#c4te

We have a new essay published by Deloitte Insights, Strategy and the art of the possible. This essay is the result of us pulling together a few threads that we’d been exploring in other areas. The most recent of these was Negotiating the digital-ready organisation, where we explored the idea of thinking about the digital workplace in terms of three interrelated ecosystems: the human, place and digital. One could view this essay as the intersection of that ecosystems view with idea of the extended mind that has been popping up in quite a bit of our other work—such as being one of the underlying themes in our recent series on creativity in business.

The extended mind is an idea from research psychology, the result of asking the question “Where does the mind stop and the rest of the world begin?” The usual answer is that we “think in our heads” or, at least, within our skin. Another school of thought sees our words, the concepts we think with, as being anchored in the world around us—we use the world around us to shape our thinking. The extended mind is a third option, where our thinking is shaped by our interactions with the world around us. We act to decide, not decide to act. For example, we don’t estimate the trajectory of a tossed ball and run to where we expect it to land. Rather we move in relation to the ball’s movement and the environment around us to improve our options to the point that eventually one option (one possibility) becomes so compelling (an actuality) that we commit to it.

If we think about organisations in terms of overlapping ecosystems then this raises interesting questions about what occurs inside an organisation, and what occurs outside it. Particularly as these ecosystems extend well beyond an organisation’s walls. This is a world where workers form heterogeneous teams to address problems that are only visible locally, weaving together a range of digital tools and platforms and places to work digitally. There’s an obvious overlap between this view and the extended mind. Where does a firm do it’s thinking: in head office via the strategy and formation, or out in the ecosystem, beyond the walls of the organisation? Where do we draw the line between strategy and operations?

When we think about how organisations form and function we tend to reach for Ronald Coase and his The nature of the firm, which frames the discussion in terms of the lone entrepreneur and the decision to employ workers or contract for the work to be done. In this digital age it might be more productive to think in terms of the extended firm. The ecosystems organisations have built around themselves have developed from tools to extend a firm’s external capabilities, to define much of what a firm can do. Strategy and operations and intertwined and extend well beyond the ‘head’ of head office, and rather than decide to act, we need to act to decide. This has interesting implications how leaders should respond to the challenging environment we find ourselves in today, and even raises important questions about what leaderships means.

We have a new essay published by Deloitte Insights, The real landscape of technology-enabled opportunity, where we look at how technology disrupts markets and society, creating opportunity.

Since Clayton Christensen published published his theory of disruptive innovation, the focus has been on finding those disruptive technologies that reshape markets. And while it's true that some novel technologies have had this effect, it appears to be the exception rather than the rule.

New technology can change the world, but so does old technology. If fact, most of the disruptions we attribute to technology—such as the industrial revolution being driven by steam power—are the result of steady incremental development of established technologies to the point that they tip over into into disruption, rather than the consequence of a disruptive new technology being invented.

The essay develops a two-by-two (included below) mapping technology novelty against solution impact. While we typically assume that novel technology drives disruption (bottom right), it's more common for disruption to emerge from existing technology (top-left) where incremental improvement culminates in an impactful solution (moving to the top-right). More over, many of the things we think are disruptive turn out not to be (most novel technologies land in the bottom-left). We're both chasing shadows and missing opportunities.

If we're to find opportunity in the landscape of technology enabled change then we need a broader focus than disruptive technoology. Wise investment decisions draw on a more complete view of how technology disrupts markets.

We have a new essay published by Deloitte Insights, Setting the stage for creative performance. This essay is the follow-on to Unshackling the creative business from a couple of months ago.

Unshackling the creative business leveraged ideas and models from research into creativity to help us understand how creativity actually works, rather than how we think it works or how we’d like it to work. It’s common to read in the business press that creativity cannot be easily defined (when it can), and that creativity is a skill (skill is a factor, but only one factor among many) beaten out of many of us in our formal education (it’s more that while business likescreativity, it does not value it, and so it is discouraged). Most importantly, this essay highlighted how framing creativity as a skill, the production of creative works, a noun, leads us to ignore creativity as a verb, creativity in how we work together. If we want to unshackle our creative business then we need to take a more holistic approach to fostering creativity in business—one that considers both noun and verb, and factors beyond skill—as the creativity of one team is contingent on others.

Setting the stage for creative performance builds on Unshackling the creative business in three ways.

First, it explores how we need to think in terms of creative potential and creative performance. Creativity is a numbers game: you can have all the right ingredients for creativity but, for some reason, it just doesn’t spark. There are number of things a firm can do to improve a firm’s creative potential, but while our investments can improve the odds, improve the potential for creativity, none of these improvements are sure to deliver a more creative outcome (a creative performance) for a particular project or initiative. Investing in creativity is a portfolio game—we can be confident that investing in creativity will improve the aggregate creativity of the firm, but we cannot predict in advance where that creativity will emerge.

Next, the essay discusses how we need to create space for creativity. There’s more factors to creativity that skill (though skill is a factor), and a useful model for thinking about these factors is the Five P’s: product, persuasion, person, process and place. Creativity is the result of a generative process that emerges from interactions between the Five Ps. The implication being that it’s not enough to change one of the Ps if we want to foster creativity, we need to change a few (if not all) of them. We could, for example, train workers in creativity techniques such as Design Thinking or Six Thinking Hats, but if we don’t also enable workers to take a different approach to there work, such as changing the nature of their product or the governance processes they must follow, then this investment will be wasted. We also need to invest in multiple layers. We tend to focus on creativity of groups (including groups of one), but the creativity of a group is shape by the creativity of the organisation it is part of, the creativity of the industry and institutions that the organisation interacts with, and even the creativity of the market (how accepting consumers are of novel ideas and products). We can create more space for groups but considering the creativity of the organisation, create more creativity for the organisation by considering the market and institutions, and so on.

Finally, if we’re to create this space then we need to change our operating models. The metrics and governance processes that firms are built on value efficiency, not creativity. Creativity comes with a cost, and so if it is not explicitly designed in, then we’re implicitly designing it out. Designing creativity in means measuring creativity, which is possible, and then integrating these creativity metrics into governance processes. Cost-benefit needs to be balanced with investment-opportunity. That is, an investments in improving creative potential of a project or initiative will, in some instances, result in a creative performance, they create the opportunity for creativity. We can then aggregate these numbers to determine if the firm’s aggregate investment in opportunity is improving aggregate creative performance.

We have a new essay published in Deloitte Insights, Unshackling the creative business: Breaking the tradeoff between creativity and efficiency. Creativity is seen as an import capability for an organisation to be successful in today's volatile, uncertain, complex and ambiguous (VUCA) world. Significant effort has been invested in fostering creativity in business, effort which sadly is often wasted. This essay looks at why this might be the case and what we can do about it.

Despite being a well researched topic, it's not uncommon to hear that creativity is some ineffable and undefinable thing. This is not the case. Research into creativity defines it as something that is both novel and useful. This implies that creativity is subjective: novel and useful to *whom*? The same research shows that creativity is a generative process, where product, person, process and place interact in interesting way to produce a creative work—it's more verb than noun, and it's increasingly something we do together rather than something we do alone.

The challenge in business is that creativity needs to be distributed across the firm, not centralised in an 'creative' group such as innovation or R&D. Realising a creative idea like "burger of the month" requires many small acts of creativity across the firm if it is to succeed—novel and useful approaches to certify vendors, training, and so on—and without these many small acts of creativity a "burger of the month" will fail. Creativity is contingent: the creativity of one team depends on the creativity of the teams it relies on. Or, put another way, a firm is only as creative as its least creative team.

The crux of it is that in the contest between creativity and efficiency, efficiency will always win as creativity is not represented in operational metrics, practices, and so on. I we want to make our firms more creative then we need to break this tradeoff by integrating creativity into our operating models.

Teaching creativity as a 21st century skill (long version)

In 2017 Deloitte Centre for the Edge hosted a public lecture by James C. Kaufman, PhD; a professor of educational psychology at the University of Connecticut as well as a creativity & education expert, where he discussed the challenges of teaching and assessing creativity. We’ve just posted an 15 minute bite-sized version of the 90-minute lecture that we pulled together after we noticed the similarity between creativity and our recent work on digital competency, which we published in From coding to competence. Both are depend more on attitudes and behaviours than knowledge and skills. Both are also tightly tied to context, and don’t transfer easily between domains.

The lecture is derived from Dr Kaufman’s cutting-edge psychological research and debunks common misconceptions about creativity, describe how learning environments can support creativity, while providing insights into teaching and assessing creativity within the established curriculum.

The lecture covers:

What is creativity?

Seeing creativity as a development trajectory and advancing along this trajectory.

Creativity across domains (not just ‘art’), and the ‘cost’ of creativity.

Measuring creativity?

How can people become more creative?

C4tE hosts a webinar on September 2nd to launch our report A moral license for AI: Ethics as a dialog between firms and communities.

Work on ethical AI has focused on developing the principles, technical standards, best practices and tooling needed to realise ethical AI solutions. However, while there is a clear consensus that AI should be ethical and a global convergence around principles for ethical AI, there remains substantive differences on how these principles should be realized, on what “ethical AI” means in practice.

Rather than attempt to define what AI uses are and aren’t ethical, this report proposes that firms need to work with the communities they touch of obtain and maintain a moral license for the AI-enabled solutions they want to operate. Moreover, firms should consider doing this for any solution that automates decisions and integrates them with other operational systems to create decisioning networks—not just solutions that contain what is currently considered AI technology.

You can find the recording of the webinar on Vimeo. The report was published on Deloitte Insights.

Work on ethical AI has focused on developing the principles, technical standards, best practices and tooling needed to realise ethical AI solutions. However, while there is a clear consensus that AI should be ethical and a global convergence around principles for ethical AI, there remains substantive differences on how these principles should be realized, on what “ethical AI” means in practice.

Rather than attempt to define what AI uses are and aren’t ethical, this report proposes that firms need to work with the communities they touch of obtain and maintain a moral license for the AI-enabled solutions they want to operate. Moreover, firms should consider doing this for any solution that automates decisions and integrates them with other operational systems to create decisioning networks—not just solutions that contain what is currently considered AI technology.

This approach is due to three observations:

That AI solutions cannot be made ethical though the development of “fair” or “ethical” algorithms or development methodologies that ensure ‘correct’ behaviour in all circumstances

That there is no single secular society (a fully normalized social world, an objective standard) against which we can determine if a solution is ethical or good

That the importance of ethical AI is not due to the development of disruptive AI technology or an existential threat from isolated, self-aware, AI solutions, but rather due to the widespread emergence of automated decisioning networks

The development of regulation, techniques and methodologies to manage the bias and failings of particular technologies and solutions isn’t enough on its own. Ethics are the rules, actions or behaviours that we’ll use to get there. Our goal should be moral AI. We must keep a clear view of our ends as well as our means. In a diverse, open society, the only way to determine if we should do something is to work openly withthe community that will be affected by our actions to gain their trust and then acceptance for our proposal.

The report suggests integrating tools from different domains—social license to operate, requirements modelling, sociology, and general morphological analysis—to create a framework to guide a firm’s interactions with the communities it touches. Such a framework could also provide a starting point for regulating ethical AI.

We have a new essay published in Deloitte Insights, Building the peloton: High performance team-building in the future of work. Jess Watson is the lead author of a report that looks into how we need to think a bit differently about teams, team work and leadership as the drive to create more agile organisations breaks down established organisation structures.

The report uses the analogy of a cycling peloton—the team-of-teams that competes and cooperates in a road cycling race—to integrate current research on team formation and operation in a world where firms function as a team-of-teams.

Highlights from the work include:

The factors long recognised as key to creating successful teams—of all types—have evolved as business has become more complex, driving organizations to work across departmental and organisational silos rather than within them.

It is important to establish a supportive environment and a clear, consistent, and compelling direction for a team if it is to be successful.

A team is built around its vision and it’s critical that all members of the team share the same vision and goals.

Diversity is also important. Business teams have long consisted of a range of different roles, but in addition to diversity of roles, identity diversity and cognitive diversity (or diversity of thinking) are now emerging as a clear differentiator between mediocre teams and those that are highly effective.

Effective practices are similarly essential to high performance in both a cycling and a business peloton.

Finally, the research is now abundantly clear that psychological safety is a powerful differentiator of effective teams.