John Hagel

Author, Co-chairman , Deloitte Center for The Edge

Working on the Edges

John Hagel used to reach out to people through ideas. Now he does it by letting down his guard every once in a while.

From his position as co-chairman of Deloitte LLP’s Center for the Edge, Hagel sees openness as an antidote to the volatility inherent in expanding global markets. A little ingenuousness builds camaraderie and generates a healthy interplay of human emotion.

“When people come at you with a façade as if everything’s under control, it does not generate trust,” Hagel says. “We’re all imperfect beings. We have flaws, things we’re struggling to find out about.”

Acknowledging—and perhaps even nurturing—our changeable, human natures can teach us to improvise and exercise tacit judgment. Whether we work in a cubicle, a research lab or a corner office, even the most routinized tasks occasionally involve ambiguity.

“We need the ability to respond to unexpected events,” Hagel says. “With intensifying competition on a global scale, stability is eroding and the manual doesn’t help you in that case.” At the Center for the Edge, Hagel carefully observes the unexpected on the “edges” of business, where things bump up against each other to produce change. It’s an important place to watch, he says, because what happens at the edges transforms the core.

But for business leaders accustomed to delegating from that core, the edges can be disconcerting. Keeping things steady out there requires an act of faith.

“As I evolve my thinking about where we’re headed, I believe that trust-based relationships are becoming more and more important,” Hagel says. “And I have a very strong belief that you don’t build trust without vulnerability.”

Being vulnerable goes against the grain of American business culture, which has worked for generations on the principles of Taylorism—each worker does his or her allotted task while the manager ensures that they interact efficiently. There is no room for the human element in scientific management.

“Frederick Taylor figured out how to standardize and precisely define work so that it didn’t matter who the people were,” Hagel points out. “But now there’s mounting pressure on everybody, from the most senior executive to the junior worker, to create an openness to at least considering other ways of thinking, acting. There’s a sense that something’s got to change.”

Taylor’s “Efficiency Movement,” which gained traction during the Progressive Era, is part of what Hagel calls the world of “push,” or, the idea that business can forecast demand with reasonable accuracy and push its operations in that direction. It is an organizational model that drives many of our institutions—such as education and government—and that places a high premium on stability. But under this model, long term profitability trends are withering, Hagel notes; since 1965, the return on assets of US public companies has declined by 75 percent.

Why keep pushing in the wrong direction? Hagel suggests that, instead of trying to predict what we need and risking miscalculation, we should be more open to making connections that will expose us to what we didn’t know we needed.

Hagel calls this the world of “pull.” It’s a place he’s been exploring at the Center for the Edge because of its high potential for the development of scalable pull platforms that reach across institutional boundaries to engage an expanding array of participants. His recently released book, The Power of Pull: How Small Moves, Smartly Made, Can Set Big Things in Motion, delves into such flexible organizational models that morph with the needs of the market.

Because the idea of “pull” is highly contingent on connections, the passion of the individual worker becomes even more important. “Passionate people are twice as connected,” according to Hagel. “They have an instinctive kind of urge to reach out to other people who share their passion.” Supple markets that are girded with the stability resulting from trust-based relationships and driven by a passionate workforce create a space for something that isn’t often talked about in business: Productive friction.

Companies, Hagel says, traditionally have sought to root out any friction in their quest for efficiency in operations. Yet, this quest ignores the fact that new insight is rarely generated without friction. “Bringing very smart and passionate people together from diverse backgrounds to discover ways to generate new levels of performance often generates heated arguments about the right approach,” he explains. “Yet if there is mutual respect generated by trust-based relationships, these arguments can often be extremely productive. New knowledge emerges and performance improvement accelerates. That’s harmony.”

A select group of highly adaptable organizations are beginning to master this convergence of friction and harmony across a growing number of participants. Their success will certainly depend on attracting the right people and the right resources at just the right time.

It seems like luck, but Hagel says it’s serendipity that we can shape.