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The Best New Books On The Creative Economy

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Over the last few years, a number of new books have set out to describe the dramatically changed roles and responsibilities of leadership and management in the emerging Creative Economy. In the coming days, I’ll be reviewing the best of the recent additions to the genre.

I will be looking at them not just from the perspective of whether the book is “a good read”, that might perhaps while away a few hours on some tedious transcontinental flight, but more importantly: does the book contribute to institutionalizing the paradigm shift of the Creative Economy?

The principles of leadership and management of the Creative Economy are thus quite different from the obsolete leadership practices of hierarchical bureaucracy in the dying Traditional Economy or the risky crisis-prone managerial practices of Financial Capitalism.

The Creative Economy generates dramatic reductions in cost, size, and time, and improvements in convenience, of products and services with new systems of infrastructure, new ways of socializing, new meaning as to how time is spent, and new ways of living these possibilities.  The Creative Economy has many firms now showing the way, including prominent firms like Apple [AAPL],  Amazon [AMZN], Salesforce [CRM], Whole Foods [WFM], Haier Group, Li & Fung, and Zara [BMAD:ITX], along with thousands of lesser-known firms.

The accomplishments of the Creative Economy lie outside the performance capabilities of firms run with 20th Century management and leadership practices, attitudes and values. If society is to get the full benefit of the gains of the Creative Economy and so emerge from pervasive economic stagnation, the principles of leadership and management of the Creative Economy—the booming economy of the future—need to be described and institutionalized. In this way, the gains of the Creative Economy can be consolidated, disseminated and replicated across the entire economy.

In coming reviews, I will be asking: to what extent do these new books contribute to this task? I will be asking seven specific questions:

1)      Does the book recognize that the Creative Economy is a new paradigm of leadership and management?

2)      Does the book constitute a constellation of coherent business principles, not a bundle of individual fixes?

3)      Does the book distinguish the principles of the new paradigm from the individuals and firms practicing them?

4)      Does the book separate core principles from a multitude of related practices?

5)      Does the book distinguish drivers from results?

6)      Does the book recognize the history of leadership and management?

7)      Does the book break free from the obsolete thinking of the Traditional Economy?

Criteria for evaluating new books on the Creative Economy

Let’s look at each of these questions.

1)      Does the book recognize that the Creative Economy is a new paradigm of leadership and management? The Creative Economy involves not merely the application of new technology or a simple set of fixes or adjustments to hierarchical bureaucracy. It means basic changes in the way organizations are led and managed. It’s a paradigm shift in the strict sense as laid down by Thomas Kuhn: a different mental model of the world—a different way of thinking, speaking and acting in the world. To traditional managers, the leadership and managerial practices of the Creative Economy often appear “questionable, if not downright crazy”. In the Creative Economy, these leadership and managerial practices constitute “the new normal”.

The leadership and management practices of the Creative Economy emerged because the internal contradictions of the Traditional Economy became so great, and the growing gap between what the marketplace needs and what the Traditional Economy could deliver became so large, that the “normal” model of leadership and management “broke” and a new model emerged with a better explanation of how the world works: a paradigm shift occurred.

As leaders and managers in the Traditional Economy found it harder and harder to survive in a marketplace in which power had shifted from seller to buyer, they often intensified their efforts to improve efficiency and increase outputs. These improvements often involved intensified implementation of hierarchical bureaucracy rather than a shift towards the more productive practices, attitudes and values of the Creative Economy. As a result, the “improvements” pushed these organizations even further from the frontier of what is possible in terms of speed, cost, size and reliability of communications and transactions.

The Creative Economy involves not just a new process or a new system or a technique or technology, although it includes all of these. It means a fundamental shift in how leaders think, speak and act in the workplace. At its heart lie a different set of habits values, attitudes and beliefs. Whereas the Traditional Economy pursued an ethos of efficiency and control, treating both employees and customers as things to be manipulated, the Creative Economy thrives on the ethos of imagination, exploration, experiment, discovery and collaboration. It deals with employees and customers as independent, thinking, feeling human beings. It embraces complexity as an advantage, rather than a hurdle to be overcome.

The first question is therefore: does the book in question recognizes this paradigm shift, or does it merely portray fixes or gadgets or adjustments to the traditional practices of hierarchical bureaucracy? Does the book address the deep changes in attitudes, values, habits and beliefs? Is the book about real change or is it a change in presentation without change in substance? Is it “more of the same” masquerading as real change?

2)      Does the book constitute a coherent constellation of principles, not a set of separate fixes? The Creative Economy is a coherent constellation of principles, attitudes, values and beliefs, not just a bundle of gadgets or processes or systems or technologies. Many of the products, processes, practices or technologies of the Creative Economy have already existed for some time. But in the Traditional Economy, they have been playing a minor role or a mere complement to existing ways of doing things. These elements include customer focus, teams, empowerment, Agile, values, horizontal communications and so on. Now these elements have moved onto center stage and become collectively part of a coherent constellation of principles that represent “the new common sense” and “the new normal”.

I will be asking: does the book recognize that breakthroughs occur not from individual process or technology changes but rather when the principles, practices, values and attitudes join together to form powerful interacting and coherent set of business possibilities? Does the book contribute to the articulation of a clear, coherent and shared vision of what we are moving from and what we are moving to?

3)      Does the book distinguish the principles of the paradigm from the individuals and firms practicing them? As writers, we are often dazzled by the extraordinary success of people like Steve Jobs at Apple, Jeff Bezos at Amazon, Marc Benioff at Salesforce and we are tempted to dwell on their highly personalized leadership styles. The mystique of the individual can then spread to the organization. Where the individual aura doesn’t exist—e.g. Tim Cook at Apple—there is a tendency to try to create it.

In reviewing these books, I will be looking to see: does the book succumb to this temptation of turning individuals or firms into flawless heroes? Or does it contribute to institutionalizing the successful managerial principles and practices that they often exemplified, while also noting the flaws and shortcomings of even the best exponents? Does the book recognize that it’s not the individual but the replicable principles, practices, attitudes and values that lead to success?

In effect, does the book focus on the principles, practices, values and attitudes and avoid hero worship? Does it say or imply: “Do what Steve Jobs did” or “Do what Apple did”? Or does it say: follow these principles, practices, values and attitudes, which were partially exemplified in the behavior of Steve Jobs and Apple?

4)      Does the book separate core principles from a multitude of related practices?  There are an innumerable number of things that need to be done for an organization to be successful in the Creative Economy. My own book on radical management noted over seventy of such practices. Yet no one can remember, digest, or replicate seventy separate practices. Nor does one need to. There is a very much shorter list of core principles from which the detailed practices flow.  My current take on this short list of core principles is this:

  • a shift from a goal of making money to the goal of delighting customers profitably. Innovation is not an option: it’s an imperative. The only question is how.
  • a shift from controlling individuals to inspiring collaboration among self-organizing teams, networks and ecosystems.;
  • a shift from coordinating work by hierarchical bureaucracy to dynamic linking, with iterative approaches to development with direct customer feedback and interaction with teams and networks.
  • a shift from a preoccupation with economic value to an embrace of values that will grow the firm and the accompanying ecosystems, particularly radical transparency, continuous improvement and sustainability.
  • a shift from top-down communications to horizontal conversations. Instead of telling people what to do, leaders inspire people across organizational boundaries to work together on common goals.

I am not suggesting that this list of core principles represents the final or authoritative version of the Creative Economy. The principles I include here have in fact evolved somewhat since I published my book on radical management in 2010. There is a continuous process of learning. I am sure that even better formulations will emerge.

The question I will be asking in my coming reviews is: does the book in question offer an intelligible and plausible set of core principles? Or does the book tend to get lost in a myriad practices?

5)      Does the book distinguish drivers from results? Organizations are complex phenomena and have a lot of moving parts. There are few simple cause-and-effect relationships. In a world in which inspiring the creativity of employees and partners has become central task and in which customers who have instant reliable information and who interact with each other have become dominant, the linear thinking of managers in the Traditional Economy who treated employees as “resources” to be told what to do and treated customers as “demand” to be manipulated doesn’t work.

Efforts to impose linear thinking on complex situations usually lead to the opposite of what is intended. As a result, the principle of obliquity becomes relevant. Where explicit articulation of a goal will result in the complex environment pushing back in the opposite direction, oblique goals will often be more effective.

To take one example:  the goal of delighting customers may make more money than an explicit goal of making money.

Another example: The kind of mass personalization that one sees in an iPhone is the result of certain leadership and managerial practices. The accomplishment of mass personalization lies outside the performance envelope of the hierarchical bureaucracy. Asking a hierarchical bureaucracy to achieve it is like asking a pig to fly. Instead, the organization needs to adopt certain leadership and managerial practices, which then enable mass personalization.  Mass personalization is a result not a driver.

The question that I will be asking in my reviews therefore is: does the book distinguish drivers from results?

6)      Does the book have a sense of the history of leadership and management? I have noted before the tendency of management thinking to stagnate. Three factors in particular play an important role in this failure to advance:

 The “Amnesia/Eureka!” Syndrome: One of the problems in management writing is a tendency to forget the past, and then rediscover it with shrieks of “Eureka!” Thus ever since Mary Parker Follett was talking about teams and the human factor at Harvard and Oxford in the 1920s, successive writers have “re-discovered” teams and the human factor with great fanfare. This includes Elton Mayo and Chester Barnard in 1930s, Abraham Maslow in the 1940s, Douglas McGregor in the 1960s, Tom Peters and Robert Waterman in the 1980s, and Smith and Katzenbach in the 1990s. There is a lack of historical perspective in the writing. “Teams and the human factor” are presented as “the big new thing”, when the idea has been around for close to a century.

The “Old Wine in New Bottles” syndrome: The second phenomenon is that minor tweaks are hyped as major changes. It is only after a number of years of excited but troubled implementation, many consulting dollars spent and millions of books sold, that it becomes apparent that “the big new thing” is largely a relabeling of existing management thought. “Business process reengineering” is a notorious example in the early 1990s, while today, “shared value” shows signs of following in its footsteps.

 The “Virgin Birth” syndrome: Intellectual disciplines that advance systematically keep track of the evolution of the subject. Writers are careful to give credit to predecessors, signal alternative viewpoints and demonstrate sensitivity to the evolution of the subject as a whole. By contrast, some leading management journals systematically eliminate traces of earlier thinking about the subject at hand. It is as though the articles have “a virgin birth” and emerge into the world without any legitimate parentage.

I will therefore be asking: does the book adequately reflect the history of the subject under discussion?

7)      Does the book break free from the obsolete thinking of the Traditional Economy? As the paradigm shift takes hold, old self-evident truths are being cast aside. Maximizing shareholder value has been recognized to be “the dumbest idea in the world”. The illusive search for “sustainable competitive advantage” as the essence of strategy is being abandoned. The supposed short-term gains of large-scale off-shoring of manufacturing are recognized to have caused massive loss of competitive capacity. Does the book in question recognize this evolution and make it explicit, or does the book ignore it or even continue to endorse obsolete leadership principles?

The reviews of individual books will appear in the coming days.

Got a great new book that should be reviewed? Let me know about it and I will be happy to include it.

And read also:

Leadership in the three-speed economy

The dumbest idea in the world: maximizing shareholder value

How America lost the capacity to compete

The Phase Change to the Creative Economy

Don’t Diss the Paradigm Shift: It’s Happening

The five surprises of radical management

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Steve Denning’s most recent book is: The Leader’s Guide to Radical Management (Jossey-Bass, 2010).

Follow Steve Denning on Twitter @stevedenning