THE PARADOX OF CREATIVE DESTRUCTION: HOW TO LEAD IN A WORLD WHERE THERE IS NO ‘BUSINESS AS USUAL’


We live in the world of "creative destruction" where those who are wedded to habitual ways of doing things are in danger of doing themselves a great disservice. In order to lead and manage in this world we need to have one foot in the world of actuality and the other foot in the world of possibility. If we lead or manage only in the world of actuality, then we are not open to the restless logic of the free market, that is "creative destruction." On the other hand, if we live only in the world of possibilities, then we are likely to be dreamers whose visions are not grounded in actuality. We need to be able to dance and play in the dialectical tension between actuality and possibility to stay ahead in a world of creative destruction. This paper focuses on the mindset that is needed to stay ahead in the dynamic tension between actuality and possibility.


I recently paid a routine visit to the dentist and was struck by a moment of what the economic theorist Joseph Schumpeter refers to as ‘creative destruction’.

I was informed that I would need to have one of my teeth capped. “Oh no,” I thought: “the pain and discomfort of numerous sessions at the dentist, sitting their squirming while he drills my tooth down to size, then takes an impression of my tooth, and then fills it with cement and finally replaces it with a temporary crown.” I then anticipated going home for a week, and waiting for the dental technicians to mould the crown in an appropriate way to fit my tooth, then having to return for another session.


My dentist knows me well, and could sense my dread and distaste. “Don’t worry” he said to me with a smile on his face, “I have a new computer driven device which will enable me to perform the whole procedure within one session”. I was relieved and excited; relieved because my sense of dread had receded, and excited because it made me aware of the phenomenon of ‘creative destruction’ in a very real way. Here was a new technology that allowed a specific dental practice and the business of dentistry to operate in a new customer centric manner. However, I also felt very sad. I felt sad for all of the technicians that would now be put out of business by the development of a cost effective and customer focussed way of making crows available for patients.


Now I know that, from behind my comfortable desk, it is very easy for me to say this, but I then thought “this is the world we are living in today.” It is a world in which new technologies and new ideas are destroying old industries, old careers, old businesses, old work practices, old identities and traditional ways of doing things. The crucial issue, however, is how the old style dental technicians respond to the disruption and crisis that they are experiencing. Do they sink into the resignation of despair and blame technology for transforming our lives; or are they able to bring out the resilience in themselves to “seize the day” so that the change and disruption that they are experiencing can open up new possibilities for themselves?

I carried on my ruminations saying to myself that my dentist (who I hope will forgive me for this judgment) is not a young man. He must have developed his skills of procedure before the development of sophisticated computer dental software. As a middle aged man fixed in his habits of doing things, he must have gone through several disruptions to acquire whole new ways of working. He could have chosen to resist the new technology and stay with his fixed habits but he chose to embrace the new possibilities for himself – and I could see that he was very excited with the technology.


Living creatively in a disrupted world

Today, we are all living in this disrupted reality. The challenges surround us:


· Retail practices such as shopping centres are being creatively disrupted by on line shopping.

· Universities have to transform themselves in the light of new technologies and student demands.

· Medical practitioners, like my dentist, need to transform themselves in the light of new technologies.

· The transformation of newspapers from broadsheet to tabloid and on-line formats.

On a personal level, careers are being creatively destroyed. In response, we constantly need to reinvent ourselves. Summing this up Andrew Grove has said:[1]

“When companies no longer have lifelong careers themselves, how can they provide one for their employees?”


More broadly, the ‘West’ needs to be able to transform itself in the context of the ‘Asian century’. As Asian businesses acquire Western businesses, so both Western and Asian employees need to be able to creatively destroy their own practices. While in the recent past Western businesses may have been able to get away with doing business on its own terms, this is less and less the case. Do Westerners have the psychological flexibility to see their – our – mindset as one amongst many? Or are we going to lose ourselves by insisting that Asian businesses acquiring Western businesses conduct business in terms of our ethics, practices of corporate governance, rules, regulations and procedures?


A few weeks ago I was speaking to an Asian business man who said to me that the so called ‘Global Financial Crisis’ was much more a ‘Western Financial Crisis’. While it might have had ripple effects in Asia, the point is that the West tends to see itself as defining the terms in which business takes place across the globe. Those who are going to prosper in the new era are those who have the flexibility to get accustomed to the ability to see beyond their Western mindset, and begin to combine this view with an Eastern, and in fact a global, perspective.


We live in the world of creative destruction where those who are wedded to habitual ways of doing things are in danger of doing themselves a great disservice. On the other hand those who are open to new possibilities in the face of the destruction of traditional ways of doing things can experience the excitement of seeing and doing things in new and different ways. It does not matter how old or young a person is, we are living in a world where we cannot rely on the actuality of familiar practices.


We are challenged to continuously reinvent our businesses, our practices and our identities.


Getting the balance right

There is no doubt that we face much anxiety as we reinvent our world. But the important issue is how we face this anxiety. Just like the dental technicians we face a choice:

Do we resign ourselves to life as we have known it and blame a fast and changing world? Or,

Do we turn the energy of anxiety into new possibilities?


In the face of creative destruction the most dangerous thing we can do is to be fixed on the current reality. Rather we need to be able to see and live into a future that is not yet, that we and others are busy creating. We need to live into a world of possibility and need to unchain ourselves from a fixation on the world of actuality, the world as we currently see and experience it. For too long the virtues of routine, regularity and stability have been promoted to the exclusion of the world of possibility.


It is now crucial to promote the art of creating and living into the possible. This does not mean giving up the world of actuality. It means being able to live in the paradox of actuality and possibility. After all, someone who is too wedded to actuality does not see beyond the horizon whilst someone who sees only possibility is a dreamer.


Dynamic balance is the key. We need the balance to be able to walk on a tightrope that connects the world of the actual and world of the possible.


The first eleven years of this century give testimony to the fact we are living in times of surprise and disruption in which we can no longer expect the future to be the same as the past. Looking backwards from the Global Financial Crisis to the emergence of the Internet our lives and ways of doing business has been defined in most unexpected ways. Perhaps the one rule that we have today is that there are no rules that are fixed in concrete. As Ernst Gellner has said:[2]

“Modern history is rather like a football cup in which only the first round was played as soccer, the second round is played as rugby, the third as ice-hockey, etc.”


In the context of surprising and unexpected change, we can no longer rely on the stability of the past and we cannot simply read the future out of a textbook, balance sheet or the data.


The question for today is:

“How do leaders lead when the stability of the past cannot be assured and the future is unknown?”


This chapter will draw out a picture of the kind of leader required for times of change.

Such leaders do not have two feet firmly plastered in reality, but rather have one foot in the world of possibility and the other foot in the world of everyday actuality or reality. We will question conventional business wisdom which says that a pragmatic and realistic leader is one who is ‘practical’ and ‘hands on’. Whilst not disagreeing with the view that a leader needs to be practical and often hands on, what we will suggest is that leaders in times of change and uncertainty need always to have an eye that goes beyond the horizon; that is constantly attuned to new possibilities and to turning these possibilities into new actualities.


Different reactions to change

To paraphrase the words of a famous philosopher:

“When circumstances change, leaders must themselves be able to see things in new ways.”

They must move beyond having their two feet stuck on the ground and lift themselves high above the ground to see what is unknown. This is an easy statement to make but it is psychologically very difficult to do. We see this quite clearly when, in the face of changing circumstances, many big names in business fail to adapt their mindset to these changing circumstances.

Leaders who were once creative and innovative become conservative and defensive.


Reactive reactions

Consider, for example, Australian retail businesses such as Myers and David Jones. Think also of business leaders such as Harvey Norman who, in the face of the rise of e-commerce, have become not only defensive, but uncertain, confused and stuck in traditional ways of doing business. Many of the structures of these organisations were built during an era of stability and now find it almost impossible to adjust to an era of disruption and destruction. They built themselves in an era when retailers had control of markets and consumers. For example, until recently, Gerry Harvey had control of product information and the supply chain. Consumers had little or no access to information. The retailers had access to information and thus power.


The internet and other forces of disintermediation have torn this asunder. Customers today have access to an unprecedented volume of information. Local retailers are now trying to compete on an equal footing with global competitors. We see the fastest growing retail channels in Australian are shoppers buying from international merchants. All this has been made possible by the internet. Too many large retail businesses are encumbered by structures and processes that are wedded to the past. They are unwieldy and lack the ability to respond with agility to the rapid changes in the marketplace. Paralysed by market fragmentation, so many of these organisations have forgotten what it means to start with the customer.


No one knows where the next source of competition is going to come from.

To compound the problem, the large retail players are serving too many masters. As they struggle to placate shareholders, staff, suppliers and other stakeholders, the customer seems to get forgotten. Ironically, this breaks the golden premise of retail: start with the customer and work backwards. This was reflected when Gerry Harvey spoke on public TV and said that Australians need to pay more import taxes.[3] One interpretation of these remarks by average shoppers was that Harvey was simply trying to regain control over the retail sector, at the expense of the consumer who was benefiting from the disruption in a previously controlled marketplace.


Pro-active reactions

In contrast to this defensive and resistant attitude to change, we see how Fairfax has the openness to embrace the disruption in their market - the world of news reporting and newspaper production and distribution. Some have said they have been slow to respond to this changing environment, but they have recently acknowledged the need to shift from a broadsheet format to a mix of traditional media together with a range of on-line formats. In this context, we should note that they have also been willing to embrace their losses. In the early 2000’nds Fairfax invested heavily in upgrading their printing press facilities. Yet in their move to on line presentation they have been prepared to close the plants in which they have invested in order to seize the day of the on-line medium. This switch requires a deep seated psychological flexibility, a flexibility that is central to entrepreneurial creativity but not to the need for the security of the familiar.


An example of this creative attitude can be seen in thinking and actions of entrepreneurs like Paul Greenberg of DealsDirect who in many ways anticipated the future as he built his company when on line trading was but a whisper in Australia. More than this, he speaks about needing to constantly be attuned to the need to remodel and regenerate his company – not as an end in itself but because business is changing so fast. He recognises that his models are becoming obsolete as he builds them and in the face of changing circumstances is always ready to destroy what he has created so as to be receptive to new possibilities.


Because the market is changing so fast, we cannot expect the models that were reliable and valid for yesterday, will be helpful in anticipating and developing the needs and demands of tomorrow. Just because we have a successful way of doing things today no longer means it is going work tomorrow.


We need to be able to build that kind of mindset or attitude that enables us to question our way of doing things in the face of changing circumstances.


The paradox of creative disruption

Actuality and possibility are the two terms which leaders must build into their vocabulary in order to face the uncertainty of the future.


Possibility allows us to change and actuality allows us to keep stable. What we call the ‘actual’ is nothing other than a set of conventions for doing things. It may appear that industries and even ways of doing business are more than conventions, that they are brute realities. Yet if we cast our eyes over history, we will see how many organisations and businesses that were built to last have crumbled and broken apart. Leaders, who can see that what passes for reality is nothing more than the strength of conventions, are those that can begin to open up new possibilities.


There is a simple framework that can help to make sense of moving from the actuality of conventions to the possibility of new visions. It is called the Convention-Disruption-Vision model and was developed by Jean-Marie Dru in his book ‘Disruption: overturning conventions and shaking up the marketplace’.[4] He maintains that for the most part our perceptions and experiences in the world are regulated by conventions that we do not think about us such. For example, we use knives and forks without thinking about them as being conventions. We do not think about our practices for eating; we simply eat. Indeed if we stopped to continually think about our practices of eating this focus on the task would get in the way of our eating:

“Although conventions are everywhere, they are generally hard to see. These are things that we don’t even notice because they are so familiar. Depending on the case, we will talk about unquestioned assumptions, good old common sense, or the current rules of the game.”


However, our conventions shape and limit the way in which we see and experience. If we want to change our way of seeing and experiencing, we often need to disrupt our existing assumptions:

All at once, we question the way we have done things in the past. We discover that our way of thinking has been conditioned by biases [and] adherence to outmoded frameworks.”


By exposing our biases we open up the possibility of seeing things in new ways. The new vision emerges out of the way in which we work with the disruption of existing conventions:

“Disruption is about developing new hypotheses and unexpected ideas … a quest for angles of attack that have never been used before. … It provides a glimpse of what does not yet exist.”


Dru maintains that it was through a disruption of their existing conventions that IBM was able to move from being seen as a manufacturer of large computers to instead becoming a provider of universal solutions. It is by disrupting the actual or our taken for granted conventions that we open up new possibilities and visions.


According to Dru, being able to view the familiar (or the actual) with new eyes is critical. Continuing, he maintains that entrepreneurship:

“... must reclaim its role of making the unstrange strange, the familiar unfamiliar.”


There are a number of corporate leaders who have understood that the free market is underpinned by cycles of creative destruction such that they have been able to destroy conventional ways of doing business and open up new ways of doing business.


The creative management mindset

Henry Mintzberg expressed this well when he says that leaders and a managers need to have three sets of attunements or competencies.[5] They need to have the mindset of a scientist, an artist and a craftsperson.


A craftsperson, from Mintzberg’s perspective is someone who is firmly anchored in the ground of everyday actuality and experience. He or she is firmly rooted in the ‘earth’.The scientific mindset is a very disciplined mindset and the artistic mindset has the foresight to see new possibilities beyond the immediate horizon. A manager or leader who has only a craftsperson’s mindset and is thus to anchored in everyday experience cannot see new possibilities emerging and is taken off guard by change.


A person with a scientific mindset is in a similar position: so dominated by numbers and analysis, he or she is unprepared for new possibilities. A manager with only an artistic mindset is so ungrounded that they cannot see everyday actuality. The issue is to combine all three in a dynamic tension. These mindsets do not sit comfortably with each other. But it is precisely because they do not sit comfortably with each other that a manager or leader who is attuned to all three can be both grounded and creative at the same time.


The creative manager or leader is one that can be attuned to irreconcilable opposites at the same time.


We’ll return later to this model after we’ve taken a look at how these elements have been combined by some well known leaders as they embraced the possible and the actual to lead their organisations through major change.


Organisationally the iconic leaders who have been able to embrace both possibility and actuality are people like Steve Jobs from Apple, Andrew Grove who led Intel through times of challenge and Jack Welch who was CEO of GE as it changed its market positioning.


Embracing the paradox of possibility: the case of Steve Jobs

Steve Jobs is a classic example of someone who lived with paradox and change.

At the same time as being attuned to creating new possibilities, Jobs was known as a manager who was at the very least obsessed with order and control, a micro manager who drove not only himself but the people around him in ways that ensured that his innovations were always on track. He had a disciplined mindset and demanded from his employees a similar attention to detail in the development, execution and delivery of products. He exemplifies the vision, craft and science of leadership required for working in the space between actuality and possibility.


The journey of Jobs is by no means unique to him.


The fear of being ourselves

Indeed, as Joseph Schumpeter has pointed out, it is central to all entrepreneurial leaders that they be able to withstand what Schumpeter describes as “the anxiety of the unfamiliar”.[6] He makes the point that only a few people are willing to leave their comfort zones. If you are not willing to leave the familiarity of your comfort zone, you are not able to see new possibilities and thus to stay in tune with the way circumstances are constantly changing. It is important to note that I say ‘willing’ rather than ‘able’ because leaving the familiarity of one’s comfort zone is an act of choice.


The question is:

How do we open ourselves to a world of possibility without losing a sense of stability?


Steve Jobs must be the icon of this paradox .Jobs has not just created iPhones and iPads. He has created an iWorld, a world which is redefining who we are, how we relate to each other and how we do business with each other not only in our local but in global contexts. He has opened possibilities for those of us ready to embrace this iWorld and created fear for those who see their businesses still grounded in the pre-iWorld.


In his now well known Stanford speech, Jobs identifies a constant attunement to death as the condition which not only kept him open to new possibilities but freed him from the constraints of following the ‘herd’, that is, doing things because they were ‘supposed to be done.[7] For example, he speaks about dropping out of university because what he was doing did not feel right to him. He was studying not what he wanted to study but what he was supposed to study.

His whole being rebelled against this.


Although he does not say this, we could well imagine that while he was at college doing what he was supposed to do but not what he wanted to do, he felt a sense of emptiness and a sense of not ‘being-there’, not being present in the courses that he was doing. Indeed he does say that when he dropped out of university, he could ‘drop in’ to the courses that interested him and about which he was passionate. One of the courses that he dropped into was a course in calligraphy which became the basis of the type face of the Macintosh.


The fear of our mortality

Overcoming the fear of death as a source of opening the world of possibility is not new to philosophers. It can be found, for example, in the philosophy of George Hegel, who speaks about the slave achieving freedom when they conquer or overcome their fear of death.[8] Nelson Mandela is also a perfect example of this. In his 1961 defence of himself at the Rivonia treason trial, he speaks about democracy as an event for which he was prepared to die. Because he and his people did not fear death, they were already liberated. Similarly, we can look at the Arab spring in this light; going beyond the fear of death, the people of a range of Arab nations have begun to open up new possibilities for themselves.


And so it is with Steve Jobs: being constantly attuned to death and going beyond the fear of death was the basis of his constantly being able to open new possibilities, from the development of the Mac, through the development of Pixar and the range of iPods, iPhones and iPads. He was always ready to let go of the old, familiar routines in order to embrace the newness of possibility.


The philosopher Søren Kierkegaard has said:[9]

If I were to wish for anything, I should not wish for wealth and power, but for the passionate sense of the possible, for the eye which, ever young and ardent, sees the possible . . . what wine is so sparkling, so fragrant, so intoxicating, as possibility!”


It is because Jobs experienced the intoxication of possibility, that, to use Kierkegaard’s words, he could see things that no one else could see. He was liberated from what Kierkegaard would call being stuck in the finite or the actual, the common sense way of seeing things.

Some people believe that it is by going overseas on journeys to strange and unfamiliar places that a person can be liberated from their every day actual and common sense ways of doing things. While not disagreeing with this, Kierkegaard says that if you can accept the possibility of your own death, then common and everyday things become small and insignificant and when the everyday becomes small and insignificant, it frees you to create and open the world beyond your immediate horizons. It is often said that one of the reasons that Israel as a nation is so innovative is because it constantly experiences itself as facing its own death.


Consequently, everyday concerns become insignificant and as a result its people are not tied and wedded to one way of doing things.

When we are free from mundane concerns, we can play and experiment, virtues so central to innovation.


It could be argued that entrepreneurs like Jobs and Greenberg are dangerous role models, encouraging us to embrace uncertainty and irregularity when what we really desire is order and stability. Yet what we need to remember is that we are living in times of uncertainty where regularity cannot be assumed. This is the case on so many dimensions of life: politically, economically, and organisationally, in relationships and as individuals. In Greenberg’s world, retail is being fragmented and atomised, and he needs to constantly be attuned to this change – and respond accordingly.


The fear of the unfamiliar

Furthermore, as Schumpeter told us at the beginning of the twentieth century, the free market does not operate in terms of principles of equilibrium but in terms of principles of ‘creative destruction’ where new industries, careers and businesses are constantly - and more often than not with surprise -- destroying conventional ways of doing business.


The creative destruction of, for example, bookstores in the name of online book ordering is not a free market anomaly but is a very central principle of capitalism. It is the essence of the free market that it destroys the comfort zones of the familiar and the actual. And it is from the essence of capitalism that we learn to develop the resilience and psychological flexibility to open up new possibilities. We need to remember that what we call the ‘actual’ is just the present day conventions for doing things. To create in the face of destruction we need to be able to let go of the familiarity of the actual or conventional so that we can open up new ways of doing business.


We need to learn how to embrace and work with uncertainty. Most of our education has not prepared us to live with irregularity and uncertainty. Indeed not only our educational practices but the whole ideology of science has reinforced in us the value of order and stability. From early experiences at school through to working in or for most institutions order and stability have been stressed.


However, in times of irregularity where the unexpected and impossible become actual and possible, the need for order and stability can be counterproductive, producing the very disorder that we fear. For the more we resist the changes that are constantly occurring, the more we marginalise ourselves, paradoxically leaving us outside of the main-stream in which change is occurring. If we do not embrace the new technologies that are constantly occurring then we leave ourselves on the outside, failing to be able to make sense of the emergent technologies and the ways of life which go with them. We hurt ourselves by refusing uncertainty.


Paradoxically, if we are willing to embrace being on the outside, we create the conditions for opening new possibilities. If we are willing to play with the new, we open new possibilities for ourselves.


Unlike Jobs, Greenberg recognises that in himself he does not combine the dynamic tension of the scientific, craft and artistic mindsets and being humble enough to acknowledge this, the management structure of his company is set up in such a way that his entrepreneurial flair for opening up new possibilities is ‘balanced’ with executives who have an appreciation for the checks and balances required for the everyday running of the business. I place ‘balanced’ in inverted commas because it is never simply balanced. It is much more like a dynamic tension with each struggling to listen to each other but being prepared to go beyond their own domain in order to hear each other.


In their own words: blending the possible with the actual

As we said earlier, actuality and possibility are the two terms which leaders need to build into their vocabulary in order to face the uncertainty of the future. In order to provide some further insights, I would like to describe the experience of two more corporate leaders: Andrew Grove of Intel and Jack Welch of GE.


The leadership of Andrew Grove

How does someone lead when they are themselves confused and uncertain?

This is a question that Andrew Grove of Intel helps us answer. The central experience of creative destruction in Grove’s leadership experience was a crisis at Intel generated by a threat from Japanese competitors. This crisis occurred in the early 1980’s when Intel dominated the microchip market. It had taken years for Intel to build itself up to be the dominant player in the market. It was proud of the achievement, and felt rewarded for the considerable effort that was involved in reaching the top position.


But, despite their efforts, something happened that the folks from Intel weren’t prepared for. Whilst they had basked in the sunshine of their success, their competitors from Japan had been slowly learning the craft of chip design and manufacture, and, seemingly from nowhere, products from a range of Japanese companies were threatening Intel’s market. Senior management at Intel realised that they did not have the know-how to beat off their Japanese competitors. In fact they were quite stunned by the way in which Japanese know how surpassed theirs,


As Grove says:[10]

“The quality levels attributed to Japanese memories were beyond what we thought were possible.”


For Intel the experience of the powerhouse of Japanese competition was one in which they felt that they had been knocked off their path. They had lost their way because they could no longer rely on their way of doing things. There came a point in Grove’s struggle that he realised that he could not struggle any more, that struggling was futile.


He contemplated both his own end at Intel and the death of Intel itself. Yet at that very moment he entered into a qualitatively different mindset. In this mindset he began to ask different kinds of questions about himself and Intel.


Groves said:

“I remember a time in the middle of 1985, after this aimless wandering had been going on for almost a year. I was in my office with Intel's chairman and CEO, Gordon Moore, and we were discussing our quandary. Our mood was downbeat. I looked out the window at the Ferris wheel of the Great America amusement park revolving in the distance, then I turned back to Gordon and I asked, 'If we got kicked out and the board brought in a new CEO, what do you think he would do?’ Gordon answered without hesitation, ‘He would get us out of memories’ I stared at him, numb, then said, ‘why shouldn't you and I walk out the door, come back and do it ourselves?’"


As indicated in the quotation, the way in which Moore answered this question renewed both Moore’s and Grove’s sense of hope. It opened up new sets of possibilities for them. They moved very quickly from a sense of resignation and despair to one of excitement. Of course, the excitement was mixed with much uncertainty. They did not have a well-developed sense of the new journey that they were about to embark upon. But, in the face of the unknown, they were open to a new direction that they did not previously have.


The combination of excitement and uncertainty about the future and the possible was more hopeful than the despair, resignation and certainty of the actual and the past.The decision by Groves and Moore to seize the day resulted in the rebirth and reinvigoration of Intel.


Jack Welch’s experience at GE

Jack Welch can also be described as a leader who blended the possible and the actual.

He is a leader who not only saw things well ahead of time but was able to act on his way of seeing things. On many occasions his call for transformation of GE has taken conventional business wisdom by surprise. This was particularly the case when he became CEO of GE in the early 1980’s. Conventional wisdom was that GE was a stable company developing in a steady way. From this perspective GE was not in need of change. Yet Welch pushed for fundamental transformation of GE. His push was met by shock and astonishment.


As one commentator puts it:[11]

“When Welch took over at GE, most observers thought he was lucky, stepping into such a successful, well-managed, respected, historic company … The media, GE’s workers, and many others were dumbfounded when Welch urgently demanded change before it was too late.”


Conventional business wisdom could not see what Welch had seen. Welch understood the perspective of those who were dumfounded with his call for change:[12]

“There was no stage set for us. We looked too good, too strong, too profitable, to be restructuring.”

Yet this did not stop Welch from committing himself and the resources of GE to a transformation, a transformation whose terms had not yet become clear to even Welch himself.


As he says:

“I did know what I wanted the company to ‘feel’ like. I wasn’t calling it culture in those days, but that’s what it was.”


What was it that allowed Welch to see possibilities beyond the horizon of conventional business wisdom? What did it take for Welch to act on his foresight when those around him, doubted him and thought that he was ‘crazy’? And how do we distinguish the gift of foresight from downright foolishness? For it could have been the case that Jack Welch was simply ‘building castles in the sky’. History as we know is littered with false prophets, with visionaries who build grand dreams.


Jack Welch’s vision for GE grew out of years of a deep sense of working for, whilst experiencing frustration with, the unresponsiveness of GE to innovation. His years of working for GE gave him an in depth understanding of GE. His frustration with GE allowed him to question conventional wisdom of GE. While at the beginning he did this in a loud and aggressive way, as he matured, he kept his thoughts to himself, always being part of GE but nevertheless having an outsider’s perspective on the company, the perspective of someone who does not quite fit into the mould. It was this combination of being inside but not quite fitting into GE that allowed him to see beyond the current horizon and imagine a future for GE that no one else could see. Indeed Welch himself says that it is important for a leader to be a bit of an outsider for this gives him or her perspective:[13]

“One of the things about leadership is that you cannot be a moderate, balanced, thoughtful, careful articulator of policy. You’ve got to be on the lunatic fringe.”


Yet Welch is very quick to say that this being on the lunatic fringe which enables a leader to see new possibilities, needs to be coupled with a very strong sense of being grounded in actuality.


As he says himself:[14]

“Facing reality sounds simple but it isn’t. I found it hard to get people to see a situation for what it is and not for what it was, or what they hoped it would be.” Continuing, he says: “Self-delusion can grip an entire organization and lead people in it to ridiculous conclusions.”


He then makes the same point in an even more specific way: “Making the numbers at GE gets you in the game. Living the values…is the road to promotions and greater personal rewards.”

What we see in all leaders who create in the face of destruction is the resilience to open up new possibilities in the face of the uncertainty of the unknown; yet they are grounded in everyday reality as well.


Blending the actual and the possible: applying the creative management mind-set

Let me reiterate, great visionary leaders are able to blend the possible and the actual.They go beyond simply balancing the world of the actual and the world of the possible: they embrace both. Accomplished leaders are able to move seamlessly between both aspects of reality. They do not get stuck in the actual or lost in the possible but are able to dance between the two.


There are key skills and abilities such leaders require for a world in which it is not business as usual. For those of us looking to bridge the actual and the possible, the simple model outlined earlier drawn from Henry Mintzberg gives us a framework to inform our thinking and our behaviour as we embrace the world of the new. Indeed in any truly creative work, art, science and craft are not so far apart.


Albert Einstein has made it quite clear that the curiosity and imagination of the artist was no less important that the methodological discipline of scientific method in his science when he says:

“To raise new questions, new possibilities, to regard old problems from a new angle, requires creative imagination and marks real advance in science.”


Of course this is not how science is traditionally seen in management. In science is seen as being all about order, control and discipline. While not excluding order and control, the challenge for management theory and practice in the future is to go beyond this narrow version of science and embrace the Einsteinian version which allows for creative destruction and the dynamic balancing of art, craft and science.


To do this managers and leaders will need to creatively destroy traditional and outmoded notions of leadership and management. In order to create in a world where business is unusual a leader needs to develop a certain mindset. There are three things that are essential to this mindset:


The willingness to embrace paradox.

· Recognise that the free market is characterised by the paradox of routine and creative destruction.

· Know when to conduct business as usual but have a mind that is agile enough to disrupt conventions.

· Be grounded in the tension between the actual and the possible.

· Focus and question at the same time.

· Experiment by allowing for chaos to reign in order to reign chaos in.

· See limits as opportunities.

The strength to sit with uncertainty.

· Be open to new possibilities and ‘seize the day’.

· Turn disruptive moments into occasions for creativity.

· Operate outside of the familiar conventions of the day.

· Be willing and able to bounce back from adversity.

· Take time to see ourselves through the eyes of our competitors and customers.

The desire to continually learn.

· Push the boundaries of thought and practice.

· Learn to stand above our business whether it is through an awareness of death, being a stranger or any other mechanism.

· Learn to see things from an outsider’s perspective.

· Learn to listen to what is occurring on the periphery of your business or industry.

· Listen to the madness within you.

· Connect to your emotions for our emotions alert us to danger before reason intervenes.

Being able to embrace some of these characteristics will enable managers and leaders in an i-World to develop the psychological flexibility to cope with, and create in, the surprising experiences of creative destruction. It is only by experimenting with these characteristics that we will develop.

We must all be willing to take a leap.


Seize the day

This theme is played out in the film the ‘Dead Poets Society’.[15]

In one of the early scenes in the move Robin Williams, the teacher takes the students into the vestibule of the school and shows them pictures of past generations of students who in their time were scholars at the school. He then asks the students where they think these students are today. Not waiting for an answer from them, he tells the current students that the past generation of students are “pushing up daffodils”. They are dead. Whilst the students are absorbing the shock of this realisation, Williams tells them to “seize the day”.


For Williams in the movie, ‘seize the day’ means, being open to expressing the possibilities that each of us are. And it takes the realisation of our own death to take us beyond the routine of the everyday to opening us up to what is possible.


It is interesting to note that Kierkegaard does not say that there are no dangers in opening us up to the world of possibility. Indeed he quite explicitly says that one of the dangers of living only in the world of possibility is that of suicide. And indeed in the ‘Dead Poets Society’ we see that when one of the students finds that he does not want to just go through the boring routine of school in order to become what his parents want him to be – a doctor or a lawyer – he is stranded in the vexations of the world of possibility. He is torn between the demands of an authoritarian father and the new possibilities that have opened up for him, the possibility of becoming an actor – something that his father is firmly set against. Not knowing which way to turn, he eventually commits suicide. Robin Williams – or Mr Keating as he is called in the movie – is held responsible for this act and is fired from the school, although the students do not want to see him go.


Thus Kierkegaard calls for a healthy balance between the worlds of possibility and the everyday world of actuality. On the one hand, too much possibility detaches a person from the world in a way that can make them delusional. It is like living only in a dream. On the other hand living only in the world of everyday actuality does not allow one to see beyond one’s horizons and so leaves one unprepared for changes that are beyond one’s immediate awareness.


A person needs to not simply have two feet on the ground but one foot in the world of possibility and the other in the domain of everyday actuality.

All of the leaders described in the second half of this chapter have the willingness to live in the space between actuality and possibility. Even my dentist who is a very grounded man, knew when to open himself up to the world of possibility.

The challenge is, can we open ourselves to this possibility?


Can we afford not to?

[1] Grove, A. Only the Paranoid Survive (Great Britain: Harper Collins Publishers, 1998), p5 [2] Gellner E. "Metamorphosis" in Thought and Change London: Weidenfeld and Nicolson, 1964, p63 [3]www.abc.net.au/lateline/content/2012/s3458857.htm [4] Dru, J-M 1996, ‘Disruption: overturning conventions and shaking up the marketplace’, John Wiley & Sons, NY. [5]Mintzberg H (2004) Managers: Not MBA’s: A Hard Look at the Soft Practice of Managing and Management Development San Francisco: Berret Koehler Publishers [6] Schumpeter, J. Capitalism, Socialism and Democracy (NY: Harper Tourchbooks, 1955). [7] http://www.youtube.com/watch?v=D1R-jKKp3NA [8] Hegel F Phenomenology of Spirit, translated by A. V. Miller with analysis of the text and foreword by J. N. Findlay (Oxford: Clarendon Press, 1977) [9] Kierkegaard S Either/Or Princeton, N.J : Princeton University Press, c1987 [10] Groves, 1996 [11] Lowe, J. 'Neutron' Jack Welch San Diego Metropolitan Magazine, 1998 http://www.sandiegometro.com/1998/may/money.html [12] Welsh, J Jack London: Headline Book Publishing 2001 [13] Welsh 2001 [14] Welsh 2001 [15] Weir Peter Dead Poet’s Society IMDp, 1989

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