Episode Transcript
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(00:00):
There's so many ideas inside this book.
And it's great pleasureto have you back again.
Welcome
Gary
Hamel.
Yeah.
Thanks to be back Aidan.
And I have to say right across thisentire series, I'll repeat myself.
I'll trigger Gary to repeat himselfbut I want you to treat it like.
A research project to get areal handle of this content.
But.
(00:20):
I wanted to start on a couple of ideastoday and as Mark Twain said, history
doesn't repeat, but it rhymes and there'stemplates here for your company today.
So I thought one thing we'd start withGary was foresight, this is always
a challenge getting it right, but thethemes, I think is what people miss.
It's the themes you're looking for.
And one of the things you wrote, Ithought set this up nicely is a sense
(00:43):
of possibility is just as important as asense of foreboding and inducing a company
to escape its past however unappealing acompany's present situation it is unlikely
to abandon the past for the future unlessit has created for itself an alluring
vista of the future opportunities anopportunity horizon that presents a
(01:03):
compelling alternative to simply relivingyesterday's successes to give up the bird
in hand, a company must see a dozen birdsin the bush beautifully said over to
Yeah.
Well, I think the idea there is justto one degree or another, we are all
prisoners of the past and in particularlarge organizations were built basically
(01:23):
to be replication machines to dothe same things over and over again.
And it is a little scary to reallocateresources, reallocate time pursue
something that is less certain than simplyrepeating what you're already doing.
It's true in our own lives, andit's true in organizations as well.
And so, yes, it's very, veryimportant to have this point of
(01:45):
view about who are we becoming?
Where are we going?
What, what, what doesthe future hold for us?
And I think a lot oforganizations lack that.
We might have talked about data, recentresearch that indicates most companies
do not have a future oriented strategy.
They don't have a point of viewabout how they're trying to change
themselves and the world around them.
And I think often there's a sensethat in a world that's so volatile
(02:08):
and where change is happeningso quickly, it's impossible to
have that point of view, right?
That, the future isessentially unknowable.
And that is definitely true to a degree.
But as you were suggesting, the broadthemes are often visible a long way off.
And there's certain things, if you look atthe trajectory of technology, if you look
at demographic factors, some geopoliticalfactors customer needs and behaviors,
(02:32):
these often have patterns that you can seeif you're willing to look closely enough.
And so I think often the reasoncompanies miss the future is they
simply didn't take the time to look.
Let me give a couple of recent orat least maybe one recent example.
You look at some things that havebeen visible, very visible over
the last, let's say 10 to 20 years.
(02:52):
We could all see them.
There was no mystery about it.
Every, the data was all there.
So I'll give three things.
One was the increasingCO2 emissions, right?
Everybody knows that's a problem.
We're trying to clean up the atmosphere,the air, and yet that's not a new problem.
You can go back 20 years and youcan look at all of this data.
So that's number one.
Number two, what you've seenover the last 20 years is
declining costs of battery power.
(03:16):
So lithium ion batteries, otherbattery technologies, the cost per
kilowatt has been coming down very,very steadily now for many, many years.
A third thing you could see wasthe growing power of GPUs, general
processing units, computers, thekind of thing that NVIDIA makes.
And so that's actually beengoing at an exponential pace.
(03:37):
So you say, okay, well, causethose are three things, seemingly
unrelated CO2 emissions.
battery efficiency, GPU.
Well, you put them together andyou have the possibility of EVs.
And the possibility of, of, of selfdriving EVs or semi autonomous EVs.
So why was it in, in, in 2012, whenElon Musk introduces the, the Tesla
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Model S, the first real commercial,EV, what what were, what were the
CEOs of all the competitors doing?
Right?
At Ford, BMW, Mercedes,General Motors, and Toyota.
They were all paid very well.
But it would seem often thatyou have to pay extra to get
foresight from executives, right?
That doesn't come witha compensation package.
(04:18):
Because none of them weretaking this very seriously.
So, again, it's not so much aboutwhether you can know the future.
It's about whether you deeplyimmerse yourself, whether you
marinate yourself in what's changing.
And I think it's a very importantexercise for leaders and indeed
at all levels of an organizationto constantly ask themselves, what
are the, emerging trends that areaccelerating and have yet gone unnoticed
(04:45):
or mostly unnoticed by our competitors.
So that's not a hard question to ask.
And often though, you can't seethe future from your vantage point.
If you're.
If you're sitting, mostly, if you spendmost of your time with executives,
with other leaders, with consultants,who've all been in the same industry,
who are all looking at the samethings you may well miss these nascent
(05:09):
trends that are gathering pace.
So,
that's, that's just a,an investment of time.
I think also, and stop me if wetalked about this before, but I
think when things are changing andparticularly when they're changing
in ways that, that , may underminecurrent success, the human capacity
(05:29):
for denial is really very substantial.
And, and I've learned that whatyou see in bedrooms is kind of the
same thing in boardrooms and senseof if a relationship goes wrong.
Right?
I I can only speak about thisfrom a guy's perspective.
I've occasionally told mywife how she's feeling.
(05:50):
That usually doesn't go so well.
So I,
never,
well.
I'll, I'll stick withwhat I my perspective.
But if you're in a relationshipthat's not going so well, at least
as a guy, your first instinctis just to dismiss the problem.
And you go like, well all relationshipshave rocky patches and whatever this
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will probably self correct at some point.
I'm not going to worry about it.
And then it doesn't.
And so you have long periods ofsilence and there's a certain kind
of tension between two people.
And so at some point you go fromdismissal to rationalization and you
say, well, yeah, this is happening.
It's maybe a bit unusual, but let mefind a reason that is exculpatory where
(06:35):
I don't have to deal with the issue.
So like my wife has issues shehas father issues or old boyfriend
issues or something, but you know,hopefully she figures that out,
but it's like, not, not, not on me.
So things continue to deteriorateand now you just have to take a
long drive to cool down sometimes.
and the kids occasionally run for cover.
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So now you go fromrationalization to mitigation.
So now I actually haveto do something here.
Clearly I can't let this go on.
So you maybe find a quiet moment andyou go to your spouse, your partner,
and you say have you thought aboutmaybe Prozac or something, right?
And this doesn't go down so well.
And so hopefully at some point you movefrom rationalization to confrontation
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where you are not confronting her, You'reconfronting your own part in this, and
you're saying, you know what, I'm not veryeasy to live with, I don't listen very
well, I'm not very emotionally attuned.
So that, that pattern of dismissalrationalization, mitigation
and finally confrontation.
Again, you see that in companies,and we talked about last time, I
think the experience of Ford aroundquality a couple of decades ago.
(07:38):
But that, that, that denialcould last a generation.
And it's very interesting.
Somebody went back and did a lotof research on military history.
And one of their questions was, why didit take so long for new technologies
or new ideas to, to gain tractionor propagate in armies and navies?
And the basic argument was ageneration of generals had to die off
(07:59):
before something new could be done.
Well, you hope that's not true inour organizations, but for that to
happen, I think leaders need to spenda significant part of their time.
I would say probably 20to 30 percent of the time.
Really digging deeply intowhat's changing, being exposed
to it, getting a first personexperience and understanding of it.
And without that, you are verylikely to be surprised by the
(08:21):
future in an uncomfortable way.
But, the thing for sure is and that's whyI don't like all this talk over the last
few years about disruptive technology,because it makes it seem like a negative.
For sure, the future hasas much promise as peril.
Right?
Equal measure of promise and peril.
balance for any particularorganization though depends on whether
you're paying attention, right?
(08:43):
And whether you're looking forward.
So, I think a lot of organizationsfail, and then they're surprised,
and say, Well, how would we know?
Well, actually youprobably could have known.
wondered about something , whenyou were saying about that denial.
With your experience working all over theworld, you mentioned you worked in Nokia.
You mentioned how theystarted off very innovative.
(09:05):
They started off embracing outwardtrends, and then as soon as they
got successful, they stopped, butsomething triggered me, which was.
In Ireland, , we don't speakup about problems that easily.
So we have a culture of alcohol,for example, and that would be
the place where you either drownyour sorrows or don't speak about
(09:26):
them, but I was thinking about how.
For example a common scene in an irishrestaurant would be the waiter comes
over at the end of the meal and i stillhave a half eaten or quarter eaten steak
how was your meal sir and i was fineit's great and then it's taken when i
was like i'm never coming back to thisplace again instead of actually speaking
(09:46):
up and, seeking out accountability.
And I wondered what was your, your viewof that from a cultural perspective,
especially when you worked in Asia.
So, so, so extensively
Yeah, I do think there's often, In manyorganizations, and yes, I think it is
probably more true in some Asian countriesthan perhaps maybe in some Western
(10:09):
countries, but I think there is thisreluctance to actually say challenging
things and to say uncomfortable things,even when they're grounded in reality.
Right?
I mean, there is this kind of,
collective silence about things that areuncomfortable to, to speak about, some
years ago I was asked to Work with a verylarge Korean company around innovation.
(10:35):
And the first time I was thereand I was talking to four or 500
people, young people, mostly, theymarched them into the auditorium
and kind of military formation.
And I said, I can already tell youguys, this is a problem, right?
I mean, you, you can't have thatkind of a culture and orientation
and maximize your innovation.
But I think and I see this even at thehighest levels Aidan, I remember, and
(10:58):
I'm going to go back now again, quite aways, but I remember the European consumer
electronics industry, the Americanconsumer electronics companies now that
really aren't in this business anymore.
And some of them don't exist, but Phillipsobviously still exists as a company.
Thompson RCA and so on.
And it was clear that Japanesecompanies were a threat, but they just
really didn't want to talk about it.
(11:20):
They didn't want to dig in into it.
And one thing I heard, and I've heard thisthrough the years a CEO will say, Well,
if I really am honest about all of this,I may discomfort the organization, right?
I'm going to make them anxious.
Well, they already know.
And what they're anxious about isthat you don't seem to know, right?
And that you're not taking this seriouslyenough because they already can see this.
And so I see it again and again, that it'soften people lower in the organization.
(11:44):
Who can see the new threats, seethe new opportunities, but feel very
disempowered to raise that and toask that one of the things I think
that as a CEO, you really do have tosearch out the malcontents, right?
You have to find the people in theorganization who do think you have it all
wrong, who do think you're missing things.
And it's uncomfortable to go searching forthose people and have those conversations.
(12:07):
There was a chap, and I'mgoing to forget his name.
And again, this is a few decadesago, but there was a chap at the big
American telecommunications company,AT& T, and folks can look this up.
You can find it, I'm sure, online.
But if you remember back before theInternet, the way telecommunication
networks worked was all of thesoftware, all of the intelligence
sat in these big central switches,and all of the devices we had at
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the end were completely dumb, right?
A phone had no intelligence in it at all.
And so the assumption was if youwant to add a new feature, like
call waiting or something, youreprogram this big central switch.
So it's a very centralizedview of technology.
And of course the goal of AT& T andthey advertise this and talked about
it was building a smart network, right?
(12:48):
Having all this beautiful code sittingrunning this, their big network.
Well, one of their internaltechnologists wrote a paper called
The Stupid Network, and he said inthe future, all the intelligence
is going to be at the periphery.
Right?
It's going to be out in our smartphonesand our PCs and our servers and so on.
And the network is just mostlygoing to be pipes, right?
High bandwidth pipes.
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Well, you can imagine in an organizationthat prides itself on building and
running like a smart network, whensomebody comes and says, the future
is a dumb or a stupid network, that'sa fairly provocative thing to say.
And I think ultimately thischap left AT& T over that issue.
People just didn't want to hear, right?
So I think as a leader you onlyhave so many hours of the day.
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There's only so much you canunderstand and know about emerging
challenges and so on and opportunities.
So you have to listen to the peoplein your organization that, that are
mostly in tune with this and also theones that are likely to be the most
critical about like, we're missing this,or we haven't paid attention to this.
So again, not a natural trait.
(13:50):
But you have to go searching forthe renegades, the malcontents,
and, and spend time and understand.
You're talking to the audienceof this show, Gary, by the way.
So you'll be prodding at some openwounds in some cases , for many of
us, but there was something that Ijust wanted to flag with you as well.
(14:11):
Is that, I know that you'vewritten this content.
In the time it was written and thatthrough your work you've updated a lot
of that i'd love to share those olderexamples that you share because i think
that's the gold to share, where arethese companies played out and i loved
what you wrote here about ibm you said.
Many times what are described astoday's implementation failures are
(14:35):
really yesterday's foresight failuresin disguise, IBM's fat overheads
were manageable when computerscarried the gross margins of illicit
drugs, IBM's overheads threatenedto sink the company when computers
became commodities with the margins.
Can vegetables and ibm are in the earlynineteen nineties might well have argued
(14:57):
it's not a vision we need it's a lowercost structure and faster development
times, this we would answer of courseyou need to reduce costs why didn't
you begin working on the cost problem adecade ago, why did you so dramatically
underestimate the downward pressurethat open systems, Clone makers and the
convergence of computing and consumerelectronics would exert, On margins many
(15:21):
of the emirs operational failures in thenineteen nineties would be traced back
to four site failures in the nineteeneighties, that is gold because that
same thing happens and people forget.
You know i was telling you one ofthe biggest challenges and one of
the drivers of doing the show isthat i know people struggle to read
(15:43):
extensively cause, i book like thisyou don't read your research and
you study i'd love you to share yourobservations on that exact theme and
how it repeats time and time again
Yeah, I think,
I probably have almost an endless listof examples, Aidan, of organizations that
(16:04):
have, that have done this exact thing.
And that's why at some point yourealize that this is a pathology, right?
You can't blame an individualexecutive or executive team.
I think that would be unfair.
You have to look deeper and say, howare organizations structured in a
way that, that it makes them blindto the future, innovation phobic.
And we'll get into this a lot when we talkabout maybe some of my more recent work.
(16:27):
But again, I see this patternagain with enormous consequences.
You go back and I'll try not torepeat this story at some future
point, but it's super important one.
You look at what happened to Intel, whichwas by far the world's most profitable,
most capable semiconductor company.
And I spent quite a bit of time in andaround Intel, maybe a decade or more ago.
(16:48):
I met some of their researchfellows and I it was a super,
super amazing organization.
But at a very critical juncture,probably around 2006, 5, 6, Steve
Jobs comes to the then CEO of PaulOtellini at Intel, and he says,
we're going to make this new device.
It's called an iPhone.
And we need a new kind of chip for it.
That's very powerful because this isbasically a PC in your pocket, but it
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has to have very low power consumptionbecause it's going to run on batteries.
So it's going to need probablysome new architecture, some new
designs, some new work and so on.
And Odalini says, no it looks like, sohe is like, and I, I don't know what
was in his mind, but I do know how hedefended that decision years later.
And he said at the time, it wasimpossible to know that this
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would be the success it was.
Okay.
I'm very suspicious of that because Isaw one of the very first iPhones, one
of the very first phones that came out,
and I'd taken it to the UK with meon a trip and it wasn't yet available
in the UK and I showed it to somejournalists that were interviewing me
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there and these guys started gigglinglike they were six years old, right?
Because you could scroll and allthis, it was now we just take it for
granted, but it's an amazing thing.
And of course, even by then, by 20056, the mobile phone is already the
most ubiquitous device in the world.
We're making more than abillion of them a year.
So if you say, I'm going to takethe most widely sold available
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electronic device, I'm going to makeit, like, almost infinitely better.
Why do you think that's notgoing to be a success, right?
So I think what was more likely, andI'm sure the case, at that time, you
go back in time market for PCs is stillgoing up, servers are still going up,
Intel has a huge demand, and the idea ofdevoting a lot of engineering resources
to a new architecture and innovatingin ways that weren't important to Intel.
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They hadn't worried muchabout power efficiency.
You just plug this thing intothe mains power and off it went.
So I'm sure that wasmuch more the challenge.
But I also have very little doubtthat if Paolo Ottelini had asked
of young people under 30 at Intel.
Hey, should we do this?
They would have said, damn, right.
Like we, like, we wantto be in front of this.
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So it's very, very hard to see the futurefrom the 40th floor . But you know, if you
talk to young people if, if you're out onthe fringe, If, if you're looking for the
chance to be surprised, you will see it.
But I think, again, you justsee, that kind of myopia,
(19:24):
pretty much everywhere.
And,
and ultimately shareholders andemployees pay the cost for that.
i love how, you bring us back you'rewriting it was cutting edge at the time.
Bearing in mind that it was actuallyeven earlier than when the book came
out cause even then it's it takes longenough to get a book today but it was
(19:46):
even longer back then and one of thethings you talked about beyond ibm
was things like the quality deficits.
Which was a major issue forus auto manufacturers and.
As they saw an erosion and share in theseventies and eighties, and you said that
it was more than just poor execution.
Detroit didn't suddenly get sloppyand Japanese car manufacturers didn't
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start out with a quality advantage.
Japanese auto companies realizeddecades ago, so this is really early,
that the new formidable competitiveweapons would be needed to beat.
the us car companies in their home market.
And what i find so interesting is thesame pattern again this these templates
that you see is the us companies knewabout it, they looked at it they studied
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it and they still didn't act and thequestion i always get is like how do you
create that hunger in paradise that willcreate that action without scaring people.
Well, I think one of the things asI said, you, you, you have to spend
a lot of time thinking about what'schanging, what are the implications,
and working through the second orthird or fourth order consequences
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if this changes that, then what?
Well, and then, and then whatthat might trigger, so it's just a
matter of, of taking the time andtaking the discipline to do that.
The other thing, veryimportant question to ask is,
are there things that,
are the things that have not donebeen done yet, but are possible that
(21:19):
haven't been done simply becauseit's not the way our industry works
or operates or whatever, but, butagain, I think having that, that,
that creative curiosity to think aboutlike, Well, why couldn't we do that?
What would happen if we did that?
And we can maybe talk about how do you do,how do you get that kind of imagination
working at scale in an organization?
But let me give you another example.
(21:41):
This is again, many years ago, butsomething you could see happening.
And, so I was talking to senior executivesat a very large food and beverage company.
I won't tell you which one, butone of the big global leaders.
And if you look at these companiesand I'll the companies Procter and
Gamble, Unilever, Nestle and so on.
(22:02):
If you look at these companies they're,it's a huge portfolio of brands, right?
They all have individual brandsfor washing powder and for,
peanut butter or whatever it is.
But, and so I was talkingto these senior leaders.
I said you guys are fragmenting yourbrand spending over dozens of brands.
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And of course these all startedout as young companies that they
bought, had bought years earlier.
And so that you understandwhere, how they got there.
But I said, and I, I use anexample from another industry.
I said, you look at a companylike Sony that uses its brand
over all kinds of products.
And, I said, somebody is going tofigure out how to capture the economies
(22:44):
of scope by having the same brandover multiple categories of products.
They thought I was stupid.
They thought like, this islike, Gary, you're just like,
that's never going to happen.
Nobody's going to do it.
So because they hadn't done it, theycouldn't entertain the possibility
that somebody might else might do it.
Even when it was completelyeconomically logical, right?
You might, you mightalmost say inevitable.
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That somebody would do it.
Well, so what happened?
Ultimately, you got grocers likeTesco or a Costco that created
huge private label brands.
So Costco, I don't know what percentage,but a significant percentage of what they
sell it goes under their Kirkland brand.
And then I can tell you, itis on everything from golf
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balls to peanut butter andeverything else you can imagine.
And, and, and so that has become theKirkland brand has become the largest.
kind of consumer productsbrand in North America.
There's nothing else, there'sno other single brand that even
comes close to their revenue.
And yet somebody was telling me a coupleof decades ago, this cannot happen.
So I think you've got to be verycareful when you say something's
(23:48):
impossible, something won't happen.
You have to be very careful to explainwhy that is economically impossible, not
why it hasn't happened yet, or it'd makeme uncomfortable, or I don't think so.
But why is this literally whywould this be defying gravity?
I had a very similar conversationin about the same timeframe with the
(24:10):
leaders of one of the biggest, brewingcompanies in the world making beer.
And I and at that time, probablycraft beers were like one or 2%.
And I said, you know what, we have ageneration that wants unique experiences.
They don't want to be like everybody else.
And, and this is just goingto grow and grow and grow.
No, no, no, Gary.
It will never be more than three or 4%.
(24:31):
I said, we'll see.
I said, you, you, you, you thinkthat there's a mass market only
because there are mass economiesin distribution and manufacturing.
But if somebody figures out how todo this at low cost and create new
brands, I said, there is no such thing.
The mass market does not exist.
That is a fiction.
It has never existed, right?
We all would like differentthings that are unique to us.
(24:52):
It was only that way because youguys weren't clever enough to
figure out how to do it, right?
And so there is this tendencysimply to believe that because it
hasn't happened, it's impossible.
But before you kind of go downthat route, you really got to ask,
really, is it really impossible?
Or is it just somethingwe haven't seen before?
It might kind of make us uncomfortablebecause so many innovations, when you
(25:13):
look at me like, Like, why didn't,like, why didn't that happen before?
Right?
And it's not that it's impossible.
It's just nobody's thought aboutit before, but, but it's still
easy to miss those things and,and even to dismiss those things,
just because they're unfamiliar.
(25:34):
By the way, I have to give you onemore little story in that regard.
This is a more recent one.
I was having I, I believe that over timeand it's going to take some time because
education is a slow moving industry.
But for sure, we're going to see a moveto more and more virtual education, right?
The economics of a typical bricksand mortar university or business
(25:54):
school are just like terrible.
You have me standing in front of70 students inside this hugely
expensive structure sitting in themost expensive part of London and
the only people can afford to comethere are pretty wealthy people.
You go like, this just, it doesn't work.
And so,, I, one night I was up at2 a. m. and I was participating
(26:15):
in it because I was in California.
I was on a call with my.
Colleagues at the London BusinessSchool, the management committee,
, the senior people, , the pastdean of the school was there.
He's a lov very lovely , and smart person.
But I made this kind of plea about, guys,we have to think about how e learning is
gonna change fundamentally this businessand how we credential people and so on.
(26:35):
And, , the dean at the other endof this call he was very skeptical.
He says, Gary, I don't think so.
People want this in person experience.
They want whatever.
I said, yeah.
People also want Louis Vuitton handbags,but most of them can't afford them, right?
So, like, are we in the businessof creating Louis Vuitton handbags?
Or are we going to, createsomething for everybody?
But anyway, he says, no, it'snot the same thing having this,
(26:56):
, virtual experience and whatever.
So anyway, we ended the call.
One of his colleagues calls me the nextday and says the first thing he said after
we got off the call was how great thatwas, and it was like you were really here.
I said, that wasprecisely my point, right?
, but when
you have a huge capital campaign, you'reraising hundreds of millions of pounds,
you have these beautiful facilities,like having a conversation about how
(27:19):
it might change is just super hard.
Walk towards the pain, walk towards
the pain, right?
When the future looks hardand it looks difficult
walk towards the unfamiliar, right?
I mean, that just has to be a mantra as aleader that you like keep inside of you.
I'm in life that's where growth comes fromit's from the difficulty all the wisdom
(27:40):
that came from the east is all aboutthis stuff i just want to find incredible
and yes we get stuck in the cycle we getstuck with the biases and the ego and the
lack of humility and all that comes withthat so that's why i love surfacing the
stuff so thank you again for revisitingthe start of this work that you've done
(28:00):
chapter seven, which is called strategy isleverage just absolute gold i was telling
you i was running a workshop yesterdaywith a group of executives and this
chapter, Was it was just so helpful andserendipitous that i read it beforehand
and one of the things you talk about inthat again let's cast yourself back to
(28:21):
the nineties, you said how is it thatjapanese firms can be more efficient with
less resources and spend less on r and d.
Back then gm spent four times thatof honda you told us that's something
that we still see today that believethat their resources are actually a
competitive advantage but actuallysometimes they can wait them down,
(28:44):
Yeah, I think, that is the conceitof size that somehow, because we have
more R and D dollars, we have moreengineers, we have a bigger marketing
budget that somehow, and I mean,it can be an advantage for sure.
It can be an advantage, but as you say,it can, it can equally be a weight you,
you look at what is, what has happenedover the last decade or less in, in, in
(29:08):
terms of, the drug discovery industry.
The largest if you take the 10 largestpharma companies in the world they
spend about 120 to 130 billion a yearon R and D like we spend, right.
The consumer spend, because they make allthat money back and more, they have pretty
good margins, but that that's how muchhas gone into it goes into drug discovery.
(29:31):
However, if you look at the drugsthat have actually been approved year
by year, On average right now, aboutsomewhere between two thirds and
three quarters of all new drugs thatare being approved by, by licensing
authorities have come from pharmaceuticalcompanies that have less than half
a billion dollars in sales, right?
These companies, , each of thesecompanies is spending three, four,
(29:52):
five, six million dollars, billiondollars on R& D, and they're losing
the companies whose total sales are afraction of the incumbent's R& D budget.
So, and, and the past the past head ofR& D at Merck he said the best thing
we could do in my organization, he'srunning this huge global R& D group,
says the best thing we can do isjust scrape off the top five layers.
(30:14):
Started with myself.
Well, unlikely to happen.
But yeah, I think,
a lot of companies work onoperational efficiency, right?
They're trying to scrape out one or twoor three or four or five percent of costs.
But you got to step back oftenand say, is there just a different
model of doing this, right?
Is there just a fundamentally better way?
(30:36):
Because what and often we think ofinnovation as like a new product or new
service, but you're going to have a hugeamount of innovation on the cost side.
Right, right now, what we need in healthcare, we have a lot of demand creating
innovation, right, better technologies,better procedures, better tests that
often are very expensive, but we needan equal amount of cost innovation that's
saying, like, how do we dramaticallyreduce the cost of health care?
(30:58):
One of, one of my favorite stories is isan Indian physician now gone Govindappa
Venkataswamy and, and he wanted to cureunnecessary blindness in India, which
often comes from cataracts and a brightsun and lack of eye protection and so on.
So to do this he didn't benchmarkophthalmic surgery in the West.
(31:18):
He went and looked at McDonald's andsaid, how did they learn to make a burger
for a couple of pounds, quid, dollars.
And so he said, how do weindustrialize this service?
So we build a model where you have manypatients laying on kind of parallel beds.
You have machines that canmove from patient to patient.
You have surgeons who are doing ahundred or so surgeries every day.
He made it a production line and theyradically reduced the cost of doing this.
(31:40):
Well, that's innovationon the cost side, right?
And so now they can do a cataract surgeryfor about 35, which is a fraction of the.
1, 800, 2, 000 B in the U. S.So yeah, I mean, you've got
to think on that side and be,
not just asking how do we take anotherfew percentage, but is there a way of
(32:02):
fundamentally changing the cost structure?
And if there is, and you're notexploiting it, somebody else will.
such a brilliant case study becauseone of the things that comes
up for me a lot in workshops isbut our product is the product.
How can we reinvent orinnovate around that?
And that's your point.
You can reinvent every differentaspect, you break it out and you
(32:25):
look at every different aspect ofit, including how you produce it.
And there's a great line here.
In my notes, I wrote down aboveit, harvesting and not sowing.
And you wrote a company needs to reducethe book for a given bang rather than
increase the bang for a given book.
Therefore denominator driven corporaterestructuring programs are more about
(32:45):
cutting resources leveraging resources ithought that was just a such a relevant
line in the age of a companies areemploying a i know to lean out their
operations optimize the operationsbut they're not reinvesting again to
create that value that you talked about,
Yeah, I think almost always when newtechnologies come along, we use them first
(33:10):
of all, just to incrementally improvewhat we're already doing and we don't
really work to see the revolutionarypotential in that technology.
And I suppose to some extentthat's understandable.
But that is why these new technologiesare available to everybody.
And they're not that mysterious andyou can everybody could use them.
So you, you end up asking like,well, why is it normally these
(33:32):
young upstarts that use thesetechnologies most creatively, right?
Whether it's in FinTech and digitalbanking whether it is in healthcare
and biotech, whether it's in publishingand it's Amazon with Kindle and so
on and not why does that happen?
And I, I think that again, webecome prisoners of the familiar.
(33:56):
We cannot step outside thatexisting business model.
And one discipline, I thinkAda, that's super important.
You have to be able to abstract away fromthe physical thing or the service that
you're providing as whatever it is, Andask, what is the need this is fulfilling?
And then say, are thereother ways of doing this?
(34:16):
So you end up just assuming there'sone way to fulfill this need when
there may be multiple, but, you youforget you, are enamored and focused
on what we're doing and the productand its manifestations rather than
what is this , really deep problemwe're trying to solve for people?
And might there be anotherway of of doing it?
And in healthcare thatis , particularly urgent.
(34:37):
Because it's just becomingunaffordable for countries
and citizens around the world.
And there just simply is not enoughgenuine cost innovation going on
there, but again, there's thistendency and I understand why
to , let me just optimize what I have.
It's easier to do.
I understand it.
It takes less creativity.
(34:59):
The returns may be more, more certain inthe short run, but then you end up with a
company filled with denominator managerswho know everything about how to cut head
count and how to reduce costs and knownothing about how to grow the top line.
It's very interesting that, roughlyhalf of the thousand largest
companies in the world are unableto grow even as fast as GDP.
(35:19):
Like what the hell guys,
but you have managers who, , andby the way, it's astounding to
me that you can become the CEO ofa large incumbent company without
ever having to build, build a newbusiness with inside that company.
Like we need builders at the top, right?
Not maintenance engineers, and yetnormally we get the maintenance
(35:42):
engineers who like ran itreally well, didn't screw it up.
Like,
And it's no disrespect to them fairplay to forget in the job but, at
a board level we need to changestrategy as well they're needed.
But not in that role at this time in theworld i really want to the hammer home
gary this point this term i learnedfrom you which is resource leverage,
(36:04):
and you talked about achieving resourceleverage i'd love you to describe what
that is in your words for me as well asthe audience but also, then you want you
go on to say resource leverage can beachieved in five fundamental ways we don't
need to go through all five these fiveare by more effectively concentrating
(36:24):
resources on key strategic goals
so focus
by more efficiently accumulatingresources, by complimenting resources of
one type with those of another to createhigher order value by conserving resources
wherever possible and by, rapidlyrecovering resources by minimizing the
(36:44):
time between expenditure payback i lovethis section and it again so relevant,
i'm just doesn't this stuff doesn't decay,
Thinking truly creatively abouthow you do more with less you,
you see this in, in guerrillawarfare and unconventional warfare.
(37:04):
I've had the chance over theyears to talk to generals and
different armies and so on.
And you go back to the Vietnam war the U.
S. dropped more ordnance just in Cambodiathat it did in Germany in all of the
Second World War with not a goodoutcome for the U. S. or anybody else.
But so the thought there was, hey,we have the biggest air force, we
(37:25):
can drop more bombs, let's go do it.
And, of course, what the Vietnamesewere doing, being resource
starved, was they were buildingtunnels as their supply chain.
They would build tunnels.
their bridges justunderneath the waterline.
So they could not be seen fromaerial reconnaissance, but
they were still effective.
Like how do you come up with that ideaof building bridges, like just two
inches under the waterline, right?
(37:46):
I mean, you have to beresource starved to do that.
And another example equally horriblewas looking at, at 9 11, right?
How does a small band of radicalsattack the largest company country
in the world and, and get throughits defense systems and so on.
Well by, by taking something, a completelyradical idea of turning a civilian
(38:11):
jetliner into a massive bomb, right?
So, again, a very, very good disciplinein any organization to ask, like,
how would we tackle this problem?
If we had 10 percent of the resourcesthat we have how would we have a
real impact if we were resource poor,because if you don't go through that
discipline every problem is justlike, can we outspend the competition?
(38:34):
So I think CK and I, we wrote anotherpaper that kind of took some of
those ideas further called strategyand stretch and leverage, but it
really was how to use partnerships.
How do you, get.
How do you get more focus?
All the things you talked about,but typically we don't think
creatively about any of those things.
(38:54):
It's just do another round of headcountreduction or let's cut expenditures here.
So you have to bring the samelevel of creativity to the resource
side as you do to the demand side.
I mentioned this one gary as wellwhich is also in that chapter which
is the speed to market and how.
Establish companies can be so slow tomarket and for whatever reason that the
(39:18):
size of them the amount of, buy in oralignment they need to get the mental
resistance that i get from inside thecompany and you call this rapid recovery,
can you say a rapid recovery processaccess resource multiplier an example
you give is the, Japanese companies andhow intent they were an accelerating
(39:39):
product development times and in thenineties you tell us it was estimated
that detroit's big three required anaverage of eight years to develop an
entirely new model line, i mean whileback then the japanese was four and
a half years with an individual modelvariant, it was developed so much quicker
and therefore they were able to recoup.
(40:01):
Return on investment was so much quickeras well that's something that you've
seen and again this resource overlyresourced can actually way down a company,
Yeah, I think, we were writing, CKPrahalad and I were writing about this
kind of thing, I think fairly early.
We wrote a paper calledexpeditionary marketing.
(40:21):
No, it was called corporateimagination, expeditionary marketing.
And, and we talked about the needto put something very quick and very
early in front of customers, even ifit wasn't the ideal the ideal product
to get feedback because when you'redeveloping , any new product or service,
The goal is to maximize this ratioof learning over investment, right?
(40:42):
I want to learn fasterwhile spending less.
I need to know where'sthe real heart of demand.
Is this a function that theyreally need in the product?
And so on.
I know there's ways of doing thisthrough prototyping and, and, but,
but you actually have to put thingsin front of customers in their hands.
Let them touch them and use them.
Now , that's easier, obviously inthe digital world where you can do A
B testing and you can put somethingout there and see what happens.
(41:02):
But yeah, the Japanese were verygood at this in the auto industry.
Now the auto industry has gotten better,but part of the problem was, and it's
still a problem for some companies, theywere organized into functional silos.
And so trying to get sales andmarketing and manufacturing and
to all work together, it just,you, you, the speed was limited by
all the internal silos and so on.
Yeah.
(41:23):
What the Japanese would do, and Hondawas probably the best at this, is putting
all the engineers, marketing peopleresponsible for a particular model in
the same room and working together andsaying, guys, let's resolve these trade
offs like right now, collectively, ratherthan having a lot of a pissing contest
and a lot of back and forth and whatever.
So yeah, but it was, it's a combination ofwhat I guess today we would call agile of
(41:47):
getting multiple teams working together.
And also what would later be calledlike minimum viable product, but getting
something that you could actuallyget out there in consumer's hands and
test, and then iterating very quickly.
The, the, the speed at whichyou improve anything is governed
by the pace of iteration.
So if you only have the chance to getbetter at something every three or four
(42:08):
years, because that's your launch cycle.
and, companies like Spotify have gottenvery good at this they got famous for
and Amazon does the same thing Amazonhas you can decouple the actual design
of your website, of elements of yourwebsite into relatively small teams,
they call those microservices at Amazon.
(42:28):
As long as they're sharing the sameunderlying APIs that interconnect, so
the stuff still all works together.
But you're not tying all these differentpieces at the same rate of progress.
So, and then you get a release trainwhere you know that just every few months
you're going to do something significant.
So these are ideas, we certainlydidn't fully work them out,
but we could see enough that weknew the principles behind them.
(42:50):
Right?
We needed, you needed lean teams, youneeded people you needed to shorten
the iterations in your release cycles,and doing so not only allows you
to recoup resources faster, but itallows you to improve faster, right?
Because you have another chance to make adesign change, to make this thing better.
And So just the speed of iterationhas become a huge competitive
(43:13):
advantage in all kinds of industries.
I'm glad we saw it,
i'll share something in a little whileas well where you actually predicted
the mobile phone i don't rememberthat but you did in this book as well
which was i'm sure you wrote this.
In nineteen ninety one becauseit was published in ninety
three so it was early man
so i'll come back to that in a moment buti wanted to share a table that you have
(43:36):
in the book and again i just think it'sso and so relevant today it's the aspects
of resource leverage so i'm sharing on thescreen for those people who are watching
us on youtube and spotify video so you'llsee it but we'll have a little bit of.
Empathy for those people whoare only listening to us, Gary.
Maybe you'll pick out some ofthese things that you feel are most
(43:58):
relevant today or most show up for you
Well, I certainly think thatfirst about building consensus
around goals is super important.
What I often find at the top oforganizations is really, deep
divides, almost like holy wars overwhat new technology or what new
markets should we be focusing on.
(44:19):
And, and so you don't really getfully committed to any of those
things or, or worse, you, youkind of, You you have one division
who's really passionate about this.
Another division who'suninvolved and doesn't care.
And so if you run into a problem it'slike, well, it's that division's problems.
They're the ones who want to do it.
That's their thing, but it's nota collective commitment to, to
(44:40):
making sure we win in this space.
Right.
So, I, I think about companieslike IBM and Oracle and others who
were very slow to get into cloud.
How is it that Amazon andAmazon web services became
a leader in cloud computing?
I'm guessing probably all the thingswe've talked about, it was something
(45:00):
new as uncomfortable as changing thebusiness model and so on, but I'm
sure there were huge debates in allthose companies, is it serious or not?
And if that debate doesn't get resolved,you just open the door for somebody else.
So I think.
You know that now at the same timeyou're trying to get consensus You've
got to keep an open mind and you've gotto be out on the fringe and exploring
and testing new things that may Not bepart of that vision, but by golly, you
(45:22):
know The top dozen people a companyneed to be a hundred percent united on
where we think our big opportunitiesare And if that doesn't exist, you are
absolutely gonna fragment your resources.
You're gonna be slow and so onthe learning thing about using
the brain of every employee.
We'll come back to that for sure.
This is one of my deep and enduringpassions, but the fact that Toyota and
(45:44):
the Japanese competitors were teaching.
employees how to do statistical processcontrol and Pareto analysis and identify
quality problems, giving them the powerto stop a billion dollar production line.
I, I don't know at the time we wrotethis book exactly where Toyota was on
this, but I know they, they get morethan a million suggestions a year
(46:06):
from their employees for improvement.
And most of those arenot mere suggestions.
There's experiments, those employeeshave run and tried something and now
are reporting on what we learned.
So again, the pace at which you canimprove is largely governed by how
much of the intellectual capacityof your organization are you using?
And so that I think is Theborrowing thing, again, I
(46:27):
think is can be very important.
You look at, Microsoft'ssuccess with the PC.
Again, now we're 30 years earlierfrom cloud computing, but why
was, why did Microsoft end upcontrolling Windows, right?
And they leveraged IBM's resources.
They went to IBM.
They said there's thisnew thing called the PC.
We'd like you, we'd like tomake the operating system.
(46:49):
IBM said, fine thinking, thinkingthat, well, at some point we'll
push Microsoft out and we'llcontrol the operating system.
Now today, of course, IBMis out of the PC business.
But at that time, they Microsoft figuredout how to leverage the global scale
and the global reach of IBM, which wasthe largest IT company in the world.
So that gave them huge leverage in thesame way a lot of Japanese companies
(47:14):
early on and today Chinese companies.
Started making OEM products for othersand learned thereby and increased their
own competence and then one day cameinto these markets with their own brands.
So, again, looking at howdo you do more with less?
How do you leverage theresources of partners?
I would encourage people, yeah, to go backand look at this and then for each one and
(47:35):
say, how does it apply in our industry?
How does it apply in our organization?
most of these strategies, I willtell you, I know that they're more
difficult, but let me say they're alittle bit more sophisticated than
just doing another round of downsizing.
Because you mentioned IBM, one of thethings you talk about is to protect those
individuals, like the guy that wrotethe paper or like you that spoke up on
(47:56):
the call on that call, that WebEx call
The company tries to protect them and sendthem off to a corporate post or innovation
lab etc skunk works whatever you want tocall that separate them away from the core
business and, you mentioned ibm did thisto create the computer but then there's
(48:18):
the problem of trying to reverse itback into the company again and it being
rejected like a bad organ transplant, ilove you to share your observations on
that cause you recognize the back then
Yeah.
And I have to, to be fair toIBM, they learned quite a lot
from that experience for sure.
But yeah one of the things that,
(48:39):
a lot of consultants and academicshave said, is that the only way in
a large bureaucratic organization toinnovate is by creating a specialized
unit that is protected from therules and the budget cuts and so on.
And I have a certain sympathy forthat because you certainly, if you're
doing something new, it does haveto have some dedicated resources.
(49:00):
You can't starve it.
And what, what you couldoften see happening.
in these large companies is, well letme, let me tell the story this way.
What was interesting to me is when I goto a company and go to the senior team and
say, how did you guys possibly miss this?
They say, well we wereworking on this, right?
We had a young team four levels down that,yeah, like we were actually ahead of this.
I go like, well what the hell happened?
Well, there was some kind of abudget cut or reprioritization
(49:23):
and that thing got killed.
Well, the problem is that no alarm bellswent off when that thing got killed.
It was like four levels down.
It was sitting in one division and, andso if you don't have that shared point of
view at the center about why this is soimportant, it's very easy for that thing
to be to be killed and that would happen.
So it wasn't always that , theexisting businesses weren't innovative
(49:44):
and trying to do new things.
They were.
But unless you understand why those areso strategically important and one of
the dilemmas in large companies is theytend to define commitment by resources.
So I often ask leaders like, how wouldyou know if your company was really
serious about opportunity X or problem Y?
And the answer is, we'd havea lot of people on it, right?
(50:05):
We'd be spending a lot of, like,well, that's a really bad answer.
Because the way you want to measurecommitment is not spending because it's
very easy to overspend on these new thingsand spend too much too quickly and get
the spending in front of your learning.
The way you have to thinkabout this is strategically,
why is this important to us?
And then how do we minimize theamount of money it's going to take
(50:25):
us to make a success out of this?
So yeah, big companies fail big becausethey can usually not because they have to.
So if you lack that point of view atthe center about why is this thing going
to be really important, it is very easyfor it to get sacrificed at some point.
And nobody knows.
Then 10 years later, you go didn'twe have a project on that?
Like what, yeah, what thehell happened to that?
Because there was no strategic focuson it, So recognizing that problem
(50:47):
and recognizing how even great ideascould be killed in the cradle and
nobody would notice, this was theidea like, , let's set up these
incubators or these accelerators,whatever you call them, and we'll
make sure they're protected and so on.
And Google has one and Walmarthad one and pretty much, and we've
studied lots of them and almostnone of them have made a big impact.
Because,
(51:10):
first of all, you have to have, you haveto ultimately grow something , very big.
If 90 percent of your business comesfrom one set of products or , one
stream, the chances of creating somethingequally big and important is pretty low.
Just it's probably not going to happen.
Apple, luckily it happened.
They created the iPhone,which is far exceeded the Mac.
(51:30):
So the question often is nothow do we do the , new thing?
It's how do we pick up thepace of evolution in our core?
What we're already doing?
How do we just get faster?
How do we get better?
And in any case, the ideawas, okay, let's put this off.
Let's protect it.
Let's ring fence it.
And so, You end up often withthe worst of both worlds, Aidan.
You end up with something thatstill has enough corporate
(51:52):
scrutiny and interference.
And by the way, the people runningthat thing really aren't entrepreneurs.
They don't have a big financial upside.
They're not working like nightsand weekends and whatever.
So you don't really havesomething that has the freedom
and the energy of a startup.
the other hand, it'sdisconnected from the core.
So what should be an advantage ofleveraging all the resources, the
(52:12):
technology, the customer information,so on, it struggles to do that.
So I think the better solution is.
If you're doing something new, give it ahome wherever in the organization it needs
to leverage those resources, leveragethose customer relationships, put it
somewhere that where it has a natural homein the organization, and then make sure
that this thing has visibility, that everymonth at the very top, how is this going,
(52:36):
what kind of progress are we making, howare we learning, so that nobody can kill
that thing several levels down, withoutsomebody noticing but The incubators
and accelerators is almost admittingfailure and saying we really don't
know how to innovate within the core.
So let's just let's justlike put this somewhere else.
And many of those have been closed down.
You can probably find some exampleswhere something great came out of
(52:58):
them, but, it was a bad strategy,but I need is innovation everywhere
from every day in every part of theorganization, both in ways that,
that push forward existing businessesand ways to create new businesses.
, and I can't create a separatededicated unit to do that.
That is just , not a workingstrategy in my experience.
i'm welcome back to that and you'rebrilliant experience with Haier of being
(53:21):
inside the company and being an advisorwill build as well and how to do it.
There was something that i couldn'tleave which was kodak and kodak.
At the time was still successful so whenyou this is the ninety so you talked
about kodak and the term opportunityhorizon, I'll quote a little piece here
just to remind you again you wrote thisover thirty years ago, eastman kodak
(53:47):
extended its opportunity horizon whenit removed its traditional blinkers.
and searched for markets that fellbetween or more accurately across
its traditional competencies areas ofchemical imaging, electronic imaging
like copiers and so forth and one of thewhite space opportunities that emerged
from this exercise was what insidersrefer to as, an electronic shoebox
(54:14):
realizing that many family photographssit in a shoebox gathering dust in the
attic Kodak's chemical and electronicengineers dreamed of medium, that would
allow consumers and customers to easilyand safely store their photographs,
view them on a standard televisionand reorder and edit them at will.
The result was a process availablethrough photo developers for turning
(54:37):
chemical images, On photographic filminto electronic images that can be
viewed via at the time, a video CDplayer connected to a television.
What Kodak called a photo cd theultimate success of this product is
less important than the lessons it'smanagers learned about how a synthesis
(54:57):
of skills residing in seemingly disparatebusinesses, could be combined to create
new competitive space so many lessonswe can go there but whatever that
sparks for you i love you to share
Clearly Kodak is a cautionary tale eventhough they were one of the first to
experiment with digital photography, thatparticular product, I'm I don't remember
(55:22):
whether it succeeded or not, but I thinkthat the lesson there is, yes, looking
at an organization as a technology.
In the first instance as a portfolioof capabilities and not a portfolio of
products, because the new opportunitiesare usually in the white spaces between
the existing product categories.
One company is very,very good at doing this.
(55:43):
Maybe the best in the world.
Having said that they've often, they'vealso had a bit of a struggle, I think
recently, and primarily because theygot caught up in kind of their own.
Cost focused, restructuring,downsizing, rationalization.
And it is , but the companythat's historically been very,
very good at doing this is 3M.
So 3M make adhesives and abrasivesand materials and so on, , and for
(56:06):
years it was rated as one of the mostinnovative companies in the world.
I think Tom Peters and in searchof excellence praise it as one
of the most innovative companies.
But they never saw the companyas a portfolio of products.
That was constantly changing, constantlyinnovating, new categories being created.
But they would tell you, and Idon't know what the number is now,
I think the last time I looked theyhave like 40, 41 core technologies.
And what's very importantis, those technologies are
(56:27):
not owned by the businesses.
What often happens is you get avertically oriented product focused
business that thinks it owns thecontributing skills and technologies.
And these go into this productand go , no, those should be
available for anybody across theorganization to leverage in new ways.
And so 3M is very good at doing thisbecause around all of these core
technologies They have regular meetings.
And when they meet with customers,they don't start by asking what do you
(56:51):
want to buy in our product portfolio?
They start by asking whatare the problems you have?
And then they have engineerssaying , man, can we use any of
these 40 different technologiesto help them solve their problem?
And out of that comeshuge amount of innovation.
So, that's a very critical lesson.
If a lot of myopia comes fromlooking at your organization in
(57:12):
terms of what it does, rather thanwhat it knows it's capable of.
so if you look at a businessschool and say, well, a business
school is about delivering degrees.
Yeah, but you have all this great,
faculty capability.
Like, why do you look at it that way?
Why isn't it about just raising thelevel of management competence globally?
(57:34):
But no, no, we run programs.
So, you have to havea deeper self concept.
If you want to be able to, seethe white spaces that exist there.
of the things that's linked to that is.
i'm probably jumping ahead in the bookshere but i just can't resist really
is that it's a quote by your colleagueZhang Rumin.With Haier and he said
(57:59):
that when he saw what the internetdid to exponential change that he
realized that you have to change thestructure of the organization so it
could no longer be in that hierarchicalstructure and i wonder what your
thoughts on that was one of the things.
suggest is just that it turnsfrom a triangle into like
(58:20):
a more like a murmuration.
So it's like, you'd see thatbeautiful murmurations with sparrows
that it's based on the projectsthat are required at the time.
And I was telling this, I wastelling, I was running this
workshop and I mentioned this.
And the, the vast difficulty ofeven approaching that from an
organization that, that one ofthe leads, there's like I really,
(58:42):
really, that idea really resonatedwith me, but I can see the immense
challenges that would lie ahead there.
Well first of all, I think that'swe'll come back to this theme.
But one of the most, some of themost influential pieces I read
that really influenced my workwere pieces that were written by
(59:03):
technologists and about the web.
One of them, and I'm going to forgetthe author, we can look it up.
But one of them was called, Ithink it was called small pieces.
loosely joined.
And I'm embarrassed right now.
I can't remember the author.
So maybe,
maybe we can put it.
Put it up on the screen there, butbasically talking about how you
built this amazing the internetitself, which is built on a
(59:27):
very small number of principles.
And but it created this opportunitywhere anybody could connect
something to the internet.
Grew up, I'm old enough.
I remember when you had to getthe net the telcos permission.
To connect a new phone to your whatever.
Now you can put anything.
So there was clearly an architecturethere that was far more flexible,
(59:47):
still coherent, still works, stillreliable, but far more flexible.
There was another book written byKevin Kelly, who at that time was
the founder and editor of WiredMagazine called Out of Control.
And basically looking at how youget, , your example of memoration
is a good one but how do you getcomplex behaviors and patterns.
(01:00:08):
Without central control, right?
So out of control and those really struckme because we've typically assumed that
the only way you get coherence focuscontrol in a system is with top down,
micromanagement and top down policy.
And it was clear that in the caseof the internet all these devices
work when you plug them in.
(01:00:28):
Right.
And through APIs you could build an appThat took address information from here
and took , a payment module from here andsomething else and stitches that together.
It's what companies likeShopify and so on have done.
And it was hugely powerful.
Spawns a huge amount.
And it was based on an architectural ideathat was just Absolutely counterposed
(01:00:49):
to, what we see in management.
And so in, in the future of management,I, I talk about that and I talked,
and that was the book that I thinkcaptured Zhang Ruomin's attention
or drew him to me, I should say,but I think you saw the same thing.
Now, here's, I think,a deeper lesson here.
You have to be able to think in metaphors.
So if you look at the internet,you say, , what does that have
(01:01:11):
to do with the organization?
It's all built on technicalstandards and so on.
But you look at it as, no, it's away of organizing human activity.
And we're also running an organization.
We're trying to, what doyou learn from that, right?
So I think this is one of the giftsof Jai Gurmin and of every innovator.
They can look at something that onthe surface seems very dissimilar, but
then they look deeper and they say, isthere some architectural similarities?
(01:01:34):
Is there something herethat we can map on?
What is a metaphor?
So, the metaphor is, maybe we need tothink of the organization as a network.
Right?
Not as a hierarchy.
So that now that's becoming less andless a radical idea, although very
few companies have taken that thinganywhere close to being serious yet.
I mean, to reallyseriously think about that.
And as your client or your friendsaid, yeah, it's going to be difficult.
(01:01:57):
That's why it's taken, higher 15 yearsto really bring this idea to fruition.
By the way, it didn't take them 15 yearsfor the thing to start to have a payoff.
It didn't take 15 years of biglosses, but you just had to work at
it and work at it and work at it.
So I think that Yeah, the
(01:02:19):
assumptions that we have about ourorganizations are hugely out of date and
often technology can point us towards likean alternative way of thinking about this
thing, but only if you're willing to likeconstantly think here's something that's
super, super different from anything I'vethought about, but how might it apply?
(01:02:39):
I don't know if we, I think I mentionedthis before, but I've read a lot of
books about evolution and about how.
And of course, there's a great debate now,not among creationists and evolutionists,
but between evolutionists on how we gotthe level of complexity we have so fast,
because mutation by itself does not seemto be enough to have gotten us here.
So there's a lot of interesting dialoguegoing on, but it seems that in nature,
(01:03:02):
there's a lot of pre adaptation.
I think I mentioned this last time.
And so you're experimentingand building things.
that may not be immediatelyuseful, but are useful later.
So I think you even look at natureand you go okay, where's the
metaphor that I can use here?
What do I take out of that?
That would be helpful to me.
, so that's a huge part of the creativeprocess of looking at things that are
(01:03:24):
very dissimilar and saying, Is there somemetaphorical level connection that helps
me think in new ways about somethingvery familiar and very traditional?
Because I will tell you and,
you cannot, Innovation alwaysrequires you to go to unusual places.
Always.
(01:03:45):
And if you're not out there on thefringe, if you're not reading books of
philosophy, if you're not learning fromother domains, You're gonna be stuck.
I loved when you said thatyou mentioned pre adaptation.
And to your very point, I was readingabout epigenetics and interviewed
this guy, Brian Diaz, and he did thisresearch on rats that passed down
(01:04:08):
fear from generation to generation.
So you can make them fear the smellof cherry blossom and pass it on
from generation to generation.
And I stumbled upon.
The story of how the monarch butterflynot my grades from canada down to mexico.
Add it comes to lake superior anddoes this crazy turn researchers like
(01:04:29):
what are these guys doing that thejourney across lake superior alone is
exhausting why are they taking thisunnecessary turn and it turns out that
there used to be a mountain there.
years and years of a, ofevolution and erosion.
In this case, the mountains no longerthere, but the generations learned
this junk , this junk adaptation that.
(01:04:52):
So it works both ways as well.
And I thought about how relevantthat is to organizations having
rituals and mindsets that they carryon that are no longer relevant.
Yeah, yeah.
No, I think it's, it's, it's veryimportant in your organization to be able
to distinguish habits from principles.
Or habits from values.
Because we get a set of habitsthat, as you say, get handed
(01:05:14):
down and become reflexive that mayor may not be creating any value
anymore, but there's just the way.
And if you don't occasionally step backand look at everything I am doing and
say like, okay, is this just like a habit?
Or is there like some fundamentallogic, but yeah, I, in fact, I think
we use this example in one of our books.
And I, it's probably apocryphal.
I don't know if it's even true or not.
I hope it's true, but of some monkeys ina cage and there's some bananas at the top
(01:05:39):
of a metal pole and the monkeys scrambleup and at some point you get an electric
shock before you get to the bananas andyou scurry back down and new monkey comes
into the enclosure and starts to go up thepole and the other monkeys pull it back.
Cause they like, no, and by theway, there's some value to that.
You shouldn't have to discover everyterrible consequence for yourself.
That's why parents help you like say, no,probably don't don't touch the stove.
(01:06:00):
That's not going to work.
But again, unless occasionally as, asliterally as a discipline exercise, you
step back and go if we look at all ofwhat we believe, like how much of this is
hand me down, how much of this is habit?
How much of this is precedent?
Versus is this really somethingthat is still serving us well?
And if you're not, if you're not havingthat exercise internally and discovering
(01:06:22):
those things that have become habitsand therefore make it difficult to
see new things or make it difficult tochange, somebody outside your company
will discover those things and we'llchallenge you on those in the same way.
SpaceX has been challenging NASA,they'll say , no, we can think
about this in a different way.
Beautiful beautiful and speaking ofthings still serving their purpose that
story is in competing the future butthe monkeys in the banana and it is
(01:06:46):
a true story i looked at the researchdates back to the fifties there was that
was a study done actually with monkeys.
What's speaking of the relevance thisbook still highly relevant i hope people.
Start to get copies you can get copies ofit is a beautiful hard copy here as well
you can still find it out there and it'salso available on kindle it's on scribed
(01:07:07):
as well you can find it there but i justwanted to say how relevant it is so.
You might not remember this, butyou predicted the smartphone.
You said that it's entirely possiblethat in 10 or 15 years, remember you
wrote this in the, in 1990 or so thepersonal computer, as we know it will be
a relic having a PC at home is a hassle.
(01:07:29):
Anyone who's had a hard drive crashwho's ever gotten a message that the
computer doesn't have enough memory fora particular task who struggled with the
bus and teen, installation processes fora new piece of software the days of the
disc of course or an expansion card orwho's worried about what would happen
if a thief made off with a whole kidand caboodle in the middle of the night.
(01:07:52):
knows that there are certain drawsback drawbacks to cds before the
cloud as well by the way what ifthere was an information utility.
of carrying an electronic organizeror cellular phone one would carry
what you called an info port a smalldevice replete with a screen telephone
link and data input device, styluskeyboard or microphone the info port
(01:08:15):
would connect our happy user to his orher, Own small corner of the T Network
or British Telecom or Bell Atlantic.
In that little corner would resideall the users files quite safe
from the neighborhood cat burglar,electrical surges and other dangers.
Anytime a new piece ofapplication software was needed,
(01:08:36):
it could be easily accessed.
is foresight
Yes.
I guess the app storetoo, is in there somewhere.
But again it's not hard to do thisif, if you can step back and you say,
okay, let, let me not think about thisspecific new technology, but we're like,
what is it going to allow us to do?
How might that supplantwhat's already here?
(01:08:56):
It's not as hard as people think.
I gave a presentation and I want tosay this is probably about the same
timeframe because When the book cameout, I got invited to speak at IBM.
And I, I got quite closeto IBM for a while.
And I, I remember giving a presentationthere called information as a utility.
And the analogy I said, , it was again,it was like having the PC or whatever.
(01:09:17):
I said, none of us have electricalgenerators sitting by, by our houses
and except for maybe emergency,we just been on the network.
So like, why I said one day,all this information is going to
reside in a network somewhere.
And we're not going to be like.
And so that was yearsbefore cloud computer.
But it wasn't, you could just like,and again, that was a metaphor.
That was an analogy.
Here's the electrical network, right?
(01:09:39):
Here's whatever.
And, so again, learning how to thinkby analogy, looking outside of
your own industry, thinking aboutnot products and services, but
the deep needs and functionality.
It's not hard to putthese pictures together.
It's, it really isn't, but it's,maybe in one of our, one of our
dialogues here, we'll talk abouthow do you get better at it?
(01:10:00):
How do you teach people how to do it?
Because, it's a skillthat can be learned.
and i think one of the main ingredients asyou identified is time you have to assign
the time and if you look at your diaryif you're a leader of an organization.
Is very few people assigning enoughtime to the future and thinking about
it and again as i say gary's bookswe're gonna cover them over the next
(01:10:21):
few weeks and i'm very grateful forthat i'm getting a unique and very
privileged opportunity to do this withyou as well gary for people who want to
find you reach out to you where's the
best
Find you
me at garyHamel.
com.
LinkedIn, an ex, you canfind me there, Prof. Hamel.
And and if you get a question orsomething that you want to know more
(01:10:42):
about, you're welcome to email me.
I'm Gary Hamel, just thename at managementlab.
org.
My
i'm gary travels extensively for keynotesall over the world as well as well
as consultancy so, reach out to himfor those services well that is still
provides brilliantly, gary Hamel author ofcompeting for the future on this instance
and many more thank you for joining us.