The latest neuroscience shows how to develop the right frame of mind for leading continual transformative change
Unprecedented and seismic drivers of change in the outside world, from exponential digital technologies to existential global risks, are putting intense pressures on today’s organizations. They will need to transform their products, processes, and people not just once, but many times. To adapt at pace, leaders in every organization, of any scale or sector, must have a ‘transformation mindset’. Most, however, have a ‘legacy mindset’: not because they aren’t smart and successful, but precisely because they are smart and successful.
It used to be the case that well-established legacy organizations could deliver predictable long-term returns without innovation and business transformation. Now, organizations that cannot constantly transform what they do and how they do it will inevitably fail, whether through spectacular bankruptcy, dull underperformance or ignoble acquisition. Covid-19 and the climate crisis leave no doubt about the requirement for constant innovation in markets that are VUCA: volatile not stable, uncertain not predictable, complex not simple, and ambiguous not clear.
But after decades of success in markets that were stable, predictable, simple, and clear – where past assets and means allowed well-established organizations to maintain market power for sustained periods – most leaders have been protected from the stark realities of constant evolutionary pressures. Lulled into a false sense of security, many leaders have lost access to the creativity and insight needed to lead transformation not just once, but many times, to stay relevant. Change begins with their mindset.
Why mindsets matter
The mindset of a leader determines whether their organization ignores and denies evolutionary pressures to adapt, or they metabolize them into value-creating innovations that shape the future of their industry. Just look at Kodak, Nokia, AOL and Yahoo; or Uber, with its ethics and workforce challenges, and Deliveroo, whose IPO flopped because of investor worries about inequality and injustice. Leaders in all these organization assumed that their success in the (near) past guaranteed success in the future.
In today’s fast- and dramatically-changing environments, our mindset – how we sense, feel, think, and then act – is our main driver of competitive advantage, and the only factor in our complete control. Every organization has access to similar technology and capabilities, so we can’t rely on ‘stuff’ – even the very latest machine-learning algorithms – to defend our business. We can’t control what our competitors do, or our customers.
We cannot control a pandemic or mass extinction. The only thing we can control – though ‘master’ is a more accurate word – is our mindset.
As leaders, we can and must take ownership of our mindset. We must choose to evolve, develop, and mature it over time, so we can reinvent ourselves and our organizations not just once but many times over as the VUCA reality unfolds.
The legacy mindset
The legacy mindset which has trapped so many leaders is shaped by the belief that power, success, knowledge and best practice from the past is enough to ensure we survive and thrive in the future. It persists, in part, because VUCA realities can be overwhelming for our brains, which tend to experience change, chaos, and uncertainty as painful: in moments of perceived threat – even when we are not actually physically in danger – our mind’s wiring has us fight or flee from rapid changes in our markets, rather than engage with them with an open mind and heart. We lose our insight and imagination right when we need them most.
Always wanting to look right and feel in control, the legacy mindset has us assume that doing what worked yesterday – just better, harder, and faster – will be enough to make it big tomorrow. We become righteous about the business model assumptions and leadership habits that have brought us success. We ignore the imperative for transformation even as our organization loses competitiveness, its culture declines and its power to innovate fades.
Schooled by management experiences and theories from a world that was not as digital or disrupted – or complex or chaotic – the legacy mindset has us project outdated meaning-making frames and narratives onto the fast-changing world. It flattens the ‘anomalies’ and ‘weak signals’ that always presage disruption, innovation, and transformation. While others might have the clarity to see and the courage to act on those signs, the legacy mindset has us cling to old assumptions as if they were eternal truths.
Professor Sydney Finkelstein, a business professor at Dartmouth, studied the decline of over 50 organizations. In Why Smart Executives Fail, he states that failures are caused by “flawed executive mindsets that throw off a company’s perception of reality” and “delusional attitudes that keep this inaccurate reality in place”. In other words, pretty much every organizational crisis is caused by senior leaders unwittingly perpetuating a legacy mindset. This is why Yale professors predict that so many of today’s Fortune 500 companies will be gone by 2030.
The transformation mindset
Carol Dweck, the renowned Stanford psychology professor, describes a growth mindset as the belief that our talents can be developed, through “hard work, good strategies, and input from others”. This is a foundational step forward – but it is no match for the fast and furious fluctuations of the VUCA world. The transformation mindset takes the idea of the growth mindset to the next level. We know that our capabilities are far from fixed; we also know that we must, and psychologically can, constantly adapt and evolve ourselves to fit the relentlessly- and ruthlessly-changing world.
A leader with a transformation mindset experiences the VUCA world as a constant invitation to lead transformative change of outdated products, processes, and people. We attune our entire being to engage fully in the dramatic changes in our external environment, rather than attempting to ignore, repress, or deny them. Importantly, we own these changes, even if we did not cause them – taking them within to metabolize them, in heart and mind, into exponentially value-creating innovations.
With a transformation mindset we can still drive forward continuous improvements in how we get stuff done – when this is fit for the moment. But we can also drive continuous transformations when adaptation and agility are needed. At the core of the transformation mindset is the capacity to switch between these two equally valuable modes of problem-solving.
Two modes of consciousness
A transformation mindset is not down to intelligence alone. In fact, recent studies have discovered that the prefrontal cortex – long-assumed to be the seat of human reason – is actually less aroused than usual when we are creative. In other words, when we are innovating to solve problems thrown up by the VUCA world, we are less in control, less focused, and less conventionally smart!
It turns out that our brain has evolved two quite distinct neural networks that allow for fundamentally different ways of sensing the world and solving problems. Working from the emerging science of these two brain networks, and adding in wisdom from both philosophy and lived experience, I suggest that every leader can access two distinct modes of consciousness that provide very different, yet equally valuable problem-solving approaches. Each mode is a good fit for specific types of problems; has a different neural architecture underpinning it; and leads to a different set of subjective experiences.
Control & Protect Mode In the task-oriented and efficient first mode, we seek to control the inherent chaos of life; predict what best to do next to survive; and protect ourselves. We are highly focused and get stuff done; we drive toward certainty as fast as possible; we leverage technical expertise to solve known problems quickly; we measure success by metrics, and are both rigorous and risk-averse. In this mode, we love to make continuous improvements to business-as-usual, to deliver predictable outcomes such as steady margins and career progression.
Create & Connect Mode The second mode allows us to connect with other people – customers, employees, partners, users, investors – to develop the fresh insights we need to innovate value-creating solutions that resolve novel problems thrown up by the VUCA world. In Create & Connect Mode we are curious, imaginative and empathic. We are more interested in asking better questions than in producing the right answers; we are ready to pause and reflect on complex problems, rather than rushing to solve them; we are able to cultivate safe psychological spaces for diverse opinions to be shared; we welcome others (respectfully) challenging our business model and leadership style assumptions; and we prioritize possibility and agility over certainty and stability.
In environments that are stable, simple, predictable and clear, Control & Protect Mode is a very effective problem-solving approach: it prevents us from having to exert the enormous emotional and cognitive effort needed to come up with fresh insights and create new ideas consciously. Yet it is not a great fit for fast-changing environments. Linear and task-oriented, it attempts to apply power and best practice – derived from technical expertise, experience, and training from the past, which are by definition outdated – to emergent transformational challenges that nobody has ever solved before.
With such transformational challenges – so-called because they demand business and leadership transformation to resolve them – we must use Create & Connect Mode to metabolize evolutionary pressures into exponentially value-creating innovations. But we still need Control & Protect Mode to deliver our ideas to time, budget and quality. In fact, the complex process of imagining and then executing high-value ideas involves a complex harmony between modes. As Dr Roger Beaty at Penn State puts it, “creative people are better able to co-activate brain networks that usually work separately.”
From being smart to being wise
A leader with a strong yet fluid transformation mindset knows which mode matches the moment. Just as importantly, they know how to switch modes. This is trickier than it seems: the neuroscience suggests that our emotional and bodily states, not our will, largely determine which mode we are in. We cannot simply decide to switch; we have to learn how to regulate and transform our emotions and bodily sensations.
To dance with complexity and wrestle breakthrough from the jaws of chaos, we must be wise not just smart. Radical levels of behavioural agility require an unshakeable emotional stability within. The transformation mindset requires unprecedented levels of embodied wisdom in order to cultivate flexible, fluid and free minds in ourselves, and in the team members we rely on to contribute to, and implement, future-proofing innovations. As we develop embodied wisdom, our cognitive ability is expanded, and our egos tempered, by empathy, insight and imagination.
Solving the transformational challenges thrown up by the VUCA reality requires that we actively build a transformation mindset. Success is less about technological brilliance or management acumen, and much more about creating the right conditions for cross-functional teams to deliver creative breakthroughs. Gone are the days when we needed to be the smartest person in the room. We need to be wise, not just smart, to confidently and consciously lead our people, organizations and systems towards a thriving future.