May 18, 2025 • 45 mins
Join us in this insightful episode as we welcome back Gary Hamel, author of 'What Matters Now: How to Win in a World of Relentless Change, Ferocious Competition, and Unstoppable Innovation.' In this episode, Gary discusses his latest book, which provides an agenda for building resilient organizations amidst dynamic global challenges. The conversation delves into the importance of core values such as stewardship, accountability, and equity. Gary also reflects on the 2008 financial crisis and its lessons on ethical leadership and innovation. Tune in to explore how businesses can rehumanize their approach, foster a culture of innovation, and retain a sense of purpose and moral high ground.
00:00 Introduction to the Book and Author
01:22 Dedication and Personal Insights
02:13 Book Structure and Context
03:29 The Importance of Values
04:02 Capitalism and Ethical Challenges
10:50 Learning from the Financial Crisis
16:53 Rediscovering Farmer Values
21:19 Renouncing Capitalism's Conceits
29:16 Reclaiming the Noble in Business
38:07 The Importance of Innovation
45:07 Conclusion and Contact Information
Gary Hamel, What Matters Now, Reinventing Management, Future of Work, Innovation Culture, Organizational Change, Capitalism Reform, Moral Leadership, Business Ethics, Corporate Accountability, Management Strategy, Values in Business, Adaptive Organizations, Leadership Innovation, Future-Ready Companies, Strategic Agility, Purpose-Driven Leadership, Post-Crisis Management, Employee Empowerment, Organizational Renewal
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Today's book is not a 250 pagedissertation on leadership
teams or motivation.
Instead, it's an agenda for buildingorganizations that can flourish in a
world of diminished hopes, relentlesschange, and ferocious competition.
It's not a manual for people whowant to tinker at the margins.
Instead, it's an impassioned plea toreinvent management as we know it, to
(00:24):
rethink the fundamental assumptions wehave about capitalism, organizational
life and the meaning of work
our guest presents an essential agendafor leaders everywhere who are eager
to move from defense to offense,reverse the tide of commoditization,
defeat bureaucracy, astonish theircustomers, foster extraordinary
(00:47):
contribution, capture the moral highground, outrun, change, and build a
company that's truly fit for the future.
It's a pleasure to welcome back a friend,a guest, and the author of the latest in
the series, what Matters Now, how to Winin a World of Relentless Change, ferocious
competition, and Unstoppable Innovation.
(01:08):
Gary Hamel, welcome back to the show.
Thanks to be back Aidan.
I'm absolutely loving it.
You have had your head below theparapet, but I've been looking up at
the amount of comments and feedbackwe're getting from this series, so
we're delighted to have you back.
I mentioned before in one of theepisodes where you dedicate the book
to your late dad, Paul Hamel, and inthis you dedicate the book to your
(01:32):
brothers, Loren and Lowell, and Ithought we'd give them a shout out to
do a proper job of this entire series.
They are, one year younger than me.
They're identical twins.
They've both been, CEOs oflarge healthcare organizations.
They're physicians, aswell, extraordinary leaders.
I've written about casesfrom the work they've done.
(01:52):
They're great change managers.
So yeah, I felt, super lucky tohave them, to learn from them and
have them as best friends as well.
Amazing.
Amazing man.
I would be delighted tosay that about my brothers.
And, big shout out to the two Ls as well.
Two more of the Hamel clan.
The clan has done very, very well,Gary, so let's get stuck in May.
(02:13):
Maybe I'll say just I'd love you toshare just a word about the book,
because this structure of this book isvery different from your other books.
You did something different, alittle bit of a twist, an innovation
of the business book as well.
Yeah, you know, I thought, rather than,one long idea endlessly worked out, I
really did wanna create an agenda, onwhat are some of the big issues facing
(02:35):
businesses and not just one issue.
And then in each case,a series of vignettes.
So in this book, you can startand stop anywhere you like.
It's basically a series,I think of about 25 short.
Yeah, just a three or four page.
I wouldn't even call 'em chapters,but, really easy to read.
Hopefully everything, everychapter of standalone has a core
(02:56):
idea of something worth learning.
And, hopefully it's a little more funthan, plowing through a really, really
long thing where the scenery doesn'tchange much from chapter to chapter.
And the timing of this book is importantas well, because it was just after
the financial downturn, 2008, 2009.
And a lot of the things that we'd takenfor granted, the American Dream, Trust in
(03:18):
institutions, et cetera, had all eroded.
So this is the backdrop to when youwrote the book and tees us up perfectly
for the very first chapter, thismini chapter that you talk about.
And in chapter one, you talkabout the importance of values.
And you say, as we struggle with theuniquely complex challenges of the 21st
century, it is good to remind ourselvesthat what matters most now is what's
(03:43):
always mattered our bedrock values.
And to your mind, you talk aboutthe importance of stewardship.
And in there, you name FiveThings, Fealty, charity, prudence,
accountability and Equity.
So maybe we'll start therebecause , there's a reason you
picked that as the first chapter.
Yeah, I think, , obviously through thatfinancial crisis , and since then for
(04:07):
other reasons, , we've lost a lot of faithin large institutions and in capitalism
itself, if you look right now among, genZ, about, 40% say they have a positive
or very positive view of capitalism.
And a slightly larger group, 44%,would say that about socialism.
In the UK among young people,that difference is even greater.
(04:29):
Where people really think,young people really think that
socialism would be a better system.
I think they'd struggle to findwhere it has really worked and
produced, prosperity and so on.
But I understand, the frustration.
It is so often as we've talked aboutAidan, it so often feels like capitalism
works for the few rather than the many.
And you see that, in the fact thatthe gains are so incredibly unequal.
(04:52):
We know that most peoplebelieve around the world.
Most people believe that capitalismdoes more harm than good.
This is a big study, just before covid.
And, I think, globally about 54, 505% of the respondents said capitalism
does more harm than good, which is anextraordinary indictment of a system.
that's lifted several billionpeople out of poverty.
(05:13):
and yet when you look atlarge institutions, they often
seem rather unprincipled.
and, we can have these kind of pale,commitments to, ESG and DEI and so on.
but a lot of it is greenwashing orethic washing, where underneath it all,
you can still be quite, doubtful aboutthe ethical commitments of businesses.
And, I think back to Adam Smith,he recognized that capitalism
(05:37):
could not survive without adeep kind of moral underpinning.
That without that it would decompose intokind of selfishness and, different parts
of society vying against each other.
I think it's important tocome back periodically and ask
ourselves how are we doing on that?
I think companies have a somewhatunique challenge because malfeasance
(05:59):
gets a lot more attention.
anything any company does in the worldbecomes public knowledge very quickly.
If you pay a bribe somewhere or if youhave a supplier who's abusing their
employees, it's difficult to hide that.
But I do think, thevalues are at the bedrock.
And I think one of the things thathappened, and I don't wanna overstate
people can decide for themselves towhat extent this happened, but I had
(06:20):
this sense that companies, becamequite arrogant and maybe still are.
and the idea is we have this power, wecan do pretty much what we want and so on.
And they forget that, thecorporation is not a person.
It does not have, what, in Americawe'd call inalienable rights.
it is a fiction.
it is a legal fiction that we'veagreed can exist and contract and act,
(06:41):
with certain boundaries around it.
And at any time society canrenegotiate those boundaries, in
ways that, may be better or worse.
But it's not like, organizationshave some, fundamental rights
that cannot be, uh, changed.
CEOs need to be very careful because,often, they may complain about regulation,
oversight and so on, but it's often theproduct of their own kind of malfeasance.
(07:04):
and sadly, all of those regulationswork a little bit like a ratchet.
when we put them in, they very seldomever come out and typically we're
trying to, control the behavior of maybethe worst five or 10 or 20% of firms.
And yet, everybody pays the price.
So within organizations and thenacross organizations, we should expect
(07:26):
leaders to really work hard to holdeach other accountable to these high
standards because when they don't, andtrust erodes, everybody pays the price.
I'm doing an interview Gary tomorrow forPBS, the US Channel on the American Dream.
So they're asking some Irish peopleabout their American dream and I
really don't know what to say anymore.
(07:48):
'cause for me, growing up as akid, , we had American tv, you
know, it was stuff like murder SheWrote and Highway to Heaven, and
even Little House in the Prairie.
and we all looked to America as thekind of, place to be and the place
to learn, and the place to grow.
And even when I was older then inmy teens, say friends that show
(08:09):
friends and you tried to Dress likeJoey and all those type of things.
And it's gone to skew in latter years and.
I still wanna believe in that dream,but it seems that values have gone awry.
Yeah, I think lot of leaders seemvery, I don't want to say corrupt,
(08:30):
but kind of morally ambivalent.
they don't have the courage tospeak up, and talk about abuses,
and problems in a forthright way.
it's a little bit like, my gosh, ifwe shine a light on this thing, we're
only going to make the problem worse.
Well, no, you're not, because ifeverybody knows those problems
are there and you're kind of in astate of denial, that doesn't help.
(08:51):
So I, there's a set of things thatat least I believe are pretty much
indefensible and I want leadersto be very public about that.
I think it's indefensible thata ever bigger share, of the
world's wealth is controlled byan ever smaller global elite.
I think that is indefensible, particularlywhen that wealth is often the product
of monopoly power or the ability tokind of control and shape the system.
(09:14):
It's not simply, you know,we had the best products and
consumers, lined up to buy them.
I think It's objectionable when companies,spend great sums to try to tilt the
regulatory playing field in their favor.
Now, I understand that regulatorshave great power and you have to be
there representing your interests.
But you know, what I would say in thatcase is be very, very careful that
(09:36):
you never let any daylight betweenwhat you think are your interests
and the interests of your customers.
and I think I said in one of our otherconversations that, so often if the
company, chieftains are sitting downwith the regulators, the interest of
consumers are probably not on the table.
So that I think is indefensible.
I think the 300 to one differentialsin CEO pay versus frontline
(09:57):
employees is indefensible.
that's up by about, five or sixtimes over the last 40 years.
Governance structures that are thereprimarily, to, thwart, shareholder action.
that treat employees as mere factorsof production or that give, 90% of the
share options, share grants, to thetop team, companies that do business
(10:18):
in repressive regimes and particularlynow, companies that willingly damage
the psyche of our children wait for,public bodies, to kind of set rules
around that rather than taking the lead.
So, yeah, I think, if I'm a CEO,I understand that my freedoms
are at risk unless I am on thefront line talking about these
(10:42):
things, encouraging my colleaguesto, have high ethical standards.
too seldom do I hear leadersout in front on this.
Which leads us to the nextpoint, , you called it learning
from the crucible of crisis.
And I'm still hurting, as I told youbefore, we came on air from the crash
because I bought a property in 2006,in my first property, et cetera.
(11:03):
terrible timing to buy a property.
But what you said in the book was,why did Wall Street's finest fail
to heed them, or more pointedly?
Why did they so completely abandontheir responsibilities as the
guardians of capitalism's mostimportant citadels as it unfolded,
the subprime banking crisis revealed aShakespearean catalog of moral turpitude.
(11:26):
It was a perfect storm of humandelinquency, deceit, hubris,
myopia, greed, and denialwere all luridly displayed.
Beautifully said, terribly played out.,
There were obviously a large setof factors that came together
to precipitate that, crisis.
There was regulatory failingin the United States.
They'd moved quite quickly to, liftsome constraints on investment banks.
(11:51):
they had lobbied hard to, raisetheir leverage, ratio so they
could, take bigger, more risky bets.
you had a government, agency thatwas, supposed to help people get
mortgages and was buying a lotof these subprime mortgages that
created kind of demand for them.
So hard to put the blame in oneplace, but for sure, that's right.
(12:11):
I think it was a kind ofShakespearean litany of human foibles.
there was certainly a lot of deceit.
a lot of the mortgage brokers who weregoing out and securing these loans
lie about their credit worthiness.
And, there were thousandsof cases ultimately brought
against these mortgage brokers.
There was a huge amount of hubris thatsomehow through financial engineering,
(12:33):
you could, and clever packaging byarranging these, loans into different
tranches and so on, you could reducethe risk, the underlying risk of
all these bad credit decisions.
but however you packageshit, it's still shit.
There was a lot of myopia.
you know, they had seen housingprices go up for about 20 years.
And of course most of these bankers,they're fairly young, young people, they
(12:54):
have no longer historical perspective.
And so their models areall built on the premise.
This keeps going on forever, even whenit was becoming kind of ludicrous, to
think that the prices go any higher.
And, you know, you might not haveseen a hundred year storm, but that
doesn't mean was not headed your way.
it goes without saying, there's ahuge amount of greed, that encompassed
(13:14):
even the credit rating agencies thatkind of let their standards slip.
but also within these banks, so this is akind of a more practical business lesson.
They had separate out the responsibilityfor risk, which was with risk
managers and responsibility for sales.
And so you had salespeople compensatedjust on how much volume, how much
income you brought in, but with noaccountability for protecting the balance
(13:36):
sheet, which is pretty much crazy ifyou separate, those two things out.
a lot of greed, a lot of money to be made.
And then just a lot of denial at the end.
you couldn't find anybodyto take accountability.
There was no mea culpa.
And I think, you know, thefact that nobody went to jail.
And the fact that some of therichest, people in the country
(13:59):
were able to, privatize the gainsand then socialize the losses.
that was probably in my lifetime,that was capitalism's, worst moment.
Yeah.
said at the time I thought thaton every bank who got any kind of
a bailout, I thought we should,like, force them to have a tattoo
on their forehead, in reverse.
(14:20):
So you see it every morning whenyou look in the mirror, and it would
say like, alchemy is not possible.
things that can't go on foreverdon't, risks and returns are
always correlated in the end.
and stupidity is contagious.
And, yeah, I mean, it's hard toimagine how, a financial system
could be so deeply infected.
(14:44):
but, you know, it's a lesson.
And, you know, there was a lot of,negative sentiment poured on the bankers.
In fact, it's basically when Istopped wearing, suits, I said, I
never wanna look like a banker again.
if you think about the incentives,you know, for most of us, if we
had the incentives with that kindof money, knowing that we were
probably backstop by the governmentof things went really wrong.
I'm not so sure we wouldn'thave done the same thing.
(15:05):
So I don't want to, make itseem as if the bankers are
particularly, morally, suspect.
But, it does say that, every dayyou've gotta pay a little attention
or be conscious of are the ethicalassumptions I'm making in whatever
decision, whatever I'm doing.
am I okay with that?
And I'm proud of that?
and am I willing to own it?
and it's so easy to point thefinger until it's your turn.
(15:27):
That's the thing, isn't it?
I feel sorry for some people in bankingnow 'cause there's good people obviously
in banking, but they've all been so badlytarnished and it's so risk averse now
that it's so hard for them to innovate.
I work with banks now and I feelso bad for them because it's like
they're personally liable as well.
So if there's a mistake,it comes down on them.
(15:48):
So it's really hardfor 'em to navigate it.
it's true.
And that's the dilemma is thatwhen an industry does not police
itself, somebody else will.
And then everybody isunder that, new regime.
but again, they kind ofgot what they deserved.
In fact, I used to say this is before thefinancial crisis, that the two biggest
profit centers for most banks are customerignorance and obfuscation or complexity.
(16:12):
and, you've seen this play out with allkinds of, regulatory issues and so on
with banks, disguising fees and, makingit difficult for customers to understand
exactly what they're paying for things.
but you know, you can findthat in every industry.
It's not unique to banking.
Sins of the fathers and mothers.
But I, I loved what you said next.
(16:33):
I heard this great line.
I don't know who said it, butwho told me was Hal Gregerson.
He was on the show before and he saidthat tenant farmers don't pick up rocks.
and I thought it was just a beautifulsaying that you also have tenant
CEOs or tenant leaders, they'relike custodians of the role.
They're not that interested in the future.
(16:53):
But what you talk about is that we needto rediscover farmer values and to achieve
resilience, you have to do the work.
And you talked about your parents-in-lawactually, and how they did it by working
14 hour days, six days outta seven,by taking few vacations and foregoing
many luxuries by building up cashreserves in good years so that they
(17:16):
could survive bad ones by diversifyingcrops to reduce exposure to fluctuating
prices and by paying themselvesmodestly while investing everything
they could in land and equipment.
I think that point with the one thatyou mentioned earlier, those are two
good ones to juxtapose because if youdon't feel like something is yours
and you don't feel, that you aretruly accountable for what happens.
(17:38):
It is very easy to become, lax.
the other way I heard thatexpression is somebody said,
nobody ever washes a rental car.
If you have a farm and it's your landand, there's nobody else to blame.
now that doesn't mean there aren'tlazy and incompetent farmers.
There are, but I was always veryimpressed, by their work ethic.
people who started, with almostnothing, rented a tractor for $5 a
(17:59):
day, ended up building, thousandsof acres of agricultural land and a
huge farm and so on, just by sheerunbelievably hard work and accountability.
I have a feeling in some wayswe've kind of gotten decadent.
we've kind of lost that connectionbetween sacrifice and hard work and gains.
if you look more generally with thewest, going into debt, having record
(18:19):
high levels globally, having recordhigh levels of indebtedness, certainly
in my country, in the United States,household debt, corporate debt,
government debt is all at record highs.
I kind of have this sense, thatwould've probably appalled, a generation
three or four generations back.
But I kind of have the sense thatwe've just put the future in Hawk
to create the illusion of increasingstandards of living they really haven't.
(18:43):
our productivity growth rate is notvery high, but we just go deeper into
Hawk because we want, the two overseasvacations a year and we want the
second or the third car, and we wantthe designer close, and so on I think
that's a dangerous thing for societywhen the connection between sacrifice,
this willingness to forego immediategains and so on, when that loses out
(19:05):
to simply, the desire to have it alland have it now and damn the future.
I do think been in danger of that.
I wondered, I wrote aboutthis actually in my notes.
I took your notes and I added it tothem, and I felt that it's a problem
in generations at the moment, and it'snot the current generation's fault in a
(19:26):
way, like they've been ushered that way.
And there's an old saying, thefirst generation makes it, the
second generation spends it andthe third generation blows it.
And it's a little bit of that where everygeneration is a little bit softer than
the one that came before, and they forgetthe origin story, that struggle story.
I think in companies it's the same thing.
a generation may not be just 25 years orone CEO, but you do see something similar
(19:51):
it's the creators, the entrepreneurs,the builders, and then you have the
caretakers, the administrators, thegood managers And then you have the
undertakers, which is, the vulturecapitalists, the private equity and so on.
And I think one of the challenges there,is that if you've never had to build
something from scratch, you have no ideahow hard it's,, you've built a business,
(20:12):
you've built a series, you understandjust how difficult that is, right?
in time and commitment andenergy and lying awake at night
and thinking about things.
And I think our organizationsare filled with people who
never had to build anything.
all they had to do was managesomething that was already there.
It's the difference between, accumulatinga fortune and then having some
money manager, manage it for you.
(20:34):
if it was up to me, I would, in anyreasonably large organization, never
let somebody become CEO unless they hadbuilt a new business, or maybe a new
brand but where it wasn't simply aboutincrementally improving something, but
you literally had to pull somethingout of the dirt and make it real.
because if you don't understandthat process, you don't
know how hard work it is.
(20:55):
You know, I've started severalcompanies, it's, ball breaking.
but I think a lot of administratorsnever, you never experience that.
You never know that.
so you don't even value the peoplearound you who might be willing to do it.
We talked about this before.
It's like for me it'slike going to the gym.
If you don't do it, the muscleatrophies or you don't even know
there's one there in the first place.
You gotta go through the struggle.
(21:16):
But the next thing youtalked about was renouncing.
Capitalism's, dangerous conceits.
And there's a couple of things here Ithought, I dunno if you've ever heard
the beautiful metaphor of tsunami stones.
So in Japan and places that are proneto flooding, they have tsunami stones
and on them are written, do not buildhouses here because this is liable to
(21:37):
tsunamis and they're us in most places.
They're grown over by grass orvegetation or just graffiti Dover.
And I was like going, well that'sone of the problems in organizations.
There's no way to go.
This happened, 2008 happenedand this is how it happened
to remind us of these things.
And I wondered, had you any advicefor organizations to pass the button
(21:59):
to the future and go, don't let thishappen the an ethical downturn, or
it could have been some bad decisionwhere we bet the farm or some poor
decision making by the leadership team.
Yeah.
Well, I would say two things there.
One, as I said, don't ever assume thatyou are not equally vulnerable to those,
human temptations, degree, denial,hubris and so on, because we all are.
(22:22):
I remember, I think his namewas Chuck Price, who was, maybe
the CEO at Citi, big US bank.
And somebody questioned him, like,why did you ride this thing all the
way out to the end and over the cliff?
couldn't you see disaster looming?
And he said, as long as the bandis playing, you have to dance.
There'll always be a rationale, mosttypically the one that teenagers use.
Everybody else is doing it.
(22:43):
There will always be a rationale.
So I do think, it's not bad tohave that reminder of greed,
hubris, denial and so on.
And think about like, is thattinging this decision in any way?
you know, that personal moralaccountability I think is important.
I think the other thing is creating anorganization where every single employee
(23:06):
like a risk taker and has the power tobe a whistleblower without consequences.
we might have talked about this company,WL Gore, makes Gore-Tex and material size
company, but one of the things that struckme when I got to know them some years
back was I was sitting in a meeting formore than an hour or two, somebody would
ask, is there a waterline issue here?
(23:26):
there something we're not seeing thatcould hit us underneath the waterline?
And that could be, we hada regulatory, screw up.
We let down a customer,we took a financial risk.
We didn't really see.
And so there was this awarenessthat we collectively the
stewards of this organization.
Now, in that case, they all areowners and so they have that sense.
But you have to have thatinstilled everywhere.
(23:48):
it's not, this group overhere is our risk manager.
And you may have obviously somespecialists who are doing that work.
But everyone has to, feel,it's my accountability to keep
the company off the rocks.
and clearly that did not happen inthe investment banks where, as I said,
these responsibilities were completelyseparate and you had the risk managers
trying to hold the reins on theserunaway horses so yeah, I think those
(24:09):
two things, be aware of your owntemptations and subject your decisions
to a little bit of ethical scrutiny.
And don't be too quick to kind, giveyourself, an excuse and then, train
everybody and understand what are thesorts of risks we face as a business?
How do they present themselves?
And also, why might we notbe as attentive as we should?
because it may cost us something to,change this, or it may be embarrassing to
(24:33):
admit that we've done something, with ourcustomers that perhaps we shouldn't have.
so you gotta, yeah, it's going tobe embarrassing, but we'd rather
recognize a problem earlier than late.
If anybody's listening thatworks in the banks, don't worry.
It's not just you, Gary says.
When it comes to free markets, there'splenty to be cynical about the food
industry's long and illicit loveaffair, where trans fats Merck's
(24:54):
disassembling about the risks of Vioxx.
Facebook's occasional cavalier attitudetowards customer privacy, the seldom
promises of airline executives to improvecustomer service and the everyday reality
of hidden bank fees, overinflated productclaims and buck passing customer agents.
I thought it was funny that you mentionedFacebook and this, you wrote this back
(25:17):
in 2009, so you, you were onto themback then and we saw how bad that went.
Yeah.
And I think it's only gotten worse,there's a new book, I don't remember
the name of this woman, but she was headof, meta Global Affairs, who's kind of
pulled the curtain back on some of this.
and, yeah, I think if you were lookingfor a modern equivalent of that kind
(25:40):
of moral failing we saw in investmentbanking, it would be social media.
I think there's just no doubt of that.
We've, and I could give you someinside stories here, which I
probably shouldn't to be prudent.
But, there has been just willful denialof a growing body of evidence that.
Shows how destructive thisis to young minds and to
social development, and so on.
(26:00):
And, it's at least as bad as the tobaccocompanies and the years they spent
denying the harmful effects of, tobacco.
Google had that famousmantra, don't be evil.
I go, guys, that's apretty low bar, right?
I mean, and you failedat even that, oftentimes.
with privacy and with social mediacompanies have not been forthcoming.
(26:22):
it's taken huge lawsuits andgovernment regulation to get them
to, accept even the most basic levelsof, control and responsibility.
And it's scandalous.
it's just no other way of saying it.
It's scandalous.
I don't, I dunno if you saw, there wasan ad campaign was the UK ad campaign.
You might've seen it when youwere lecturing in London where
(26:43):
a nuclear bomb or some type ofbomb gets delivered to somebody's
house and they're like, on what?
What's this?
And they're going, oh, you own it.
It's part of yourinvestment stock portfolio.
And I always think of it as one of thosewhere you may be critical of somebody,
like one of the social media companies oran alcohol company or a tobacco company.
(27:05):
And oftentimes we may be throughour pension funds or through
some type of investment or.
Actually strategicallyinvesting in those companies.
And that's where you go, is that,we'll, that's where we contribute and we
don't even maybe admit it to ourselves.
Yeah, I think that's a fair point.
I think that sense, you know,we can all be complicit.
(27:28):
you have to draw yourown, boundaries there.
I do worry that we may see more of thisrather than less of this as, any sense
of a societal consensus around rightand wrong and, moral boundaries seems
to be in some danger and, eroding.
yeah, we'll have a reckoning and weprobably have to have some deeper
(27:49):
conversations about, how do we, setthe boundaries as a society on this
and at different times through history.
we've done this, if you go back,I guess it must have been the
beginning of the 20th century, TeddyRoosevelt, the great campaigner
against, monopoly power and the trust.
these were the most powerfulinstitutions in the United
States, standard Oil and so on.
He pulled them apart and, said, youcan't have institutions that are
(28:12):
that powerful and unaccountable.
and we've seen that now around the waysocial media is shaping behaviors and,
gatekeeping information and so on.
So maybe it's just inevitable that everygeneration or so you gotta come back to
this, be reminded that these institutionsserve us and not the other way around.
That we have a right to hold them tocertain standards of accountability.
(28:33):
And, we have to assert that, right.
I don't think the problem ever goes away.
I think you deal with it.
every generation has to dealwith it a new, I suppose.
but it's, it's, it's pretty disconcertingthat we let, monopoly power in tech.
And the influence it has over humandevelopment and so on goes so far with so
(28:53):
little in the way of effective breaking.
It's such an analogy though for business.
I often think society goes through asimilar S curve as businesses That, you
get to this breaking point, the greatcivilizations get to this breaking point.
There's chaos.
And then from the chaos,new order stems from that,
Sometimes you just havea long period of chaos.
(29:14):
Yeah, and it can feellike that at the moment.
I know for many, many people there,there's a, the next thing you say is
you, you talk about the reclaiming ofthe noble, and here you say, why is
the language of business so sterile, soun uninspiring, so relentlessly banal?
Is it because businesses is theprovince of engineers and economists
(29:35):
rather than artists and theologians?
Is it because emphasis on rationalityand pragmatism squashes idealism?,
I'm not sure, but I do know this.
Customers, investors, taxpayers,and policy makers believe there's
a hole in the soul of business.
And the only way for managers to changethat fact and regain the moral high
(29:56):
ground is to embrace what Socrates calledthe good, the just, and the beautiful.
Yeah, I think again,multiple causes for that.
and let me come back and, andjustify the premise in a minute.
But, I think there are multiple causes.
you know, partly because we have kindof, pushed the sublime, out of the frame.
(30:16):
For all the advances of science andreductionism and, and, the assumption
that we live in a purely materialworld, you know, and you, we've, we've
abandoned those higher order deeperhuman longings, and I think human truths.
, One of the, one of the little exercisesI sometimes give to, to a, a company
or a group of employees is to go lookat their CEO's speeches or go look at,
(30:39):
the annual reports and so on, and justlook at the words, that are used there.
And you'll, undoubtedly see wordslike, you know, superiority, focus,
cost, quality growth and so on.
But you'll almost never hearwords like joy, truth, honor,
beauty, justice, love wisdom.
(31:01):
And, and again, yeah, Ithink that's part of it.
There's a very super smart Englishphilosopher, Ian Mcg Gilchrest, I think
he must be in his mid seventies now.
He's a great friend of the show.
we've had him on a few times.
Okay,
Beautiful books.
Yeah.
I learned so much from him.
his argument is like the leftbrain, the rational mechanical
part of us has, taken over theWestern world and reigned supreme.
(31:27):
I think his argument in one of hisbooks, the Master and the embassy is
like, the left brain is a really goodservant, but it's not a very good master.
What you want is the right brainthat is a seed of values and
wisdom and perspective and nuance.
So let's not get, too metaphysical here,
I love it, Go ahead.
I do believe that, longbefore I read his work.
I said again, partly in chess,that, the average, accountant,
(31:48):
engineer, manager has, a left brain,the size of a watermelon and the
right brain, the size of a walnut.
they've just been called to useonly one half of themselves.
you see this in our organizations and,you have to be pragmatic, of course,
in a business, but I think we oftenget so conservative, so utilitarian,
so process focused, so driven by data,so obsessed, in our pursuit of, meager
(32:13):
efficiencies that we can't dream ofdoing anything bigger or greater.
One of the things I, when I firstreally started thinking about this, I
was at an Apple event, when they usedto do these big product launches, but
Steve Jobs would get up on stage andtalk and so on, and he almost never
talked about what made Apple, apple.
And by the way, this is then not now.
(32:35):
So I'm not talkingabout Apple circa today.
This is now, 20 yearsago perhaps, or almost.
And he said, let me tellyou what I, how I see Apple.
And he put up like an image of twostreet signs, at an intersection.
and one said technology, andone said the liberal arts.
And by liberal arts, that's what he meant.
He meant Socrates.
He meant the things, the principlesthat we have around justice
(32:57):
and beauty and truth and so on.
and, they were trying towork at that junction.
They were trying to take technology andhumanize it and make it beautiful and
something you wanted to look at and holdthat felt like, it spoke to you rather
than just like a mechanical thing.
And I think that's a very difficultthing to marry those ideas.
but I think that's what they did.
you know, we talked at one point,I think in our series about, John
(33:19):
Mackey when he was founding WholeFoods, and he said, I wanna create a
company based on love instead of fear.
the founder of Southwest Airlines,his name's now gonna escape me.
Herb Kelleher, he talked aboutlove over and over again with no
embarrassment, no shame, standing infront of his organization and, saying,
this is the most powerful force ofbinding an organization together.
So, yet I think most of us wouldfeel really weird and nervous and
(33:43):
a little bit out of place, likestanding up in some corporate meeting
and talking about love, like readingthe Bible in a brothel, right?
Like, just like, doesn't add up.
But I think that's really, really sadbecause, if you look at all of the
greatest human accomplishments in history.
they were all driven by, these values, youknow, joy, truth, fidelity, beauty, so on.
(34:04):
And, Viktor Frankl, the famous Austrian,philosopher and psychologist and
Holocaust survivor, you know, he talkedabout the fact that human beings cannot
be happy in an existential vacuum.
in fact, he said the following,he said, in the absence of a
transcendental purpose, human beingswill be bored, cynical, and selfish.
(34:26):
And you wanna just thinkabout that for a moment.
Like, to what extent are our organizationsor our lives feel like bored?
And we're constantly trying to distractourselves with some nonsensical
thing on TikTok or something cynical.
Where, when you hear leaders talkabout, human beings being their
most important asset or whateverelse, like Yeah, yeah, yeah.
Highly cynical and actually quite selfish,where, it's kind of the zero sum game
(34:49):
where you're after your career and yourbonus and your promotion and so on.
If there's no higher order shared purposethat ameliorates those things, that's
the kind of organization you end up with.
I think at least we have toadmit we've kind of, driven the
human out of our organizations.
Purpose is such a, Isee purpose everywhere.
(35:12):
Like as in you retire.
I've seen people retire who weremagnificent in their retirement and
then just degrade so quickly, it's liketime is on fast forward for them and
it's because of that lack of purpose.
And then you're kind of going, yousee that and then you see people,
we've talked about it before.
Where they retire on thejob, and again, no purpose.
(35:33):
Maybe have a great hobby outsidework, but they're certainly not given
discretionary effort to the company.
Yeah, let me see I can, find a quotehere that I often use in my students.
We can have all kinds of purpose.
You can have a purpose, which is to getrich and have a career and, surround
yourselves with luxury and so on.
So I think.
the purpose has to have acertain ability to it as well.
(35:56):
I'm gonna forget who said this, butthe point was this, that, we don't
stop dreaming because we get old.
We get old because we stopped dreaming.
you know, our institutions and almostall the systems and processes inside
of them, Aidan or built, and I don'twanna pick on anybody, but they were
built by accountants and engineersand managers and they probably
(36:18):
have a serv of pragmatism, right?
and that's great because you need that.
But the greatest author in GermanJohann Wolfgang von Goethe, he said,
dream, no small dreams, for, they haveno power to move the hearts of men.
I think we kind of forget that.
and you know, the problem with bureaucracyis if you cannot tell people how you're
(36:39):
going to achieve something, they'llgive no credit to the goal, right?
If, I might say what we need toget here, but if I cannot say
how, like, why would we do this?
Like, you don't evenknow how to get there.
So let's give up, you know, we'lltalk about the, transformation
at, Roche in some future episode.
But they started that with no ideaof how, I mean, nothing truly worth
doing ever comes with the roadmap.
(37:01):
Can you see the endfrom the beginning ever?
And so if you start by saying,we need a clear roadmap.
I need every step laid out.
I need to know, we can actually do this.
You'll never do anything worth, doing.
And, reclaiming rehumanizing the languageof business, and rebuilding kind of
our humanity inside our organizations,I think is hugely important.
(37:22):
And if nothing else, it just meansbeing respectful of people who have
dreams, being respectful of peoplewho talk about their work with more
meaning and with this higher sense ofpurpose, rather than roll your eyes.
And, so yeah, I think, again, I'm notsure exactly how to solve this problem,
but I think we just have to be awarethat we have, to use Max Weber's term,
(37:45):
disenchanted our organizations and Ithink have paid a price because, you
know, without that higher purpose, thatstretch, that noble purpose, you're gonna
have an incremental organization doingthings that are, not that impressive.
and with AI we're only fasttracking all of that as well.
if the AI's based on efficiency,you know, we're in trouble.
(38:07):
So chapter two or section two, asyou call it in the book, because each
section has five chapters in it iscalled Innovation Matters Now, and
there was an opening line here andit's gonna reach through the screen
or through the EarPods into people'shearts here who work in innovation.
You said, when you seem to be caughtin a cycle of endless retrenchment,
(38:29):
it can be hard to be optimistic,even if you believe the world is
filled with more promise than peril.
And if you're a champion ofinnovation, it's harder to put on a
happy face if you're a mid-level vp.
You've probably had a pet project guttedby some newly empowered bean counter.
If you're a struggling entrepreneur,you may have had to lay off some key
(38:52):
talent and cut expense to the bone.
And if you're a consultant who helpsother folks to innovate, you've maybe
won spending freeze away from postingyourself at a busy Intersection
with a hand lettered sign thatreads will brainstorm for food.
In recent years, left braintypes have had the upper hand
(39:13):
while starry-eyed innovatorshave struggled to get a hearing.
Nevertheless, before innovation slipsany further down the list of corporate
priorities, we need to remind ourselvesthat we owe everything to innovation.
Yeah, I think it's true.
You know, as human beings, Ithink we're at our happiest when
we're creating and innovating.
(39:35):
I mean, obviously innovation iswhat lifts the human condition.
innovation and agriculture andin communications and so on is
what makes our lives, better.
it's what raises productivity and allowsus to afford, important social priorities.
you know, it's the only insuranceagainst irrelevance in a world
where so much is changing.
So, yeah, I guess my wholecareer, I've often been.
(39:57):
perplexed by how could this be soimportant and yet be so minimized.
in most large organizations, youknow, the answer is really simple.
Our organizations are builtto do something else, right?
They were built to do the samethings over and over again with ever
increasing, productivity and, so on.
And, innovation was alwaysa tangential, you know, a
relatively tangential activity.
(40:18):
I think that's still the case.
If you wanna make innovation a deepcompetence in a company, like everybody's
job, every day, you have to re-engineer.
every system, everyprocess, every structure.
So it is innovation friendlyrather than innovation, toxic.
that means making innovation a largepart of executive compensation.
it means ensuring that you are settingaside a sufficient amount of capital
(40:40):
expenditure and operating expenditure,and getting that behind projects that
meet a real task of being innovative.
it means when you hire everyhiring decision you are asking,
you know, you're kind of testing,can this person think laterally?
Thinking creatively, it meanstraining every employee on the
basic disciplines of design thinkingand creative thinking, and so on.
So it's, again, it's notthat it's that hard to do.
(41:04):
very seldom do you see companiestreating this as a systemic problem,
which is kind of odd becauseif you go back over the last.
30, 40 years, you know, the bigre-engineering craze, we turned
our organizations inside outto create more efficient supply
chains, global supply chains.
Now we're gonna probably haveto reconfigure those again,
given the de integrion that'sgoing on in the global economy.
You know, a decade later, every companywas like turning everything upside
(41:27):
down for digital transformation.
it's not like we don't know how todo difficult things kind of systemic
things, but we've just never said.
And you know, part of my suspicionaround this is that very few leaders
get promoted because they have thatskill, because they're great innovators.
It's not somethingthey're comfortable with.
It's not something, that theyfeel like I'm an expert at.
(41:48):
So it just gets downgraded.
they have a hard time recognizingit, even when they see it.
And so, they're happy to put inall kinds of systems for financial
control and so on, but like, Idon't really know about this.
I wouldn't know how tomanage it, and so on.
That's, probably part of it.
also we've had this kind of mythologyaround innovation that, innovators
are these rare, amazing people, , likeSteve Jobs, and they come along
(42:13):
once every so often and they'regeniuses and they're just wired
differently than the rest of us.
you can't teach people, youcan't make that systematic.
So I think for all those reasons, Iwould argue that, and I think I could
back this up, that probably mostorganizations are using maybe 10 or 15%
of their, potential innovation capacity.
(42:35):
Gary as you say here,you say it beautifully.
If life had adhered to SixSigma, we'd still be slime.
Yeah.
Well, life has to make a lot ofmistakes, the species forward
and, If genetic transcriptionwas perfect every time you get no
mutations, and therefore no progress.
I think ultimately stakeholders haveto put more pressure, investors have
(42:55):
to put more pressure on companies.
You know, I think I was saying the otherday, Procter and Gamble, I do not believe
has created a major new brand in 40 years.
And you go, like, how you have so manypeople and so much resource and so much
data coming from your customers, likehow in the world can that be possible?
and you know what I'm always quite,inspired when I see innovation and
(43:19):
really basic products and services , andyou realize like, what can be done.
You know, there's a, non-alcoholic beerbrand in the US called athletic beer.
And it was just a couple of peoplepassionate about creating beer
without alcohol, did hundredsand hundreds of experiments.
They're now, I think, the number thirdbeer in what is a very competitive
market with powerful competitorsand so on, just because they were
(43:39):
like, believed it could be better.
or I go back, almost a half decade.
And I look at the group of people at,Nestle who said like, Hey, wouldn't it
be great if we could give you like abarista experience and espresso coffee
in just like a machine you could getat home or in the workplace and so on.
They spent years andyears perfecting that.
so innovation is not, thisgigantic breakthrough always, and
(44:01):
you're going to win a Nobel Prizeor you get a bunch of patents.
It's just, being able to see wherecustomers are ill-served, where the
incumbents have missed some opportunity,and then having the persistence,
one of the wonderful stories andthen I'll stop with stories, but
another kind of story about like.
how you can innovateliterally in anything.
I don't believe there's anysuch thing as a mature industry.
(44:22):
anybody who's in London for sure, you'vehad a sandwich at Pret a Manger, right?
They're all over London.
I guess in maybe someother cities in the uk.
I think there are a few in NewYork, these are two young guys at
Bristol University who said like,why can't fast food be healthy?
and it took 'em years to figureout how to do that, how to
get the supply chain right?
How to get the labor practices right?
(44:44):
So people are building these, you havepeople making the sandwiches and so on
every morning from fresh ingredientsand now I could hardly imagine being in
London without having that at my disposal.
so that possibility iseverywhere all the time.
but I don't think most CEOs believe that.
And certainly very, very few have said,let me look at everything we're doing and
see if we can make it innovation friendly.
(45:07):
Beautiful.
And I don't want people tothink it's all negative.
We only really cover chapter oneand chapter two very, very positive.
We're gonna move on to.
If you're reading along with us three,four, and five the next day and finish
off this, there's another one inthe beautiful series of Gary Hamel.
Gary, for people who wanna reach out andfind you for keynotes, for workshops,
et cetera, where's the best place?
(45:29):
the website is, gary Hamel.com.
You can find me at LinkedIn, just under,my name and on x it's just Prof Hamel.
Author of What Matters Now, GaryHamel, thank you for joining us.
Pleasure.
Today's book is not a 250 pagedissertation on leadership
teams or motivation.
Instead, it's an agenda for buildingorganizations that can flourish in a
world of diminished hopes, relentlesschange, and ferocious competition.
It's not a manual for people whowant to tinker at the margins.
Instead, it's an impassioned plea toreinvent management as we know it, to
(00:24):
rethink the fundamental assumptions wehave about capitalism, organizational
life and the meaning of work
our guest presents an essential agendafor leaders everywhere who are eager
to move from defense to offense,reverse the tide of commoditization,
defeat bureaucracy, astonish theircustomers, foster extraordinary
(00:47):
contribution, capture the moral highground, outrun, change, and build a
company that's truly fit for the future.
It's a pleasure to welcome back a friend,a guest, and the author of the latest in
the series, what Matters Now, how to Winin a World of Relentless Change, ferocious
competition, and Unstoppable Innovation.
(01:08):
Gary Hamel, welcome back to the show.
Thanks to be back Aidan.
I'm absolutely loving it.
You have had your head below theparapet, but I've been looking up at
the amount of comments and feedbackwe're getting from this series, so
we're delighted to have you back.
I mentioned before in one of theepisodes where you dedicate the book
to your late dad, Paul Hamel, and inthis you dedicate the book to your
(01:32):
brothers, Loren and Lowell, and Ithought we'd give them a shout out to
do a proper job of this entire series.
They are, one year younger than me.
They're identical twins.
They've both been, CEOs oflarge healthcare organizations.
They're physicians, aswell, extraordinary leaders.
I've written about casesfrom the work they've done.
(01:52):
They're great change managers.
So yeah, I felt, super lucky tohave them, to learn from them and
have them as best friends as well.
Amazing.
Amazing man.
I would be delighted tosay that about my brothers.
And, big shout out to the two Ls as well.
Two more of the Hamel clan.
The clan has done very, very well,Gary, so let's get stuck in May.
(02:13):
Maybe I'll say just I'd love you toshare just a word about the book,
because this structure of this book isvery different from your other books.
You did something different, alittle bit of a twist, an innovation
of the business book as well.
Yeah, you know, I thought, rather than,one long idea endlessly worked out, I
really did wanna create an agenda, onwhat are some of the big issues facing
(02:35):
businesses and not just one issue.
And then in each case,a series of vignettes.
So in this book, you can startand stop anywhere you like.
It's basically a series,I think of about 25 short.
Yeah, just a three or four page.
I wouldn't even call 'em chapters,but, really easy to read.
Hopefully everything, everychapter of standalone has a core
(02:56):
idea of something worth learning.
And, hopefully it's a little more funthan, plowing through a really, really
long thing where the scenery doesn'tchange much from chapter to chapter.
And the timing of this book is importantas well, because it was just after
the financial downturn, 2008, 2009.
And a lot of the things that we'd takenfor granted, the American Dream, Trust in
(03:18):
institutions, et cetera, had all eroded.
So this is the backdrop to when youwrote the book and tees us up perfectly
for the very first chapter, thismini chapter that you talk about.
And in chapter one, you talkabout the importance of values.
And you say, as we struggle with theuniquely complex challenges of the 21st
century, it is good to remind ourselvesthat what matters most now is what's
(03:43):
always mattered our bedrock values.
And to your mind, you talk aboutthe importance of stewardship.
And in there, you name FiveThings, Fealty, charity, prudence,
accountability and Equity.
So maybe we'll start therebecause , there's a reason you
picked that as the first chapter.
Yeah, I think, , obviously through thatfinancial crisis , and since then for
(04:07):
other reasons, , we've lost a lot of faithin large institutions and in capitalism
itself, if you look right now among, genZ, about, 40% say they have a positive
or very positive view of capitalism.
And a slightly larger group, 44%,would say that about socialism.
In the UK among young people,that difference is even greater.
(04:29):
Where people really think,young people really think that
socialism would be a better system.
I think they'd struggle to findwhere it has really worked and
produced, prosperity and so on.
But I understand, the frustration.
It is so often as we've talked aboutAidan, it so often feels like capitalism
works for the few rather than the many.
And you see that, in the fact thatthe gains are so incredibly unequal.
(04:52):
We know that most peoplebelieve around the world.
Most people believe that capitalismdoes more harm than good.
This is a big study, just before covid.
And, I think, globally about 54, 505% of the respondents said capitalism
does more harm than good, which is anextraordinary indictment of a system.
that's lifted several billionpeople out of poverty.
(05:13):
and yet when you look atlarge institutions, they often
seem rather unprincipled.
and, we can have these kind of pale,commitments to, ESG and DEI and so on.
but a lot of it is greenwashing orethic washing, where underneath it all,
you can still be quite, doubtful aboutthe ethical commitments of businesses.
And, I think back to Adam Smith,he recognized that capitalism
(05:37):
could not survive without adeep kind of moral underpinning.
That without that it would decompose intokind of selfishness and, different parts
of society vying against each other.
I think it's important tocome back periodically and ask
ourselves how are we doing on that?
I think companies have a somewhatunique challenge because malfeasance
(05:59):
gets a lot more attention.
anything any company does in the worldbecomes public knowledge very quickly.
If you pay a bribe somewhere or if youhave a supplier who's abusing their
employees, it's difficult to hide that.
But I do think, thevalues are at the bedrock.
And I think one of the things thathappened, and I don't wanna overstate
people can decide for themselves towhat extent this happened, but I had
(06:20):
this sense that companies, becamequite arrogant and maybe still are.
and the idea is we have this power, wecan do pretty much what we want and so on.
And they forget that, thecorporation is not a person.
It does not have, what, in Americawe'd call inalienable rights.
it is a fiction.
it is a legal fiction that we'veagreed can exist and contract and act,
(06:41):
with certain boundaries around it.
And at any time society canrenegotiate those boundaries, in
ways that, may be better or worse.
But it's not like, organizationshave some, fundamental rights
that cannot be, uh, changed.
CEOs need to be very careful because,often, they may complain about regulation,
oversight and so on, but it's often theproduct of their own kind of malfeasance.
(07:04):
and sadly, all of those regulationswork a little bit like a ratchet.
when we put them in, they very seldomever come out and typically we're
trying to, control the behavior of maybethe worst five or 10 or 20% of firms.
And yet, everybody pays the price.
So within organizations and thenacross organizations, we should expect
(07:26):
leaders to really work hard to holdeach other accountable to these high
standards because when they don't, andtrust erodes, everybody pays the price.
I'm doing an interview Gary tomorrow forPBS, the US Channel on the American Dream.
So they're asking some Irish peopleabout their American dream and I
really don't know what to say anymore.
(07:48):
'cause for me, growing up as akid, , we had American tv, you
know, it was stuff like murder SheWrote and Highway to Heaven, and
even Little House in the Prairie.
and we all looked to America as thekind of, place to be and the place
to learn, and the place to grow.
And even when I was older then inmy teens, say friends that show
(08:09):
friends and you tried to Dress likeJoey and all those type of things.
And it's gone to skew in latter years and.
I still wanna believe in that dream,but it seems that values have gone awry.
Yeah, I think lot of leaders seemvery, I don't want to say corrupt,
(08:30):
but kind of morally ambivalent.
they don't have the courage tospeak up, and talk about abuses,
and problems in a forthright way.
it's a little bit like, my gosh, ifwe shine a light on this thing, we're
only going to make the problem worse.
Well, no, you're not, because ifeverybody knows those problems
are there and you're kind of in astate of denial, that doesn't help.
(08:51):
So I, there's a set of things thatat least I believe are pretty much
indefensible and I want leadersto be very public about that.
I think it's indefensible thata ever bigger share, of the
world's wealth is controlled byan ever smaller global elite.
I think that is indefensible, particularlywhen that wealth is often the product
of monopoly power or the ability tokind of control and shape the system.
(09:14):
It's not simply, you know,we had the best products and
consumers, lined up to buy them.
I think It's objectionable when companies,spend great sums to try to tilt the
regulatory playing field in their favor.
Now, I understand that regulatorshave great power and you have to be
there representing your interests.
But you know, what I would say in thatcase is be very, very careful that
(09:36):
you never let any daylight betweenwhat you think are your interests
and the interests of your customers.
and I think I said in one of our otherconversations that, so often if the
company, chieftains are sitting downwith the regulators, the interest of
consumers are probably not on the table.
So that I think is indefensible.
I think the 300 to one differentialsin CEO pay versus frontline
(09:57):
employees is indefensible.
that's up by about, five or sixtimes over the last 40 years.
Governance structures that are thereprimarily, to, thwart, shareholder action.
that treat employees as mere factorsof production or that give, 90% of the
share options, share grants, to thetop team, companies that do business
(10:18):
in repressive regimes and particularlynow, companies that willingly damage
the psyche of our children wait for,public bodies, to kind of set rules
around that rather than taking the lead.
So, yeah, I think, if I'm a CEO,I understand that my freedoms
are at risk unless I am on thefront line talking about these
(10:42):
things, encouraging my colleaguesto, have high ethical standards.
too seldom do I hear leadersout in front on this.
Which leads us to the nextpoint, , you called it learning
from the crucible of crisis.
And I'm still hurting, as I told youbefore, we came on air from the crash
because I bought a property in 2006,in my first property, et cetera.
(11:03):
terrible timing to buy a property.
But what you said in the book was,why did Wall Street's finest fail
to heed them, or more pointedly?
Why did they so completely abandontheir responsibilities as the
guardians of capitalism's mostimportant citadels as it unfolded,
the subprime banking crisis revealed aShakespearean catalog of moral turpitude.
(11:26):
It was a perfect storm of humandelinquency, deceit, hubris,
myopia, greed, and denialwere all luridly displayed.
Beautifully said, terribly played out.,
There were obviously a large setof factors that came together
to precipitate that, crisis.
There was regulatory failingin the United States.
They'd moved quite quickly to, liftsome constraints on investment banks.
(11:51):
they had lobbied hard to, raisetheir leverage, ratio so they
could, take bigger, more risky bets.
you had a government, agency thatwas, supposed to help people get
mortgages and was buying a lotof these subprime mortgages that
created kind of demand for them.
So hard to put the blame in oneplace, but for sure, that's right.
(12:11):
I think it was a kind ofShakespearean litany of human foibles.
there was certainly a lot of deceit.
a lot of the mortgage brokers who weregoing out and securing these loans
lie about their credit worthiness.
And, there were thousandsof cases ultimately brought
against these mortgage brokers.
There was a huge amount of hubris thatsomehow through financial engineering,
(12:33):
you could, and clever packaging byarranging these, loans into different
tranches and so on, you could reducethe risk, the underlying risk of
all these bad credit decisions.
but however you packageshit, it's still shit.
There was a lot of myopia.
you know, they had seen housingprices go up for about 20 years.
And of course most of these bankers,they're fairly young, young people, they
(12:54):
have no longer historical perspective.
And so their models areall built on the premise.
This keeps going on forever, even whenit was becoming kind of ludicrous, to
think that the prices go any higher.
And, you know, you might not haveseen a hundred year storm, but that
doesn't mean was not headed your way.
it goes without saying, there's ahuge amount of greed, that encompassed
(13:14):
even the credit rating agencies thatkind of let their standards slip.
but also within these banks, so this is akind of a more practical business lesson.
They had separate out the responsibilityfor risk, which was with risk
managers and responsibility for sales.
And so you had salespeople compensatedjust on how much volume, how much
income you brought in, but with noaccountability for protecting the balance
(13:36):
sheet, which is pretty much crazy ifyou separate, those two things out.
a lot of greed, a lot of money to be made.
And then just a lot of denial at the end.
you couldn't find anybodyto take accountability.
There was no mea culpa.
And I think, you know, thefact that nobody went to jail.
And the fact that some of therichest, people in the country
(13:59):
were able to, privatize the gainsand then socialize the losses.
that was probably in my lifetime,that was capitalism's, worst moment.
Yeah.
said at the time I thought thaton every bank who got any kind of
a bailout, I thought we should,like, force them to have a tattoo
on their forehead, in reverse.
(14:20):
So you see it every morning whenyou look in the mirror, and it would
say like, alchemy is not possible.
things that can't go on foreverdon't, risks and returns are
always correlated in the end.
and stupidity is contagious.
And, yeah, I mean, it's hard toimagine how, a financial system
could be so deeply infected.
(14:44):
but, you know, it's a lesson.
And, you know, there was a lot of,negative sentiment poured on the bankers.
In fact, it's basically when Istopped wearing, suits, I said, I
never wanna look like a banker again.
if you think about the incentives,you know, for most of us, if we
had the incentives with that kindof money, knowing that we were
probably backstop by the governmentof things went really wrong.
I'm not so sure we wouldn'thave done the same thing.
(15:05):
So I don't want to, make itseem as if the bankers are
particularly, morally, suspect.
But, it does say that, every dayyou've gotta pay a little attention
or be conscious of are the ethicalassumptions I'm making in whatever
decision, whatever I'm doing.
am I okay with that?
And I'm proud of that?
and am I willing to own it?
and it's so easy to point thefinger until it's your turn.
(15:27):
That's the thing, isn't it?
I feel sorry for some people in bankingnow 'cause there's good people obviously
in banking, but they've all been so badlytarnished and it's so risk averse now
that it's so hard for them to innovate.
I work with banks now and I feelso bad for them because it's like
they're personally liable as well.
So if there's a mistake,it comes down on them.
(15:48):
So it's really hardfor 'em to navigate it.
it's true.
And that's the dilemma is thatwhen an industry does not police
itself, somebody else will.
And then everybody isunder that, new regime.
but again, they kind ofgot what they deserved.
In fact, I used to say this is before thefinancial crisis, that the two biggest
profit centers for most banks are customerignorance and obfuscation or complexity.
(16:12):
and, you've seen this play out with allkinds of, regulatory issues and so on
with banks, disguising fees and, makingit difficult for customers to understand
exactly what they're paying for things.
but you know, you can findthat in every industry.
It's not unique to banking.
Sins of the fathers and mothers.
But I, I loved what you said next.
(16:33):
I heard this great line.
I don't know who said it, butwho told me was Hal Gregerson.
He was on the show before and he saidthat tenant farmers don't pick up rocks.
and I thought it was just a beautifulsaying that you also have tenant
CEOs or tenant leaders, they'relike custodians of the role.
They're not that interested in the future.
(16:53):
But what you talk about is that we needto rediscover farmer values and to achieve
resilience, you have to do the work.
And you talked about your parents-in-lawactually, and how they did it by working
14 hour days, six days outta seven,by taking few vacations and foregoing
many luxuries by building up cashreserves in good years so that they
(17:16):
could survive bad ones by diversifyingcrops to reduce exposure to fluctuating
prices and by paying themselvesmodestly while investing everything
they could in land and equipment.
I think that point with the one thatyou mentioned earlier, those are two
good ones to juxtapose because if youdon't feel like something is yours
and you don't feel, that you aretruly accountable for what happens.
(17:38):
It is very easy to become, lax.
the other way I heard thatexpression is somebody said,
nobody ever washes a rental car.
If you have a farm and it's your landand, there's nobody else to blame.
now that doesn't mean there aren'tlazy and incompetent farmers.
There are, but I was always veryimpressed, by their work ethic.
people who started, with almostnothing, rented a tractor for $5 a
(17:59):
day, ended up building, thousandsof acres of agricultural land and a
huge farm and so on, just by sheerunbelievably hard work and accountability.
I have a feeling in some wayswe've kind of gotten decadent.
we've kind of lost that connectionbetween sacrifice and hard work and gains.
if you look more generally with thewest, going into debt, having record
(18:19):
high levels globally, having recordhigh levels of indebtedness, certainly
in my country, in the United States,household debt, corporate debt,
government debt is all at record highs.
I kind of have this sense, thatwould've probably appalled, a generation
three or four generations back.
But I kind of have the sense thatwe've just put the future in Hawk
to create the illusion of increasingstandards of living they really haven't.
(18:43):
our productivity growth rate is notvery high, but we just go deeper into
Hawk because we want, the two overseasvacations a year and we want the
second or the third car, and we wantthe designer close, and so on I think
that's a dangerous thing for societywhen the connection between sacrifice,
this willingness to forego immediategains and so on, when that loses out
(19:05):
to simply, the desire to have it alland have it now and damn the future.
I do think been in danger of that.
I wondered, I wrote aboutthis actually in my notes.
I took your notes and I added it tothem, and I felt that it's a problem
in generations at the moment, and it'snot the current generation's fault in a
(19:26):
way, like they've been ushered that way.
And there's an old saying, thefirst generation makes it, the
second generation spends it andthe third generation blows it.
And it's a little bit of that where everygeneration is a little bit softer than
the one that came before, and they forgetthe origin story, that struggle story.
I think in companies it's the same thing.
a generation may not be just 25 years orone CEO, but you do see something similar
(19:51):
it's the creators, the entrepreneurs,the builders, and then you have the
caretakers, the administrators, thegood managers And then you have the
undertakers, which is, the vulturecapitalists, the private equity and so on.
And I think one of the challenges there,is that if you've never had to build
something from scratch, you have no ideahow hard it's,, you've built a business,
(20:12):
you've built a series, you understandjust how difficult that is, right?
in time and commitment andenergy and lying awake at night
and thinking about things.
And I think our organizationsare filled with people who
never had to build anything.
all they had to do was managesomething that was already there.
It's the difference between, accumulatinga fortune and then having some
money manager, manage it for you.
(20:34):
if it was up to me, I would, in anyreasonably large organization, never
let somebody become CEO unless they hadbuilt a new business, or maybe a new
brand but where it wasn't simply aboutincrementally improving something, but
you literally had to pull somethingout of the dirt and make it real.
because if you don't understandthat process, you don't
know how hard work it is.
(20:55):
You know, I've started severalcompanies, it's, ball breaking.
but I think a lot of administratorsnever, you never experience that.
You never know that.
so you don't even value the peoplearound you who might be willing to do it.
We talked about this before.
It's like for me it'slike going to the gym.
If you don't do it, the muscleatrophies or you don't even know
there's one there in the first place.
You gotta go through the struggle.
(21:16):
But the next thing youtalked about was renouncing.
Capitalism's, dangerous conceits.
And there's a couple of things here Ithought, I dunno if you've ever heard
the beautiful metaphor of tsunami stones.
So in Japan and places that are proneto flooding, they have tsunami stones
and on them are written, do not buildhouses here because this is liable to
(21:37):
tsunamis and they're us in most places.
They're grown over by grass orvegetation or just graffiti Dover.
And I was like going, well that'sone of the problems in organizations.
There's no way to go.
This happened, 2008 happenedand this is how it happened
to remind us of these things.
And I wondered, had you any advicefor organizations to pass the button
(21:59):
to the future and go, don't let thishappen the an ethical downturn, or
it could have been some bad decisionwhere we bet the farm or some poor
decision making by the leadership team.
Yeah.
Well, I would say two things there.
One, as I said, don't ever assume thatyou are not equally vulnerable to those,
human temptations, degree, denial,hubris and so on, because we all are.
(22:22):
I remember, I think his namewas Chuck Price, who was, maybe
the CEO at Citi, big US bank.
And somebody questioned him, like,why did you ride this thing all the
way out to the end and over the cliff?
couldn't you see disaster looming?
And he said, as long as the bandis playing, you have to dance.
There'll always be a rationale, mosttypically the one that teenagers use.
Everybody else is doing it.
(22:43):
There will always be a rationale.
So I do think, it's not bad tohave that reminder of greed,
hubris, denial and so on.
And think about like, is thattinging this decision in any way?
you know, that personal moralaccountability I think is important.
I think the other thing is creating anorganization where every single employee
(23:06):
like a risk taker and has the power tobe a whistleblower without consequences.
we might have talked about this company,WL Gore, makes Gore-Tex and material size
company, but one of the things that struckme when I got to know them some years
back was I was sitting in a meeting formore than an hour or two, somebody would
ask, is there a waterline issue here?
(23:26):
there something we're not seeing thatcould hit us underneath the waterline?
And that could be, we hada regulatory, screw up.
We let down a customer,we took a financial risk.
We didn't really see.
And so there was this awarenessthat we collectively the
stewards of this organization.
Now, in that case, they all areowners and so they have that sense.
But you have to have thatinstilled everywhere.
(23:48):
it's not, this group overhere is our risk manager.
And you may have obviously somespecialists who are doing that work.
But everyone has to, feel,it's my accountability to keep
the company off the rocks.
and clearly that did not happen inthe investment banks where, as I said,
these responsibilities were completelyseparate and you had the risk managers
trying to hold the reins on theserunaway horses so yeah, I think those
(24:09):
two things, be aware of your owntemptations and subject your decisions
to a little bit of ethical scrutiny.
And don't be too quick to kind, giveyourself, an excuse and then, train
everybody and understand what are thesorts of risks we face as a business?
How do they present themselves?
And also, why might we notbe as attentive as we should?
because it may cost us something to,change this, or it may be embarrassing to
(24:33):
admit that we've done something, with ourcustomers that perhaps we shouldn't have.
so you gotta, yeah, it's going tobe embarrassing, but we'd rather
recognize a problem earlier than late.
If anybody's listening thatworks in the banks, don't worry.
It's not just you, Gary says.
When it comes to free markets, there'splenty to be cynical about the food
industry's long and illicit loveaffair, where trans fats Merck's
(24:54):
disassembling about the risks of Vioxx.
Facebook's occasional cavalier attitudetowards customer privacy, the seldom
promises of airline executives to improvecustomer service and the everyday reality
of hidden bank fees, overinflated productclaims and buck passing customer agents.
I thought it was funny that you mentionedFacebook and this, you wrote this back
(25:17):
in 2009, so you, you were onto themback then and we saw how bad that went.
Yeah.
And I think it's only gotten worse,there's a new book, I don't remember
the name of this woman, but she was headof, meta Global Affairs, who's kind of
pulled the curtain back on some of this.
and, yeah, I think if you were lookingfor a modern equivalent of that kind
(25:40):
of moral failing we saw in investmentbanking, it would be social media.
I think there's just no doubt of that.
We've, and I could give you someinside stories here, which I
probably shouldn't to be prudent.
But, there has been just willful denialof a growing body of evidence that.
Shows how destructive thisis to young minds and to
social development, and so on.
(26:00):
And, it's at least as bad as the tobaccocompanies and the years they spent
denying the harmful effects of, tobacco.
Google had that famousmantra, don't be evil.
I go, guys, that's apretty low bar, right?
I mean, and you failedat even that, oftentimes.
with privacy and with social mediacompanies have not been forthcoming.
(26:22):
it's taken huge lawsuits andgovernment regulation to get them
to, accept even the most basic levelsof, control and responsibility.
And it's scandalous.
it's just no other way of saying it.
It's scandalous.
I don't, I dunno if you saw, there wasan ad campaign was the UK ad campaign.
You might've seen it when youwere lecturing in London where
(26:43):
a nuclear bomb or some type ofbomb gets delivered to somebody's
house and they're like, on what?
What's this?
And they're going, oh, you own it.
It's part of yourinvestment stock portfolio.
And I always think of it as one of thosewhere you may be critical of somebody,
like one of the social media companies oran alcohol company or a tobacco company.
(27:05):
And oftentimes we may be throughour pension funds or through
some type of investment or.
Actually strategicallyinvesting in those companies.
And that's where you go, is that,we'll, that's where we contribute and we
don't even maybe admit it to ourselves.
Yeah, I think that's a fair point.
I think that sense, you know,we can all be complicit.
(27:28):
you have to draw yourown, boundaries there.
I do worry that we may see more of thisrather than less of this as, any sense
of a societal consensus around rightand wrong and, moral boundaries seems
to be in some danger and, eroding.
yeah, we'll have a reckoning and weprobably have to have some deeper
(27:49):
conversations about, how do we, setthe boundaries as a society on this
and at different times through history.
we've done this, if you go back,I guess it must have been the
beginning of the 20th century, TeddyRoosevelt, the great campaigner
against, monopoly power and the trust.
these were the most powerfulinstitutions in the United
States, standard Oil and so on.
He pulled them apart and, said, youcan't have institutions that are
(28:12):
that powerful and unaccountable.
and we've seen that now around the waysocial media is shaping behaviors and,
gatekeeping information and so on.
So maybe it's just inevitable that everygeneration or so you gotta come back to
this, be reminded that these institutionsserve us and not the other way around.
That we have a right to hold them tocertain standards of accountability.
(28:33):
And, we have to assert that, right.
I don't think the problem ever goes away.
I think you deal with it.
every generation has to dealwith it a new, I suppose.
but it's, it's, it's pretty disconcertingthat we let, monopoly power in tech.
And the influence it has over humandevelopment and so on goes so far with so
(28:53):
little in the way of effective breaking.
It's such an analogy though for business.
I often think society goes through asimilar S curve as businesses That, you
get to this breaking point, the greatcivilizations get to this breaking point.
There's chaos.
And then from the chaos,new order stems from that,
Sometimes you just havea long period of chaos.
(29:14):
Yeah, and it can feellike that at the moment.
I know for many, many people there,there's a, the next thing you say is
you, you talk about the reclaiming ofthe noble, and here you say, why is
the language of business so sterile, soun uninspiring, so relentlessly banal?
Is it because businesses is theprovince of engineers and economists
(29:35):
rather than artists and theologians?
Is it because emphasis on rationalityand pragmatism squashes idealism?,
I'm not sure, but I do know this.
Customers, investors, taxpayers,and policy makers believe there's
a hole in the soul of business.
And the only way for managers to changethat fact and regain the moral high
(29:56):
ground is to embrace what Socrates calledthe good, the just, and the beautiful.
Yeah, I think again,multiple causes for that.
and let me come back and, andjustify the premise in a minute.
But, I think there are multiple causes.
you know, partly because we have kindof, pushed the sublime, out of the frame.
(30:16):
For all the advances of science andreductionism and, and, the assumption
that we live in a purely materialworld, you know, and you, we've, we've
abandoned those higher order deeperhuman longings, and I think human truths.
, One of the, one of the little exercisesI sometimes give to, to a, a company
or a group of employees is to go lookat their CEO's speeches or go look at,
(30:39):
the annual reports and so on, and justlook at the words, that are used there.
And you'll, undoubtedly see wordslike, you know, superiority, focus,
cost, quality growth and so on.
But you'll almost never hearwords like joy, truth, honor,
beauty, justice, love wisdom.
(31:01):
And, and again, yeah, Ithink that's part of it.
There's a very super smart Englishphilosopher, Ian Mcg Gilchrest, I think
he must be in his mid seventies now.
He's a great friend of the show.
we've had him on a few times.
Okay,
Beautiful books.
Yeah.
I learned so much from him.
his argument is like the leftbrain, the rational mechanical
part of us has, taken over theWestern world and reigned supreme.
(31:27):
I think his argument in one of hisbooks, the Master and the embassy is
like, the left brain is a really goodservant, but it's not a very good master.
What you want is the right brainthat is a seed of values and
wisdom and perspective and nuance.
So let's not get, too metaphysical here,
I love it, Go ahead.
I do believe that, longbefore I read his work.
I said again, partly in chess,that, the average, accountant,
(31:48):
engineer, manager has, a left brain,the size of a watermelon and the
right brain, the size of a walnut.
they've just been called to useonly one half of themselves.
you see this in our organizations and,you have to be pragmatic, of course,
in a business, but I think we oftenget so conservative, so utilitarian,
so process focused, so driven by data,so obsessed, in our pursuit of, meager
(32:13):
efficiencies that we can't dream ofdoing anything bigger or greater.
One of the things I, when I firstreally started thinking about this, I
was at an Apple event, when they usedto do these big product launches, but
Steve Jobs would get up on stage andtalk and so on, and he almost never
talked about what made Apple, apple.
And by the way, this is then not now.
(32:35):
So I'm not talkingabout Apple circa today.
This is now, 20 yearsago perhaps, or almost.
And he said, let me tellyou what I, how I see Apple.
And he put up like an image of twostreet signs, at an intersection.
and one said technology, andone said the liberal arts.
And by liberal arts, that's what he meant.
He meant Socrates.
He meant the things, the principlesthat we have around justice
(32:57):
and beauty and truth and so on.
and, they were trying towork at that junction.
They were trying to take technology andhumanize it and make it beautiful and
something you wanted to look at and holdthat felt like, it spoke to you rather
than just like a mechanical thing.
And I think that's a very difficultthing to marry those ideas.
but I think that's what they did.
you know, we talked at one point,I think in our series about, John
(33:19):
Mackey when he was founding WholeFoods, and he said, I wanna create a
company based on love instead of fear.
the founder of Southwest Airlines,his name's now gonna escape me.
Herb Kelleher, he talked aboutlove over and over again with no
embarrassment, no shame, standing infront of his organization and, saying,
this is the most powerful force ofbinding an organization together.
So, yet I think most of us wouldfeel really weird and nervous and
(33:43):
a little bit out of place, likestanding up in some corporate meeting
and talking about love, like readingthe Bible in a brothel, right?
Like, just like, doesn't add up.
But I think that's really, really sadbecause, if you look at all of the
greatest human accomplishments in history.
they were all driven by, these values, youknow, joy, truth, fidelity, beauty, so on.
(34:04):
And, Viktor Frankl, the famous Austrian,philosopher and psychologist and
Holocaust survivor, you know, he talkedabout the fact that human beings cannot
be happy in an existential vacuum.
in fact, he said the following,he said, in the absence of a
transcendental purpose, human beingswill be bored, cynical, and selfish.
(34:26):
And you wanna just thinkabout that for a moment.
Like, to what extent are our organizationsor our lives feel like bored?
And we're constantly trying to distractourselves with some nonsensical
thing on TikTok or something cynical.
Where, when you hear leaders talkabout, human beings being their
most important asset or whateverelse, like Yeah, yeah, yeah.
Highly cynical and actually quite selfish,where, it's kind of the zero sum game
(34:49):
where you're after your career and yourbonus and your promotion and so on.
If there's no higher order shared purposethat ameliorates those things, that's
the kind of organization you end up with.
I think at least we have toadmit we've kind of, driven the
human out of our organizations.
Purpose is such a, Isee purpose everywhere.
(35:12):
Like as in you retire.
I've seen people retire who weremagnificent in their retirement and
then just degrade so quickly, it's liketime is on fast forward for them and
it's because of that lack of purpose.
And then you're kind of going, yousee that and then you see people,
we've talked about it before.
Where they retire on thejob, and again, no purpose.
(35:33):
Maybe have a great hobby outsidework, but they're certainly not given
discretionary effort to the company.
Yeah, let me see I can, find a quotehere that I often use in my students.
We can have all kinds of purpose.
You can have a purpose, which is to getrich and have a career and, surround
yourselves with luxury and so on.
So I think.
the purpose has to have acertain ability to it as well.
(35:56):
I'm gonna forget who said this, butthe point was this, that, we don't
stop dreaming because we get old.
We get old because we stopped dreaming.
you know, our institutions and almostall the systems and processes inside
of them, Aidan or built, and I don'twanna pick on anybody, but they were
built by accountants and engineersand managers and they probably
(36:18):
have a serv of pragmatism, right?
and that's great because you need that.
But the greatest author in GermanJohann Wolfgang von Goethe, he said,
dream, no small dreams, for, they haveno power to move the hearts of men.
I think we kind of forget that.
and you know, the problem with bureaucracyis if you cannot tell people how you're
(36:39):
going to achieve something, they'llgive no credit to the goal, right?
If, I might say what we need toget here, but if I cannot say
how, like, why would we do this?
Like, you don't evenknow how to get there.
So let's give up, you know, we'lltalk about the, transformation
at, Roche in some future episode.
But they started that with no ideaof how, I mean, nothing truly worth
doing ever comes with the roadmap.
(37:01):
Can you see the endfrom the beginning ever?
And so if you start by saying,we need a clear roadmap.
I need every step laid out.
I need to know, we can actually do this.
You'll never do anything worth, doing.
And, reclaiming rehumanizing the languageof business, and rebuilding kind of
our humanity inside our organizations,I think is hugely important.
(37:22):
And if nothing else, it just meansbeing respectful of people who have
dreams, being respectful of peoplewho talk about their work with more
meaning and with this higher sense ofpurpose, rather than roll your eyes.
And, so yeah, I think, again, I'm notsure exactly how to solve this problem,
but I think we just have to be awarethat we have, to use Max Weber's term,
(37:45):
disenchanted our organizations and Ithink have paid a price because, you
know, without that higher purpose, thatstretch, that noble purpose, you're gonna
have an incremental organization doingthings that are, not that impressive.
and with AI we're only fasttracking all of that as well.
if the AI's based on efficiency,you know, we're in trouble.
(38:07):
So chapter two or section two, asyou call it in the book, because each
section has five chapters in it iscalled Innovation Matters Now, and
there was an opening line here andit's gonna reach through the screen
or through the EarPods into people'shearts here who work in innovation.
You said, when you seem to be caughtin a cycle of endless retrenchment,
(38:29):
it can be hard to be optimistic,even if you believe the world is
filled with more promise than peril.
And if you're a champion ofinnovation, it's harder to put on a
happy face if you're a mid-level vp.
You've probably had a pet project guttedby some newly empowered bean counter.
If you're a struggling entrepreneur,you may have had to lay off some key
(38:52):
talent and cut expense to the bone.
And if you're a consultant who helpsother folks to innovate, you've maybe
won spending freeze away from postingyourself at a busy Intersection
with a hand lettered sign thatreads will brainstorm for food.
In recent years, left braintypes have had the upper hand
(39:13):
while starry-eyed innovatorshave struggled to get a hearing.
Nevertheless, before innovation slipsany further down the list of corporate
priorities, we need to remind ourselvesthat we owe everything to innovation.
Yeah, I think it's true.
You know, as human beings, Ithink we're at our happiest when
we're creating and innovating.
(39:35):
I mean, obviously innovation iswhat lifts the human condition.
innovation and agriculture andin communications and so on is
what makes our lives, better.
it's what raises productivity and allowsus to afford, important social priorities.
you know, it's the only insuranceagainst irrelevance in a world
where so much is changing.
So, yeah, I guess my wholecareer, I've often been.
(39:57):
perplexed by how could this be soimportant and yet be so minimized.
in most large organizations, youknow, the answer is really simple.
Our organizations are builtto do something else, right?
They were built to do the samethings over and over again with ever
increasing, productivity and, so on.
And, innovation was alwaysa tangential, you know, a
relatively tangential activity.
(40:18):
I think that's still the case.
If you wanna make innovation a deepcompetence in a company, like everybody's
job, every day, you have to re-engineer.
every system, everyprocess, every structure.
So it is innovation friendlyrather than innovation, toxic.
that means making innovation a largepart of executive compensation.
it means ensuring that you are settingaside a sufficient amount of capital
(40:40):
expenditure and operating expenditure,and getting that behind projects that
meet a real task of being innovative.
it means when you hire everyhiring decision you are asking,
you know, you're kind of testing,can this person think laterally?
Thinking creatively, it meanstraining every employee on the
basic disciplines of design thinkingand creative thinking, and so on.
So it's, again, it's notthat it's that hard to do.
(41:04):
very seldom do you see companiestreating this as a systemic problem,
which is kind of odd becauseif you go back over the last.
30, 40 years, you know, the bigre-engineering craze, we turned
our organizations inside outto create more efficient supply
chains, global supply chains.
Now we're gonna probably haveto reconfigure those again,
given the de integrion that'sgoing on in the global economy.
You know, a decade later, every companywas like turning everything upside
(41:27):
down for digital transformation.
it's not like we don't know how todo difficult things kind of systemic
things, but we've just never said.
And you know, part of my suspicionaround this is that very few leaders
get promoted because they have thatskill, because they're great innovators.
It's not somethingthey're comfortable with.
It's not something, that theyfeel like I'm an expert at.
(41:48):
So it just gets downgraded.
they have a hard time recognizingit, even when they see it.
And so, they're happy to put inall kinds of systems for financial
control and so on, but like, Idon't really know about this.
I wouldn't know how tomanage it, and so on.
That's, probably part of it.
also we've had this kind of mythologyaround innovation that, innovators
are these rare, amazing people, , likeSteve Jobs, and they come along
(42:13):
once every so often and they'regeniuses and they're just wired
differently than the rest of us.
you can't teach people, youcan't make that systematic.
So I think for all those reasons, Iwould argue that, and I think I could
back this up, that probably mostorganizations are using maybe 10 or 15%
of their, potential innovation capacity.
(42:35):
Gary as you say here,you say it beautifully.
If life had adhered to SixSigma, we'd still be slime.
Yeah.
Well, life has to make a lot ofmistakes, the species forward
and, If genetic transcriptionwas perfect every time you get no
mutations, and therefore no progress.
I think ultimately stakeholders haveto put more pressure, investors have
(42:55):
to put more pressure on companies.
You know, I think I was saying the otherday, Procter and Gamble, I do not believe
has created a major new brand in 40 years.
And you go, like, how you have so manypeople and so much resource and so much
data coming from your customers, likehow in the world can that be possible?
and you know what I'm always quite,inspired when I see innovation and
(43:19):
really basic products and services , andyou realize like, what can be done.
You know, there's a, non-alcoholic beerbrand in the US called athletic beer.
And it was just a couple of peoplepassionate about creating beer
without alcohol, did hundredsand hundreds of experiments.
They're now, I think, the number thirdbeer in what is a very competitive
market with powerful competitorsand so on, just because they were
(43:39):
like, believed it could be better.
or I go back, almost a half decade.
And I look at the group of people at,Nestle who said like, Hey, wouldn't it
be great if we could give you like abarista experience and espresso coffee
in just like a machine you could getat home or in the workplace and so on.
They spent years andyears perfecting that.
so innovation is not, thisgigantic breakthrough always, and
(44:01):
you're going to win a Nobel Prizeor you get a bunch of patents.
It's just, being able to see wherecustomers are ill-served, where the
incumbents have missed some opportunity,and then having the persistence,
one of the wonderful stories andthen I'll stop with stories, but
another kind of story about like.
how you can innovateliterally in anything.
I don't believe there's anysuch thing as a mature industry.
(44:22):
anybody who's in London for sure, you'vehad a sandwich at Pret a Manger, right?
They're all over London.
I guess in maybe someother cities in the uk.
I think there are a few in NewYork, these are two young guys at
Bristol University who said like,why can't fast food be healthy?
and it took 'em years to figureout how to do that, how to
get the supply chain right?
How to get the labor practices right?
(44:44):
So people are building these, you havepeople making the sandwiches and so on
every morning from fresh ingredientsand now I could hardly imagine being in
London without having that at my disposal.
so that possibility iseverywhere all the time.
but I don't think most CEOs believe that.
And certainly very, very few have said,let me look at everything we're doing and
see if we can make it innovation friendly.
(45:07):
Beautiful.
And I don't want people tothink it's all negative.
We only really cover chapter oneand chapter two very, very positive.
We're gonna move on to.
If you're reading along with us three,four, and five the next day and finish
off this, there's another one inthe beautiful series of Gary Hamel.
Gary, for people who wanna reach out andfind you for keynotes, for workshops,
et cetera, where's the best place?
(45:29):
the website is, gary Hamel.com.
You can find me at LinkedIn, just under,my name and on x it's just Prof Hamel.
Author of What Matters Now, GaryHamel, thank you for joining us.
Pleasure.
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Boysober
Have you ever wondered what life might be like if you stopped worrying about being wanted, and focused on understanding what you actually want? That was the question Hope Woodard asked herself after a string of situationships inspired her to take a break from sex and dating. She went "boysober," a personal concept that sparked a global movement among women looking to prioritize themselves over men. Now, Hope is looking to expand the ways we explore our relationship to relationships. Taking a bold, unfiltered look into modern love, romance, and self-discovery, Boysober will dive into messy stories about dating, sex, love, friendship, and breaking generational patterns—all with humor, vulnerability, and a fresh perspective.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com