Changing Your Beliefs Is Hard

Thinking about things differently is surprisingly difficult. And it’s even harder for people whose thinking and habits to date have created great success—leaders like you. The average CEO has thirty years of business experience on which she habitually relies (and for board members, it is even higher). The neural pathways created in her brain by those years of experience run deep and feel reliable. But the world is a very different place now than it was even ten years ago. The same thinking, and the actions it drove, that led to market success in 2005, 1995, and 1985 are not likely to work now.

Ask yourself this: how long has it been since you have examined your core beliefs and the related actions? We don’t mean your next vacation or what car to buy, but something that you truly care about—perhaps a closely held belief about life, family, or business. For most of us, this happens rarely, especially in business where industry best practices rule the day. David McRaney wrote as follows in his 2011 best seller, You Are Not So Smart.

Although thinking differently is hard, and acting differently is even harder, it’s imperative if you are serious about making the shift to become a network orchestrator.

Thinking Creates Action, and Action Creates Outcomes

Our thinking creates our actions—even if we’re not conscious of our thoughts. This relationship is obvious to most people, because we understand generally that something must be happening in our brains in order to move our mouths and our feet. But try turning the statement around: all of our actions result from our thoughts and beliefs. This perspective brings a different nuance, because often we don’t take time to reflect on the thoughts that motivate our habitual actions.

The term mental model refers to your internal beliefs, preferences, and biases—conscious or unconscious—about the world and the way it operates. There are some types of preferences that, after they’re formed, we rarely reexamine. Much of our thinking becomes habitual and unexamined, resulting in habitual and rote action. Habit isn’t necessarily a bad thing; leaving your toothbrush in the same place every night so that you can find it every morning is a good idea. But some habits get in the way of progress. Have yours?

Your core beliefs are deeply held beliefs about the way the world works. In business, core beliefs are often about what creates value and risk in industries and organizations. Core beliefs are so innate that we often perceive them as facts.

Our core beliefs lead us to create our guiding principles—the rules and ideals that we live by. These principles then drive how we allocate our time and money, what capabilities we develop and how we generate revenue, and ultimately how we measure success. Out of this cycle emerges our business model. You’ll notice that at no point does an arrow point back into the core beliefs. That is because once we form them, we protect our core beliefs against counterpoints and arguments. The whole system surrounds, protects, and ultimately reinforces our core beliefs—and that makes it hard to change them.

Let’s examine what this looks like with regard to business models. Most leaders of asset-building companies believe that owning and controlling physical assets is the path to creating value. Therefore, they spend their money buying physical assets, and their time operating and managing them. The leader develops capability, and comfort, with these assets and the business model. He measures his success at managing physical goods, adjusts his guiding principles slightly, and the cycle continues. At no point does the leader seriously reconsider whether physical assets create the best path to value, and whether those assets need to be designed, created, and maintained using internal resources. Instead, he focuses on being a better asset builder.

Network Leaders Have Different Beliefs

As you would expect, network orchestrators take a perspective that’s different from the one taken by legacy leaders. Network orchestrators invest in different assets, create different relationships, and manage people differently because they have taken on a different way of thinking about the world—a different mental model. Here are examples:

• Traditional thinking holds that companies need to be large-scale to reduce unit costs and stay competitive. Network thinkers leverage intangible assets and external networks to achieve very low marginal costs from the beginning.
• Traditional thinking advises that employees must be carefully managed to maximize output. Network thinkers believe that employees, or network partners, who manage their own work create more value.
• Traditional thinking believes that financial accounting provides a thorough view of a company’s health and viability. Network thinkers believe that a complete view comes only when you add measures of intangible assets, such as customer loyalty and employee engagement.

What makes network orchestration difficult to develop is that it is not just an adjustment or “tweak” of previous business models. In many cases, the network way of thinking directly contradicts previous management norms. Network orchestration is not merely the next model in a progression from asset builder, to service provider, to technology creator. In fact, the business models are not a progression at all. Instead, network orchestration takes leaders into uncharted territory, leveraging the great networks that lie outside traditional company boundaries, not just the assets and employees within its control. This is why we recommend an approach to transformation with incremental change, guided by the PIVOT process.

Inverting Your Core Beliefs

If you want to become a leader who embraces the newest assets and technologies and capitalizes on them, then you need to start the never-ending process of examining and adapting your core beliefs. With our clients, we use a five-step process we’ve developed over the years for uncovering and adapting core beliefs. We call this process inversion: considering ideas that are the opposite of your habitual ones. Here are the steps:

1. Identify how your core beliefs manifest themselves in your business. Refer back to the figure “The evolution of mental models” and document your guiding principles, time and capital allocation patterns, primary skills and capabilities, and the key metrics and outcomes that you track. For the leader of an asset building company, most of these dimensions would revolve around the efficient production and management of physical goods.
2. Uncover the core beliefs that motivate these behaviors and priorities. This step usually takes some ongoing reflection, and the result might be something you wouldn’t want to admit to your peers. Industry best practices likely influence your thinking. Focus on your beliefs about assets, value creation, and business model. For example, a core belief could be, “Physical assets are durable and reliable; digital networks volatile and risky,” or “The value that my employees provide for our customers is irreplaceable.”
3. Invert the core belief and consider the implications. There are many possible inversions in each instance. For example, in response to the belief about physical assets above, one could think, “Physical assets are actually riskier than other assets,” or “Digital networks help firms reduce risk.” Find an inversion that resonates with you—one that you think might actually be true—and consider how this new belief would change your guiding principles, asset allocation, capabilities, and key metrics.
4. Extrapolate what implications these new core beliefs and the resulting principles, asset allocation, capabilities, and metrics would have for your business. Observe what is happening in your industry and, more broadly, how different core beliefs might help you address or prevent disruption. Consider the implications these beliefs could have for your customers, employees, suppliers, and investors. For most leaders, new core beliefs often reveal previously unconsidered possibilities and options.
5. Act on the new core beliefs by sharing them with your leadership team and adapting your guiding principles, asset allocation, capabilities, and metrics. Consciously changing your actions, particularly with regard to capital allocation, is an important part of the process and helps reinforce the changes in thinking you are trying to achieve. Ultimately, these changes will alter your overall business model, bolstering your long-term success and survival.

At any point in the process, feel free to take a step back, revise, and iterate. Over time you will home in on the beliefs and practices that best suit you, your organization, and industry.

Most Innovators Are Inverting Old Beliefs

Most industry-changing innovations are based on new beliefs. Netflix is a prime example. From the outside, Reed Hastings, Netflix’s CEO, observed that many of the video rental and movie industry’s core beliefs and supporting systems (physical stores and movie theaters with transactional revenue models) were failing to make customers happy. He questioned each and every one of them, inverted them, and brought them to market. On-demand home delivery of movies with no late fees was a revelation for the market; it constituted a major disruption. This new business model took down Blockbuster and has forced movie theaters to adapt and find new ways to lure customers off their sofas to the big screen.

Today this story is familiar and can be seen in many industries. Uber’s CEO, Travis Kalanick, did the same thing when he created a ride-sharing service using mobile technologies to connect drivers and riders directly, where existing black car and taxi companies didn’t. Founder of Angie’s List Angie Hicks connected homeowners to share reviews of local businesses and service providers, creating enormous value over traditional listings like the Yellow Pages.

But don’t assume that only start-ups can embrace new mental models and core beliefs. General Motors is demonstrating that it too can shift its core beliefs about value with a $500 million investment in the ride-sharing start-up Lyft and a commitment to build digital networks and autonomous vehicles.

Take It Outside Your Mind and into the Real World

As you update your mental model, you need to take reinforcing actions to help realize the change. Here’s what we recommend.

TAKE IN NEW INFORMATION, NEW DATA, AND NEW IDEAS. As a leader in business, you probably already keep up with the latest news and the ways others are thinking, but, as we’ve said, all of us naturally have a bias toward perspectives like our own. In fact, we automatically select ideas that reinforce our own. You need to work to incorporate a more diverse perspective into your daily updates. Keep tabs on industries a bit further afield, particularly on trends in the advancement and use of technology.

Within your own organization, spend time with the groups that normally get less of your attention. Ask them about their priorities, concerns, and ideas for innovation.

WRITE NEW STORIES. You probably have an elevator pitch for yourself, and another for your company, that you pull out on autopilot when needed—a short story that cuts right to the heart of your strengths and purpose. For example, you might say you’re a “seasoned operations expert who can quickly identify waste and motivate a team to fix it.” You work for a “large-format, value-oriented grocery and general goods retailer.” To change your thinking, don’t let the stories you’ve told in the past limit your options for the future. Let the stories of the past stay in the past.

As you read this book and identify shifts and opportunities that make sense for your firm, start telling yourself and others new stories about what you are and what you’re becoming. Be bold. You can always scale back, but without that big stretch, you’ll tend to stay within your habits.

BREAK HABITS. Once you start to grasp the edges of your current mental model, you will start identifying times when it puts you on autopilot. These are times when you operate quickly or habitually in line with your old mental model without taking time to consider whether it’s the right decision for this particular instance. The fastest way to break old habits is, paradoxically, to slow down.

For example, when you’re allocating budget, deciding whom to invite to a meeting, or choosing whom to interview, you probably have some rules of thumb based on an outdated perspective of the world, yourself, or your company. You need to change your routine for making these decisions and try out a new mental model, if only a few times. For example, invite a representative of every division to a meeting that is usually more exclusive, or ask the people in your star business unit to justify their budget.

SEEK AN OUTSIDE PERSPECTIVE. Ask for counsel or mentorship from individuals who have different mental models from your own. Although they might exist within your company, it is far more likely that they’re external—outside your industry, outside your demographics, outside your comfort zone.

Technological mentorship is especially important for anyone wanting to ride the digital network wave. CEO.com found in 2015 that 61 percent of CEOs have no social media presence whatsoever.² They’re not on Twitter, Facebook, Instagram, or LinkedIn. Perhaps we can agree that they may not be tuned in to the nuances of millennials, 88 percent of whom use Facebook regularly to get news and information.³

Reverse mentorship—in which a younger employee provides the mentoring for someone more senior—is a great option for those who want to experience a new mental model or gain technological perspective. Reverse mentoring was popularized by GE CEO Jack Welch, who learned how to surf the internet from an employee in her twenties.

Gaining a new mental model seems a dangerous goal for someone who has been successful in her career. After all, almost all of us would agree on the truism, If it ain’t broke, don’t fix it. But many of our business habits aren’t aging well—and a new generation of disruptors is right around the corner, and the next generation is right around the next one. To change your habits, you need to make the effort to try on new perspectives. Even if some of them don’t fit, the experience will open your mind and will prove to be valuable.

Others Are at Work on Old Mental Models

In 2010, Jeff Immelt, CEO of General Electric, saw that GE needed to respond to the expansion of innovative digital technology into its primary sector: industrials. Rather than let new players consume the value that was created as his industry digitized, Immelt began to purposefully evolve the firm in the direction of digital networks.

Describing this transformation to McKinsey, Immelt said, “We want to treat analytics like it’s as core to the company over the next twenty years as material science has been over the past fifty years. . . . We can evolve our business model accordingly.”⁴

Immelt decided to develop the analytics capability in-house rather than through external acquisitions, but during the process he found that norms and mental models throughout the organization needed to adapt. Describing the transformation that was required, Immelt conceded, “I thought if we hired a couple thousand technology people, if we upgraded our software, things like that, that was it. I was wrong. Product managers have to be different; salespeople have to be different; on-site support has to be different. We’ve had to drill and change a lot about the company. And I just think it’s infecting everything we do . . . I think in a positive way.”

What Immelt discovered is that business model transformation doesn’t come about simply by changing a few outward behaviors. It requires a deeper change—leaders with new ideas that, in turn, create new behaviors throughout the organization.

Build a New Mental Model for the Network Age

When the environment is static, an old mental model is fine, or even good; you’ve had decades to polish it, after all. But when the environment is changing rapidly, an old mental model can prevent you from understanding the new environment, much less reacting to it effectively and benefiting from the new outcomes that new beliefs will deliver.

Are you willing to lead like Jeff Immelt in your organization and for your industry? Your willingness to change your mental model—through new stories, habits, perspectives, and ideas—will set the trend for other leaders in your firm. If you will challenge your historical viewpoint on each of the ten principles we raise in this book, and create a new digital network path for your firm, you will deliver unprecedented growth and value.