Episode Transcript
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Grow, Sell and Retire is thepodcast for the lazy overachiever. B D.
Dalton, author of the assistant Purchase, True Gravity and Grow, Sell
and Retire, is here to givehis twenty five years of secrets, tips
and assistants to take your business tothe next level. This podcast is for
anyone who wants to sell more,work less and make better business. Now
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here's your host, BD with today'sGSR podcast. Hey, everybody, Bad
Dalton here Grows, Sell and Retirepodcast. I'm looking forward to today's interview.
Got a celebrated author, award winningthinker, and we'll talk about that
a little bit strategic visionary. AndI've got Michael Watkins here and we're going
to talk about his new book andthe puthora of books that he has out
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there. But Michael, welcome tothe show. Tell us a little bit
about you and a little bit aboutthe new book that's coming out. Sure,
thanks, b D. We'll justdelight it to just spend some time
with you. I'm a academic,originally so Hard Business School and then now
Professor of Leadership and Organizational Change atIMD Business School in Lasan, Switzerland,
and I also co founded a consultingcompany. I'm best known for the first
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ninety days, right, you know, I like to joke vd that.
You know, I've written fourteen booksat this point, you know, one
of which sold almost two million copiesin English at this point, and the
others which sold fifty copies each.That's a joke. It wasn't quite that
bad, but you know. Butso I've got big hopes for this,
this new one, right, abit of a departure, a new subject
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area for me. I've mostly beenwriting about leadership and transitions for a long
time. Strategic thinking the six disciplinesof the strategic thinking is the title,
and I'm looking forward to talking toyou with you about it. That's cool
because I think right now is andI'm not a doom say or anything else,
but I do think we're working inthe challenging times, both geopolitically and
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business wise, and I think we'recoming into something that's going to, if
it doesn't already feel like a recession. So I think that people need to
really sit back and spend some timeoutside of their businesses at a inside of
it. So strategy is key here. So could you walk me through the
six principles? Just headline and thenI really want to test you out with
some questions and have hopefully some funwith the six disciplines. Awesome. Well,
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so just before we do that,though, I think what you just
said is so super important, right, which is I don't think there's been
a time and you know, recenthistory that we face more challenges than we
face today. Right, there's enormousturbulence economically, socially, you know,
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technologically, and I you know,if you're not thinking strategically, I think
you're going to be in deep trouble, right, because there's going to be
need to be a sense of makingfairly continuous pivots and changes and responding to
what's going on. And I youknow, when I talk about these these
days, I say, you know, strategic thinking is essential. It's not
enough. You need organizational agility,you need personal resilience. Right, There's
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there's a package of things we're goingto need to get through all this,
but I don't think you can doit without without strategic thinking. That's cool,
Yeah, so let's go what Well, we'll hit on them. But
then I want to come back toa couple of them that I think are
very pertinent for the audience. Sogo for the six the six different strategies.
Sure, So the basic organizing frameworkis you as a leader need to
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be able to recognize, prioritize,and mobilize to deal with emerging challenges and
opportunities. Right, That's the frame. And then the question is what are
the mental disciplines that'll let you dothat? Right? And that's how I
conceptualize strategic thinking is in terms ofthat recognized, mobilized, prioritized cycle.
You need to be going through andaround. You know, it happens to
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have the initials RPM. That's notan accident, right, So getting around
in this faster is better then themental disciplines that support it. How to
recognition, right, the ability tosee important, consequential, relevant patterns in
the midst of a sea of noise. I was trained originally as an engineer,
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electrical engineer, and so we usedto talk about signal to noise ratio,
right, and how you extract thesignal from the midst of the noise,
kind of recognition, and if you'renot recognizing patterns, none of the
rest of it matters that much.Right. Number two systems thinking, Right,
So, how do you understand actionand reaction? How do you understand
that if something happens over here,it's likely to spin out over here and
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create a feedbook back loop down thereand hit you on the flop over here.
Right, And so that systems thinkingis a key, is a really
key, a really key piece ofit. Number three mental agility. And
here I mean a couple of thingswe can talk about. Right. One
is a CEO. Know a CEO, I know it describes it as cloud
to ground thinking. Right, howdo you go from the big picture to
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the details, but the intentional aboutwhat altitude you're flying at? And then
I packaged with that mental agility thesort of chess master skills of looking forward
a couple moves and thinking about whatyou know, what your best reaction is
given what the competitive and social environmentis likely to do. Those three things
basically are the recognize and prioritize partof the RPM cycle. But then you've
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got to mobilize the organization, right, Yes, So number four is structured
problem solving. How do you takea team through a process of really framing
and solving the right problems? Isthe way I describe it. Visioning.
So how do you establish a visionof a desirable but achievable future, and
then work backwards from that to whatare we going to do right to get
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there? And why why should webe excited about getting there? And the
third and this is one that Iyou know, I think it's going to
come as a surprise to some folksbeing included in strategic thinking. But it's
political savvy, right. It's theability to understand the political currence, understand
power and influence, critically, buildalliances, the lives, the energy you
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need to do to achieve your goals. So when we're talking politics, it's
not always what I'm talking governmental politics. Always it's about internal politics and in
your competitors in the local chamber andthings like that. So understanding that the
big vision of the politics of dealingwith people. Yes, and you know,
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much of what business leaders need todo these days is shaped by regulation.
It requires, you know, approvalsof varying forms. I've been working
with a CEO has gone through awhole series of acquisitions in the last four
or five years, and of courseevery one of them required many levels of
governmental approval. Right, And soyou're engaging absolutely politically internally, but also
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but also exchange very good. Soyeah, give us a bunch of stuff
there and they're all great. Soa couple of challenges here for you.
Yeah, no, I'm excited.I'm ready. Okay, here it goes.
So you've gotten in a time machineand you can go back to any
company in time that was creating avision. That so somebody that maybe we
all know, but it doesn't haveto be. But what company would you
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choose to be able to sit intheir boardroom and help them or watch them
design their vision that they've delivered hopefullywell or poorly. So I'm going to
give you a one that's really obvious, and your audience is going to go,
oh, that's that was just suchan easy one to come up with,
But I'm going to give it alittle twist that I think makes it
a bit more interesting. Right.So, I would love to have been
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able to see Steve Jobs conceptualize theearly Apple Mac revolutionized computing forever. I
would love to have been there tosee that. He was a complicated guy,
but you know, there's no denyinghe was an absolute visionary. So
but that's kind of a you know, that's an easy one. The one
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that's related to him that I thinkis really fascinating is Pixar, right,
so you know Pixar, Toy,story, bugs, life, you know,
cars, and actually Steve Jobs wasa co founder of Pixar. I'm
not sure how many people know that, but he also had this amazing guy
named John Lassiter, who was oneof the founding members of Pixar, the
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chief creative officer. He directed mostof those rely hits, and I would
have loved to have sat around thetable when they figured out, you know,
the vision for Pixar, because evenI, as an adult, loved
taking my kids to those movies,right, I loved taking my kids to
those movies. I enjoyed it asmuch as the kids did, maybe more,
you know, because of something theydid, right. They changed,
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you know, animation from the kindof the somewhat tired sort of Disney formula
no white into somebody just had areally interesting edge to it. And I
would have loved to have seen that. So when you're when you're consulting people,
So if we're sitting in there,we pretended like now now you're sat
with me and I have a manufacturingbusiness, and I'm thinking, I'm thinking
this is a bunch of hog watchvision that you know, It's like that
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that's just something you write on awall and do that stuff. How do
we take it from that process todelivering movies and entertainment that engages parents and
creates a people that can sit ona couch and have a family time.
It's not about the movie, it'sabout the experience. How do I apply
that to manufacturing business or a smallservices business. No, I think it's
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harder, right because you don't havethe scope necessarily to shape things from the
absolute outset the way you do.But you know, I always counsel people
to look for the purpose and lookfor the vision and what you're doing right.
And you know, if there's nopurpose and there's no vision, then
why are you doing it would bea question I would ask, right,
I mean, but I think whenyou engage even you know, small business
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owners, they have a sense ofpurpose off and for what they're doing right,
there was a reason why they're engagedin what they're engaged in, and
often they do have a vision forwhat they're trying to accomplish right now,
to your point, you know,going from vision to reality as far you
know, execution is an underrated youknow, I mean we say vision,
right, vision, But now executionis tremendously important right to make things happen,
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So you need both right in anyan equal measure. But i'd certainly
i'd certainly tell those smaller business folksor mid sized business folks, you know,
especially with younger generations today, theyconnect with purpose, right, So
you have to be able to havea purpose and articulate a purpose if you're
really going to mobilize their their energy. It's very good. So if you're
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you were talking about at the verybeginning when you were explaining it, and
because this is audio, you didn'tsee Michael's hands flying all over the place,
but you talked about, you know, when you're talking about system thinking.
So can you explain a time whensomething happened in a business that happened
over here to the right hand,but you didn't know it swung back around
and hit somebody in the foot Likeyou said in your nation, is there
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is there an idea of something thatwe can think about. I didn't think
that was going to affect that asmuch as it did in a company.
That could be a good example.I'm going to give you two examples,
Bedie, but they're not quite exactlywhat what you asked for, but I
think you're going to like them anyway. Right. So the first is one
that's described in the book, whichis the ship that got stuck in the
Suez Canal. Right, one ship, one canal, you know, seemingly
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not a very big deal, disruptedyou know, global trade for six months
or more, right, And whyis that the case? Because you've got
this very intricate network of interconnections.People were running very lean, right in
terms of you know, manufacturing justin time, you know, inventories.
They were sourcing from long distances away, and you cut one little critical cord
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and it just starts to propagate throughthe entire system, right, and pretty
soon many, many, many companiesare suffering severe you know, severe supply
chain but difficulty. So that wouldbe one I give you. The other
was one. I actually had ahave a slight personal twist too. And
again it's not exactly a well itiact it impacted business, right, which
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you may remember, And it wasin twenty ten there was a big volcanic
eruption in Iceland. Do you rememberthis? Yes, got stuck, Okay,
you guys, I couldn't leave.I think we were in Spain,
and I couldn't leave because the ashcloud had reached over into Europe and they
didn't know how to fly in theairspace. Well, so exactly right.
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And my first connection to this,and it sounds somewhat similar to yours,
is I got the last flight outof London to Boston before they closed it
down. Right. I was sittingin the throw looking up at the screen,
you know, of the flights andit's canceled, counsel, council canceled
Boston. You know, it's justit was. And I got on it,
you know, and I remember lookingout the window and there's kind of
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this reddish you know color out thewindow. Right, But just think about
that one Bookano, you know,seemingly maybe not such a big a big
deal, but over one hundred thousandflights were canceled, created enormous disruption.
One of the estimates is that almosttwo billion dollars was lost in the process
of doing that. It completely changedthe regime for dealing with airspace management.
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It also disrupted supply chains again,right, because often very critical components are
applying, you know, bi FedEx, you know, to to China or
from China. Right. It createdpolitical issues and so you know, to
me, the hallmark of these youknow, of systems is that dead set
of interconnections, right, and thereforesome fragility that comes from having a network
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like that. But then there's alsojust the action and reaction, right of
being able to create these mental modelsof the way things work that let us
navigate through the world. You know, great strategic thinkers have great mental models,
which are basically systems models, andthe way we think about it that
is really good. So we kindof let off with the challenging times and
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everything else. So we talk aboutresources, talk about you know, strategic
thinking when it comes to leveraging resources. Talk a little bit about Pixar and
I know it's not a Pixar movie, but ratatudi it's all about cooking,
all about it's all about ingredients,it's all about bringing all this stuff back
down. So, if we wereto look at our businesses and you were
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the strategic chef coming into a businessright now with limited resources, what are
you going to want on the menuor in the recipe to deliver something for
whatever is limited resources? And sowhat are you looking at with strategic thinking
there? So so first of all, you ratitude, right, I hate
a plant just for the record,right, I might be quite despairs of
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me for this, right, SoI'm not making ratitude me, that's for
sure. So this was an interestingone. You know, if you think
about entrepreneurship, right, and there'sbeen some great stuff written about kind of
the theory of entrepreneurship and how itworks. And there's a particular school of
thought that actually was developed in largemeasure by a colleague of Minded im D
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called effectuation, Okay, and effectuationbasically says, rather than set a goal
and work towards it, figure outwhat you got and what you can do
with it, right, And soone of the foundational principles of effectuation and
entrepreneurship is called the bird in thehand principle. Right, you start with
what you have, who you are, who you know, what they know
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you know, and sort of workfrom there into what's possible and let it
able? Right, Yes, andso then you know, a good example
of this is the way Airbnb gotgoing. Right. Do you know the
story of how Airbnb got going?No, it's enlightened. I mean I've
heard gives a year of your take. So you've got two founders, right,
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living out in San Francisco with normaljobs and struggling to pay their rent.
And in two thousand and seven,there was a big conference in San
Francisco and every hotel in the citywas booked, and they saw an opportunity.
Right. So they had this apartment, their apartment, and a city
without a whole lot of accommodation,right, And so they set up a
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website, right and rented out airmattresses if you can believe it, on
their living room for me andb thereyou are, right, and so and
it really kind of went from there, right. What they then started because
they had, you know it,experience building this online platform, begin to
connect people needing accommodation with those thathad had it available, right. And
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to me, it's just a greatexample of the sort of principle of working
with what you have and kind ofgrowing something out of that. Right.
So that was an example I cameup with around around resources. That's really
good. Okay, So now let'slet's talk a little bit about having some
fun and decision making. So,so if you if you were to play
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a little bit of decision making roulette, and you you were able to look
at something and spin the wheel,what's something that you made a gamble on
Spun the Wheel and it came outgood. Because I know you used to
live in the States. Now youlive in Switzerland. So what's something in
your business life or even in oneof your client's business lives that you thought
this is never going to work Spinthe wheel and they came out a winner
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in this, and then how howdid they? How do you capitalize on
that luck of the draw? So, you know, I think one of
the CEOs I worked with, hisname is Jean Woods, and he's actually
also featured in the book. Youstarted out with a relevant, modest sized
healthcare system in the Southeast and afterseven years, is now leading the third
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largest nonprofit healthcare system in the country. Right. And he did it through
a series of deals that nobody thoughtwas possible, right, And he had
a vision for them, and hehad the political savvy honestly to make it
happen. Right. And he's youknow, to me, someone asked me,
who's a great strategic thinker, He'sone of the people I point to
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for sure. Yeah, but Igot very This question is an intriguing question,
right, because I think that italso goes to what do you do
you know when you see something isn'tworking necessarily or isn't working the way you
want, and do you have thestuff to then make a pivot? Right?
That was another way I kind ofthink about the question you're at you're
asking, right, And the examplethat came up for me there was Instagram,
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right. And again this is thefounding you know, you know,
kind of not miss but the realitiesof him. Right. So it was
originally named Bourbon believe it or not, started out as a location based app
like four square basically where you couldcheck in and do stuff like that.
And then they just realized there,you know, it was already a highly
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competitive space and you know, theyweren't really getting traction, but they noticed
that users were more engaged with thephoto sharing aspect of the app, and
so they made this decision to stripaway everything except for the photos and the
documents and the other stuff like that, right, And that was that was
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the creation. And they changed thename to Instagram, right, which is
I think some mixture of like instantphoto and telegram or something on it.
And and this thing just took offlike a rocket, right. And so
to me, that's you know,is it relate to exactly. Maybe it's
just, hey, we know thisisn't going to work if we don't make
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the change, but you still gotto have some you know, you see
that do a lot of people yousee out there, and the experiences and
the books that you've written and allthis type of stuff. Do do people
from that behavioral finance side sit onthat some cost fallacy a lot? Absolutely?
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Right? No? No, SoI think this is the right linkage,
right, which is there are reasonswhy people tend not to be willing
to make pivots like that when theyshould, right, and you have to
overcome some of those biases, youknow, risk aversion being one, you
know, the sun cost fallacy beinganother really critical one. Right, So
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you know what is it that letssome people basically say, Okay, you
know bourbon isn't working, right,We're going we're going to create something different.
We're just going to throw the dice, right, Actually, I gotta
spin the wheel your in the metaphorof the Roulette stuff. The other example
I thought was kind of an oppositeexample and maybe it kind of proves your
point a little bit right about suncosts and so on, which was Nokia
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competing with Apple early two thousands,and they built a touchscreen internet enabled smartphone.
Right, they had a prototype,right, yes, but they decide
it is you know that they weren't. It was not that big a deal.
It was minor. They had thistremendously booming you know, care of
the mobile phone market, right,and so they didn't pursue it. And
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and we know we know the historyof that, right, you know,
yes, here it is. AndI think it goes to some of those
biases you're talking about in the herealeconomics, right, in the sense not
it's kind of sunk costs, butit's also a failure to realize that you
know, yes, you have adominant position today, but if you don't
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take the choices to continue to goand innovate, you can head up with
if you can end up like nohere, right, which is kind of
kind of too bad. So ifwe're coming into we're coming to the end
of the year, we're coming intoa reset, We're coming into a vision.
And I think, what are threequestions that an slt A senior leadership
team or CEO or whoever else shouldbe asking themselves right now to kind of
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look forward and think strategically, what'sbecause we want I mean, people want
a practical thing. You know we'vetalked about yeah and all these big companies,
But how do I apply this toa two hundred three hundred, four
hundred, five hundred person company tomake something that I could say today this
actually worked. So I think thatthe answer lies in that that recognized,
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prioritize, mobilized cycle and just reallygetting clear on what your company does to
do that today. Right. Imean I work through questions when I work
with the executive teams about setting youknow, overall strategic direction for organizations,
right, you know, what doyou want to do? Why should people
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get excited? How are you goingto shape the culture? But the number
one question is where are we anddo we have a shared view of reality?
And are we staying in tune withwhat's happening right, recognizing, you
know, sensing and responding to what'sgoing on appropriately. And to me,
that's the number one thing I wouldI would sort of talk with my team
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about I would be testing first ofall, do we have a shared view
of reality, reality of the customer, reality of the political environment we're operating
and right, reality of what thepotential risks are we're facing right and really
testing and pushing on that pretty hard, which I think you can do,
you know, in any size ofbusiness. And then I think it's then
okay, what's how are we engagingin a way that lets us recognize,
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prioritize, mobilize to see emerging challengesand emerging opportunities. Right, what's our
logic for doing that? What areour systems for doing that? How do
we gather information? How do weprocess that information? Right? That's right,
sort of be focusing first, becausethat's the basis then for all the
work you then doing to make goodstrategic decisions. But if you're not,
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if you don't have a shared realityas a leadership team and you're not staying
in tune with what's going on,you're on you're hitting a our clip.
Yeah, and people don't People don'trealize that, especially when things are going
decently. They don't may not begoing great or as good as they used
to, but people get that that. You know, when the tide goes
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out, you see who's running swimtrunks from for more embuffet. You know,
I think we're headed to a littlebit of tide going out, So
people need to put the shrimp trunkson. So it's so when we're looking
at this, and I'm a bigsports fan, and you can you can
take this analogy in whichever direction youwant to go, but football fan,
So, how does a coach lookat a team and get the vision the
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besides score more goals, get thevision and the team to line up?
And then how do we kind oftake that into the business setting? So
how do we get the team toline up with everything we just talked about
with the direction of travel and thegoals? How do we now get the
workers that are on the pitch todo what they're supposed to do? So
this is this is a fun question, right, And I am Yeah.
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I live in Europe, as youknow, and so when you at football,
I interpreted it as soccer, Right, you want to talk about soccer.
I'm joking, I'm joking, right, What I actually, what I
actually did was think a little bitabout the difference between soccer and American football
as metaphors for execution and the relativeadvantages of those two. Right, I
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mean, soccer, You've got alot of flexibility. It moves very quickly,
it's very fluid. You know,you've got to change and adapt on
the fly. There's a lot ofcreativity typically in the game, right,
whereas in American football you typically havethe more defined roles, the planned and
structured execution, right, the morecentralized decision making right, the calls from
the side of the field. Andso to me, you know, the
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two types of football basically represent twomodels of how you how you execute,
and I think you need both,right. You need that you need the
part of soccer that's about the fluidity, the adaptability, the flexibility that the
team works, but the team thatknows each other's moves, right, And
you need the ability a plan andexecute and assigned roles and you have a
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disciplined approach to running a play inthe same way that you do in American
football. Right. So to me, it's, you know, the right
answer is a mixture of the twokinds of football, if that makes any
any sense, you know, Iguess I would say, though, given
the turbulence you you talked about andwe've discussed that adaptability is really absolutely essential
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today right now. But you seethat in American football too, right,
you see people adapting the plays theyplay, deciding what plays are going to
run. So it's not like Americanfootball isn't an adaptive game. It certainly
is, right, but maybe notas fluid as as soccer is. But
anyway, I think it's a superinteresting question. I know by the way
sports metaphor is that it can bereally helpful and interesting, right for thinking
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about these things. They bring alot of people along. I think,
So you're you're a big thinker,and tell me about the words you just
want because there's fifth there's fifth involvedand you you are just recently in London.
So I was, so, whatwas the award and how did it
come about? Sure, so there'san organization called Thinkers fifty and every two
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years they rank the top fifty managementon leadership thinkers in the world. Right,
So, and some people call itthe Academy Awards of Management and Leadership,
Right, And so they hold thisevery two years, big gala in
London, black tie affair, andthey've won it like the oscars, Right,
the academies are the winner is andso you know which is great?
(27:37):
Right? And I actually went onthe Thinkers fifty originally back in twenty nineteen,
and I stayed on it again intwenty twenty one. Right, because
you can fall up the Thinkers fiftytwo. Right, you're a former thingers
fitting you know, all the right. But actually this year they decided to
give me particularly particular recognition in theThinker fifty Hall of Fame. Wow,
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the Thinker fifty Hall of Fame.It's basically kind of the lifetime Achievement award
equivalent for my overall career achievements.And the nice thing about that is,
once named to that, they can'ttake you off, right, So you're
there for life. You can't makeme leave. I'm furniture, and I
have two jokes about it, right. One was when I heard, I
thought, oh, this is great, but I was really hoping for the
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Rock and Roll Hall of Fame,you know, yes, yes, and
the other ones that I quickly wentto the list and checked out who else
was on the the Thinker shifty Hallof Fame and was quite relieved to find
that most of them were also stillalive. So you weren't the only living
member of the Thinker fifty. Weneed a live one. Everybody else is
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gone. Bring one in that's stillwith us, so exactly, that's cool.
So where can we find out moreabout you? Sure? So?
Probably easiest place is LinkedIn right,I do my own LinkedIn you know,
work basic me in, answer messagesand respond and it's almost certainly the single
best place to get cool. Andwhere can we buy the book? Everywhere?
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But not until January ninth, becauseI mean you can pre order it
now. And what's the good thingis this will be coming out right about
January ninth, so it'll be readyto go. That's perfect. That was
be good. So here's the rewindsegment. So one top tip that if
somebody just catches the last minute ofthe podcast, they'll rewind and say,
hey, I need to hear everythingthat Michael had to say. So how
(29:37):
about your your one top tip thatwe can apply today. Yeah, if
you're not prepared to adapt, you'regoing to die. If you're not a
good strategic thinker, you won't beprepared to adapt. If you don't ensure
your team is on the same pageabout reality and able to respond to what's
going on, and won't be ableto think strategic. That's amazing. Michael
Watkins, thank you so much forcoming on the Growth Sell and Retire.
(30:00):
Has been amazing to have you on. Thanks Peedie really enjoyed its. Thanks
for joining us on grow Sell andretire. For more information, tools,
or to book one of our teammembers to work with your team business,
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If you like the podcast, you'lllove one of BT's three books,
(30:22):
The Assistant Purchase True Gravity and theBook. The podcast is based on,
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