John Hagel on positional advantage in the postnormal

John Hagel has written a multipart series on his Edge Perspectives blog on the Big Shift concept that he and his colleagues at Deloitte — most centrally, John Seely Brown — have developed over the past five years or more. The Big Shift is a characterization of the change that businesses will have to take on to compete — or survive — in what I call the postnormal era, which John & Co. think of as a shift from push to pull. Odd that they don’t name the new economy that we are hurtling into, just focused on the Big Shift to get there. Since he hasn’t done it, I will call it the postshift (which I think is a synonym for postnormal, anyway).

[Interesting story in convergent thinking: my dear friend Lee Bryant has named his new consulting firm Post*shift after merging his earlier firm — Headshift — into Dachis Group, and then leaving after three or so years.]

As I wrote last week, in an abbreviated start of the longer analysis I am taking on here,

In the most recent piece, John has taken on the task of rethinking strategy in light of the postnormal realities. John makes the case that we are in a new environment for business (his Big Shift, my Postnormal), and the rules change. Increased competitive intensity, accelerating change, and increased complexity/uncertainty/ambiguity/volatility are forcing us to up our pace, but

In that kind of environment, movement quickly becomes a treadmill that moves faster and faster and, when you least expect it, lurches to a stop and throws you against the wall.

Don’t get me wrong. Execution, hustle and adaptation are all necessary for survival. But movement alone, no matter how efficiently executed, may no longer be enough for us to escape the dark side of technology. Instead, it may just suck us deeper and deeper into the abyss of the dark side.

So, what is to be done? Perhaps it’s time to execute yet another shift in business strategy. One that helps us to harness the capabilities of the Big Shift to accomplish things that weren’t even possible before.

John seems to be recasting the idea of ‘preparatory exploratory’ that top performers use in building social connections with experts prior to needing them (see What top performers do, and how to do it), and proposing that ‘positioning’ as a new imperative for business strategy. In this use, he uses positioning in the business strategy sense, as in investing in a customer-centric business model or a low-cost product model. This is a slightly weightier version of the sloppier marketing use of branding, which often devolves to nothing more than messaging.

But John’s positioning also feels like a three dimensional sort of positioning, where the company is a node (or sub network) in a network of partners, customers, and competitors. In this sense, positioning means creating and using connections made with others to position the company in the network. As he puts it,

In the world of the Big Shift, the most valuable positions help us to influence events and achieve greater leverage by mobilizing the resources of others – we’re able to accomplish far more with a lot less. Let’s call these strategic positions “influence points”.  Control is less and less feasible in a turbulent world, but if we play our cards right, we might be able to significantly influence or shape the evolution of the world around us.  Through influence, we can motivate others to invest and act in ways that reinforce and amplify our own efforts.

Much of the discussion that follows is closely related to the notions of social capital as advanced by Ronald Burt, who said in Structural Holes and Good Ideas:

“Social capital exists where people have an advantage because of their location in a social structure.”

His argument is that being near ‘structural holes’ in social networks confers strategic advantage. I wrote about Burt’s analysis last year, saying

[…] his work shows that those who bridge across a gap in a social network, connecting otherwise disconnected subnetworks, have greater social capital than those who do not act as potential bridges in this way. For example, I know many people in Portugal, and if some innovative idea arose there I would have a greater likelihood of learning of that innovation before others in the U.S. And if I were to pass that information along, my value to those without that connection would rise.

The social capital is only potential until I actually broker it to others. Burt makes the distinction among different sorts of brokering information in the context of this structural social capital:

  1. Awareness — to make people on different sides of the structural hole aware of “interests and difficulties” of those on the other side
  2. Transferring best practice — to become familiar enough with innovative practices in one group to help them become established in another group
  3. Drawing analogies — to reflect on the practices in one group and to infer through analogy how those practices might be adapted in a second group
  4. Synthesis — to reflect on activities in practices of disparate groups and to meld together ideas, coming up with an innovative combination

The takeaways are that there is a practical advantage to being at the edge: it confers social capital.

John’s formulation of this advantage is different, but points in the same direction:

In a world shaped by knowledge flows, you want to be at the intersection of as many flows as possible. These influence points bring some awesome advantages:

  • By having privileged access to flows, you’re in a better position to anticipate what’s going to happen by seeing signals before anyone else does.
  • By being in the middle of more flows, you have an opportunity to shape those flows in ways that can strengthen your position and give you important leverage in a world of mounting performance pressure. When you’re in the flow, small moves, smartly made, can indeed set very big things into motion.
  • Third, by concentrating information and knowledge flows within a broader system, these influence points drive more rapid learning by offering privileged access to a growing and diverse set of information or knowledge flows.  In a turbulent world, this is perhaps the most significant advantage of all. If my firm or institution can learn faster than anyone else, it will have a significant advantage relative to those who are scrambling to catch up.

John continues his analysis, suggesting that companies should find and occupy these ‘influence points’ that provide strategic advantage, and to harness the power of pull, since this sort of potential energy will attract other participants who want the same advantages.

He also makes the case that being in the right place at the right time is only a precondition to taking action. In his theoretical terminology this is uniting ‘movement’ with position, and transitioning to the new foundation of advantage: learning faster. As he says,

Ultimately, the true winners of these new strategies will not just be those who find ways to occupy influence points, but those who also are adept at building the only sustainable edge – the capability to learn faster by working effectively with others. By effectively combining position and movement, these players will be able to tap into the power of network effects, attracting more and more participants, drawn by the potential to learn faster.

John closes by suggesting we would be well-served to think beyond the present for influence points, and he closes by asking how could these macro-level considerations about corporate advantage translate into our individual lives.

I have part of that answer. As I have said many time, the most important decision you can make in a connected world is who to follow. And the non-obvious reason for that is that by making connections with people that are well-positioned in their social connections your potential for better information and higher influence increases. And thinking topologically, when you connect to someone that is connected to many people that you otherwise are unconnected to, you are making the network smaller. Not just for yourself, but for everyone.

This means that the value of the network increase when individuals make smart connections, and their personal value — and advantage — increases, too. Note that this explicitly does not mean having the most connections, but the right kind of connections. Instead of quantity, its quality: being connected to people whose connections open up new social ‘scenes’ brings you closer to novel information.

Stowe Boyd, It’s Betweenness That Matters, Not Your Eigenvalue: The Dark Matter Of Influence

So, its not really who you know, it’s where you know. It’s where you are situated in the network, and not just in the limited sense of how many immediate contacts you have.

The subtle, dark-matter mystery of social networks is that influence is oblique, and not easily determined by the sorts of tools we have today.

It is not your follower count, or who you follow, per se. But, instead, do you have short paths into other social scenes, both incoming and outgoing? That is the deep structure of being truly connected: bridging over different social scenes, acting as a conduit, a vector, a filter and amplifier for ideas good and bad, the best insights, and deadly viruses.

So, to answer John’s question, the same behaviors and theory that govern the success of companies in the postshift/postnormal are in parallel with what makes people more influential and valuable in social networks. And that should come as no surprise.