The Weird CEO Read online

  Sustainable businesses must be structured such that change takes place naturally - without the intervention of the CEO. Very few companies last more than a hundred years. In fact 50% last less than five years and 70% are bankrupt within ten years.[ix]

  The challenges facing businesses today are not getting easier, and that is before we consider the effect of Artificial Intelligence.

  Professionally, there are four reasons for changing our approach to work: technology, business, social issues and education.

  i Technological Challenges

  In order to survive and prosper in a machine-dominated world, we need to change our mentality towards work. Part of the reason for this is that technology will change at an exponential rate. The blogger Tim Urban explains the effect of exponential change:[x]

  “It takes decades for the first AI system to reach low-level general intelligence, but it finally happens. A computer is able to understand the world around it as well as a human four-year-old. Suddenly, within an hour of hitting that milestone, the system pumps out the grand theory of physics that unifies general relativity and quantum mechanics, something no human has been able to definitively do. Ninety minutes after that, the AI has become an ASI [Artificial Super Intelligence], 170,000 times more intelligent than a human”.

  The changes brought about by Artificial Intelligence are different to the employment changes of previous Industrial Revolutions when only manual jobs were replaced. Over the coming years, computers will take over many tasks of an intellectual nature (eg legal work)[xi] and society will need more creative, rather than mundane, jobs.

  There is a potential for mass unemployment – due to a combination of technology and the inability of people to make cultural changes at the same pace as the introduction of new technology.

  A survey conducted by Quartz in 2017 explained why human complacency is a concern.[xii] This found that 90% of respondents believed that up to half of all jobs would be lost to automation within five years, but 91% thought that there was no risk to their own job.

  The implications of the technological changes that are taking place can be summarised as follows:

  Any job that can be defined within a process can, and probably will, be replaced by a computer. This will destroy more jobs than can be created within a short period of time in today’s culture and environment;

  To avoid this, we need to change the way that we work so that we can embrace and work alongside computers to replace the jobs that will be lost.

  ii. Business Challenges

  As a race we are very good at making incremental improvements but not so good at dealing with core issues. This is especially true in business, where livelihoods, reputations and pride are at stake. Hierarchies, communication and scalability are at the core of each business – and often require fundamental rather than incremental changes.

  Hierarchies

  Hierarchical organisations have existed for as long as we have lived and worked in groups.

  However, within the last generation or two, it has become clear that hierarchies are not necessarily the most effective structure for optimising returns. Furthermore, employees are no longer willing to follow orders blindly for the benefit of their bosses or shareholders.

  From birth we are programmed to listen and obey. At school we are taught within a framework which limits initiative, and most of us have worked in organisations where the structure is deemed to be more important than the output.

  Despite the disadvantages of this structure, it is difficult to dismantle as we have been trained to listen to figures of authority. I am constantly reminding managers not to make decisions on behalf of their colleagues – and encouraging employees to make decisions for themselves rather than relying on their managers to do so.

  A dictatorship is one form of hierarchy and has advantages when the dictator is very good at his job. For example, Peter the Great made Russia a global power (though he caused many to die in the process). However, if the dictator makes bad decisions (for example Hitler) – the country, or organisation, is likely to fail. Many companies are, in effect, dictatorships – with the corresponding rise and fall of the company depending upon the CEO’s abilities. Ironically, in 99.9% of companies, the group of people with the best understanding of the effectiveness of the CEO has no say in his or her appointment – namely the employees.

  Likewise, employees are rarely willing, or in a position, to express a critical opinion to a boss on whose goodwill their jobs depend. One of the reasons I have generally tried to avoid reporting to a boss is that I find it very difficult to ensure that I am doing my job as best I can as well as doing what my boss wants me to do. Whilst these two objectives should be the same, the natural tendency is to prioritise tasks expected by the boss, even if this not to the benefit of the company. I admire employees who, working on limited information, manage to understand what their boss expects. However, I am sure this is one of the key causes of work stress.

  Many bosses assume (wrongly) that they understand the job better than their employees, resulting in a strong possibility that their decisions have little relation to the problems being addressed.

  Employees in hierarchical organisations are not encouraged to collaborate with others with whom they do not share a direct report. This motivates individuals to put their own agenda before that of their team or organisation. Pushing a selfish agenda may allow them to climb up the hierarchy and gain more power, money and status; but it also creates a natural tendency for competition between colleagues and withholding of information – to the detriment of the company. This is particularly evident during the allocation of budgets – a hotspot for rivalry within hierarchical organisations.

  However, the greatest disadvantage of hierarchical organisations is slow communication leading to delayed and disjointed decision making.

  Communication and Scalability

  Another disadvantage of hierarchical organisations is that decision making is laborious due to the need to follow a chain of command. This also has a detrimental effect on the efficacy of communication.

  I am not advocating that we should all take up smoking but a friend of mine, working in a large hierarchical organisation, pointed out that he could get things done much quicker than others because, when he had a problem, he would go outside and ask for help from his smoking buddies who had created a communication channel that bypassed the hierarchical structure. This example provides evidence that communication, and therefore productivity, are optimised naturally in small groups.

  The effect of productivity per person falling when more people are added to a team is known as the Ringelmann effect. Ringelmann measured the force pulled by an individual on a rope and continued to measure as more people were added. With the addition of each new person, the pull force (or efficiency) of the previous recipients dropped by about 6%. So, with eight people, each person was only exerting 50% of the force compared to when they were on their own.

  The Ringelmann effect is mostly linear; adding new people into a team, depending upon their role, character, experience and other factors, could have a greater or lesser effect – but for sure the efficiency of the group will diminish.

  Leaving aside the need to employ more people to overcome the Ringelmann effect, hierarchical organisations can theoretically scale to an infinite size.

  Within organisations with a flatter structure, including Pod Group, a scalability problem exists as there is often no structure to support infinite growth. How do such companies maintain their level of service whilst taking on more customers?

  Artificial Intelligence will provide part of the answer. The other part is to organise companies in such a way that scaling comes naturally.

  However, this is often stifled during the development of new organisations. In a start-up environment, with less than ten people involved, everybody knows what’s going on. As the company scales, there is a natural tendency to create silos, with a ‘them and us’ mentality which pushes people to become
‘specialists’ in their area – and a resistance to any perceived interference with that specialism. There is no easy way to avoid this but organisational changes discussed in Chapter 3 can be implemented to scale infinitely within flat organisations.

  While addressing the business challenges relating to scalability, communication and the effects of Artificial Intelligence, social challenges also need to be overcome.

  iii. Social Challenges

  The way that we work has changed more in the last 30 years than in the previous 200 years. One of the consequences is that, in developed economies, we have a level of choice that would have been inconceivable to our forefathers. However, with choice comes uncertainty.

  The American psychologist Barry Schwartz studied the effects of too much choice in his book, The Paradox of Choice and in a TED talk[xiii]. Schwartz’ premise was fairly simple – too much choice is a bad thing.

  Various studies have shown that too much choice results in paralysis of decision making[xiv]. Some supermarket chains, such as CostCo or Aldi, have understood this and deliberately offer fewer choices, but the paralysis of choice runs through everything in our lives. Schwartz quotes research carried out on investment decisions made through employee schemes at Vanguard. For each additional 10 funds offered to employees, those who joined a pension scheme dropped by 2% (due to indecision) – despite the fact that employees would get free matching funding from their employers.

  Too much choice leads people to question their decisions when unrealistic expectations of perfection result in disappointment.

  According to Schwartz, the secret to happiness is having low expectations. Much has been written about the high expectations of millennials but there is a surprising difference between the expectations of older versus younger millennials. Older millennials have higher expectations within many aspects of their life. This has led to some positive changes in the workplace where employers have needed to change their attitude towards employees in order to attract and retain millennials. The most important of these (in my opinion) is the move to self-management which allows employees greater choice over how they work.

  With each new generation come new ideas, enthusiasm and approaches. These will be required as there is no single magic wand to solve the social problems of the world. In fact, as the world becomes more intertwined, it is increasingly necessary to take a multi-pronged approach to social issues. For example, assisting a village in a developing country requires intervention at multiple levels, including irrigation, sanitation, health, education and access to markets. However, many of our social institutions (for example the National Health Service or the prison service) were created in an industrial age and designed to relieve the symptoms rather than the cause of a problem.

  Current generations, accustomed to disruptive technologies, are beginning to think about restructuring rather than just tinkering at the edges of existing systems. The changes quoted below by Indy Johar, founder of Dark Matter Labs, require this type of mindset:[xv]

  “This future of social innovation requires us to also recognise change in this world cannot be designed as a strategy written for one organisation but has to consist of the investment in growing a movement of change, or shared intent, a mission which is an open invitation to take part and innovate together; a shared language and understanding of interdependent issues; and the distributed collective intelligence and agency of a movement. This is a future which fundamentally asks us to rewrite the models of change — from hard power to soft power, from command and control to protocols, mutual accountability, investment & system leadership”.

  There is of course a flip side to this creation of interdependence – the generation, with or without our knowledge, of data. Data are already being used to make decisions for us, to guide our buying choices, our medical choices, our reading choices – in fact data are becoming increasingly important in our lives.

  An example of this is health data which bizarrely, despite being about our bodies, do not necessarily belong to us. In the US, with the exception of New Hampshire, no state specifies that individuals own their health data.[xvi] So, who does? Generally, the person who authored the data owns the data. This applies to data captured as a result of a hospital visit as much as to a website visit. As data are becoming the new gold, I will explore who owns the data about ourselves and to what extent we are willing to let others use that information to increase our perceived happiness or satisfaction.

  An obvious, though hard to implement, solution is to add much higher levels of regulation to data control. Within Europe in 2018, new legislation was enacted to try and protect consumers against abuse of their personal data. However, the need for legislation goes beyond protecting data – and it can go too far. I used to live in Russia where the natural inclination (a throwback to Soviet times) is bureaucracy for its own sake. Even now, each apartment building has its own authority and it is necessary to deal with that bureaucrat to get a sink mended.[xvii] Luckily, in Western countries, on the whole bureaucracy is less intrusive.

  However, we will need some legislation around Artificial Intelligence. Various business and other leaders are calling for regulation due to the potentially detrimental ways that it could be used. The reverse argument is the danger of stifling innovation both of which will be explored later.

  The fastest disruption of jobs that we will ever have seen will be caused by Artificial Intelligence. The social implications of this could change our view on employment, such that we need to look seriously at such alternatives as Universal Basic Income.

  iv. Educational Challenges

  It is interesting that the most popular TED talk prior to publication of this book was by Ken Robinson entitled ‘Do schools kill creativity? It has been listened to over fifty million times and, although very humorous, clearly resonates around the world.

  The summary in his own words is[xviii]:

  “I believe our only hope for the future is to adopt a new conception of human ecology, one in which we start to reconstitute our conception of the richness of human capacity. Our education system has mined our minds in the way that we strip-mine the earth: for a particular commodity. And for the future, it won’t serve us. We have to rethink the fundamental principles on which we’re educating our children”.

  It is surprising that educational systems around the world are not more active in re-thinking these fundamental principles. After all, at least fifty million people have an interest in Ken Robinson’s viewpoint.

  Many progressive schools that are trying new ways of education have either removed themselves from the need to follow the National Curriculum or have spent much time trying to work out how to adjust the way they educate to meet the minimum requirements of the curriculum whilst keeping to their core beliefs – although these are often contradictory.

  An example is given in Frederic Laloux’s book Reinventing Organisations[xix]. He interviewed staff and students at a secondary school in Berlin called ESBZ which was started in 2007 by a group of parents with a dream of a different school. Started with 16 pupils, it now has 500 who are each responsible for their own learning. Instead of standing at the front and telling the children what they need to learn, the teachers act as mentors and coaches and only ‘teach’ when required. Much of the assistance that pupils need comes from their peers, and they are free to decide where to focus the balance of their time. If they are struggling in maths, then they can spend more time on that subject than others. Equally, they can cover the basic concepts or, if they choose, they can study at a more advanced level. Each child has clear expectations of what they should achieve through the year, they set their own goals and attend a tutorial each week. As teachers spend less time teaching classes, the level of tutoring that they can give to each child is far greater than in a traditional school. There are many initiatives within the ESBZ school that make it unique and effective (including giving teachers more autonomy), but it is an example of how, within a bureaucratic system, it is possible to
create an environment for the future.

  This change of approach is required. At a May 2018 meeting in Madrid, the Managing Director of a Spanish regional trade association pointed out that their partner companies had 200 vacancies that they couldn’t fill – despite a youth unemployment rate of 36% in Spain.[xx] The reason was that they couldn’t find young people with sufficient basic skills or appropriate attitude to undertake the work required. He rounded on the educationalists in the room and begged them to change the way children are taught to prepare them for work.

  This does not mean that we should only focus on teaching children business skills, but rather the skills and attitude to thrive in the future – both inside and outside of the commercial world.

  There are many examples of progressive schools, and even countrywide educational systems (eg in Singapore and Finland)[xxi], where the value of education is not only understood but prioritised. However, the ideal that teaching is viewed as one of the most prestigious jobs in the country with pay to match, is unlikely to be enacted in most of the rest of the world anytime soon. As a result, many educational systems may make superficial changes (sufficient to remove a sense of security among teachers), but they retain the core practice of trying to fill a child’s head with a pre-set amount and range of knowledge.

  Just like the technological, business and social challenges, there is no easy fix to the educational challenges that we face today. To accommodate the changes ahead, we must change our approach to life and work – and for that it is important to understand what it means to be WEIRD.