Jan 8, 2018 · 8 minutes

Editor's note: This is a guest post by Natalie Fratto, VP of Early Stage Practice at Silicon Valley bank.

I often think the near future — say 2045 — might look something like this:

On the walk back from her high school, Max drops by the corner bodega to pick up a NeuroStim pill — a prescription neuro-plasticity stimulator. She’ll pop it at exactly 10 a.m. tomorrow as she sits down to take the AEI. Neurostim will accelerate her brain’s ability to create new synaptic pathways, helping her quickly learn new behaviors and spot new connections when exposed to rapidly changing stimuli. The AEI is a standardized test, implemented 10 years ago in place of the SAT. It has become a globally accepted metric for aptitude and projected performance in the modern workplace.

Colloquially called “The Qs”, the AEI tests 3 variables: Adaptability Quotient (AQ), Emotional Quotient (EQ), and Intellectual Quotient (IQ). While each is valued, it’s clear that AQ is the most prized of all. Strong scores in adaptability mean that you’re eligible for the ‘salaried track’. On salary, you get a minimum of a 3 year contract, with employers committing significant sums toward your retraining every 1–6 months. With low scores, you must rely on the ‘gig track’ — which can mean flexibility and higher sums, but only short duration contracts and no supported retraining. There is no inherent safety net if you bet too long on the wrong gigs in dying industries instead of continually re-focusing on emergent needs.

What is AQ and Why Will it Matter?

You may not agree that New York City will still have bodegas in 2045 (how dare you!), but I think a heightened reliance on AQ — Adaptability Quotient — is probable. Technology is changing at an exponential rate, requiring us to learn at a faster clip than humans have ever had to before. The behaviors we have honed for decades will become obsolete in a few short years. Our off-the-shelf neuroplasticity might not be enough for us to succeed in a 45 year (or likely, longer) career, where each year’s work is dramatically different from the last.

In the late 1990s, we witnessed an emotional intelligence boom, where scholars and psychologists led by Daniel Goleman convinced the population that we’d been over-indexing on IQ instead of prioritizing the “people-side” of smart. In business, the concept of EQ was course-altering, “particularly in the areas of leadership and employee development […]. The Harvard Business Review has hailed emotional intelligence as ‘a ground-breaking, paradigm-shattering idea,’ one of the most influential business ideas of the decade.” (Goleman).

EQ is important, but it’s only one leg of the stool. I subscribe to Carol Dweck’s growth mindset: both IQ and EQ are not fixed properties, but rather can be developed through dedication and hard work. I’d guess that AQ works similarly — some of us are born with higher AQ potential, but each of us can work to alter it over time. We all have that friend who loathes change and another who thrives on new experiences. This leads me to suspect that we are already subliminally aware that AQ exists and that it has variance, but we’re not talking about it. Furthermore, we don’t have a compelling way to test or improve it.

Googling “adaptability quotient” is like shouting into an abyss. The top hit is a short Inc article written by the leader of a change-management consulting firm, along with a 2011 Harvard Business Review article titled “Adaptability: The New Competitive Advantage” (worth a read) and a blog post from Singularity University (where I first heard of the AQ concept). Beyond those, virtually nothing.

If the scholars and scientists of today aren’t talking about AQ like they were about EQ, where might we look for examples to test this hypothesis?

Real-Life Examples: High AQ vs. Low AQ

Organizational AQ: IBM vs. Kodak

According to a 2012 report by Innosight (“Corporate Longevity: Turbulence Ahead for Large Organizations“) based on almost a century’s worth of market data, corporations in the S&P 500 Index in 1965 stayed in the index for an average of 33 years. By 1990, average tenure in the S&P 500 had narrowed to 20 years, fell to 18 years in 2012 and is forecast to shrink to 14 years by 2026. At the current churn rate, about half of the S&P 500 firms will be replaced over the next 10 years as we enter “a stretch of accelerating change in which lifespans of big companies are getting shorter than ever” . (Mark J. Perry)

IBM, my previous employer, is among the 12% of companies that made both the 1955 Index and the 2016 Index — all 60 shown below.

Why has IBM succeeded for so long? I’d argue, and I’ve seen it firsthand, that IBM has strong organizational AQ. On day 1 of my corporate training in Herndon, VA (mandatory for every US employee), I distinctly recall a slide about IBM’s core competency. IBM is not a hardware company, nor is it a software company, they harped — IBM sells innovation.

Innovation naturally evolves, thus IBM has well-positioned itself to ride the shifting tides over the years. From 1880–1924, IBM sold tabulating machines. In 1933, electric typewriters. In the 1960’s, they were one of the first on the market with mainframe computers. Since then, they’ve profited on everything from PCs to scanning tunneling microscopes to software and management consulting. While at IBM Watson in 2014, I worked with a partner who was one of IBM’s top Machine Learning Experts. Fast forward to 2017, and his LinkedIn Profile now reads “Bitcoin & Digital Currency Industry Expert”. IBM changes course quickly. Always in the direction of the money.

Contrast IBM’s trajectory with that of Kodak, and it’s clear that one expresses more organizational AQ than the other. Starting in the 1990’s, Kodak began a steep decline in the face of mobile phone technology and eventually, social media photo sharing. The business model was deeply rooted in photographic film, which proved to be a dying art. The company struggled to capitalize on new revenue streams and was slow to adopt relevant products like digital printing and digital picture frames. Unlike IBM, Kodak was not organizationally adaptable enough to survive, and was ultimately forced to file Chapter 11 bankruptcy in 2012.

National AQ: Sweden vs. The United States

The New York Times published a fascinating article last week on Sweden’s perspective on automation and the impact to their collective livelihood. One of the Swedes interviewed is Mika Perrson, a remote mine operator testing self-driving vehicles to replace truck drivers.

Source: New York Times
“Mr. Persson, 35, sits in front of four computer screens, one displaying the loader he steers as it lifts freshly blasted rock containing silver, zinc and lead. If he were down in the mine shaft operating the loader manually, he would be inhaling dust and exhaust fumes. Instead, he reclines in an office chair while using a joystick to control the machine.” — New York Times

Persson and the nation on the whole do not fear the automation of existing jobs because of strong social safety nets — the government provides health care and free education, plus employers finance extensive job training programs. According to the Swedish minister for employment and integration, “The jobs disappear, and then we train people for new jobs. We won’t protect jobs. But we will protect workers” (NYT). Furthermore, unions in Sweden “generally embrace automation as a competitive advantage that makes jobs more secure” (NYT). If the AEI Test existed today, I think Sweden would receive an extraordinarily high AQ score.

Contrast Sweden with the US, however, and I become deeply concerned about our own AQ. In the US, our healthcare system is dependent on our employers, so “losing a job can trigger a descent to catastrophic depths. It makes workers reluctant to leave jobs to forge potentially more lucrative careers. It makes unions inclined to protect jobs above all else” (NYT).

With this mindset, it’s no wonder that 72% of “Americans were ‘worried’ about a future in which robots and computers substitute for humans”(Pew Research survey in the NYT) as compared to the “80% of Swedes that express positive views about robots and artificial intelligence, according to a survey this year by the European Commission” (NYT).

Individual AQ: Yangyang Cheng

In 2003, Yangyang Cheng was a recent college graduate and CPA working as an auditor for Ernst & Young in Hong Kong. By 2007, she’d moved across the globe to teach Chinese language and culture as an Adjunct Professor at Pepperdine University while taking improv lessons at the famed Upright Citizen’s Brigade at night. In 2009, she parlayed her cross-cultural understanding into a role as the host of Hello! Hollywood, a TV show filmed in LA but aired in mainland China. The show was a hit — 300 million Chinese viewers watched Yangyang introduce the “Hollywood lifestyle” and bring western culture into their homes. In 2012, despite success, Yangyang pivoted for the fourth time to create Yoyo Chinese, an educational video platform to help English-speakers learn Mandarin Chinese online. Yoyo Chinese has since delivered over 12 million lessons to over 300,000 students worldwide. In my favorite video ,Yangyang teaches Mandarin through the songs in Oscar-winner La La Land.

Yangyang is clearly highly adaptable, not only because she’s navigated four highly successful careers in less than 15 years, but also because of the growth-mindset she exhibited at each step. She is motivated by curiosity — hence the nightly improv classes — and able to see future themes across her experiences, tying threads between her professorship and acting role into a big vision for Yoyo Chinese.

What’s Next For AQ?

IBM, Sweden, and Yanyang are enough to convince me that we might be well on our way toward a future of high school AQ tests and NeuroStim pills.

In a broader sense, I think three things are likely to happen:

  1. As a society, we will agree that adaptability is an important indicator for future success and we need a metric for it — AQ.
  2. We will seek new ways to both test our AQ and improve it over time.
  3. A sizable industry will emerge to boost our AQ — from pharmaceuticals to training, games and media (maybe even a TV show hosted by Yangyang!).