15,99 €
Mehr erfahren.
- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
Learn what matters most in leading your team through change
When change is constant and accelerating, our success depends on embracing its potential for growth. Global executive Steve Vamos reveals how powerhouse tech companies like Xero, Microsoft, Apple and IBM thrive by enabling change, creativity and innovation. Inside, you’ll find practical tools and a playbook that will help you manage disruption and successfully align your people and resources with your goals.
From industry challenges to the AI revolution, Through Shifts and Shocks shares a pathway that leaders and teams can follow to navigate change and perform better together. As a leader, you need to understand how to balance being (who you are as a leader) and doing (how you lead through words and actions). Through Shifts and Shocks shares crucial leadership must-dos, engaging stories and surprising insights gleaned from the author’s experiences at the biggest tech organisations in the world.
Discover a framework that will help you and those you work with be better every day:
- Develop the right mindset for change
- Be clear about your priorities and drive alignment
- Assess current performance, strategy and tactics with a diagnostic toolkit
- Make hard choices and have difficult conversations
- Create an environment of psychological safety that encourages your team to innovate and drive growth
When it comes to change, it is not enough to know why. You also need to know how. From real-world examples to practical exercises, this guidebook will show you how to make a vital difference in your team and organisation as you think, act and lead.
'A must-read, sharing inspired insights into what it takes to be a great leader of people and organisations, from one of the best’ —David Thodey AO
Sie lesen das E-Book in den Legimi-Apps auf:
Seitenzahl: 323
Veröffentlichungsjahr: 2024
Ähnliche
Table of Contents
COVER
TABLE OF CONTENTS
TITLE PAGE
COPYRIGHT
DEDICATION
INTRODUCTION
The right place at the worst time
Who is this book for?
How this book can help
Two domains and eight Must-Do actions
Are you up for what follows reading this book?
PART I: WHAT HAS CHANGED AND WHY CHANGE IS HARD
CHAPTER 1: TECHNOLOGY AMPLIFIES PEOPLE!
People are our greatest asset!
The potential of people is amplified
Organisations are a social network
Artificial intelligence (AI) is the next amplifier
CHAPTER 2: HUMANS IN A NEW WORLD OF WORK
Diversity and inclusion intensify
Social activism at work
Health and wellbeing go mainstream
Hybrid workplaces and finding the right balance
CHAPTER 3: CHANGE IS HARD BECAUSE WE ARE HUMAN
To fear change is human
It's hard to learn from success
Our conditioning at work is not ‘change friendly’
PART II: ‘BEING’ AND WHY CHARACTER MATTERS
CHAPTER 4: HOW CHARACTER FORMS AND PLAYS OUT
Understand how life experience shapes you
We can all be leaders of change
CHAPTER 5: MUST-DO #1: APPLY THE RIGHT MINDSET
Mindset shift 1: from control freak to connector and enabler
Mindset shift 2: from fear of mistakes to embracing the learning
Mindset shift 3: from know-it-all to learn-it-all
CHAPTER 6: MUST-DO #2: BE SELF-AWARE
Listen and seek feedback
Get a coach
Belief is everything
Don't be a victim
CHAPTER 7: MUST-DO #3: CARE ABOUT PEOPLE
Serve others before self
Create a safe environment for people to speak their truth
Value the strategic role of the HR function
A strong leadership team is the primary team
Be head coach more than star player
Develop great people managers
Put the right people in the right roles
Know who you would hate to lose
Final words on Being and Character
PART III: ‘DOING’ THROUGH WORDS AND ACTIONS
CHAPTER 8: MUST-DO #4: SEEK CLARITY
Clarity of purpose
Burning ambition
Priorities and focus
Expectations of behaviour
Final words on clarity
CHAPTER 9: MUST-DO #5: DRIVE ALIGNMENT
The missing link
Drive alignment with level order planning
Working across functional silos
The product management process
Multi-product and multi-geo organisations
Technology and the business
Short-term and long-term expectations
Final words on alignment
CHAPTER 10: MUST-DO #6: FOCUS ON PERFORMANCE
The devil is in the detail
An effective rhythm of the business
The right scorecard
People manager performance
Individual performance management
Team performance focus
Final words on performance focus
CHAPTER 11: MUST-DO #7: HAVE DIFFICULT CONVERSATIONS
Words are all we have
Confront difficult conversations about performance
The master
Practise giving feedback
Final word on having difficult conversations
CHAPTER 12: MUST-DO #8: MAKE HARD CHOICES
Prioritising our time
Hiring the right CEO
Replacing a founder
Letting someone have their way (against your judgement)
Entering new markets and lines of business
Making across-the-board job cuts
Making a next career move
Final words on making hard choices
PART IV: TAKE ACTION AND BE REWARDED
CHAPTER 13: THE MUST-DO DIAGNOSTIC AND PLAYBOOKS
The Must-Do Diagnostic
The Being/Character Domain Playbook
The Doing/Words and Actions Domain Playbook
Notes for an individual contributor
Individual contributor actions and tools
Notes for a Board Director
What does success look like?
Final words on the Must-Do Diagnostic and playbooks
CHAPTER 14: THE MUST-DO TOOLBOX
1. Confront individual performance issues
2. Practise feedback speed dating
3. Fast-track clarity of priorities in 1–2 days
4. Develop a team code and live by it
5. Implement level order planning
6. Align to be a better product business
7. Implement a nine-box talent management tool
8. Career counselling process
CHAPTER 15: THE JOURNEY IS THE REWARD
Working with great people
Steve Jobs
Rod Drury
James Packer
Kerry Packer
Bill Gates
Achieving something special
FINAL THOUGHTS
GRATITUDE
SOURCES
END USER LICENSE AGREEMENT
List of Tables
Chapter 13
Table 13.1: Must-Do Diagnostic
Table 13.2: Must-Do Playbook — Being/Character domain
Table 13.3: Must-Do Playbook — Doing/Words and Actions Domain...
Chapter 14
Table 14.1: tools and associated benefits
Table 14.2: example offsite meeting agenda
Table 14.3: feedback rating chart
Chapter 15
Table 15.1: Xero data points, 2016-2023
List of Illustrations
Introduction
Figure I.1: career chronology shifts and shocks
Figure I.2: the two domains and eight Must-Do actions
Chapter 1
Figure 1.1: S&P market value
Figure 1.2: traditional organisation chart
Figure 1.3: social network organisation chart
Figure 1.4: adoption of modern technologies
Chapter 4
Figure 4.1: the iceberg — change happens below the surface
Chapter 5
Figure 5.1: apply the right mindset
Figure 5.2: stuff you don't know
Chapter 6
Figure 6.1: digital advertising in Australia, 1999–2023
Figure 6.2: the dotcom crash
Part 3
Figure III.1: interplay of Must-Do actions
Chapter 9
Figure 9.1: driving alignment at ALDI
Figure 9.2: level order planning
Figure 9.3: ALDI level one strategies and objectives
Figure 9.4: a typical matrix structure
Chapter 12
Figure 12.1: direct and indirect founder influence
Chapter 13
Figure 13.1: Xero TeamX Diagnostic
Chapter 14
Figure 14.1: virtuous cycle of product management
Figure 14.2: nine-box matrix
Guide
Cover
Table of Contents
Title Page
Copyright
Dedication
Introduction
Begin Reading
Final Thoughts
Gratitude
Sources
End User License Agreement
Pages
i
ii
iii
iv
v
ix
x
xi
xii
xiii
xiv
xv
xvi
xvii
1
2
3
4
5
6
7
8
9
10
11
12
13
15
16
17
18
19
20
21
22
23
25
26
27
28
29
30
31
32
33
34
35
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
93
94
95
97
98
99
100
101
102
103
104
105
106
107
108
109
110
111
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
135
136
137
138
139
140
141
142
143
144
145
146
147
149
150
151
152
153
154
155
156
157
158
159
160
161
162
163
164
165
166
167
168
169
170
171
172
173
174
175
176
177
178
179
180
181
182
183
184
185
186
187
188
189
190
191
192
193
194
195
196
197
198
199
200
201
202
203
204
205
206
207
208
209
210
211
212
213
214
215
216
217
218
219
220
221
222
223
224
225
226
227
228
229
230
231
233
234
235
236
237
238
239
‘Few leaders can boast to have led through some of the most significant industry events over the past 40 years. Steve Vamos was there for the PC, the networking era, the internet, mobile, cloud computing and now AI. If you want to learn how to effectively navigate through massive change, this book is for you.’
— David Shein, general partner, OIF VC
‘Steve distils his lifetime experience in major organisations at the technological frontier. It isn't the “tech” that interests him rather people and what they can achieve with the right motivation, support and work culture. This book provides a powerful case for change and a practical and compelling guide to action.’
— Emeritus Professor Roy Green AM
‘Steve Vamos has packed in so much practical wisdom into Shifts and Shocks drawn from his depth of global business experience. This makes Shifts and Shocks an essential guide for anyone in leadership.’
— Narelle Hooper, award-winning Australian business editor and interviewer (Company Director, AFR BOSS Magazine), non-executive director The Ethics Centre
‘Whether you are a CEO of a large listed company or a team member of a small start-up, the “Must-dos” Steve recommends can help every industry, business and team change better to achieve their full potential.’
— Clinical Professor Leanne Rowe AM
‘After seeing Steve speak years ago, it was humbling to meet one of my heroes and have him help shape Xero to be a global technology business. It has also been humbling to be a peer to Steve, and to become over many shared experiences and laughs, a friend.’
— Rod Drury, founder, Xero
‘Steve Vamos succeeded in doing what very few executives have accomplished in the tech industry: taking the reins of a high-growth, industry-defining company from its iconic founder/CEO and taking it to the next level. Whatever Steve has to say about that amazing journey deserves our attention and admiration.’
— Graham Smith, former board chair, Splunk and Xero
‘Steve's insights are an invaluable guide to anyone interested in developing their leadership skills from a leader who has achieved it all over his 40 plus year career.’
— Steven Worrall, corporate VP, Microsoft
‘Steve's grasp of how people leadership impacts an organisation, particularly one requiring great change, is unparalleled. If we all followed his practical advice, coupled with his genuine humility and integrity, we would all be better leaders and better people. This book needs to be front and centre on your bookshelf.’
— Brett Chenoweth, chairman, CDC Data Centres
‘Steve's team-centric leadership approach enables success in turbulent times and high growth. Through Shifts and Shocks provides the pathway to creating a team environment of high trust and psychological safety, where the “being” and “doing” are in focus and the team works hard to excel in both.’
— Rachael Powell, CEO, Magentus
‘Steve is an inspiring leader. I have seen him align teams to achieve seemingly impossible goals. He enables others to overcome obstacles and tackle the difficult conversations that others walk away from. This book outlines his technique with 8 Must-Do actions to follow.’
— Christa Davies, board member, Stripe and Coinbase, former CFO Aon
First published 2025 by John Wiley & Sons Australia, Ltd© Steve Vamos 2025
All rights reserved, including rights for text and data mining and training of artificial intelligence technologies or similar technologies. Except as permitted under the Australian Copyright Act 1968 (for example, a fair dealing for the purposes of study, research, criticism or review) no part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise. Advice on how to obtain permission to reuse material from this title is available at http://www.wiley.com/go/permissions.
The right of Steve Vamos to be identified as the author of Through Shifts and Shocks has been asserted in accordance with law.
ISBN: 978-1-394-29350-6
Registered OfficeJohn Wiley & Sons Australia, Ltd. Level 4, 600 Bourke Street, Melbourne, VIC 3000, Australia
For details of our global editorial offices, customer services, and more information about Wiley products visit us at www.wiley.com.
Wiley also publishes its books in a variety of electronic formats and by print-on-demand. Some content that appears in standard print versions of this book may not be available in other formats.
Trademarks: Wiley and the Wiley logo are trademarks or registered trademarks of John Wiley & Sons, Inc. and/or its affiliates in the United States and other countries and may not be used without written permission. All other trademarks are the property of their respective owners. John Wiley & Sons, Inc. is not associated with any product or vendor mentioned in this book.
Limit of Liability/Disclaimer of WarrantyWhile the publisher and author have used their best efforts in preparing this work, they make no representations or warranties with respect to the accuracy or completeness of the contents of this work and specifically disclaim all warranties, including without limitation any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives, written sales materials or promotional statements for this work. This work is sold with the understanding that the publisher is not engaged in rendering professional services. The advice and strategies contained herein may not be suitable for your situation. You should consult with a specialist where appropriate. The fact that an organisation, website, or product is referred to in this work as a citation and/or potential source of further information does not mean that the publisher and author endorse the information or services the organisation, website, or product may provide or recommendations it may make. Further, readers should be aware that websites listed in this work may have changed or disappeared between when this work was written and when it is read. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.
Cover design by WileyCover image: © Rolling Stones/Adobe Stock
For my father, Peter Vamos
INTRODUCTION
We are living at a time defined by constant and accelerating change, which gives rise to two big problems that need to be solved, and solved fast:
Problem 1. Our ability to lead and respond to change is not good enough (to put it kindly).
Problem 2. Change is best managed through great teamwork and collaboration, yet most people work in mediocre teams, limiting their ability to perform at their best.
These problems lead to flawed or failed change initiatives, wasted human potential and low productivity. The resulting social and economic impacts on the wellbeing of people, organisations and societies are significant and unacceptable.
So how do we fix it? By improving the way leaders and members of their teams think and act in the face of change. This can be any kind of change such as responding to external forces, improving a product or process, or taking action to help teams work better together.
We must urgently address this problem of wasted potential and productivity in the workplace by learning how to be better at change.
Organisations don't change unless their people do, and without the right approach to engaging people and teams, the status quo outweighs the change agenda every day and progress stalls.
Despite successive waves of hype around new technology, it isn't technology doing the disrupting; it's people! Technology amplifies the potential of people. But at the same time as being the force behind change, people also offer the greatest resistance to it. Change is hard for people because our natural reaction to it is shaped by:
fear — an important instinctive response to change
conditioning — from our social and workplace influences
attachment — to past success and knowledge.
Now more than ever, the human element of change must be a constant, front-of-mind obsession and focus of attention on any change journey.
In this book I share the most important things about leading, responding to and overcoming the human challenge of change that I have learned from 40 years on the front line of the technology industry. I also share the most effective tools I use to enable people and teams to perform at their best in the face of change.
Change is a human thing more than a technology thing, so being good at it requires focus on who you need to be and what you need to do to make change happen better.
The right place at the worst time
I know what being disrupted feels like. I’ve been at the right places at the worst times throughout my career, from being the CEO of software company Xero during the COVID-19 pandemic to experiencing crises at IBM, Apple and ninemsn. I am a survivor from the front line of virtually every significant shift and shock to the technology sector and industry over the last 40 years.
Figure I.1, a snapshot of my professional journey through four decades, shows the shifts of change impacting computing, technology and society, and the shocks of disruptive industry, economic and global events.
Figure I.1: career chronology shifts and shocks
Back in the early 1990s, as General Manager of IBM's Western Australia branch, I announced the company's first-ever layoffs in Australia. The announcement ended the longstanding ideal of ‘jobs for life’ at IBM, the giant of the mainframe computer era that dominated the information technology industry for decades. The layoffs, which were called a ‘voluntary relocation program’, were hardly voluntary, as offers of alternative roles in Sydney or Canberra were generally unpalatable to our Perth-based people.
As Vice President of Apple Australia and then Apple Asia Pacific, I led through the company's most difficult times in the mid 1990s. Apple's troubles included enduring massive quarterly losses and three CEOs in a little more than two years.
I was CEO of the Microsoft and PBL joint-venture start-up, ninemsn, when the dotcom crash hit in 2000. I remember how it felt being in a meeting room with a hundred young people looking at me with fear in their eyes, asking me, where to from here?
Working as Managing Director of Microsoft Australia, and as Vice President in the Online Services Division in the mid 2000s, I experienced the impact on the company of the US Department of Justice anti-trust rulings, the rise of the open-source or ‘free’ software movement at the time, and the emergence of Google and other competitors in the mobile and internet space.
Over nine years as a non-executive director of Telstra, Australia's leading telecommunications company, I experienced a major shift with the emergence of voice messaging services, once exclusive to telcos, becoming available free of charge from ‘over the top’ services like FaceTime, WhatsApp and Viber. We navigated through another major shock to our business with the Australian government's decision to build and operate the National Broadband Network.
As a non-executive director of large organisations like Medibank, David Jones and Fletcher Building, I experienced the consequences of change and technology disruption in the health insurance, department store retail, and building products and construction industries.
Leading Xero, a fast-growing global technology business, through the pandemic required me to lean on every bit of learning from experience I had gained about confronting change and uncertain circumstances.
Despite the unique nature of the pandemic (I hadn't managed through one of those before), I felt clear and confident about how I needed to be and what I needed to do to guide our business through the challenge. That's not to say I always got things right or executed as well as I'd have liked. Facing into change and uncertainty is not the domain of perfection; it is about learning as quickly as you can and correcting course as you go.
During those long days, weeks and months working from my apartment in Wellington, New Zealand, I was thankful for the people and experience that had shaped me and prepared me for what I had to face.
Who is this book for?
This book is intended to help anyone who wants their team to perform better, their work environment to improve or the change initiatives they are part of to succeed. In an immediate and practical sense, people who lead organisations and teams will gain most, because they have the greatest influence on the nature of teamwork and the success of change initiatives.
However, any individual contributor can also use the actions and tools to encourage and help the leader of their team improve performance. Individual team members can have a very positive influence on performance especially if their team leader is receptive.
Whatever your aspirations are for a better future in whatever domain you care about, the superpower you must develop is how to effectively lead and respond to change.
Whatever the change being initiated or confronted, at work or in life, Through Shifts and Shocks will help anyone improve the change process they are working on.
How this book can help
This book takes you on a journey, from exploring the nature of change, and why change is so hard, through to how you can best think and act in the face of change.
Part I looks at how technology has amplified the potential of people, and trends that are changing the nature of our workplaces, and at why change is hard for humans.
Part II explains how you need to think and behave to be your best in leading change and building a great team, and how having the right mindset, self-awareness and care for people is critical.
Part III covers the most important things that must be done to drive change, execute strategy and build a great team, and how to do that by confronting difficult conversations and making hard choices.
Part IV outlines how to make effective change and great teamwork happen. This section includes a diagnostic, playbooks and tools that have served me well over the years. You will also find playbooks that can help individual contributors and Board Directors take appropriate action.
Finally, I reflect on the rewards of doing the hard work of being a leader of change and great teams. For me, one reward has been the opportunity to work with talented people, especially those who have shown appreciation for how I have helped their career and development. I also reflect on the reward of learning from and observing up close high-profile technology industry leaders, including Xero founder Rod Drury, Australian media and entertainment giants James and Kerry Packer, Microsoft co-founder Bill Gates, Steve Ballmer and Apple co-founder Steve Jobs.
Two domains and eight Must-Do actions
Two domains, ‘Being’ and ‘Doing’, frame the eight Must-Do actions in the book:
Being
reflects the important character attributes of a leader and team, such as self-awareness and having the right mindset and motivation, when initiating or confronting change.
Doing
reflects the words spoken and actions taken to execute change by confronting difficult conversations, making hard choices, seeking clarity, driving alignment and focusing on performance.
Great change and teamwork come down to activating across these two domains.
Across the two domains of Being and Doing, eight Must-Do actions, listed in figure I.2, represent the most important lessons I've learned and applied. The eight Must-Do actions cut through the expansive volume of things to consider about leadership, teamwork and change in order to focus on the actions that deliver the most benefit.
Figure I.2: the two domains and eight Must-Do actions
The Must-Do actions are interconnected. For example, if you don't apply the right mindset, progress on all other Must-Dos will be limited. And, it will be hard to drive alignment if you don't have difficult conversations.
No individual or team is great at all Must-Dos at once. External circumstances (such as a global pandemic) and internal circumstances (such as a change of team members) will impact progress.
Understanding current performance and continuously improving in any of the Must-Dos will have a positive impact on the quality of change efforts and teamwork. The aim is not to seek perfection; it is to understand your current reality and drive small improvements every day to gain the associated benefits.
The change journey for any person, leader or team is analogous to sailing between two locations, correcting course as wind conditions change. The journey towards your intended destination is rarely travelled in a straight line.
Are you up for what follows reading this book?
The eight Must-Dos are largely common sense, but that doesn't make them common practice or easy to do. If they were easy, many more organisations would be high performing and envied, and many more change programs would succeed.
The Must-Dos are hard to execute because they require having difficult, confronting conversations, making hard choices and taking actions that are tough to execute because of their impact on people close to you.
At Xero, I would meet with people across our business and ask them one question: ‘What's the one thing about Xero you would change if you were the CEO?’ I was open to hearing the truth and confronting uncomfortable reality, so I lived every day with the knowledge and frustration that the Xero I wanted us to be was not the Xero our people experienced every day.
This dissatisfaction is not unique to me and Xero but is an aspect of the culture of the technology industry that is common to most of the companies I have worked with (although not necessarily under all leaders). We would force ourselves to see the gap between current reality and aspiration and work hard to close it. It is a culture that doesn't spend much time celebrating success; rather, it quickly notes progress and moves on to the next challenge.
Your level of commitment and accountability to close the gap between current reality and your aspirations (and those of people around you) is unique to you. It comes down to what motivates you and how much you care about helping others around you to be more successful (or appreciate the extent to which your success is enabled by this).
I never shoot for perfection; I gave up on that a long time ago. Instead, I shoot for better every day. The exciting thing is that people see it, feel it and thank you for it, even if you're still some distance from where you want to be, because it means a lot to their work lives and how they feel about what they are doing.
For this book to be as useful to you as I want it to be, the question you need to answer is: How committed are you to prioritise and take action every day that will change things for the better for those around you?
If you commit to working every day to execute improvement in any Must-Do, you will build a more successful organisation or team, one that can change better and perform better — I guarantee it!
I hope Through Shifts and Shocks will be the most useful business book you'll read and that it contributes to greater success for you at work and in life.
PART IWHAT HAS CHANGED AND WHY CHANGE IS HARD
‘Shifts and shocks’ characterise the rapid evolution of technology and its impact on people and the course of every industry. As one wave of technology enables and gives way to the next, more change and disruption follow.
Artificial intelligence, blockchain and the metaverse have played into recent waves of technological change that have grabbed attention. For a time we are caught up in the hype and debate about how each innovation will change the nature of work and life. I can be a bit of a sceptic. In the 1980s the hype was all about the ‘paperless office’, and I'm still waiting, but that's only part of the reason I'm sceptical.
The truth is that in the short term the hype rarely lives up to expectation, yet with time almost every wave of significant new technology has created long-term change in how we work, live and play. ‘Convergence’ of text, data and media was the talk for decades, until 2007 when the stars aligned and Apple delivered the iPhone.
The more significant reason to downplay the hype around technology is that the real story of technology change is a human story. As new services emerge that make doing things easier and cheaper, it is people putting technology to use that is the source of change. Technology is the enabler.
At the same time as being the source of change, people are also the source of resistance to change. Some technology has taken decades to be fully embraced and adopted.
As a case in point, the adoption of cloud accounting software by small business has a long way to run around the world despite having been successfully embraced by millions over the past 10 to 12 years.
Technology change doesn't happen without people changing. After observing this in many different contexts over 40 years, I strongly believe this:
Change is a human thing more than a technology thing.
And the more technology surrounds and enables us, the more the human element matters. In Part I we look at the human nature of change, what has changed and why change is so challenging for people.
CHAPTER 1TECHNOLOGY AMPLIFIES PEOPLE!
Technology amplifies the value and potential of people, requiring us to think differently and more deliberately about the human element of everything we do.
People are our greatest asset!
We often hear leaders of organisations say this, but how often have you really felt or believed it? In some cases (if you're lucky) it plays out in action rather than just talk, but more often the reality falls short. Despite that, much research has confirmed that people and the value they create are indeed our greatest asset, and it's time to embrace that principle with conviction.
Figure 1.1 (overleaf) plots the dramatic shift in the proportion of enterprise value (using the S&P 500 as a benchmark) from physical and financial assets to those often referred to as ‘intangible’ or ‘other factors’.
Physical and financial business value (the stuff you can touch or count) has dropped from 68 per cent in 1985 to just 10 per cent of total market value in 2020.
Figure 1.1: S&P market value
Source: Ocean Tomo
Intangible value (stuff that's hard to touch or count directly) reflects human knowledge, relationships and potential, in the form of goodwill and brand value.
No wonder share prices are volatile. With 90 per cent of value tied up in what we can't touch or count, it is understandable that when an organisation or the economy experiences uncertainty or a shock of any kind, investors flee and market values plummet. For example, according to CNBC the big tech companies Apple, Microsoft, Google, Amazon and Facebook lost a combined US $1.3 trillion of their market value between 19 February 2020 and 23 March 2020, when the global pandemic hit.
It's sobering to realise that most of the value of a business derives from an expectation that the people in the organisation will continue to create value from their intellectual property, ideas and actions well into the future.
We have well-established measurement and assurance processes for financial and physical assets; the same can't be said for intangibles or the human elements of value creation.
Financial performance reporting is a bit like looking at the light from a distant star. What you see today is an outcome of what happened in the past, rather than how today's reality will play out in the future.
Management and measurement of the ‘non-financial value drivers’ (often demeaned as ‘soft’ measures), such as staff engagement and customer satisfaction surveys, are now more commonly used to monitor performance. The Employee Net Promoter Score (eNPS) is one example and a meaningful element of compensation incentives for senior leaders at Xero.
Integrated Reporting, initially stewarded by the International Integrated Reporting Committee (IIRC), is increasingly demanded by shareholders and embraced by corporate Boards. This momentum is also reflected in additional environmental reporting standards, such as the Task Force on Climate-related Financial Disclosures (TCFD), the Global Reporting Initiative (GRI) and organisations such as the Sustainability Accounting Standards Board (SASB), which publicly listed companies increasingly observe and need to comply with.
This reporting aims to provide better insights into longer-term business prospects across a range of dimensions, with varying levels of interest from a wide range of stakeholders.
Given how valuations increasingly recognise that ‘people are our greatest asset’, we need to place far more emphasis on the human and relationship elements of performance.
Despite increasing use of top-level eNPS or employee engagement scores for the human element of organisational performance, stakeholders (including boards) have insufficient insight to assess the impact of the human element on organisation performance. This book suggests ways to better address this need going forward.
The potential of people is amplified
As noted, digital technology has changed many industries by amplifying the impact of their people. Consider the customer and shareholder value created by top internet services such as Amazon, Airbnb, Uber and WhatsApp, to mention just a few. The same is evident across many other industries.
Information and communications technology has provided us with access to more information and knowledge than ever before. It has allowed us to connect and share with others more than ever before. For these reasons, the potential value of people to the organisations they work for has greatly increased.
When I started work at IBM in 1979, my best sources of information were my dad (a wonderful mentor), my boss, more experienced people around me at work and the trusty if unwieldy Encyclopaedia Britannica. I could also count on relevant learning from my university and school education.
Today we have instant access to unlimited sources of knowledge and information thanks to the internet. I guess that's why my daughters never ranked me at the top of their sources of knowledge or information.
Back in the early eighties we didn't have email and rarely spoke to or connected with more than 10 people in a day. These people were physically nearby or available on a local phone call. International communication was achieved by means of a Telex (from a dedicated room staffed by a specialist operator) with the hope of receiving a response in three or four days’ time. Today we communicate with people anytime, anywhere, almost instantaneously, to the point that we are all ‘media outlets’ and have the potential to influence others on a much bigger scale.
Reflecting on these changes, it is important to remember that technology isn't disrupting you and your business, people are!
A simple way of looking at the amplified potential value of people is to consider these two dimensions:
knowledge — what you (or the people in your organisation) know
relationships — who you (or the people in your organisation) are connected to.
Knowledge and relationships combine to create economic and social value. You need both in order to create the value. If you are the smartest person in the world but don't connect with anyone, you will create no value. If you are the most connected person in the world, but know nothing, again you will create no value. Real value can only be created when knowledge is shared or passed between people.
If you embrace this simple model of human and organisational value being a function of individual and combined knowledge multiplied by connection, then you can see that in each of the past four decades the potential of people and organisations (to do good or bad) has been amplified substantially.
Despite this amplified human potential, many organisational leaders and managers fail to tap into this resource. Productivity and potential are going to waste because we still think and act (often unconsciously) with a limiting mindset that sees people as tools to get things done rather than as hearts and minds that can create new possibilities for organisations.
Young people today are smarter and more connected and have greater expectations than their predecessors. This is because they have far greater access to information and more connections than were possible when baby boomers and Generation X entered the workforce.
Generation Y and Millennials are more motivated by meaningful purpose because they have grown up with more options and sources of information than previous generations. They are less likely to take no for an answer and more likely to search for what they believe does or should exist. This characteristic reflects greater potential that we need to value and engage with.
My daughters’ experience entering the workforce convinced me that in some professions, senior people expected young people to suffer the same limited scope of work they did when they started out many years ago. I'm not suggesting that young people shouldn't be ‘put through the mill’ when it comes to gaining the required professional skills and experience, but rather that if we don't listen to them, value their input and create opportunities for them to contribute beyond basic tasks, we will lose them.
Let's face it, your industry and organisation are most likely to be disrupted by young people outside the organisation, so why not make your own young people disrupters?
Importantly, the same applies to all people, regardless of age and generation. What Gen Y and Millennials want we all wanted too, but we didn't live in a time when it was possible.
We must stop thinking of people and their potential in historic terms or by relating it to our own experience.
Underestimating the potential of people is a huge trap. We must think and operate in a way that encourages and enables the people who work with us to be the best they can be.
