The real AI story in most organizations isnt about algorithms; its about habits. New tools arrive with impressive demonstrations and confident promises, yet the day-to-day routines that decide what gets attention, who can take a risk, and what counts as a good job tend to remain the same. Leaders set up special units, roll out training, or look for quick savings, only to find that the old culture quietly resets the terms. When that happens, early gains fade, adoption stalls, and cynicism grows.
This article draws on our forthcoming book to look at three recurring myths that help prop up existing cultures and prevent the deep transformations that are needed to support successful AI implementations. Transforming a business to make the most of AI means moving past these comfortable stories and changing the conditions under which the whole organization works.
Myth 1: ‘Innovation Units Will Save Us’
After five years of operation, the U.K.s Government Digital Service (GDS) seemed untouchable. Created in 2011, the GDS revolutionized Britains digital services. With the goal of reenvisioning government as a platform, it consolidated hundreds of websites into a single, easy-to-use portal, cut waste by forcing departments to unify their platforms, and showed that, with the right attitude, even government agencies could move with the speed of a startup. In 2016, the U.K.s digital services were ranked the best in the world. Yet by 2020, the GDS had disappeared as a force within the U.K. government.
This pattern repeats regularly across corporate innovation labs: create an elite unit, give it special rules, celebrate early wins, watch it die. An innovation unit can deliver extraordinary results so long as it has senior leadership protection, free-flowing resources, and an internal culture that attracts exceptional talent. But the model also contains the seeds of its own demise. The outsider status that enables breakthrough innovation makes large-scale sustainability nearly impossible. When executive sponsors move on, the shield drops, and organizational antibodies start reasserting cultural norms.
This predictable lifecycle applies to AI-focused teams as much as those driving any other type of technological change. Leadership transitions are inevitable. New executives question special rules. The innovation unit that draws its power from being outside the system gets pulled back in again, and the flow of novel ideas slows to a trickle.
The lesson to take from this isnt that we should abandon innovation unitsits that we should use them strategically and follow up on the gains they make. Innovation units should be seen as catalysts, not permanent solutions. While these teams are forging ahead with quick wins and proving new approaches, organizations also need to transform their broader culture in parallel. The goal shouldnt be protecting the innovation unit indefinitely but aligning organizational culture with the innovative approaches it pioneers. If innovation units are sparks, culture is the oxygen. You need bothat the same timeor the flame dies.
Myth 2: “Our People Just Need Training”
Companies spend millions teaching employees to use AI tools, then wonder why transformation never happens. The reason is that the underlying problem isnt just about skillsits about the imagination needed to use them effectively. You can train your workforce to operate the new technology, but you cant train them to be excited about it or to care where it will take the business. That requires change at the cultural level.
When it comes to AI, the real gap is conceptual, not technical. Employees need to shift from seeing AI as a better calculator to understanding the role it can play as a thought partner. This requires more than tutorials. It means showcasing how AI can transform workflows and then rewarding its creative use. Show a sales team how AI can predict client needs before calls, not just transcribe them afterward. Demonstrate how legal teams can shift from document review to strategic counseling.
When organizations tell employees to use the tools but dont change the social norms around using them, people can be punished for doing exactly what leadership asked. A recent experiment with 1,026 software engineers found that when reviewers believed code was produced with AI assistance, they rated the authors competence lower by about 9% even though the work was identical. Even more concerning was that the penalty was larger for women and older engineers, groups who tended to be treated negatively in assessments already. In a companion survey of 919 engineers, many reported hesitating to use AI for fear that adoption would be read as a lack of skillillustrating why access and training dont translate into uptake when the culture signals that visible AI use will harm credibility.
Myth 3: “AI Makes It Easy to Slim Down the Workforce”
Theres a seductive promise being sold to companies right now. The way to realize AIs value is simply to replace as many workers as you can. Fire half your staff, pocket the savings, let machines handle the rest. Simple arithmetic for simple minds.
The messy truth is that AI can and will replace many human jobs, but it wont do it cleanly and it wont do it easily. In most cases, the idea that you can simply swap out the human component and replace it with a machine just doesnt work. Humans work together as parts of multilayered social structures that have evolved as ecosystems. Its often the case that if you change one part, there will be major consequences for another. If we rush into automation too quickly, we risk pulling away the pillars that hold the whole structure up.
Think about the tedious hours that junior analysts spend cleaning data, checking figures, and building models from scratch. Or the work a newly appointed manager will do overseeing performance and filling in paperwork. We call it grunt work, but its actually how humans develop the skills they will need in more senior roles. Take away the entry-level jobs and you lose the career path that delivers the highly skilled senior leaders you need. Allow AI-powered deskilling to take place and you lose the human judgment and oversight that institutions rely on.
Klarnas trajectory shows both sides of this equation. In early 2024, its AI assistant handled two-thirds of customer chats, delivering resolution times under two minutes and a 25% drop in repeat inquiries. By 2025, Klarnas leadership was publicly acknowledging the limits of an AI-only approach and began reopening human roles and emphasizing the customer experience alongside automation.
The real question isnt how many people you can eliminate. For effective AI implementation, you need to understand that humans make essential contributions that dont appear in their job descriptions.
The Culture Transformation Playbook: Fixng the Myths
Culture change depends on habits, incentives, and expectations, not just adding new tools. The playbook that follows presents concrete steps that leaders can take now to avoid the pitfalls many companies are running into.
Run Parallel Transformations (Fixes Myth 1). The innovation unit delivers quick wins while a separate initiative transforms broader culture. These must happen simultaneously, not sequentially. Use the innovation units protected status and early victories to create organizational belief in change but invest equally in preparing the mainline culture for whats coming. Without parallel tracks, the innovation unit becomes an isolated island of excellence that will eventually be washed away.
Transform the Middle Layer (Fixes Myth 2). Middle managers are the real gatekeepers of culture change. Stop wasting energy trying to convert skeptics. Instead, identify the curious and give them authority to experiment, budget to fail, and cover from meeting traditional metrics. Try giving selected managers a micro-charter to implement change in their team, along with a weekly show-the-work session (what AI was used, what was accepted or overruled, and why) to share what theyve learned with peers.
Build Alternative Learning Paths (Fixes Myth 3). If AI eliminates the experiences that build judgment, you must consciously re-create them. High-fidelity simulations, rotation programs, and human days working without AI become existential necessities. Explicitly preserve activities that develop pattern recognition and business instinct. The investment might seem wasteful until you realize the alternative is a workforce that can operate tools but cant respond when something breaks.
The Choice
Culture transformation is harder than technology implementation. Its messier, slower, and impossible to fully control. Most companies will choose the easy path: buy the AI, train on the tools, create an innovation lab, and hope for the best.
The few who choose the hard pathparallel transformation, cultural evolution, preserved learning experienceswill gain powerful competitive advantages. Theyll have workforces that dont just use AI but think with it, cultures that dont just tolerate change but expect it, and organizations that dont just survive disruption but drive it.
There has been a lot of chatter about A24s takeover of the Cherry Lane Theatre. What might seem a quirky side project for the independent studio known for Lady Bird, Uncut Gems, and Hereditary is in reality a sharp, shrewd move in an industry facing disruption and streaming fatigue. Live performance is one of the few cultural experiences that cant be automated, replicated, or played on demand. By stepping into theater, A24 is hedging against an AI-saturated future while also deepening its cultural footprint.When the deal was first announced in late 2023, the scuttlebutt was rooted in practicalities. Its all about creative synergies, was one refrain. Theyre diversifying their revenue streams to help offset the volatility of the film business. Theatre is more predictable than film. They can test out new stories in a low-risk environment. These were all valid comments, sure, but then a close friend and accomplished film industry executive said something that really piqued my interest. I wonder if they are further differentiating themselves in the market by building a futureproof brand. Aha! Now we were getting somewhere.
[Photo: Dia Dipasupil/Getty Images]
A powerful brand
Coming from the branding world, I may be biased. Or perhaps just acutely aware when I sense a company doing something out of the norm. A24 certainly fits the bill. To start, the story its looking to tell, its role in the industry, and how it wishes to be perceived are markedly different from the other studios. As a result, it has a growing community of acolytes who identify with it and love it for that. These are trademarks of a powerful brand.
Michelle Yeoh in Everything Everywhere All at Once, 2022. [Photo: David Bornfriend/courtesy A24]
Most studios understand that their franchises are brands that they can build around, but when it comes to themselves, there is little to no attention given to an overarching narrative about what they stand for. To a branding person, this is perplexing. There is only one other industry that comes to mind that acts like this: Big Pharma. The drug companies seem to care that their patients know their drugs by name (think Lipitor, Prilosec, Viagra, Prozac) but less about how they themselves are perceived.
Adam Sander in Uncut Gems, 2019. [Photo: Julieta Cervantes/courtesy A24]
A24 is different. It is one of the very few in Hollywood that seems to be building a truly beloved brand. Do this simple test at home. When A24 flashes up on the screen at the start of a movie, does it mean something to you? Does it affect your perception of what is to come? Like me, do you even get warm and giddy inside?
Florence Pugh in Midsommar, 2019. [Photo: Gabor Kotschy/courtesy A24]
Perhaps deep down, we all understand that A24 is all about exceptional, original, creative content. The questions one might ask are: How is it going about building a world-class brand? And why does that matter?
A$AP Rocky and Rose Byrne in If I Had Legs I’d Kick You, 2025. [Photo: Logan White/courtesy A24]
Content is still king
One simple idea prevails in our fast-evolving world: Creativity wins. And increasingly so. The adae content is king has been floated around the entertainment industry over the years. And yet, for whatever reason, it seems to get forgotten with every new business cycle. In its place, Im hearing things like, “We’re leveraging AI-driven audience analytics and predictive modeling algorithms to revolutionize content creation through real-time sentiment optimization and it’s a complete paradigm shift that democratizes storytelling via data-driven narrative matrices.”
Paul Rudd and Jenna Ortega in Death of a Unicorn, 2025. [Photo: courtesy A24]
Its becoming readily apparent that the general public doesnt want an AI-generated model in their Guess ads, or a machine-generated song that Nirvana could have written. Audiences want to be surprised and delighted with new, fresh, exciting content. A24s brand is synonymous with creativity, and younger movie lovers inherently understand this.The brands that matter most today are those that are daring. Anyone who has seen Ons Zone Dreamer campaign with Zendaya floating around in outer space knows what I mean. The Big Five studios are publicly traded, and so by nature forced to drive revenue for shareholders and to mitigate risk (the yin to darings yang). Ironically though, the greatest historical payoffs in Hollywood, either on a % basis or through expansion into other verticals, are those that have taken calculated risks. A24 exemplifies that spirit today, with the Cherry Lane acquisition its latest proof point.
Dwayne Johnson in The Smashing Machine, 2025. [Photo: courtesy A24]
Daring creativity
Another key tenet to building a strong studio brand has to do with the same advice as I give to all the companies and institutions we work with: Do what the robots cant. At its core, this is a euphemism for fostering human interaction. That matters especially now. The U.S. surgeon general recently declared a loneliness epidemic. In this context, A24 isnt just buying a building, its investing in the kind of in-person experiences people are craving.
Whether actively or intuitively, A24 is building an increasingly powerful brand that stands for daring creativity. Believed and beloved, it has established a cultlike following that subscribes to this world its creating, a world that gives it license to expand into any line of business that stands for the same. The Cherry Lane is a fascinating early move that insulates the company from a future saturated with AI.
The question is whether others will follow suit. Will studios also see an opportunity to congregate people, perhaps by incorporating next-generation movie theater experiences into their businesses? Could they blend hospitality and entertainment through partnerships that deliver immersive venues? The door is open . . . and A24 is first through it.
With more than 30 years in digital transformation, Ive seen technology cycles come and go. And the latest wave Im seeing is AI-powered automation. It promises sweeping gains in productivity, but without ethical guardrails, it risks undermining the trust leaders depend on to grow.
Thats why leaders can no longer treat ethics as an afterthought. Automation isnt just a technical upgrade. It is a human, cultural, and reputational challenge. The choices that leaders make today will determine whether automation drives sustainable progress or fuels mistrust and inequity.
The promise and the peril
Automation has a lot of benefits. It can free workers from repetitive tasks, improve customer service, and open new possibilities for innovation. In manufacturing, robots can boost safety by removing people from hazardous environments. When it comes to finance, AI can spot fraud faster than any analyst. And in healthcare, hospitals are using automation to speed up patient admissions (though there are privacy and consent issues).
But every gain carries a shadow. Bias in algorithms can lock in discrimination. Displaced workers may find no clear pathways to re-skill. Opaque decision-making can leave customers and regulators in the dark. And what looks like a cost saving in year one can become a reputational crisis by year three.
Lessons from the field
Global surveys show that leaders remain uncertain about the value and risks of AI adoption. McKinsey reports that while nearly 70% of businesses have adopted at least one AI capability, fewer than one in three have embedded AI into core strategies with measurable returns. The World Economic Forums 2025 Future of Jobs report projects that by 2030, automation and other global shifts will create about 170 million jobs, while displacing around 92 million, for a net gain of 78 million roles. This makes equity, transparency, and upskilling urgent priorities for leaders.
The Back on Track Foundation, a not-for-profit case study, illustrates both the potential and the pitfalls. By introducing AI tools to support case management, they improved efficiency but faced immediate questions about data privacy and oversight. Their experience is a reminder that automation is never just about efficiency. Its also about accountability, transparency, and public trust.
And it doesnt just impact nonprofits. Manufacturers rolling out automated quality control or banks deploying AI in credit decisions face the same ethical crossroads. How do we balance efficiency and productivity gains with fairness, transparency, and responsibility?
Why leaders cannot wait for regulation
Unlike the European Union, many countries have not yet built comprehensive legal frameworks for AI. Existing laws around privacy, consumer protection, and workplace rights still apply, but theres no dedicated safety net.
That means every board, CEO, and executive team needs to lead with their own ethical compass. Transparency is nonnegotiable. Customers, staff, and stakeholders deserve to know when automation is involved, what guardrails exist, and how to handle recourse if (or when) things go wrong.
In my own work with clients, I use AI tools for research, analyzing reports, and preparing strategy briefs. The responsibility and decisions remain mine, but using these tools has reinforced how transparency builds trust. Leaders need to hold themselves to the same standard and be open about where and how they use automation.
Equity and the human-first lens
Equity is the ethical line thats most at risk. Without deliberate design, automation can deepen divides: between city and region, skilled and unskilled, and insiders and outsiders. PwC estimates that up to 30% of jobs in OECD countries are at potential risk of automation by the mid-2030s, with lower-skilled roles most exposed.
A factory that automates its production line might save millions, but what happens to the workforce whose jobs disappear overnight? If you dont reinvest savings into re-skilling or transition, inequity widens. This is the human-first lens. Technology can (and should) amplify the roles of the people in the organization. What it should never do is replace their dignity or the critical and creative lens humans bring. Ethical automation aligns with company values and extends them into every workflow and algorithm.
Ethical AI adoption
Leaders who are looking to adopt AI in an ethical way should consider taking the following steps
Audit your automation footprint. Map where automation already touches your business, who it impacts, and what risks are in play.
Create governance frameworks. Decide who is accountable, how they will explain decisions, and what ethical standards apply.
Invest in literacy. When it comes to training, you need to go beyond technical staff. Boards, executives, and frontline teams all need a baseline understanding of automation. Googles AI Works 2025 report found that organizations investing in AI training achieved productivity gains of up to tenfold.
Measure more than ROI. Track trust, transparency, equity, and social impact alongside efficiency metrics.
Be transparent. If automation influences a customer outcome or an employee process, disclose it. Trust grows in the open.
Automation is inevitable. Ethical leadership is optional, but only in the short term. Regulation will eventually catch up, and those who embed human-first, transparent practices now will be far ahead of the curve.
Ethical automation isnt just about managing risks. It is a competitive advantage. Organizations that lead with equity and transparency will be the ones attracting talent, investors, and customers in the years ahead.
Every year, 12.5 million travelers pass through South Station, Boston’s 126-year-old transportation hub, to hop on Greyhound buses, Amtrak trains, and the commuter rail. But the station hadn’t been renovated in 30 years, and looked worn, industrial, and dated.
For decades, the city of Boston has been working on an ambitious urban infrastructure redevelopment project to reimagine the city’s downtown. It recently unveiled a stunning transformation of South Station that includes a redesigned transportation hub as well as a 51-story tower that will house luxury condos, offices, a rooftop garden, and a high-end restaurant.
[Photo: Jason O’Rear/courtesy Pelli Clarke & Partners]
For the hundreds of thousands commuters who pass through South Station every day, the most obvious change is the new vaulted concourse, called the Great Space, that will usher them to their trains. It features 10 concrete arches that reach 60 feet into the air.
The archways open to the street, bus stops, and train lines. The structure supports three enormous domes that have a ring of spotlights at the center of them to brighten the interior. While the previous concourse felt industrial and functional, with concrete ceilings and metal railings, it now feels opulent and open.
[Photo: Jason O’Rear/courtesy Pelli Clarke & Partners]
The design of the space was conceptualized by Pelli Clarke & Partners, an architectural practice based in New Haven, Connecticut founded in 1977 by Yale Professor Cesar Pelli. The firm is known for taking ambitious projects in cities around the world, including the Petronas Towers in Kuala Lumpur, Malaysia; Tokyo’s Mori JP Tower, which is now the tallest skyscraper in Japan; and the Natural History Museum in Chengdu, China.
The project was a private-public partnership, backed by the developer Hines. Amtrak, the Massachusetts Department of Transportation, and Boston Planning and Development Agency were also involved in the process.
[Photo: Jason O’Rear/courtesy Pelli Clarke & Partners]
While part of the goal of the project was urban renewal, the architects were also tasked with modernizing the transportation hub to increase capacity and improve efficiency. There is now 50% more capacity in the bus terminal, and 70% increased rail capacity.
“As Boston’s population grows, so is the demand for transportation,” says Graham Banks, a partner at Pelli Clarke, who worked on this project. “But rebuilding South Station without disrupting any of the transportation service was an enormous challenge. Work took place slowly.”
Banks says work began on this project in early 2020. The COVID-19 pandemic delayed construction, and then afterwards, workers were only able to work in the brief stretches when trains and buses weren’t running. “Workers would be sitting around waiting for Amtrak to give them the signal that they could get going,” he recalls. “Orchestrating the logistics of construction took a lot of work.”
[Photo: Jason O’Rear/courtesy Pelli Clarke & Partners]
The original South Station structure was unveiled in 1899 during the late Gilded Age, when railway tracks expanded rapidly across the country. Five different railroads served Boston, and initially, each had their own terminal. South Station, which was designed by architects Shepley, Rutan, and Coolidge, was meant to consolidate these different lines. By 1913, it had become the busiest station in New England, helping to boost Boston’s status as a city.
The station in the late 19th century. [Photo: GHI/Universal Images Group/Getty Images]
Pelli Clarke wanted to preserve the original South Station building, while also modernizing it. They have kept the South Station’s facade, but they also built a glass tower on top of it, adding another skyscraper to Boston’s skyline. On lower levels, there is office space. Banks says that there is already interest from local firms to move in. “These offices are designed to have all the amenities and ambiance of a hotel,” says Banks. “Companies realize that they have to entice workers to come into the office.”
[Photo: Jason O’Rear/courtesy Pelli Clarke & Partners]
Starting at the 36th floor and going to the top, there are luxury Ritz-Carlton apartments, that cost between $1.3 million for a 683-square-foot one-bedroom and $14.5 million for a duplex penthouse. Residents will have access to an outdoor pool that overlooks Back Bay, as well as a 1-acre rooftop park that features gardens, a dog run, an outdoor movie theater, and a dining terrace. Residents have their own private entrances, both from the street and from a private parking garage.
The idea of introducing luxury apartments to South Station is fairly radical. For years, the station and the area around it were crime ridden. The neighboring financial district emptied out at night, as workers went home. But building high-end condos is likely to make the area livelier and spur restaurants, grocers, and shops to come back to the area. It’s a similar transformation to what has happened in New York’s financial district, which is now bursting with luxury apartments, office buildings, and glittering shopping centers. “This part of the city will now be alive 24/7,” Banks says.
[Photo: Jason O’Rear/courtesy Pelli Clarke & Partners]
South Station’s redevelopment is part of a broader revitalization of downtown Boston. Boston’s Planning and Development Agency, in partnership with WS Development, transformed the Seaport District from an industrial wasteland, covered in parking lots and vacant wharves, into one of its hottest neighborhoods. In 2014, it unveiled the new mixed-use development, which features high-end condos, buzzy restaurants, and hip retailers like Warby Parker and Mejuri. It quickly became the fastest-growing part of Boston, and is now an economic engine for the city.
There’s some concern that these luxury apartments and offices will alienate Boston’s lower and moderate income residents. And it could further exacerbate the city’s affordability crisis, much like the one New York City has experienced in recent years. But at the same time, the revitalization of this transportation hub also benefits everyday Bostonian who pass through it on their daily commutes and who rely on buses and trains to get in and out of the city.
We’ll have to wait and see how the new South Station Tower transforms the neighborhood. But in the meanwhile, hopping off a bus or train upon your arrival to Boston is already a more pleasant experience.
Climate tech isnt a thing. It has shifted in recent years from a category to define clean energy companies to an umbrella phrase that loses meaning the more we use it.
Granted, the term is everywhere: inserted into VC pitch decks, plastered on billboards along highways from San Francisco to Austin to Boston, wedged into government policy papers, and featured prominently on conference agendas. Media properties from CNBC to GreenBiz rely on it as a traffic-driving category.
And theres a reason why. A changing climate is the most complex and vast challenge and opportunity confronting our society today. That also means we cant afford ambiguity. We need accountability. We need progress. We need to reengineer infrastructure with advanced tech that future-proofs as it solves urgent and complex problems. Now.
Which means we need precision. And we need to acknowledge that infrastructure and markets that have served us for so long are failingand in need of rebuilding to anticipate and meet future challenges.
Our world is in desperate need of solutions tied to specific applications and impact across energy tech, waste tech, food tech, and carbon tech. We need solutions that advance specific areas of deeply specialized work with distinct metrics and challenges like energy storage, batteries, food security, and sustainable fuel development. And, we need talent trained and sharpened to tackle these specific problems.
Ambiguity is the enemy of progress
Progress requires clarity. Energy technology is a distinct thing. Waste technology is a distinct thing. Transportation technology, energy storage, agriculture and food sustainability, carbon removalthese are specific categories with definable challenges and measurable outcomes. Each is firmly tied to infrastructure and requires dedicated engineering, specialized expertise, and different pools of capital.
For example, grid storage is not a climate tech problemits a specific energy challenge with concrete metrics: cost per kilowatt-hour, storage capacity, duration, and efficiency. Grid storage is about optimizing supply and demand, the outcome of which is a financial, political, and engineering goal, not a moral imperative.
We must connect the promise and hype of AI-powered software solutions to their physical applications in the real world. Why? Because solving these big, specific problems requires more than computation behind a screen. Realizing the promise of AI to transform and improve is only possible if it enters the physical realm and changes the mechanics of existing ways of doing things. Calling the solutions to these problems climate tech is a disservice to the work because it no longer adequately captures the scale and range of what’s required.
Breaking climate tech down to drive breakthroughs
We need to build and invest in technologies that are better, faster, cheaper than what came before and solve real problemsrather than loaded words that offer environmental promise and not much else.
The trajectory of biotech offers a solid framework. Rather than lumping everything under a term like health tech, industry pioneers stood up clearly defined categories, including: immunotherapy, CRISPR, mRNA vaccine development, oncology, longevity, and so on. Each domain pursued a specific set of problems and attracted talent and capital to solve them. The result? Breakthroughs.
Whether we realize it or not, software also focused in recent years, which has helped to accelerate progress. Information technology gave way to specific technical disciplines like cybersecurity, cloud computing, and enterprise tools. Category focus allowed companies to gain market share and differentiate with customer experience and accountability front-and-center.
Its time that climate tech undergoes the same level of rigorous redefinition. And its not just because were approaching critical climate tipping points (which we are). Its because the economic opportunity cost of not acting is too great. The future of American communities and industries from agriculture to manufacturing rests on our ability to effectively seize the opportunities in front of us and reengineer them.
Everything needs to be built for the future with engineering precision and a specific problem in mind to solve. We need infrastructure and hardware solutions to solve focused problems like recycling plastic for manufacturing, rendering cement carbon-neutral, electrifying freight transport, rethinking protein production, and removing carbon at scale. We cannot grow the economy in the future without approaching all tech as climate tech.
For example, the investment firm I cofounded, Incite, invested in Monarch, a startup with a fleet of AI-powered electric vehicles and tech solutions that work for agricultural clients ranging from dairy farmers to municipalities to winemakers. Monarch recently shipped MonarchOne, an end-to-end physical AI platform for OEMs to more efficiently manage work and use data to influence operations across environments. Monarch isnt a climate tech company. Its an AI and robotics company with clear environmental benefits.
Working toward a post-climate tech world
Climate tech served its purpose as an initial rallying cry. It placed an urgent crisis squarely on the map of capital markets, boardrooms, and policy agendas. It made innovation to help us take care of our planet inevitable. Totally unsurprisingly, however, grouping a product or tech into the vague category enables more greenwashing and ambiguity when what we need is progress, focus, and accountability.
In order to scale up the grid, add resilience to infrastructure, and prevent the housing market from insurance collapse, we need to retire not just the language but the entire categorization of climate tech completely. We must dismantle the umbrella term into specific, infrastructure-centered areas in need of urgent work.
Lets refine our language. Words matter.
Tech is crucial to curbing negative environmental impacts. But the utility of climate tech is running on fumes. Lets stop pretending its still a thingand seize the opportunity to build and invest in the physical infrastructure, software, apps, and technologies that will power economic opportunities and enrich life around the world.
A new type of window on the verge of mass production in the United States will provide a new vision for architects and builders seeking to marry design with energy efficiency.
This window, made from millimeter-thin glass panels, can achieve exceptional energy efficiency scores and make a significant difference in global emissions. Buildings account for about 30% of global energy consumption, and about half of the energy use in residential and commercial buildings is used for heating and cooling.
Corning, the firm that developed Gorilla glass in 2007 for Apple iPhones, helped refine the mass-manufacturing process based on material discoveries made at Lawrence Berkeley National Labs. In the late 1980s, researchers at the lab began looking into window efficiency in the aftermath of the energy crisis of the 70s. It led them to develop a new kind of glass that was thinner, yet stronger and more efficient.
In short, by creating these ultra-thin layers of glass, more layers and air gaps can be arranged inside a standard window frame, which multiplies a windows ability to insulate. Typical double-pane windows utilize two sheets of glass three or four millimeters thick; this new thin glass can be a half-a-millimeter thick.
Corning developed a modified manufacturing process based on the lab’s research that can create glass sheets at scale, as thin as a credit card. It can be cut and modified to suit standard window frames, as well as for more unique designs for custom buildings designed by architects. Corning calls this new, larger commercial glass Enlighten.
The Kenzi Apartments at Bartlett Station, Boston-area [Photo: courtesy Alpen]
A more efficient window
Stephen Selkowitz, a research scientist at the Lawrence Berkeley National Laboratory who theorized this process in the 80s, before it was commercially possible to produce, says that windows lose 10 to 20 times more energy per square foot than a well-insulated wall. Within a standard home or business, windows and glass represent the most porous area for heat exchange, letting in cold weather in the winter and heat in the summer.
By cutting down this energy transfer, this new glasswhich contains layers of inert gas between thin panes, increasing its insulating propertiescan slash the costs of heating and cooling a single-family home or office building.
Andrew Zech, the CEO of Alpen, a company that has collaborated with Corning on commercializing this technology for the last six years, says this new glass can achieve five times the energy efficiency of standard windows. The material also boasts a special coating that inhibits solar gain, or the heating effect of bright sunlight on a room.
As Ronald Verkleeren, Cornings senior vice president for the Emerging Innovations Group, sees it, energy efficiency codes have in effect provided a limiting factor for glass. Increasingly strict building standards require a more balanced approach to material choices and window sizes to limit energy use. This development, in effect, frees up the industry to use and buy more windows, and will help manufacturers utilizing this process gain market share in the large, lucrative, architectural glass market. Corning has reached out to architects to encourage them to create case studies and new designs utilizing this glass.
All of a sudden you can show up with a window that comes as close to matching what’s possible from a wall, in terms of energy efficiency, and that gives a lot of degrees of design freedom to be able to meet the code, Verkleeren says. That’s the game changer.
Ramping up production
Alpen was the first domestic firm to manufacture this glass, and will ramp up facilities in Pennsylvania and Colorado later this fall. According to news from Lawrence Berkeley National Labs, which helped develop the breakthroughs that made this process possible, a number of larger producers will begin making these kinds of windows. Manufacturers include Andersen, the world’s biggest window manufacturer, which plans to open a plant in Georgia in October specifically geared towards this product, as well as PGT, which makes hurricane-resistent windows.
The rate of window replacement is rather slow, says Zech, just about 1.4% of the national stock gets updated every year, and the number of windows sold each year is generally split in half between new projects and replacement. As Zech sees it, these new thin glasses can be used for any shape or profilethey can be as boring as you need them to be.
This new wave of thin glass production in the United Statescoming during a time of heightened tariffs and a loosening of environmental regulationscan help U.S. developers and builders utilize more glass on projects in a way that can not just cut emissions but help architects rethink how theyre designing buildings.
The end of architectural trade-offs
Alpens factory utilizes a number of robotics and advanced manufacturing technologies in the production process, says Zech. A vacuum system holds onto the panes as they roll down a conveyor belta stiff wind could blow them offand a series of superfine bristles wash the glass, akin to a microscopic glass carwash.
Alpens Zech says the companys working theory was that they would sell tons of these new windows in cold climates like Alaska or Minnesota. But theyre also selling a lot in hotter climates and temperate areas like San Francisco, as a way to open up walls and facades with glass without creating additional heating burdens through substantial solar gain. Selkowitz believes this tech offers so many commercial opportunities where this technology helps meet real world needs, such as building offices with more daylighting.
In fact, Zech says the trend in recent years has been adding fewer windows to new construction, as energy efficiency standards have demanded builders figure out how to meet more strict insulation goals. He believes this new thin glass will eliminate the need for these kinds of design trade-offs, and allow for larger windows and showier facades.
There is an energy savings story here, and it’s really potent, Zech says. But probably the bigger story is actually, people just want to have massive windows in their homes and businesses, they want walls of glass.
In part three of How YouTube Ate TV, Fast Companys oral history of YouTube, new parent Google confronts the messy issues standing in the way of the video streamer’s long-term viability. As Viacom sues over YouTube users unauthorized uploading of intellectual property, Google and YouTube engineers simultaneously build technology that will save the business. Called ContentID, it lets copyright holders remove their workor, better yet, leave it up and benefit from its monetization.
YouTube also sets viewership goals that are even more wildly audacious than the ones its already achieved. First, though, Google has to convince even its own employees that buying the video-sharing service hadnt been a horrible mistake.
Comments have been edited for length and clarity.
Read more ‘How YouTube Ate TV’
Part one: YouTube failed as a dating site. This one change altered its fortunes forever
Part two: Pit bulls, rats, and 2 circling sharks: The inside story of Google buying YouTube
Shishir Mehrotra, YouTube chief product officer/CTO (20082014): The general perception inside Google was that [buying YouTube] was Googles first mistake. Every previous acquisition had worked out so well: Android and Google Maps, and even Google Docs was off to a reasonable start. But this one didnt seem like it was going anywhere.Matthew Darby, YouTube director of product management (2008present): I remember giving a talk to my team about, like, How the hell is YouTube going to make any money for Google? There was this odd thing going on in San Bruno and it was costing a great deal of money, because video is an expensive thing to serve.
Mehrotra: About a month after I joined, we went to see Patrick Pichette, who was the CFO at the time. He had these three charts. The first said, here’s how much money YouTube is losing. It was hundreds of millions of dollars. The second said, here’s how much money YouTube loses per view. It was just under a penny. And the third chart showed viewership. It wasn’t just up and to the right, it was a straight line. He said, This is the worst business on the planet. Thankfully, [then-Google CEO Eric Schmidt] was in the room. He kind of laughed and said, No, no, nodon’t listen to Patrick. You guys have time. Go figure it out. But it was very clear that we were on a clock.
Outside Google, media companies and marketers alike remained skeptical about partnering with YouTube. Viewers also werent wild about the prospect of marketing intruding on the experience.
Michael Fricklas, general counsel, Viacom (20002017): Googles a big, responsible company, and the thought that it would be acquiring a site that we viewed as a pirate site was considered, at best, bad form. We thought big, responsible companies would behave in responsible ways.Chris Maxcy, YouTube VP of business development (20052013): [Media] companies that had been collaborative with us shifted and said, Now we cant [acquire] you, so were going to try to shut you down. Or Now you have a really, really large parent with lots of money. Its time for us to extract some.Amy Singer, YouTube development, partnerships, strategy executive (2010present): [Media companies] wanted to manage their distribution ecosystem, and so there wasnt a lot of reception to working with YouTube.
Ian Hecox, cocreator (with Anthony Padilla) of the comedy duo Smosh: The Logitech deal [in 2009] was probably our first big brand deal. The audience hated that we did sponsored videos back then.
Suzie Reider, YouTube CMO (20062013): There were marketers who saw it as such a creative marketing platform. I remember the first million-dollar program that we sold was a battle of the bands. We had a wireless company sponsor it.
Some marketers were willing not only to use YouTube, but to embrace its spirit, such as the ones responsible for promoting the 2007 film Hairspray.
Russell Schwartz, New Line Cinema president of theatrical marketing (2001-2007): When Nikki Blonsky was awarded the role of [Tracy Turnblad], she was working at a Baskin-Robbins on Long Island. We brought in a camera crew and told her, in front of all her peers, You’ve got the role. It was the most emotional thing I’d experienced. What better content do you need for YouTube than that? Once we realized the response to the piece we put up, we said, Well, this is a place we have to be.
Reider: And then there were a lot of folks who were resistant to it.Tara Walpert Levy, Google ads director (20112021); VP, Americas at YouTube (2021present): It was my job to bridge Madison Avenue and Silicon Valley, to explain this new platform that looked and sounded like TV but had a lot of differences from TV. That was a hard pitch.Reider: Procter & Gamble and Unilever were saying, Were not touching it until you have the right brand safety mechanisms and control in place.
How YouTube Shaped CultureGangnam Style, July 2012 In an early example of K-pops international appeal, rapper Psys music video both silly and hypnoticsurges right off YouTube to become an unavoidable cultural phenomenon.
In March 2007, YouTube faced its greatest legal threat when media giant Viacom (now Paramount) sued it for $1 billion for copyright infringement by its users. But YouTube prevailed in 2013, establishing protections for itself and other online services yet to come.
Zahavah Levine, YouTube general counsel, chief counsel (20062011): Viacom argued that YouTube was responsible for all of the copyright infringement of its users, who, it alleged, uploaded over 150,000 clips of Viacom-owned programming without authorization, which had collectively been viewed 1.5 billion times. This was itthe existential lawsuit we all knew was coming.Fricklas: We sent this notice saying, Take down our stuff. And [Google general counsel Kent Walker] sent a letter that said they had no responsibility. We decided we really had no choice but to bring litigation.
Levine: It got worse. Shortly after Viacom sued, at least two class actions were filed against Google. One class represented sports leagues and music publishers, and the other represented all copyright holders in the world.
Even as YouTub battled Viacom, it was developing Content ID, a fingerprinting technology designed to identify copyrighted material and allow owners to decide what to do with it.
Robert Kyncl, YouTube chief business officer (20102022): During one of our first meetings, Eric Schmidt said, Can you figure out how to stop them from sending us paper? Meaning lawsuits. And instead, we send them paper. Meaning money.Levine: With Googles substantial resources and top talent, we developed the copyright management system that YouTube has in place today.Kyncl: The first step was getting [media companies] to embrace Content ID and use it to block content [from appearing on YouTube]. And then, Now that youve got the hang of this, how about tracking it, so you see whats happening with your IP? And then, This IP is doing well. How about turning on monetization? Many did and started to make money.Lyor Cohen, Warner Music Group CEO of recorded music (20042012); YouTube and Google global head of music (2016present): Content ID is the unsung hero of YouTube. It was absolutely the most brilliant and critical decision that our leadership has made.
How YouTube Shaped CultureHot Ones, March 2015Rapper Tony Yayo chats with host Sean Evans while eating increasingly spicy wings, launching a show that will eventually host more than 300 guests, including Questlove, Conan OBrien, Billie Eilish, and Donald Duck.
Fricklas: It’s a tough case to win in court that once they had Content ID in place, that [YouTube] was generating a lot of copyright damages. They could say, At least they’re not willful. So we narrowed our lawsuit to focus only on what happened up until Content ID.
Mehrotra: The reason we won the case was that it turned out there were a bunch of Viacom marketing people uploading clips. They had figured out that it was a good way to drive attention to [Daily Show host] Jon Stewart.Levine: This just underscored that there is no way for YouTube to know who uploaded each video and whether they are authorized to do so. Viacom appealed, and the appeals court overturned a small part of the district courts decision, but affirmed most of it. The case was sent back to the district court, which again ruled in YouTubes favor, and the parties eventually settled.Fricklas: We needed to operate in the world of YouTube. Google was selling our adsthey had bought DoubleClick. They were buying movies from us for distribution on their devices. They were just so big we needed to normalize our relationship with them.
How YouTube Shaped CultureBaby Shark Dance, June 2016Cartoon sharks, two live-action kids, and an earworm of a song add up to the mostwatched YouTube video of all time, at 16,524,112,698 views and counting.
As YouTubes legal woes receded into the past, it could concentrate on building out its advertising-based business model.
Reider: When were in the original offices with Chad and Steve, there was a lot of discussion about how we were never going to run pre-roll ads.
Kyncl: Shishir did many things, but I would credit him with the most important thing, which was skippable ads.
Mehrotra: I had written a paper. During the Super Bowl, the commercials are actually quite good. And you pause and you rewind and you watch them again. And I said, what if every commercial was good enough to pause and rewind and watch again? Why don’t you put a skip button on ads, and then when people don’t watch, don’t charge the advertiser and create an incentive to create better and better ads?
Kyncl: Everybody was like, That’s stupid. Everybody will skip the ads. And he was like, No, not if you think of them as information, not an intrusion. And if you think of them as information. It means they have to be well targeted and you have to have a lot of them, different versions. It was a big moment.
The focus on advertising led to goals that were on a whole new level of ambition.
Kyncl: If you want to serve more ads, you need more impressions and more content. It was tied together.
Mehrotra: By 2011, 2012, we didn’t have any competition anymore. Nobody quite knew why we were doing what we were doing. And somebody told this story, which I think is folklore, about a famous Coca-Cola board meeting where somebody said, Hey, are we just going to go back and forth with Pepsi at 60% share and 55% share, or is there something bigger were aiming for? Someone else said, How about we measure progress by percentage of the stomachthe liquid you drink that comes from our company?
Darby: We had this goal that Shishir came up with. Mehrotra: At the end of the day it was my decision, but a group of us came up with it. We were doing a hundred million hours a day of watch time. It turned out television was about five and a half billion hours a day. We said, If we get to a billion hours a day, not only is it five times what Facebook is today, but its 10 times bigger than we are today. But its only 20% of television.John Harding, Google software engineer (20052007); YouTube engineering manager, director, VP (2007present): We did the math of, okay, if we were to serve a billion hours of YouTube every day, here is what that would look like in terms of network consumption. And then we had another graph: Heres what the internets total network capacity looks like over time. And at a certain point, those lines crossed, and we would be serving more traffic than the entire internet capacity was projected to be. And so, we had to go and say, Well, what do we need to build?
Jake McGuire, YouTube software engineer (2006present): We knew that a lot of other teams at YouTubethe people making the features, the people getting the partnerswere going to have to do their part. I don’t think that we doubted it would happen. We just weren’t sure when.Mehrotra: When I left, in 2014, we had crossed the 400-million-hour line, but we were nowhere near a billion. I got a really nice call from the team when they hit it [in 2017].
Additional reporting by María José Gutiérrez Chávez, Yasmin Gagne, and Steven Melendez.
From the constant LinkedIn updates of ex-colleagues climbing the corporate ladder, to friends hitting career milestones or landing their dream roles . . . its easier than ever to feel professionally behind.
Theres a name for that feeling you cant shake: career dysmorphia.
Youve probably heard of body dysmorphia (an actual medical diagnosis) or money dysmorphia (not a medical diagnosis). Career dysmorphia is an anecdotal term that follows a similar line of thinking: a disconnect between someone’s professional achievements and their perception of their worth.
Some classic signs: You hold back from going for promotions because you feel unprepared, even when others insist youre more than capable. You keep collecting certifications and degreesnot out of ambition, but from a lingering fear of never being enough. Or maybe you sit through meetings with ideas in your head, but hesitate to speak up.
Also called job dysmorphia, the topic has gained traction in recent months: on LinkedIn posts, in YouTube videos, in articles on lifestyle sites, news sites, and youth publications.
Similar to imposter syndrome (minus the fear of being exposed), career dysmorphia describes not just a singular moment of self-doubtbut an outlook that defines your view of your entire career. Its unsurprising. We live in an era where success is curated and easily shareable via LinkedIn updates (Im excited to announce . . .). Many feel inadequate.
According to a 2024 Gallup survey, employees across America are feeling increasingly detached from their jobs. Others are impacted by toxic bosses or workplaces that don’t recognize and reward their contributions, which could potentially fuel job dysmorphia. Only 30% of U.S employees feel that someone at work encourages their development, down from 36% in March 2020, another 2025 Gallup survey found.
Career dysmorphia born out of workplace discrimination adds another layer of complexity. The old adage “you have to work twice as hard to get just as far” holds true for many women, people from low-income backgrounds, people of color, and many other marginalized communities in the workplace.
Whether its caused by an innate feeling of inadequacy or by external pressures and societal inequalities, career dysmorphia is a cycle that can hold workers back from reaching their true potential. Its always worthwhile to employ the same techniques as you would with general comparison anxiety: set social media boundaries, naming and processing your feelings, or spending time with people who admire you and build you up.
Overcoming confidence issuesin the workplace or otherwisealways takes time. (If nothing else, you can try laughing at LinkedIn vs. Reality posts like this, this and this.)
As news worsens, the potential for comedy rises.
No one understands this inverse relationship better than the team behind The Onion, which has channeled todays dystopian political slide into banger headlines (Trump Spends Entire U.K. Trip Trying To Figure Out Where He Knows Prince Andrew From). The news site has attracted nearly 54,000 subscribers since its relaunch last year, and is on track to generate $6 million in revenue in 2025, according to The Wall Street Journal.
Which is why it seemed particularly comical when, in May, the satirical news outlet issued a press release announcing a foray into advertising in order to expand its marketplace dominance. Companies could enlist writers at The Onion for creative projects, because nothingnot spouses, not children, not fragile elderly parentsmatters more . . . than helping brands tell their stories.
It seemed like a classic Onion spoof of capitalism and corporate jargon. But for once, The Onion was not doing a bit. Or at least we dont think it was.
The Onion has launched what its describing as a strategy and creative agency that operates adjacent to, yet distinct from, the publication. Called Americas Finestnamed for The Onions tagline, Americas Finest News Sourcethe agency is avowedly not a gag. Yet it gleefully satirizes itself in its own press release and social media posts.
For The Onion, the agency represents an opportunity to create a new revenue stream: providing corporate clients with copy that is fresh, funny, and written by actual writers, to stand out from AI slop. Americas Finest currently has between five and ten clients, and has done work for Paramount, an ETF fund, and a nonprofit.
Its comedy, but packaged as a brand message, says The Onions chief marketing officer, Leila Brillson.
The Onions CEO, Ben Collins, sees no downside to the effort, unless we start working with ICE and Raytheon, he says.
The Onion launches an Agency
The Onion has been lampooning the news for almost 40 years, running classic headlines like “Black Guy Given Nation’s Worst Job” following Obamas election, and “‘No Way To Prevent This,’ Says Only Nation Where This Regularly Happens,” after countless mass shootings. A surprising new coalition took over the website in April 2024, led by former NBC News reporter Collins, who pledged as the new CEO to give the writers more creative freedom. The publication relaunched a print version in August 2024; Collins reported recently that it is now the now the 13th largest print newspaper in the United States by subscribers, on a list right between the Boston Globe and the Chicago Tribune, and growing fast.
Brillson, who previously worked in marketing at Disney, Netflix, and Bumble, and then ran her own agency, says that it was she whod ushered through the agency idea. I don’t want to say that there were naysayers, she says of her initial pitch, but a lot of people didn’t fully understand what it looked like until it was up and running.
The concept of an agency living within a media company is hardly newThe New York Timess T Brand Studio and The Washington Posts WP Creative Group have been operating custom content divisions since 2014 and 2021 respectively, creating stories that may look like standard articles but are really marketing for brands (and acknowledged as such).
The Onion itself used to do something similar. Its previous owners, G/O Media, ran an in-house agency called Onion Labs from 2013 to 2019, which produced ads for brands such as Mr. Peanut and Whitecastle. It generated the kind of sponsored content that mirrored Onion stories, along with ads that ran on The Onion‘s own website.
It was no small operation. At one point, Brillson says, 30 people worked for this full-service studio that had video capacity, which was costly to maintain. We simply dont live in that market anymore, Brillson says.
Americas Finest operates differently. It produces copy for everything from social media posts to billboard adsbut The Onion plays no part in hosting or distributing the work. People are like, Will The Onion write about this? And we have to say, no, Brillson says. We have a pretty strong separation of church and state.
Marnie Shure, the former managing editor of The Onion who now works as creative producer for Americas Finest, explains that we’re not necessarily trying to make everybody sound like The Onion. And while video capabilities exist, the focus is more tightly on copy, content, and strategy.
To that end, The Onion is commissioning former writers. Louisa Kellogg, a senior staff writer from 2015 to 2018, now accepts agency assignments as they come in, and as they suit her schedule. Her first assignment, in October 2024, was a campaign for The Onion itself, writing fake testimonials from subscribers. She now writes copy for external clients.
Comedy writers for hire
The company put out the ambiguous press announcing Americas Finest in May; today, Americas Finest has a team of roughly eight writers, specifically ones who dont live in Chicago, including the L.A.-based Kellogg.
Living near the The Onions Chicago headquarters is one of the news outlets rigid rules for editorial staffers, but it has left some Hall of Famers out there in the wilderness, Collins says. Americas Finest is a way for Onion management to support writers during a shaky time, in the aftermath of the writers strike, COVID, and the L.A. fires. We wanted to give them a chance to make some rent, he says, and use some of the world’s best comedy writers wh otherwise should be writing for Colbert. But that show is dead now.
Americas Finest copywriters use the same system they did in the Onion newsroom: best joke wins. That very deliberate process, honed for almost 40 years, is something you can apply to projects, Shure says, even when the project is not a satirical newspaper. Since theyre remote, Kellogg says writers often email in their jokes (the ad copy), and Shure chooses the winner. The key difference is that its not just the punchline, but also the client brief, that will determine the victor.
Clients like the real writingan antidote to the AI-generated slop that’s being presented as advertising right now, Collins saysand the fact that it can be comical. Ads just aren’t funny anymore, and it’s a disease, he says. I cant remember the last time I laughed at an advertisement.
‘If you cant beat em, join em’
Many of Americas Finests early clients are in the entertainment realm: the agency has written for Paramount, including for The Naked Gun, which did well in theaters this summer as R-rated comedies have floundered in recent years. (The agency is hesitant to identify other movie and TV clients: They don’t want to admit that they delegate out copywriting to anybody else, Collins says.)
[Photo: courtesy of the author]
Other clients have included nonprofits such Subversive ETFs, a fund that invests in equity securities of publicly traded companiesspecifically ones that, public disclosures indicate, sitting U.S. Congress members have invested in. Americas Finest created copy for social media and for posters that were recently wheatpasted around New York City that read: This should not be legal. Congress trades on inside information . . . But if you cant beat em, join em.
The agency also works on events. It threw an off-beat party at SXSW for Project Liberty, a nonprofit, founded by billionaire executive Frank McCourt, aiming to create a people-powered internet by shifting control of data to individuals. (Americas Finest wrote the speeches, too.) It also helped throw a party in September for Mexican sports store Culto, themed around the cult of soccer as a religion (it featured a ball that predicted the future, among other curiosities).
People come to us knowing they’re going to get some unhinged stuff and might be made uncomfortable, Collins says. Some clients have turned down copy pitches, Brillson says, because they were too weird for them.
Parodying LinkedIn from the inside, but still for real
One challenge Americas Finest may face as it grows is maintaining its signature voice while convincing potential clients that the whole thing isnt a gag. The agencys new LinkedIn feed, for example, features refreshingly facetious posts about capitalismYou don’t want to be on your deathbed wondering if you could’ve delivered more value to your clientsalongside more earnest posts, like the invitation to the Culto event: I would love to invite you folks to come hang out with us. Lemme know here if you want to party!
Collins reassures me that it is not, in fact, a joke. Everything involving The Onion, the first instinct is: it’s a bit, he says. That was true when it announced the rerelease of the print paper, or the bid to buy InfoWars from conspiracy theorist Alex Jones. Yet somehow, I still wonder.
Collins finds this ambiguity fun to play with. It’s a strange way to run a business where you’re just constantly having to tell people everything you’re doing is real, actually.
Weve all heard the saying, When you change the incentives, you change the behavior, and most of us even believed it at some point. But with experience, you find that human behavior doesnt fit into such neat little boxes. People act the way they do for all kinds of reasons, some of them rational, some of them not.
The truth is that incentives often backfire because of something called Goodharts law. Once we target something to incentivize, it ceases to be a good target. A classic example occurred when the British offered bounties for dead cobras in India. Instead of hunting cobras, people started breeding them which, needless to say, didnt solve the problem.
Smart leaders understand that behavior is downstream of culture. There are norms that underlie behaviors, and those norms are encoded by rituals that guide everything from how you hire to how you promote, and how you determine compensation. Thats why you cant just tweak incentives. For meaningful change, you need to activate cultural triggers that shift norms from the inside out.
The surface behaviors you see
In 1984, Michael Dell launched his eponymous company from a college dorm room with a simple idea: bypass the reseller channel and sell customized computers directly to customers. The model gave Dell a clear cost advantage by eliminating dealer markupsand even more importantly, it allowed him to receive payment before paying suppliers
This direct model was a simple idea and a clear competitive advantage, but none of the incumbent industry giants, such as Compaq and HP, managed to adopt it. It wasnt for lack of trying. The advantages of Dells model were well known, widely publicized, and seemingly straightforward to replicate. There were a number of efforts to replicate it.
Theoretically, switching to a direct model shouldnt have been that difficult. If a college student like Dell could set it up in a dorm room, surely multibillion-dollar corporations could do the same. They could just easily tweak commissions so that salespeople would be incentivized to focus on selling directly to customers rather than resellers.
Yet the real world isnt so simple. Consider all of the salespeople servicing retail and reseller accounts. Theyd spent years earning status within the organization by building those relationships. Its not just about financial incentives, but the identity and status conferred by the connections everybody worked so hard to build.
Its not just salespeople either. Logistics would have to be completely redesigned. Longtime employees would have to sever relationships and build others, learn new skills, and do their jobs differently. Jobs are more than just transactions; theyre expressions of who we are and how we see ourselves.
The norms that underlie those behaviors
While Dells direct model was gaining dominance, the company that launched the PC revolution, IBM, was going through a crisis of its own. After decades of market leadership, it had become a faltering giant, losing competitiveness in the very industry it had pioneered. It wasnt until Lou Gerstner arrived as CEO in 1993 that the company began to reckon with the deeper cultural issues driving its decline.
Irving Wladawsky-Berger, one of Gerstners chief lieutenants, would later explain what had gone wrong. At IBM we had lost sight of our values, he told me, and then continued:
For example, there was a long tradition of IBM executives dressing formally in a suit and tie. Yet that wasnt a value, it was an early manifestation of a value. In the early days, many of IBMs customers were banks, so IBMs salespeople dressed to reflect their customers . . . IBM had always valued competitiveness, but we had started to compete with each other internally rather than working together to beat the competition.
In a similar vein, when Paul ONeill took over aluminum giant Alcoa, he told reporters and analysts, If you want to understand how Alcoa is doing, you need to look at how we treat safety. If we bring our injury rates down, it wont be because of cheerleading or posters. It will be because the people at this company have agreed to become part of something important: theyve devoted themselves to creating a habit of excellence.
In both cases, transformational leaders, ONeill at Alcoa and Gerstner at IBM, understood that the behaviors they were seeing were a function of norms, some explicit and some otherwise. Both also understood that if they were going to change those behaviors, they had to reshape the rituals that encoded those norms into the culture.
Changing rituals to encode new norms
Gerstner noticed when he arrived at IBM how the companys rituals reinforced internal rivalry. Instead of collaborating, business units often worked to undermine one anotherhoarding information and maneuvering for dominance. As he would later write in his memoir, Who Says Elephants Cant Dance:
Huge staffs spent countless hours debating and managing transfer pricing terms between IBM units instead of facilitating a seamless transfer of products to customers. Staff units were duplicated at every level of the organization because no managers trusted cross-unit colleagues to carry out the work. Meetings to decide issues that cut across units were attended by throngs of people because everyone needed to be present to protect his or her turf.
Gerstner understood that if he was going to change IBMs culture and turn the business around, he needed to dismantle the rituals that were reinforcing dysfunctional norms. Through company-wide emails and personal conversations, he made it clear that collaboration was now a core expectation. He even fired a number of senior executivespreviously regarded as untouchablewho were known for infighting.
While Gerstner broke old rituals that encoded the infighting norms, ONeill focused on creating new ones. He introduced a simple but powerful rule: any time someone was injured on the job, the unit president had to inform him within 24 hours. But to achieve that, their vice presidents needed to be in constant communication with floor managers, which required them to create new rituals of their own.
These rituals encoded new norms ofresponsiveness and transparency that were used to share information that went far beyond safety. Soon, company executives all over the world were actively sharing local market conditions, competitive intelligence, emerging problems, and best practices from across the organization.
Gerstner and ONeill both achieved historic turnarounds at iconic companies because they understood how the cultural triggers of norms and rituals shape behaviors.
Designing a performance culture
Lou Gerstner, reflecting on his legendary turnaround at IBM, wrote, Culture isnt just one aspect of the game, it is the game. In the end, an organization is nothing more than the collective capacity of its people to create value . . . What does the culture reward and punishindividual achievement or team play, risk-taking or consensus building?
Every culture encodes norms through rituals. How you hire, promote, produce budgets, and account for expenses and profits all involve ritualized processes. These reflect both explicit and implicit values that guide people on how theyre expected to act. Deliberately or not, leaders are constantly sending signals and people are constantly reading them.
Its not uncommon for leaders to be unaware of the signals they are sending. Take stack ranking, which requires managers to rank employees by performance and eliminate the bottom 10%. It’s meant to encode norms of excellence. But often it does just the opposite, encouraging employees to undermine each other instead of collaborate together effectively.
All too often, leaders try to shape behavior through incentives. But trying to bribe and bully your way to a performance culture is like closing the barn door after the horse has already bolted. To effectively shape behavior, you need to address the norms and rituals that underlie it. Incentives might enforce compliance, but they wont inspire passion or creativity.
To build a true performance culture, it is not enough to simply plan and direct action; you have to inspire and empower belief. You do that by being deliberate and precise about how you design cultural triggers.
