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The Role of Emotions in Business

John Hagel is an entrepreneur and renowned business strategist with over 40 years experience in the business world and the author of The Journey Beyond Fear: Leverage the Three Pillars of Positivity to Build Your Success

My professional career has been in business strategy. I was trained to believe that strategy is everything – with the right strategy, you can achieve amazing things. Over the years, I have come to realize that psychology is more important than strategy. If we don’t understand the emotions that are shaping our choices and actions, the best strategy will just sit on a shelf somewhere.

Unfortunately, in most businesses today, the tendency is to ignore emotions. Emotions are a distraction – just focus on the numbers and the analytics. Read the process manual and perform the assigned tasks reliably and efficiently.

That approach worked in the world of scalable efficiency – the institutional model that has driven companies and all other large organizations for almost a century. That’s because we lived in a more stable world where tightly specified and highly standardized tasks were the way to get the job done. The key to success was to become more and more efficient at scale – finding ways to do things faster and cheaper.

But the world is changing in a fundamental way – I call it the Big Shift. Long-term forces are transforming the global economy – competition is intensifying, the pace of change is accelerating, and extreme, unexpected events disrupt our best laid plans.

In this world, scalable efficiency actually becomes increasingly inefficient as workers scramble at the last minute to address unforeseen developments, departing from the process manual scripts. The new world we are entering requires a different institutional model – scalable learning. The key to success in this world is learning in the form of creating new knowledge by addressing situations that have never been encountered before. This kind of learning is best done in small groups of 3-15 people – I call them impact groups.

But here’s the key: these impact groups require the participants to build deep, trust-based relationships with each other, because they are going to be constantly challenging and supporting each other in the quest to learn how to achieve greater impact.

The challenge is that all large organizations are still operating in the scalable efficiency model. They are increasingly relying on fear to motivate workers to produce more in less time. There’s a recognition that learning is becoming more important – the phrase “life-long learning” is heard everywhere. But the learning they’re talking about is training programs that share existing knowledge, not creating new knowledge through action. And, once again, the motivation for life-long learning is fear – if you don’t learn faster, you’re going to lose your job. In a world of mounting performance pressure, fear is becoming the dominant emotion at all levels of our organizations.

While the spread of fear is understandable, it is also a very limiting emotion. People will have much greater impact, especially in times of growing pressure and uncertainty, if they are motivated by hope and excitement. This is one of the key reasons why I wrote my new book, The Journey Beyond Fear.

The companies that begin to focus on the emotions of their employees and make a concerted effort to help them move beyond fear will be the ones that create the most value in challenging times. In fact, they will tap into exponentially expanding opportunities that are also emerging in the Big Shift. A key to unlocking those opportunities will be cultivate a very specific form of passion – the passion of the explorer – among all workers at all levels and in all departments of the organization.

It will be a challenging journey, but one with rich rewards. But we’ll only reap those rewards if we focus on the emotions of those who work with us. We need to help them to move beyond fear and unleash the passion of the explorer.

John Hagel is an entrepreneur and renowned business strategist with over 40 years experience in the business world. He is the founder of two tech start-ups in Silicon Valley and has worked with Boston Consulting Group, McKinsey & Co., and Deloitte. Most recently, he is the founder of Beyond Our Edge, LLC that works with companies and people who are seeking to anticipate the future and achieve much greater impact. He is widely published and quoted in major business publications including The Economist, Fortune, Forbes, Business Week, Financial Times, and Wall Street Journal, as well as general media like the New York Times, NBC and BBC. He has won two awards from Harvard Business Review for best articles in that publication and has been recognized as an industry thought leader by a variety of publications and institutions, including the World Economic Forum and Business Week. He speaks at conferences and leadership gatherings around the world.