Robert Burgelman - The Inescapable Dilemmas of Organizational Adaptation

Strategic Innovation and the Joe Bower Model Extended with Robert Burgelman

 

In this episode, host Aidan McCullen delves into the intricacies of strategic innovation with Professor Robert Burgelman. The discussion focuses on the extension of the Joe Bower model, exploring organizational adaptation, strategic dissonance, and the strategic context process.

Burgelman elucidates four types of strategic context processes: rationalizing new initiatives, dissolving core business contexts, the emaciation of strategic contexts, and the fizzling out of proactive strategic contexts. Key insights include the balancing act between positional advantages and distinctive competencies, the dilemmas faced by multi-business companies, and the challenges of insufficient variation and co-evolutionary lock-ins. The episode also touches upon the importance of strategic leadership in navigating these complex dilemmas. This deep dive is a must-watch for anyone interested in organizational strategy and corporate innovation.

📘 Based on decades of research and experience alongside Andy Grove at Intel, Burgelman offers frameworks every leader needs to navigate uncertainty and disruption.

🎧 Hosted by Aidan McCullen
🎯 Featuring case studies from Intel, HP, Nokia, Apple, JetBlue & more

#RobertBurgelman #OrganizationalAdaptation #StrategicDissonance #AidanMcCullen #InnovationShow #IntelStrategy #NokiaCaseStudy #ClarkGilbert #GaryHamel #AndyGrove #StrategyExecution #CorporateInnovation #LeadershipDevelopment #BusinessTransformation #InnovationLeadership

 

00:00 Introduction and Sponsor Message

00:45 Welcoming Professor Robert Burgelman

00:59 Strategic Dissonance and Context Processes

02:35 Intel's Strategic Context Evolution

07:13 Clark Gilbert's Duality Insight

09:07 Disruption from Above and Below

16:58 Intel's Competency and Position Traps

27:51 Multi-Business Dilemma

39:35 Adapting Organizations to Changing Environments

40:42 Case Study: Swedish Media Company ER Bony News

42:23 Challenges of Biased Leadership

42:51 Intel's Strategic Shifts and Learning Curves

44:47 Co-Evolutionary Lock-In Dilemma

46:06 Exploration vs. Exploitation in Organizations

47:25 Narrow Business Strategy Benefits

50:44 Corporate Venture Capital and AI

57:08 Disruptive Technology Dilemma

58:21 The iPhone's High-End Disruption

01:00:45 Nokia's Missed Opportunities

01:08:34 Strategic Leadership and Emotional Attachment

01:13:02 Concluding Thoughts and Future Discussions

 

Episode Transcript

(00:00):
Welcome back to another episode of thisseries on the work of Joe Bower, but
we're featuring one of the contributorsto that who has extended the Bower model.
Is Robert Burgelman.
Before I get to introduce Robert, I wantthank our sponsor, Kyndryl and Kyndryl
Institute has just dropped their veryfirst edition of its biannual journal,

(00:20):
which features a collection of articlesfrom some of the world's most forward
thinking executives, policy makers andacademics, including friends of the show
such as Rita McGrath, with actionableinsights and perspectives around things
like ai, global trade and transformation.
You can find the Journal andthey have an app as well.
And find out all aboutthe Kyndryl Institute at

(00:41):
Kyndryl.com/institute on the app store.
Over to the inescapable dilemmas oforganizational adaptation and the
author of this brilliant work, wewelcome back Professor Robert Burgelman.
Thank you very much, Aidanfor inviting me again.
So what I will do here is I willstart by saying that these dilemmas,

(01:03):
which are really difficult choices,they are strongly related to, where
in the previous session we discusseda strategic dissonance, right?
Strategic dissonance has to do with changethat forces and top management to make
very difficult choices, often dilemmas.
So that is what these, varioustypes will be relating to.

(01:28):
They also relate to the, the conceptthat I, highlighted in relationship to my
extension of Joe Bower's model, which is,what I call the strategic context process.
Right.
We showed in previous session howthe strategic context does not
really exist for new businessesbecause the, we don't know what

(01:49):
will work and what will not work.
And so that, led me to actuallyextend Joe's work because that
had to do with resource allocationto existing strategic, Whereas
mine, , studied a new strategic area.
So the first, , strategic, , contextprocess had to do with how do you, in

(02:09):
a way, almost retroactively rationalizeat the top level these initiatives and
thereby amend the corporate strategy.
So that was one type, ofstrategic context process.
The other one had to do with thedissolution of the strategic context for
an existing core business, which was atIntel, which was the memory business.

(02:31):
For which the strategic contextbasically got dissolved over time.
And a new strategic context emerged aroundthe the pro, the microprocessor or the
logic business, which then became themicroprocessor business and which really
was the result of what Andy Grove onceI think very well put, he said, yeah.

(02:55):
In terms of the distinctive competenceassociated with that shift from one
to the other, he said that, yeah, wehad moved a silicon-based distinctive
competence in memory products to adistinctive competence in embedding
design architectures in logic products.
That's a brilliant way of tryingto understand why did this actually

(03:17):
happen at a fundamental level ofcompetence of the organization.
So that's the second area thatis dissolution ex of a core
business strategic context.
The third one we also briefly highlightedwas then I call emaciation of the of
impediment of the strategic context.

(03:39):
Simply because your core business is sopowerful, it absorbs all the attention
and interest really of the top management.
So there is really no time an interestin, in spending a fair amount of
top management time on, somethingnew because we don't need it.
And then finally the last one, whichI actually published only last year.

(04:01):
Has to do with where the topmanagement in an incipient way, already
establishes the strategic context.
This was in a pharmaceutical companya new business, and then begins to
move from exploration to exploitation.
But by, by developing a very strongexploitation drive that is allocate

(04:24):
resources to these new projects inthe early stages of earlier than
in the other projects to drive it.
But where then the capabilityof actually exploiting these,
commensurate with the early, and soI call that the, where you have the

(04:44):
fizzling out if you want, of an incipient,proactively established strategic context.
But the company simply can't do it.
And eventually it just fizzles outand we're back to where we were before
in spite of all these investments.
So these are the four types of strategiccontext processes that are, that I

(05:05):
was able to get to because I extendedJoe's model and that each time also
have associated with them as a certainway and degree of strategic dissonance.
And so at the end of the session,if I may, I will actually then try
to sort of summarize, but how doyou deal with these things from a
strategic leadership perspective?

(05:27):
strategic context is such animportant thing to highlight and it's
something Clark brought up where.
If you remember, he was talking abouthow he had a challenge of the shift
from analog media to digital media anda sales, one of his top salespeople
who was wedded to the idea that theyshouldn't put much resources towards

(05:48):
digital, and that the old adage wasanalog dollars to digital dimes.
And the reason I'm bringing this upis I had just yesterday I was speaking
to Gary Hamel and we were talkingabout his book Humano, but I told
him I was speaking to you and he isgreat respect for your work as well.
And he said about Intel and the shiftto and the miss of the mobile chips.

(06:10):
When I, when Apple asked him to make themobile chips and he said that this is
also a contextual problem in that you,you can't see that the volume will be much
more, but the margin will be much less.
And it's that understanding of thatcontext shift is so important as well.
And Clark said the same, he said.

(06:31):
When you had a laggard in the oldmodel, in the analog world, who was
right in that context that he had tomake him successful in a new context.
So there, there's a lot, there's apsychological context shift to make
people successful in the new context,but also then say finance, like to Gary
Hamel's point, I have to tell financethat yes, the margin on the chip for

(06:56):
the iPhone is way less, but there'sgonna be way more mobile phones than
there is gonna be PCs or laptops.
And I just wanted to share that, tomake sure that I have that right.
Or you might comment and put it into yourparlance of what that means strategically.
So I will make two commentsand later come back.
So first, with Clark Gilbert's work,one thing that I took away from it,

(07:19):
and that will forever stay with me, isactually the following duality, right?
I now, he speaks better about his ownwork than I, but I may be wrong, but
that's at least what I, even if I'mwrong, it's still a lesson for me.
And so , he was, examining these, Ithink , these newspapers and so forth

(07:39):
for that had to deal with digital.
And so, the powerful insight that hehad to my mind was dependent on how
this new area of digital publication wasdefined as an opportunity or as a threat.
If it was defined by the publisher asan opportunity a new possibility, they

(08:04):
would give that opportunity a lot ofstrategic leeway, but few resources.
On the other hand, other guys who defineit as a threat, they would give a lot
of resources, but no strateg leeway.
That's powerful.
That, and that speaks directly again,to the strategic context determination

(08:25):
process because in the first one, yes,we let you define the new, the strategic
context, but we get no resources.
In the other one, we give youresources, but no strategic, no room
to change the strategic context.
Just to add to that, that one of thesayings Gary Hamel has is that in that
context to, if you have , a bird in thehand, you actually need like a hundred

(08:47):
birds in the bush to pull people awayfrom the inertia of the presence.
And that's the difficulty.
It is.
And so then the second point, which I willthen come back to because that's something
I discovered after I had actually, writtenin that, in the chapter that we have been
discussing about the, about disruption.
Is that the, there is disruption frombelow which Clay was the master of, but

(09:13):
there is also disruption from above, andthat is in some ways, far more difficult.
And I will explain later why that is.
In fact, I'm still rightwriting about that, but, so yes.
So that is the, so the iPhonewas a problem for Intel
in terms of going for it.
And we explained that before, becausethey, but it was even a bigger problem for

(09:36):
Nokia Ericson, Blackberry and Motorola.
And it's, and since, and I, me,I have already spoken about that
in one of the previous sessions.
And so now Andy Grove and I thoughtthat that Apple would be an re become
an incumbent and a successful one inthe, that, mobile communication space.

(09:59):
We did not think they wouldbe able to disrupt it.
Disrupt, because you had these fourcompanies that, plus the Chinese
one, but especially those four,were very innovative by themselves.
And so now we, I have begun totry to explain why we're grove
and I wrong in thinking that therewill, would not be a disruption.
And I've actually identified several.

(10:21):
Aspects that I think help understand that.
So we can perhaps come back to that laterbecause that's something I have just
the last few years been able to resolve.
.Good news on that point as well, that Robert has agreed to come back
and do a series on his own work.
I have in my hand herea couple of his books.
This book is a cracker for anybodyworking as a con corporate intrapreneur

(10:43):
Inside Corporate Innovation.
It's like I mentioned the last, it's likesnakes and ladders of how to politicize
your idea to get it over the line or atleast give it the best chance possible.
I have also here in my hand, becomingHewlett Packard again, we mentioned
this a couple of times, the contextof h HP and your work there and
your understanding of diving inside.

(11:03):
And then there's the book youco-authored with Andy Grove Strategy
is Destiny as well, which is thebig book that you published as well.
And then you mentioned also forthose who are gonna buy these
books ahead of us and read them.
There was a recent book aswell, I wasn't aware of that.
You released a smaller volume.
What was the name of that?
Where Robert?
It is called strategy makingand organizational evolution,

(11:25):
managerial agency perspective.
And by that I mean it really focuseson what managers do or don't do, the
combination of these interlockingactivities that managers engage in to
get something achieved within, you know,that that's of strategic importance.
Yes.
So that's coming in the new year in 2026.

(11:47):
You can look forward to that.
So if you're gonna read ahead, somepeople read ahead, Robert, so if
you're gonna read ahead, they'rethe books to do your homework work.
They're the books to ask and puton your Santa list for Christmas
as well, if you're gonna get them.
They're still out there.
I manage to get copies.
They're still available, they'reavailable on Kindle as well.
Robert, let's get stuck into dilemmas.
The first is the positionversus competence dilemma.

(12:10):
And we talked about this, but I pulledtogether a one liner on it to put,
bring it into my basic understandingso companies can succeed in two
main ways according to this dilemma.
Positional advantages, which is like beingin the right place at the right time.
They rarely admit that, and thiswould be like Intel with the IBM rise.

(12:31):
So being able to actually be in the righttime at the right place with that to build
or having a strong brand or market share.
And then the second is distinctivecompetencies being really good at
something like, again, Intel, forexample, at design or at an r and
d in the early days, just to setyou up here to prime the pump.
But let's listen to themaster of what this one is.

(12:53):
Well, yes.
So that's actually a, a very,a very good introduction.
I, because there are, there reallyare fundamentally two, there were
maybe still are the two theories aboutstrategic competitive advantage, right?
Michael Porter, as an economist dida brilliant job in highlighting the
importance of positioning, right?

(13:15):
Position yourself in that, uh, ecosystem.
He called it industry at the time.
You position yourself in the, inthat industry and you try to have
strong bargaining power with all theparties that you will have to deal
with, customer suppliers and so forth.
So that was, that was an, that's a,a perspective rooted in industrial

(13:39):
organization economics, about positioning.
The other theory was basically developedby Hamel with their notion of the
core competence of the organization.
And so there, the theory is,well, your competitive advantage
depends on your competencies.

(14:00):
You know, in some ways that actuallythat's, and, and so today this what we
speak about, the dynamic capabilitiesand that sort of thing as the foundation,
what I try to do in, in my work, andthat's what what we show the strategy
diamond in one of the sessions that youneed to think about them together, right?

(14:20):
Because you can occupy a,position in the ecosystem.
That is relatively unique because youdo have that allow you to do the things
necessary to occupy that position.
Those competencies also allow you todefend it, and to leverage is to do more

(14:41):
so that the theoretical framework thatis embedded in the strategy diamond is
that you need both, you need to combineposition and competence together.
That is, that's the full, that's thefundamental idea of the strategy diamond.
So it integrates two fundamentaltheories of strategy.

(15:01):
The one that developed by MichaelPoorer, and the one then that was
developed basically by Pala Hamel,who I should say really, and this is
often overlooked the core competence.
is kind of a technical argument,but there is a deeper under.
There is a deeper, more in even morefundamental aspect to this, which

(15:23):
was highlighted by Philip Selznick inhis little book called Leadership in
Administration 1957, is one of the mostfundamental and brilliant books ever
written about institutional leadership.
makes distinction to go fromorganizational leadership to institutional
leadership, which means that's anorganization that is rooted very deep

(15:48):
competence and the associated values.
allow it to do things for the longterm in certain wa in particular
ways that are relatively unique.
actually I like the Selznick book alot because of that foundation of, like
Andy Grove had said, our distinctivecompetence that changed from being

(16:12):
strong in memory products to actuallybecoming strong and embedding like
computer architectures and logic products.
That's a fundamental, deep, if youwant distinctive competence that set
the company apart from all others.
that is, that's basically if you wantthe foundation on which I have now will

(16:34):
develop the dilemma, if I might do that.
So a dilemma is a difficult choice,and it is also one that usually,
I rises because offorces in the situation.
really fully grasped.
Where this was leading you, andso now we have to deal with it.

(16:58):
So in the case of Intel therewere Intel faced a competency
trap in the DRAM business.
Why?
what they were doing is in fourgenerations, actually in four, in the
16th, in this, in the 16 K, that waslike the second, the two, that K, 4K.

(17:19):
Then 16 K, they were the leader andthey already came up with a with a
new process, technology that directthat showed how strong they were in
process technology did a particularthings that were supposedly more better
for the customer, but actually thecustomer was not really going for that.

(17:41):
So they were ahead withtheir competence, right?
What they could do with theircompetence too far ahead of
what the customer was doing.
Then for 60 4K, the Japanese camein and they were doing still things
in the standard way, not in thatnew way that Intel was already
pushing, forced intel to come up withanother DRAM related, if you want.

(18:06):
Process technology advance.
They called it redundancy.
And what it was the following,they said, well, the Japanese are
better in manufacturing than we are.
So they have higher yields becausethey have better so more good ships
on every wafer than we do becausethey are better in manufacturing.
So they brilliantly as they areto say, well, the chip is really a

(18:29):
matrix with the rows and columns.
So you know what we will do?
We will add an additional column.
So if there is an, if there is an impurityin one of the chips, we can just activate
that new column and it, we will be okay.
Well, brilliant.
But it really doesn't take off either.
Right.
So then for the, that was the 60 4K eachgeneration, it was a multiple, but you

(18:51):
multiply by four, so 16 times 4, 4 64.
Then for the next generation, they cameup with an very important and lasting.
Lasting innovation, which was called SMOs,complimentary metal oxide, semiconductive
SMOs, which still, still today isvery, but again, they were too early.

(19:12):
Then finally they came up with one moreof these things, but by that time, their
market share had dwindled to, you know,to about 4% or something like that.
So here, so they faced acompetency trap, right?
They only, they couldn't compete reallywith the Japanese or manufacturing,

(19:33):
but they were extraordinarily strong inmaterial science and process technology.
And so they their.
Competency in that particularcompetency, but it became a trap
because they, it didn't do the many,it didn't allow them to compete
effectively against the Japanese thatare now, that had now begun to compete

(19:54):
basically on manufacturing skills.
So that's the competency trap.
Intel faced that competency trap.
And so as a result, they lost theirposition right from one, from 100%
market share to less than four.
So, but then of course we know that theycompensated with that, with having become

(20:15):
the leading player in logic products.
had been better thanMotorola and so forth.
then Intel now becomes a, if youwant they gain a very strong position
because they become the leading playerin, after about 10 years doing all
these logic products with the pc.

(20:38):
with the IBM, right?
As you just said, they nowhave a dominant position.
The danger when you have a dominantposition, which is based on the
competencies that you have, butthey were better than the other
guys because otherwise you wouldn'thave gotten the basic position.
But now over time you tend to spendmore strategic emphasis on pos

(21:03):
maintaining your position as on well,but is the competency base still the
same or are there other guys who arebeginning to do things differently?
And so Intel got basicallystuck with a position trap.
Micro process, four PCs.
That's why they couldn'treally do the one for mobile.

(21:27):
in mobile arm was, yousee arm came out, right?
The arm microprocessor based inCambridge, where at least the r
and d is done around CambridgeUniversity and the arm processor.
So there's, there were two keyelements in microprocessor performance.
One was speed.

(21:48):
But the other was power consumption.
And so Intel is the master inspeed, but at very high consumption.
In fact, when Pat Gelsinger was theCTO, remember that, in, in the early
two thousands, he said that theintel, the next, microprocessors,
the next Pentium generation, it'llgenerate more heat than the sun.

(22:10):
Was a metaphor.
A but was saying we can'tcontinue to do that.
But so Intel , because of their competencyand the position that they had, because
people were expecting faster compute,they did not really realize the importance
of, power consumption, which becamevery important for the mobile devices.

(22:32):
That's in part why theycould really never get there.
Right.
And then even later, of course, theymissed out on ai, on the graphical.
So this an example.
I would use it position trap.
You are the king of that world,there may be some revolutionaries
.The AI one's interesting 'cause they had an opportunity to buy

(22:55):
in Nvidia in the early days.
And I wonder, were you aware of thatwith the leadership team and because
of the heat, say in the mobilephones and the early mobile phones,
people's phones used to go on fire.
You still hear it in the plane, you know,when you get on the plane, it's like, if
your phone's overheating, let us know.
So this was a problem.
But then to your point about theenergy consumption, we know in ai

(23:18):
for example, that's a huge, hugeproblem, the energy consumption of ai.
And maybe, 'cause I'm sure people,maybe that thought has bumped into
their heads and they're going, whydidn't Aidan ask Robert about that?
Well, you see AI is differentfrom the power consumption.
That's important too, but sowhat is the logic of Moore's law?
Moore's law is like a steam roller, whichmeans because you reduce the line width.

(23:45):
There is more room to putthings on a chip than before.
Intel, I guess when they saw, Nvidia doingthings for games, go, well, yes, you know,
graphical capability is important too, butwe can incorporate that through Moore's
Law into our CPUs or a chip that is, weconnect quickly, connect connected to it.

(24:11):
But so Moore's law became a trap in itselfbecause the Moore's law leads intel to
say, yeah, over time we, why I used tosay to partners of Intel and to Intel too.
So how do you deal with partners?
Because eventually what thesepartners are doing, the steamroller
will take it all in, which Isaid, you must warn your partners.

(24:38):
That this naturally happens.
This is not because we are bad guys.
The logic of Moore's Law, that's atechnological logic, lead to incorporating
more and more capabilities into the CPU.
So if you want to, know, stay alive,partner, you must stay ahead of us.

(25:00):
That's your game.
we warn you, right?
But when AI came along,suddenly the application space
for GPU grow dramatically.
Actually, I was told, I haveto be a little careful here,

(25:20):
but I can't actually say this.
So I, I discussed this with thenthe later CEO of, and he told me,
well, we have the CPU and we haveacquired a field programmable called
Gator Eye Company called Alter.
And so CPU plus field programmablecan do, can, actually, he said

(25:44):
this is all matrix algebra.
It is actually true, but he said we can,with the combination of those two deal
with more, with algorithms that are lesswell-defined, whereas the Nvidia must
deal with very well-defined algorithms.
So I went with my colleagues from Stanfordonce to, to, that's why I can this story.

(26:07):
Otherwise I would not tell himto, Nvidia with my colleagues.
And so I asked Jensen this, I. They in,I didn't tell They believe that when you
combine the CPU with G, with the fieldFGPA, that you can actually deal with a
broader range of algorithms than you guys.

(26:29):
Is that true?
And you know what he said?
He said, yes, it's true, but he saidthere are not enough software developers
and Intel is not a software company.
So they probably didn'treally fully grasp that.
It's a, a little bit likethe Nokia Nokia shift.

(26:52):
And you will later I will come thatbecause you see this is not because
these players are stupid, becauseyou learn nothing from a stupid
player doing something stupid.
You only learn something if a verysmart player doesn't see something.
And I'll explain later if we have enoughtime why Nokia and these others didn't

(27:14):
see what could happen and did happen.
I'm intrigued man.
I'm looking forward to that.
So now I have explained the traps, right?
The competency trap, which then leadsyou to lose your strategic position
like intel and DRAM or the positiontrap where then your competence begins

(27:35):
to fall behind what some of theseother highly dynamic players can do
as the world is beginning to change.
Beautiful, great.
Great job.
So I'll set you up next.
So that's dilemma one andbrilliant job de describing it.
Robert.
Dilemma two is the multi-business dilemma,which on a high level makes sense.

(27:55):
But just to give a bit of context, andagain Robert, I'd love you to take us
through it in depth, companies thatown multiple businesses can sometimes
protect the weaker parts of theirportfolio from real competition.
They create a false reality for thosecompanies to keep them in the portfolio.
Perhaps.
Maybe this is power, maybe it'sstatus, maybe it's somebody's legacy.

(28:19):
Like we saw a little bit with DRAM forIntel . There was people hanging onto
that past because it was our identity.
While that may seem like a goodshort term move, it can weaken the
whole company over time, and thatis the key message of this one.
But I'd love you to tellus through your lenses.
So, you know, remember from our previousdiscussion, it took about three years,

(28:42):
three to four years for the top managementof Intel to realize that you know,
they are no longer a memory company.
But again, that was not really stupidbecause the key competency in line
with reduction, which is that processtechnology competence was actually
associated with the DRAM guys, notwith the migrant processor guys.

(29:04):
So if they had moved quickly, really outof the dram, hey Lin Sha, who was the guy
who was in charge, he might have left andsay, okay, so the, that's the dilemma.
That's why it's a real dilemma.
It's not being stupid.
you know how Intel try to, how thefinance guys try to deal with this.

(29:25):
So this is a resource allocation.
Now back, so remember wesaid , when there is constrained
capacity, who gets the capacity?
So the memory guys could stillmake some reasons for why we should
stay in the memory business, right?
I just said the, their guyswere the top ones for what?

(29:45):
The critical competence,which is line with reduction.
So what the finance guys then forcedthe DRAM leaders to do, they had to
sign a check for margin foregone.
And so then I ask myself, howmany of those checks do I want

(30:06):
have in my file when I'm up fora raise in salary or So they,
Wow.
they try to do, I mean,that's, just, just brilliant.
Yeah.
But it's in the end, they couldnot continue to support 'cause dram
got still one third of the r andd expenses, investments, right?

(30:27):
Because that's was that horizontalcurve as I did in my previous session.
the, or we still have high levelof r and d in dram, but our revenue
budget is and down and down.
That's an example.
Now I have extended this dilemma
by my research on hp that'sactually in the HP book.

(30:51):
And here is how this goes.
So hp is in multiple businesses,and you could categorize
them two major categories.
One is the consumer oriented businesses,which is basically PC and printers.
Of course, companies buy those too.
But that's mainly more the consumeroriented then the enterprise
oriented, which is servers andstorage and, big computers, right?

(31:15):
Which are bought by enterprise.
Even when Mark Hurst was the CEO, thisis in my book, that's why I can say this.
He actually told me that there was greatcomplementarity between the PC business,
which was consumer oriented and theenterprise business, because he told

(31:37):
me about 70% of a server, which is anenterprise product, uses PC components.
Therefore, if you are big inPC, you are more leveraged with
your suppliers and so forth.
So there, the complementarity betweenthese two businesses was quite high.
Mark hurt gives me, youcould look it up in the book.

(32:01):
So that, so I thought,yeah, a very important
strategic variable in multi business,context is the complementarity between
extent is their operational synergy.
You could also talk aboutfinancial synergy, but I'm now
more the operational synergy.

(32:23):
Then there was the other variable thatI had to bring into my thinking was,
besides complementary is complexity.
So the time that hurt made this statementabout to complementarity between consumer,

(32:45):
between PC and server, and enterprise,the complexity was relatively low.
So Intel HP could sell serverproducts to the enterprise, or
storage products or some relatedservices and that sort of thing.
And in the PC space.

(33:06):
They sold PCs and various newgen generations of printers, but
the top management could clearlyunderstand these businesses, right?
And so when the enterprise peopleasked for resources, right?
Investments and the the consumeroriented, they asked for investments.

(33:30):
The top management basicallyunderstood these businesses.
And you know, I'm making this up now,you know, but I mean, let's say I
and you were running the enterprisebusiness, you know, and let's say I
was running the consumer business.
Meg Whitman eventually has to make it.
You ask for a billion, and I'masking for a billion right now.

(33:53):
When the complexity of the businessesis not too high, the CEO can,
and the top man can still reallyunderstand these businesses, right?
So they know I didn't,you always ask too little.
You ask for a billion, and I, inthe top management multiplies that
with one, 1.05 because he is goingto come back in this morning.

(34:15):
am the guy, I was asked too much sothat when I ask a billion, they go,
well, yeah, we're going to multiply0.95 and we have learned this.
this works now if the complementarity goesdown, so it is no longer so clear who, how
related what I am doing with you, and youand me, and the complexity is going up.

(34:40):
a lot more difficult for topmanagement to make these judgements.
So then you ask the question,why is it become more difficult?
And it is because the, becausefundamentally the ecosystems within which
these two businesses are operating isshift, it's like tectonic plates, right?

(35:00):
Who shift.
And that's really from a if you want,from an evolutionary perspective, actually
pretty interesting because if you read,you know, people have read Darwin.
he saw in the Galapagos that theseislands had actually, they were at
one point together, they had split.

(35:21):
And even the same, the originally thesame bird species had begun to develop
different beaks and different beakers.
They are now operatingin different ecosystems.
So if the tech, so what happened in thecomputer space was two major things.
One was cloud computing.
Right.

(35:42):
And that was also related tothem, to software as a service
a little bit later, right?
Because people could now, work withSalesforce And so a result of this
technological paradigm shifts, I callthat the tectonic plates on which
each of these businesses was resting.
They diverged.

(36:03):
And so now you have , what?
Darwin and, biologists called speciation.
So these businesses that beforewere highly related, right?
Like the birds look allthe same in the old days.
They, as a result of having todeal with these changing ecosystem

(36:24):
forces, they actually begin tohave different cha challenges.
For instance, for a long time thePC industry and the, , printer
business were cash generations.
They generated free cash.
And that free cash could be taken becausethey, why, because their rates of growth

(36:46):
were not as high anymore relative to whatthey could generate, know as because of
their market shares that they already had.
So , they generate free cash.
The enterprise guys, they need to grow.
They want to grow, not alwayseffectively, but they cl they claim
they have growth opportunities.
So for a long time, in fact, WhitWhitman even did that for a while.

(37:10):
Take cash from the PC and printerand put it into the enterprise.
Now I am Robert, the guy who isrunning the consumer business.
And I'm beginning to say, wait a moment.
You know my opportunity set has changed.
I have more as that.
COVID actually was abig force in that too.

(37:32):
But, so I am, I have now I'vefaced big growth opportunities
much bigger than before.
Why would I give my freak mycash, which is no longer free to?
So you begin to see, you know,the dynamics that happen because.
The technological context changesdramatically and the businesses themselves

(37:56):
begin to change, like the birds and thegallop on the different Galapagos Islands.
And at some point, the top man, andactually that's how I give you very
high marks to make Whitman for havingdone that because she went from betters
together, from betters together.
meant high complementarity,low complexity to actually

(38:19):
low, much lower complementarityand much higher complexity.
So we go from better togetherto let's split the company.
So these are the.
And by the way, not everybody of course,in immediately was going to be con, oh,
that's really the right thing to do.
That's why it's strategic dissonancewithin the organization and ultimately

(38:40):
the CEO has to determine that.
So this is where I think wehave, whether rich topic that
really is and it goes in cycles.
That's why you could probably see thatthere is periods in which there is a
lot of diversification and business.
And now the last five years or so wesee split just Time Warner is also

(39:01):
splitting, know, HP split, , UnitedTechnologies split G of all splits.
Johnson and Johnson that splits andseveral other, and that I think is in part
the function of course, of the internalstrategic leadership capability, whether
you can continue to understand even thishigher complaint, but it's ultimately, I

(39:25):
think it's driven by ecosystem changes.
I read Thanks to you, I read thatorganizational ecology book by Hannan
and Freeman that you recommended,
Yes.
and I was really struck by that wholeidea that and, I kind of landed on
that myself, whereas like going,well, species of organism morphs and
it changes to adapt to its currentclimate or business environment and

(39:50):
therefore so too should organizations.
And the one place I saw Robert was,again, I worked like, that's why
the Clark example is very good.
Clark Gilbert, I worked in media and youcould see that even though the revenue
return was smaller in digital, thatthat's where the whole industry was going.
Yet all the resources went tothe past and trying to manage

(40:14):
the melting iceberg instead of.
The opportunity of greener pasturesover here and that, that's such a
very difficult dilemma to managebecause also as I mentioned there,
status and position and legacy ofthe old business all lies there.
And when the CEO lies there, whenthe CEO lies in the legacy dying

(40:34):
business, the new people are reallyscrewed and they usually leave.
exactly.
Exactly.
In fact, yeah.
Yes.
Actually I did big case studies on theSwedish media company called ER Bony News.
Yeah.
And so I may already have mentionedthat, but that CEO Anders Erickson is
a really brilliant guy because what hedid, he was, he realized that there was

(40:59):
still a large number of readers, older,probably like me, who still wanted
to print, print is on the decline.
And so rather than of them immediatelywent out of the printing, but he
realized, no, we still need print.
But I am going to imposeefficiency on print.
In other words, I don't, we'renot going to stop your printing

(41:23):
operations, but you're going to haveto make them break even at least.
So what are you, you will haveto bring the costs down if you,
otherwise I'll have to shut it up.
You know, I'll have to stopit, but I give you a chance.
To show how we continue to do thingsthat some of a large customer, and
by the way, these are, well, the paylot, we make a fair amount of money

(41:44):
uh, out of that one rather than outof, of, of the, uh, digital one.
But you must, you must be
That is the, so like, anyway, I'm goingtoo far now in this, but this is the
sort of, this is how the, how the reallyoutstanding CEOs are able to do this.

(42:06):
And they go, yes, we still need theprint, but print must be viable.
You are the guy who runs the print.
Show me how you're going to do that.
And if you can't, then maybe we, you.
There, there's a key linein that, in that section.
We're still on two, by the way.
The level two.
Yeah.
And you said that a biased CEOmust not interfere with the

(42:27):
autonomy of middle managers inallocating resources to projects.
Now that is so difficult if thatCEO is biased towards the past or.
Their own legacy or their own statusor how they got to the CEO position
was from the past products, and I justthought we'd shine a light on that one
because this is probably probably oneof the biggest difficulties for A CEO.

(42:51):
Yes, it is actually even in Intel,you know, Gordon Moore will probably
admit that to what you call, Icalled it emotional attachment.
And, you know, emotionalattachment is not bad per se.
It can become bad because it'sgood to have, but that is become,
eventually becomes a yeah, because forinstance, Gor, one of the things that
Gordon said, well, we stay in DRAMbecause it's our technology driver.

(43:17):
the reason for that was of course, inpart the line width, but also because
DRAM was still the highest volume product.
Now in manufacturing, if you knowsomething about the learning curve
in manufacturing, the unit cost is afunction of, volume, but not scale.
It's the number of timesthat you have done this.

(43:38):
So it's another word that Ijust, it's scale, but not.
Scale, like bigger machines.
It's the number of timesthat you have done something.
That is , the scale.
Because that is whatteaches you how to improve.
And so the, , for a while I didn't tellthere was the belief that we learned from.

(44:00):
Our large volume dram manufacturingthings that are important for
our other products as well.
The problem with that argument was thatIntel now was down to 4% market share,
whereas Hitachi at 15% market share.
So then you ask, , what is thecumulative, it's cumulative volume.
That's the term cumulative volume.

(44:22):
Right?
Then you go, wait a moment.
Then the learning curve of Hitachiis probably a lot steep than the
learning curve, of Intel , and thenof course the guy, the brilliant guy
Intel said, well, that's true, butI'll use better statistical techniques.
And probably was in, in part correct.
But you see, man, thisis, I could stay on this.

(44:45):
It's a difficult, very difficult.
So , the next one then is we, and this isyour term co-evolutionary lock-in dilemma.
So this is exploit versus explore.
I'll just give a bit of contextto link it back to the previous
chapter that we talked about as well.
And I wrote about this and Robert kindlychecked it to make sure it was accurate.
This idea of target fixation thatyou're so fixed on a strategic

(45:10):
direction that you miss changes in theenvironment, or you make those choices,
you make the resource allocation.
Process directed on where you're going.
And you say, here, Andy Grove'sability to vectorize everybody at Intel
in the same direction led to quickconvergence of individual beliefs.
So away from DRAM towardsmicroprocessor, this is strategic

(45:31):
initiatives and the organizationalcode or their corporate strategy.
Intel experienced a reasonable amountof turnover, and I thought this was
a key point because low individualperformers were systematically replaced,
but in doing so, also made sure thatthe socialization of new employees to

(45:51):
Intel's organizational code was rapid,but they were institutionalized with the
new context of microprocessor is King.
And I thought about that.
I'm probably going a bit too farin this, but I thought about ants.
I love the example of ants and theirforaging behavior that if you're
to put down a piece of informationto a hundred ants, the majority

(46:15):
will go towards the apple, but therest will kind of, the maybe 10%
or so will start to still explore.
And there's a load of reasons to dothat, but also they're always looking,
they're always exploring while exploiting.
Yes,
And what I really felt from thiswas it dampened the explorers in the
organization and gave all the resourcesand all the credit and respect and

(46:40):
recognition towards the exploiters.
And that's the problem.
So there is an interesting paradox rightthere in, I took this from Jim March's
article on learning, exploration andexploitation organizational learning.
So the paradox is that fast learningactually become an impediment to
innovation because the fast learningmeans that all the players quickly

(47:04):
learn the existing strategy.
Right.
And therefore the exploitationto dominate exploration, right?
Because everybody, and everybody wantsto be it, because I don't want to
be the guy who is left on the side.
And so that actually leads also back tothe other dilemma that I have highlighted,
which is the narrow business strategy.

(47:25):
Which is actually, we can talkabout it for a moment now, because
the narrow business strategy,which actually was written up.
In the American Economic Review in1994, benefits of a narrow business
strategy by, Rotemberg and Saloner . Soeconomists, there is a whole area
what is called incomplete contracts.
So you can never really writea contract that will deal with

(47:50):
all the potential contingencies.
And so one of the things that the narrowbusiness strategy does sends clear signals
to what the top management will support.
Therefore, that it means that if I'min the context of a narrow business
strategy, I will be willing to gofor innovations that are related to.

(48:14):
Right, because I know thecompany, that's what they do.
Whereas if it's unclear what the, orit's a very broad strategy, then I'm
not so sure whether I should really tryto do something new because, you know,
God knows that's, they say no, that'snot what we, that's not what we want.
Whereas if the strategy is narrow andclear, they go, yeah, that's, you now know
what type of innovations we will support.

(48:36):
So that's a, that's apowerful argument actually.
And it did happen at Intel, as I mentionedlast time, you could do things on the
side but don't get in front of the train.
So that is so that is actually this ideaof March, which I think was, that was a

(48:58):
new insight that is that fast learningis not necessarily good for innovation.
Right, because you now everybody islearns what the, where we are want to go
now and nobody, or very few think well,but maybe should the path not taken!
The listener of this show, Robert, youprobably guessed, are the people who

(49:22):
kind of go, I don't think this is theright way and don't have, certainly for
me, one of the reasons I started doingthe show was I didn't have the language.
I didn't have the variation of experts topoint to and go, look, this has happened
here, this has happened here, et cetera.
And the not, it's so difficult.
And you know, it's one of the reasons Ithink this book is so important as well

(49:44):
to our audience, the, I'm holding uphere for just people listening inside
corporate innovation because theyleave because nobody's listened to 'em.
Nobody's given them any recognition.
They're like Cassandras, likeAndy Grove would say, and we know
how badly it ended for Cassandra.
Exactly, yes.
The next one then is a nice segue tothe insufficient variation dilemma.

(50:08):
And I mean, that speaks to itself.
The environment changes, butthey don't have the skillset or
the mindset to be able to takeadvantage of new opportunities.
They don't have the right beak!.
Yes.
So that is especially true in a veryfast moving technological spaces, right?
you can have new ideas, but the,even the way you have a lot of

(50:31):
autonomous initiatives, the rateat which you can generate those is,
is not commensurate with the rateat which they are generated outside
of your organization, for instance,through the venture capital work.
That's why companies will, forinstance, adopt a corporate
venture capital approach.
I've just written some case studiesabout JetBlue, who, , actually did create

(50:55):
JetBlue ventures, but then at some pointit's in, it's pretty interesting because
I'm going to do an update now because Now.
Actually, JetBlue has been undersome interesting pressures as well,
and they have now sold basicallythe corporate venture capital
tactical unit to another one.
They will just have a stake still in it,but it is so, but, so for instance, in the

(51:17):
nineties Cisco was very good in acquiring,and you see what they then do, the key
was they didn't acquire big companies.
Big companies already have their ownculture and it's far more difficult
to integrate these different cultures.
But they were looking, trying tounderstand who in the space, in which

(51:40):
venture capital is basically supportinga multitude of new ventures, ones are
likely to become leaders, and then weacquire those if we can, , before they
have become actually big, because thenthey have their own culture and so forth.
So that was actually a very good model.
I think today the same thingis happening with ai, right?

(52:02):
There are so many ai initiativesand models and directions.
Look at Microsoft.
And Google, , they could not sufficientlygenerate themselves all the variations
that potentially will be importantfor building a new strategic vector
if you want, in that, in that space.

(52:22):
And so then they have to acquire,they have to look around acquire
and develop a competency inactually, , determining who is likely
to be on the winning side for that.
Yeah.
So that is also a cyclical thingbecause, that is why in Autodesk,
which I have got case studies on that.
The CEO before Anagnost, helet a thousand flowers bloom.

(52:44):
Why?
Because, the technology spaces wereopen-ended, just like Intel when
Gordon Moore, the CEO, we don't reallyknow what all the opportunities are.
So then when an Anagnost came in, , herealized that space with software
as a service, which is the bigtransition that has already narrowed.

(53:05):
And so I can now focus morea little bit like Grove.
But now with ai, he hasto open it up again.
So it goes through cycles.
That's such an important pointfor the type of leader you need at
certain points in the lifecycle.
That's exactly right.
That's right.
And Intel did that.

(53:25):
Okay.
I'm not going to say too much, but theydid that very well with Robert Noyce
and then Gordon Moore, and then AndyGrove, and then Craig Barrett still.
Then afterwards, I think itbecame more difficult, right?
And Robert in today.
So that's for our audience today.
One of the things that often comesup for me is that when I'm working
with companies, I will say, you needto have a hand in new opportunities.

(53:50):
It doesn't mean you need to bet the farm.
You do small investments in theseget a position in their companies
and it's as much to learn fromthem as it is to succeed in
them because of the capabilitiesproblem of waning capabilities.
And the question always comes up then,and it's a nice segue to the last one,
is, do I build an innovation team andkeep it away from the sucking sound of the

(54:14):
core as Clark Gilbert would call the it.
And that's really what became knownas the Clayton Christensen model.
Or do I do what?
Tushman O'Reilly, which would be more inthe Jim March camp, would be I bring it in
because eventually I'm gonna have to bringit in and if it's out there, it's gonna
be rejected, like a bad organ transplant.
And I wondered what yourthoughts were on that.

(54:35):
Is it contextual?
Yeah, so actually Grove and I, wedid write an article in the Strategic
Management Journal, an academic articlein 2007, which is called Let Chaos Rain.
Then Reign in Chaos.
That was a line that Grove haddeveloped in relationship to my blue
and green model induced and autonomous.

(54:55):
But I changed it a little.
I said, chaos reign, thenreign in chaos repeatedly,
right?
So that the strategic dynamic, youmanage the strategic dynamics for
corporate longevity, but you mustbe able to do that more than once
I I have a little framework where havefour situations that CEO faces, right?

(55:18):
So you have the autonomousinnovation, that's one, whether it's
demonstrated or not demonstrated.
And then you have the resourceavailability, Whether in case
it fails, does it really puta company at risk or not?
So now you have four combinations.

(55:39):
So if the autonomous, initiativeis demonstrated and you have enough
resources that even if it did fail,you would not put a company at risk.
I call it a safe bet, right?
Then there is a situation whereactually it's not yet demonstrated,

(55:59):
but you do have enough resources sothat if it were to fail, it would not
put a company at risk so that in thatbox, you must wait before you bet.
But the question is how long?
Right?
So that's where you wait to bet.
But the question then is how longthe lower ones are dangerous.

(56:21):
Where the cash reserves are insufficient.
That's dangerous because even if theautonomous opportunity seems to be
validated, you are betting the company.
Right.
And then the worst caseis it's not yet validated.
don't have the cash reserves, but you aredesperate, so you make it desperate, . And
it is somewhat related to that previousframework that that I have there.

(56:43):
. Strategic dynamics, right?
Where you have a stable industry structure
where, or where you have at the otherextreme, a runaway industry change.
And so, you know, it could, Ithink in the paper we give some
examples on the part of Intel
. So I'm, I'm just gonna tell you here, me and Robert went off piste
down down a rabbit hole talkingabout his other books as well, which

(57:06):
we're gonna cover in the future.
I'm not gonna publish what we just didthere, but it was essentially leading us
up to the very last of these dilemmas,this is the one that we kind of touched
on just talking about the idea, do Iput the corporate outpost miles away
from the cord company or do I put itin the cord company, or at least very
adjacent to it, which is a link to thedisruptive technology dilemma, which is

(57:32):
essentially , the innovator's dilemma,which is also very closely aligned to
the co-evolutionary lock-in dilemma.
Yes.
So yes, uh, I, so this is,now I'm going to elaborate a
little bit because now I will.
So what Clay came up with wasvery brilliant, was this low end
disruption, the coming up with agood enough product that the low

(57:54):
end of the distribute of the demand,distribution, would be happy with that.
Finally, we have something we're have topay so much for, and it's good enough.
As you may recall , from the previoussession, I actually, when, when Clay,
when I discussed this with Clay, I said,well, but by having written your book,
that's the end of disruptive innovationbecause , which CEO is still going to

(58:15):
give up on the low end if he knows, orshe knows that the next step will be,
, they'll take another segment of that.
So that's low end, but what Clay did notreally write about and nobody did was
, the disruption can happen on the high end.
So if you remember for a momentwhen I, talked about the, in one of

(58:35):
the previous sessions I said on thevertical axis is performance, right?
That's a vector with a number ofthings, which really is the elements
that customers value in the performanceof the device that you are, the
product that you are selling of.
Then there is, thehorizontal axis is time.

(58:55):
is an average demand curve forperformance because naturally
these things get better over time.
Every product, the engineerstry to add more features.
Clay even made the important observationthat in fact, they overshoot even.
they, they do even more, meaningthat, you're going to more features.

(59:17):
And, and so they intersect at a higherlevel in the, if so, if the demand curve
is an, is a normal, let's say normaldistribution around that average demand.
So then through overshooting, theyintersect with even a little bit
higher than the average demand, right?
And some customers go, oh, this is great.
I, it's more than I had expected.

(59:39):
But so what did the iPhone do?
So even though through overshootingyou intersect with a somewhat
higher of the demand distribution,
there is always a latent demand foreven more that's above that, what Nokia

(01:00:00):
doing, Motorola, Ericsson, and, Nokianumber one, sells 400 million units in
2007, so they are doing pretty good.
But the iPhone, there was stilldemand for better than that, right?
A usage model that was differentfrom that vector of performance

(01:00:22):
that everybody is familiar with.
Now, that was latent demand, butthe iPhone made it manifest because
in 2007 Jobs came out at Applewith the iPhone and suddenly they
go, oh, this is really incredible.
That's what I really always want.

(01:00:45):
So now you ask, how come thatNokia and Ericsson and Blackberry
and Motorola, why did they not seethis and could respond in time?
And so I'll highlight nowfour elements of that.
First one is, each of these companies isoperating on their own S-curves, right?

(01:01:06):
Which are curves of productdevelopment progress.
They use the competencies that theyhave, which are the best in the industry
because that's why they are the leaders.
So as a result of operating on that same,in two dimensional space, on that S-curve,

(01:01:29):
they only look forward within that spaceand saying, Hey, today we're good, but
next time we're going to be even better.
But using the the usage model,the perceived value vector,
that everybody isn't familiar.
So that means there is income, andthat is why this disruption is almost,

(01:01:56):
I'll give, I'll explain why.
Sometimes it can be solved,but often it cannot be solved.
We could give examples of wherethat happened in the past.
So the first factor is thatI call incumbent myopia.
I am running on my scur fast asI can, or with deliberate speed.

(01:02:19):
Let's put it up again.
And I can't see beyond thatbecause I'm the best to begin with.
So that's one thing.
Then, then there's a competencygap because how come that Apple
can bring out a usage model?
A ve a performance vectorthat is better than mine.

(01:02:40):
I am already overshooting.
Well, apple is a computer company.
They were able to bring their computerknowledge this performance vector.
So that is something that wouldtake time to overcome, because now

(01:03:01):
Nokia is not a computer company.
Nokia is not even reallya software company.
Nokia is a hardware company,and so are these other guys.
So then the third thing is,and how fast is the incumbent
demand moving to the new thing.

(01:03:21):
In the iPhone case, and then with with.
Google, Android very fast withinthree years, basically, you
know, Symbian was all the way.
That was the operating system okay.
All the way down.
So these guys didn't really have timeto bridge the competency gap to be

(01:03:47):
able to do the same thing that Google.
And then finally is what theecosystem, there's a, you have
now the iOS is a platform.
Android is a platform, and now youhave developers who are working
on this platform and they rapidlydevelop valuable app applications
that the customers really want.

(01:04:09):
And so you can basically say there wasno way really that Nokia or Motorola,
because actually some people havewritten Yeah, there was disarray in Noia.
That's why they couldn't do it.
Now it's the other way around.
because they couldn't doit, that there was disarray.
Yeah.
And, and at the time, Robert, on the,, I was, my work was in media and I was

(01:04:31):
building apps and Nokia actually gaveus money to build apps for Symbian.
That's how desperatethey were to get people.
'cause app developers just weren'tbothered building for them.
Yeah, I was actually a little bitinvolved because the offense, the
Finn resource Organiz asked me tocome and give talks about this.
But I'm, this is something Iprobably should not really talk.

(01:04:52):
Sure, sure.
And, and actually just, justa couple of things I'd learned
since on the Nokia case was.
One of them was Paul Nunes, whowrote jumping the S-Curve, Bing Bang
Disruption a great friend of the show.
He was the head of research forAccenture for a long, like 30 years
plus, uh, head of thought leadership.
Great guy, by the way, you'd love him.

(01:05:12):
He said that one of the problems wasNokia had over invested in the dumb
phone capability to the point thatthey had these huge mortgages in
China, for the factories that were onlycapable of building these dumb phones.
So that was one thing.
This endowment, and then Gary Hameland Rita McGrath both on the show said
they had both seen that Nokia had builta touchscreen tablet, like an iPad.

(01:05:38):
They didn't call it that,but also touchscreen phones.
They had built them, but they didn'tallocate the resources to them or
the attention to them that was neededto propagate them for the future.
Yeah, so actually it's even deeperthan that, I think, because Blackberry
also developed a touch screen, but itdid not the touch screen experience.

(01:06:04):
That's the difference they did nothave the computing technologies, like
the operating system and so forth, theGPU, that actually Apple already had.
they had, because with wifi, theyknew about communications too.
They didn't have a great, actually,they were 2.5 G as opposed to,
but they had, these other guys,yes, , they developed touchscreens,

(01:06:29):
but not the touchscreen experience.
That's the difference.
And they couldn't because theydid not have the competencies to
actually create the experience.
That's different.
And that is in a way, that's why I thinkthis is just like with Kodak, losing , to

(01:06:51):
the digital camera , those are situationswhere , unless there is enough time.
So now I apply this toelectric vehicles, right?
So there the time ofadoption is much slower.
So there may be these guys, they havetime to develop these competencies,
which Nokia and, and the otherthree major ones did not have

(01:07:13):
,That point about time again, Paul Nunes talks about this.
He said that the distribution oftechnology curve, the Everett Rogers
curve has become so consolidated now.
He calls it the shark fin.
It goes like this and it's,it rises and falls as quick.
yeah.
And one of the problems being that youcould actually though think you're very

(01:07:34):
successful and then overinvest in theproduct, and then nobody wants it anymore.
By the time , you've geared up andcreated your factory and hired all
these people, and now it's moved on.
And it could be because somebodydid a post on social media or
an influencer got behind yourproduct or something like that.
He talks for the example.
But an apparel company, AmericanGiant actually , as the big example.

(01:07:57):
And then the thing I think about as wellis the s-curve is also verticalizing
that in an AI world where things aremore virtual and less physical or
digital and less physical, that the, thetechnology can come very, very quickly.
And your capabilities can.
Disappear very, very fast.

(01:08:18):
And you know, it's one of the reasonsI think that , in society today, it's
so important for people to realizethat and continually learn how to
learn and unlearn as well as one ofthese problems with the dilemmas.
Like, I can be an expert,but not for long, perhaps.
Yes, correct.
I agree I don't have the solutions, but,so this brings us in the end back to

(01:08:39):
what Strateg leadership is really about,
.And so there you could say it, really depends on your ability to engage
with people that are maybe havingdifferent ideas than the ones you have.
And, and being able toseparate signal from noise.
That is really what, how do you as a CEOdealing with a strategic inflection point,

(01:09:03):
strategic dissonance that is triggeredby this strategic inflection point.
How do you basically resolve that?
And that is, I think that'sstrategic leadership.
That's what I have been talking about.
Let's put it that way.
you still work with leaders allthe time, and one of the things we
said before we came on air is it'snot that you're saying things that

(01:09:24):
are cheeky or anything like that.
It's more that you're saying them througha different lens with no baggage, even
no emotional baggage to their context.
And so few leaders hear thetruth, unvarnished truth that
they so necessarily need to hear.
Yes, that's actually right.
And I think Andy was aware thateverybody is subject to that force

(01:09:46):
of emotional attachment and so forth,but he was trying at least always
to disengage from that and, and takeas objective, if you want, and data
based, assessment of the situationthat is, that you could possibly do.
But that means you have to listen also.
Just that piece about Andy andhaving you as a mate, having you as

(01:10:10):
a friend in his ear all the time.
And I, you know, the famous storyabout Clay Christensen coming
and he goes, I heard about yourbook you've got five minutes.
Tell us about it.
And he is, and Clay pushed backand said, I'm not gonna tell you
what to do with your business,but I can tell you the lens.
So you can see throughthe lens of the theory.
And then you make your own decisions'cause you know your business best.

(01:10:32):
And I wondered, were you aroundthat time, were you in that meeting
'cause you brought 'em into Intel?
So it's interesting because Andy actually.
While he, was very aware of Clay, requiredintel to develop a low end microprocessor.
Actually, I was once in a meetingwhere he was talking to his top

(01:10:54):
executives, and so that, I willprobably not bring up here about this.
They did, but the irony is that actuallythe threat did not come from below.
It came from AMD at a higher end, andfor the reason that I have just said
that they had a position trap, whichled them to not pay attention so much.

(01:11:19):
Even to what, who could, it would,oh, it would, would say, yeah, the
low end is something that we are notgood at, and he is correct, but the
threat didn't come really from there.
It came actually.
A MD came up with a new processorthat actually challenged them for a
while, at least on, on the high end.
So, yes.

(01:11:39):
So therefore nobody the complete answer
That that ain't that the truth
that.
for life?
And so I, I, I, I also, you know, I,I, I, I was said, look, that everybody
calls everything a disruptive technology.
So what does it really mean?
It becomes a buzz word.

(01:11:59):
I, so each time in my classes whensomeone, and I do that in executive
teaching, when someone uses a wordlike that, I ask them to define it.
I said I am, a non buzzwordguy, and I know nothing.
So you use disruptive technology.
Tell me once, what does that really mean?
What is your definition?

(01:12:21):
where a leader is willing to give up alow end, be a low end product because it
looks like it will, we'll all do better.
That's why I told Clay once I understandthat this will not happen to me, but then
he did not think about the high end andAndy Grove himself, who was such a keen

(01:12:46):
guy, and he liked Clay's work a lot.
I know it because he did think it wasthe low one that was a threat end.
Oh my God.
It's so, it's so difficult.
It's so difficult and I thinkthat's really important to call
out how difficult it is as well.
Robert.
Robert, I am so grateful.
I, I'm, I'm so.
Privilege to have spent this time atyou and I'm very, very grateful for

(01:13:09):
you and I'm even more grateful to coveryour that your future books that we're
gonna cover when we carve out sometime and do deep dives into this work.
Because personally I've learnedso much, got some great messages
from the audience as well.
And it's been an absolutepleasure having you on the show.
Thank you.
It was great working with you, andI look forward to staying in touch.

(01:13:30):
Robert Burgelman, thankyou for joining us.
All the best to the audience as well.
Once again, thank you to our friendsKyndryl and the Kyndryl Institute who
have just launched their first editionof the Biannual Journal, which features
a collection of articles from some ofthe show's previous guests and friends
of the show, such as Rita McGrath, andsome of the world's most forward thinking

(01:13:50):
executives, policy makers and academics.
Michelle Wucker's in there, for example,Dr. Helena Boschi, who's been on the show
on her Brain Bite series, is in there.
Many, many more.
You can find out a lot about AI globaltrade and transformation in there.
You can find it at wwe dotKyndryl dot com/institute.

(01:14:11):
Or you can download theKyndryl app on the app store.