Zarządzanie Firmą Archive

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Strategy at the speed of digital

To succeed in the digital age, companies need to significantly raise their metabolic rate

In this episode of the Inside the Strategy Room podcast, we share McKinsey research on how fast and boldly companies need to move to win in the digital era, and describe some common pitfalls in digital strategy and ways to avoid them. This is an edited transcript. For more conversations on the strategy issues that matter, subscribe to the series on Apple Podcasts or on Google Play.

39:45 Audio ” Strategy at the speed of digital” in https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/

Podcast transcript

Sean Brown: From McKinsey’s Strategy and Corporate Finance Practice, I’m Sean Brown. Welcome to Inside the Strategy Room. In this episode we discuss how digital leaders execute strategic moves with a speed and power that far exceeds those of their peers. I’m joined by co-authors of a recent McKinsey Quarterly article, “The drumbeat of digital: How winning teams play.” Tanguy Catlin is a senior partner in our Boston office who focuses on digital strategy and insurance clients. Laura LaBerge, based in Stamford, Connecticut, is a member of our digital strategy team. It’s my pleasure to welcome you both.

Laura, let me start with you. You and Tanguy previously wrote about pitfalls that cause digital strategies to fail. How does this new research expand on that?

Laura LaBerge: We started by looking into what is really known about disruption. It isn’t new—it’s been happening for centuries. Prior to digital, incumbents typically experienced a survival rate of less than 20 percent during extreme disruptions. So, we asked more than 2,000 organizations how well prepared they felt to navigate the current change, and 92 percent did not feel their current business model would be economically viable as digitization progressed. Tanguy and I wanted to understand why digital is so hard. We looked at organizations attempting large digital transformations and surveyed thousands of companies implementing digital change at various scales and with various degrees of success.

[…]

Sean Brown: Given this winner-takes-all scenario, how should an incumbent invest in digital? It seems to imply that you have to go big or go home.

Tanguy Catlin: You’re exactly right. Companies need to move faster and be bolder. Bolder might mean repositioning yourself on the chess board, and that involves M&A—both acquisitions and divestitures. And it’s a game of musical chairs, so you need to make sure there are still chairs for you and move faster toward your objective.

Laura LaBerge: Not only do you have to move faster but move first. Even five years ago, being a fast follower versus being first mover—there were differences between those strategic postures, but the outcomes were not drastically different. Now, being a first mover or extremely fast follower is starting to have significant economic benefits. Part of the reason is the rate at which organizations can learn with digital. In the past, it was often six months after a product launch that you would do the postmortem to understand what was working and what wasn’t. Now you can have three-day iterations. This causes is a rapid divergence. The first mover, rather than being on version 2.0 when someone offers a me-too product, is on version 40. This, combined with network effects, gives first movers a huge advantage. If you are first to lock in strategic partnerships, in many cases, just from a scale perspective, you win.

[…]

Sean Brown: What implications does your research have for midsize companies that may not have the resources to pursue large-scale M&A to acquire digital capabilities?

Laura LaBerge: Actually, a large percentage of the companies we surveyed were midsize organizations. Obviously, they are not doing M&A on the same scale as some huge incumbents, but we also saw that when M&A isn’t an option, partnerships are. You can partner in more strategic ways to gain digital capabilities.

Tanguy Catlin: The emergence of ecosystems creates many opportunities, just as eBay created a marketplace that all of a sudden allowed small and midsize enterprises a way out of competing on marketing to get exposure to customers. You don’t need to be the architect—the eBay—of the ecosystem and still find a marketplace that allows you to reach millions of customers.

About the authors: Sean Brown is McKinsey’s global director of communications for strategy and corporate finance and is based in the Boston office, where Tanguy Catlin is a senior partner; Laura LaBerge is a senior expert in the Stamford office.

More: www.mckinsey.com/business-functions/

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BCG – The New Logic of Competition

Many of today’s business leaders came of age studying and experiencing a classical model of competition. Most large companies participated in well-defined industries selling similar sets of products; they gained advantage by pursuing economies of scale and capabilities such as efficiency and quality; and they followed a process of deliberate analysis, planning, and focused execution. The traditional playbook for strategy is no longer sufficient. In all businesses, competition is becoming more complex and dynamic. Industry boundaries are blurring. Product and company lifespans are shrinking. Technological progress and disruption are rapidly transforming business. High economic, political, and competitive uncertainty is conspicuous and likely to persist for the foreseeable future.

Accordingly, in addition to the classical advantages of scale, companies are now contending with new dimensions of competitionshaping malleable situations, adapting to uncertain ones, and surviving harsh ones—which in turn require new approaches. And the stakes are higher than ever: the gap in performance between the top- and bottom-quartile companies has increased in each of the past six decades.1

Today’s business leaders are dealing with complex competitive concerns in the short run. But as the 2020s approach, they must also look beyond today’s situation and understand at a more fundamental level what will separate the winners from the losers in the next decade. We see five new imperatives of competition that will come to the forefront for many businesses (See Exhibit 1):

  • Increasing the rate of organizational learning
  • Leveraging multicompany ecosystems
  • Spanning both the physical and the digital world
  • Imagining and harnessing new ideas
  • Achieving resilience in the face of uncertainty

In short, the logic of competition has changed—from a predictable game with stable offerings and competitors to a complex, dynamic game that is played across many dimensions. Leaders who understand this, and re-equip their organizations accordingly, will be best positioned to win in the next decade.

Competing on Resilience

Looking ahead to the 2020s, uncertainty is high on many fronts. Technological change is disrupting businesses and bringing new social, political, and ecological questions to the forefront. Economic institutions are under threat from social divisions and political gridlock. Society is increasingly questioning the inclusivity of growth and the future of work. And planetary risks, such as climate change, are more salient than ever.

Furthermore, deep-seated structural forces indicate this period of elevated uncertainty is likely to persist: technological progress will not abate; the rise of China as an economic power will continue to challenge international institutions; demographic trends point toward an era of lower global growth, which will further strain societies; and social polarization will continue to challenge governments’ ability to effectively respond to national or global risks. (See Exhibit 5.)

Under such conditions, it will become more difficult to rely on forecasts and plans. Business leaders will need to consider the larger picture, including economic, social, political, and ecological dimensions, making sure their companies can endure in the face of unanticipated shocks. In other words, businesses will effectively need to compete on resilience.

Survival is already challenging for many businesses today. Building resilience is often at odds with traditional management goals like efficiency and short-run financial maximization. But to thrive sustainably in uncertain environments, companies must make resilience an explicit priority:

  • Prepare for a range of scenarios to ensure that strategy is robust and risks are survivable.
  • Build an adaptive organization that can rapidly adjust to new circumstances—for example, by constantly experimenting to identify new options.
  • Proactively contribute to collective action on the biggest issues facing global economies and societies, in order to maintain a social license to operate.

By Ryoji Kimura, Martin Reeves, and Kevin Whitaker

More: The BCG Henderson Institute is Boston Consulting Group’s strategy think tank, dedicated to exploring and developing valuable new insights from business, technology, and science by embracing the powerful technology of ideas. The Institute engages leaders in provocative discussion and experimentation to expand the boundaries of business theory and practice and to translate innovative ideas from within and beyond business. For more ideas and inspiration from the Institute, please visit Featured Insights.

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Empatyczne roboty

Empatyczne roboty, czyli trendy technologiczne, które zmienią biznes w 2020 roku

Globalny rynek rozwiązań opartych o sztuczną inteligencję, które pomagają rozpoznać emocje człowieka, będzie rósł o 32,3 proc. rocznie w ciągu najbliższych czterech lat

Aby technologia stała się motorem zmian, w organizacji niezbędne jest umiejętne połączenie ze sobą kilku przełomowych innowacji. Jak wynika z raportu firmy doradczej Deloitte „Tech Trends 2020”, decyzje w sprawie inwestycji w IT coraz częściej należą do dyrektorów finansowych, podczas gdy architekci systemów informatycznych zaczynają brać na siebie większą odpowiedzialność za wdrażanie poszczególnych usług. Współpraca obu działów jest konieczna do rozwoju technologicznego organizacji. Jak ustalili eksperci firmy doradczej w tej chwili działy IT na wdrożenie nowych rozwiązań innowacyjnych wydają średnio 18 proc. swojego budżetu.

W erze cyfrowej, umiejętność łączenia wielu różnych technologii naraz stała się kluczem do rozwoju organizacji i najwyższym priorytetem działalności firm. Według ekspertów Deloitte to właśnie rzeczywistość cyfrowa, blockchain oraz technologie kognitywne, takie jak uczenie maszynowe czy boty, będą kształtowały biznes w ciągu najbliższej dekady. Aby jednak było to możliwe, konieczna będzie bliska współpraca pomiędzy prezesami zarządów a szefami działów IT. Pozwoli ona firmie nie tylko zidentyfikować obecne trendy rynkowe, wypracować odpowiednią strategię działań, lecz też uzyskać pozycję lidera na tym niezwykle konkurencyjnym rynku.

Doświadczenie cyfrowe, analityka, technologie kognitywne czy też blockchain to tylko niektóre z czynników, które już teraz decydują o losie przedsiębiorstw. Oczekujemy, że w ciągu kolejnych kilku lat innowacyjne rozwiązania jeszcze bardziej zakorzenią się w biznesie. Sztuczna inteligencja w sposób wykładniczy zacznie nie tylko rozpoznawać wzorce, ale również interpretować ich sens, co pozwoli firmom jeszcze efektywniej działać, np. poprzez bardziej kontekstową obsługę klientów. Spodziewamy się też dalszego rozwoju technologii kwantowej, która zacznie znajdywać praktyczne zastosowania przy rozwiązywaniu na dziś wciąż zbyt skomplikowanych zagadnień i nie będzie już tylko odległym marzeniem – mówi Sławomir Lubak, Partner, Lider obszaru strategii i integracji technologii oraz

Trendy technologiczne 2020 – prezentacja: https://www2.deloitte.com/pl/pl

Zaufanie nigdy nie było tak ważne

W ciągu ostatnich lat rola etyki w biznesie zyskała na znaczeniu. Nad kwestiami wykorzystania danych osobowych czy śledzenia zachowań w internecie zastanawiają się nie tylko klienci, lecz też pracownicy, partnerzy, inwestorzy oraz organy regulacyjne. Pojawienie się technologii cyfrowej oznacza zatem dla firm walkę o większe zaufanie. Jak wynika z badania Deloitte sporządzonego we współpracy z MIT Sloan Management Review „Accelerating digital innovation inside and out”, 35 proc. respondentów uważa, że liderzy ich organizacji poświęcają wystarczająco dużo czasu na przemyślenia i komunikowanie wpływu innowacji na społeczeństwo. Wykorzystanie technologii w sposób etyczny pomaga nie tylko zdobyć jeszcze większe zaufanie wśród interesariuszy, lecz też zwiększa przejrzystość funkcjonowania firm oraz zapewnia bezpieczeństwo danych.

Zaufanie do firm jest dziś ważniejsze niż kiedykolwiek wcześniej. Klienci, organy regulacyjne i media oczekują, że marki będą otwarte, uczciwe i spójne we wszystkich aspektach swojej działalności, od produktów i promocji, po kulturę pracy i relacje z partnerami biznesowymi. Ponieważ każda firma jest teraz mniej lub bardziej technologiczna, wartości te powinny być wpisane we wszystkie działania wykorzystujące technologię – od odpowiedniego zabezpieczenia danych klientów i kontrahentów, przez etyczne wykorzystanie danych i algorytmów AI po informowanie otoczenia o wykorzystywaniu konkretnych rozwiązań technologicznych. Tylko etyczne wykorzystanie technologii może zbudować zaufanie, które zaowocuje długotrwałymi relacjami biznesowymi – mówi Mariusz Ustyjańczuk, Partner w departamencie zarządzania ryzykiem, Deloitte.

Niezbędna jest współpraca

Jak wynika z badania Deloitte „CIO Survey 2018”, przeciętny dział IT wydaje 56 proc. budżetu na utrzymanie działalności biznesowej i tylko 18 proc. na innowacje. Uzyskaniu większego wsparcia w kwestii unowocześniania systemów IT przeszkadzają wewnętrzne procedury planowania budżetu firm. W związku z tym, zgodnie z przewidywaniami autorów raportu „Tech Trends 2020”, w ciągu kolejnych dwóch lat coraz więcej liderów działów IT i finansów będzie nawiązywać współpracę w celu wypracowania elastycznego podejścia do finansowania innowacji.

W ramach zwinnej transformacji zazwyczaj redefiniowany jest proces budżetowania w firmach, który historycznie bazuje na corocznych budżetach, co może utrudniać szybkość działań w organizacji. Podejście zwinne, wymaga częstych zmian kierunku i decyzji w kontekście przeznaczania zasobów. Właśnie dlatego, coraz więcej firm decyduje się na plany kwartalne. Co więcej, aby przyspieszyć wdrożenie innowacyjnych rozwiązań, dyrektorzy zarządzający i finansowi muszą zbadać inne możliwości finansowania na przykład współinwestowanie w obrębie branży czy sektora. Pozwoli to nie tylko współdzielić ryzyko z tym związane, lecz też osiągać wspólne cele rozwojowe – mówi Daniel Martyniuk, Partner, Lider doradztwa technologicznego, Deloitte.
 

Empatyczne roboty

Rozwój affective computing, czyli technologii rozpoznającej stan emocjonalny człowieka, nabiera tempa. Według ekspertów Deloitte, w ciągu następnych dwóch lat coraz więcej firm będzie inwestować w takie rozwiązania, które pozwolą im lepiej zrozumieć potrzeby swoich odbiorców. Oczekuje się, że dzięki technikom HCD, czyli projektowaniu opartym na szerszym poznaniu perspektywy człowieka, np. użytkownika, technologia będzie w stanie coraz lepiej rozpoznać emocje i kontekst sytuacji, w której człowiek się znajduje, a także odpowiednio na to zareagować. Z raportu Deloitte wynika, że wykorzystanie informatyki afektywnej pomoże organizacjom osiągnąć wzrost przychodów 17 razy szybciej od tych, które takich działań nie podejmą. Ponadto, wielkość globalnego rynku rozwiązań afektywnych wzrośnie z 22 mld dolarów w 2019 r. do 90 mld dolarów w 2024 r., osiągając roczny wzrost na poziomie 32,3 proc.

Połączenie badań neurobiologicznych, czyli pomiaru aktywności mózgu, czy ruchu gałek ocznych, technik HCD, odpowiednich zasad etycznych organizacji oraz wartości ludzkich, pozwoli firmom lepiej zrozumieć naturalne procesy decyzyjne klientów. Umiejętne przetwarzanie pozyskanych danych stanie się zatem czynnikiem decydującym o sukcesie przyszłych innowacji – mówi Sławomir Lubak.
 

Wirtualizacja świata

Z biegiem lat granice pomiędzy fizycznym a cyfrowym światem coraz bardziej się zacierają, stwarzając tym samym nowe możliwości rozwoju. Już dzisiaj na wiele różnych sposobów firmy wykorzystują potencjał cyfrowych bliźniaków, czyli wirtualnych replik fizycznych urządzeń lub złożonych systemów. Np. w służbie zdrowia służą one do symulacji pracy ludzkiego serca. Możliwości te nie są nowe, ale trend nabiera tempa dzięki szybko rozwijającym się metodom modelowania, lepszej interoperacyjności oraz większej dostępności narzędzi i infrastruktury obliczeniowej. Jak twierdzą eksperci Deloitte, rozwój cyfrowych bliźniaków będzie się nasilać w nadchodzących latach.

Bliźniaki cyfrowe mogą zwiększać wydajność produkcji, optymalizować łańcuchy dostaw, przewidywać potrzebną konserwację maszyn, czy pomagać w ograniczaniu zatorów – a potencjalnych zastosowań jest o wiele więcej. Dostęp do coraz większej ilości danych umożliwia tworzenie symulacji, które są bardziej szczegółowe i dynamiczne niż kiedykolwiek. Ponadto, wirtualizacja obiektów stała się tak samo dostępna dla dużych, jak i małych organizacji. W najbliższym czasie niemal każda firma będzie mogła wykorzystać cyfrowe bliźniaki do optymalizowania procesów, podejmowania decyzji na podstawie danych w czasie rzeczywistym oraz opracowywania nowych produktów, usług i modeli biznesowych – mówi Mariusz Ustyjańczuk.

Architekci IT idą na całość

Architektura IT, czyli projektowanie, wdrażanie i nadzorowanie poszczególnych komponentów technologicznych, ma obecnie większe znaczenie strategiczne niż kiedykolwiek przedtem. Według 42 proc. respondentów webcastu Deloitte „The future of architecture: Designing a foundation for growth” architekt IT przyszłości to jeszcze bardziej wyspecjalizowany technicznie i dostosowany do środowiska biznesowego specjalista. To osoba, która pomaga w dialogu pomiędzy biznesem a IT, przekładając potrzeby firmy na język systemów. W najbliższym czasie architekci zaczną brać na siebie coraz większą odpowiedzialność za tworzenie usług i zarządzanie systemami operacyjnymi. Ponadto, będą bezpośrednio odpowiedzialni za osiąganie wyników biznesowych i rozwiązywanie problemów architektonicznych.

– Aby zachować konkurencję rynkową, duże organizacje będą musiały przemyśleć swoje podejście do architektów IT. Architekci powinni wyjść ze swoich stref komfortu i udzielać wsparcia na projektowej linii frontu. Taka zmiana pomoże im podnieść poziom zaangażowania, responsywności i kreatywności, a jednocześnie zachować całościowy obraz organizacji. Podwyższone zaangażowanie architektów w kluczowe projekty transformacyjne pozwoli napędzić szybkość zmian, usprawnić działanie całej organizacji i z pewnością przyczyni się do jej rozwoju – dodaje Daniel Martyniuk.

Magdalena Biedrzycka-Doliwa (Selwant-Różycka)

Magdalena Biedrzycka-Doliwa (Selwant-Różycka)

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The Emerging Art of Ecosystem Management

Today’s artists express their vision by stretching far beyond the boundaries of canvas and paint. Through unorthodox juxtapositions of light, color, video, sound, and nature, artists such as Bill Fontana and the artist couple Christo and Jeanne-Claude create immersive experiences that require the input of a complex and highly adaptable network of collaborators—including the spectators themselves, each of whom comes away with a highly personalized experience. To succeed, this type of ambitious endeavor requires radical connectivity, an open mind, and a wide range of players. The collaboration itself and the interplay of different elements create artistic value.

The same is true for the complex ecosystems now emerging throughout the business landscape and across industries—and for the new ways they deliver value. As the Internet of Things (IoT) makes our homes, phones, and cars “smart,” companies must work with a far wider range of partners to pull together the underlying technologies, applications, software platforms, and services needed for an integrated solution. The need for partnerships is further amplified by rapidly changing technologies and consumers’ growing demand for a highly customized user experience.

Today’s “smart” products depend on complex networks of partners. But few companies know how to manage these networks effectively.

Some large networks, such as the digital ecosystems of smartphones, comprise a million or more platform partnerships through their integrated app stores. And it’s not just the tech industry that’s undergoing these changes. All industries—including incumbents such as banking, health care, consumer products, logistics, and automotive—are seeing an evolution of their products and services and a need to collaborate differently.

This new reality can be especially challenging for incumbent players, many of which are used to going it alone—either by trying out new things in-house or by buying a company in order to enter a new space. And when they do set up partnerships or make acquisitions, they often end up with an ecosystem more by accident than by virtue of long-term strategic planning.

A better approach is to actively participate in shaping the new landscape. To this end, many leading companies are building their own collaborative networks and/or joining existing ones. The challenge is how to effectively set up and manage these ecosystems and use them strategically to maximize value—and gain a competitive edge. Companies that can meet this challenge will reap enormous benefits, while those that don’t risk falling behind or becoming irrelevant.

In this article we’ll explore a number of key strategic questions, including:

  • How collaboration within an ecosystem is different from traditional collaboration
  • What types of ecosystems are available and which are best suited for incumbents
  • How incumbents can gain a competitive advantage through the strategic use of digital ecosystems

The New Collaboration Model

Just as contemporary art installations are completely unlike traditional paintings, the members of today’s digital ecosystems collaborate in ways that are fundamentally different from collaborations of the past. Case in point: the auto industry, which is currently undergoing radical changes. In the past, automakers either formed a joint venture or alliance with an OEM to enter a new market (such as China) or formed contractual relationships with hundreds of suppliers to secure parts. These traditional partnerships still exist, but today a typical European auto company will draw on an ecosystem of more than 30 partners across five different industries and several countries to make cars that are connected, electric, and autonomous. (See Exhibit 1.) The auto company acts as the “orchestrator,” whose role is to organize and manage the ecosystem, define the strategy, and identify potential participants.

Today’s collaborations have a different purpose, structure, and outcome than those of the past—and industry lines are becoming increasingly blurred. Articles in academic and business journals have explored only limited aspects of these differences, such as the new focus on smart, integrated solutions;1 the goal of achieving innovation leadership and speed to market;2 and the shift from rigid value chains to highly adaptable value webs.3 But these are only part of the story.

Our extensive research into 40 ecosystems revealed four additional aspects of the new digital ecosystems that are changing how companies collaborate: geographic diversity of participants; cross-industry focus; shorter, more flexible deal structures; and mutual, continuous value creation. (See Exhibit 2.)

Super Platforms: Integrating Several Platforms into One Fully Integrated Offering

Some platforms integrate a wide range of complementary platforms into a single, fully integrated super platform. A good example is a digital assistant that integrates transportation, payment, shopping, and communication services into a single user-friendly solution. This type of ecosystem requires advanced digital capabilities, an openness to outside partners, and a well-established platform to start with. For these reasons, it tends to be preferred by well-established tech companies.

Number and Type of Partners. This type of ecosystem depends on a high volume of users driven by a limited number of well-established partner platforms and their contributors, which number in the millions. As a result, super platforms are open—even to competitors, if they can add unique features. For instance, Amazon’s Alexa integrated the Sonos smart-speaker platform to attract high-end users. Rather than standardizing partner screening, super platforms focus on strategic considerations, such as what impact potential partners will have on the overall market opportunity, product cannibalization, and user lock-in.

Role of Orchestrator. Since super platforms have a relatively small number of partners (i.e., the partner platforms), the orchestrator can focus on negotiating the strategic aspects of the ecosystem, such as data sharing, exclusivity, and any changes to the platform that affect services or functionality. The orchestrator’s negotiating strength depends on the power of the super platform, which is a direct function of the number of engaged users and the products and services that are already integrated. The orchestrator also sets technical requirements for the partner platforms.

Another key focus is on providing a best-in-class customer interface and user experience to drive user engagement, grow the user base, and attract other partner platforms. Both Amazon Alexa and WeChat, two well-established super platforms, offer highly intuitive user interfaces that draw upon extensive user preference data from the companies’ other businesses. The two super platforms also integrated their own adjacent services and platforms before adding key partners. This allowed them to experiment with integration, prove the viability of the combined offering, and build up their user base—all of which made the platforms more attractive to potential partners.

A strong financial backbone is needed to grow a super platform. For instance, Amazon launched an extensive marketing campaign to promote Alexa and discounted speaker prices to bring in users. It also provides financial support (via the Alexa Fund) and gives programmers financial incentives to develop skills that continually increase Alexa’s usability and appeal.

Value Creation. A super platform makes money largely through adjacent, mostly data-based businesses, such as ads, e-commerce payments, and new service offerings. A good example is WeChat, which started as a social messenger and now allows users to buy and sell products, send money to friends, order food and groceries, and check news. Customizing service offerings and building adjacent businesses that users want and need require a broad set of user data. Super platforms therefore focus partner negotiations on trying to safeguard their own data and get access to the data of other integrated platforms.

Key Success Factors. Our research suggests that a successful super platform needs a well-established technology foundation, a superior user interface and experience, and strong financial backing.

Looking Ahead

Companies used to work primarily one to one with another companies, but that was ten years ago. To create products today, Niki Lang says that companies need to have an array of partners.

In today’s connected world, industry and geographic boundaries are becoming meaningless, and unexpected change has become a constant. Adaptable ecosystems are designed to respond more quickly to evolving demand patterns, customer preferences, and the competitive landscape.

The new art of setting up and managing these broad collaborative networks—and leveraging their potential—is still uncharted territory for most businesses. The insights described above provide a starting point. Forward-looking companies that can capitalize on the potential power of ecosystems will reap enormous benefits and be well positioned for an uncertain future.

Authors:

Nikolaus Lang  Managing Director & Senior Partner; Global Leader, Global Advantage Practice, Munich;

Konrad von Szczepanski  Managing Director & Partner, London

Charline Wurzer Project Leader, Munich

TEN PRINCIPLES OF ECOSYSTEM MANAGEMENT

The BCG Henderson Institute is Boston Consulting Group’s strategy think tank, dedicated to exploring and developing valuable new insights from business, technology, and science by embracing the powerful technology of ideas. The Institute engages leaders in provocative discussion and experimentation to expand the boundaries of business theory and practice and to translate innovative ideas from within and beyond business. For more ideas and inspiration from the Institute, please visit Featured Insights.

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Understanding the leader’s ‘identity mindtrap’: Personal growth for the C-suite

Millions of years of evolution have shaped our brains, with nature selecting for many adaptive and energy-saving, if imperfect, shortcuts. Some are easy to spot—for example, how we systematically fall for optical illusions and how our loss-aversion reflex biases our choices. Other ancient shortcuts trip us up in subtler, more personal ways.

A CEO named Hans experienced this firsthand as he debriefed his executive team on what he’d learned at his leadership retreat. Hans gestured to a printout—a feedback report drawn from a combination of psychometric tests and 360-degree feedback. He told the team that the report found him intelligent, passionate, and purpose led. However, he added, he was also seen as too controlling, prone to quick judgments, and mostly certain of the rightness of his own opinions.

Hans jammed the papers back into his folder. “So you can see,” he noted with a somewhat rueful smile, “these assessments have shown me the ways I am difficult to work with. I have become aware of the reasons behind some of these challenges, and I want you to know that I am grateful to you for putting up with them.” He paused momentarily before adding, “I am delighted to say that with this new information, it will be easier for all of us as you are able to stretch your styles to work within my complications for the good of the work we all care so deeply about.” Hans smiled graciously at the team and moved to the next agenda item.

If Hans’s reaction strikes you as defensive, or perhaps just unthinking, then you’d be partly right. As we will see, it was a deeply human reaction. From our work with Hans, we know him to be a respected, intelligent, and generally well-liked CEO. In that moment, however, he was unconsciously protecting his ego and identity, as all of us do when we feel them come under threat. Hans held a view of himself as a tough, confident, and decisive—if rough-around-the-edges—leader. He knew what it took to get things done. He also didn’t believe that changing himself was possible. Instead of wasting time trying, he wanted to get back to business.

As Hans would come to learn, however, this fixed projection of his identity and his visceral defense of it were unconscious shortcuts that can point leaders in exactly the wrong direction when we face ambiguity. We call it the “identity mindtrap” and have seen it trip up executives all by itself or in combination with other shortcuts. In this article, we describe how the identity mindtrap can blind us to valuable personal-growth opportunities and how a more expansive view, grounded in the principles of adult development, can help us recognize our potential and improve the odds of seizing it. The results not only are personally beneficial—helping us lead with more ease and empathy and improving our ability to deal with complexity—but can also help our teams and organizations thrive in an uncertain, rapidly changing world.

Three questions to help you grow

Interviews, written assessments, and other instruments can help orient us on the map of our development. Self-awareness is the torchlight for walking through this terrain. Over years or decades, we can see and understand the patterns and large shifts described in this article, but we live them in a series of tiny moves. In these moments, things we were once blind to become assumptions we can see and make decisions about. We can help prompt this form of developmental self-awareness by asking ourselves three vital questions:

1. Why do I believe what I believe? We often confuse our beliefs with the truth and rarely question how we came to hold them. To break this pattern, stop looking for evidence to support your beliefs and instead try looking for their sources. Did a belief come from an external authority in a socialized way? Did you write it yourself, basing it on your principles or values? As you examine your system of beliefs, you can begin to shift your attachment to your current form of mind. For example, you might find that your belief that “loyalty is paramount” was inherited from your father in a socialized way because loyalty mattered most to him.

2. How could I be wrong? This question isn’t meant to help you make your beliefs bulletproof but rather to open them up so that you recognize other ways of seeing the world that might be helpful to you—and might be as true as your own vision. For example, if you question your socialized view of loyalty, you might see how loyalty to an outside cause can blind you or others and generate mistakes that eventually hurt the cause. The discomfort you feel at this process (“I can’t be wrong!”) means you’re on the right track. Keep going; this practice creates psychological flexibility and opens us up to new possibilities. When used in the right way, this question is a high-energy packet of developmental goodness.

3. Who do I want to be next? This question is a beacon in the distance for all of us. We often consider what we want to do next or what we want our next career move to be, but we rarely consider who we will be next. Will we be less reactive? Will we have a bigger view? Will we be less oriented to our achievements? If we have a sense of this new person we are growing into, it will be easier to spot—and avoid—the identity mindtrap and continue to walk through our development path with grace.


Our world is changing faster than our biology can adapt. Mindtraps that once helped minimize distractions from ancient challenges are unhelpful in addressing modern ones. Fortunately, our minds can evolve faster than our genomes and can be intentionally developed through practice. Our reflex to protect our egos never leaves us, but as we ask ourselves different questions, we can discover—and follow—a development path that enriches us as human beings and ultimately benefits our teams, organizations, and even the world.

And not a moment too soon. Some of the organizational, environmental, and geopolitical issues before us represent the biggest and most complex challenges human beings have ever faced. By avoiding the mindtraps, and participating more fully in our own evolution, we can generate the collaboration and new ideas needed to solve these challenges.

About the author(s)

Jennifer Garvey Berger is the CEO of Cultivating Leadership; her latest book is Unlocking Leadership Mindtraps: How to Thrive in Complexity (Stanford University Press, 2019). Zafer Gedeon Achi is a partner at Cultivating Leadership and a director emeritus at McKinsey.

More: https://www.mckinsey.com/