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CHAPTER I - The Exponential Shift

“I’m all in favor of progress; it’s change I don’t like.”
–Mark Twain

For the past nine years, the Aspen Institute Roundtable on Institutional Innovation has been exploring the challenges to corporations and other organizations of operating in the radically changed competitive environment of the 21st century.

The starting premise of the Roundtable, based on the work of John Hagel and John Seely Brown at the Deloitte Center for the Edge, is that the rules of doing business that were the basis for success in the last century are no longer valid. In a relatively stable environment, a company gains competitive advantage by achieving economies of scale that allow it to drive down costs, outperform its competitors and dominate its market. But globalization and the emergence of a radically new information and communications infrastructure have changed the rules. We now live in a “whitewater world”1 where change is constant and success is no longer dependent on building tightly controlled, durable institutions to scale efficiency, but rather on finding ways to scale learning to enable organizations to adapt to a continuously shifting environment.

Each year, the Roundtable has convened a diverse group of leaders from the private and public sectors to consider the implications of this “big shift.” One conclusion that has emerged from these conversations is that newer organizations that were founded in this new environment have an advantage in operating in ways that are well suited to it. By necessity, start-ups begin with minimal resources and an imperative to organize themselves to address a single challenge. With no track record or an established structure to rely on, everyone is under pressure to develop a new product and create mechanisms appropriate to the market.

Some of these start-ups have become “exponential organizations” able to operate and grow faster by an order of magnitude than traditional organizations founded in the last century (or in some cases, even earlier). Even as they have grown, these firms have kept the ability to innovate and to respond quickly to changes in their environment.

These organizations stand in contrast to traditional firms that have been slow to abandon the paradigms on which their past success was based. Many established organizations that are being buffeted by the winds of change are struggling with a structural lag that makes it difficult for them to undertake the transformations they may recognize as necessary. In fact, examples of established institutions that have truly transformed their structure or operations to respond to the challenges of a whitewater world are strikingly rare.

However, a participant in the 2016 Roundtable presented a detailed case study of one venerable institution that, in a time of crisis, did undergo a far-reaching transformation that fundamentally changed not only how it was organized and how it operated but also its basic mission, even while preserving its core values. The unlikely source of this case study was a key component of the U.S. military.

The Transformation of JSOC
In 2003, General Stanley McChrystal assumed command of the Joint Special Operations Command (JSOC), which was responsible for the most elite units of the armed forces—the Navy SEALS, the Army Rangers, the Army Delta Force, the Air Force Special Tactics Squadron and SOAR (Special Operations Air Regiment). At that time, JSOC had become deeply engaged in counter-terror operations in Afghanistan and Iraq.

Although special ops were the most highly trained and best-equipped units in the military, McChrystal soon recognized that U.S. command and forces had “lost the initiative” in a different kind of war. Trained to fight against conventional forces, they were now confronting a network of insurgents operating in largely independent bands capable of continually adapting to the conditions they were facing. JSOC was organized hierarchically (the military is the quintessential hierarchical organization) and was designed to carry out a limited number of carefully planned operations. Most critically, information gleaned from these operations had to be sent back to intelligence analysts in the U.S. for interpretation, which diminished its operational value. McChrystal decided that Special Operations needed to change to become “flat and fast.”

After gaining the trust of the units under his command by going into the field to get first-hand knowledge of their operations, McChrystal began to take a series of actions designed to give more decision-making authority to individual units and to speed up the process of making use of the raw intelligence gathered by each operation. His first task was to articulate the changes he sought and to identify a new mission: To fight a network, Special Operations needed to become a network. Rather than simply executing individual operations, their mission needed to be to gather actionable intelligence then quickly put it to use. These messages were intended to be compelling emotionally, but also to be ambiguous enough to be adopted locally.

To support the transformation of JSOC, McChrystal introduced a series of new “methods, practices and protocols” designed to change how it operated. To emphasize the critical importance of intelligence and speed up its analysis, McChrystal brought civilian intelligence analysts from Washington and embedded them directly with Special Operations units. The goal was to break down the barriers between the two cultures and introduce a new spirit of shared mission. To increase transparency and encourage greater accountability, he introduced a daily operations and intelligence video teleconference (VTC) that was accessible worldwide to virtually everyone associated with JSOC’s mission whether in the Pentagon or a forward operating base. (Starting small, these VTCs grew to include several thousand daily participants.)

McChrystal tried numerous different strategies and mechanisms to support transforming JSOC into a blend of network and hierarchy and he did this in action. Things that did not work or help were abandoned. In the end, there were half a dozen actions that created the most significant impact. Over time, McChrystal noted, his role shifted from making command decisions to “orchestrating conversations” that led to action. Within two years, JSOC went from conducting 10 operations each month to 300 operations against an increasingly faster and smarter enemy—a truly exponential shift.

1 The term “whitewater world” refers to a world that is rapidly changing, increasingly connected and radically contingent. From A. Pendleton-Jullian and John Seely Brown, Design Unbound. Designing for Emergence in a White Water World (MIT Press, early 2018).
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