Host Intro (Gene Kim)

All right, the last speaker today is Jon Smart. I met him in 2016 when he headed up the ways of working at Barclays, a bank founded in the year of 1690, which predates the invention of paper cash in the West. So I'm so happy that he's part of our program committee. Over the years I've learned so much from Jon, so much of which went into his book, Sooner Safer Happier. So Jon is actually working on a new book, delving into the centuries of advancing the ways of working. So up next here, we will be sharing some of the amazing things that he's learned — and so much that resonates with my own learnings over the last three years. Here's Jon.

Jon Smart

Good afternoon. What an amazing three days, right? Incredible, incredible three days. It's like drinking from a fire hydrant of learning. It's amazing.

So I am going to share with you the top three patterns from past ways of working that you absolutely need to know — a deliberately clickbaity title. And in terms of your cognitive load, it's only three things you need to remember. And I have the advantage of recency bias — you'll remember the last thing you heard.

So this is not a quote from Babbage, although Babbage wrote about division of labor and division of mental work in 1835. Oh my God, he was ahead of his time.

And you know what, as I've been doing research for the next book, I have seen this recurring pattern from previous ways of working, from previous technology-led revolutions. And I have the advantage of having line of sight over roughly 80, 90 companies. And I can see that these things that we've learned in the past, we are still failing to apply today.

So I'm gonna share with you the top three lessons that we keep on relearning and relearning and relearning and relearning so that you can apply them today. And this is without relearning the hard way — because I have read more than 60 books or publications which were written from 1776, Adam Smith, The Wealth of Nations, through to 1950. And so without you needing to read those 60 books, I'm gonna share with you the top three learnings, so you don't need to learn the hard way.

"We must study the present in the light of the past for the purposes of the future." I like this quote from John Maynard Keynes. In order for us to understand and think about the future and to study the present, we need to understand the past. And this is why I've gone deep on this topic. We need to understand why we work the way we work today, why we have our ways of working in organizations. Because in my experience, you don't learn about this at school. You don't learn about this at college or university. And to the best of my knowledge, most MBAs also don't really cover the history of ways of working and the way we work today. But it is so relevant.

So there will be many of you who have seen this before. This is from Carlota Perez. Every 50 to 60 years there are repeating technology-led revolutions, starting in 1771 — the first Industrial Revolution. Then we have the Age of Steam and Railways. So these are repeating technology-led innovations that lead to new ways of working. After Steam and Railways, we have the Age of Steel and Heavy Engineering, which was triggered because of the railroads. And actually Steam and Railways was triggered because of the textile industry and shipping raw cotton longer distances — triggered the invention of the steam engine. Cotton mills triggered steam. Steam triggered steel. Steel triggered the Age of Oil and Mass Production. And now we're in the Age of Digital.

And that dotted line down the middle — there is a recession every single time, because venture capital, there's investment in the new technology, there is a bubble, there is hype and there is a depression, there is a recession down the middle. And then we have the new normal. And right now we are fortunate enough to be in the new normal.

Right now there is management innovation every single time. The management innovation for the first Industrial Revolution was factory systems — for the very first time we have a thousand people working in a factory with division of labor at scale. Then we have middle management, because the length of the railroads meant you couldn't manage by walking around the textile mill. Another term for this is systemic management. Systemic management was a precursor to scientific management. Scientific management — the most famous person on this is Frederick Winslow Taylor. He was one of a number of people who were leading on scientific management. This is a stopwatch with a clipboard, and it's the manager determining what's a good day's work. If you do more than that, you get a bonus. If you do less than that, you get less than your day's pay that you would've got previously on a day wage. So autocratic, dictatorial, top-down. And then we have Fordism and the Toyota Production System. Now we have a moving assembly line. The Toyota Production System: Kaizen, continuous improvement, respect for people, a focus on flow — led by the economic situation for Toyota at the time where they couldn't have large inventory, they couldn't afford to. And there was a large variability in terms of the cars.

And now we have Agile and Lean. So I like to use the word "agility" for this — it's Agile and Lean. Agile suits the context of unique, unknowable work you've never done before — multidisciplinary teams, minimize time to learning, maintain variability because you don't know. Lean is the name that John Krafcik, an American, gave to the Toyota Production System based on his MIT master's thesis, which then became famous in The Machine That Changed the World by Womack and Jones. Lean production is another word for the Toyota Production System. And that suits repetitive, knowable work. So it's Agile and Lean. And for software, the binary is: Agile create, and the path to production is Lean. So it's both Agile and Lean. It's not Agile everything, and it's not Lean everything. And it's not, definitely not, waterfall anything. You can quote me on that.

So in our organizations today, we have role-based silos. Like I said, I have the advantage of having a view across very many large organizations globally. We have role silos. And if just listening to the language of the last three days — I keep hearing "the technology organization." I'm sorry, what? In the technology — an organization with a technology organization? No, it's an organization that uses technology. Now, you might be a technology organization if what you are selling is an information technology product, but most organizations — most, as a conference for horses by horses — most organizations are not selling IT, but need to be good at it. So watch out for your language. If you think you're about to say "the business," suggestion: say "our business" instead. It's not about the business, it's about our business together. This is not about technology, but it's not not about technology. It's about what we're doing.

And then we have the world's first org chart. This is 1855, and the language is of superior and subordinate. And the original word for manager was "overlook." And that's where supervisor comes from — "super-visor," looking. And it's ordering lines. And then we have project management. Henry Gantt worked with Frederick Winslow Taylor as his first apprentice, starting in 1887. And that's where the Gantt chart comes from. Two technology-led revolutions ago. So you know what — we are partying like it's 1771.

So the top three relearnings. And this is from 1771 to 1950. And I love the fact that with all the hyper-gen-AI, we are finishing on this topic. I love that, because it's the same every single time, whatever the technology-led revolution is. And this is featuring unsung heroes — so hopefully names you haven't heard of.

Lesson number one, pattern number one: a data feedback loop. The first character unlocked — this is Daniel McCallum. That photo was taken about 30 years before the world's first moving image. Thank you, gen AI.

He was born in 1815. His industrial revolution was the second industrial revolution. He was the general superintendent of the New York and Erie Railroad. His claims to fame: he created the world's first org chart in 1855, and he innovated on ways of working. His superpower is disrupting the status quo. That's the first character unlocked.

That is the world's first org chart. It is a work of beauty. The senior leaders are at the bottom and not at the top. And it's drawn like a plant, where the senior leaders are nurturing the rest of the people in the organization. And then it all changed.

So this is the 1855 New York and Erie Railroad annual reports. If you have access to the internet at home, as Jason was saying a couple of days ago, you can look this up. It's all freely available. And his leadership principles: number one, clear responsibilities; number two, delegated autonomy; number three, a fast feedback loop; and number four, information to be obtained through a system of daily reports. This was way ahead of its time. Clear roles, delegated autonomy. He had multidisciplinary teams because you couldn't manage by walking around on a long railroad. "Officers should be in full possession of all the information necessary to judge industry and efficiency." "The comparison of division accounts will have the effect of exciting an honorable spirit of emulation to excel." That's an 1855 way of saying gamification. Friendly competition. Genius — this is a genius move. Surface the data, have some friendly competition, make it transparent. And you know what, this is not happening today in most companies.

Next character unlocked. This is level three. This is Professor Robert Thurston. Anyone heard of Professor Robert Thurston? Show of hands. Fantastic. I have succeeded in the unsung-heroes point. Nobody put their hand up. This is important. Industrial revolution: steel. He's the first professor of mechanical engineering at Stevens Institute of Technology. Claims to fame: oh my God, he taught Taylor and Gantt. Now, I didn't come across that in the writing. I pieced the jigsaw pieces together myself from the research. He taught Taylor and Gantt when they were in their early twenties. He's the first president of the American Society of Mechanical Engineering, which is an 1880s version of the Enterprise Technology Leadership Summit. It was a community — and this is all in the public domain, accessible internet. This was a community for sharing. And his superpower: he's the founding figure of scientific management — the actual founding figure of scientific management in my opinion, which is using data.

This is from his opening speech at the very first ASME, American Society Mechanical Engineering, meeting. "The first step is the careful collection of facts and the patient study of all phenomena... systematically and completely, such that their values and their relations shall be detected and quantitatively measured." He had an international reputation for treating mechanical engineering as a science. I think he's the godfather of scientific management. And the pattern here is a data feedback loop. Previously it was rule of thumb, laissez-faire — that's how industry worked at the time.

So today, this is what I recommend you measure: better value sooner safer happier. I'm biased — this was my learning the hard way. This is what I recommend you measure: quality, value, time to value, lead time, throughput, flow efficiency, continuous compliance, minimal viable governance, and happier customers, colleagues, citizens, and climate. And this is both technology and not-technology advice. Don't only measure technology metrics with a framing of software development. Yes, it's good to have that as a local optimization. Even better, treat these measures as organizational measures. And this applies outside of technology change as well.

Then visualize and make it transparent. These are fuzzy because these are production screenshots. So make it transparent — and the pattern here is a dedicated focus on the "how" measures. So few companies that I talk to or work with are actually measuring their system of work.

The next one is continuous improvement. This is Andrew Carnegie. Did I pronounce his name correctly? Yes, Carnegie. He was born in Scotland. I think he's quite famous in USA. Born in 1835, he immigrated age 12. This is level three. He was the founder of Carnegie Steel. His claims to fame: he learned from McCallum during the US Civil War. He reported to Daniel McCallum in the railroads. So he learned from McCallum, and he was the leading figure in the third industrial revolution. And he was the richest person in USA when he sold Carnegie Steel to US Steel. In real terms, he's the second most wealthy person in USA after Rockefeller. And his superpower: he gave away 90% of his fortune to charity — $6.3 billion in current money.

This is the first steel works, the Edgar Thomson Steel Works — by the way, he named it after his biggest client. Edgar Thomson was the president of the Pennsylvania Railroad. What a genius move — naming your factory after your client. "Yeah, I'll buy steel from you." Carnegie hired a German scientist to find out what was going on in the blast furnace and significantly increased efficiency. This is about continuous improvement. He tore down a brand new steel rolling mill to build another one when there was new technology. He innovated the processes so that the molten metal didn't need to cool — previously it would cool down and they would remelt it into a shape. He went for end-to-end flow — he optimized for end-to-end flow. He bought the iron ore, he bought the mines, he bought the railroads. He owned the full value chain end-to-end. And the factory was built by Alexander Holley, who was a co-founder of ASME with Professor Thurston.

Oh my god, light-bulb moment, goosebumps. They all knew each other. Carnegie worked with Holley. Holley worked with Thurston. Thurston taught Gantt and Taylor. And Carnegie previously reported to McCallum. Oh my flipping goodness. OMFG. Oh my goodness. They all knew each other. And this isn't written down anywhere — I've just put the jigsaw — if it is, I haven't read it. I figured out the jigsaw pieces. Oh my goodness, they all knew each other. They were all learning from each other, but we are not learning from them. So we should.

By 1890 it was the largest and most profitable steel company in the world. Only 15 years later, because of a focus on data and continuous improvement. Pattern: incentivize continuous improvement in your organizations. Hardly any company I go to and I talk to incentivize continuous improvement.

This next one is Charles E. Sorensen. This is Ford. He was a principal at Ford. His claims to fame: he was the originator of the moving assembly line — not Henry Ford. And he was the head of production at Ford. His superpower was translating sketches from Henry Ford. He was one of six people who were the number two to Ford. Go figure.

And in his book My Forty Years with Ford, what they realized was that the job of putting the car together was simpler than bringing the materials, the parts, to the car. So what did they do? They took the car to the parts. "So the idea occurred to me that assembly would be easier, simpler, faster — sooner, safer, happier — if we moved the chassis along, moving it past the parts rather than moving the parts to the chassis." Because they were bumping into each other as they went into all the inventory storerooms. So one Sunday morning they put the frame on skids, they hitched a tow rope and they pulled it along — and it was Sorensen that pulled the frame on skids. They were in on the weekend doing continuous improvement. They built the first car that was ever built on a moving assembly line, because they were continuously improving. The time to build a Ford Model T went from 12 and a half hours to 93 minutes. Ford doubled the day rate for most workers and reduced working hours only to 80 hours a week — I think in reality it was from six days a week to five days a week. But incredible. And then people could afford to buy their own products that they were making.

So the pattern here is: incentivize continuous improvement. It's that simple. Incentivize continuous improvement. Don't be too busy pulling the cart with square wheels. Every single organization I work with or talk to, people are busy being busy, pulling — I see nods in the audience — people pulling the cart with square wheels. So as leaders or individual contributors, incentivize, reverse-mentor, incentivize continuous improvement. It's that simple. Well, it's easy to say, it's hard to do.

And then number three is humanity. Now, you would not expect this. I did not expect this at all. This is Henry Gantt. You know what — Gantt was writing about respect for people. The irony, the deep irony of how we use Gantt charts. It's like — this is like the last person I thought would be writing about autonomy and respect for people, because of the way we abuse Gantt charts. He's the creator of the Gantt chart. He was Frederick Taylor's assistant. His superpower is predicting the future with a Gantt chart. Of course, it's perfect. Yeah, of course we're gonna deliver that output on that date. Of course we put it together at the point of having learned the least. But of course we'll be right.

So in his book Organizing for Work, what he says is the following: "We have ignored the human factor. We have failed to take advantage of the ability and desire of the ordinary person to learn and improve their position. These efficiency methods have been applied in a manner that was highly autocratic." Does that sound familiar? Has anyone been imposing any frameworks or org designs in a highly autocratic manner? I wonder. "This alone would be sufficient to condemn them." He's condemning scientific management being implemented in an autocratic manner. Oh my goodness, this was in 1919. We are doing it again. We're doing it again. Respect for people.

And then finally — we're on level four — Konosuke Matsushita. Has anyone heard of this person? 1, 2, 3 — sorry, Panasonic. Panasonic. Well done. He's the founder of Panasonic, born in 1894. Founder of Panasonic. Claim to fame: he created one of the world's largest manufacturers of electrical goods. He published 44 books, and he didn't start writing until he was 65. He's referred to as the "God of Management" in Japan. But about three people in this room put their hands up. This is what I mean about unsung heroes.

To quote him age 88, in 1982: "Your firms in the industrial West are built on the Taylor model. So are your heads — with the bosses doing the thinking while the workers wield the screwdrivers. The essence of management is getting ideas out of the heads of bosses and into the heads of labor. We are beyond your mindset. Business is now so complex and difficult that the continued existence of firms depends on the day-to-day mobilization of every ounce of intelligence."

Humanity: the age of empathy, respect for people. Everybody use your brain for continuous improvement based on the data feedback loop.

So today: nurture humane ways of working — long-lived multidisciplinary teams (value streams), high alignment with OKRs enabling high autonomy, a focus on outcomes over output, nurture psychological safety, adopt enabling leadership stance ("How can I help?", servant leadership, intent-based leadership), and have leadership principles. So few organizations are explicit about the leadership behaviors they want in their organization. Often it's words on a piece of paper, but it doesn't have teeth. There is no feedback loop on those leadership principles.

So quick recap: data feedback loop number one. Number two, continuous improvement. Number three, respect for people. If you do those three things — clear outcomes, measurable, continuous improvement, respect for people — you cannot fail but be successful.

So to wrap up, one slide: an almost-feasible dinner party from the past, given they knew each other. If I could have a dinner party from the past, it would be this. There's Gantt, there's Carnegie, this is Lillian — Lillian Gilbreth, who was doing motion studies. And there is Thurston, and there's Daniel — McCallum — and there's me saying OMG, getting a blank look from my dinner party guests.

Thank you very much.