Speaker 1: Technology has had a major impact on the world's workforce. In the last 100 years, we have seen factory automation and robotics displace millions of physical laborers, leading to the knowledge work era. In the last 20 years, the proliferation of computers and the internet have displaced millions of knowledge workers, causing the current shift to what is referred to as the creative economy. The creative economy is based upon the uniquely human capability to generate new ideas, new technology, and works of art. In the creative economy, workers are driven by autonomy, mastery, and purpose. When these conditions are present, innovation thrives, customers are delighted, and workers collaborate to unite science and art to solve deep human problems. Unfortunately, most organizations are not set up with the needs of creative workers in mind.

Speaker 2: Our management approach comes from the 100-year-old concepts of Frederick Winslow Taylor.

Speaker 1: And our org structures go back even further to the hierarchy of Julius Caesar's armies. These approaches were breakthrough ideas at the time, but are not effective approaches in creative economy organizations. In the second half of the last century, the big three automakers dominated the market with massive workforces, inventories, and bottom lines. Toyota, a scrappy automated loom company in Japan, was just entering the auto industry. There was no way they could afford to match the economies of scale of the US manufacturers. Their only competitive advantages could be speed and quality. The American expert W. Edwards Deming was working with several Japanese business leaders teaching them the total quality management approach. A rising executive at Toyota named Taiichi Ono embraced Deming's ideas and expanded upon them to create the Toyota production system, what we now refer to as lean manufacturing. Three key concepts from lean that are helpful in the creative economy are 1. Trusting the workers to decide how to do the work, rather than relying on managers to choose the process. 2. Focusing on continuous improvement over relying on prescribed best practices. And 3. Viewing value from the customer's perspective instead of from the company's profit motive. Let's fast forward to the 90s and transition to the world of software. The chaos reports from that time do a nice job of illustrating the somewhat disappointing state of the industry. The large majority of the features we were building were rarely or never used, and most projects were at least challenged and at worst completely failing to deliver on their stated goals. In 1984, two business professors published a paper sharing the results of their study of several lean companies that were getting great results. Jeff Sutherland combined their findings with ideas from complexity science and other areas to give birth to Scrum. Notice that lean was a direct ancestor of agile. Scrum incorporates and builds upon several lean concepts. Three key ideas from Scrum that are helpful in the creative economy are 1. Focusing on building small, high-performing, cross-functional teams rather than relying on and rewarding individual heroics. 2. Developing products incrementally where each increment is potentially releasable so that we can get good feedback. And 3. A new type of role that uses a servant-leader approach to help organizations to continuously improve. Scrum and related agile approaches did help many organizations get better at delivering working software. One such company, called IMVU, was using full XP practices. However, they were still failing to succeed in the market. While agile had helped them build things fast, and build them the right way, it had not helped them build the right thing and deliver value to their customers. Eric Ries, the CTO at IMVU at the time, was taking some classes at Stanford from noted business professor Steve Blank, whose approach had helped many startups pivot towards a great product-market fit. Eric combined the ideas from Blank's customer discovery process with lean, agile, and open source into what he called Lean Startup. Three key ideas from Lean Startup that are helpful in the creative economy are 1. A focus on working directly with potential customers to develop empathy for their problems and better understand their unmet needs. 2. A rapid, iterative approach to discovering what solutions we might provide to meet those needs. And 3. A shift from thinking about requirements to testing hypotheses in the market prior to investing in actually developing the product. So while we burn energy debating the merits of these approaches, they are in fact not competing ideas. Lean begat agile, which begat Lean Startup. They are fully aligned and, used together, are creative economy enablers that create an environment where autonomy, mastery, and purpose are not just posters that HR puts up on the wall. These approaches have emerged in generational waves about every 20 years. Each new evolution of the mindset enabled us to deal with increasing levels of complexity. When I noticed this 20-year pattern, I began to wonder what might be the next evolution. I discovered some interesting research that shows some emerging and aligned patterns at the organizational level. Let's take a look at some metaphors. Some organizations see themselves as armies with strict hierarchy and processes. Organizations like machines where leaders pull levers and the org spits out a result. Agile organizations, like families, strive to balance the needs of everyone involved. And a new pattern is emerging in organizations that see themselves as living systems, evolving without hierarchy, towards a shared purpose. Three key concepts from this emerging organizational paradigm are 1. Anti-fragile organization patterns, usually completely flat or based on interlocking circles with no managers. 2. A primary focus on achieving a shared, evolutionary purpose. And 3. A focus on wholeness, where workers don't feel like they have to be a different person when they're at work. A 2014 Gallup poll shows that only 31% of US workers are actively engaged at work, and Gallup estimates that the 18% that are actively disengaged cost the United States $500 billion a year in lost productivity. The numbers internationally are worse, and I believe that the engagement problem is a root cause of the world economic crisis. It is no wonder that so many organizations are struggling to figure out the engagement problem. All of the advances described in this video were a reflection of a new mindset, and simply adopting the resulting processes is not enough. Combining the concepts of lean, agile, lean startup, and organizational agility provides us with a framework for dramatically improving the level of engagement at work. Old thinking does not create new results. We need to shift from ideas of exerting control and achieving financial profit towards enablement and achieving a shared purpose. There is a paradox here. When we focus on control and profit, we often struggle to succeed, especially over the long term. But when we focus on purpose and engagement, we regularly achieve good outcomes in both the short and long term, including profit. Engaged employees tend to result in happy customers, which tends to result in high profits. Everybody wins.