The Next Big Wave is the BrainWave

Brain Power: the Last Unexploited Capital Asset

Karl Albrecht

We may be poised at a very special transition point in time. Modern cultures, and the business culture in particular, are moving into a period of anxious self-examination, the likes of which we see perhaps once in many decades, or even once in a century. During special times like these, in which so many people - and businesses - are forced to examine their most basic beliefs, values, and aspirations, minds are temporarily open to new ideas and new possibilities.

Something very basic changed in the American culture after the historic "9-11" disaster, and those same changes are working their way through the cultures of all of the developed countries. People are different, at some deep psychic level; their sense of the comfortable, self-indulgent, produce-and-consume pattern of living and being entertained has been permanently impaired. Suddenly, the priorities have shifted toward finding meaning rather than money.

This new search for meaning and identity has shaken enterprises as well as individuals - each is reflected in the other. Looking back from the next decade, we may well consider this time of confusion and transition as one of the most fruitful turning points of modern life - and business thinking. The premise of this discussion is that the answers, if there are any to be found, are most likely to be found inside our own heads - literally, in our own gray matter.

The Brain Wave

Futurist Alvin Toffler gave us the concept of the three great waves of change in human history. The first of Toffler's socioeconomic waves was agriculture; the second was industrialization; and the third - upon us now - is the wave of information. Although we're currently fascinated with this awesome Third Wave, it won't be the Last Wave.

The Fourth Wave, I believe, will be the wave of consciousness - the "brain wave." The last unexploited capital asset in business is the gray matter: the human capacity to think productively. Jeff Taylor, CEO of the Internet job exchange firm Monster.com, talks about the fast-approaching "smart gap," a shortage of competent knowledge workers. He warns: "The knowledge worker is going to be at the center of company desperation." One of the irresistible trends of Toffler's Third Wave is a steady shift in the working population from "thing-workers" to "think-workers." The trend goes far beyond the shortage of computer and software specialists. This shift to think-work may force us to completely rethink human education.

The Human Software

Many businesses, for at least a decade, have been fascinated with all things digital - often at the expense of things human, and even sometimes at the expense of common sense. The deadly combination of "digital mania" and "profit psychosis," particularly rampant in business from the early 1990s through 2000, has given us the biggest economic bubble and the biggest economic bust in nearly a century. Both have achieved exactly the opposite of what they were touted to do. The mantra of "shareholder value" turned out to be a cover story for the hands in the corporate cookie jar, and shareholder value actually tanked to the tune of over a trillion dollars. The mantra of "Internet über alles" turned out to be a cover story for the geeks running amok with the shareholders' money, and "E-Commerce" turned out to be (as I and others predicted in early 1999) the big failure story of the decade.

Many businesses that dumped tens of millions of dollars into "IT solutions" - the machine software - didn't feel it was important to invest a few tens of thousands of dollars to enhance their employees' mental capacity - the human software. The message is clear: machines are more valuable than people.

We've come to the bottom of the psychological business cycle, which follows in step with the economic business cycle. The old stuff isn't working any more, and there is a desperate craving for a new explanation of what businesses need to do. This could be the quintessential "teachable moment."

Employees as Appreciating Assets

Contrary to popular business mythology, machine software is a depreciating asset. It rots over time. Indeed, both hardware and software suppliers work diligently to ensure it will become obsolete and need replacement as soon as possible. Only recently have large corporate buyers begun to balk at the ethos of forced obsolescence that forms the dominant ideology of the "IT" industry.

Human software - individual knowledge and competence - by contrast, represents an appreciating asset. Other factors being equivalent, would you rather invest in a company with an experienced, skilled, motivated workforce, or a company with a green, incompetent, unmotivated workforce? And, although people need occasional "upgrading," human development is mostly cumulative and durable.

Does employee brain power translate to bottom-line business results? The answer is obvious. Why else would the largest consulting firms, investment banks, law firms, and brokerage firms pay top salaries to recruit the smartest college graduates and MBA students they can find? Why not just hire the run of the mill and save huge amounts of money? They also know that they're hiring the smartest future leaders, because some of those new people will rise to executive positions. If there is a clear connection between brain power and the bottom line for those kinds of firms, why would it be any less true for any other kinds of businesses?

But faced with an impending shortage of smart people - thanks partly to the ineffective public education system - the critical question arises: when we run low on smart people to hire, can we make the people we already have smarter? Can we grow our own smart people?

Again, the answer is obvious: of course we can. If we didn't think training programs could help people do their jobs better, why would we spend billions of dollars a year on corporate training of all kinds? Can anyone seriously dispute that giving people superior cognitive skills makes them economically more valuable to the enterprise? The challenge is to redeploy much of the training investment in business, toward foundation skills, i.e. basic mental competence.

Can We Train Brains?

In order for the energy of the Fourth Wave to kick in, we need to sweep away the remaining debris left by several myths that have been deeply embedded in our educational establishments and, by extension, in the overall culture.

• Myth #1: Intelligence is basically fixed - a gift, or a genetic endowment that can't be changed. Your IQ defines your potential in life.
• Truth #1: The concept of IQ may be one of the most destructive propositions that's ever emerged from the education industry, and it's absurd to assume that a person's possibilities are determined by a 3-digit number. An IQ test only assesses a small portion of a person's mental competence, and certainly not the most important parts.
• Myth #2: Brain power is basically a matter of IQ. The higher your IQ, the more successful you'll be in life, and the lower your IQ, the less successful you'll be.
• Truth #2: Brain power is only loosely connected with IQ. We all know people with super-high IQs who've made miserable failures of their lives; and there are many people with very "ordinary" IQs who have learned to use their gray matter effectively for their own success. Brain power is the capacity to use one's mental resources - whatever they may be - to best advantage.
• Myth #3: A person who arrives at young adulthood is about as smart as he or she is ever going to be.
• Truth #3: No human being is a "finished product." We are all "works in progress," if we choose to be, and any normal person should be getting smarter as he or she gains the kind of enlightenment that comes with life experience.

I've been studying the human mind for over 20 years, and I've learned that thinking clearly and effectively can be learned. I've also learned how to explain - in simple, down to earth terms - what clear thinking is, what it looks like in action, and how a person can learn to do it. I can show people how to diagnose flaws in their thinking habits, and coach them to replace faulty habits with effective habits. And I have trained many others to do the same.

US Businesses have recently been spending about $40 billion per year on IT programs - machine software. If they reallocate just two percent of those funds, approximately $800 million, to developing employee brain power, they'll still be spending less than Coca-Cola's annual bill for advertising. It's a pretty safe bet that at least two percent of those IT funds are wasted, or spent on misguided projects, so it would be hard to claim any negative impact on the machine software anyway.

How Do We Train Brains?

Actually, training brains is not a new concept in business. During the 1970s and 1980s, before the mechanistic ideology of "total quality management" swept through business and government, quite a few firms invested liberally in cognitive development programs. Training courses for problem solving, brain storming, innovation, and creativity were plentiful. Companies like 3M, Dupont, IBM, and others trained employees and teams for innovation, and some even built special learning centers to support the process. Employee suggestion systems, out of fashion these days, were commonly used. Even the US Defense Department's National Defense University, just outside Washington D.C., hosted an all-services symposium on innovation and creativity in government.

Many of those early training methods lived on and have become enshrined in today's "process improvement" methods and self-directed work teams. General Electric's highly-touted Six Sigma approach owes much of its origin to those earlier investments in individual and collective brain power.

Currently, more organizations are flirting with the idea of cognitive-skill training. The American Management Association has recently made a commitment to this cause, particularly with its "Brain Power Course," a two-day public seminar program which I designed, devoted solely to the development of thinking skills useful to business and professional people in their careers. According to AMA Senior Vice President Diane Laurenzo,

"We've long recognized the value of training professional people in advanced cognitive skills - divergent and convergent thinking, brainstorming and creative idea production, information mapping, group dynamics and team problem solving, understanding thinking styles, listening and explaining ideas, and even building self-concept and self-esteem. These are foundation skills every person can use every day in his or her job, career, and personal life."

The Australian Institute of Management and the Australian Graduate School of Management have offered versions of the same program.

The American Society for Training and Development, the professional and trade association for corporate trainers and consultants, has recently granted formal recognition to the category of "brain training" at its international conference.

Senior executives at a city in Michigan recently commissioned an intensive one-day "executive brain power" training program for their own development. According to the city's human resource manager, "Our executive team felt it was important to refresh and challenge their thinking processes, and to enhance their collective problem solving skills. They also discovered that learning about differences in thinking styles helped them immensely in sharing ideas, not only among themselves, but with subordinates."

The steadily increasing investment by business organizations in coaching as a developmental strategy has also rekindled an interest in cognitive process. Many coaches use cognitive style profiles of various kinds, such as the Mindex Thinking Style Profile which I developed, to help executives, managers, and professional people to better understand how they and others process ideas. A number of professional coaches are adopting cognitively based strategies and methods.

And going beyond the methods we've known for many years, we now also have access to exciting new findings from brain research that translate directly into training and learning strategies to make people smarter. The emerging new "modular mind" concept, concepts such as "emotional intelligence," and now a much better understanding of the hierarchical nature of the brain's idea-management strategies can apply directly to helping people use their gray matter more effectively.

Building Smart Organizations

Is "organizational intelligence" - basically, brain power writ large - the ultimate oxymoron, or will it become the defining proposition for businesses that hope to survive through the decades? According to studies by Royal Dutch Shell, the average lifetime of a Fortune 500 company is less than fifty years. The average lifetime of all incorporated businesses is estimated at about fifteen years. In the words of J. Willard ("Bill") Marriott, founder of the Marriott Corporation, "Success is never final."

We can define organizational intelligence as the capacit of an enterprise to mobilize all of its brain power and to focus that brain power on achieving its mission.

Transforming individual intelligence into organizational intelligence involves making good use of the management tools we already have: employee training, coaching, team building, and the development of the organization itself.

What Will Power the Fourth Wave?

The fuel for the Fourth Wave - the brain wave - will be a combination of forces. One will be the sheer hunger, on the part of most employees, many managers, and some executives, for a return to the focus on people. We're moving into a state of "digital fatigue" after the false promises and excesses of the Internet bubble; people want people to count for something again.

Another fueling force will be the prevailing attitude of mistrust and cynicism on the part of so many workers, and the need on the part of executives to get out in front of the people they're trying to lead and to lead them where they're already going. Recession or not, people want purpose and meaning in their lives. They've had enough of being digitized and commoditized. Loyalty to one's employer is a charmingly outdated concept in today's business world, just as loyalty to the employees has expired as a management precept. If the smart gap comes true, just stealing knowledge workers away from your competitors with better pay and benefits won't be enough. We'll need to enlarge the pool of talented thinkers because there simply won't be enough of them to go around.

Still another fueling force will be the ever-widening acceptance by corporate leaders of the impact and value of brain training as a high-payoff investment, combined with the continued failure of the public education system to supply enough smart people to the workforce. In one widely-quoted study, forty percent of a group of seniors who were about to graduate from American high schools could not locate France on a map. And the relentless "dumbing down" of most of the Western cultures by the dominance of television, movies, and entertainment disguised as news leaves an educational gap that will not be filled by any other commercially motivated enterprise. This leaves the employer as the educator of last resort.

Is this renaissance of the mind, this brain wave, a real possibility in the business world? Will we take the opportunity to build smarter and saner businesses, and by extension a smarter and saner society? Will we teach our children how to use their natural brain power? The need is undeniable; the means are another matter. Novelist H.G. Wells characterized human civilization as "a race between education and catastrophe." We'd better find the answers, and soon.

Ultimately, I believe, sanity is inevitable. And a return to sanity in business must surely include a greater appreciation for the last appreciating asset we have: human brain power. As the late UN diplomat Abba Eban observed, "Human beings can be counted on to do the right thing - after they've tried everything else."

Dr. Karl Albrecht is an executive management consultant, futurist, lecturer, and author of more than 20 books on professional achievement, organizational performance, and business strategy.

He has pioneered a number of important new concepts in the business world. For example, he is widely regarded as the father of the American "customer revolution" and service management. His book Service America: Doing Business in the New Economy (co-authored with the late Ron Zemke), sold over 500,000 copies and has been translated into seven languages.

He is also a leading authority on cognitive styles and the development of advanced problem solving skills. His recent books Social Intelligence: the New Science of Success, and Practical Intelligence: the Art and Science of Common Sense, together with his Social Intelligence Profile and his Mindex Thinking Style Profile are widely used in business and education. The Mensa society honored him with its lifetime achievement award, for significant contributions by a member to the understanding of intelligence.

Originally a physicist, and having served as a military intelligence officer and business executive, he now consults, lectures, and writes about whatever he thinks would be fun.