Economic Machines, Human Communities, and the Shift into Long-Term Thinking

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My company’s identity and my own were twisted into a toddler’s knot for too long. I had mushed them together so much that I couldn’t tell them apart, like a brown ball of kids putty.

Joy, for me, comes from a relentless (sometimes overly) intellectual pursuit of the elusive Truth (with a capital T, yeah, I believe it). But my business solves a need less lofty than that. We help companies turn complexity into engaging learning experiences– lofty, but not looking for the meaning of life.

By confusing the two, I force-shaped our positioning around the pursuit of the Truth. I over-engineered what we do (or say we do), overwhelming my team and anyone wanting to work with us. We didn’t close any new business for six months. I started to doubt myself. Does the Truth even matter?

Of course, it does, you dummy; you were confusing yourself with your business!

The relationship between self and vocation is a much-explored phenomenon but not the subject of this essay. In this essay, I want to share how this new-found separation allowed me to see Curious Lion in a new light. I tapped into a powerful new perspective for running my business, which has implications for all our clients.  

At the big companies I’ve worked for, we tended to over-engineer things like I was subconsciously doing with Curious Lion. We tightened our control grip in a crazy illusion that the world is controllable. Why is that? The more I explored it, the more one factor kept coming up.

When you invest your savings, you want the highest returns in the shortest possible time. It’s human nature. We want everything, everywhere, all at once. You could argue that we’ve been conditioned like this, but that’s also for a different essay. This essay is about how the natural human desire for instant gratification runs counter to the way companies that last centuries have been run. Tension exists between the time horizons of shareholders and the leaders responsible for growing sustainable companies. If companies don’t resolve this tension in today’s world of startup shutdowns, fire sales, and sharp business-strategy changes, they risk extinction.

Time is both the problem and the solution.

Then I remembered reading about eighteen companies, studied by Jim Collins and Jerry Porras in their book Built To Last, that outperformed the market by 15x from 1926 to 1990. I compared these companies with the living companies I wrote about previously. Not surprisingly, they all still exist today. What sets them apart? The answer is counterintuitive and critical for resolving this time horizon tension. Re-visiting these companies today reveals eye-opening truths about the importance of learning inside companies.

The Visionary Company Myth

So, what sets these companies apart? How did these companies survive and thrive?

They must focus on maximizing shareholder wealth, right?

Not exactly. While profits are important, these companies are primarily driven by a core ideology beyond simply making money (which we will get to). The values in this ideology guide everything from hiring to decision-making and help create a shared sense of purpose.

Take Johnson & Johnson (J&J), for example. The company has a well-articulated credo engraved in stone at its headquarters that outlines its responsibilities to customers, employees, communities, and finally, shareholders—in that order.

This credo was tested when the 1982 cyanide-laced Tylenol crisis led to seven deaths. J&J promptly recalled 31 million bottles at a $100 million cost, prioritizing consumer safety over immediate profit. The crisis response gained public approval and ensured long-term success by upholding the company’s core values.

Ok, they probably have a high-profile, charismatic leader.

Actually, no. Studies suggested that superstar leaders could hinder a company’s prospects for long-term health. When a company’s identity is tied too closely to the identity of a single leader, the company is subject to volatility and instability that wouldn’t be there if leadership was more evenly distributed. This hit me like a shot between the eyes. I was doing exactly this at Curious Lion!

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Steve Jobs was a high-profile, charismatic leader, but companies don’t need people like him to be successful. To be clear, I am not comparing myself to Jobs, only that Apple’s identity and his own were indistinguishable. In most cases, leaders like Jobs can do more harm than good when left unchecked.

Surely the company was built on a great idea, then?

Again, you’d be wrong in assuming this. The authors found that a great initial idea is not a necessity for long-term success. Many visionary companies started with either unclear or quite ordinary ideas.

Take Hewlett-Packard (HP), for example. When Bill Hewlett and Dave Packard started their company in 1939, they didn’t have a specific product idea. They started in a garage with just $538 in the bank, and their first product was an audio oscillator, an electronic test instrument used by sound engineers. The company’s success came from its commitment to ongoing innovation, its approach to management, its treatment of employees, and other factors emphasized in its core ideology.

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The concept of the genius idea is a myth—the best companies continually learn and innovate, they don’t rely on a founding idea.

Well, they must all be “Great Places To Work” and attract the best talent.

Nope. In fact, while these companies often have strong cultures, they might not suit everyone. Those who do not align with the company’s core values might find it a difficult place to work, which is exactly what working at Apple is like. People covet a job at Apple because of its reputation for innovation, but the work environment is intense and demanding. The relentless pursuit of perfection means long hours and high stress. Apple’s culture also emphasizes secrecy, which isn’t everyone’s cup of tea.

Truly living companies are not universally recognized as great places to work—for some, the cult-like culture can be a major turn-off.

Ok, then it must be down to brilliant and complex strategic planning… right?

Not really. The authors found that visionary companies often try out many things and keep what works rather than rely on intricate strategic planning.

3M is a perfect example. No complex strategic plan mapped out the creation of Post-it Notes. One employee, Spencer Silver, developed a low-tack adhesive that didn’t have immediate use. Another employee, Art Fry, came up with the idea of using this adhesive for bookmarks in his hymnbook. These casual, random explorations led to the creation of one of 3M’s most iconic products.

3M has this random exploration institutionalized with their “15% Time” rule, which encourages employees to spend 15% of their time on projects unrelated to their regular work.

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Post-It-Note to Self: learning from casual, random experiments leads to unexpected breakthroughs.

Unconventional Success

The 18 visionary companies in Built To Last are not built on specific products or charismatic leadership or any of the seemingly obvious factors we’ve discussed. They are built to last on strong cultures, core ideologies, and an innate drive to push for progress while preserving their core.

Collins and Porras identified seven common qualities and behaviors across all 18 visionary companies:

  1. Preserve the Core/Stimulate Progress: they hold a core set of values and purpose while continually pushing for progress and change. Their values are sacrosanct, but their strategies and practices adapt with time.
  2. BHAGs (Big Hairy Audacious Goals): they set extraordinarily ambitious goals that often seem impossible, then mobilize the organization to meet them.
  3. Cult-like Cultures: they often have strong, distinctive cultures that reinforce the company’s core values and discourage deviation.
  4. Try a Lot of Stuff and Keep What Works: they encourage pragmatic innovation, embrace failures as learning opportunities, and retain what works.
  5. Home-Grown Management: leaders usually rise from within the ranks. This ensures continuity in the company’s culture, values, and long-term objectives.
  6. Good Enough Never Is: they always strive for improvement. They are never complacent, even in times of success.
  7. Clock Building, Not Time Telling: they focus on building an organization that can prosper beyond the tenure of its current leaders rather than being overly dependent on a few charismatic leaders.

These characteristics are much less “machine-like” than we’d expect from traditional wisdom on corporate entities. Counter-intuitively, these companies seem to leave more to chance. They don’t try to command and control every micro-component of the system. It’s almost as if these companies evolved naturally.

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Companies As Living Organisms

We have partners at Curious Lion who work closely with the U.S. military’s Special Operations units. The whole point of Special Operations is you need to solve problems now. But if you are taught to solve a problem today in a way that reduces your ability to solve the problem tomorrow, you’re in trouble. For example, if Special Operations soldiers are shown only how to diffuse a specific type of bomb, they will only be prepared to diffuse that particular type of bomb. They won’t know how to approach bombs they’ve never seen before in a way that maximizes their chance of diffusing them. In other words, if you are taught to solve a problem by receiving the answer, you won’t know how to think for yourself and solve tomorrow’s problem. This is the tragedy of top-down training.

There is pressure to be completely effective now without screwing yourself tomorrow. It is always a balance. The challenge is finding the right balance between short-term and long-term thinking. The companies in Built to Last found that balance. They see themselves less as machines and more as living, learning organisms. The same phenomenon is present in the companies studied at Royal Dutch Shell in the 1980s, which the researchers called living companies. This is not a coincidence.

Living Companies Adapt And Evolve As The World Changes

Imagine spending all your time perfecting a new sales methodology to prepare your team for a new go-to-market push. You may eventually get it right, with everyone executing the cadences and talk scripts perfectly… just in time for the market to shift again. Or you could spend your time learning how to learn.

The complexity of modern work calls on everyone to be inventive, to accumulate and distribute new knowledge. But people can’t do this well because they suffer from

  1. Power struggles for control
  2. Work stress from constant firefighting and battling the four horsemen
  3. The deeply ingrained attitude that “learning means you didn’t already know it”
  4. Cynicism from an environment that stifles innovation, energy, and commitment

Businesses in the Industrial Age measured success based on the preservation and growth of capital. Businesses in the Internet Age measure success based on the accumulation of knowledge. Modern companies die because managers are too focused on the economic activity of producing goods and services and forget the reality of work is about getting along with other humans to get things done. You can’t blame them, either. Investors still measure companies according to return on capital like in the Industrial Age. For employees, though, it’s clear: success relies on a bunch of people getting along continuously and sharing knowledge in a working human community.

Unless a company can accelerate the rate at which it learns, its primary asset (its people) will become stagnant. Companies that figure this out— living companies— become magnets for talented people searching for meaningful work, putting personal fulfillment over traditional priorities like income and status (see this WSJ essay for more on this trend).

But how exactly do you achieve this ideal state?

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Learning How To Learn

First, it’s important to understand the role of learning and how learning and working are the same thing.

The essence of learning is the ability to manage change by changing yourself.

We face constant change in our work, for example:

  • New technology
  • New cost revisions
  • New price structure
  • New product portfolio
  • New service schedules
  • New marketing policies
  • Etc.

When something changes around us, it’s outside of our control. We have two options when this happens. We can resist the change. Or we can change ourselves to adapt. The second option is the essence of learning. We change our identity when we learn something new. It shapes our worldview, but most fundamentally, it shapes our view of ourselves. For example, learning to play tennis gets you to identify as a tennis player. Learning how to cook makes you the de facto family chef.

We must do things differently when the world changes around us. This “doing” is an act of learning. We are updating our mental models of how the world works so we can better perform our jobs. We are changing ourselves to adapt to the change around us.

Decision-making is learning.

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A perfect example of this is the decision-making process we are all familiar with at work, which looks something like this:

  1. Perceiving – a meeting is called because someone has seen something funky. Sales have slipped, a competitor makes a move, or a government releases new regulations. People gather to figure out what this means for the company. The process of developing a mental model begins.
  2. Embedding – people at the meeting explain to each other how they see the problem. Together, they try to understand how this external event relates to their company and update their previous understanding of how things worked. Language is invented to “label” the parts of the mental model under construction. The process of externalizing and calibrating the mental model is underway.
  3. Concluding – people arrive at a shared understanding, and action plans are developed. Then someone asks, “what happens if…?” and chaos ensues—messy but productive chaos. People talk through the “what if?” scenarios, experimenting with various conclusions. The mental model is now a simulation model for testing ideas.
  4. Acting – finally, people are ready for implementation and action. They design a plan that allows them to keep track of the effects of their decision. If they are advanced, they may evaluate the decision-making process to see how to improve it next time.

Psychologists consider these the four defining elements of learning. Every act of decision-making is a learning process.

If it is true that work and learning are the same, then we need to lean into this process to solve the twin problems we’ve identified: not equipping people to think for themselves and thinking too short-term.

Shifting Into Long-Term Thinking

Imagine two companies on opposite ends of a continuum.

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One is an economic machine driven by the short-term view of immediate success. For economic machines, it’s all about maximizing gains while minimizing resources for the fastest exit. Immediate success is sexy. The other is the human community, which recognizes striving as counterproductive for their basic purpose: to survive long enough to realize their full potential.  Human communities mimic nature and emphasize trust, connection, relationships, and thoughtful decision-making to improve continuously while remaining in the game until the end.

Neither of these companies is good or bad, right or wrong – each end of the spectrum has an important role in the global economic and financial system. But building a company, as with all things worth doing in life, is a matter of finding the right balance. Economic machines can take instant gratification too far and cause employee burnout. Human communities can take laissez-faire too far and run out of momentum.

Yes, solving immediate problems is important, but we need to solve these problems in a way that sets the stage for ongoing success. As people and companies, we need to learn how to learn. Burnout this quarter can have detrimental consequences next quarter. Giving people the answer this month can limit their ability to think for themselves next month. Building ‘tomorrow’ into the system is key. The question becomes, where is your sweet spot today?

As for me, I’m making some changes to my business based on a healthy view of Curious Lion as a separate, living organism. I hope it is shaped by many curious people, not just me. Perhaps some are yet to be born.

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