“Begin at the beginning,” the King said, very gravely, “and go on till you come to the end: then stop.” ― Lewis Carroll, Alice in Wonderland
Like many other things in Alice in Wonderland, this sounds like nonsense advice. Yet it is amazing how many people, when confronted with a challenge or a problem, don’t go back to the beginning (the basics) but instead, look for the “conventional wisdom” or an analogy. “Oh, this is just like …, so the solution must be similar as well!” As a result, very little new thinking happens and very few real breakthrough ideas come about. But this approach is easy and expedient!
Elon Musk, the successful entrepreneur, inventor and investor ($9 billion net worth, co-founder of PayPal, driving force behind Tesla Motors and Space X) is a radical thinker in every sense of the word. Consciously avoiding “conventional wisdom”, he relies on a methodology he learned in a college physics class to help him find new ways of solving old problems. The methodology is called First Principle Thinking.
Here is an example of First Principle Thinking in action:
“First principles” is a physics way of looking at the world. What that really means is that you boil things down to the most fundamental truths and then reason up from there.
Someone could – and people do — say battery packs are really expensive and that’s just the way they will always be because that’s the way they have been in the past. They would say it’s going to cost $600 / KWhour. It’s not going to be much better than that in the future.
So, from first principles, we say: what are the material constituents of the batteries? What is the spot market value of the material constituents? It has carbon, nickel, aluminum, and some polymers for separation, and a steel can. Break that down on a materials basis, if we bought that on a London Metal Exchange, what would each of these things cost? Oh geez, it’s $80 / KWhour. Clearly, you need to think of clever ways to take those materials and combine them into the shape of a battery cell, and you can have batteries that are much cheaper than anyone realises. (from the article: Elon Musk’s Secret Weapon: A Beginner’s Guide to First Principles)
In this example, Musk talks about breaking down the battery pack into its foundational, material elements: carbon, nickel, aluminum, polymers, a casing. These are the essential ingredients of a battery pack, the fundamental truths of the problem. From there, everything else can be optimised and improved upon depending on the smarts of the people tackling the problem.
Culture Change: The Conventional Wisdom
Change Management seems to result in lots of management and little change. What I’m really looking for is Change Leadership! ~ a very frustrated CEO
The “conventional wisdom” of culture change is that it takes 3-5 years to change a culture. This wisdom is based on a series of assumptions built up over the years through traditional approaches and thinking. In my experience, many of these assumptions (fiction disguised as truth) are false:
- There is a clear relationship between culture and performance. While this is often assumed to be the case, and we all intuitively believe that culture impacts performance, most of the academic studies are based on correlations, not direct cause and effect. A lot more work needs to be done here.
- Culture is the problem to be fixed. The problem may not have anything to do with culture. It may be a flawed strategic assumption in the business model, it may be a pricing issue. Before you launch off on culture change, make certain that is the root of the problem.
- Culture can be changed. There is a large body of evidence that says large-scale culture change is extremely difficult, risky and more often than not doesn’t really work. You should think about smaller and focused changes that might have a higher probability of success.
- The benefits outweigh the cost. Very few (almost none) of the culture change consulting firms are willing to work on a ‘no gain, no fee’ basis. Identifying and measuring the actual financial and organisational benefits expected must be done early on and takes considerable skill and attention. There are very few examples of tangible ROI gains from culture change programs.
- Culture change does more good than harm. All change efforts, but especially culture change programs, produce collateral damage of one kind or another that is often not anticipated and may create additional problems.
- Culture change is a logical decision. The big assumption here is that employees will change their working habits if it makes logical, business sense. Human change is emotionally driven and you are messing with social dynamics, not reprogramming machines.
- Culture change is another business project. If anything, culture change is a major leadership activity, not a management project and the CEO and senior team must be prepared to spend 40-60% of their time on leading, imbedding and sustaining the new culture.
- Culture change is about values. All experience points to the fact that internal policies and procedures drive culture as much, or more, than employee-held values and leadership styles. Be ready to rethink, lean and streamline everything you do so that your internal processes drive the desired behaviours.
My next blog will deal with how to apply First Principle Thinking to Culture Change.
John R Childress
Senior Advisor on Corporate Culture, Leadership and Strategy Execution
Author of LEVERAGE: The CEO’s Guide to Corporate Culture
Visiting Professor, IE Business School, Madrid
PS: John also writes thriller novels