No burning platform? That’s a poor excuse for continually mismanaging change

Phil Fersht, CEO and Chief Analyst at HFS Research, is joined by futurist John Hagel for the second episode of the From the Horse’s Mouth podcast.

Don’t wait to find your business frantically reacting to catch up. Emerging technology opportunities continue to be missed due to fear of replacement. Instead, leaders should find the motivation to create psychological safety for their organizations so that they can realize the benefits.

A culture of “scalable efficiency” (cost cutting and firing), racked by technical debt, stands in the way. Company cultures must instead aim for “scalable learning” that continuously navigates the upcoming and unknown environmental, social, and technological change on our horizons.

Management 101 tells you to stop waiting for a “burning platform.” That’s especially true with emerging technologies such as GenAI. As business leaders, if you wait, you’re doomed to repeat the same mistakes of every past wave of change. Companies continually discount new technology because it’s not perfect from the start, especially companies at the current forefront of their industries. Business school case studies paint Blockbuster and Kodak in a particularly bad light. Their leadership teams discounted Netflix and digital images because their first iterations weren’t much to look at. With those stories in mind, how many conversations can you recently recall where AI is downplayed because of its imperfections?

We’re still in the early stages of exponential change

Despite widespread AI-washing, John agrees it is a key catalyst for change. His experience is technology advances far more rapidly than humans do: “We’re scrambling to catch up and find ways to actually use [AI]. It takes time for us to absorb what the potential is.”

Waiting for a burning platform means missing out on early-mover opportunities

Once the herd moves, reacting frantically to catch up means benefits will diminish. For example, many failed to adapt to the internet and get their businesses and employees online. With Gen AI, for example, the burning platform doesn’t appear to be lit (see Exhibit 1). Change appears to remain slow and hard.

John focuses instead on positive opportunities: “[the burning platform is] a way of driving change by appealing to fear. Fear can be a motivator, but the most profound motivation is the opportunities being created.”

Exhibit 1: Reality check: GenAI is a smoldering platform, not a burning one

Sample: 550 Enterprise Leaders
Source: HFS Research, 2024

The opportunities of emerging technologies demand fundamental change beyond excitement and fear

HFS Research recently completed a study with 600 Global 2000 decision-makers in technology and solutions. Only 15% said they were excited by AI solutions. Many said they were struggling with upskilling.

John’s experience, even now, of senior leaders in large organizations is one of surprise. “They are dominated by fear. And if you’re afraid, you just want to hold on to what you have…don’t get distracted or take risks with new technology.”

Technical debt is grinding the “scalable efficiency model” of business to a halt

Businesses still depend on legacy technology, such as ERP systems, which require armies of consultants to dissect their “technical debt” and move toward more opportunistic mindsets (see Exhibit 2). John calls these century-old processes “the scalable efficiency model,” with cost-cutting and diminishing returns at its heart.

Exhibit 2: We need to pay our debts before we can become a Generative Enterprise

Sample: 550 Enterprise Leaders
Source: HFS Research, 2024

New institutional models will leverage emerging technologies

John calls for “scalable learning,” where the focus is for everyone in the organization to learn faster.

However, scalable learning is not the same as training programs, as many executives think. Training programs share existing knowledge, and “in a rapidly changing world, existing knowledge is becoming obsolete at an accelerating rate.”

With scalable learning, employees learn faster by creating new knowledge and confronting unexpected situations to create more value for all stakeholders.

Move beyond ‘automate and fire’

John elaborated on scalable learning: “It requires us to challenge and question the conventional approaches to how we manage organizations. We as human beings are not very good at [scalable efficiency] types of work. The machine can do that better. When I talk to executives about artificial intelligence and digital technology, they have two questions…How quickly can I automate? And how many jobs can I eliminate?”

“The question they should be asking is, as people free up their time, what could they do to learn and create more value?”

“Technology is going to restore our humanity. We have not been operating as human beings in large organizations for over a century.”

Psychological safety is critical to positive technology adoption

John cited the example of a clinical laboratory company and its call center operations. The company’s customers were increasingly unhappy. The department head went to the team and said, “I’m going to guarantee nobody’s going to get fired. But you need to work with the technology department to automate routine questions. Then, when you free up time, identify the really hard questions nobody’s answering.” Within a few months, customer and employee satisfaction increased significantly because teams were finally making a meaningful difference that nobody else could—because the success wasn’t just from a manual.

HFS found that 65% of our 600 G2000 respondents were worried about their jobs. Fear is preventing people from automating. If people aren’t scared, and the culture allows, they experiment. However, capabilities have to underpin this change in mindset.

The Bottom Line: Future leaders will have all the questions—not all the answers.

John: “When I talk about learning, executives talk about skills and re-skilling…But when I think of skills, those are valuable in a specific context, like operating this machine in this factory. These skills are becoming obsolete.”

John outlined a much-needed switch from skills to capabilities, mirrored in our data (see Exhibit 3), which are valuable in all contexts—curiosity, collaboration, imagination, creativity, reflection—to drive continuous, scalable learning.

Exhibit 3: The ability to combine business and technical skills will be critical to succeed in the AI-led era

Sample: 550 enterprise leaders
Source: HFS Research, 2024

How can we create these environments? John believes that “today…we have leaders who say they have the answers to all the questions. But…the mark of a strong leader in the future is someone who has the most powerful and inspiring questions and who will freely admit they don’t have an answer and ask for help. That sets an entirely different culture in the organization where it’s not only okay to ask questions, it’s absolutely essential.”