Business thinking in the virtual post-capitalist age

In the first of a series of articles on the issues surrounding leadership in the 21st century, Margot Cairnes discovers that very few companies understand the changes taking place and fewer can keep pace with them

In the last year have you changed jobs, ended a relationship, moved house, re-skilled or felt stressed? Welcome to the world of rapid discontinuous change. A time when every part of our work, social and political worlds is being transformed. In the whole history of Western civilisation there have been less than six such periods - including the agricultural and industrial revolutions. Our current transformation is more dramatic because it is faster and global.

According to Ray Kurzweil (author of The Age of Intelligent Machines), progress during the entire 20th century was equivalent to only 20 years' development at today's rate. He reports that 21st century technical evolution is a thousand times that of the 20th century.

As Paul Van Ziji, senior manager of KPMG's Assurance and Advisory Centre put it, 'reading the newspapers' financial sections has become a distressing experience'. With corporate collapses, such as Enron and WorldCom in the US, accountants worry that they, like Andersens, may hit international headlines.

Both individuals and companies are struggling as change speeds up. Less than 10% of organisations make it to their 20th birthday. The World Health Organisation reports that depression is now the fourth leading cause of disease and disability. Is this depression caused by rising divorce rates (42% of women and 44% of men will not marry, and those who do have a 50% chance of divorce) or by fear of terrorism? Or is it a loss of trust in our leaders (both corporate and political) - reported vividly in the World Economic Forum Public Trust Research (2002).

Change is real and discontinuous. We are not changing along a continuum but are at a cultural jump point. British futurist, Charles Handy, claims we can no longer predict the future from the past. This is not cyclical change, a blip or a correction - we are changing from one era to another and every institution of our society is being transformed.

The social institutions of marriage and the family have shifted from the nuclear variety (mum, dad and 2.4 children - now a statistical aberration) to either singles or blended families (mum, dad and kids from a variety of pairings all living together). Political institutions are being reshaped, as exemplified by the reunification of Europe. Less than 60 years ago we had World War Two, followed by the Cold War, where the only thing shared by countries that now sit at table and share a currency was the desire to destroy each other. Economically we have moved into an entirely new era - as different from capitalism as capitalism was from feudalism. I remember at a World Economic Forum breakfast hearing Don Cruikshank, the then chair of the London Stock Exchange, explaining that regulating the stock exchange may be pointless as the stock exchange was becoming increasingly irrelevant with over the counter - off stock exchange trading far exceeding on stock exchange trading.

The major problem with all this change and why we aren't coping very well is that we have been trained to think, behave and relate in a way appropriate for the world as it was, not the way it is now.

Our entire education system, and most of our work places, are run on principles that were derived for and worked perfectly well in the now dying capitalist era. Post-capitalism is a virtual age. We are connected 24/7, 90% of workers are knowledge workers, 50% of whom work out of virtual offices. Money is just an idea. When companies such as Elan in Ireland lost 50% market cap in one day, what did they lose? Even sex has become virtual, with one Fortune 500 company finding that 62% of male computer use time at work was spent having cyber sex.

Yet we have been taught at school, university and college, and then later at work, that the world is akin to a huge machine - best understood by the principles of scientific method and management. These principles tell us:

• only that which is tangible, visible and measurable matters
• the universe is a mechanical system composed of elementary material building blocks
• life is a competitive struggle for existence
• problem solving involves separating things into bits
• continuous improvement demands controlling the environment, and
• management is planning, organising and controlling.

This mechanistic world view is reflected in the fragmentation of our academic disciplines, government agencies and the treatment of our natural environment as if it consisted of separate parts, to be exploited by different interest groups.

Margaret Wheatley, in her ground-breaking book Leadership and The New Science, challenged the machine age capitalist paradigm. Wheatley pointed out that we now have the new sciences.

• Systems theory, which tells us that everything is related to everything else; you change one part of a system and you change that system plus every system to which that system is connected. Problems can't be solved piecemeal. To make sense of the world we need to think holistically.
• Chaos theory, which tells us that the world is in a constant state of chaos in which even the smallest alteration can lead to exponential upheaval, making scientific predication and control a fallacy. We have been trained to manage a static or, at best, incrementally changing world not a chaotic one.
• Nuclear physics, which tells us that it is not the physical world that we can see and measure that matters but the relationship between the things we can see. It is not the atom that releases energy in a nuclear explosion but the relationship between the elements of the atom. A musical analogy is that it isn't the notes that make music (that is just noise) it is the spaces between the notes that matter. The world is a set of interconnected relationships not a mechanical system.

A practical business example of machine thinking versus new paradigm thinking would be the recent spate of boardroom failures. From a mechanistic view the problem is the things you can see and measure such as laws, regulations, board structure and committees - the independence, or otherwise, of board members and the quality of director qualification and experience. However, research into board failure shows that the only variable common to failed boards is the failure of their relationships. In 2002, Jeffrey Sonnenfeld published the findings of his governance research in the Harvard Business Review. The study found that exemplary boards show a virtuous cycle of respect, trust and candour, leading to robust, effective social systems.

Coming out of philosophy, sociology, education and psychology we learn that less than 20% of the adult population has been trained to think at the level of independent adult reasoning necessary to understand the nature of transformation we are facing. Less than 1% have the maturity and thinking levels necessary to lead appropriately at such times.

What does this mean?

• We are in a time of exponential rapid discontinuous change which is reshaping all the institutions of our society.
• The rate of company failure and personal dislocation show that few businesses and individuals are coping well with change.
• We have been trained to think in ways appropriate for where the world has been not where the world is going.
• To make sense of today's reality we need to learn to think in quite different ways.
• These ways are well researched and easily available. However, our outdated education and training systems have failed to make people aware of what is possible and necessary.
• To learn the skills, uses and survival techniques of new paradigm post-capitalist thinking, be sure to read the rest of the articles in this series.

Margot Cairnes is an international leadership strategist, keynote speaker and chair of Margot Cairnes International, a consultancy specialising in corporate transformation.
E-mail: mcairnes@margotcairnes.com.