F. SPENCER + Y. MONTERO SALVATICO

on SMART value creation

the exponential IN AN ATTEMPT TO DEFINE change that is re-framing our traditional operating systems and social structures, sociologist Ziauddin Sardar coined the phrase ‘Postnormal Times’. Based on the concept of postnormal science — in which facts and values are constantly in flux — Sardar’s framework captures the unique aspects of the ambiguous and shifting world in which we find ourselves.

The ideas that have historically guided us — hierarchical structures, top-down governance, segmented industries, intellectual property, personal ownership, etc. — are becoming increasingly irrelevant. To thrive, modern organizations must cultivate and embrace new pathways to value creation that align with the characteristics of a Postnormal Age characterized by chaos, complexity and contradiction.

The Industrial Revolution certainly brought about many wonderful advancements in human development: The introduction of machine tools in manufacturing processes; the mass production of iron, which resulted in the expansion of railroads and a boom in urban development; and a consistent increase in the standard of living for the general population. However, the same era that framed today’s approach to value creation around efficiency, productivity, economies of scale and mass consumption also established systems and structures that have largely neglected a generative and human-centric worldview in favour of a more mechanistic approach.

As we continue the shift from the Industrial Age to the Postnormal Age, the metrics that have led us to educational siloing, organizational reductionism and the general quantifying of life will no longer result in successful value creation. As sustainability expert Dr. Daniel Christian Wahl points out in Designing Regenerative Cultures: “What we need is a more nuanced understanding of how, as living systems mature, they shift from an early (juvenile) stage that favours quantitative growth to a later (mature) stage of growing (transforming) qualitatively rather than quantitatively.”

If we are moving into an era with a greater focus on qualitative growth, it is important to identify the prevailing characteristics of what might be called postnormal value creation. Following are three key principles of this new paradigm.

1. POSTNORMAL VALUE CREATION IS FUTURE-EMPOWERED Recently, we spoke to a group of engineers and scientists at an aerospace agency who were tasked with working on novel approaches to urban transportation. Rather than talking to them about the latest advancements in electric drone taxis or driverless hotel rooms, we challenged them to see how mobility as we know it today is dramatically morphing and may no longer be limited to physical modalities. As technology improves and adoption rates rise, individuals will increasingly leverage the options provided by ‘holoportation’, augmented reality and digital worlds as a substitute for movement and interaction in the physical world.

At the end of our presentation, we shared an even more provocative idea: these digital landscapes are creating a

world of ‘quantum travel’. If we can virtually be in more than one place at one time — or perhaps even embrace more than one persona at any single point in time — might this not be preferred to traditional notions of physical mobility?

As we accelerate towards a new world of education, work and community, the present-day definition of value that stems from short-term agendas, incremental development and historical forecasting is becoming just as antiquated as the system for which it was coined. We must learn to pull from the future to create robust value in the present. In a world that is being rapidly reshaped by networked matter, artificial intelligence and digital lifestyles, creating value requires an emphasis on foresight rather than hindsight.

2. POSTNORMAL VALUE CREATION IS ORGANIC AND COMPLEX

In his groundbreaking book The Origin of Wealth, Professor of Public Policy Practice Eric Beinhocker argues against the classical notion of equilibrium in economic theory, stating instead that wealth creation has all of the characteristics of a ‘complex adaptive system’. As is the case with organic or natural systems, the economy trends towards greater complexity, spontaneous self-organization, pattern generation and the accumulation of novelty over time.

Referring to this concept as ‘Complexity Economics’, Beinhocker notes that, “The most obvious characteristic of economies is that they are collections of people interacting with each other in complex ways, processing information, and adapting their behaviours. Rather than portraying the economy as a static equilibrium system, these models presented the economy as a buzzing hive of dynamic activity, with no equilibrium in sight. Just as the pattern of a whirlpool arises from interacting water molecules, these models showed complex patterns of boom and bust and waves of innovation emerging from the interactions of simulated agents.”

Beyond recognizing that an increasingly complex environment is a natural and organic sign of maturity, researchers and professionals alike are realizing that complexity is the seedbed of unlimited human creativity. This generative idea re-frames our view of complexity from being a force that opposes progress to one that enables us to unearth creative solutions to our greatest challenges. Much like an ever-growing canvas, accelerating complexity is giving us more space on which to paint an unending series of unique masterpieces. 3. POSTNORMAL VALUE CREATION IS OFTEN INTANGIBLE Everyone is excited about the possibilities surrounding the Internet of Things — the idea that machines of all kinds are being connected to one another and can communicate efficiently and effectively. In such a world, your car can talk to the city’s power grid, or your refrigerator can talk to an online delivery service. Nevertheless, we still live in a world where Apple’s Siri can’t even talk to Amazon’s Alexa. Why can’t there just be a design pattern that would create a model of technological compatibility for competing technologies?

This is the question that technologist Pria Randolph asked when she decided to create Bitgram, a service that uses machine learning and blockchain to create a ‘Superidentity’ for every person on the planet. Transcending hardware and software compatibility — as well as time and space — this Superidentity acts as your universal DNA in the digital realm. Thanks to Bitgram, “Real-time collaborations between global businesses — for instance, a bank, hospital and an insurance provider — through a digital identity is no longer in the realm of the imagination, but is becoming a reality.”

The past several years have seen the dominance of intangible companies such as Uber (which owns no physical fleet of cars), Airbnb (which owns no physical properties) and Facebook (which creates no content)—but the bigger potential for impact exists around the growing intangibility of every single person on the planet. As tangible value takes a backseat to intangible benefits, the hard skills we have craved for so long are giving way to skills such as sensemaking, creativity and empathy.

To properly respond to the myriad changes around us, we cannot rely on the mental models that were constructed for success in a previous era. Following is our framework for postnormal value creation, which goes by the acronym SMART.

Those who hone the skills of sensemaking and pattern recognition will be able to understand and leverage the world that is emerging around us.

Value Creation is derived through SENSEMAKING. Trends in quantifiable technology, social algorithms and Big Data are exploding, but it is those who hone the skills of sensemaking and pattern recognition who will truly be able to understand and leverage the world that is emerging around them. As a matter of fact, it is the quantum speed at which these ideas are unfolding that is making the human-centric quality of holistic sensemaking a vital leadership mindset. This way of thinking is not only critical for

looking beneath the surface of fast and furious change, but allows us to envision the outcomes to the convergence of trends and complex situations so that we can get ahead of the future.

Value creation is derived through MESHING. In this new era, we must ‘un-silo’ disciplines and practices to foster the emergence of unique ideas and actions. This is the skill of intentionally creating the ‘spaces in between’. As it turns out, the silos between disciplines have actually created many of our greatest problems and challenges, and the ability to explore the sweet spots between ideas and practices allows us to ‘dance with complexity’, purposely embracing, harnessing and leveraging the new landscape in order to create unseen organizational models, strategies, innovations, experiences, and services. We often frame the mindset of meshing as the ability to think in ‘simultaneous multiples’, envisioning the expanding landscape of possible futures.

Value creation is derived through ADAPTATION. Adaptation is the ability to learn from the context of a situation and evolve business practices in real-time to become better suited to respond to internal or external change. Core to this definition is fast-paced flexibility, with the most adaptive organizations embracing fluid, decentralized structures that empower decision-making at all levels. Adaptive leaders embrace a learn, unlearn and relearn strategy, realizing that a perpetual state of revision is required for success in the current environment. Author Greg Satell describes the value of adaptation in a volatile landscape: “In a fast-moving world, where technological cycles outpace planning cycles, we need to continuously reevaluate the context in which we operate. In an age of disruption, the only viable strategy is to adapt.”

Value creation is derived through RESILIENCE. Resilience is the ability to mitigate risk in the face of disruptions, recover quickly while maintaining continuous business operations and safeguard people, assets and overall brand equity. Simply stated, a resilient structure is able to bend without breaking. Author Jamais Cascio highlighted resilience through the real-world example of the traditional electricity grid, noting that, “Today’s power grid (centralized, with limited diversity) is brittle, and the combination of a few local failures can make large sections collapse; a ‘smart grid’ (de- centralized and highly diverse) has a wide variety of inputs, from wind farms to home solar to biofuel generators, and its network is designed to handle the churn of local power sources turning on and shutting off.”

We are experiencing an in-between period where old orthodoxies are dying, new ones have yet to be born, and very few things make sense.

Value creation is derived through TRANSFORMATION. An increasingly complex world demands that we move beyond incremental development into transformational thinking in order to deliver sustainable value. In this environment of volatile change, leaders must be willing to embrace the unknown, developing an ability to go beyond their comfort zone and explore ideas outside of the scope of their everyday activities. According to author Stephen Denning, 21st century leaders and organizations must become ‘future fit’, and this is accomplished by expanding the field of vision when it comes to transformation: “Transformational innovation requires leadership that continuously looks at the world so as to understand the story that is emerging, and is constantly on the lookout for the possibility of creating a new narrative that can successfully guide the organization into the future.”

In closing

As described by Professor Sadar, postnormal times are “an in-between period where old orthodoxies are dying, new ones have yet to be born, and very few things seem to make sense.” Most organizations today have spent considerable time and resources to ensure that they can successfully create (or at least sustain) value in an environment characterized by innovation and disruption. However, very few are prepared for a world in which the concept of value itself is completely re-framed.

The profound changes that are taking place today demand that we let go of outdated mindsets and practices and adopt a novel way of seeing, designing and activating value. For those with the courage to pivot, an untapped wellspring of opportunity awaits.

Frank Spencer is the Founding Principal and Creative Director of Kedge Futures. Yvette Montero Salvatico is Principal and Managing Director of Kedge. She previously led the effort to establish the Future Workforce Insights division at the Walt Disney Company. Their clients include Procter & Gamble, Toyota Financial Services, Petsmart, X-prize, Disney and LEGO.