LEADERSHIP AND SYSTEMS THINKING
In the behavior economy, value is non-linear, and relative to the size and quantity of experience nodes and the behaviors enabled across the network. The flows of experiences, and specifically the people interacting with the platform, are the primary source for value extraction. While clear in theory, the navigation and creation of emerging systems requires new tools for defining, articulating and delivering opportunity that are at conflict with the archetypal business narrative.
A system is a sum of multiple elements that when combined will result in functions that cannot be achieved by any of the elements on their own. Linear businesses divided into functional units, can operate as weak systems, where elements—functional units—can be bought, sold and traded on the marketplace as isolated entities. In the Pharmaceutical industry for example, individual drugs are managed as an isolated business due to regulatory and administrative requirements. This makes it possible for companies to purchase drugs from competitors with little business integration.
In the behavior economy, value is created by the emerging functions made available by increasing the number of elements and relationships within the system. Increased value occurs through the integration of technology and platforms in order to activate desired experiences. Google is currently buying businesses from diverse areas such as home appliances, robotics, artificial intelligence and energy capture, as it works to develop an integrated system of technologies focused on enabling behaviors that improve the quality of life for connected people across the world.
Apple's iPhone is a defining product of the behavior economy, both for what it has enabled and for how it came to existence. To develop and bring the iPhone to market, Steve Jobs and Apple required a network of partners that included traditional vendors, collaborators and even competitors, all of whom gained direct and indirect value through the development of the product/ platform. This network included:
- • AT&T, who agreed to the unique revenue model that made the product affordable.
- • Samsung, a competitor who provided the chips to run it.
- • Corning, a glass manufacturer searching for new markets through internal research and development.
- • Motorola, whose Rokr E1 Apple iTunes mobile phone gave Apple the opportunity to learn how to build a cellphone.
- • Apple's internal suite of products and capabilities including the iPod and iTunes.
Much has been written about Steve Jobs and his ability to craft the vision that brought many partners to the table. This level of vision and determination will be required more and more, in a behavior economy that requires interconnected products and services as a default. Integrated innovation will be a core requirement of businesses, and the future valuation of businesses will include the internal portfolio of products, services and platforms and their connections to external enablers.
To define the ideal qualities of a leader in the behavior economy, we must first look at what leadership means in the context of transformation, and we must differentiate leadership from the day-to-day administration tasks of management. Russell Ackoff, cited earlier in Chapter 12, defines three levels accordingly:
Administration consists of directing others in carrying out the will of a
third party, using means selected by the same party.
Management consists of directing others in the pursuit of ends using
means both of which have been selected by the manager. (Executives are
managers who manage other managers.)
Leadership consists of guiding, encouraging and facilitating the pursuit by others of ends using means, both of which they have either selected, and the selection of which they approve.
A fundamental difference between management and leadership is the ability to articulate and motivate others toward desired end goals, which encourage individuals to overcome challenges and roadblocks. Ackoff deliberately describes leadership as an artistic and aesthetic pursuit, reinforcing intangibles and intuition as a required capacity. These attributes further reinforce how difficult it is to endow desired leadership qualities to individuals, through traditional training and linear methods.
The leaders mentioned in this chapter have been chosen for the lessons they reveal in maintaining an intuitive vision of their enterprises, while empowering others to implement complementary visions in a way that generates ongoing value. The businesses they have created are highly systemic, achieving sizable success due to their integration of multiple technologies.
-  Ackoff, R.L. (1998). 'A systemic view of transformational leadership.' Systemic Practice andAction Research, 11(1), 23-36.