2020: The Isolation Economy

On Forcing functions

(For reference, reprint from Dec 2020, https://leadingedgeforum.com/insights/2020-the-isolation-economy/)

Throughout history, the major changes to our workplace, to our organisations and even to our way of living have been driven by the industrialisation of technology. The automobile you drive is built upon layer upon layer of industrialised components from the steel to make the body to the rubber to make the tyres. Without industrialisation, there is no internet, there is no electricity and there are no toasters.

This process of industrialisation, the shift from more product to more commodity, from imperfect to more perfect market competition changes our practices which in turn changes how we live and how we organise. Commoditisation of the nut and bolt through the screw-cutting lathe and the introduction of Whitworth standards helped develop the American System of Engineering. Commoditisation of electricity from generators to utility services with Tesla and Westinghouse gave us Fordism. Commoditisation of compute to utility services (nee cloud) gave us DevOps. In short, commoditisation of one part of our economic system leads to new practice, new things and new opportunities in other parts of the system. It’s the essential driver of what Joseph Schumpeter called ‘creative destruction’.

However, it doesn’t happen in isolation. There can be forcing functions. The first part of the 20th century saw the rapid adoption of motor vehicles in NYC driven by the public nuisance of horse manure. These environmental conditions acted as forcing functions to change. Today, we have our own forcing function in terms of physical isolation caused by COVID. This is forcing us to quickly adopt a more virtual world and it’s this adoption that is creating new practices, new needs and new things which in turn will cement this change. As the Federal Reserve Chairman, Jerome Powell, said “We’re recovering, but to a different economy”.

It has been quite remarkable to see how some executives have adapted. In our pre-study tour ‘elective’ sessions with Nadav Goshen (CEO of MakerBot, one of the leading 3D printer companies), he described his initial reluctance to adopt this virtual world as he was looking forward to a return to the office. However, they adapted and now he praises the benefits of remote collaborative design for a manufacturer of physical goods. He has made a complete change and intends to continue these virtual practices.

We ourselves at the LEF have adapted our Executive Forum, our Study Tour and even conferences like Map Camp to a virtual world and I suspect these changes will also become the norm long after the threat of COVID has passed.

However, not everyone has been able to adapt, both in terms of the wider society and specific industries. Many of those will need ongoing support. One of the more unusual examples is to do with power. To explain this, we need to first turn to our work on Reconfiguring the Collaborative Workspace. In one interview, Dr Kerstin Sailer of UCL noted that “If you have power (that) manifests itself in the corner office, with the biggest square footage, and the nicest furniture and the best views … everyone knows their place in the organisation. The way to rise up the ranks is to get a nice office. When you replace all of that and tear down the walls and say, “we’re now all open plan”, the power relations don’t go away, they’re just invisible. Then it just becomes much more difficult to manoeuvre; you need extra levels of information.”

In our virtual world, systems like Zoom can have a very democratising effect as there are no obvious top floor corner offices. Technology has always been a ‘distribution system for power’ and if you haven’t had a chance to listen to Dr. Caitlin McDonald’s and Ivana Bartoletti’s podcast on this subject, I would recommend it.

Alas, a number of executives are struggling with this loss of status symbols or relationship power (that is, physical presence) or both. Some have responded not by embracing this or trying to learn new ways or being mentored by those skilled in this space but by trying to recreate past status symbols in this virtual world — the professional ‘Zoom’ studio, the ‘artist’ Zoom background, the ‘digital command centre’ for ‘leaders only’. We’ve all seen it. A better course of action might be to send your executives on a four-month virtual training course on World of Warcraft. Created by Fernando Flores, former Chilean Finance Minister with his company Pluralistic Networks, the Working Effectively in Small Teams (WEST) course does exactly that. To quote their tagline, “the world is increasingly unsettled, virtual and diverse. We help you build the skills required to be effective in it”.

The changes that seem to be occurring, caused by the industrialisation of underlying technology, driven on by the isolation economy, are quite profound. Hence, it has been a research area for the LEF and though this is not yet completed, common themes of change are appearing. We’re aware of 43 broad themes of change, many of which we are examining in both the electives and the upcoming study tour. These include subjects as diverse as:

We cannot yet point you to the right path, hopefully, we will be able to do so shortly. However, to leave with words of comfort I’ll repeat those immortal lines of the Tao Te Ching — “before and after follow each other”. There will be an ‘after COVID’ but there is no going back to how we were before. We will all need to adapt but then that is progress even if we’re forced along this path with the human tragedy (both physical and mental) that has occurred. Our eyes must now be set forward to the shifting digital landscape

I like ducks, they're fowl but not through choice. RT is not an endorsement but a sign that I find a particular subject worthy of challenge and discussion.