Competing in Modern Business: Learning from the Hackers and Revolutionaries

The average lifespan of a company on the S&P 500 has declined from 67 years in the 1920s to 15 years today, and we can assume that a large part of this decline can be attributed to technological innovation outpacing corporate agility. Corporations that are designed for the industrial age, where you can turn a profit doing one (or a few) thing(s) relatively well, are having difficulty adjusting to the rapidly changing technological landscape.

Some companies, like General Electric, may have been able to stay relavent by adopting new technologies like "data lakes," but far more companies struggle with "changing the culture" or "thinking like a start-up." And if keeping up with technology wasn't challenging enough, the average consumer is now more politically charged, diverse, and willing to boycott than ever before.

With all of the advancements in Data Science allowing firms to better target consumers with specific advertisements, we can no longer assume that there is such a thing as an "average" consumer, or that we'll know what "average" is when we see it. What we can know is how society has shifted in the post-internet connected world. The largest of these shifts is an obsession with negation.

The rise of the Internet and Social Media has caused a crisis in authority within the Western World, and while this is a potentially catastrophic problem for governments, it is an important lesson to understand before it affects your company's bottom line. Just as governments no longer have a monopoly on the information their citizens receive about their government, your company does not have the ability to control its message.

Countless marketing firms like to sell you consultants that promise to help you control your message and rebrand your company, but these promises can be idealistic and hollow. This doesn't mean you should abandon marketing, far from it, but there is no cheat sheet to making sure that "your" idealized image of your company is the same image that thousands of consumers have of you; if one person has a poor image of your company, then multiple people will and, because of our bias towards negative information, that information will be stronger than any marketing method you employ.

For example, when an over zealous customer service representative at Comcast refused to allow an individual to cancel his service, the audio recording went viral and customers were outraged at Comcast for their clearly predatory behavior, and no amount of public relations work was able to smooth the waters any quicker than time.  To make matters worse, when it later came out that the customer service representative felt pressured by the need to meet quotas in order to retain employment, the Internet was further outraged, and there was nothing Comcast could do but weather the storm.

While Comcast was able to weather the outrage about predatory service representatives, the popular domain hosting site GoDaddy wasn't as fortunate; thousands left its service over their support of the controversial SOPA bill, resulting in the company's official position doing a complete flip-flop to avoid catastrophic losses to their bottom line.  This was in spite of GoDaddy's extensive marketing campaign designed to sell itself as a domain hosting platform of the people, for the people. Once information leaked about GoDaddy's support of a wildly unpopular bill, the company could not control that information and had little choice but to bow to public opinion.

The central commonality of these two examples was the role the Internet's decentralized model played in citing outrage against these companies.  In past generations, the only information the Public could gather on a company was what was presented to them in the news outlets and advertisements, but in today's market - where everyone can be a sleuth eyed journalist - companies have a much harder time faking authenticity, or keeping up with consumer's fickle and ever changing demands.

There are thousands of (mostly useless) articles on how to create an authentic brand, but since I can sum them all up in "don't be a piece of shit," I don't really see the point in rehashing all of that here.  Instead, I'm going to focus on the latter part of that statement and the part I opened with:  Re-framing your management style to keep up with the innovation of technology and consumer's fickle demands.


Digital Activists, Hackers, and Revolutionaries


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Our story begins with a young man by the name of Aaron Swartz. Incredibly gifted, Aaron Swartz helped pioneer an age digital activism through the liberation of public domain documents (court documents and scientific research) that were being held by gatekeepers (PACER and JSTORs) who charged large sums of money for access. He also founded MoveOn.org, which helped create the online movement that overturned the SOPA bill in Congress.  

In particular, the overturning of SOPA was a historic moment:  It signaled to Congress that this generation was politically active. MoveOn's success with the SOPA campaign would spawn many copy cats (Demand Progress, The Internet Defense League, and several grass-root campaigns for specific bills, like our recent and on going Net Neutrality debate) and would help show case the power of digital activism to the world.

Prior to the success of MoveOn, the Internet had only been used to gather people for protests of negation, like Occupy Wall Street (or the overseas equivalents: Indignados, Tel Aviv, etc).  These protests were focused on gathering angry people together to show their discontent with the status quo, they had no discernible objective or criteria for success - they had no demands. Given the lack of focus, these protests typically failed, but with the rise of MoveOn and other grass roots organisations like it, the world has shown that netizens are capable of enacting clear and specific change, rapidly, and with little financial cost.

The underlying success of these campaigns was not in their message or their nonexistent advertising campaigns, but in the decentralized way information flew between protesters. Consider an older, and more closely analyzed, historic example:  Rosa Parks.  Montgomery, Alabama had several examples of other African Americans refusing to give up their seats, so why was Rosa Parks the one that incited the next wave of civil rights protests?  One theory is that Rosa Parks had an impressive extended network that spanned several social and economic cliques.  When news aired that Rosa Parks had been arrested, it affected several groups in the community; not just the already slighted African American Community.

In today's social media fueled world, almost all of us exist between multiple groups of people.  In high school, we might have been in the band while in college we picked up softball, and finally we ended up becoming a lawyer. The entire time we're going along picking up friends and social media contacts from band members, softball players, and lawyers; so when we get fired up about a cause, multiple groups in the community feel our passion.

The deep orange circle represents a person fired up about a cause; the yellow are those immediately adjacent to them and are likely to be swayed, whereas the blue circles are external connections who will likely hear about the issue.

This nuanced approach to connecting people based on interests, rather than (as strictly) by socioeconomic status has enabled the rapid transfer of ideas between multiple sectors of society, mostly irrespective of geographic distance.  My passion about Net Neutrality, for example, is heard by friends and family in Arkansas, even though I'm in Utah.  This decentralization makes it impossible for marketing firms to target every affected consumer niche simultaneously, and even harder to dissuade negative notions about their company.

While this decentralization is extremely beneficial for the free exchange of ideas, The Malware Business Model teaches us that hackers and cyber criminals use similar methods to make it harder for authorities to track them down to prevent cyber attacks. These complex command and control models manipulate their victims into acting against their own best interests, and help the attackers further their own fiscal or ideological objective.

In much the same way that digital activists use the Internet to create movements that governments cannot control, hackers hide their actions through layers of obscurity and adopt the same decentralization to enact carnage on their victims. Hackers can exploit social media to give the illusion of popular support, causing the same benefits that digital activists enjoy to be given to the hackers.  Hackers have an even better parallel between corporations than that of activists:  Hackers have a specific, financial, goal at stake.  They want to accomplish an objective with as little effort and financial cost as possible in order to increase profits.  This decentralization of resources and responsibilities plays a major role in helping hackers achieve this objective while making it impossible for authorities to ever fully prevent.

 

Finally, revolutionaries are an example of a combination of activists and hackers; requiring the same information flow as the activists while obfuscating and decentralizing to prevent - unpleasantness - like hackers, a revolutionary movement in the modern world is far safer, and more effective, than in years past. As (surprisingly peaceful) protests for democracy unfold in Hong Kong, the communist rule in China has attempted to remove internet access from the protest camps, but the revolutionaries have turned to a work-around for Internet access known as FireChat. By connecting tens of thousands of smart phones together, the citizens have been able to create their own network which has several ways in which to connect to the Internet.

This is a technology known as mesh networking, and it's not a new technology, but its resiliency is brought about because there is no single point of failure. Use of this technological method of decentralization in protests around the world has risen as the general public has grown more distrustful of centralized internet service providers that can be manipulated or forced into shutting down protests. Revolutionaries, hackers, and activists are well aware of their limitations: Single points of failure are a recipe for disaster.

Companies, however, are slower to learn that lesson.


Agile Management, Holocracy, and Small Team Leadership


Agility and decentralization isn't something that is isolated to those operating on the wrong side of the law, nor is it isolated to just small start-ups that have the luxury of being able to use buzz words to their advantage.  In fact, we see it in one of the most bureaucratic institutions on the planet:  The American Military.  The agility and decentralization of the American Military, when combined with its increasingly complex and effective Command and Control structure, led to one of the greatest strategic advancements (and, incidentally, tactical blunders) of modern warfare: The Rumsfeld Doctrine.

 

And while this post is not about military tactics, it is important to highlight the relative ease in which the military shifted from four separate services that operated independently and with large footprints to an agile and near-real-time interdependent conglomerate over the course of about three years.  Their secret?  Separation of Roles.

Consider a large franchise, like Ruby Tuesday, that is faced with a sudden and unexpected public relations problem.  In a large organization, not many people would be surprised to know that the response could be incredibly slow.  First leadership at the corporate headquarters has to learn of the story, and then they have to go through the bureaucratic processes of investigating and ultimately removing the employee before they could move to control their public image.

However, Ruby Tuesday is a franchised organization; meaning that each restaurant is independently owned and operated with a fair amount of suzerainty, and is capable of maintaining their own discipline and image. In this particular instance, about fifteen hours after an employee made a vitriolic anti-military (blah blah blah, fuck the military's uneducated and untipping inbreeds) rant on a public Facebook post, the franchise location had investigated the issue, discharged the employee, and calmed public outrage.

 

Those of you who have messaging us. We are investigating what you have sent to us. Please know - this does not represent our feelings and immediate action will be taken. Thank you for your understanding.

Posted by Ruby Tuesday Hawaii on Sunday, 3 May 2015
 

Aloha Facebook friends. I am a partner in Ruby Tuesday Hawaii and have just been notified of one of my employees...

Posted by Ruby Tuesday Hawaii on Sunday, 3 May 2015

I'll admit that I didn't follow every nuance of the case after about a day, but I don't recall there ever being any outrage against the restaurant, or even that franchise, nor any talks of a boycott or anything else.  The franchise was permitted to handle its affairs as it saw fit and in the most efficient way possible; the result was avoiding a potentially damning public relations nightmare.

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"Well, that's great - but I'm not a franchise, Danial."  - You, probably.

You might be right, random reader, (I love you) but don't lose sight of the forest for sake of admiring the trees!  Of course this separation of roles is most pronounced in franchised establishments, but we still see its effects in large international firms, like Google.

Google made waves in the modern world of business by pioneering (or, probably more accurately, perfecting and publicizing) this small-team method of management.  By creating multiple small teams, on which a single person may reside in different capacities, you create a non traditional management hierarchy and a more robust meritocracy.  Plus, you have the added benefit of cutting back on mob mentality and bureaucracy, while also boosting your response time.

In hindsight, this should have been obvious to companies the world over.  Smaller teams means less effort for more coordination, more accountability and transparency, and less mob mentality taking over.  However, translating an ideology into an actual game plan can be incredibly difficult, and if you're just a middle manager with no real authority outside of your island empire of Accounting, it might be damn near impossible.

Holacracy is a social technology or system of organizational governance in which authority and decision-making are distributed throughout a holarchy of self-organizing teams rather than being vested in a management hierarchy.

That's where, in theory at least, Holocracy comes into play.  Officially the definition is a little dense and there are entire books dedicated to implementing it as a top-down management philosophy. However, the chances of you being a Chief Executive Officer are pretty slim, so we're only going to take the high level concepts and try to apply them to what we already know about modern management theories.

For example, we already know that meritocracies in large organizations are mostly bullshit, just as we know that - in large group settings - women are often interrupted by men and, typically (2-to-1), with the intent to deliberately disagree.  We are also figuring out that the feedback we crave most is from our peers, not our managers; which is good news for managers, because our peers really know what we do - a lot better than you do.

Which leads us full circle to small team management.  Smaller teams means that our peers are more invested in making sure every team member pulls their weight, disputes can be settled democratically so strict hierarchies aren't required, the teams can be both autonomous and responsive, and they bypass most of the mob-mentality, meritocracy killing biases, and the sexist nonsense that happens in larger forums.

However, as we pointed out earlier, these small teams have significant overlap with one another.  For example, a Database Administrator might find themselves on a team of six developing a new Business Intelligence platform while also working on a team of fifteen to maintain and improve current operations.  This diversification of duties not only helps improve the employee's skills, but also instills a sense of value in their work by enabling the employee to see a wider breadth of the impact their services provide.

These small teams also enable the same agility and autonomy we saw with Ruby Tuesday, as well as the resiliency and resistance to single points of failure that activists enjoyed at the beginning of this essay. It also cultivates an extended network of each employee within the company that helps increase buy-in across multiple teams (like the civil rights movement benefited from Rosa Parks), establishes more frequent weak-ties between employees who might have never interacted with one another, and opens up greater peer-to-peer communication across the entire company.

Two teams exist (blue and orange), and the Database Administrator (Yellow) participates on both, in a different capacity.  We can see how members of each team communicate with one another regularly (solid lines), but the database administrator has also introduced a few members who periodically share ideas with one another (dashed lines).

This extended network pull is precisely the reason why friends-of-friends (or your "extended network") typically have the best job referrals.  As researchers at Harvard found:  Weak ties [from your extended network] are more valuable when individuals are seeking diverse or unique information from someone outside their regular frequent contacts. This information could include new job or market opportunities. 

The final substantial benefit to this small team approach is that this diversification of information from extended networks can enable - at least artificially - divergent problem solving. Divergent problem solving is the ability to take diverse sets of information and come up with multiple feasible solutions, whereas convergent problem solving is the ability to narrow these ideas down into a smaller number of specific and obtainable goals.

One of the greater successes of hackers and activists is the ability to pull upon the collective experience of thousands of people without being hindered by bureaucracy or societal expectations. However, as we're also aware, activists also typically fail to enact change due to an inability to narrow their focus down to specific and obtainable goals.  This is a classic convergent-divergent dilemma; the activists are able to appeal to large numbers (divergence), but are too large in numbers to come to a consensus (converge) on a specific goal.

In large group settings in the office, we see this quite often:  One or two "Alpha Males" or "Highest Paid Persons" dominate the conversation and focus on getting the group back to work as quickly as possible by selecting a specific goal rapidly, often times without entertaining competing ideas.  In less structured large group settings, the conversation becomes muddled and incomprehensible, and far too long is spent working on a consensus than actually working. However, in a small group setting, we enable the ability for competing ideas to be entertained, without them dominating the conversation, while also increasing our employee buy-in, improving transparency, and creating a resilient and productive workforce.


Application as a middle manager


The evidence and historic precedence is there to support small team leadership, the only question is, how am I - a middle manager on the Island of Obscure Project Management - going to implement these philosophies into my every day life?  So, I'm going to close with three concrete and actionable steps you can take to start your career, if not your company, down a more productive path:

  1. Break up large groups whenever possible.  If you have a team of fifteen people working on a project, focus on creating smaller group meetings based on specific specialties before holding a larger group meeting.  For example, if you're implementing a new software package, host a small group meeting with the application developers and a separate meeting with the system analysts, before hosting a town hall meeting.
  2. Diversify your (employees') skills.  No one (not you or your employees) are mindless drones capable of only doing one thing repeatedly.  Stretch yourself and your employees by placing them in tangential roles on multiple projects.
  3. Promote employee buy-in. Make sure that your projects are not being dominated by one or two self-assured individuals; ensure that all team members feel comfortable contributing and, most importantly, feel that their contributions are valued by the other members of the team.