickiness of cultures resides. We are living on borrowed time in businesses because we can no longer operate effectively at the rate of technology changes of the Third Industrial Revolution, and that is only going to get much worse as the Fourth Industrial Revolution crashes over us. You can see the auto-self implications of the Fourth Industrial Revolution in my annotations of Schwab’s book at www.2Selfs.com/fourth.

Business-Process Innovation Deathtrap: “That is how we do it here.”

Shared auto-contexts form the basis of cultures that both enable and disable critical business factors such as the mission of a business, and they control our professional norms. While I was conducting a four-session workshop for top management of a company on making commitments and holding people accountable for their commitments, I was leading the participants through how auto-contexts operate. One of the participants, Chris, who headed a design department, got an “ah ha” moment that he courageously shared with us. He said that an intern came to him some time ago to ask him why they used a specific process. Chris said he explained to the intern, “That is how we do it here.” When the intern asked him again later, Chris reported being annoyed and telling him, “That’s just the way we do it, stop worrying about it, and get on with your assignment.” The intern had the courage to come back a third time; this time he told Chris that he realized he was just an intern but that he was there to learn and he just could not figure out why they used the process the way they did. He said that he would appreciate it if Chris would take the time to explain it to him. Chris reported that finally out of frustration he decided to sit down with the intern and explain it to him so that the intern would get off his back. This is where Chris bravely revealed to the assembled group of his peers and his boss his astonishment to realize he could not explain it at all. He said it was obvious to him that the current process was the correct one to use, but when he examined it closely, he couldn’t explain why. Chris finally figured out that he had probably learned the process when he started with the company many years earlier and just accepted it without question. When Chris made his hidden assumptions explicit, he was able to analyze them with the intern and realize that although the process did work, or else they would have noticed a problem with results, it wasn’t optimum and a better process was available. Chris said that learning about auto-contexts enabled him to understand what happened to him because when it occurred he was dumbstruck about it. I was able to use Chris’s gutsy disclosure to help others at the workshop understand that auto-contexts, and particularly shared auto-contexts in the form of professional worldviews or organizational cultures, are hidden assumptions and beliefs that appear to us as the way things “really are” or as “the way we do it.” Chris’s story also helped the participants understand that once we can make our hidden assumptions explicit, we have the opportunity to test them and reconstruct them if needed. We should recognize a couple of general principles from this encounter. Our auto-contexts-based certainties often mislead us – we become certain we are correct even though when forced to defend our certainties, the thinking-self is often clueless. Also, we should all actively challenge each other’s hidden assumptions (even the deepest “certainties”), and we need to do our best to pay attention and bravely examine our own assumptions when others challenge them or ask for explanations.

Business-Model Innovation Deathtrap: Kodak

Kodak (Eastman Kodak Company) provides us with a potent example of how company cultures block incorporating technology innovations. I had a couple of personal touch points where I could observe Kodak’s attempt to head off their downfall due to the emergence of digital image technology.

When I was in the process of relentlessly reconstructing the culture of the Burroughs financial electromechanical products business into an imaging business back in the late 80s and 90s, people from Kodak who were also trying to get that company into the digital imaging business came to see me. They wanted to learn about what we were doing on the leading edge of employing high-speed, high-resolution imaging technology. I was impressed with their knowledge of imaging and with their insightful preparation for the eventual replacement of film-based cameras with digital cameras. Fast forward about a decade, after I had successfully led the launch of Burroughs (by then, Unisys) into the imaging business, and I had my second encounter with Kodak. An executive search firm recruited me to lead the charge into the imaging business at Kodak. I spent an interesting day with executives and technical experts at their Rochester headquarters. I was surprised that they had not made more business progress on digital products. I had been using the most advanced imaging technologies for many years as part of our first-to-market high-speed check image processing systems, so I had solid insights into the cost/performance trends of image technology. I met with imaging people who had great technical knowledge and business insights on imaging but were struggling to make progress within the company.

Kodak was at a crucial juncture at that point. Their film-based business was still generating enough cash to fund a transformation to a bold new direction. The advocates of the film business, who still occupied the power positions, had laid out their vision of how to create a brighter future for the film-based business. Imaging was a competing technology for the future of Kodak.

I could see the standard battle lines: nurture the bread-and-butter business that everybody understood well or strike out in a scary, unfamiliar new direction. I had fought that battle repeatedly at Burroughs. The arguments for the status quo seemed compelling. “Mainframes are generating our profits, where they produce over 65% gross margins. Why should we invest in a risky new technology when the one we have now is working so well?” The answer, of course, was that the margins were not sustainable nor was the mainframe business. Technological forces in the industry were pushing toward ever more powerful microprocessors that created an entirely different business model with higher volumes and lower profit margins that were unfamiliar to Burroughs.

It was déjà vu for me at Kodak. I had successfully fought and won many battles at Unisys to launch a viable imaging business that was a radical departure from anything Unisys had previously done. The battles would be the same at Kodak only they had a much better base to start from since they had been working on digital imaging for many years. They had a powerful brand in the consumer market. They could sell digital cameras. They could sell color inkjet and laser printers. They could build high-quality scanners. With their expertise in chemistry, they could design, manufacture, and distribute printer supplies just as they were doing for film. It would have been an interesting challenge, but for personal reasons, I could not pursue it.

Whomever they brought in to drive the digital imaging business apparently lost out to the film advocates because Kodak slouched by their window to launch a viable digital imaging business. Kodak missed the wave, and they started on their inevitable, painful death spiral of decreasing revenues and repeated layoffs culminating in filing for bankruptcy in January 2012. Kodak succumbed to the innovation deathtrap!

Overcoming Innovation Deathtraps: Annual Culture-Reconstruction Retreats

Kodak has since emerged from bankruptcy, but it is just a shell of its former self and the continuing greatness it could have achieved in the consumer imaging market where it had such a renowned reputation and powerful brand. This is a common sad tale that was not due to lack of innovators within the company because Kodak had many digital imaging experts. The destruction of a once great company was caused by the inability to make the needed culture change to incorporate an emerging technology that was inevitably going to emasculate the existing film business. It may seem that the resistance to change in companies and other types of organizations comes from leaders protecting their turf. Although explicit thinking-self calculations to protect one’s career interests sometimes plays a role in resisting culture change, a more powerful involuntary force comes from deeply embedded auto-contexts. The current path appears to people who rose to leadership positions in the old business model as clearly and fundamentally the proper path to follow into the future. Our auto-contexts, especially when we share them with others as part of a company culture (or professional worldview), lock us in a mental prison from which escape is extremely difficult – a reality straight jacket, the certainty illusion, from which most people and therefore their companies never free themselves without deploying some type of formal intervention.

An excellent mechanism to escape innovation deathtraps is to turn the strategy formation activities into something that consistently produces valuable results. The real value of an annual strategic planning retreat does not come from identifying incremental (normal) improvements; each operating unit and functional area is quite capable of doing that on their own. An annual retreat of top management can serve an enormously useful function if it focuses on searching out revolutionary innovative processes, technologies, and product concepts within the company and using auto-context-focused processes to ensure that the best ones get turned into new profit streams for the business. Accordingly, identifying these annual gatherings as Annual Culture-Reconstruction Retreats can focus on the real deep and quite possibly company-saving purpose.

The first barrier to taking innovative concepts through the process of making them new profit streams in established companies is the moat that surrounds the fortress of the status quo in the form of the certainty illusion. That barrier is so formidable that people rarely have any interest in even attempting to cross it. If a company somehow builds a bridge over the seemingly impenetrable certainty-illusion moat, it then runs smack into a giant gate that seems impassable in the form of the unfair fight associated with encountering debilitating discomfort when attempting to reconstruct a key element of the company culture. This is where we need theory-based processes because most people seem to believe, at least implicitly, that this is a thinking-self activity. However, systemic discomfort is involved, which leads to an unfair fight that normally causes discontinuous product innovations to fail to achieve business successes. To reconstruct the culture (shared auto-contexts) to enable the successful launching of innovative new products, we need to employ the counteracting principle (using thinking-self-initiated feelings to counteract auto-self-reconstruction discomfort), just as we do when we need to transform counterproductive auto-behaviors. There are many ways to use the counteracting principle to overcome the effects of the unfair fight. The key point is to recognize that transformational (culture) change is not a thinking-self activity but rather an auto-self (in this case auto-context) reconstruction activity, which requires a different suite of processes.

It may seem that waiting for the Annual Culture-Reconstruction Retreat creates too much of a restriction. Of course, nothing prevents companies from going through the innovation launch process between these annual retreats, but most product launches are not emergencies and innovations typically languish for many years, so a robust annual process of monetizing internal innovations will be a massive improvement over what typically occurs now. Take Kodak for an example. I know they had active digital imaging work going on inside the company for more than a decade (and they got a patent on the digital camera way back in 1978). Therefore, they passed through many annual strategy-planning cycles, both before and after they recruited me, where they could have used the process explained above to launch Kodak into a great digital-imaging business.

It does not matter how smart you are, how much knowledge you have, or how forceful your personality is, you suffer from certainty illusions just as everyone else does. Repeated success in the future will require following a viable auto-self-oriented process and using the counteracting principle as the most effective path to overcome the certainty illusion and the discomfort inherent in auto-context reconstructions. We will require these dedicated processes to escape innovation deathtraps, which unfortunately are an intrinsic property of the human mind where success sows the seeds of failure by inoculating organization cultures against future disruptive innovations. The certainty illusion dupes everybody and transformation-discomfort paralyzes all of us. The processes that got us here will not get us there because our business world has fundamentally and permanently changed; repeated future successes will require that business leaders and their companies must become transformable

Transformability: The Key to Repeated Successes

To achieve repeated successes in the Fourth Industrial Revolution, businesses must get ready for the onslaught of technologies that will come in broader areas and at an increasingly rapid rate. That will require periodically transforming auto-behaviors to align them with execution needs in order to succeed repeatedly in the intensifying global economy, and it will require the ability to change cultures even more frequently than in the past.

We manage things, which is primarily a thinking-self process built upon an empowering worldview foundation. We lead people, which is mostly an auto-self process. Until recently, intelligence, knowledge, and personality were the most important parameters of leadership leading to business successes. These thinking-self-based and personality attributes will remain crucial, but transformability will become more important. Two necessary processes to achieve transformability are the systematic abilities to reconstruct errant auto-behaviors (barriers to consistent actions and behaviors that disrupt others) and stagnating auto-contexts (professional worldviews, business cultures, self-images, and attitudes). However, businesses will need another elusive mechanism as part of becoming transformable – they will need to construct 2Selfs Worldview (or some worldview about automatic mental-world activities), just as the greatness of the Modern West was built upon a worldview that maximized the effectiveness of our thinking-self to solve many physical-world problems. Business will need to diffuse 2Selfs worldview throughout their organization so they can understand and use 2Selfs Theory effectively and see automatic human activities intuitively. Worldviews empower us to understand specific topics and to solve important problems within the domain of their effectiveness, which is why we need a new empowering worldview to understand and manage automatic human activities, crucially including our auto-contexts.

Individuals will need transformation coaches to reconstruct their errant auto-behaviors and businesses will need transformation coaches to reconstruct their operating processes and company cultures to benefit from the technology maelstrom that is inevitably coming. Smaller companies may need to rely on external transformation coaches for both of these transformability attributes. However, medium to large companies should have those transformability capabilities internally, but they may need to rely on expert external providers to bootstrap these internal proficiencies that will become necessary to achieve repeated successes in the future.