Many incumbents die because their leaders fear change. You can turn fear into energy via emotion management to accelerate business model change.
You might know that your company should adopt a platform business model and start using AI. And you might also know that there are many attractive opportunities outside your current core. Yet, fear can block you.
How might you overcome this fear? In this blog, we show insights from our recent research which we published in Harvard Business Review.
We introduce the concept of emotion management. It means that you should in intentionally influence your own and others’ emotions. And you do this for the benefit of business results, not to make people feel good.
Often, business results require you to become what we call an intelligent platform. They:
- generate network effects via a platform
- use AI to accelerate value creation and performance, and
- continuously find new ways to serve new customers.
Why do we need emotion management?
Emotion management is needed because executives often fear change. They might identify with the current way of operating. But becoming an intelligent platform implies changing this. And they therefore might fear that they lose themselves. Like we described in our first blog on how Tetrapak started to change its business model with a B2B marketplace.
The platform business model reduces executives’ formal power. They have less power because platform members are not their sub-ordinates. Rather, they are other firms that provide services via the platform. The reduced power might make the executives feel anxiety.
Others fear the new technology itself. Yet, to succeed, your company needs AI. And trust AI’s advice. Even if they contradict executive intuition. And this is painful.
Increase trust and psychological safety with emotion management
Often, threats make executives defensive. Hostile speak makes it worse. In contrast, a respectful style increases trust.
Hence, as part emotion management, the Nokia board created formal interaction rules. They called them Golden Rules. For example, assume the best of intentions in the actions of others. Nokia’s chairman even shared them on twitter.
This approach was lauded even by Harvard’s Amy Edmondson in her recent book. She is the professor who coined the term “psychological safety” in a hallmark study.
The way you organize the strategy process can also create psychological safety. You might have phases such as option generation, option elaboration, critical option analysis, and decision. In this way, executives can focus on one task at a time. Hence, they need not worry about too many things. That makes them feel safe.
Analyse emotionally counter-intuitive options for your business model
Executives’ judgment is often their core strength. And they can quickly assess whether any option is a good one or not. They therefore don’t need to waste time on bad options.
And still, it’s this very judgment that is often their main weakness. Judgment is based on past experience. But if past experience comes from traditional business models, it’s bad experience. In other words, the judgment is likely to be faulty.
Emotion management helps in overcoming faulty intuitions.
Nokia’s board did not let their executives past experience rule. Rather, they had a policy that all options are carefully analyzed. Even those that seemed bad ones. They started analyzing if they could divest the phone business and acquire a networks business.
And, it was precisely the “bad options” that the company ended up choosing. These proved to be the best ones. Analyses changed their judgment.
Generate various options to reduce emotional attachment to your old business
Often, new ideas seem bad. But emotion management can overcome this bias. You should generate several new ideas. Some of those new ideas can be really wild and crazy. This stimulates your imagination. And you come up with even more ideas. Ultimately, you have a dozen new ideas. Some of them start looking better than others. And suddenly you see that you have attractive new ideas.
A variety of options also reduces emotional attachment to the old business. When you see several potential futures, you don’t need to hold on to the past. And this gives you the courage to act.
Use emotion management to build intelligent platforms
Fear can make executives hold back radical decisions. But emotion management turns fear into energy. Hence, you should remember the three steps to succeed:
- Increase trust;
- challenge your gut with data;
- generate various options.
Start applying emotion management today! Use these steps in your everyday actions. In your next meeting, for instance.
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