Edge Perspectives with John Hagel: Relationships and Dynamics

Do we all look at the world in the same way? Hardly. We can each look at the same scene and focus our attention on something completely different. Individual idiosyncrasies definitely play a role, but broader patterns of perception are at work as well. Are certain patterns of perception more or less helpful in these rapidly changing times? Most definitely – in fact, they may determine who succeeds and who fails.

About five years ago, Richard Nisbett, a professor of psychology, wrote "The Geography of Thought." This fascinating book drew on extensive research pointing to fundamental cultural differences in how we see the world. Specifically, he contrasted an East Asian way of seeing the world with a more traditional Western way of seeing.

While it would be difficult to summarize Nisbett’s rich analysis, I want to focus on a key distinction that he develops in his analysis of two cultural ways of perceiving our world. He suggests that East Asians focus on relationships as the key dimension of the world around us while Westerners tend to focus more on isolated objects. In other words, East Asians tend to adopt more holistic views of the world while Westerners are more oriented to reductionist views. This basic difference plays out in fascinating ways, including the greater attention by East Asian children to verbs while Western children tend to learn nouns faster.

One very tangible illustration of this is a simple test reported by Nisbett. A developmental psychologist showed three pictures to children – a cow, a chicken and some grass. He asked children from America which two of the pictures belonged together. Most of them grouped the cow and chicken together because they were both objects in the same category of animals. Chinese children on the other hand tended to group the cow and grass together because “cows eat grass” – they focused on the relationship between two objects rather than the objects themselves.

I found this intriguing in the context of our continuing work at the Center for the Edge on the Big Shift. As I indicated in a previous posting, the Big Shift is a movement from a world where value creation depends on knowledge stocks to one where value resides in knowledge flows – in other words, objects versus relationships. Our Western way of perceiving has been very consistent with a world of knowledge stocks and short-term transactions. As we move into a world of knowledge flows, though, I suspect the East Asian focus on relationships may be a lot more helpful to orient us (no pun intended).

Of course, this is not an either/or proposition. Nisbett holds out hope that these perspectives might ultimately converge, citing some promising research evidence:

“So, I believe the twain shall meet by virtue of each moving in the direction of the other. East and West may contribute to a blended world where social and cognitive aspects of both regions are represented but transformed – like the individual ingredients in a stew that are recognizable but are altered as they alter the whole. It may not be too much to hope that this stew will contain the best of each culture.”

But wait, there is more. The distinction between perception of objects and relationships is just one dimension of difference. In fact, the East Asian and Western modes of seeing share one common element: they view the world as largely static. As Nisbett points out, the Greek philosophers gave us the notion that “the world is fundamentally static and unchanging.” East Asians tend to focus on oscillations and cycles which acknowledge change but contain it in relatively narrow fields – the world is in flux but it does not head in fundamentally different directions over long periods of time.

So, there is another dimension that differentiates perception – and this is a point that Nisbett sadly does not explore or develop. Some of us tend to view the world in static terms while others focus on the deep dynamics that lead to fundamental transformations over time. Many executives, especially in large firms, tend to adopt a static view of the world. They want detailed snapshots of their environments to drive their decision-making. When they go to distant countries and markets, they carefully observe the state of play as it is today, but they rarely ask for “videos” – detailed analyses of the trajectories of change that have been playing out over years and are likely to shape future markets. Even in the more contemporary world of social network analysis, this analysis often remains highly static – elegant maps show the rich structures of these social networks as they exist today, but they rarely reveal the dynamics that evolve these networks over time.

Why is this the case? Many factors contribute to this static view of the world. Modern enterprise is built on the notion of scalable efficiency and scalable efficiency requires predictability. Predictions are much easier in stable or static worlds, so executives are predisposed to see the world in these terms. Change can be highly unpredictable and can rapidly call into question the ability to predict demand for products or services. Whether one sees in terms of objects or relationships, these are much easier to understand and analyze if they remain stable. Contemporary economics is largely built around equilibrium models that are essential if the detailed econometric analytics are to work. Social networks are complex and messy as it is, without having to factor in even more complex dynamics that continually reshape these networks over time. We don’t even have a very robust set of categories to describe various trajectories that can play out over time. Let’s face it, life would be a lot simpler if everything just came to a halt and stayed the way it is right now.

But, of course, it does not stand still. Our world is constantly evolving in complex and unexpected ways. And there is evidence that it is evolving ever more rapidly, generating disruptions that send people and things careening in new and unanticipated directions. Product life cycles are compressing across many, if not most, industries. The movement from products to services as key drivers of growth reinforces this trend, since services can often be updated far more frequently than products. With the growth of outsourcing, new competitors can enter and scale positions in global markets in ways that simply were not feasible in the past when capital intensive physical facilities needed to be built before products could be launched. Edges of new innovation rise quickly and gather force to challenge entrenched positions in the core of our global economy. Black swans pop up with increasing frequency, seemingly out of nowhere and challenging some of our most basic assumptions about the world around us.

Yet, we do not have very good lenses or analytic tools to bring these dynamics to the forefront. They tend to operate behind the scenes, rarely seen until it is too late and the latest disruption is enveloping us. Survival in this more rapidly changing world requires developing new modes of perception, ones that put structure in the background and focus attention on the deep dynamics that are re-shaping the structures around us.

This is the other key message of the Big Shift work. We are going through a profound long-term shift in the way our global business landscapes are evolving. We get so caught up in short-term events that we lose sight of these long-term changes, much less understanding what is driving them or thinking about their implications for how we work and live. As we have emphasized, we must learn to make sense of the changes unfolding around us before we can make progress. Even more fundamentally, we must learn to see these changes, searching them out where they remain hidden or obscured and penetrating through the surface currents of change to focus on the deeper dynamics shaping these currents.

What is required to do this? Well, first we need to embrace change rather than dampen or suppress it. Virginia Postrel wrote "The Future and Its Enemies" over a decade ago, a fascinating book that described a persistent and intensifying conflict between stasists, those who fear and resist change, and dynamists, those who welcome change as an opportunity to create even more value for more people. Those who fear and resist change spend relatively little time understanding change – all of their energy is focused on blocking it.

By embracing change, we begin to see the opportunities it creates. We are motivated to explore the contours of change in ways that moves us from focusing on what is to what could be. As we begin this migration, we will need new analytic tools to help us on our way. Promising early toolkits can be found in diverse arenas. For example, the Santa Fe Institute is studying the evolution of complex adaptive systems and increasing returns dynamics. On another front, the revival of Austrian economics challenges equilibrium analysis and instead focuses on processes of change unleashed by distributed tacit knowledge, inspired by the early work of Friedrich Hayek. In yet another arena, work in the technology world seeks to understand the implications of continuing exponential improvement in the price/performance of digital technology as it breeches the boundaries of computing and invades such diverse arenas as biology, materials science and robotics.

Stepping back from all of this, the challenge is great, especially for those of us in the West. We must learn to shift attention from objects to relationships while at the same time moving from structure to dynamics as the key lens for perception. We were not trained this way. We generally have not operated in this way. All of our assumptions tell us that this is the wrong way. Yet, there are enormous opportunities for those who do make this shift. Perhaps most importantly, those of us who remain wedded to the old way of seeing things will find ourselves increasingly stressed, blindsided and marginalized in a world that will continue to move on without us.

Comments

John
The "East / West" differences in how view the world start in childhood as Elinor Ochs, John Bradbury and others (described in the book Rapt) begin with our child-rearing practices. In Eastern cultures children are taught to look outward, to attend to others, whilst in Western, people in the highly individualistic West are encouraged early on to concentrate on their own needs and desires.

This thoughtful post convinced me to get your book and "Geography of Thought."

Posted by: KareAnderson | March 28, 2010 at 06:40 AM

John,

Thanks for the fascinating post. Those of us who were marginalized by the old way of thinking may find that the world does not have as many closed doors as we thought. Predictability is not always an asset.

Margaret

Posted by: Margaret_h | February 06, 2010 at 09:50 PM

Great post John!! I always love reading your posts, but this one is real gem. Some recent research on unexpected incentives found a very fascinating East/West difference. Previous research on job incentives has found that when they are unexpected, they have a greater impact on productivity. In fact, when incentives become too expected, they cease to have any impact at all, everywhere from manual labor to hedge fund managers.

The East/West difference found that in an Eastern population, unexpected incentives had a positive effect only when they were framed as luck (which is valued in the Eastern culture) but not when they were due to individual achievement (which is not). The opposite was true with the Western population.

Posted by: Marc Resnick | January 17, 2010 at 10:43 AM

Great post, John.

It reminded me of an awesome TED talk I watched last month by Devdutt Pattanaik, who gives a very entertaining overview of the "mythology of business", and how the difference between the Western and Eastern ways of doing business/operating really comes down to our fundamental belief structures about the way the world works (the process of life/death). (http://video.ted.com/talks/podcast/DevduttPattanaik_2009I.mp4)

It made so much sense to me, and underlies that "relational" thinking that's common in the East. I've been thinking about this topic a lot, and it seems that many of the problems we face result from our complete disconnect with Nature - and by Nature I don't mean "outside," I mean all of life and process within the ecosystem. For instance, your cow-grass example..... Americans are frighteningly disconnected from food, from thinking about where it comes from and how it gets to their table. It's causing tons of health problems, because people literally have forgotten how to eat, and it's also creating a potentially huge problem that we have forgotten how to raise food. (and Monsanto is engineering all our seeds). I started a garden 2 summers ago, and I have to tell you, growing food from a seed is an AMAZING experience! It gave me a different relationship with the earth and with whatever force (God?) drives the transformation from something that fits in the wrinkle of my palm to something that could sustain my life just by nurturing it with light and water.

The point is, the garden is like a metaphor for everything else... it's in a constant state of flux, changing, evolving, and if you meet it's needs, it will reward you with value.... but you can't force it to grow, you kind of become a part of its process.

I've found this to be very helpful when looking at most things around me. That everything is interconnected, even though sometimes it seems like it's not, and that we can't continue pretending like we exist outside of it, and that we can control it to make it give us what we want without being affected ourselves... that's not sustainable. we're all part of the process, we always have been. it's time to wake up and recognize it.

- @venessamiemis

Posted by: Venessa Miemis | January 15, 2010 at 04:50 AM

First, let me say that this was awesome. The East-West description is by far the best descriptor for the paradoxical Reductionism/Holism relationship. Fun read!

Did you know that when you put holistic methods into a computer they do really strange and interesting things to massive data sets?

(None of the above are technical terms.)

Hope you are well!

Posted by: Michael Gusek | January 13, 2010 at 06:06 PM