Rita McGrath & Sangeet Paul Choudary — Rule Makers, Rule Takers and Structural Uncertainty

"Structural uncertainty is simple. The game itself is in question. The playing field is in question. You're no longer playing with uncertainty inside the rules — the rules are the thing that's moving."

Rita McGrath wrote The End of Competitive Advantage and gave us transient advantage. Sangeet Paul Choudary wrote Reshuffle and won the 2025 Thinkers50 Strategy Award. Aidan McCullen puts them in the same room to ask a question neither can answer alone: in an age of AI, is advantage getting shorter, or are a small number of firms locking in something far more durable by making the rules everyone else has to play by?

In this conversation, Rita and Sangeet reveal:

• Why the two founding assumptions of strategy — that industries have boundaries, and that equilibrium is normal — are now absurd
• What Carlota Perez's turning point framework says about where we are, and why data and intelligence are the new oil
• The investor who always bet against Netflix, and the one thing he never believed the film studios would be stupid enough to do
• How Netflix beat Blockbuster before streaming existed, by serving local demand with national supply
• Why Tesla went vertically integrated in the decade everyone else preached openness
• How Reliance Jio commoditised its own cash cow, took 400 million users, and collapsed an industry from 17 players to three
• The difference between a rule maker and a rule taker, and why rule takers are condemned to run from one transient advantage to the next
• Why roughly 93% of corporate assets were tangible in 1975 and almost exactly the reverse is true today
• How Binah.ai deleted the blood draw, the lab, the chemicals and the actuary from life insurance pricing
• Sangeet's test for anyone using AI at work: are you working for the model, or is the model working for you?
• Why translators are now paid half as much to do the harder half of the job
• Rita's SDSS times two: stop doing stupid stuff, then start doing smart stuff

00:00 Sponsor Message

00:25 Strategy Rules Rewritten

01:26 Meet Rita and Sangeet

03:22 Strategy Origins and Transience

05:25 Turning Point in Capitalism

07:25 Capabilities and Competitive Insulation

Episode Transcript

(00:00):
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Conventional strategy usedto have specific rules.
When the game was largely aboutoccupying markets in the physical
world and dominating over companiesdoing the same thing you were, how we
used to think about competition, , youduked it out with existing structures.
Now, with the advent of a digital world,AI, and dematerialization, you win by

(00:49):
changing the structures themselves.
You could even say reshuffling them.
One of today's guests wrote the bookThe End of Competitive Advantage,
which highlighted the birth oftransient advantage, a business
strategy stating that companies'edges are very short-lived.
Our other guest wrote a bookcalled Reshuffle: Who Wins When

(01:09):
AI Restacks the Knowledge Economy.
So kind of like Reese's Pieces, I mashedthese two things together, and it makes
me wonder, are we seeing the end oftransient advantage, or are we seeing
a doubling down of certain advantages?
So before we attack those questions,let me first welcome not only
friends of the show, but two peoplewho have become friends of my own.

(01:34):
First, a lady who never sits still.
She just brought into the world agrandchild, and now she's bringing
in a new child and a new book, andshe doesn't sit on the laurels of her
massive success and her hit books.
She's just written a new book, whichwe'll hear a little bit about today.
Welcome to the show, asalways, Rita McGrath.

(01:54):
Pleasure to be here, Aidan
Always a pleasure, Rita.
And a gent who recently won theThinkers50 Award for strategy for
his work on platforms and thenhis hit book, Reshuffle, that
many of us have studied over time.
And he will give us a sneak peek, notonly into his new book, not Reshuffle
Part Two, but the man who calls TheInnovation Show, the idea sommelier, the

(02:18):
fine wine himself, Sangeet Paul Choudary.
Welcome to the show.
Thank you, Aidan.
So good to be back
It's great to have you, man.
And I looked everywhere for whitegloves to treat you two fine wines
with the respect you deserve.
But I thought we'd beginwith some definitions.
I thought we'd take a little lessonfrom your book, Rita, which I wish I
had 10 years ago, The EntrepreneurialMindset, where you talk about

(02:42):
the idea of an assumptions map.
So not, let's not let anyassumptions go astray and assume
people are on the same page.
So let's give a whirlwindhistory of what got us here.
Rita, you've talked before aboutthe theory of the growth of the
firm, the late Edith Penrose.
Your, the, the current collaboratorof yours, Coletta Perez, her role,

(03:06):
her work plays an important role inunderstanding long- longer term cycles.
So I'd love you to give us awhirlwind history of what got us to
today, and then maybe where we aretoday, and then what's reshuffling
it later, Sangeet can talk about
I'll try to make it concise.
So if you think about the fieldof strategy, it had, it has its

(03:27):
intellectual roots in a thingcalled industrial economics.
And industrial economics makes twoassumptions that I would argue and
believe Sangeet would agree, in today'senvironment are just kind of absurd.
The first assumption is that thereis such a thing as an industry with
clearly defined boundaries, and thatthe most significant competition you'll
face comes from within that industry.

(03:48):
And the second assumption is that thenormal state of things is equilibrium.
Because if you're an economist,you love equilibrium.
You can derive all yourfancy formulas from that.
if you relax those two assumptions, whatthat creates is a very different world.
And so if I were to go all the wayback to Edith Penrose, who was very
interested in how firms actuallygrow, and unlike most economists

(04:09):
of her time, she actually talked topeople and studied what firms did.
And what she articulated was that firmswould a success, they'd accumulate
some s- some, slack resources, andthen entrepreneurially minded managers
would go off and look for new areasto deploy those resources, and
that was what caused firms to grow.
And that firms themselves wereunique in that their paths were

(04:33):
path-dependent and idiosyncratic.
So even if you wanted to copy a firm,you'd gone on that same journey, it
would be very difficult for you to do so.
So moving forward, what I startedto look at back in the '90s was this
phenomena of transient advantage.
And my first book, EntrepreneurialMindset, was about, well, what do you
do when advantages don't last and whenthe most significant competitors you

(04:56):
face are not even in your industry?
And so that book was how dowe teach companies to behave
like habitual entrepreneurs.
next book was Market Busters, whichwas where do we look for opportunities?
Then Discovery Driven Growth was where dowe, , how do we make all this systematic?
End of Competitive Advantage, as you said,Aidan, was really about this transient
advantage phenomena and how we needto have a new playbook for strategy.

(05:18):
And then the most recent one, SeeingAround Corners, , was, well, if
advantages are transient, what arethe signals in the environment you
need to be paying attention to?
Now, the new one is really lookingat what I believe to be this massive
transition, and I, I think, Sangeet,you, you agree as well, which is
we're really going from this, systemof physical things, mass production,

(05:39):
suburbs and appliances and, you know,basically a, a robust middle class, to
a system which has yet to be defined.
We know some of what its contoursare, but we know that the mass market
paradigm is not gonna be the onethat w- works for this future system.
So Carlota Perez is a, is a researcher,an economic historian some people
call her, and she studied this andsaid, "You know, we've been down

(06:02):
this path before with capitalism."
And what happens is an old regime,and we, in our, in our situation,
the mass market phenomena loses itsability to continue to drive growth.
Capital goes lookingfor the next big thing.
When it thinks it finds it, you know,capital goes flowing and creating
a bubble, , or a series of bubbles.
But anyway, what happens iseventually the bubble comes to an end.

(06:23):
Capital, which has been gailyoperating in kind of a casino
environment, sort of sobers up.
And if we play our cards right, we, canget, , capital aligned with production,
we can reduce income inequality, and weget to what Carlota calls a golden age.
And she's argued we've donethis five times already before.
So we both, Carlota and I both believethat we're at this turning point.

(06:45):
It's, and it has all the hallmarksof a classic turning point: massive
inequality you know, populism, peoplefeeling rightly, you know, we played
by the rules and the, the rules changedon us, and we feel we're being treated
unfairly, and, and, and, and, and.
And on top of all that, now the substrateof what we're doing is creating digital

(07:05):
inputs, which are general purpose.
So Carlota was talking about GPTlong before we knew about AI.
But as oil was cheap and ubiquitous andeverywhere in the previous regime, today
data, information, and intelligenceare that in our current regime.
So that kind of brings us to where we are.
the concept of capabilitiesis an important one as well.

(07:28):
Maybe before we come to Sangeet, thesystems thinker himself, maybe we'll talk
about that because capabilities will openup later in the conversation, the idea of
playing to different rules, being a rulemaker, being a rule taker, what arena
you play in as well, which is somethingthat you talk about a lot in your work
So I define a corporate capabilityor competence as equivalent to a

(07:51):
human skill, so typing, for example.
And when you first start, you're notgonna be very good, and then as you
gain practice and get better, eventuallyyou get to the point where it's so
natural you don't even realize you're,you're making an effort to type.
So a capability in a corporatecontext is the ability to increasingly
achieve what you set out to.
in my own dissertation, whatI, what I studied was how,

(08:13):
where these things come from.
So it starts off with understandingwhat's driving what, which would be
sort of discovery-driven planning.
How are you convertingassumptions to knowledge?
Then you build a team that getsbetter and better over time.
Now, in the beginning, they'regonna be terrible because they don't
know what they're doing, literally.
As these things start to work together,you start to see the emergence of
new competencies or new capabilities,some of which are distinctive, and

(08:36):
some of those distinctive competenciescan create a competitive advantage.
And Sangeet, I wouldlove a different word.
I don't, I 'cause it's notadvantage over competition.
It's gaining rents from theenvironment that, that you alone
can access, and I don't knowhow to describe that succinctly.
But anyway to me, a competitiveadvantage has three necessary conditions.
So you have to get the marketenthusiastic about it, so somebody's

(08:58):
gotta be willing to pay you for this.
You've gotta get your company enthusiasticabout this, and we have this myth in our
heads that something that's beloved by themarket is gonna be beloved by your firm.
No, not necessarily.
Your sister divisions may not beset up to support and endorse you.
And then you've gotta have some kindof competitive insulation, otherwise
people will copy that's the, thegrowth path of a competitive advantage.

(09:22):
Sangeet opens you up perfectlybecause recently I had the amazing
honor to host Carlos Baldwin andKim Clark on the book Design Rules.
And what I, what I really learnedabout it, also with the work of Rebecca
Henderson, was that you create thosecapabilities that Rita talked about.
You're terrible at them.
Then you create the firm based on thosecapabilities, and you inadvertently

(09:46):
create s- silos inside the company,and then that informs all future
products going out of the companybecause they become kind of a mirror
of the organizational setup, and theyneed to be reshuffled in an age of AI.
Or not that they need tobe, but they have to be.
They have no choice as the organization.
So I, I always see your work as a, asystems thinker in action, and actually

(10:11):
the growth of your work throughplatforms as well to where you are today.
But I thought it was important totalk about something that's a huge
shift from a physical world, wherewe created physical products, to a
digital world, which is the idea of anetwork effect on a digital platform.
I'd love before you get stuck in onwhere you see strategy is today and
that idea of rule maker, rule taker,to describe to us the idea of a network

(10:36):
effect and what a digital platform is
Yeah, absolutely.
So my, my first body of work wasfocused on explaining digital
platforms and network effects.
But really what we saw with digitalplatforms back in you know, 2010s and
what we are seeing with AI right now,there's something underl- underlying

(10:56):
both of them which is very similar, andis that you have a shift in technology
because of which previous bottlenecks getremoved, you start seeing a fundamental
restructuring , of the landscape.
I won't even use the termindustry to Rita's point.
You start seeing arestructuring of the system.
And so the last time around the mostinteresting set of shifts that brought

(11:22):
this together was the convergence of thesmartphone data and cloud capabilities
and to some extent, the social graph.
All these four things comingtogether gave us what we now
think of as the platform economy.
Now, the reason that's interesting isthat before that convergence happened,
the shift to online had alreadyhappened quite some time back, but

(11:45):
the mental models we had all throughwere very much channel-based mental
models or artifact-based mental models.
We were focused on transformingthe artifact from the store to the
website, from offline to online,and we even looked at, say, a
Netflix versus Blockbuster as well.
Netflix is going online;Blockbuster was offline.
Fundamentally, we were missing the factall through that when technological shifts

(12:10):
play out, they allow a fundamentallynew way to restructure the system.
I'll just give a simple example whichhappened even before the, the smartphones.
So N- take Netflix as an example, right?
Both Blockbuster and Netflixwere delivering DVDs offline
and through physical logistics.
But what really separated the two wasthe fact that Netflix had a data-driven

(12:32):
inventory management system which allowedit to predict demand at national scale.
Because as customers were queuingwhich DVDs they wanted to get access
to, they were giving the signalsto Netflix in terms of where they
could move DVDs across the country.
And what that helped Netflix dowas it allowed them to convert

(12:53):
what was previously a local market,because Blockbuster, you had
local supply serving local demand.
Even if the movie was available40 miles away, you would not
drive all the way to get it.
You were still s- being servedby stores in your vicinity.
Netflix, because it could move inventoryat national scale, was able to serve
local demand with national supply.

(13:14):
And it's simply impossible fora local demand, local supply
economic model to compete with thatfor a variety of reasons, right?
And that, that essentially is whatenabled Netflix to, compete or, to,
fundamentally create a model thatBlockbuster simply could not copy.
It could copy the removal of latefees, it could copy going online.

(13:37):
It could simply not copy thismodel of serving local demand
with national inventory.
Now, the reason all of these things areimportant is because when we started
seeing the convergence of smartphone,social, cloud data, we started getting
the ability to create global markets whichcould be orchestrated using a central

(13:57):
brain, which is what data allowed, andwhich could have trust embedded in them,
thanks to social technologies improving.
And so that led to the rise ofcompanies like Airbnb, Uber, and so on.
And what we saw as the dominant modelacross all of this was that the firm
was no longer creating products andservices and selling it to the customer
in the traditional linear model, whichis what I call the pipeline model.

(14:20):
The firm now was creating the rulesand the tools for the market to come
together and transact with each other.
But the other thing that, the firmwas doing was that it was changing
the distinction between who was arule taker and who was a rule maker.
Traditionally, the regulator was therule maker, and companies competing
in the market were the rule takers.

(14:41):
And the structures within which theycompeted, the industry structures
that we're talking about, used tobe very fixed, very clearly defined.
And what started happening firstwith the smartphone, because
a-a-and with data, because withboth of these things, you could now
easily cross industry boundaries.
The smartphone allowed thecustomer journey to cross
different industry boundaries.

(15:02):
Data allowed capabilities to crossdifferent industry boundaries.
And because of that, you now had thisconvergence where the rule making of
these new arenas was up for grabs.
And so that created this, thedistinction between who could make the
rules and who could take the rules.
So you had Uber, Airbnb, Google, Facebook,all of these companies emerging as

(15:23):
rule makers, eventually the platformcompanies, and everybody participating
in their ecosystems were the rule takers.
That brings us to thisidea of network effects.
You know, the i- fundamental idea ofnetwork effects is that once you provide
the tools and the rules, because youare making the rules, others are taking
them, and you organize demand and supplyaround yourself, you start benefiting

(15:44):
from network effects, not because you'veaggregated the market, but because
you aggregated them in a way that theysubscribe to your rules, and hence the
more they engage with your governancemechanism, the more they play by your
rules, the more value gets created onthat basis, the more it becomes difficult
for somebody else to displace you.
And that is essentially what we saw withthe rise of platform business models.

(16:07):
Beautiful.
Beautiful job.
I wanna just double click on onething you said there, because it
speaks to what Rita calls an arena.
So what arena do you play in?
And, , it's why I love doing thiswork, I think the work that we do is
to give people a new set of lenses.
Our mutual friend, Scott Anthony, toldme that Clayton Christensen's wife,
Christine, used to joke with him thathis, his glasses had an S-Curve built

(16:31):
into them and, and his disruptiveinnovation model was in there, and
he saw everything through that lens.
And it stuck with me as this conceptthat when we give an organization a
new lens through the work that youdo, that we all do in this field,
they can see advantages that theyhave sitting right in front of them.
And the reason I mention that is sometimesorganizations, lots of which you've worked

(16:53):
with, don't see the oil, to Rita's point,that could be data sitting right in front
of them, some capability that they've,they've built, that if they see it through
the new lens, they could unlock it.
And I think bringing them thiswork and bringing them these
new concepts, the books that youwrite, is a way to unlock that.
And Rita, I'd love you both to sharean example of when you've seen that in

(17:15):
play, because I really wanna make thisrelevant to people to go, "Oh, that's
not just talking about Airbnb and Uber."
Airbnb, A- Airbnb was a physicalproduct in the first place, and
eventually either they realized orsome consultant or some- something they
read unlocked a new way of seeing theirv- their business, and it became a

(17:35):
platform, or they saw it as a platform.
I'd love you to share that i- asan encouragement for people to
see that this is relevant to youand so much so in this age of AI.
Oh, absolutely.
Before I go there though Sangeet Iwas at an investor conference not too
long ago, and there was a, you know,an investment advisor there who said
he had always bet against Netflix.

(17:56):
And we all looked at him in horrorand we said, "Why would you bet
against Netflix? They're so great."
He said, "I never thought the moviestudios would be stupid enough to provide
them with all that content." I think itreally reinforces your point about where
the choke points are, because if youlook at it very narrowly, right, what the
movie studios were all saying was, "Whoa,all this new revenue from, you know,

(18:18):
old libraries of content which we arenot monetizing anymore," because they've
already gone through their life cycle.
They were in the movies, thenthey were on TV, then they were
on reruns, then they were… Andthey're just sitting there now.
, We're not monetizing them.
And Netflix "Oh, here's a whole newrevenue stream if you license them to
us." And this guy was saying, "I can'tbelieve anybody would be so stupid
to allow this competitor to emerge ina market, with that would eventually

(18:40):
destabilize that power transition."
something I learned from you was then,Netflix didn't rest on their laurels.
They saw the threat, and they went,"Actually, we need our own competitive
advantage here, which is our own content."
to make it really concrete, I run a courseat Columbia called Leading Strategic
Growth and Change, and as part of thatcourse each participant prepares what

(19:00):
we call a personal case, which is somesituation or dilemma or problem that
they're facing, and they write it out.
And then we put them in small groups withw- e- every day they, they work with their
groups on making progress on their case.
Now, they may not get to a solution, butalmost always they have their assumptions
challenged, they think about whether theydefined the problem accurately or not.

(19:23):
And one of the participants inthat course was a guy who was in
the seed and fertilizer business.
S- sensible enough, right?
And his, the problem he came intothe course with was, well, how do
I improve, you know, better, betterseed and fertilizer combinations?
And, and was wrestling with it, andabout halfway through the course,
the light bulb went off in hishead, and he said, "Wait a minute.
I'm not in the seed andfertilizer business.

(19:43):
I'm actually in the informationbusiness, because through the business
of selling these seeds and fertilizers,I have all this information about the
quality of the soil, and which plantsrespond best, and how best to deal with
weeds, and that information actuallyhas huge value to local townships,
and environmental regulators, andpeople that are concerned about, you

(20:04):
know, are we overusing the soil?"
And, you know, all kinds of things.
And he left the case, and you'dbe very proud of this, Sangeet.
He left the case with, the course,with the idea of creating indeed
a platform on another example isthe Leading Hotels of the World.
Same, same sort of scenario.
They came into my course, andthe original idea was, well,

(20:24):
how do we make this collection?
And these are uniqueindividual hotel properties.
And Ted Tang, who was in my course,said, "Oh, what we really need to
create is a platform for these hotelsso that there's this commonality
that a guest would experience eventhough they're all very different."
And so their their tagline became,"Every kind of one of a kind," which I

(20:45):
thought was just so interesting, right?
Rita, I hope you got some contra onboth of those for the garden and for
as an educator, you kind of we, we liveon the reflected glory, right, Aidan?
Sangeet, speaking to that, one ofthe cases we spoke about recently was
John Deere as a, a great example thatto extend the idea of the garden.

(21:05):
But I'd love you to shareone that you've seen.
Again, just to encourage people tosee what they do and the capabilities
they've built through a different lens
Yeah, I think, one thing I'd like tocall out is that Very often discount
the value of a lens and look for silverbullets, and this was my experience

(21:25):
with this whole platform journey, right?
A lot of companies would call me and theywanted to figure out if they were building
a platform or not, and if they werebuilding a platform, how is it different
from one of the big tech platforms?
And so it was all about we've set thisbox as the winning box, and we need to
figure out how we fit inside that box.
And the question is really, you'renot looking for a silver bullet.

(21:46):
You're looking for a new way tonavigate an uncertain landscape.
you're looking to understand if thelandscape is uncertain, how do I read it?
And what are the few points atwhich I apply pressure which
then works in my favor, right?
That's what you're essentially looking at.
What, what kind of givesme that, that leverage?
And if I go back to the Netflix examplevery briefly, what Netflix has done all

(22:10):
through and which is why anybody who'sbet against them has struggled, it's
they've always looked for what is the newchoke point that needs to be released.
another example is Tesla, right?
Tesla's North Star was always,this is an emerging industry.
We need to get to maximum drivingrange, in order to get to that driving
range, we have to work with capabilitiesthat are evolving very rapidly.

(22:33):
So we need to figure out whichcapability is the bottleneck right now.
Once we release that, what's the next one?
And so if you look at Tesla's s-sortof strategy, if you will, right?
During a time when everybody was talkingabout openness, platforms, et cetera, they
were vertically integrated because whencapabilities are rapidly evolving, only
way to guarantee end user performance isto work across the full chain and figure

(22:57):
out where the bottleneck is, attack it.
Battery performance, go for it, attack it.
Charger performance, go for it, attack it.
Charger rollout, software, it's theintegrated set that you have to attack.
So the reason I'm saying all ofthis is when I was talk-- when I
used to talk about platforms in the,in the 2010s this was a question

(23:17):
that used to keep coming my way.
If everybody's doing platforms, whyis Tesla doing vertical integration?
So the point, again, isthere are no silver bullets.
You have to figure out what is thelandscape you're playing in, what
is re-required to play successfullyin that landscape, and given the
capability set that you have and youhave access to, what is the best way in

(23:38):
which you can orient yourself towardswhat that landscape has to offer?
So that's, that's really key a-and you,you mentioned the John Deere example.
I mean, there are many other cases Iwould say which are, quite interesting.
A client or a company that I workedwith over the years which is quite
interesting is this Norwegiannewspaper company called Schibsted so

(24:02):
Schibsted Media Group they came fromthe traditional newspaper business.
And then when newspapers gotunbundled, so the traditional bundle
used to be content classifieds andadvertising, and Google unbundled it,
aggregated all the advertising towardsitself, content became commodity.
So they decided, "Let's double downon classifieds." Pretty soon with

(24:23):
social, mobile, cloud, everything Italked about, the platform economy
came in and they realized pureplay classifieds doesn't work.
We need marketplaces, so theymoved into marketplaces, created,
a common ID and a common paymentsmechanism across all of that.
And now some of the questions that they'relooking at is, well, in the platform
economy, there was the idea of a networkeffect, and if you were running a real

(24:46):
estate marketplace or if you were runningsay, a used car marketplace, you had
the benefit of the local network effect.
So think again th- about theBlockbuster versus Netflix example.
A real estate marketplace, a usedcar marketplace, these are all local
network effect models, so it's verydifficult for the global player to
come in and get into your business.
So Zillow might dominate in the US,but they won't easily come into Norway.

(25:09):
All of those marketplaces are havinga Netflix moment because a horizontal
AI model trained in the US can comein and become a buyer-side agent
real estate transactions, on mobilitytransactions in a European market.
And so the traditional marketplacemodel unbundles, the network effect

(25:29):
is no longer strong enough, and AIor, you know, a horizontal AI player
can either get trained in one market,move to others, or get trained
in one vertical, move to others.
As long as it represents the buyer sidewell, it is able to represent their
participation across multiple markets.
So again, the point I'm trying tomake is this is an example of a
traditional business, 150 years oldor whatever, constantly looking at

(25:54):
new lenses, and that's what we need.
We can't say, "Well, network effectsare the way to go," and then suddenly
AI comes in and you're still applyingthe network effects model because now
you have a buyer-side agent coming inand disrupting the network effect model.
So that's the key point.
Always look for what is the rightlens with which you should be looking
at the uncertainty you are facing.

(26:15):
And you know, I mean in businessmore than anything else, all models
are wrong, but some are useful.
So even if, you know we have thisconversation and there are points
where Rita and I may agree, andthere are points where we may not
agree as much, it's because allmodels are wrong and some are useful.
And I believe both the models that webring here are useful in their own ways,
and you have to figure out what's themodel you should be applying to look at

(26:37):
the uncertainty you are dealing with.
So I think that's really whata lot of companies looking for
silver bullets tend to miss.
It's not so much this is a bigtech thing, we can't do it.
It's more we've been looking for asilver bullet, it didn't work, and
now we're going the other directionsaying that this does not work for us.
So that's the wrong wayto approach innovation.
I love that you said that.
And, you know, the, the, the sillyarguments you often see about my

(27:02):
framework, deliberate, emergent,whatever it might be, are often
just the, the same person looking atthe exact same thing with the lens
that they have available to them.
And it's ignorance by exclusion ofthe other framework half the time.
That's one of the reasonsI love doing the show.
I love learning wi-witnesses, as you guys know.
But I also think it's so importantto just have that empathy, to go,

(27:24):
"Okay, well, what are you seeing,and how are you d- defining that?"
'Cause the definition makes a, ahuge difference to what you see.
And I wanna come to the definitionof uncertainty itself, because
you talk about the definition ofuncertainty a firm is facing, Sangeet.
But before I do, just on this idea of rulemakers, rule takers, and regulation, I was
thinking about this as you were speaking.

(27:46):
And Rita, I know you, you again,work that you've done, and you've
collaborated with Carlotta Perez.
if I'm a regulator, on a countrylevel, and I go, "This firm is too big
to fail, I need to bail it out," orthe opposite, is that we don't have
enough GDP coming in, the rules arechanging, we have to deregulate in

(28:06):
this area, like an Uber, for example.
We have to let an Uber in,so we have to actually change
how rules are done, et cetera.
There's a pressure, call itan environmental pressure, on
governments to change the rulesas well as we go into this.
And they too lack the lenses to seewhat's actually right in front of them.
And they have some gold right there.

(28:27):
They might see it astrash, but it's treasure.
And I'd love you to maybe sharewhat, what shift you see there.
So, 'cause a lot of people in regulationlisten to the show, and I'd love you
to share your perspectives to them
If you have a policy role, I wouldlove to be in touch with you,
whatever level of policy you're at,because we are in this seismic shift.

(28:47):
So we are going from a world whereenergy was cheap and materials were
cheap and plentiful and trade was fairlyfrictionless and, you know, there were,
there were a known set of, of rules andwe're going into a world where really
for our own good energy should beexpensive, materials should be expensive.

(29:08):
there should be greater frictionsbetween moving stuff around.
So a couple of quick examples.
Right now we as a species s-s-- we spendmore calories moving food around the
world than we do actually consuming it.
So just to take a simple example,there are fisheries off of Norway
that catch the fish, freeze it, sendit to China where it gets deboned and

(29:30):
then it gets sent back to markets,like in the Nordics and in France.
That's insane from a perspectiveof, you know, you wanna
conserve energy and calories.
That's just nuts.
But right now we have a set of rules that,that make that economically attractive.
So I think as politicians we really haveto think about what's the directionality
that we want to give capital?
Because capital by and of itself,it's like a river, you know, it's

(29:52):
gonna flow wherever the, you knowtells it to and wherever gravity goes.
So it by itself does nothave a moral imagination.
So as a policy maker, whatwe ought to do, right?
Is think about how do we createmore broadly shared prosperity.
Because if all the billionaires controlthe wealth, we know from history that

(30:13):
creates social instability, populismand potentially far worse things.
And we muffed it at the end of the '20s.
What happened in the '20s was therewas this incredible advance in
manufacturing capability so we hadactual mass market capability but
there was no corresponding demand.
People didn't have money.
And so you had all this excess capacityand, and at the same time incredible

(30:37):
poverty and deprivation and it wasn'tuntil we had Roosevelt's New Deal, the
Second World War and a group of peoplevery intelligently sat down and said,
"What kind of rules do we need so thatwe don't repeat the '30s or break them?"
And out of that came the world orderwe currently are very familiar with.
So the Bretton Woods Agreement,the Marshall Plan which some people

(30:57):
have described as the, the biggestbribe ever offered in history but
what that did was it rebuilt Europe.
It created demand for American goods andit created a fairly stable social bloc.
You had the IMF, World Bank.
I mean this whole structure thatcame out of-- that was all designed
and I think people forget that.
You know, it's what's the oldline from Hamilton, right?
"I wanna be in the room where it happensnot just assume that it happened."

(31:20):
so policy makers think about whatwould it take to make a lifestyle
that's less asset intensive okay?
would it take to make energy actuallyreflect the true costs of burning?
What would it take to you know-be kinder to labor and harsher
on pure investment returns.

(31:40):
And those kinds of questions arethe things I really encourage
policymakers to think about.
So, you know, my expertisereally is on corporations.
A little bit on public policy, but,but I think there's a, a bunch of
really rich conversations to be had.
And what we know made that sosuccessful in War period was it
was government stepping up, butit was also business stepping up.

(32:01):
It was ordinary people puttingpressure on moving certain
things to work a certain way.
And so the answer for the demand questionwas let's make the suburbs happen, right?
And then when people can afford a house,let's create the 30-year mortgage.
Let's build the highway infrastructurethat means then we'll need cars, and
then those houses all have people inthem, so they're gonna need appliances.
And it was just this really bigcreation of demand together with

(32:24):
a broadening a, a reduction inincome inequality and a broadening
of payments into ordinary people.
Now, the parallel, right?
So back then, the, these leaders saidto themselves, "You know, we don't
wanna repeat the '30s, and there aregonna be literally millions of men who
are going to be demobilized, and wehave just spent the last four years

(32:45):
teaching them how to kill people. Thisis probably not a good situation if we
don't have anything for them to do."So there was a real sense of urgency,
and I think what you're seeing now isthe beginning of that sense as well.
You've got, large numbers ofpeople feeling very hard done by.
You're starting to see, which sadindicator, you're starting to see

(33:05):
violence against business leaders.
know, I mean, Sam Altman just had aMolotov cocktail thrown on his porch.
I mean, you don't have to be a geniusto figure out that a large number
of people feel that business is notworking in their best interests.
You had the murder of a healthcare CEOon, in broad daylight in, in New York.
So, and business leaders andthe government leaders need

(33:26):
to kind of pay attention tothings that maybe they're not…
You know, back to your idea oflenses Aidan, maybe they're not
normally thinking about this, thatpeople are telling them very, very
clearly this system is not working
Thank you for saying that, Rita.
And also, as an Irish person, thankyou for your work on Irish policy that
we're benefiting from today, but isabsolutely transient and needs an update.

(33:50):
That pol- those policiesneeds an update as well.
, Before we come to Sangeet on the samepoint for policies makers and what
you're seeing, Sangeet, what you'reseeing the really advanced thinkers out
there from a country level are doing, Ithought about what you said, Rita, about
the idea of build the infrastructure.
So in, in Ireland, we had a lotof our infrastructure built by

(34:10):
overseas companies, so therewere public-private partnerships.
, And it… I, I always see it as ametaphor for business, that Clay
Christensen used to talk about thisidea of the Ship of Theseus, of about
outsourcing, like ASUS and Dell.
Don't outsource too much because youwon't have anything left and that you'll
give them all the competitive advantage.
But that giving away of the crownjewels, it's such an important aspect

(34:33):
as well from a metaphorical concept.
Sangeet, maybe you'll share whatyou're seeing out there and the
threats you're seeing as well.
, riffing off what you just said aboutoutsourcing, because one of the
issues with this whole question aroundoutsourcing was that the easier lens
to use around outsourcing was, is thisoperationally something that should

(34:55):
be outsourced or can be outsourced?
The, the more important lens should havebeen, is this strategically something
that should be outsourced in the sensethat if I outsource this, will I enable
the creation of capabilities outside?
And y-we've sort of seen that withApple in China and all of those
things in, in recent cases whereeven the best companies fall prey

(35:16):
to over-outsourcing capabilities andbuilding rival capabilities externally.
And, you know, all of this sortof comes back to looking at , your
competitive system the system in whichyou are playing - with the right lens.
Because going back to this point aboutthe world we created in the latter half
of the previous century, which was stablefor a period of 40, 50 years or so, the

(35:39):
post-war all the way through globalizationtill digital happened, if you will.
It was a fairly well-structured worldwith clear boundaries to industries,
clear boundaries in terms of whereyou could meet the customer, w- how
you could reach the customer, a-and how the customer could interact
with the business, and so on.

(36:01):
assets applied to which industries.
W- there was a lot of asset specificitywhere- whenever there was assets around
which you could create advantage.
And in, in this in you know, inthis scenario, the, the dominant
uncertainty that firms faced was whatI think of as operational uncertainty.
It was the rules of the game were fixed.

(36:21):
It was uncertainty within that.
So you were playing the same game,but, you know, demand would fluctuate,
and you would have supply shocks,but fundamentally, the way your
business worked or, or more broadly,the, the, the, the phrase I would
just use is rules of the game.
The rules of the gamewere very fixed, right?
Today, we're increasinglyconfronting structural uncertainty.

(36:44):
This happened with the shift todigital and then to the platform
economy, but even more so with AI.
The, the big difference between whathappened with platforms 15 years
back versus what's happening with AIright now is that you are, you know,
the, the impact of technology isplaying out not just at the level of
structured interfaces between firms.

(37:06):
It's playing out in workflows insidefirms, in unstructured interfaces like,
you know, negotiations and contractsand conversations between firms.
All of those things which weretraditionally beyond the impact of
technology are now getting restructured.
So, for instance, if you deploy a salesagent to negotiate with your customer,

(37:27):
or if you run procurement where anagent is working on your behalf, you
have converted a previously tacit,unstructured interaction into a highly
structured learnable interaction, whichchanges where the value of the interaction
accrues, whether to the procurementmanager at that point or to an AI tool
provider somewhere else or to some otherplayer's learning loop, and so on, right?

(37:51):
And so that is a, a, a reallyprofound shift that we haven't
yet come to terms with.
But whether it's with what happened with,you know, platforms or what's happening
with AI right now, what's common acrossall of this is that we're increasingly
confronted with structural uncertainty.
And structural uncertainty,very simply put, is that the

(38:11):
game itself is in question.
The playing field is in question.
You're no longer workingwithin the rules of the game.
You're no longer playing withuncertainty within the game.
The game itself is uncertain.
And so that is where The real advantage,and this is the key idea of my next book,
which I call term "Unfair Advantage,"the real source of advantage comes by

(38:32):
setting the new playing field, definingthe new playing field, and defining the
game within it in a way that everybodyhas to follow and start playing your game.
An example to illustrate this iswhat happened with Reliance, which
is an oil and gas company in India,moving into telecom with Reliance Jio.
So Reliance moved into Reliance Jiowith this technological shift that

(38:55):
happened when India went from 3G to 4G.
They were the first mover, investedin 4G infrastructure, and overnight
they commoditized voice and data.
They made it almost free, and throughthat, amassed 400 million users over
a period of three to four years.
Now, the reason that was sointeresting was that the traditional

(39:16):
telco model was invest a lot ininfrastructure and make money on voice
and data, and suddenly Reliance hadcommoditized the cash cow, right?
Now the telcos who were competing orthe incumbent telcos, Reliance is also
a 100-plus-year-old company or, it's avery traditional company, if you will.
So it's not an AI native startup comingfrom s- somewhere and doing all of this.

(39:36):
But they were thinking in termsof structural uncertainty.
The telcos that saw this, they thought ofthis in terms of operational uncertainty.
They felt, well, the game is supposedto be the same, and now -- Reliance
is basically starting a price war.
So they started engaging in a pricewar, which was fundamentally misreading
the whole game, because what Reliancewas trying to do was commoditize

(39:57):
data and voice, through that amassan audience, and move that audience
into higher value-added services overwhich you own the central choke point
because all of them are coming to youthrough commoditized data and voice.
And That essentially moved the industryfrom some 17 or 20 players to really
two or three big players overnightbecause everybody who read that as

(40:20):
playing the same old game but runninga price war, all of them went out
of business or had to consolidate.
And a few rivals like Airtel, whoinitially read it wrong, but then
realized what the real game was andthen changed their game to, play
the structural game as well, theysucceeded and they've played on.
So that's a really interestingexample of you're, no longer in

(40:40):
the traditional telco industry.
You fundamentally changed the game.
You fundamentally changed theplaying field because you're no
longer just selling voice and data.
You're going into e-commerce, you're goinginto content, you're now competing with
Netflix, Amazon, and, , Facebook, Amazon,Google, everybody's investing in you.
So -- you've changed both the playingfield and the game at the same time.
And so that's the, distinction of whatI call a rule maker versus a rule taker.

(41:03):
Rule takers are constantly movingfrom transient advantage to transient
advantage to transient advantagebecause they're taking the rules of
anybody who's willing to set them.
That's the rule takers, but the rulemakers have the ability to corner a
certain arena, capture that, and then keepcoding there or keep expanding beyond that

(41:24):
as long as they continue making the rules.
But, you know, as, as we see with it'snot traditional competition anymore, but
at the same time, today's rule makers canbecome tomorrow's rule takers as well.
So it's constant reinvention.
You know, Google seeing OpenAI comingup, rule maker had to take rules for
some time and now is trying to figureout how to make the new rules as well.
So that's really the distinction that Ifeel most companies miss, which really

(41:49):
explains a lot of what's happening today.
One of
the fun stories to me is how Reliance Jiogot going, and apparent- I'm told that
the daughter of the founder had been inNew York and was attending university
there, and came back to India and said,"Why is our service so awful compared
to what we've got in other parts of the

(42:10):
Right
Right.
Which I thought was a veryhuman aspect to that story.
I'm sure it would havetriggered over there.
Yeah.
Rita, from your perspective there, if,if you're gonna understand rule-making,
rule-taking, firstly you have to a-almost unbundle yourself and understand
your capabilities, where, where you'vebuilt capabilities itself, which i-

(42:30):
it's kind of like an inventory of sorts.
And one of the questions I wanted toask you both was this, was I, I sh- and
the way I'm gonna do this is actuallygonna illustrate with a, a brilliant
image I use in my own workshops,which, which is the, the following.
So you can see it on the screen there.
For those just listening, 'cause most ofthe show are listeners, it's a giraffe as

(42:51):
an artist painting a woman who's wearingan orange hat, and the artist has created
a brilliant version of what they can see.
The giraffe is the artist.
They're looking head down onto thewoman, which is, all they've painted is
essentially an orange dot on the page.
Now, the woman's gonna be disappointedwhen she sees that, kind of like when
you go to Paris and you get your portraitpainted and it's terrible for 10 euro.

(43:16):
But from your own perspective, ifyou were to look at your work through
the lens of someone else and say,"This is where people challenge my
work," how would you articulate that?
So Rita, your work, say, for example,competitive advantage, then to transient
advantage, and some people would go,"No, no, there, there's moats to be had,"

(43:38):
or, "There's a, a long-term advantageto be had," where would you see that?
And then Sangeet, I'm gonnacome to you, yourself.
So this is what I'm saying, that I,I see a lot of this kind of people
arguing their perspective, which isperfectly right from your perspective.
But I'd love you to, in a way,if you had somebody challenging
it, to go, "Here's what theychallenge and here's what I say."

(44:01):
Roger Martin and I,debate this all the time.
And we actually had a series in HBRwhere I think Roger's article was s-
entitled something like, competitiveadvantages, habitual advantages last
forever, and my counterpoint to that wasold habits die hard, but they do die.
And so there's a whole group of peoplewho are still very wedded to the

(44:24):
traditional frameworks of strategy.
So, there are people even today whowill say Michael Porter's Five Forces
is the way to understand where yous- where you are, in competition.
So for those that don't knowit, it basically what Michael
Porter did was brilliant, right?
What he said was, "If you want tounderstand how a company's gonna
make big fat profits you need tocreate the company equivalent of a

(44:45):
monopoly." So what you want is powerover your buyers and suppliers.
You want to be unique sothere are no substitutes.
You want low levels of rivalry, andyou want high barriers to entry, right?
Well, Sangeet, tell me, isGoogle, Apple, Samsung buyers,
suppliers, rivals, substitutes?
All of the above.
So to me, that framework it operatesvery well in a specific set of

(45:10):
boundary conditions, and more andmore of our economy has nothing to
do with those boundary conditions.
So you know, my, my argument with folksis we're really looking at, if you look
at the, the, the, the balance sheets ofmost large companies in 1975, you would
have had something like 93% of the assetson those books would have been tangible

(45:31):
assets, so plant, property, equipment,inventory, you know, you name it.
If you took the same slice of companies inour economy today and, and looked at it in
2026 it, it would be completely flipped.
It would be something like 93, 94%intangible, so intellectual property,
software patents you know, thingsthat you cannot drop on your foot.
And so if we're talking about strategydesigned for an era in which it was

(45:54):
things you could drop on your footversus strategy today, which is about
network effects and value from connectionand, you know, things that used to be
physical things being replaced completely.
I'll give you a, a concrete example.
So there's a company in Israel called BinaAI, and they've developed this application
which can use a phone to get vital signs.

(46:19):
So in the past, if you wanted to get, say,life insurance you would go to a doctor.
You'd get blood drawn.
The blood would go to a lab.
The lab would analyze it using chemicals.
The chemicals wouldgive a certain reading.
Then somebody expert would read it.
They'd say what it was.
Then the results would go to an actuarywho would then give you a price and
say, "Okay, this is how much it'sgonna cost us, you know, cost you
for, for us to insure you," right?

(46:40):
All that, that's the way it used to be.
Bina, you start yourapplication on the phone.
get to the point where you needto submit your vital signs.
What you literally do is you hold thephone up to your face and you circle your
face a few times with the the light fromthe phone doing just under under your
skin analysis of your vital signs, andI think they're up to 15 vital signs.

(47:01):
Then no actuary, the, the results of thatthing go to an AI built into the app it
runs through its calculations, which it'sbeen taught to do, and it gives you a
price right then and there in two seconds.
So no blood draw, no lab, nochemicals, no reading, no actuary.
All that disappears.
So when people say to me, "Oh, you know,five forces," you tell me how that's

(47:21):
even relevant in an example like that.
It's, it's, you know, it's acompletely different solution
to basically the same problem.
So I, you know, I always try tounderstand when people criticize
my work, which I'm always open to.
You know, you can always learn something.
I try to really understand whatboundary conditions they're coming
from, and very often they're justoperating with a very different
frame of reference than I would be

(47:43):
and that's why I found Sangeet,your definition of the whole idea
of being comfortable with beinguncomfortable, but it depends on
what uncomfortable means to you
Mm-hmm.
an organization.
I think that's a huge, it's a hugechallenge in life when you come
across arguments all the time.
Like, my wife just thinks Itake way too many risks, and I'm
like, "Um, what's the big deal?"

(48:03):
But we have totally different settingsof what comfort and what risk is,
and that has a huge determinationon how you see things and how you
measure things and how you go forward.
Sangeet, the same question to you.
That idea of when you're looking fromperspective, where do people come at
you in a way, and maybe the, the mostcommon way, because somebody always does

(48:25):
Yeah.
Yeah, absolutely.
So I think, there are two or threethings . First is that I, I welcome other
perspectives just from the perspective ofall models are wrong, but some are useful.
So let's start with that, andthen let's try to figure out
what are your assumptions whatare your first principles?
What are the first principles basedon which you are creating your model?

(48:47):
Because the problem is that peopleargue using models, and those models,
to Rita's point, have s- assumptionsunderneath which are not very explicit.
And so the models, emit answerslike, "This is right, that is wrong.
This is the way to think about it."
But if you really have a more fundamentalconversation about what the assumptions

(49:09):
are underneath, what-- and you reasonit out through first principles, that,
that gives a much richer conversation.
And so , coming in and disagreeing isopen to doing that, we've always figured
out a way to identify where we are seeingthings in a fundamentally different way.
It's difficult to argue out the models.
It's much easier to figure outfrom first principles what you

(49:30):
are looking at differently, right?
, But the, the third thing that I wantto say is probably the most important,
and that is this, that a lot of the,the criticism on a model on what the
receiver understands of the model,not on, you know, underst-- They
don't go into figuring out what thef- what the principles underneath are,

(49:54):
why the model was created that way.
And that, that happens because there's alot of silver bullet thinking going on.
So you'd use you know, take the idea of aplatform or take the idea of a reshuffle.
All of these are packagedconcepts because packaged
concepts are easier to understand.
There's a specific boundary.
It can fit in a book.
It can fit in a keynote.
And so people then get wedded toas absorbing that package concept.

(50:19):
But what's important is both understandingwhat the assumptions are and much
more importantly, understanding whatthe dynamics are, because the package
concept only contains the statics.
I'll just talk about, you know, twoways to think about dynamics, which
are really important today, right?
So first, I talked aboutstructural uncertainty outside
in what's happening to the firm.
If the playing field was stable,as was traditionally the case, then

(50:42):
the assumptions of the playing fieldand how you get advantage and which
positions are advantageous versus not,where can a distributor have more power
versus a supplier have more power,all of that was very straightforward.
But if the playing field is theobject of strategy, and if every firm
is then pursuing actions that arechanging the state of the playing

(51:02):
field, that means that the dynamicsare more important than the statics.
You have to constantly understand andmonitor how the rules of competition
are changing in response to thef- to the moves that individual
firms are actively taking.
So it's no longer power of buyers,bargaining power of suppliers,
substitutes, none of that matters.
What matters is who's changing,who's making what moves, and

(51:26):
how is that changing the playingfield that you are operating in.
It's no longer bilateral power.
It's working on the playingfield and the playing field
putting pressure back on you.
So understanding that is dynamics.
I'll take another example of dynamics,which is more inside out, right?
It's very easy to say that, "HeyThat's an AI-native firm, and

(51:48):
this is not an AI-native firm.
This firm has adopted AI, this has not.
But if you really think about whatAI does to a firm, it creates a
constantly evolving capability set.
The reason I say that is becausethere are three vectors through which
this constant evolution happens.
First, AI capability in itself constantlyevolves because with every new model,
we're extending what that capabilitycan do, a certain capability, right?

(52:13):
Then the second thing is that there'san adoption and diffusion element to
it, which is the extent to which it isbeing adopted in the firm and becoming
a usable capability for the firm.
So even if Anthropic or OpenAIlaunch new capabilities, they become
usable inside the firm only oncethey're adopted in a certain way.
And the third is, as these capabilitiesget adopted, people who are using AI or

(52:38):
who are in the firm, they constantly tryto rethink what they should be doing,
and so they're evolving the capabilitiesthat they can offer to the firm.
if you really think about the firm,there's a dynamic playing field because
everybody is making a different choice andimpacting the field, and there's a dynamic
capability set because it's constantlyevolving with this constant sh- constantly

(53:00):
shifting division of what humans do,what machines do, and how everybody
is reimagining their work around it.
And so the goal of the firmis to fig-figure out how to
marry, marry those two things.
And if you think of those in terms ofstatics, where you say, "Okay, we need
an AI strategy, and you know what?We need a strategy for horizontal
AI coming in, and we need a strategyfor our s- our suppliers coming into

(53:23):
our business," those are all statics.
And so a lot of the criticism to any modelhappens because in a world which should
be understood through dynamics, peopleare arguing it on the basis of statics.
That's been my experience.
Man, you remind me of the Heraclitusquote that, "No one ever steps in the
same river twice, for it's not the sameriver and they're not the same man or

(53:43):
woman." But I always think about this asthe way the world continually changes,
where it's almost like jumping intoa moving train, and inside the moving
train there's a conveyor belt, andyou're trying to land on one of those
wobble boards to strengthen your ankle.
And the train is on a boatthat's going down a waterfall.

(54:03):
So everything's moving, and it's not allmoving in the same direction, either.
But one of the things just both of youalluded to is this, is that y- you talked
about the individual there, Sangeet.
The individual in the age of AI, and I seethis as a real threat, I wrote about this
today, is that we're also using AI to tryand understand what to do in an age of AI.

(54:28):
And by not actually going through thestruggle of the work, and I, by that
mean reading the papers, reading thebooks, studying the work, we lose that
ability, and the organization loses thatability, and there's gonna be very few
people who actually can attend to actuallyunderstand this work, and we're gonna
outsource all that thinking to the LLMs.
And there's nobody actuallymaking the strategy anymore.

(54:49):
And it's a real danger because already Ifind it really hard to understand how a
CEO or a strategist with- inside a companyis getting the time to actually study
work, to understand all these differentframes, to understand all these different
lenses, to see things differently.
Because if they have to do that and theystill have to deliver and they still
have to lead people and develop people,where do they get the time to learn?

(55:13):
And time needs to be carvedout for the learning.
And in times like, Rita, I, I saw yourecently wrote, wrote about the MIT
Sloan review being shut down, when weneed it probably most in the world.
Th- like, this is a real challenge, andI just thought we'd share a thought from
you both on that challenge that we'reseeing on a human level, regardless

(55:34):
of strategy, the ability to attendand to actually do the strategy work.
I think that's, really a questionof discipline and prioritization.
Work will expand to occupy allthe time you allocate to it.
And so if I give somebody halfan hour to solve a problem or
have a negotiation or do a thing,it'll get done in half an hour.
If I give them two hours,it'll take the two hours.

(55:55):
So I think the first issue that Isee in companies is just very poor
Prioritization and clarity aroundwhat's on the agenda and what's not.
So it's like peanut butter, right?
It's a little bit ofeverything all at once.
Where-- And so this argument that I'mmaking about strategic centering is
it should really inform your agenda.

(56:16):
And I've said for years that ifsomething's important to you, so let's
say it's innovation or it's strategyor it's whatever, I wanna be able to
look at your agenda, which is what's onyour meeting list, how you spend your
time, who you're with in meetings, andI wanna see that visibly represented
as item number one, two, or three.
So if you start from there and say, "Thisis not a nice to have that I'll squeeze

(56:37):
in when other pressures me," but if yousay, "This is actually-- this is the
most important thing I do." For example,Vas Narasimhan, who's the CEO Novartis
has a great phrase which I really love.
He said he sees his primary job asdirecting the energy of the organization.
Like-- And he's a scientist andhe's an enormously capable person.
But that, that leadership rolethat he's got is directing

(57:00):
the organizational energy.
So that, that, that's one.
The other thing that I think is, is trueis we, we're, we just take on a lot of
stuff, and we're not judicious aboutwhat we can stop doing and what we what,
what we believe to be important or not.
So, you know, a friend of mine,Sharon Price John, who was the

(57:21):
CEO of Build-A-Bear Workshop andis now taking on that role at
Carter's has this great phrase.
She calls it SDSS times two.
And the first SDSS isstop doing stupid stuff.
You know?
And if you think about it, over time,any organization accumulates stuff,
you know, habits, processes, approvals.

(57:42):
I read somewhere that, that atHarvard, they're, they're doing this
exercise right now, and that it w- tooksixty-seven steps to hire somebody.
You know, sixty-seven completelydifferent processes to hire somebody.
Well, so get rid of that stuff, sothat'll clear a lot of bandwidth.
And then the second SDSSis start doing smart stuff.
But until you get the deck clearedof the stupid stuff that's no longer
relevant, you're not gonna havethe bandwidth to do the new things.

(58:04):
So I think that's a, just a, apoint of discipline, you know?
And making choices is hard.
But hey, if you got the top job,that's what you're getting paid for.
And Sangeet, what's your take?
Yeah.
You know, I, I, I'm going tocomplement what Rita shared.
I'm going to look at it from a differentangle of what has it-- what has,
what has been my personal experiencesort of thinking about my work as,

(58:28):
you know uh, I've started using AI.
So One of the key things that I believeis important is to make a distinction
between are you working for the model is--or is the model working for you, right?
I mean, at the extreme, it's thedistinction that I make between an
Uber data scientist and a driverUber driver, where the Uber data

(58:48):
scientist is, you know, structuringthe algorithm and the Uber driver is
essentially working for the algorithm.
But you know, in a differentway, it applies to a lot of
knowledge work that we do.
We, we sort of collapse all of it inthis fuzzy word called augmentation.
Just because you use the tooldoesn't mean you're using it right.
so the way I think about it is that ifmost of my time is spent in generating

(59:13):
AI and then correcting and fixingit and making it usable for myself,
I'm really working for the model.
I'm not making the model work for me.
And in order for… What thathas then helped me, you know,

forced me to think about is (59:27):
how do I make the model work for me?
How do I provide it sufficient context?
How do I think about creating a frameworkand a structure where I don't have to
keep providing it context every time?
And there have been differentways of going about it.
You know, I've worked on creating aknowledge graph that brings together
all of my research links it to otherresearch that's interesting, and then

(59:48):
I always start the model by creatingthe knowledge graph first before
I start looking at any problems.
So it starts with my lens.
Otherwise, you know, if it's genericanswers that I'm retrofitting into my lens
that's, that's just a lot of wasted work.
So, so that's one thing.
You know, I'm constantly lookingat, am I working for the model
or is the model working for me?
And that's something that'shappening a lot of professions today.

(01:00:12):
You know, take the example of translation.
The moment you think large languagemodels, you think that translators
are out of a job, and clearlyboth the translation companies
and their clients think that way.
So what's happening with translatorsis that translators are stuck verifying
and correcting AI translation, whereasvery often it's faster for them to

(01:00:33):
translate the document themselves.
they are not just spending double the timedoing this, they're also being paid half
the money to do this because everybodyassumes that AI is doing all of the work.
But translation is not just mappingof language, it's understanding of
context, it's understanding of risk,what should be managed in what way.
And if if the translator isfixing you know AI output, the

(01:00:57):
easy part has been done by AI.
The harder part for which their neckis on the line is what they have to
do, but now they have to do it in aworkflow that is not familiar to them.
So that's the distinction of,you know, working for the model
versus the model working for you.
The other piece that is, is you know,I've kind of always tried to think about
is, A- and again what you wrote in yourarticle, there's an-- resonates right?

(01:01:21):
So always thinking about Am I justbeing fluent because I've got enough
output to deal with and to work with,and some slides are looking good
because Claude code designed them?
Or do I actually understand this ina way that I can tear that apart and
rethink about it in different ways?

(01:01:41):
And again new way of thinking abouthow you provide context to the
model has helped me figure that out.
The, the final point is, you know,going back to versus dynamics.
If I'm talking about reshuffle and I'mgoing to be going and giving answers
that are statics, which is, "Here'show I believe your industry is-- you

(01:02:03):
know, things are playing out, andhere's what, what this means for you."
By the time I do the analysis andI present it two weeks later the
playing field has changed again.
So clearly that is notthe right way to do it.
So what I, what I'm trying to do rightnow, what I'm-- I'm, I mean, it's still an
experiment, but what I'm hoping to do isto move the work from statics to dynamics.

(01:02:26):
So I'm working on creating an indexwhere essentially use AI as a monitoring
mechanism where, you know, agents canconstantly figure out what are the
moves that companies are making ona daily basis, bring them back in.
But what I do is I curate the centrallens in a deep way, where every move
informs the lens and the lens informshow the move should be evaluated.

(01:02:49):
So yeah, that's been my, my big personalproject this year that I've been
working on and I'm, I'm, I'm hoping tobring it out in the next two months.
So that's-- you know, those are someways that I'm thinking about how do
you preserve your edge in an age wherejust the tools are getting better,
but the way people think the tools aregetting better is actually outpacing

(01:03:11):
how, good the tools are because peoplejust assume that everything is being
solved by the tool, but it's not.
And speaking of which, Rita, you'vejust written another brilliant
article for Harvard Business Review.
I'll link to that because youcontinually go into the mind gym,
just like Sangeet alluded to.
For both of you, where isthe best place to find you?
Rita, where is the best place people canfind your writing, your books, et cetera?

(01:03:34):
ritamcgrath.com will sortof be the central hub.
I have a regular podcast, as you know,Aidan, and publish regular articles
on Substack and Medium and on LinkedIn
And I'll link to those.
And Sangeet, for people that wannafind you, where's the best place?
Yeah, you can go to reshufflebook.com andplatforms.substack.com for my newsletter

(01:03:57):
It's always a pleasure.
I always learn wi-witnesses with you two guys.
It's been an absolute pleasurelearning from you today.
Rita McGrath and Sangeet PaulChoudary, thank you for joining us
Thanks
Thank you so much
Thanks as always to our sponsor,Kyndryl, who runs and reimagines the
technology systems that drive advantagefor the world's leading businesses.

(01:04:18):
With a unique blend of AI-poweredconsulting built on unmatched managed
service capability, Kyndryl helps leadersharness the power of technology for
smarter decisions, faster innovation,and a lasting competitive edge.
And don't forget the Kyndryl Institute.
You'll find Rita, you'll find Sangeet,you'll find many more brilliant thinkers
on there, Kyndryl.com/institute.

(01:04:41):
See you next week