Assumption Hunting: a new diligence for the C-Suite?
I published this paper at the Convergence Culture Consortium at the Department of Comparative Media Studies at MIT, March 8, 2011 under the title “Assumption hunters: a new profession for the corporation in the throes of structural change.� It has since disappeared from view. I am reproducing it here so that I can reference it this week at . (Please come have a look!)
Introduction
I read recently that the thing that keeps CEOs awake at night is “discontinuous innovation� of the kind Clay Christensen describes. This struck me as odd because Christensen’s discontinuity isn’t hard to recognize or anticipate. (His model says: an incumbent offers more value than customers want, and a competitor responds with products that are cheaper but “good enough.�) Scary, to be sure, but how does it count as a sleep stealer? There’s nothing particularly mysterious or unmanageable here.
Surely, the scarier thing for a CEO to discover is that the world has changed in a way that defies his or her deepest assumptions. This change is hard to detect. And when detected, it is hard to respond to. I would have thought that in a Schumpeterian world of creative destruction, this is more likely and the more problematical event (Handy 1991). Let’s call it “structural change.�
Every corporation, every act of commerce, is predicated on a set of assumptions. These are the infrastructure of all thought and even the most instrumental action. Every enterprise is, as Drucker and Levitt demonstrated, shot through with assumptions, some witting, most not.
These assumptions aren’t just technically invisible. They are deliberately invisible. In turns out that some knowledge is more efficacious the more deeply it is assumed. (So says Bateson.) Indeed, the more we use an idea, the more completely it disappears from view. Thus do our deepest ideas “go without saying.”� Semi-deep ideas can be evoked with a single ‘buzz word.”� They are “built in� or, as Foster and Kaplan prefer, “locked in.�
In a perfect world, these assumptions would float to the surface upon expiration. As fish do. But they don’t. So we keep using them. These assumptions are deeply implicated in the way we see the world. They can be and have been stuff of our best hunches and most powerful intuitions. Breaking up is hard to do.
What provokes assumption failure? Where does structural change come from? Some of it comes from the ceaseless innovation of the world. Dupont introduces something called “plastic.� James Black finds a new way to make pharmaceuticals. Or Mr. Newmark invents Craig’s List. We doze for a moment and there’s a fast food industry. We doze a moment more and there’s a slow food movement (American markets are like the weather, or for that matter the markets, in Ireland. Wait a moment, they will change). Even as these innovations make themselves visible on the surface of the marketplace, in a less obvious way they attack our deepest assumptions.
Some structural change comes from the academic and the management literature. The authors of the Cluetrain Manifesto say “advertising is not messaging, it’s conversation.”� An industry turns on its ear. Jenkins changes the way we think “media� mediates. Another industry is upended. Florida says creativity is not an ancillary of the marketplace, but it’s prime mover. Pine and Gilmore say, “You are not making products or services. You’re making experiences.”�
Whatever else they do, these ideas contradict a fundamental assumption of capitalism, that the business of business is making things. Each in their way, Drucker, Porter, Stewart and others anticipated this assault on literalism. We are not “making things to make money,� they said. We are “creating value to capture value.”� And with this fundamental change, new process and practice is set in train, and the world begins to drift.
Structural change also comes from practice. It emerges from things happening in the marketplace, the corporation, or the world of the consumer. This change is not created or officiated by experts. (Unless of course that expert is Oprah.) It comes swimming up out of the interactions of many parties, driven by various motives, parties who may not be aware of the intentions or even the presence of others.
Take the case of the American “great room.� In the last 25 years, millions of Americans knocked down the walls between kitchen, living room, and dining room. They spent many hundreds of millions of dollars, in the process turning their homes into construction zones. The great room did not come from the design community or even an Oprah episode. It came from Americans, flying by the seat of their pants, trying to figure out a way to accommodate emerging notions of children, childhood, child rearing, domesticity, parenthood, feminism, informality, media consumption, dining, hospitality, weekends, entertainment, cooking, serving, and food. So much for our assumptions about the American family.
Implications
There are several steps the corporation can take to protect itself from structural change.
1. Scan the horizon
Watch for changes in the world that will test and perhaps overturn the assumptions in the corporation. The disintermediation of the supply chain, what will this mean to our assumptions about distribution? More specifically, what happens when Amazon.com begins to eliminate bricks and mortar retailers and the Mall? Is there a “New Normal� that defines consumer taste and preference and what would it mean to our assumptions about what consumers want? The corporation needs to examine the future, and to anticipate how it will challenge present assumptions (McCracken).
2. Excavate the assumptions of the corporation
2.1 Excavate Management models
These models sweep through the corporation with some frequency: “excellence� from Peters and Waterman, “reengineering� from Hammer and Champy, “built to last� from Collins and Porras. These models, with their key phrases and characteristic points of view, reform the corporate culture and the minds of managers.
There is no “sunset clause� for management models. We may stop using the model, but rarely do we repudiate it. The model is still there, passive and invisible. Occasionally it will “reactivate� without warning. Someone will object to “strategy A� on the grounds that “I can’t see what this has to do with excellence.”� Everyone recognizes the term. They know it as a value that corporation once valued. So people are inclined to defer. “Excellence. Good point. Let’s move on.”� Too bad. Because “strategy A� was a good idea.
2.2 Excavate the local culture of the corporation
The local culture of the corporation has many sources: the vision of the founder, ideas introduced through mergers and acquisitions, cataclysmic events in the history of the corporation (public ones like the depression of the 1920s, and private ones like the time the CFO decamped with the corporate “playbook�), and the culture of the locality (Silicon Valley vs. New York City vs. Austin, Texas). Here too we have a variety of old and new ideas pouring into the corporation. The old live on. The new recruit vigorously. The corporation hums with a variety of ideas, some visible, all active.
2.3 Excavate the culture of the component professions
There are many professional paths to the business world. People come up as engineers, MBAs, entrepreneurs, accountants, industrial designers, graphic designers, liberal arts graduates. Each of these professions imbues the graduate with a certain way of seeing the world, of solving a problem. (I did a project for a Canadian telecom and the marketer expressed her frustration with the engineers with whom we were working, “Every time I leave them in a room together, they start building a machine!�) In a perfect world, the corporation would achieve a miracle of ecumenical cooperation. More often, certain professional cultures are given more influence than others. So we need the various professional assumptions and the value hierarchy that distribute their power.
2.4 Excavate the culture of the industry
Every industry has characteristic ways and means. The car culture of Detroit, the start up culture of Silicon Valley, the P&G method as it has influenced the world of CPG (consumer packaged goods), the engineering cultures of IBM and GE, the new approaches emerging from the likes of Etsy and Zappos. Furthermore, every industry is various. Some part of the financial world sees itself as “white shoe.”� Another is “Florsheim.”� Still another is “hush puppy.”� These assumptions need mapping. To be sure, they build consensus and confer strength. But they also create vulnerability when change happens.
2.5 Excavate out the culture of business
The world of business has certain shared assumptions. We are inclined to share a certain way of defining the actor, the action, the motive, the objective, the unit of analysis. These appear to be matters of simple rationality. But of course the differences between Japanese, American, and Canadian business practice tell us that cultural choice shapes this rationality. Furthermore, there is a range of choice within the rational. There are many ways, in that horrible phrase, to skin a cat.
The key problem: one rationality may conceal another, as they discovered recently at IBM. Kevin Clark, then Director of IBM Alumni Relations and the Greater IBM Connection, noticed that IBM was insisting on the boundaries of the corporation perhaps a little too literally. The fact of the matter is that Information Technology is a small world. Sooner or later everyone in the industry is going to work for IBM. And this means that it’s wrong of IBM to treat outsiders as outsiders. Clark noticed, for instance, that when people left IBM, IBM was inclined to severe the relationship. Clark believed the more sensible approach was to treat them as “temporarily relocating� and to keep the relationship alive.
The culture of business encourages the corporation to insist on an emphatic boundary when indeed something more porous is sometimes called for. Only the retrieval of business assumptions renders this opportunity visible. The task here is to find the assumption and to release the corporation from its thrall. This is what Henry Jenkins� did with his notion of “transmedia.”� We can see how many ideas take their powers of illumination and the ability to create value from their ability to transcend the assumptions of the moment. This category has many examples including Henry Jenkins� notion of “transmedia,� C.K. Prahalad on the notion of “cocreation,� Charles Handy on the future of work and Warren Bennis on the nature of the leader.
Professional development
Who will do this? Who will dig out assumptions for the corporations? The Liberal Arts ought to be a superb recruiting ground for this new profession. One could argue that the ability to find and scrutinize assumptions is the great gift part of the liberal arts education. But of course this part of the university continues to sneer at anything attached to commerce as beneath its dignity and corrupted by gainful motive (Nussbaum). The move to post-modernism compounds the problem by insisting on the instability of knowledge and the inscrutability of the world (Swaim). A.G. Lafley has called for a “hard headed humanist� but only a few humanists have a feeling for taking on the problems of the real world.
The management consultant may not be the right person to undertake this work, but we have much to learn from the Bains and McKinseys of the world. The consulting houses are good at working from faint signals and approximate measures, at living with noisy data sets and problems that might as well be shape-shifters they are so fluid and changeable. We need to learn these methods and approaches, which is another way to say that we need to learn how to deal with the world when it is merely ignited by ideas and not very much comprehended by them.
A profession of this kind will need an institutional locus. To be sure, there are inklings and experiments. Henry Jenkins and William Uricchio have created something remarkable at CMS, and Henry Jenkins� experiment continues at the Annenberg School at USC. David Kelley is creating something interesting at the Design Program at Stanford as is Joel M. Podolny at Apple University. Peter Drucker left behind an inclusive experiment at the Claremont University business school named for him.
If we dolly back a little further, another opportunity emerges: the creation of a consulting house that makes the pattern recognition of the arts, humanities and social sciences an integral part of the advice it gives to business. Here too there are inklings and experiments. And a question: why only these?
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Acknowledgements
Thanks to Dan Pereira for his thoughts on the original version of this paper.
