In Search of Emergence

If we were to consider that we may have reached the end of yet another technological cycle, how can we leap from the lessons learned during the previous cycle?

First, let me explain what cycle I’m referring to.

Longwaves

Recognized by renowned economists such as Joseph Schumpeter and Carlota Perez, Russian agricultural economist Nicolai Kondratieff suggested that capitalist economies go through long-term growth and decline driven by technological innovation.

These cycles, known as K-waves, are thought to last between 50 to 60 years. Considering the increased volatility, uncertainty, complexity, and ambiguity, we believe we may have reached the end of the 5th (1974-2024?) longwave.

As you can see in the graph, the 4th longwave phased out somewhere between 1974 and 1980. Interestingly, observations made by Peters and Waterman of best-run companies in the late seventies and early eighties, described in In Search of Excellence, Lessons from America’s Best Run Companies, covered precisely that period. While there is much to learn from the McKinsey study, ‘discrete emergence’ may be the best way to characterize these outliers’ prevalent mode of operation.

Best-run companies

In their bestseller, In Search of Excellence, McKinsey consultants Peters and Waterman found that outperformers, coinciding with the end of the previous K-wave, lived the notion that people are their most important assets.

Contrary to the ruling notion of management in those days ─ that fanatical disrupters, the disturbers of the peace, needed to be contained in favor of continuity ─ these best-run companies believed that when people are in control of their destiny, led by intrinsic motivation and self-determination, they perform much, much better. Decades later, authors like Daniel Pink and Tim Collins would confirm these early findings.

Given that these giant companies were run from ivory towers, these initiatives needed to operate in stealth mode, often on a very tight budget, forcing them to rapidly test their assumptions by creating prototypes. They could scale up their initiatives when certain thresholds were met.

Many years later, Steve Blank and Eric Ries argued that this type of M.O. was unique to the LEAN start-ups in Silicon Valley, but they may have ‘overlooked’ the breakthrough study performed by McKinsey’s consultants on the incumbents.