by Aman Mann

Why rate of change should be the most important metric in your company

Aug 24, 2017

Most disruptive companies that challenged the status quo and became industry leaders were not interested in looking for mere strategic advantages, or incremental improvements over the competition. They resolutely cultivated a culture that empowered their teams to breed new ideas and bring them to life.

businessman climbing stairs / growth / achievement / new territory
Credit: Thinkstock

Tech leaders, in general, are always accused of overzealousness, setting bold expectations, imploring their teams to do the impossible. Perhaps this mania, as it were, is a response to the state of our times — the only way, some might argue, to stay relevant at a time when relevance is a very transitory thing.

I’ll save you the usual cliches about technology and change, but to really understand what distinguishes great companies from the rest, we need to understand — really understand — the world we are in today, and its changing relationship to time.

To that end, let’s consider inventor and futurist Ray Kurzweil’s theses (Not just another best-selling academic, Kurzweil belongs to the entrepreneur species, having pioneered and sold four AI-based businesses.) 

In the 1980s, Kurzweil developed mathematical models to predict the extent of technological progress across industries. Looking over the course of the last 30-plus years, one realizes that the models were frighteningly accurate — indeed, Kurzweil holds the rare distinction of being 86% accurate in his predictions.   

What these models, however, indicated was that the rate of progress itself was changing over time. “…the last 20 years are not a good guide to the next 20 years. We’re doubling the paradigm shift rate, the rate of progress, every decade. The 20th century was like 25 years of change at today’s rate of change. In the next 25 years, we’ll make four times the progress you saw in the 20th century,” says Kurzweil.

The question, therefore, is what’s causing this acceleration (or the increase in the rate of progress)? Behind the wheel are companies that have, in just a few years, been able to make a greater impact on the way we live, than the thousands of years of human endeavor preceding them. 

How did they do it? To say that technology was only following the course of evolution, and that Google, or Apple, or Netflix, or Amazon were riding on its coattails does not suffice. So is there something that’s fundamentally different about these companies?

Change → Progress

“Incremental improvement is guaranteed to be obsolete over time. Especially in technology, where you know there’s going to be non-incremental change.”

Larry Page 

Consider Google itself. What started out as Page’s post-graduate thesis on web annotations was stripped down, taken apart, and fashioned into a search engine. Where Google differed from the incumbents (the likes of Yahoo, Ask Jeeves, Yandex and dozens of others) was that it underwent sweeping changes in a very small period of time.

Gmail, Google News, AdSense — each of these services that we now take for granted were not part of Google’s grand design; they didn’t even figure in the product roadmap. Neither were they conceived top-down; rather, they started out as small, everyday inspirations that the company had the good sense to seize upon and quickly move into execution. 

In most other companies, any suggestion to channel any resources away from the core business would have been met with resistance; worse, any suggestion to diverge from the product vision and steer a different course would have led to just the sort of ugly showdowns that companies garb under the euphemism of change management. And that’s why most companies change so little, and so slowly.  

By their very nature, inspirations are unforeseen and fleeting. They can’t be summoned, or forced out of your team. And that’s why culture is so important.

Where process, structure and efficiency — the three pillars of management — fail, culture lives. But where culture thrives is that rare company where management cultivates it, instead of repressing it.

At Google, for example, the management lets every team member take 20% of their time off to work on a project of their own. Gmail, Google News, AdSense, along with at least 47 other services, were created during this 20% time off.  

What is truly valuable in any company is the capacity to generate new ideas, and how quickly such ideas can be executed upon. That is why the rate of change is the most crucial metric in your company.