In 2001 the largest five companies in the world by market capitalisation were GE, Microsoft, Exxon, Citi and Walmart. By 2011 they were Exxon, Apple, Petro China, Shell and ICBC (Bank of China). By 2016 they were Apple, Alphabet (Google), Microsoft, Amazon and Facebook.
What distinguishes GE, Exxon, Citi, Walmart, Petro China, ICBC and Shell from Microsoft, Apple, Google, Amazon and Facebook is that the former could all be classed as conventional and the latter can all be classed as post-conventional.
So – what do we mean by conventional and post-conventional? Essentially the differences comes down to outlook, leadership and culture.
Conventional businesses have typically had the same business model for most or all of their existence Their vision (such as it is) is to get good at delivering on that business model, to be able to do what they say they are going to do, reliably. Some even proudly state a vision of “being the worlds best or number one X”.
Conventional organisations have prioritised management and developed an obedient culture to keep cranking the handle. They may now be able to crank the handle remotely, over the internet, they may have outsourced cranking the handle to India or they may now crank the handle globally, but essentially cranking the handle is what they do.
In a conventional business where reliability is the ambition, management is the key skill, because management is all about reliability, and leadership is annoying, because leadership is about change and change is disruptive. Many conventional organisations actively discourage signs of leadership.
Post-conventional businesses change or augment their business model by disrupting other business models, typically by collapsing value chains. We can use Apple as an example of this – Apple invented the desktop computer and then disrupted it with the laptop, disrupted that with the smartphone/tablet and are now disrupting that with the watch. Along the way, they have disrupted music, photography, video and more – in each case collapsing the value chain.
To understand value chain collapsing think about photography – before digital cameras, the photography value chain included standalone cameras, film, film developers and printers, then there were also stand-alone digital cameras. By including a good enough camera in a smartphone and then selling them to huge numbers of people the whole photography value chain was collapsed to a single multi-function device.
What enables these businesses to do this is the way that they do leadership. Firstly they have a vision which is not about being the best at cranking their particular handle, but is about achieving something extraordinary and inspiring to all stakeholders. More important than that is the way that leadership is seen less as a person and more as a skill that large numbers of people need to be able to deploy alongside the skills of management and followership. People dance between the three so that when something needs to change the skill deployed is leadership, when something needs to be kept reliable the skill deployed is management and when someone else does something inspiring followership is deployed.
That leadership, management and followership is interdependent and authentic, meaning that there are high levels of psychological safety and trust and crucially vulnerability. Vulnerability is the essence of leadership because leadership requires us to take a position without knowing what the outcome will be. This is as true for the Wright brothers flying the first plane in 1902 as it is for any of us standing up for what we believe to be the right thing in the face of opposition or apathy. The feeling we have is vulnerability, when we choose to lean into that vulnerability rather than running away, it is an act of leadership. When someone follows us it becomes leadership.
Without a combination of psychological safety and a willingness to be vulnerable, no one says what is really on their mind, no one shares their crazy ideas, no one does anything that no one has done before.
In post-conventional organisations, we must embrace the anarchist in as many of our people as possible. We must be able to recruit, retain and develop individuals we find a little bit annoying. We must nurture leadership wherever and however it appears and encourage it to align with our vision.
Conventional organisations find innovation so disruptive that they tend to isolate it, in its own special unit, quarantined from the rest of the organisation to prevent the anarchy from infecting others. Post-conventional organisations have to find ways to be agile to marry reliability and disruption not just in the same organisation, but within individuals.
We must think like the Kung Fu master, always disciplined with our own habits and emotions always looking to improve ourselves, always encouraging discipline and brilliance in our colleagues.
For many conventional businesses, the only alternative to self-disruption is to be disrupted by others. The only consequence of exclusively managing reliability is that you are in fact managing decline.
It is also worth saying that post-conventional organisations are also run by humans and, as such, they too are vulnerable to hubris and stealing from the future. They too are vulnerable to ruler and boss style leadership and at the point at which they succumb to these temptations they too are managing decline.
The Business Transformation Network has posted this article in partnership with Holos Change.
