This latest episode of the AIQ Podcast explores the role of connected thinking in technology, business and the environment.
Understanding connections between people and ideas is crucial in the modern world. In this podcast we explore how organisations can put connected thinking into practice.
Tune in to learn more about:
- What investors can learn from Charles Darwin’s pen pals
- The link between coffee queues and idea generation
- How culture can drive performance
- David Attenborough’s views on the connectedness of the natural world
Exploring the role of connected thinking in technology, business and the environment. Find out more in this episode.
[Archive documentary on Bell Labs]
The shape and texture of perceived objects are studies that look deep into the future of communications. When we learn to separate the relevant from irrelevant in visual information, we’ll be on the way to sending three-dimensional colour picture messages on ordinary telephone lines…
The next time you pick up your smartphone, spare a thought for Bell Labs.
Based in a campus of glass-fronted buildings in New Jersey, Bell Labs was the brains trust that lay behind the success of AT&T, the US conglomerate that dominated the telecoms industry for much of the 20th century. A series of revolutionary innovations, from radar to lasers, solar cells to communications satellites, started here. Its most famous invention, the transistor, is the basic building block of every electrical gadget in the modern world.
So what was the company’s secret? The answer can be summed up in two words: connected thinking. Bell Labs was in the business of connections: it laid phone cables across America and under the Atlantic ocean. But it also grasped the importance of the more intangible links between people and concepts. With its interdisciplinary approach, Bell Labs was able to mint new ideas at the rate other companies churn out widgets.
Bell Labs’ influence waned in the 1980s when AT&T’s monopoly ended and its research teams were broken up. But its record of collaborative innovation contains valuable lessons for companies today.
In this special episode of the AIQ podcast, we explore how companies can put connected thinking into practice, drawing on examples from finance, technology, architecture and science. As we will see, connected thinking is not just an organisational imperative – it may present solutions to some of the most serious challenges facing the world today.
Bell Labs knew that for connected thinking to work, you need the right people, in the right place, in the right environment, working on the right problem. We’ll use this four-step principle as our guide. Let’s start with people.
[Maritime sound effects]
Picture the scene. It’s the early 1830s, and Charles Darwin is pacing the deck of the HMS Beagle as it sails through the tropics. He’s mulling his observations of new species and slowly forming the ideas that would lead to his theory of evolution. But the great scientist didn’t work alone. There’s one part of this story that often goes overlooked: Darwin’s pen-pals.
Darwin combined his own insights with the knowledge he gained from hundreds of correspondents across the world. He would cut out passages from these letters and paste them into his notebooks to develop his ideas. His great theory of the interconnectedness of life was itself a classic example of connected thinking.
Darwin shows us that great ideas are more often the result of networks and collaboration than an individual’s eureka moment. People who innovate are often “generalists”, who are curious about other disciplines and draw analogies that they can apply in their own fields.
Scientists and engineers have found the natural world to be fertile ground for analogies. Velcro is modelled on the seeds of the Burdock plant. Termite mounds have taught architects how to keep their buildings cool.
Analogical thinking can also be useful in finance. Here’s Aviva Investors’ CEO, Euan Munro, who used an analogy to rethink his investment process after learning of the collaborative methods employed by surgical teams in hospitals.
When I first designed the AIMs style of investing many years ago, the inspiration for that, I had a colleague in the risk team […] and he was from a medical family. He was describing the process on the morning of an operation – someone is going to get a valve replaced on their heart or something. The anaesthetist and the surgeon and the chief nurse […] have a meeting and they put up the charts and they discuss how the day is going to go. You have all these different disciplines working together on a common problem. When he was explaining this I was thinking: our industry is rubbish at that, because our clients have got a common problem – how do I drive a decent return, how do I drive a decent income – but the equity guys didn’t talk to the credit guys and people in real estate didn’t speak to the rates people. How on earth were we supposed to coordinate to solve that client problem?
Munro took this analogy and used it to build a multi-strategy approach to macro investing that brought together asset-class specialists who usually operated separately. He then applied the same principle in other areas – at Aviva Investors, infrastructure and real estate specialists work side by side in an integrated real assets business, while equities professionals collaborate with credit experts to identify well-run companies and flag potential risks.
But ensuring good collaboration isn’t just about hiring the right kinds of people and putting them in the right teams – there is little point in hiring adaptable professionals if they are shut away in offices in remote locations, unable to communicate.
This brings us to the second principle behind good connected thinking: place.
The executives at Bell Labs were keenly aware of the importance of place in fostering innovation. At the centre of the physics wing at the company’s New Jersey campus was a 700-foot long corridor that ran past the doorways to laboratories and offices. It was deliberately designed so that “travelling its length without encountering a number of acquaintances, problems, diversions and ideas would be almost impossible”, as author Jon Gertner put it in his book about Bell Labs, The Idea Factory.
Modern technology companies have identified other ways to bring about coincidental meetings between experts and ignite the creative spark. Take Google, which noticed staff in long queues at the company canteen were more likely to strike up conversations with those around them. So managers devised an experiment to find out the optimal length of time baristas should spend making a coffee. Not so long as to annoy employees thirsty for a caffeine hit, but long enough to promote serendipitous conversation – what Google likes to call ‘casual collisions’.
We caught up with Kirk Vallis, global head of creative capability development at Google, to find out more.
Those casual collision zones are my top tip – how do you create casual collision zones where people come together more? […] Now at Google in San Francisco for example, we try and make it so – there’s a certain barista that I’m thinking about in one of our San Francisco offices – where you wait four minutes for a coffee on average, regardless of how many people are there. They just speed up or slow down. So if you’re the only person in the queue, they will just slow down, about four minutes, because they are maximising the opportunity for that collision.
The third principle of good connected thinking has to do with the environment. Just as important as the physical layout of an office is the more-intangible organisational culture. What does it feel like to work in a company? Are fresh ideas encouraged or shot down? Are new colleagues enthusiastically welcomed into the fold, or frostily left to their own devices?
A good yardstick of a healthy working culture is whether meetings feel inclusive. Creating a sense of “psychological safety” is important if everyone is to pitch in. One way of doing this is to outlaw interruptions – psychologists have observed that when a speaker is interrupted their brain goes into fight-or-flight mode, in the same way it would respond to a physical threat. Another option is to formalise the procedure for contributions so that everyone is given an equal opportunity to speak.
These inclusive principles can be carried beyond meetings into everyday conversations. The global equities team follows a principle known as “vulnerable sharing”: Derived from the work of author Brené Brown, this technique is about encouraging individuals to open up to their colleagues about their strengths and weaknesses. Such dialogue tends to facilitate an open environment that is conducive to debate. Here’s Stephanie Niven, global equities fund manager at Aviva Investors.
Teams can’t flourish together unless they have a safe environment to share. In a culture based on trust, you are free to ask questions whose answers might be assumed to be obvious – for example, a member of the team might ask why Google is a good investment. It means we can rigorously test ideas and challenge conventional wisdom.
Asking questions and challenging received wisdom are key to connected thinking. The desire for harmony can lead to a fuzzy consensus, overriding the inclination to correct bad decisions. The result is groupthink: the dangerous tendency to follow the crowd. One of the best ways to avoid groupthink is to ensure teams are diverse, as groupthink is more likely to arise in an environment that lacks diversity of gender, ethnicity, sexual orientation and social class.
Diversity can also bring commercial benefits. In a recent talk at the World Economic Forum, Victoria Plaut, professor of law and social science at the University of California, Berkeley, showcased a dizzying array of research that indicates diverse teams outperform more homogenous ones in business and finance.
Diversity used in the right way can help power innovation. I once gave a talk on unconscious biases for a group of synthetic biologists, and they were excited to tell me about a discovery they’d just made: among the prize-winners in a global competition the teams that had women in them tended to win more often. I went back and looked at the literature in experimental psychology and once again groups that had some gender diversity tended to perform better on a variety of measures.
I then looked at the literature in business and management. As it turns out, one study, conducted by researchers who looked at companies in the S&P composite 1500 list – they looked at the representation of women in those companies in top management - found gender diversity in top management predicted a $42 million increase in firm value. Another similar study was conducted looking at 177 US national banks, looking at racial diversity, and once again it found that firms with better racial diversity tended to have enhanced performance.
Bringing together all of these aspects of connected thinking – the right people, in the right place, in the right environment – can enable organisations to solve problems.
In asset management, for example, marshalling global expertise to spot overlooked connections holds the key to identifying opportunities. Spotting the relationships between assets, markets and economic data is a critical skill. How will ageing demographics affect European property valuations? How will Amazon’s move into prescription medication affect share prices among health insurance companies? Answering these questions requires teams of experts that are able to work together to understand how each moving piece interacts with the others. Here’s Euan Munro again.
I’ve often said you’d need to be a megalomaniac to believe you have a deep insight on the best possible investment opportunities throughout the world. You need to draw on the experts within your organisation and what they’re seeing. […] I think what you need is a network of specialists giving you insights so you can make those higher-level calls.
Research shows many investors are poor at managing and responding to information in this way. Academic studies have proved that even simple connections between companies in the stock markets are overlooked.
Connections are even more likely to be ignored when their relevance depends on future developments. Investors can solve this problem by communicating across asset classes to share information and pick up on relevant trends. Stephanie Niven says that working with colleagues in the real assets team opened up valuable insights for both groups.
Consulting with different asset-class specialists helps us identify potential opportunities. For example, we learnt from conversations with analysts in the real assets team that battery technology improvements were being made that expanded the opportunity set of data centres. We combined this with our own insight that battery technology was likely to improve further thanks to the investments being made elsewhere by the likes of electric vehicle companies and mobile phone developers. We subsequently invested in a renewable energy company as well as a data-centre operator.
Another example of the role of connected thinking in investment is the rising importance of environmental, social and governance (ESG) factors. Once considered a niche pursuit, ESG is now understood to be a vital part of the investment decision-making process across all asset classes. It can help deliver long-term value, offer insight into key risks and improve corporate performance on sustainability issues. On a wider scale, connected thinking on ESG is likely to play a major role in the global effort to tackle climate change and environmental collapse.
It’s difficult to overstate it. We are now so numerous, so powerful, so all pervasive, the mechanisms we have for destruction are so wholesale, and so frightening that we can actually just exterminate whole ecosystems without even noticing it.
The unmistakeable voice of Sir David Attenborough, speaking at the World Economic Forum at Davos in January. Attenborough argues that understanding the connectedness of the natural world and our role in it is crucially important if we are going to grasp how our own actions damage it – and the steps we need to take to preserve it.
[…] The connection between the natural world and the urban world, human society, has always since the industrial revolution been remote and widening, and we didn't realize the effects of what we were doing out there. But now we are seeing that almost everything we do has its echoes and has its duplications and inter implications across the natural world, so that we have now really to care for what we do because we can exterminate things without even knowing.
[…]We are one coherent ecosystem. It's not just a question of beauty or interest or wonder; it's the essential ingredient, the central part of human life is a healthy planet. We are in the danger of wrecking that. If we don't recognize those sort of connections that I've been describing, then the whole of the planet comes in hazard and we are destroying the natural world, and with it, ourselves.
To rescue the environment, carbon emissions will need to be drastically curtailed at source. This will require a coordinated effort between governments, markets and individuals. Appreciating our position in the network – and how our behaviour affects the other links in the chain – is a good starting point.
Throughout history, from the deck of the Beagle to the innovation hub at Bell Labs, from the trading desk to the sports field, connected thinking has played a crucial role in bringing people together to solve problems. As we face up to climate change – the greatest challenge of all – it might just help save the world.
Thank you for listening to the AIQ podcast. Please look out for future episodes and feel free to subscribe through any of the major podcast channels.
Want more content like this?
Sign up to receive our AIQ thought leadership content.
Except where stated as otherwise, the source of all information is Aviva Investors Global Services Limited (AIGSL). Unless stated otherwise any views and opinions are those of Aviva Investors. They should not be viewed as indicating any guarantee of return from an investment managed by Aviva Investors nor as advice of any nature. Information contained herein has been obtained from sources believed to be reliable but has not been independently verified by Aviva Investors and is not guaranteed to be accurate. Past performance is not a guide to the future. The value of an investment and any income from it may go down as well as up and the investor may not get back the original amount invested. Nothing in this material, including any references to specific securities, assets classes and financial markets is intended to or should be construed as advice or recommendations of any nature. Some data shown are hypothetical or projected and may not come to pass as stated due to changes in market conditions and are not guarantees of future outcomes. This material is not a recommendation to sell or purchase any investment.
In Europe this document is issued by Aviva Investors Luxembourg S.A. Registered Office: 2 rue du Fort Bourbon, 1st Floor, 1249 Luxembourg. Supervised by Commission de Surveillance du Secteur Financier. An Aviva company. In the UK Issued by Aviva Investors Global Services Limited. Registered in England No. 1151805. Registered Office: St Helens, 1 Undershaft, London EC3P 3DQ. Authorised and regulated by the Financial Conduct Authority. Firm Reference No. 119178. In Switzerland, this document is issued by Aviva Investors Schweiz GmbH.
In Singapore, this material is being circulated by way of an arrangement with Aviva Investors Asia Pte. Limited (AIAPL) for distribution to institutional investors only. Please note that AIAPL does not provide any independent research or analysis in the substance or preparation of this material. Recipients of this material are to contact AIAPL in respect of any matters arising from, or in connection with, this material. AIAPL, a company incorporated under the laws of Singapore with registration number 200813519W, holds a valid Capital Markets Services Licence to carry out fund management activities issued under the Securities and Futures Act (Singapore Statute Cap. 289) and Asian Exempt Financial Adviser for the purposes of the Financial Advisers Act (Singapore Statute Cap.110). Registered Office: 1 Raffles Quay, #27-13 South Tower, Singapore 048583. In Australia, this material is being circulated by way of an arrangement with Aviva Investors Pacific Pty Ltd (AIPPL) for distribution to wholesale investors only. Please note that AIPPL does not provide any independent research or analysis in the substance or preparation of this material. Recipients of this material are to contact AIPPL in respect of any matters arising from, or in connection with, this material. AIPPL, a company incorporated under the laws of Australia with Australian Business No. 87 153 200 278 and Australian Company No. 153 200 278, holds an Australian Financial Services License (AFSL 411458) issued by the Australian Securities and Investments Commission. Business Address: Level 27, 101 Collins Street, Melbourne, VIC 3000 Australia.
The name “Aviva Investors” as used in this material refers to the global organization of affiliated asset management businesses operating under the Aviva Investors name. Each Aviva investors’ affiliate is a subsidiary of Aviva plc, a publicly- traded multi-national financial services company headquartered in the United Kingdom. Aviva Investors Canada, Inc. (“AIC”) is located in Toronto and is registered with the Ontario Securities Commission (“OSC”) as a Portfolio Manager, an Exempt Market Dealer, and a Commodity Trading Manager. Aviva Investors Americas LLC is a federally registered investment advisor with the U.S. Securities and Exchange Commission. Aviva Investors Americas LLC ("AIA") is a federally registered investment advisor with the US Securities and Exchange Commission. AIA is also a commodity trading advisor (“CTA”) registered with the Commodity Futures Trading Commission (“CFTC”) and is a member of the National Futures Association (“NFA”). AIA’s Form ADV Part 2A, which provides background information about the firm and its business practices, is available upon written request to: Compliance Department, 225 West Wacker Drive, Suite 2250, Chicago, IL 60606.