Today's Reading

Until recently, it seemed like Microsoft's inventing days were over. The company was so attached to Windows it almost let the future pass it by. But with a leadership change from Steve Ballmer to Satya Nadella, the company returned to Day One and embraced cloud computing, a threat to desktop operating systems like Windows, and became the world's most valuable company once again.

Apple under Steve Jobs developed the iPhone, a device that rendered desktop computers like the Mac and portable music players like the iPod less relevant but also set the company up for years of success. Today, Apple is having its Windows moment. It must leave iPhone orthodoxy behind and reinvent itself again to compete in the age of voice computing.

At Amazon's South Lake Union campus in Seattle, one of the newest buildings is called Reinvent. It's an odd word coming from one of the earth's most successful companies. But in today's business world, where Day Two is death, it's the key to survival.


IDEAS VS. EXECUTION

Operating an inventive company takes more than speeches and internal messaging. It takes a reimagination of the way you run a business, which is finally possible due to a revolution in the way we work.

There are two types of work: idea work and execution work.

IDEA WORK is everything that goes into creating something new: dreaming up new things, figuring out how you're going to make them, and going out and creating.

EXECUTION WORK is everything that goes into supporting those things once they're live: ordering products, inputting data, closing the books, maintenance.

In the industrial economy, almost all work was execution work. A company founder would come up with an idea (Let's make widgets!) and then hire employees for execution purposes only (they'd be in the factory, making the widgets). Then, in the late 1930s, we started moving from an economy dominated by factories to one dominated by ideas—what we call the "knowledge economy."

In today's knowledge economy, ideas matter, but we still mostly spend our time on execution work. We develop a new product or service, and then spend our time supporting it instead of coming up with something else. If you sell dresses, for instance, supporting each design requires loads of execution work: pricing, sourcing, inventory management, sales, marketing, shipping, and returns. Additional support work props up these processes, including basic tasks in human resources, contracts, and accounting.

The burden of execution work has made it nearly impossible for companies with one core business to develop and support another (Clayton Christensen calls this the "innovator's dilemma"). Those who've tried have almost always pulled back, or found it impossible to sustain multiple businesses at once. "GM historically made many things other than cars," Professor Ned Hill, an economist at Ohio State University, told me, citing refrigerators and locomotives. "They were an octopus, and they couldn't manage it."

Drowning in execution work, today's companies thus devote themselves to refinement, not invention. Their leaders might desire to run inventive cultures, but they don't have the bandwidth. So they deliver a limited set of ideas from the top, and everyone else executes and polishes.

But running a company with an inventive culture, rather than one of refinement, is now suddenly possible. Advances in artificial intelligence, cloud computing, and collaboration technology have made it feasible to support existing businesses with much less execution work, helping companies turn new, inventive ideas into reality—and sustain them. These tools are the next evolution of a workplace software explosion that's made companies more efficient, and AI is putting it into overdrive. Experts say AI will free people up to do more "creative" or more "human" work. But more precisely, AI enables them to do more inventive work. This, I believe, is a critical factor behind the tech giants' success.

Pushing a new wave of enabling technology forward, the tech giants have figured out how to minimize execution work. This creates room for new ideas, and they turn those ideas into reality. Their cultures therefore support invention, not refinement. They remove barriers that would prevent ideas from moving through the company, and bring the best of those ideas to life. Simple in theory, but complex in practice, this is what makes them tick.

For some time, I was convinced the tech giants would hold this advantage over the rest of us for many years. But then I took a trip to Miami.
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