John Hagel III and John Seely Brown on “Six Fundamental Shifts in the Way We Work”

John Seely Brown and John Hagel III

Here is an excerpt from an article written by John Hagel III and John Seely Brown for the Harvard Business Review blog. To read the complete article, check out other articles and resources, and/or sign up for a free subscription to Harvard Business Review’s Daily Alerts, please click here.

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It’s been a while since we posted here because of all the craziness surrounding the launch of our book, The Power of Pull [click here] but we are happy to announce that we’re going to be resuming a regular schedule of postings to build on the themes in our book. We thought we would kick off our new postings by summarizing some of the ideas from Pull that resonated the most in our many conversations from the last few months. from The Power of Pull.

The Red Queen was optimistic. Nearly everybody in management is familiar with the Red Queen effect [click here], taken from Lewis Carroll’s Through the Looking Glass: this is the notion that “It takes all the running you can do, to keep in the same place.”

It turns out the Red Queen represents an optimistic view of the world. Despite long-term increases in labor productivity, the average return on assets (ROA) of US companies has steadily fallen to almost one quarter of what it was in 1965. We’re running faster, but still losing ground. There is no sign of this long-term erosion flattening out, much less turning around.

The conclusion is inescapable: our management practices and corporate institutions are fundamentally broken. The good news, if you can call it that, is that this isn’t sustainable for much longer: the trend line on ROA approaches zero in 2020. If you believe that markets spur innovation, however, it does bring up a conundrum: Why haven’t companies yet figured out how to compete more successfully? One reason is because…

Value ain’t where it used to be. Competition is not only intensifying, it’s changing the source of value creation from and the means for value creation from push to pull. These changes require such fundamental shifts in mindset and approach that most executives are unable to make the leap from their current ways of seeing and doing. Thus their companies remain mired on the downward slope of performance.

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Passion is everything. Management can only do so much. All of us are responsible at a personal level, too — for reintegrating our passion into our profession. What is passion? More than simple satisfaction, passion is when people discover the work that motivates them to achieve their potential by seeking extreme performance improvement. Their job becomes more than a mode of income.

Yet our survey in the 2009 Shift Index [click here] showed that passion levels are low across all US industries. In most of them there are fewer than 20 percent of employees that say they are passionate about their work–and no industries have more than 25% that say so. Furthermore, passion levels are inversely related to the size of the employer: the larger the company, the lower the passion levels.

Why is passion so important? Because it drives a questing disposition that is essential to employee performance as they react to the inevitable unexpected challenges today’s work environment presents. It also drives more connection. Our Shift Index found that passionate workers participate much more actively in knowledge flows that are the new key to value creation. If you can help make your employees more passionate, you can create value in today’s economy.

Book writing has many purposes, but surely among the most important is to spark conversation, and maybe even controversy. What did we get right? More importantly, where did we go wrong? What can we do to sharpen and refine these propositions?

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John Hagel III and John Seely Brown are co-chairmen of the Deloitte LLP Center for the Edge, and have written several books focused on technology and innovation.