August 20, 2025 • 63 mins
What if everything you knew about strategy was wrong?
In this profound and candid episode, legendary Harvard Business School professors Joseph Bower and Clark Gilbertdismantle the myths of top-down strategy and reveal what actually drives innovation inside organizations — resource allocation.
Hosted by Aidan McCullen, this conversation connects over 50 years of organizational research with real-world disruption—from Clay Christensen’s disruptive innovation, to Intel’s strategic shifts, to why academic institutions resist change.
🔥 You’ll learn:
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Why strategy emerges from internal decisions—not just executive planning
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The role of middle management and customer capture in strategic failure
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How organizations can manage dual transformation
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The secret behind Harvard’s innovation blind spots
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Advice for innovators, executives, and scholars navigating complex systems
This is not your typical leadership podcast. It’s a masterclass in innovation thinking, organizational change, and deep system insights — directly from the architects of the field.
00:00 Introduction and Sponsor Message
00:21 Introducing the Guests: Clark Gilbert and Joe Bower
01:02 Clark Takes Over as Host
01:33 The Connection Between Resource Allocation and Strategy
05:26 Challenges in Strategy Implementation
09:03 Case Studies and Real-World Examples
11:11 Issues in Academic Research
19:48 The Harvard Business School Case
28:10 The Teradyne Case Study
32:41 Elon Musk's Unique Management Style
35:21 The Power of Structural Context in Education
37:50 The Concept of Undermining in Business
39:23 Managing Cognitive Framing in a Changing World
44:06 The Importance of Deep Industry Knowledge
49:16 Advice for Future Scholars
55:56 Final Reflections and Gratitude
📚 Resources and People Mentioned:
- Book: From Resource Allocation to Strategy – by Bower, Gilbert & others
- Dual Transformation – by Clark Gilbert & Scott D. Anthony
- The Innovator’s Dilemma – by Clayton Christensen
- Case Studies: Intel, Teradyne, Kodak, Harvard Business School
💡 Featured Thinkers Mentioned:
- Clayton Christensen – Disruptive innovation pioneer, HBS
- Tom Eisenmann – Strategy & entrepreneurship expert, HBS
- Donald Sull – Former HBS faculty, expert on execution and volatility
- Yves Doz – INSEAD professor, known for multinational innovation research
- Howard Yu – IMD professor; explored tech disruption in Asia
- Tomo Noda – Japanese academic and innovator in business education reform
- Robert Burgelman - MIT professor and prolific author
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Before we start today's episode,I wanna thank our sponsor,
Kyndryl, over my right shoulder.
There you can find Kyndryl atwww.Kyndryl.com/institute, where
you'll find their brand new institutecontent from all over the world on
ai, on change, on transformationfrom the world's best academics,
business thinkers, and speakers.
(00:21):
. It is a massive pleasure to welcomethe two authors of this brilliant
book from Resource allocation tostrategy, Clark Gilbert and Joe Bauer.
You're very welcome to the show.
Thank you.
It's good to be with you.
I'd researched this episodeand then I had a chat to Clark
(00:41):
and he goes, you know what?
I have some questions I wanna ask Joe.
And I said, why don't you just bethe guest host for today's episode?
Because Joe has changed how peoplesaw strategy, gave them new lenses
to see strategy, and Clark hasseen so many academics and business
people flourish because of that.
So.
(01:02):
I wanna welcome our hostfor today, Clark Gilbert.
You're very welcome.
Well, thank you for having us andJoe, what a thrill to be with you.
I'll always be grateful.
I was assigned as a doctoral studentoriginally to work with Nitin Noria,
heard my questions and interestsand he said, do you know Joe Bower?
(01:24):
should be working with Joe Bauer.
I was never so grateful, Joe, to behanded off to you from someone else.
Well, my pleasure.
well let me just start, Joe, the processresearch and in particular how it,
how you connected it into strategy,through the resource allocation process
(01:46):
itself led to breakthrough research andinsight for practitioners and scholars.
Everything from disruptive innovationtheory to resource dependency, big bets
chains in the presence of fent and somany other big breakthroughs in the field.
(02:09):
What do you think it was aboutthe connection between resource
allocation and strategy that haslent so much insight to the field?
I think the key that the
(02:31):
thinking about
long range planning, thinking aboutgoals and as separate from anything
else in the organization as justparticularly something that was primarily
(02:52):
economic analysis and forecasting.
Never really was a, particular use tocompany managements because would have
an economic, a team of economists, theywould re yet it didn't link up with goals.
(03:19):
I guess because I was.
I came at it from capitalbudgeting long range planning
and they didn't fit together.
One was had this view that what youdid was figure out what you wanted
to do and then you broke it upinto pieces of assignments and gave
(03:42):
it, and that's how it would work.
the allocation of money, capital budgetingthe opposite way, worked bottom up.
and then when I watched it, and thatwas I guess, the key that I spent
a year just watching what happened
what in effect the way thecompany was run was determining
(04:09):
the direction of the company.
And that sounds so obvious,
Yeah.
it's not the way we taught about thingsand it was also much more complicated.
any of the models being used totry and help managers, but focusing
(04:34):
on how resources were used.
And once you sort of say thatto a manager, they say, of
course, that's what it is.
Yeah.
And then the sort of linking thatto how performance was measured,
performance of managers and how peoplewere paid and promoted of made sense.
(05:00):
And that really is what it was.
That kind of an in intuitive
that just how you useyour resources is going to
determine things.
And just because youwrote something on paper.
(05:21):
called a strategy or called your longrange goal that wasn't gonna do anything.
So, Joe, two things I'll pullout of that One is the actual key
insight that how resources areallocated where they're allocated.
Shapes the resultant strategy,
(05:42):
Right.
that seems so intuitive to thoseof us who've worked in this field.
But it wasn't, you said, a lot ofpeople thought it was top down, built
at the very senior levels, maybe bya strategy consulting firm, maybe
by a senior executive, and then justdownloaded it onto the organization.
(06:03):
The other thing you said wasthat it's much more complex.
in, in that first chapter of thebook, we looked at the model that you
originally wrote in 1970, and we'veexplored so much, so in so much depth.
But the resource allocationprocess is multi-level.
(06:24):
It's iterative over time sothat it's not a one-time event.
are inevitably in conflict and context.
Shapes the strategy that comes outta that.
Right.
you know, and some, some scholarsand even executives will say,
(06:46):
well, that's frustrating.
Why can't it just be clean and simple?
So is this just a real pol politicof how it actually happens?
Or is, is there something that youcould help executives understand so
(07:07):
they realize this is more than justpolitics inside of an organization?
I have to give credit toBruce Henderson because
he, he didn't have the, the same insighthe, but he did say, look, as a consultant,
(07:29):
I find everybody focused on projects,
and that's crazy.
They should be focused on businesses.
Building a business and then whichprojects are right for that business.
But you have to be allocating resourcesto businesses and that led the famous BCG
(07:57):
growth market share.
And
but that was an important insight.
So as soon as you take the intuitionthat it's the allocation of resources
that you wanna focus on, it's veryimportant to add Bruce's notion.
(08:17):
It's to businesses
Yeah.
because what we saw, both just inmy case study, but also others, don
so and so on, companies would keepallocating resources to dying businesses.
Yep.
But the project proposal would lookprofitable and it, so that was a big step
(08:47):
was important.
I think once company leadershad that insight and began to
understand that, then it took off.
And then there were all sorts ofother problems which were studied in
the various theses that we looked at.
You know, you know, starting with Clayto, Don Sull, Tom Eisenman, Tomo Noda,
(09:11):
down to me, it, of the things that'sinteresting to me about the research
is people kept picking up this insightthat resource allocation's a process
A and then B, it's, that is wherestrategy is made in an organization.
And from resource dependency, howcustomers capture the resource
(09:36):
allocation led clay to eventuallysee disruptive technology.
Tom Eisenmann looked at big bets
Right.
that was hard for, you know, Donlooked at why, why aren't we, why
aren't people getting out of, youknow, certain technologies in the
tire industry into others tomo withcell phones, me with the newspaper
(09:57):
industry, E even at the end, Clay didthat piece on personal life choices.
Yes.
Right.
know, and he looked at Harvard, MBAalums who had made really bad life
choices and he said it wasn't theirstrategy, their written strategy.
No one started with a written strategythat said, in 15 years, I wanna be
(10:19):
obsessed with my work, estranged frommy children, divorced from my wife.
And yet every day, these little decisions
Inside the personal resource allocationprocess the strategy even though the
written strategy was different, youknow, and, and so, so many settings.
(10:41):
What is it, Joe, about the, thatconnection resource allocations
to strategy that have yieldedsuch fruit for so many scholars?
It's real.
I mean, you could alsoask it the other way.
Why has so much academic researchof late lacked any intuitive power
(11:07):
and been not very useful at all?
I was thinking, we may get to thislater, but there's a lot of fraud
in published research these days,
which is terrible.
Well, how is that happening?
(11:29):
Well, if you, you can fake thedata think about process research.
Yeah.
If you don't do that, you, you go findout what's going on and what the reality
is, and then you try to understand it.
And Over time.
(11:51):
You begin to un understandingsmake it possible for researchers
coming along the even further work.
There are plenty of questions now.
Joe, let's go into that.
You know, you talked about why somany miss it, and of course you
can't do this kind of researchjust sitting in your office.
(12:13):
You have to embedyourself in organizations.
You have to observe.
I remember we used to teach theIntel multi-part case at HBS and
would see the first you know, the Acase, was Andy Grove was the CEO and.
(12:35):
they were trying to get out of dramsand, and into microprocessors, he
couldn't get the senior leadership tochange the budgets, but deep down inside
the organization, I think it was the,the guy on the manufacturing floor was
allocating manufacturing capacity basedon gross margin per wafer square inch.
(12:59):
but that because financegroup said he had to do that.
And it moved a multi-billion dollarcompany out of Drams into microprocessors.
And Andy Grove thought he had to makethis big decision and he treated it like
he had made this big corporate executivedecision, but in the end, really a guy
(13:20):
he might not have even known the nameof, had moved the entire production the
right strategy, and all he had to dowas catch up to the corporate budget in
r and d. But the MBA students looked atthat they said, oh, that's brilliant.
every company just needsthat allocation rule.
(13:41):
And they didn't see thatthat could go the other way.
So it, it's brilliant Xpost, ex-ante, hard to know.
And, and remember, the B or the C case nowhad Andy Grove trying to get the company
to invest in the celleron processor, hada lower margin per wafer square inch.
(14:05):
And I remember someone held up acell phone in, you know, and said,
what are you putting in these?
the answer for Intel was nothing.
and Andy couldn't get anyone to do it.
And it turned out the rule thathelped him get into the microprocessor
was preventing him from gettinginto the celleron because.
(14:27):
The seller on had lower grossmargin per wafer square-inch
And even then our MBA studentscouldn't see it wasn't a new strategy.
It wasn't the ex-ante X antideliberate rule that should have
been downloaded on the organization.
that strategy was multi-level
Yeah,
(14:48):
are in conflict.
It proceeds iteratively over time.
All the things you had said and evenour faculty, so these are the MBAs,
but our faculty would be like, we studystrategy, like it's a one-time event and
the more brilliant the analysis, know,then we don't need to deal with all this
(15:08):
complexity in an organization and theyjust couldn't see the phenomenon that we
are trying to teach in the Intel case.
absolutely.
And, and unfortunately it's the, thefield of strategy has become pretty empty.
(15:29):
And unimportant.
The work that is more interestingwas the work that Howard Stevenson
was doing with entrepreneurshipto get together with Bill Solomon.
Yeah.
I think their contribution was reallyto get finance out of the exhibits
(15:53):
and into the heart of the thinkingabout how a company could grow and
how important was you use resources,the timing of resources, how you
could control risk by managing thesequencing of all, but it's all so
(16:14):
what?
You know, Joe, I, I love theHoward Stevenson and Bill Salman.
Ca and it's interesting.
couldn't do that in strategy.
They had to create a new,we created a new unit at
Right,
and, and in a lot of ways,clay couldn't do what he did
exactly.
In,
union.
(16:35):
tm.
That, that it, it was, and evento this day, Clay's course sort
of sits, it's popular with thestudents, it's not academic.
Yeah.
Yeah.
And I, I remember I all out of thedignity to our colleagues, I won't say
(16:55):
who it was, but one of our strategycolleagues and I, I'd been, I had left
HBSI and I was running all the LDSchurches, media companies, and a bunch
of New York media firms asked me to comeand a, and a leading strategy scholar
who was still in a strategy department.
(17:16):
And he presented the Netflix case and,you know, how dis how strategy should
be made at Netflix and how that shouldbe transposed to media companies.
And he said, all of the strategy canbe made with these two decisions by
a strategist you know, why botherwith the rest of the organization?
(17:40):
And I literally couldn'tbelieve he would say that.
And yet he really believed it.
Yes.
what do you think it is about.
The modern academic enterprise thathas made so many strategy scholars miss
what happens inside an organization.
Either they miss it out of ignoranceor they think, well, it's just
(18:03):
dysfunctional decision making.
And if we could just get peoplethe rational decision making, this
is how an organization should run,
Think about academia as a largeorganization ask the question
then how are, are resourcesbeing allocated to whom and why?
(18:26):
How is performance being measured?
Performance is being measuredby referee published in referee
journals, but ideally a journals.
So in fact, the people who arecontrolling the progress of individuals
aren't even the faculty in the schools.
(18:47):
the editors of the journals andthey are sitting in t tunnels
talk about tunnel thinking.
Each journal and journalshave proliferated.
I don't know how many there are now, andI remember the first time I went to an
academic meeting as a department chairand you get this book of abstracts.
(19:13):
So I'm pretty diligent when I have a job.
So I looked at all the, it,most of it was terrible.
I don't, I mean, was crap.
It and.
These poor people had been workinghard at this stuff and it was just,
and then you begin to talk to academicsand their goal in life is to get senior
(19:39):
enough so that they don't have to teach.
So it's the whole enterpriseunfortunately, is corrupt.
Joe, I don't know if I've sharedit with you, but when I left HBS
and I was leading strategy for theuniversities of BYU Idaho BYU pathway,
(20:01):
and in the media organizations, Iwrote a short little five page case
on the Harvard Business School itself.
And I started with theformal statement of strategy.
You know, and, and it starts withthe opening section with Kim Clark.
Presenting a PowerPoint slide withthe mission statement of the Harvard
(20:24):
Business School on the first slide.
educate leaders who makea difference in the world.
And I take two junior academics.
It was disguised, but itwas me and Mary Tripps
and we're, we joined the faculty.
We hear Kim Clark say that strategyand we're like, this is awesome.
This is why we came to theHarvard Business School.
(20:46):
We wanna do work that will helpleaders make a difference in the world.
And then the first year Iwon a rookie teaching award.
the response from mydepartment isn't enthusiasm.
It's, Hey, we need to take youout of the classroom because we
think you like teaching too much.
(21:08):
I was like, but the missionstatement of the Harvard Business
Schools educate leaders who willmake a difference in the world.
And they're like, well,your teaching's good enough.
You don't need to get any better,just stop working hard on it.
You know?
And you know, and so after thatdeflating moment, then you know, Mary
gets a piece published in the HarvardBusiness Review her department chair
(21:30):
and colleagues are like, why are youpublishing in the Harvard Business Review?
And she's like, well, it'sthe most influential business
publication in the world.
And they're like, you need to publishin peer reviewed academic journals.
And she's like, the missionstatement says, educate leaders
who make a difference in the world.
aren't reading the journals, they'rereading HBR and by step, these
(21:57):
two young faculty get the messagedeepen by, by the way, back to your
model, deepen the organization thatshould allocate their resources.
And what are the resources forfaculty time and attention?
It's not money, it's time and attention.
We allocate our time suddenly now tojust the peer review academic journals.
(22:20):
That's right.
And and then late in the process, I getthis research sabbatical and we're at the
Academy of Management and colleagues aresaying, how did Clark get that sabbatical?
And the, and the person that I'vewritten up as my colleague who
loves teaching, loves the MBAstudents, she says, oh, is so lucky
(22:46):
he gets to be out of the classroom.
Teaching is such a tax.
Huh?
And she, I know she doesn'tbelieve it that way, but every
day over those first five years ofdecisions are going another way.
Right.
and Aiden, you have tounderstand it's so hard.
'cause I'm this junior faculty member.
(23:06):
I'm Joe's former star doctoral student.
like, why are you evengoing to the academy clerk?
It's a waste of time.
Yeah.
colleagues are sayinghe's gotta get published.
And I, I win the PA paper of the year inthe Academy of Management Journal, but
it gets through by the skin of my teeth.
(23:27):
my editor, I don't think shehad ever been inside a business,
Right.
know, for her, this was, you know, asociology publication or a psychology
publication, a business publication.
And, you know, and I thought,here's Harvard Business School with
a multi-billion dollar endowmentand it can't carve its own path.
(23:54):
That's right.
to replicate every otherbusiness school in the world.
And with all of those resources,the Academy and peer review
journals had captured.
resource allocation process.
And Joe, I think that is why, I mean,your own research is why your research
can't be done today in by junior scholars.
(24:18):
And it, you know, as powerful as HBSis, it's own resource allocation system.
Its strategy has been captured by, inClay's terms, in Robert Burgelman's
terms by its customers, which nowaren't students or alumni the publishers
(24:40):
and scholars at other institutionswho definitely don't believe that
the mission should be educate leaderswho make a difference in the world.
that, exactly right.
And we're not.
It.
That's not our main goaltoday in our conversation.
But if you wanna ask, why is itthat we're having so much trouble
(25:04):
with the Trump administration?
It's precisely because ofwhat you're talking about.
a lot of what gotpublished was really crap.
And then it, it, it, I mean,we're lucky that at least
they're talking about business.
And if you think about impact of forCO or what's and Dorita and so, and
(25:29):
they're saying there are no facts.
There is no reality.
Yeah.
There's a reason why we're having these
Yeah.
I think it's so interesting becauseI think that blind spots for process
research the very kinda research youled so effectively aren't cognitive,
(25:52):
aren't intellectual, they'restructural, which is, you know, what
the very insights from the Resourceallocation Pro, I mean, back to 1970,
I'm just gonna come in for a momentbecause there's a perfect quote I
pulled from one of the chapters.
It says, Joe Bower showed how thestructure of the incentives and
(26:14):
reporting systems shapes which projectsoperating managers will consider,
middle managers, will champion, andcorporate level executives will fund.
This led to the conclusion that structureshaped strategy, and it's, it's perfect
for exactly what you're talking about,but also Clark, what you experienced is
what so many people who are listenersto this show, heads of innovation,
(26:38):
heads of change or transformation.
They come in with the best of intentionsAnd, then they pretty much learn the
way things are done around here by thebehaviors and the reward incentives.
And Aiden, the, so many people think it'sa cognitive or an intellectual problem.
What Joe taught us isit's a structural problem.
(26:58):
Joe, do you remember the Teradyne case you
Sure.
It, it's the, we use that toclose in the final chapter.
I remember Joe had Alex d'Arbeloff come,and Joe and Clay Christensen and I were
doing a workshop with the CEO of Kodak,the CEO of Hallmark, the CEO of the us or
(27:21):
the secretary of the US Navy Intel, allof the, the CO in their top five reports.
taught that case.
Alex came, Al, Alex had been the CEOof Teradyne and Joe, the chairman
of m mi the board, board at MIT.
chairman of mit.
(27:41):
Yeah,
And, and I remember one of the vicepresidents asked Alex, Alex, you,
you understood this, you, and thenyou protected new projects from the
structure that was killing them.
And what if your CEOdoesn't understand this?
And I remember Alex paused andhe said, I'd find another job.
(28:08):
You give us a bit of context on that guys?
Could you elaborate a littlebit on the Teradyne case?
Alec d'Arbeloff, the wayhe would describe it.
The first Teradyne makes testequipment for chip manufacturers.
He had all the strength of a goodengineer, which is important.
(28:31):
He cared about substanceand was very frustrated
as time developed, his engineers justkept trying to make things more and more
complicated and their customers loved it.
'cause they would be faster.
customers.
Yeah.
(28:51):
Their leading.
And he, stayed as a good engineer,kept reading the literature.
He became very concerned that newtechnology going to permit the critical
parts of testing to be done much witha much, much more simpler process.
(29:19):
And he kept trying to get people in hiscompany to study it and they wouldn't.
So finally, he hired a consultant towork with the new technology and see
if in fact he was right and he wasso then he still couldn't persuade.
(29:43):
I mean, the power of thecustomer is very real.
then what
I
happened was he set up aseparate unit and even there.
a classic case and the customercaptured every part of the
resource allocation process, so thesalespeople wouldn't prioritize it.
(30:03):
The product teams wouldn't make it
Right.
because they had built theirDNA around the customer.
And so an externalstakeholder had captured that.
And the only way Alex could getaround that is create a new context
and that was the new division.
even there, the head of engineering andthat new thing was approaching the problem
(30:31):
the way they had that always had done it.
And Alex said, look, there'sa very interesting company.
Go talk to them about whatthey're doing, a new company.
How did Alex know that?
Well, he, he stayed broadly aware.
And it turned out they were using
(30:56):
coding methods that are, that were totallyad hoc, totally specific to specific pro.
this firm was using Excel
and they modified Excel to doeverything this engineering
vice president wanted to do.
(31:17):
And cost $300, not only that, you coulddo it right away instead of taking weeks.
So the seeking simplicity, I mean, Aleckept saying to his engineers things.
One, started with an eight bit chip.
(31:42):
We were able to build atester with eight bits.
Now, why do you need all complexity?
The second thing he, when he was, hewould always eat in the cafeteria,
and he said, I love to ask theengineers what they're doing, and
then why does the customer buy it?
(32:04):
And they would alwaystell me about the product.
And I would say, no, no, no.
I'm asking you why doesthe customer buy it?
And it, it, it was, was very hardto get them to understand that the
customer, this clays language, now you'resolving a problem for the customer.
(32:29):
And if they're buying it, it mustbe 'cause you're doing it well.
And those are such simple ideas.
What what struck me?
When I've been thinking about thisand thinking about your, the future
there, I mean, Elon Musk as a managerof a company is a very unusual guy.
(32:56):
I mean, I think he was disasterin the government, but he,
I mean, think about it.
He got a good attractive carselling in the market, 18 months,
general Motors, Ford, all, theycan't get a good electric car.
(33:16):
So what is he, I wrote down his question.
He said, question every requirement.
The only laws are physics.
Delete any part or process.
You can simplify and optimize.
Accelerate cycle time and automate.
(33:38):
And we don't know thathow to deal with that yet.
But that's, and what's interestingwhen you talk to people from his
company that he, they, they say he'sbrutal about asking those questions.
And if we aren't persuaded him whenwe're debate discussing something
(34:06):
critical, he'll say, okay, haveto do it my way, it's on me.
it's fails, it's my, so he gets it.
He's not holding people's livesaccountable for his decision.
(34:26):
He's, he's, we don't, I, I think thereare a whole bunch of these guys Clark.
That we really don't understand yetbecause they're playing a role in what we
call definition or that is a little morepowerful than we've studied carefully.
(34:53):
And and there are a bunch of them.
I mean, there's Edison, Steve Jobs at all
yeah.
Gates Bill, and that'spretty interesting stuff.
I mean, I would say in your worldwhat you are doing is like that
Yeah.
you're ha a very powerful impact,
(35:17):
but you're not ignoring the process.
Well, and you know, even, even for meAidan, if, you look at the church's
educational system, we have thisflagship, scholarly focused National
Merit Scholars program in BYU.
(35:38):
We have a teaching focuseduniversity in BYU Idaho.
We have an onlineuniversity in BYU pathway.
You know, someone might think, oh, that'sa nice portfolio, each one of those
couldn't do what the other one did.
In the structural context, they had,they had a resource allocation process
that leads to a very different strategy.
(36:00):
So to do the next one, you hadto do it in a different setting.
you know, as an executive in my church.
Of course it's a spiritual endeavor,I'm Dr. I'm benefited all the time from
the early work from Joe and from Clayabout how structure determines strategy
(36:21):
and you just can't do certain things.
And I think Joe, the entrepreneursyou describe, they're doing things
outside of the traditional context.
That's right.
The current system willnot yield that answer.
So I'm gonna create anentirely different system,
In our last chapter we when we look atthe model, we put the financial markets
(36:48):
and then the product in one as context.
Yep.
External thing and
they have changed so much.
And academia hasn't changed,
(37:09):
I mean, hardly at all.
If anything, it mayhave gotten more rigid.
But I think that's, again, thepower of the model is to help people
see, okay, if, capital marketswant us to perform all the time and
(37:35):
doesn't fit what we're trying to do,
new product.
then I have to find a way of structuringmyself so that I'm protected, and
some companies have done exactly that.
CI wanted to share guysa brilliant metaphor.
I came across it, it's aboutthe term undermining the, or
(37:58):
origin of the word undermine.
It's a military tactic actually.
So the whole idea was you'd have bigcastle walls, then they'd tunnel in under
the wall, they'd build a timber frameto keep up the wall structure, and then
they'd light it on fire and leave it.
So the, your, your, your strengthwould become your weakness.
And I, and I always think about that.
(38:18):
as a metaphor for what happenshere, is that the incumbent has a
way of doing things, including acognitive frame of how to do things.
And then.
The technology shifts, thedisruptive innovation comes along.
And there's a line that stuckwith me from Gary Hamel.
He said, to give up a bird inthe hand, you have to see a
(38:40):
flock of birds in the bush.
And that when you have a technologysay that's not based on a Moore's law
change, like from an Intel computer chipto a mobile phone, which is much cheaper
and they can't see the future, and theycan't lean into things like Moore's Law.
It's that dilemma or that paradoxthat the real structure, the real
(39:03):
struggle is, and it still remainstoday with so many companies.
And I'd love you to share yourthoughts on managing that.
'cause that has not gone away.
As you said, Joe education hasn't actuallydealt with that, those changes, but that
paradox or that dilemma hasn't gone away.
(39:24):
Well, this is where I thinkClark's thesis, Clark's research
added a, very important,
element, and that is attention tothe issue of cognitive framing.
(39:44):
That if you are,
you know, can, most of it tendto be hard, pretty hardwired.
When we get up in the morning, wewant things to be the way they were
when we went to bed the night before.
And when the world is changing, wehave a very hard time dealing with it.
(40:14):
And boy is the world changingaround us in an important way.
I mean, another one of the questionsthat I put down was just how is it
that things that we thought werevery, like in, in ai, AI in the United
States is absorbing huge amounts ofpower and enormous time to do things.
(40:39):
is it the Chinese got it so fast and theyhave a much simpler, what are they doing?
Why are their cars even they, can,they are beginning to disrupt Tesla.
What is going on there?
Now, there are aspects of peoplewill say, oh, it's a cooked market.
(41:02):
You know, they get subsidiesand so, but we use subsidies to
reinforce what we're doing, not to.
So it's, there are things westill need to understand, we are
hardwired to do what we've before.
(41:23):
And Joe, one of the things on this,changing cognitive lenses is it's
really hard when, yeah, you hearrumblings of coming, but the old model.
Still seems viable for a season.
These don't stop.
And then a new one starts.
(41:43):
They often have long periods of overlap.
And if the, if your old customershave captured the resource allocation
and the capital markets have captureda measure around gross margin or
whatever other financial measure,
you may not have the crisis in theold world at the time you need to
(42:07):
invest in the new, and that reallyled to the book Scott, Anthony and
I wrote, called Dual Transformation.
'cause you needed to be making changesin bold contexts concurrently, and this
is already hard enough, you've gotta keepthe old context tight and aligned and
(42:27):
rewarded in capital markets and customermarkets you're building a new context.
And, and that's why a separatecontext, a separate division, it
sounds like such a simple heuristiclike set up a new division.
But it's a simple solution toa very, complex problem, which
(42:49):
is world still is working whilethe new world is being created.
And you can either kill the old worldlet that world continue to operate
you start to build the new worldin a completely separate context.
(43:09):
And you see this in evolutionary biology.
And you'll see the, they draw thesewith fitness landscapes where a
population is still well fit to aclimate or an environmental condition.
And a new condition is,forming on the periphery.
And the peak of that world willnot be realized by the old peak.
(43:33):
In fact, any move from the top ofthe peak is a downward decline.
if you're trying to optimize,you stay on the top of the peak.
Right.
So I think one of, the things, dualtransformation, I hate to belittle
my work, or certainly our belovedcolleague Clay's work, disruptive
(43:54):
innovation, dual transformation,are all just really interesting
applications of Joe's original theory.
Joe, can I ask this question?
Clay comes along, is doctoralstudent late mid-career, comes back
(44:15):
to do his doctorate after Clay.
You ha you know, I, I, I'llget the sequence out, but.
know, Tom
Right.
Tomo Noda Don Sull,
some of those folks arereally, really smart.
Others like me we're justabove average on our best days.
(44:35):
Okay.
you kept,
I don't know if it was every one ofyour doctoral students in that 10, 12
year period, but almost every otheryear doctoral students won best doctoral
paper in the Academy of Management.
Were you just good at picking these guys?
(44:55):
they really smart or were, what was itabout the lens you gave All of us that
helped us see things others had missed?
I would say it was two things.
One, , I really,
(45:18):
I insisted that the people essentiallyget out and look at something
and.
I run, Yves Doz talks about this.
He said, Joe introduced me to someoneI think it was, and then he just left.
(45:41):
So I had to do it.
And I think that's the second thing thatif you a, if you want people to really
think you can't constrain them becauseall you're gonna do is tell them what
they can't do and what's not right.
And they are have to have the opportunityto, to, to start really talking to
(46:09):
people who are way up there and beginningto understand , and sitting in the
room and watching what's going on.
And I think
it wasn't that can.
I mean, the people you mentioned all arepretty brilliant, including Clark Gilbert,
(46:31):
but the key thing was to get him out and
know, it's interesting, Joe, you hadClay do a deep dive in disc drives.
Tom,
Yeah.
did a deep drive in the cable industry,
Right.
the cable industry.
Don Sull in that tire industry, you know,poor Don, I mean, who wants to study tires
(46:55):
for four years, but, you know, tomo in thecell phone industry, me and the newspaper
industry, I remember my first, when weidentified this industry, my first trip
you know, , I got on an airplane, went outto an a industry meeting in the Bay Area.
(47:16):
All these newspaper companies,didn't know a person.
I just started networking
Yeah.
within three months Iwas in with the CEO of.
That, you know, 10 largest mediacompanies in the world and in
the United States at least.
And, months and months of watchingtheir decision meetings and where
(47:37):
decisions were meeting, going on salescalls watching the newsroom meetings.
I mean, things I just wouldn't have done.
And, and Joe pushed us in there, andall, all of his students, knew these,
you know, if you went into Clay'soffice, there were all the disc drives
Yes.
sitting on a shelf.
And you know, Tom Eisenmanknew those CEOs and their teams
(48:01):
at all the cable companies.
And, you know, I, I knew every newspaperexecutive and their leadership team
in the US in the entire country.
And, I do think Joe pushed us.
You pushed us, Joe, into deep,we knew them, those industries.
We knew those organizations and wewere looking at 'em with this question.
(48:24):
is strategy being made
and why isn't being madethe way you would think?
and I, you know, I just, we are allblessed that we had your framework,
but you also pushed us intoorganizations in a very embedded way.
if, don't know if you,how much do you have?
(48:44):
You run into Howard Yu?
Yeah.
I don't know.
Well, but Aiden broughthim up the other day.
Yeah.
Well,
I.
yeah, but Howard, he was the last in thesequence, but he did a, population study
of motherboard makers in, in, in Taiwan.
(49:08):
it's just in, but that's how you learn.
Yeah.
It is
Joe, what, what advice.
This is hard.
Not a lot of scholars would tell you, godeep, spend a year and a half inside an
industry and a group of organizations.
(49:28):
They'd say, put it into astate, a statistical tool, a
regression and see what you find.
For rising scholars coming up inthis climate that we talked about,
what advice would you have forfuture scholars who wanted to make
(49:48):
a big difference in the world?
it is a very hard question.
I talk with, when I talk with peoplewho are thinking about going into
doctoral work, I'm talking about
they have to go to a placewhere they'll get support.
Either that or,
(50:12):
there are places that if they're asking agood question, we'll hire them like a a,
some of the consultant firms will hire youand say, fine, you do that for a while,
we understand that if we can't keep you,you're gonna go back and write about it.
(50:33):
I think that you just have to have ayear or two to look at something that,
and I mean, typically if you haven'tbeen talking to executors, you don't
even know what's an important question
Yeah.
and, and I mean,
I love that, Joe.
I think one of the clay wrote thatlittle piece once on anomaly seeking
(50:57):
right.
do great questions come from?
And I remember I had been studyingdecision making when you were under
threat and I was looking at the newspaperindustry, but I still really early.
I didn't have a good
Mm-hmm.
yet.
(51:17):
we, we were in a doctoral seminar.
You ran, we were reading.
and by the way, Aiden, you grow up somuch when you're under Joe's development.
I, I remember asking Joe, well,what's gonna be on the test?
And he looked at me like Iwas an absolute neophyte.
And he is like, well,what do you wanna learn?
(51:39):
He's like, the wholepoint of this is for you.
We, we don't care about tests.
We want you to learn.
so I built some of the readings and wewere reading Dutton and Jackson outta
the University of Michigan who said,under threat, become risk avoiding.
And Kahneman and Tversky had said, underthreat, people become risk seeking.
(52:04):
And I realized there'sone of Clay's anomalies,
Yes.
they can't both be right.
And I finally realized that Dutton andJackson were talking about process.
Kahneman Tversky weretalking about expenditures.
And what I was seeing in thenewspaper was tightening process,
(52:26):
but increased risk taking to spend
Right, right.
I knew at that point, Joe, youdidn't have to be that smart.
I had a good question.
The right industry and any idiotcould find something really
interesting from that point on.
I just had to go do it.
And, and I, I think we spend today,modern doctoral students spend
(52:51):
so much time on methods, researchmethodologies, statistical analysis.
They don't ever look at what's aninteresting question in the first place.
Yeah.
Well, and, and I mean,it's, it's all over.
I, I mean, I have a, a grandson who isastronomer and he's been spending a, I
(53:19):
think for the last four or five yearshe's been a, an intern, but he's been
working at Keck Observatory in Hawaii and.
Everybody wants to hire himbecause he actually knows a lot,
not in, I mean, and he's, we'rewe're discussing a doctorate and
(53:46):
it's, not clear what he, he'sgonna be able to do better because
he has a doctorate other thana living as an academic, but.
There's a brilliant line.
Again, this is serendipity.
I just have a bunch of quotes infront of me in one of the segments.
Clark, you wrote this piece.
You said, the psychologicalliterature often describes cognitive
(54:08):
frames as schema, a patternimposed on a complex reality to
help interpret and guide response.
Schemas employ three basiccoding processes to process to
respond to stimuli, abstraction,interpretation, and selection.
What is encoded is heavily determined bya guiding schema or knowledge framework
(54:29):
that selects and actively modifiesexperience in order to arrive at a
coherent, unified expectation confirmingand knowledge, consistent representation
of an experience, experience.
Only the information that is relevantand important to the currently
active schema will be encoded.
And that came to mind when you said,you asked Joe what's gonna be on
(54:51):
the exam because if he had said thatyou'd only pay attention to what was
on the exam and you don't learn then.
but.
I'm saying that for that reason,but also because what your work,
and I'm talking to both of you here,I've read your work and studied it.
What it is is a new schema or achallenge to your existing schema.
(55:12):
So at least you have new lensesthrough which to look at the world.
And I think that for me, that's the.
Joy and the goal of education,including doing things like this show.
That's why I'm personally so keen tobring this work to people is so they
have new schema and they can makeat least more informed decisions.
(55:35):
And I, I believe That's what both ofyou have contributed to the world.
Well, Aiden, thank you.
And, and, you know, talk about the powerof a schema is Joe's original framework
and you know, the rippling effect it had,and you've been so generous to let us
have this time to have this conversation.
(55:56):
Joe, I'm gonna close with athought and then I'll turn it
to you for the final remarks.
First of all, my life has beenso impacted by Joe's mentorship.
And Joe, I just, you toknow how grateful I am.
It really changed my life.
I would not have gotten theinsights in my research.
(56:18):
I wouldn't have beenhired onto the faculty.
and even today, the impact I'mhopefully having on education around
the world for my church in largepart because of the way you taught
me to think all those years ago.
And, and even, even beyond thework and resource allocation, the
(56:42):
strategy at an organization level.
when, when I was asked to gooriginally by Kim Clark and the church.
I, I made a resource allocationdecision and it, it was hard.
I had been trained in a field.
I love teaching at theHarvard Business School.
But I didn't let the structureshape Myra personal strategy.
(57:06):
And, I'm so grateful I made adecision that really shaped a personal
strategy and a huge change in my life.
And I'm grateful to have beenmentored and taught so well.
I hope you know how much all of usclay, Tom Tomo, Don, so many of us who
(57:29):
you impacted, and we just, we look backat the impact you've had on us in awe.
it's an impact on a field, butit's also an impact on a group
of individual scholars bothprofessionally and personally.
I tip my hat to you and what a, whatan opportunity to have this time.
this conversation in reflection today.
(57:53):
Well Clark.
That, that is extraordinarilygenerous and I appreciate it.
And all I can say is that
I have felt very lucky that
(58:14):
I went to Harvard Business Schoolbecause it was a totally different
set of values at that timethan regular rest of academia.
Hmm.
It, most of the faculty really believedthe mission that came and, and then
(58:39):
all that happened with me is thatsomeone, some professor said to me,
you seem to really enjoy classroom.
Have you ever thought of teaching?
And of course I hadn't.
But I did.
And it was an environment that supportedcrazy ideas so that when I was so young,
(59:11):
but when I think I was 20, let's see,I joined 63, I joined the fa faculty.
So at that point I was 24, I think.
Wow.
And then, I was just very, my father hadmet this guy who was a chief economist
(59:32):
at a company, and he told, my father,told him that I was very interested
in planning and capital budgeting.
And so he said, come talk to me.
And it's through that guy that he whowho said, well, you know, it's really,
(59:56):
and then he introduced me to someother people who were very fascinating.
And when I went to talk to thedean, he said, well, I'll help you.
And so I, he, he went calledthe CEO of that company and
said, would you let our guy in?
(01:00:18):
And mean it, that's how it, it worked.
And I think it remains the way, I mean thelast I taught were at the Kennedy School
and I learned that about half to threequarters of my class was foreign students.
(01:00:45):
They were gonna lose theirfellowships from their countries
if they didn't get A's.
Wow.
So I remember I told the class, look,this is crazy, it's the way it is.
So look what, here's what we're gonna do.
You don't, you stop worrying about finalgrades and I'm gonna keep asking you
(01:01:10):
to do written work and I'm gonna giveyou grades you've never seen before.
And I discovered that's a great contractand I don't, we wanna look at it.
I mean, it, it was very clear that realfeedback, honest feedback, willingness
(01:01:34):
to talk to them about what they weredoing and what was wrong with it.
And they just blossomed.
It was a great class and I, so I did it.
I, so in my own view, I think wecan improve education if we find
(01:01:55):
better ways of giving feedbackthan published grades or, and, and
scores.
I, it's, I'm horrified that
to avoid bias, we're gonna go more andmore toward quantitative measures be,
(01:02:17):
No.
so all I guess I'm saying is that it's,I was just very lucky that I was, that my
particular set of skills was appreciatedat Harvard Business School and they
gave me the resources and said, go and.
(01:02:38):
Wow, what a phenomenon.
Thank you, Joe and Aiden, thank you forthis time and for the work you're doing.
A pleasure.
And speaking of resources, that's thebook these two gents put together.
It's a fascinating read.
It needs a deep dive.
It's the only way you learn, you giveit, you give it the adequate resource
and attention in order to learn.
(01:02:59):
It's a brilliant book fromresource allocation to strategy.
The two authors of that book, JoeBower and Clark Gilbert, Thank you.
for joining us
Thank you.
you
As always, thank you toour sponsor, Kyndryl.
You can find the Kyndryl Instituteapp and the Kyndryl Institute
content at www.Kyndryl.com/institute,where you'll find thoughts from the
(01:03:23):
world's leading experts in change,technology, ai, and so much more.
See you next week.
Before we start today's episode,I wanna thank our sponsor,
Kyndryl, over my right shoulder.
There you can find Kyndryl atwww.Kyndryl.com/institute, where
you'll find their brand new institutecontent from all over the world on
ai, on change, on transformationfrom the world's best academics,
business thinkers, and speakers.
(00:21):
. It is a massive pleasure to welcomethe two authors of this brilliant
book from Resource allocation tostrategy, Clark Gilbert and Joe Bauer.
You're very welcome to the show.
Thank you.
It's good to be with you.
I'd researched this episodeand then I had a chat to Clark
(00:41):
and he goes, you know what?
I have some questions I wanna ask Joe.
And I said, why don't you just bethe guest host for today's episode?
Because Joe has changed how peoplesaw strategy, gave them new lenses
to see strategy, and Clark hasseen so many academics and business
people flourish because of that.
So.
(01:02):
I wanna welcome our hostfor today, Clark Gilbert.
You're very welcome.
Well, thank you for having us andJoe, what a thrill to be with you.
I'll always be grateful.
I was assigned as a doctoral studentoriginally to work with Nitin Noria,
heard my questions and interestsand he said, do you know Joe Bower?
(01:24):
should be working with Joe Bauer.
I was never so grateful, Joe, to behanded off to you from someone else.
Well, my pleasure.
well let me just start, Joe, the processresearch and in particular how it,
how you connected it into strategy,through the resource allocation process
(01:46):
itself led to breakthrough research andinsight for practitioners and scholars.
Everything from disruptive innovationtheory to resource dependency, big bets
chains in the presence of fent and somany other big breakthroughs in the field.
(02:09):
What do you think it was aboutthe connection between resource
allocation and strategy that haslent so much insight to the field?
I think the key that the
(02:31):
thinking about
long range planning, thinking aboutgoals and as separate from anything
else in the organization as justparticularly something that was primarily
(02:52):
economic analysis and forecasting.
Never really was a, particular use tocompany managements because would have
an economic, a team of economists, theywould re yet it didn't link up with goals.
(03:19):
I guess because I was.
I came at it from capitalbudgeting long range planning
and they didn't fit together.
One was had this view that what youdid was figure out what you wanted
to do and then you broke it upinto pieces of assignments and gave
(03:42):
it, and that's how it would work.
the allocation of money, capital budgetingthe opposite way, worked bottom up.
and then when I watched it, and thatwas I guess, the key that I spent
a year just watching what happened
what in effect the way thecompany was run was determining
(04:09):
the direction of the company.
And that sounds so obvious,
Yeah.
it's not the way we taught about thingsand it was also much more complicated.
any of the models being used totry and help managers, but focusing
(04:34):
on how resources were used.
And once you sort of say thatto a manager, they say, of
course, that's what it is.
Yeah.
And then the sort of linking thatto how performance was measured,
performance of managers and how peoplewere paid and promoted of made sense.
(05:00):
And that really is what it was.
That kind of an in intuitive
that just how you useyour resources is going to
determine things.
And just because youwrote something on paper.
(05:21):
called a strategy or called your longrange goal that wasn't gonna do anything.
So, Joe, two things I'll pullout of that One is the actual key
insight that how resources areallocated where they're allocated.
Shapes the resultant strategy,
(05:42):
Right.
that seems so intuitive to thoseof us who've worked in this field.
But it wasn't, you said, a lot ofpeople thought it was top down, built
at the very senior levels, maybe bya strategy consulting firm, maybe
by a senior executive, and then justdownloaded it onto the organization.
(06:03):
The other thing you said wasthat it's much more complex.
in, in that first chapter of thebook, we looked at the model that you
originally wrote in 1970, and we'veexplored so much, so in so much depth.
But the resource allocationprocess is multi-level.
(06:24):
It's iterative over time sothat it's not a one-time event.
are inevitably in conflict and context.
Shapes the strategy that comes outta that.
Right.
you know, and some, some scholarsand even executives will say,
(06:46):
well, that's frustrating.
Why can't it just be clean and simple?
So is this just a real pol politicof how it actually happens?
Or is, is there something that youcould help executives understand so
(07:07):
they realize this is more than justpolitics inside of an organization?
I have to give credit toBruce Henderson because
he, he didn't have the, the same insighthe, but he did say, look, as a consultant,
(07:29):
I find everybody focused on projects,
and that's crazy.
They should be focused on businesses.
Building a business and then whichprojects are right for that business.
But you have to be allocating resourcesto businesses and that led the famous BCG
(07:57):
growth market share.
And
but that was an important insight.
So as soon as you take the intuitionthat it's the allocation of resources
that you wanna focus on, it's veryimportant to add Bruce's notion.
(08:17):
It's to businesses
Yeah.
because what we saw, both just inmy case study, but also others, don
so and so on, companies would keepallocating resources to dying businesses.
Yep.
But the project proposal would lookprofitable and it, so that was a big step
(08:47):
was important.
I think once company leadershad that insight and began to
understand that, then it took off.
And then there were all sorts ofother problems which were studied in
the various theses that we looked at.
You know, you know, starting with Clayto, Don Sull, Tom Eisenman, Tomo Noda,
(09:11):
down to me, it, of the things that'sinteresting to me about the research
is people kept picking up this insightthat resource allocation's a process
A and then B, it's, that is wherestrategy is made in an organization.
And from resource dependency, howcustomers capture the resource
(09:36):
allocation led clay to eventuallysee disruptive technology.
Tom Eisenmann looked at big bets
Right.
that was hard for, you know, Donlooked at why, why aren't we, why
aren't people getting out of, youknow, certain technologies in the
tire industry into others tomo withcell phones, me with the newspaper
(09:57):
industry, E even at the end, Clay didthat piece on personal life choices.
Yes.
Right.
know, and he looked at Harvard, MBAalums who had made really bad life
choices and he said it wasn't theirstrategy, their written strategy.
No one started with a written strategythat said, in 15 years, I wanna be
(10:19):
obsessed with my work, estranged frommy children, divorced from my wife.
And yet every day, these little decisions
Inside the personal resource allocationprocess the strategy even though the
written strategy was different, youknow, and, and so, so many settings.
(10:41):
What is it, Joe, about the, thatconnection resource allocations
to strategy that have yieldedsuch fruit for so many scholars?
It's real.
I mean, you could alsoask it the other way.
Why has so much academic researchof late lacked any intuitive power
(11:07):
and been not very useful at all?
I was thinking, we may get to thislater, but there's a lot of fraud
in published research these days,
which is terrible.
Well, how is that happening?
(11:29):
Well, if you, you can fake thedata think about process research.
Yeah.
If you don't do that, you, you go findout what's going on and what the reality
is, and then you try to understand it.
And Over time.
(11:51):
You begin to un understandingsmake it possible for researchers
coming along the even further work.
There are plenty of questions now.
Joe, let's go into that.
You know, you talked about why somany miss it, and of course you
can't do this kind of researchjust sitting in your office.
(12:13):
You have to embedyourself in organizations.
You have to observe.
I remember we used to teach theIntel multi-part case at HBS and
would see the first you know, the Acase, was Andy Grove was the CEO and.
(12:35):
they were trying to get out of dramsand, and into microprocessors, he
couldn't get the senior leadership tochange the budgets, but deep down inside
the organization, I think it was the,the guy on the manufacturing floor was
allocating manufacturing capacity basedon gross margin per wafer square inch.
(12:59):
but that because financegroup said he had to do that.
And it moved a multi-billion dollarcompany out of Drams into microprocessors.
And Andy Grove thought he had to makethis big decision and he treated it like
he had made this big corporate executivedecision, but in the end, really a guy
(13:20):
he might not have even known the nameof, had moved the entire production the
right strategy, and all he had to dowas catch up to the corporate budget in
r and d. But the MBA students looked atthat they said, oh, that's brilliant.
every company just needsthat allocation rule.
(13:41):
And they didn't see thatthat could go the other way.
So it, it's brilliant Xpost, ex-ante, hard to know.
And, and remember, the B or the C case nowhad Andy Grove trying to get the company
to invest in the celleron processor, hada lower margin per wafer square inch.
(14:05):
And I remember someone held up acell phone in, you know, and said,
what are you putting in these?
the answer for Intel was nothing.
and Andy couldn't get anyone to do it.
And it turned out the rule thathelped him get into the microprocessor
was preventing him from gettinginto the celleron because.
(14:27):
The seller on had lower grossmargin per wafer square-inch
And even then our MBA studentscouldn't see it wasn't a new strategy.
It wasn't the ex-ante X antideliberate rule that should have
been downloaded on the organization.
that strategy was multi-level
Yeah,
(14:48):
are in conflict.
It proceeds iteratively over time.
All the things you had said and evenour faculty, so these are the MBAs,
but our faculty would be like, we studystrategy, like it's a one-time event and
the more brilliant the analysis, know,then we don't need to deal with all this
(15:08):
complexity in an organization and theyjust couldn't see the phenomenon that we
are trying to teach in the Intel case.
absolutely.
And, and unfortunately it's the, thefield of strategy has become pretty empty.
(15:29):
And unimportant.
The work that is more interestingwas the work that Howard Stevenson
was doing with entrepreneurshipto get together with Bill Solomon.
Yeah.
I think their contribution was reallyto get finance out of the exhibits
(15:53):
and into the heart of the thinkingabout how a company could grow and
how important was you use resources,the timing of resources, how you
could control risk by managing thesequencing of all, but it's all so
(16:14):
what?
You know, Joe, I, I love theHoward Stevenson and Bill Salman.
Ca and it's interesting.
couldn't do that in strategy.
They had to create a new,we created a new unit at
Right,
and, and in a lot of ways,clay couldn't do what he did
exactly.
In,
union.
(16:35):
tm.
That, that it, it was, and evento this day, Clay's course sort
of sits, it's popular with thestudents, it's not academic.
Yeah.
Yeah.
And I, I remember I all out of thedignity to our colleagues, I won't say
(16:55):
who it was, but one of our strategycolleagues and I, I'd been, I had left
HBSI and I was running all the LDSchurches, media companies, and a bunch
of New York media firms asked me to comeand a, and a leading strategy scholar
who was still in a strategy department.
(17:16):
And he presented the Netflix case and,you know, how dis how strategy should
be made at Netflix and how that shouldbe transposed to media companies.
And he said, all of the strategy canbe made with these two decisions by
a strategist you know, why botherwith the rest of the organization?
(17:40):
And I literally couldn'tbelieve he would say that.
And yet he really believed it.
Yes.
what do you think it is about.
The modern academic enterprise thathas made so many strategy scholars miss
what happens inside an organization.
Either they miss it out of ignoranceor they think, well, it's just
(18:03):
dysfunctional decision making.
And if we could just get peoplethe rational decision making, this
is how an organization should run,
Think about academia as a largeorganization ask the question
then how are, are resourcesbeing allocated to whom and why?
(18:26):
How is performance being measured?
Performance is being measuredby referee published in referee
journals, but ideally a journals.
So in fact, the people who arecontrolling the progress of individuals
aren't even the faculty in the schools.
(18:47):
the editors of the journals andthey are sitting in t tunnels
talk about tunnel thinking.
Each journal and journalshave proliferated.
I don't know how many there are now, andI remember the first time I went to an
academic meeting as a department chairand you get this book of abstracts.
(19:13):
So I'm pretty diligent when I have a job.
So I looked at all the, it,most of it was terrible.
I don't, I mean, was crap.
It and.
These poor people had been workinghard at this stuff and it was just,
and then you begin to talk to academicsand their goal in life is to get senior
(19:39):
enough so that they don't have to teach.
So it's the whole enterpriseunfortunately, is corrupt.
Joe, I don't know if I've sharedit with you, but when I left HBS
and I was leading strategy for theuniversities of BYU Idaho BYU pathway,
(20:01):
and in the media organizations, Iwrote a short little five page case
on the Harvard Business School itself.
And I started with theformal statement of strategy.
You know, and, and it starts withthe opening section with Kim Clark.
Presenting a PowerPoint slide withthe mission statement of the Harvard
(20:24):
Business School on the first slide.
educate leaders who makea difference in the world.
And I take two junior academics.
It was disguised, but itwas me and Mary Tripps
and we're, we joined the faculty.
We hear Kim Clark say that strategyand we're like, this is awesome.
This is why we came to theHarvard Business School.
(20:46):
We wanna do work that will helpleaders make a difference in the world.
And then the first year Iwon a rookie teaching award.
the response from mydepartment isn't enthusiasm.
It's, Hey, we need to take youout of the classroom because we
think you like teaching too much.
(21:08):
I was like, but the missionstatement of the Harvard Business
Schools educate leaders who willmake a difference in the world.
And they're like, well,your teaching's good enough.
You don't need to get any better,just stop working hard on it.
You know?
And you know, and so after thatdeflating moment, then you know, Mary
gets a piece published in the HarvardBusiness Review her department chair
(21:30):
and colleagues are like, why are youpublishing in the Harvard Business Review?
And she's like, well, it'sthe most influential business
publication in the world.
And they're like, you need to publishin peer reviewed academic journals.
And she's like, the missionstatement says, educate leaders
who make a difference in the world.
aren't reading the journals, they'rereading HBR and by step, these
(21:57):
two young faculty get the messagedeepen by, by the way, back to your
model, deepen the organization thatshould allocate their resources.
And what are the resources forfaculty time and attention?
It's not money, it's time and attention.
We allocate our time suddenly now tojust the peer review academic journals.
(22:20):
That's right.
And and then late in the process, I getthis research sabbatical and we're at the
Academy of Management and colleagues aresaying, how did Clark get that sabbatical?
And the, and the person that I'vewritten up as my colleague who
loves teaching, loves the MBAstudents, she says, oh, is so lucky
(22:46):
he gets to be out of the classroom.
Teaching is such a tax.
Huh?
And she, I know she doesn'tbelieve it that way, but every
day over those first five years ofdecisions are going another way.
Right.
and Aiden, you have tounderstand it's so hard.
'cause I'm this junior faculty member.
(23:06):
I'm Joe's former star doctoral student.
like, why are you evengoing to the academy clerk?
It's a waste of time.
Yeah.
colleagues are sayinghe's gotta get published.
And I, I win the PA paper of the year inthe Academy of Management Journal, but
it gets through by the skin of my teeth.
(23:27):
my editor, I don't think shehad ever been inside a business,
Right.
know, for her, this was, you know, asociology publication or a psychology
publication, a business publication.
And, you know, and I thought,here's Harvard Business School with
a multi-billion dollar endowmentand it can't carve its own path.
(23:54):
That's right.
to replicate every otherbusiness school in the world.
And with all of those resources,the Academy and peer review
journals had captured.
resource allocation process.
And Joe, I think that is why, I mean,your own research is why your research
can't be done today in by junior scholars.
(24:18):
And it, you know, as powerful as HBSis, it's own resource allocation system.
Its strategy has been captured by, inClay's terms, in Robert Burgelman's
terms by its customers, which nowaren't students or alumni the publishers
(24:40):
and scholars at other institutionswho definitely don't believe that
the mission should be educate leaderswho make a difference in the world.
that, exactly right.
And we're not.
It.
That's not our main goaltoday in our conversation.
But if you wanna ask, why is itthat we're having so much trouble
(25:04):
with the Trump administration?
It's precisely because ofwhat you're talking about.
a lot of what gotpublished was really crap.
And then it, it, it, I mean,we're lucky that at least
they're talking about business.
And if you think about impact of forCO or what's and Dorita and so, and
(25:29):
they're saying there are no facts.
There is no reality.
Yeah.
There's a reason why we're having these
Yeah.
I think it's so interesting becauseI think that blind spots for process
research the very kinda research youled so effectively aren't cognitive,
(25:52):
aren't intellectual, they'restructural, which is, you know, what
the very insights from the Resourceallocation Pro, I mean, back to 1970,
I'm just gonna come in for a momentbecause there's a perfect quote I
pulled from one of the chapters.
It says, Joe Bower showed how thestructure of the incentives and
(26:14):
reporting systems shapes which projectsoperating managers will consider,
middle managers, will champion, andcorporate level executives will fund.
This led to the conclusion that structureshaped strategy, and it's, it's perfect
for exactly what you're talking about,but also Clark, what you experienced is
what so many people who are listenersto this show, heads of innovation,
(26:38):
heads of change or transformation.
They come in with the best of intentionsAnd, then they pretty much learn the
way things are done around here by thebehaviors and the reward incentives.
And Aiden, the, so many people think it'sa cognitive or an intellectual problem.
What Joe taught us isit's a structural problem.
(26:58):
Joe, do you remember the Teradyne case you
Sure.
It, it's the, we use that toclose in the final chapter.
I remember Joe had Alex d'Arbeloff come,and Joe and Clay Christensen and I were
doing a workshop with the CEO of Kodak,the CEO of Hallmark, the CEO of the us or
(27:21):
the secretary of the US Navy Intel, allof the, the CO in their top five reports.
taught that case.
Alex came, Al, Alex had been the CEOof Teradyne and Joe, the chairman
of m mi the board, board at MIT.
chairman of mit.
(27:41):
Yeah,
And, and I remember one of the vicepresidents asked Alex, Alex, you,
you understood this, you, and thenyou protected new projects from the
structure that was killing them.
And what if your CEOdoesn't understand this?
And I remember Alex paused andhe said, I'd find another job.
(28:08):
You give us a bit of context on that guys?
Could you elaborate a littlebit on the Teradyne case?
Alec d'Arbeloff, the wayhe would describe it.
The first Teradyne makes testequipment for chip manufacturers.
He had all the strength of a goodengineer, which is important.
(28:31):
He cared about substanceand was very frustrated
as time developed, his engineers justkept trying to make things more and more
complicated and their customers loved it.
'cause they would be faster.
customers.
Yeah.
(28:51):
Their leading.
And he, stayed as a good engineer,kept reading the literature.
He became very concerned that newtechnology going to permit the critical
parts of testing to be done much witha much, much more simpler process.
(29:19):
And he kept trying to get people in hiscompany to study it and they wouldn't.
So finally, he hired a consultant towork with the new technology and see
if in fact he was right and he wasso then he still couldn't persuade.
(29:43):
I mean, the power of thecustomer is very real.
then what
I
happened was he set up aseparate unit and even there.
a classic case and the customercaptured every part of the
resource allocation process, so thesalespeople wouldn't prioritize it.
(30:03):
The product teams wouldn't make it
Right.
because they had built theirDNA around the customer.
And so an externalstakeholder had captured that.
And the only way Alex could getaround that is create a new context
and that was the new division.
even there, the head of engineering andthat new thing was approaching the problem
(30:31):
the way they had that always had done it.
And Alex said, look, there'sa very interesting company.
Go talk to them about whatthey're doing, a new company.
How did Alex know that?
Well, he, he stayed broadly aware.
And it turned out they were using
(30:56):
coding methods that are, that were totallyad hoc, totally specific to specific pro.
this firm was using Excel
and they modified Excel to doeverything this engineering
vice president wanted to do.
(31:17):
And cost $300, not only that, you coulddo it right away instead of taking weeks.
So the seeking simplicity, I mean, Aleckept saying to his engineers things.
One, started with an eight bit chip.
(31:42):
We were able to build atester with eight bits.
Now, why do you need all complexity?
The second thing he, when he was, hewould always eat in the cafeteria,
and he said, I love to ask theengineers what they're doing, and
then why does the customer buy it?
(32:04):
And they would alwaystell me about the product.
And I would say, no, no, no.
I'm asking you why doesthe customer buy it?
And it, it, it was, was very hardto get them to understand that the
customer, this clays language, now you'resolving a problem for the customer.
(32:29):
And if they're buying it, it mustbe 'cause you're doing it well.
And those are such simple ideas.
What what struck me?
When I've been thinking about thisand thinking about your, the future
there, I mean, Elon Musk as a managerof a company is a very unusual guy.
(32:56):
I mean, I think he was disasterin the government, but he,
I mean, think about it.
He got a good attractive carselling in the market, 18 months,
general Motors, Ford, all, theycan't get a good electric car.
(33:16):
So what is he, I wrote down his question.
He said, question every requirement.
The only laws are physics.
Delete any part or process.
You can simplify and optimize.
Accelerate cycle time and automate.
(33:38):
And we don't know thathow to deal with that yet.
But that's, and what's interestingwhen you talk to people from his
company that he, they, they say he'sbrutal about asking those questions.
And if we aren't persuaded him whenwe're debate discussing something
(34:06):
critical, he'll say, okay, haveto do it my way, it's on me.
it's fails, it's my, so he gets it.
He's not holding people's livesaccountable for his decision.
(34:26):
He's, he's, we don't, I, I think thereare a whole bunch of these guys Clark.
That we really don't understand yetbecause they're playing a role in what we
call definition or that is a little morepowerful than we've studied carefully.
(34:53):
And and there are a bunch of them.
I mean, there's Edison, Steve Jobs at all
yeah.
Gates Bill, and that'spretty interesting stuff.
I mean, I would say in your worldwhat you are doing is like that
Yeah.
you're ha a very powerful impact,
(35:17):
but you're not ignoring the process.
Well, and you know, even, even for meAidan, if, you look at the church's
educational system, we have thisflagship, scholarly focused National
Merit Scholars program in BYU.
(35:38):
We have a teaching focuseduniversity in BYU Idaho.
We have an onlineuniversity in BYU pathway.
You know, someone might think, oh, that'sa nice portfolio, each one of those
couldn't do what the other one did.
In the structural context, they had,they had a resource allocation process
that leads to a very different strategy.
(36:00):
So to do the next one, you hadto do it in a different setting.
you know, as an executive in my church.
Of course it's a spiritual endeavor,I'm Dr. I'm benefited all the time from
the early work from Joe and from Clayabout how structure determines strategy
(36:21):
and you just can't do certain things.
And I think Joe, the entrepreneursyou describe, they're doing things
outside of the traditional context.
That's right.
The current system willnot yield that answer.
So I'm gonna create anentirely different system,
In our last chapter we when we look atthe model, we put the financial markets
(36:48):
and then the product in one as context.
Yep.
External thing and
they have changed so much.
And academia hasn't changed,
(37:09):
I mean, hardly at all.
If anything, it mayhave gotten more rigid.
But I think that's, again, thepower of the model is to help people
see, okay, if, capital marketswant us to perform all the time and
(37:35):
doesn't fit what we're trying to do,
new product.
then I have to find a way of structuringmyself so that I'm protected, and
some companies have done exactly that.
CI wanted to share guysa brilliant metaphor.
I came across it, it's aboutthe term undermining the, or
(37:58):
origin of the word undermine.
It's a military tactic actually.
So the whole idea was you'd have bigcastle walls, then they'd tunnel in under
the wall, they'd build a timber frameto keep up the wall structure, and then
they'd light it on fire and leave it.
So the, your, your, your strengthwould become your weakness.
And I, and I always think about that.
(38:18):
as a metaphor for what happenshere, is that the incumbent has a
way of doing things, including acognitive frame of how to do things.
And then.
The technology shifts, thedisruptive innovation comes along.
And there's a line that stuckwith me from Gary Hamel.
He said, to give up a bird inthe hand, you have to see a
(38:40):
flock of birds in the bush.
And that when you have a technologysay that's not based on a Moore's law
change, like from an Intel computer chipto a mobile phone, which is much cheaper
and they can't see the future, and theycan't lean into things like Moore's Law.
It's that dilemma or that paradoxthat the real structure, the real
(39:03):
struggle is, and it still remainstoday with so many companies.
And I'd love you to share yourthoughts on managing that.
'cause that has not gone away.
As you said, Joe education hasn't actuallydealt with that, those changes, but that
paradox or that dilemma hasn't gone away.
(39:24):
Well, this is where I thinkClark's thesis, Clark's research
added a, very important,
element, and that is attention tothe issue of cognitive framing.
(39:44):
That if you are,
you know, can, most of it tendto be hard, pretty hardwired.
When we get up in the morning, wewant things to be the way they were
when we went to bed the night before.
And when the world is changing, wehave a very hard time dealing with it.
(40:14):
And boy is the world changingaround us in an important way.
I mean, another one of the questionsthat I put down was just how is it
that things that we thought werevery, like in, in ai, AI in the United
States is absorbing huge amounts ofpower and enormous time to do things.
(40:39):
is it the Chinese got it so fast and theyhave a much simpler, what are they doing?
Why are their cars even they, can,they are beginning to disrupt Tesla.
What is going on there?
Now, there are aspects of peoplewill say, oh, it's a cooked market.
(41:02):
You know, they get subsidiesand so, but we use subsidies to
reinforce what we're doing, not to.
So it's, there are things westill need to understand, we are
hardwired to do what we've before.
(41:23):
And Joe, one of the things on this,changing cognitive lenses is it's
really hard when, yeah, you hearrumblings of coming, but the old model.
Still seems viable for a season.
These don't stop.
And then a new one starts.
(41:43):
They often have long periods of overlap.
And if the, if your old customershave captured the resource allocation
and the capital markets have captureda measure around gross margin or
whatever other financial measure,
you may not have the crisis in theold world at the time you need to
(42:07):
invest in the new, and that reallyled to the book Scott, Anthony and
I wrote, called Dual Transformation.
'cause you needed to be making changesin bold contexts concurrently, and this
is already hard enough, you've gotta keepthe old context tight and aligned and
(42:27):
rewarded in capital markets and customermarkets you're building a new context.
And, and that's why a separatecontext, a separate division, it
sounds like such a simple heuristiclike set up a new division.
But it's a simple solution toa very, complex problem, which
(42:49):
is world still is working whilethe new world is being created.
And you can either kill the old worldlet that world continue to operate
you start to build the new worldin a completely separate context.
(43:09):
And you see this in evolutionary biology.
And you'll see the, they draw thesewith fitness landscapes where a
population is still well fit to aclimate or an environmental condition.
And a new condition is,forming on the periphery.
And the peak of that world willnot be realized by the old peak.
(43:33):
In fact, any move from the top ofthe peak is a downward decline.
if you're trying to optimize,you stay on the top of the peak.
Right.
So I think one of, the things, dualtransformation, I hate to belittle
my work, or certainly our belovedcolleague Clay's work, disruptive
(43:54):
innovation, dual transformation,are all just really interesting
applications of Joe's original theory.
Joe, can I ask this question?
Clay comes along, is doctoralstudent late mid-career, comes back
(44:15):
to do his doctorate after Clay.
You ha you know, I, I, I'llget the sequence out, but.
know, Tom
Right.
Tomo Noda Don Sull,
some of those folks arereally, really smart.
Others like me we're justabove average on our best days.
(44:35):
Okay.
you kept,
I don't know if it was every one ofyour doctoral students in that 10, 12
year period, but almost every otheryear doctoral students won best doctoral
paper in the Academy of Management.
Were you just good at picking these guys?
(44:55):
they really smart or were, what was itabout the lens you gave All of us that
helped us see things others had missed?
I would say it was two things.
One, , I really,
(45:18):
I insisted that the people essentiallyget out and look at something
and.
I run, Yves Doz talks about this.
He said, Joe introduced me to someoneI think it was, and then he just left.
(45:41):
So I had to do it.
And I think that's the second thing thatif you a, if you want people to really
think you can't constrain them becauseall you're gonna do is tell them what
they can't do and what's not right.
And they are have to have the opportunityto, to, to start really talking to
(46:09):
people who are way up there and beginningto understand , and sitting in the
room and watching what's going on.
And I think
it wasn't that can.
I mean, the people you mentioned all arepretty brilliant, including Clark Gilbert,
(46:31):
but the key thing was to get him out and
know, it's interesting, Joe, you hadClay do a deep dive in disc drives.
Tom,
Yeah.
did a deep drive in the cable industry,
Right.
the cable industry.
Don Sull in that tire industry, you know,poor Don, I mean, who wants to study tires
(46:55):
for four years, but, you know, tomo in thecell phone industry, me and the newspaper
industry, I remember my first, when weidentified this industry, my first trip
you know, , I got on an airplane, went outto an a industry meeting in the Bay Area.
(47:16):
All these newspaper companies,didn't know a person.
I just started networking
Yeah.
within three months Iwas in with the CEO of.
That, you know, 10 largest mediacompanies in the world and in
the United States at least.
And, months and months of watchingtheir decision meetings and where
(47:37):
decisions were meeting, going on salescalls watching the newsroom meetings.
I mean, things I just wouldn't have done.
And, and Joe pushed us in there, andall, all of his students, knew these,
you know, if you went into Clay'soffice, there were all the disc drives
Yes.
sitting on a shelf.
And you know, Tom Eisenmanknew those CEOs and their teams
(48:01):
at all the cable companies.
And, you know, I, I knew every newspaperexecutive and their leadership team
in the US in the entire country.
And, I do think Joe pushed us.
You pushed us, Joe, into deep,we knew them, those industries.
We knew those organizations and wewere looking at 'em with this question.
(48:24):
is strategy being made
and why isn't being madethe way you would think?
and I, you know, I just, we are allblessed that we had your framework,
but you also pushed us intoorganizations in a very embedded way.
if, don't know if you,how much do you have?
(48:44):
You run into Howard Yu?
Yeah.
I don't know.
Well, but Aiden broughthim up the other day.
Yeah.
Well,
I.
yeah, but Howard, he was the last in thesequence, but he did a, population study
of motherboard makers in, in, in Taiwan.
(49:08):
it's just in, but that's how you learn.
Yeah.
It is
Joe, what, what advice.
This is hard.
Not a lot of scholars would tell you, godeep, spend a year and a half inside an
industry and a group of organizations.
(49:28):
They'd say, put it into astate, a statistical tool, a
regression and see what you find.
For rising scholars coming up inthis climate that we talked about,
what advice would you have forfuture scholars who wanted to make
(49:48):
a big difference in the world?
it is a very hard question.
I talk with, when I talk with peoplewho are thinking about going into
doctoral work, I'm talking about
they have to go to a placewhere they'll get support.
Either that or,
(50:12):
there are places that if they're asking agood question, we'll hire them like a a,
some of the consultant firms will hire youand say, fine, you do that for a while,
we understand that if we can't keep you,you're gonna go back and write about it.
(50:33):
I think that you just have to have ayear or two to look at something that,
and I mean, typically if you haven'tbeen talking to executors, you don't
even know what's an important question
Yeah.
and, and I mean,
I love that, Joe.
I think one of the clay wrote thatlittle piece once on anomaly seeking
(50:57):
right.
do great questions come from?
And I remember I had been studyingdecision making when you were under
threat and I was looking at the newspaperindustry, but I still really early.
I didn't have a good
Mm-hmm.
yet.
(51:17):
we, we were in a doctoral seminar.
You ran, we were reading.
and by the way, Aiden, you grow up somuch when you're under Joe's development.
I, I remember asking Joe, well,what's gonna be on the test?
And he looked at me like Iwas an absolute neophyte.
And he is like, well,what do you wanna learn?
(51:39):
He's like, the wholepoint of this is for you.
We, we don't care about tests.
We want you to learn.
so I built some of the readings and wewere reading Dutton and Jackson outta
the University of Michigan who said,under threat, become risk avoiding.
And Kahneman and Tversky had said, underthreat, people become risk seeking.
(52:04):
And I realized there'sone of Clay's anomalies,
Yes.
they can't both be right.
And I finally realized that Dutton andJackson were talking about process.
Kahneman Tversky weretalking about expenditures.
And what I was seeing in thenewspaper was tightening process,
(52:26):
but increased risk taking to spend
Right, right.
I knew at that point, Joe, youdidn't have to be that smart.
I had a good question.
The right industry and any idiotcould find something really
interesting from that point on.
I just had to go do it.
And, and I, I think we spend today,modern doctoral students spend
(52:51):
so much time on methods, researchmethodologies, statistical analysis.
They don't ever look at what's aninteresting question in the first place.
Yeah.
Well, and, and I mean,it's, it's all over.
I, I mean, I have a, a grandson who isastronomer and he's been spending a, I
(53:19):
think for the last four or five yearshe's been a, an intern, but he's been
working at Keck Observatory in Hawaii and.
Everybody wants to hire himbecause he actually knows a lot,
not in, I mean, and he's, we'rewe're discussing a doctorate and
(53:46):
it's, not clear what he, he'sgonna be able to do better because
he has a doctorate other thana living as an academic, but.
There's a brilliant line.
Again, this is serendipity.
I just have a bunch of quotes infront of me in one of the segments.
Clark, you wrote this piece.
You said, the psychologicalliterature often describes cognitive
(54:08):
frames as schema, a patternimposed on a complex reality to
help interpret and guide response.
Schemas employ three basiccoding processes to process to
respond to stimuli, abstraction,interpretation, and selection.
What is encoded is heavily determined bya guiding schema or knowledge framework
(54:29):
that selects and actively modifiesexperience in order to arrive at a
coherent, unified expectation confirmingand knowledge, consistent representation
of an experience, experience.
Only the information that is relevantand important to the currently
active schema will be encoded.
And that came to mind when you said,you asked Joe what's gonna be on
(54:51):
the exam because if he had said thatyou'd only pay attention to what was
on the exam and you don't learn then.
but.
I'm saying that for that reason,but also because what your work,
and I'm talking to both of you here,I've read your work and studied it.
What it is is a new schema or achallenge to your existing schema.
(55:12):
So at least you have new lensesthrough which to look at the world.
And I think that for me, that's the.
Joy and the goal of education,including doing things like this show.
That's why I'm personally so keen tobring this work to people is so they
have new schema and they can makeat least more informed decisions.
(55:35):
And I, I believe That's what both ofyou have contributed to the world.
Well, Aiden, thank you.
And, and, you know, talk about the powerof a schema is Joe's original framework
and you know, the rippling effect it had,and you've been so generous to let us
have this time to have this conversation.
(55:56):
Joe, I'm gonna close with athought and then I'll turn it
to you for the final remarks.
First of all, my life has beenso impacted by Joe's mentorship.
And Joe, I just, you toknow how grateful I am.
It really changed my life.
I would not have gotten theinsights in my research.
(56:18):
I wouldn't have beenhired onto the faculty.
and even today, the impact I'mhopefully having on education around
the world for my church in largepart because of the way you taught
me to think all those years ago.
And, and even, even beyond thework and resource allocation, the
(56:42):
strategy at an organization level.
when, when I was asked to gooriginally by Kim Clark and the church.
I, I made a resource allocationdecision and it, it was hard.
I had been trained in a field.
I love teaching at theHarvard Business School.
But I didn't let the structureshape Myra personal strategy.
(57:06):
And, I'm so grateful I made adecision that really shaped a personal
strategy and a huge change in my life.
And I'm grateful to have beenmentored and taught so well.
I hope you know how much all of usclay, Tom Tomo, Don, so many of us who
(57:29):
you impacted, and we just, we look backat the impact you've had on us in awe.
it's an impact on a field, butit's also an impact on a group
of individual scholars bothprofessionally and personally.
I tip my hat to you and what a, whatan opportunity to have this time.
this conversation in reflection today.
(57:53):
Well Clark.
That, that is extraordinarilygenerous and I appreciate it.
And all I can say is that
I have felt very lucky that
(58:14):
I went to Harvard Business Schoolbecause it was a totally different
set of values at that timethan regular rest of academia.
Hmm.
It, most of the faculty really believedthe mission that came and, and then
(58:39):
all that happened with me is thatsomeone, some professor said to me,
you seem to really enjoy classroom.
Have you ever thought of teaching?
And of course I hadn't.
But I did.
And it was an environment that supportedcrazy ideas so that when I was so young,
(59:11):
but when I think I was 20, let's see,I joined 63, I joined the fa faculty.
So at that point I was 24, I think.
Wow.
And then, I was just very, my father hadmet this guy who was a chief economist
(59:32):
at a company, and he told, my father,told him that I was very interested
in planning and capital budgeting.
And so he said, come talk to me.
And it's through that guy that he whowho said, well, you know, it's really,
(59:56):
and then he introduced me to someother people who were very fascinating.
And when I went to talk to thedean, he said, well, I'll help you.
And so I, he, he went calledthe CEO of that company and
said, would you let our guy in?
(01:00:18):
And mean it, that's how it, it worked.
And I think it remains the way, I mean thelast I taught were at the Kennedy School
and I learned that about half to threequarters of my class was foreign students.
(01:00:45):
They were gonna lose theirfellowships from their countries
if they didn't get A's.
Wow.
So I remember I told the class, look,this is crazy, it's the way it is.
So look what, here's what we're gonna do.
You don't, you stop worrying about finalgrades and I'm gonna keep asking you
(01:01:10):
to do written work and I'm gonna giveyou grades you've never seen before.
And I discovered that's a great contractand I don't, we wanna look at it.
I mean, it, it was very clear that realfeedback, honest feedback, willingness
(01:01:34):
to talk to them about what they weredoing and what was wrong with it.
And they just blossomed.
It was a great class and I, so I did it.
I, so in my own view, I think wecan improve education if we find
(01:01:55):
better ways of giving feedbackthan published grades or, and, and
scores.
I, it's, I'm horrified that
to avoid bias, we're gonna go more andmore toward quantitative measures be,
(01:02:17):
No.
so all I guess I'm saying is that it's,I was just very lucky that I was, that my
particular set of skills was appreciatedat Harvard Business School and they
gave me the resources and said, go and.
(01:02:38):
Wow, what a phenomenon.
Thank you, Joe and Aiden, thank you forthis time and for the work you're doing.
A pleasure.
And speaking of resources, that's thebook these two gents put together.
It's a fascinating read.
It needs a deep dive.
It's the only way you learn, you giveit, you give it the adequate resource
and attention in order to learn.
(01:02:59):
It's a brilliant book fromresource allocation to strategy.
The two authors of that book, JoeBower and Clark Gilbert, Thank you.
for joining us
Thank you.
you
As always, thank you toour sponsor, Kyndryl.
You can find the Kyndryl Instituteapp and the Kyndryl Institute
content at www.Kyndryl.com/institute,where you'll find thoughts from the
(01:03:23):
world's leading experts in change,technology, ai, and so much more.
See you next week.
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