Gary Hamel - Competence Based Competition - podcast episode cover

Gary Hamel - Competence Based Competition

Mar 05, 20251 hr 9 minSeason 31Ep. 583
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Episode description

In this episode of The Innovation Show, host Aidan McCullen welcomes back esteemed guest Gary Hamel, celebrated business strategist and co-author of the revolutionary article on core competencies. They dive deep into the concept of competence-based competition, discussing the origins, importance, and modern applications of core competencies. Gary shares insights from his extensive work alongside CK Prahalad and reflects on how their ideas shaped corporate strategy. Using historical and contemporary examples, including Tesla and HAIER, they explore how focusing on deep skills can lead to enduring competitive advantages. This episode is a must-listen for anyone interested in innovation, strategy, and the future of business in a rapidly evolving world.

 

00:00 Introduction and Welcome

00:23 The Concept of Competence-Based Competition

01:24 Historical Context and Development

02:26 Core Competence and Strategic Implications

05:03 Challenges and Misinterpretations

13:37 Modern Examples and Applications

28:23 Strategic Conversations and Future Focus

35:12 The Danger of Viewing Companies as Product Sets

35:33 Intel vs. TSMC: A Strategic Misstep

37:56 Bounded Innovation and Core Competencies

38:49 Uber's Broader Vision Beyond Ride-Hailing

42:23 Amazon's Evolution from Online Retailer to Logistics Giant

43:21 US Car Makers' Myopia and Missed Opportunities

44:24 Historical Examples: Honda and Sony

47:01 Tesla: An Energy Company, Not Just a Car Maker

48:08 Microsoft's Myopic View and Missed Opportunities

56:00 The Importance of Organizational Flexibility

01:02:26 Encouraging Internal Innovation

01:08:42 Conclusion and Next Steps

Transcript

It is great to be back for another episode. This one is on competence based competition. And we are joined once again by our guest, Gary Hamel. Welcome back to the show. Yeah. Nice to see you again, Aiden. Happy to be back. Gary's just back after some extensive travels throughout China in the provinces, so he is tired and I'm, I'm very grateful to have you back with us. We're gonna cover this, right, so I want to explain this book. This book is a very interesting concept.

Gary and Aimé Heene both invited academics to contribute, to challenge, to build upon this article that they wrote back in 1990, published in 1990, probably written for many years before that. Gary, maybe you'll give us some context on that. But this book is really interesting 'cause it was an invite to the academic community who were often battling over what is strategy? Is it emergent, is it designed, et cetera, et cetera. What do you think? And it was an invitation and beautiful idea.

So we're really gonna focus on Gary's and CK's work on core competence and core competencies being the competitive advantage. And bear in mind, this is several decades ago, so this work back then still hasn't seen the light of day in many, many companies. So I am very, very grateful to be putting a spotlight on this brilliant work. Well, as you say, Aidan, a long time ago, and I can tell you a little bit about how these ideas came to be and perhaps a little bit about the context.

I think, the work first showed up as an article in, in, in the Harvard Business Review. And it was interesting, , in those days, maybe it still doesn't, Harvard Business Review ran, they, have this jury every year to, to choose the best articles. They call it the McKinsey Award, I guess, sponsored by a McKinsey company, the consulting company. And CK and I won that several times. I think our competence came second that year.

But probably is one of the more enduring pieces that, that we've written. The province is, let me try to go back into that timeframe, , strategy and marketing had almost converged at that point. Most of the conversation about strategy was really about what products are you gonna sell? How are they positioned in the marketplace? What brands do you control? But strategy was very, very much product focused. And we thought, well, that certainly makes sense.

But we wondered if there was a deeper element to strategy, which is really focused on, on building deep skills that you could apply across multiple businesses over, over time. And that was just pretty much ignored. There was here and there a little bit of academic work called big clumsy phrase called the resource based view of the firm, which like is a good way of thinking about firms. What are the resources you have?

So there was that current out there, I guess in the academic world, but certainly not mu much attention in the corporate world. And against, this was the, against the backdrop of increasing international competition writing from the United States at that time. And I think CK and I almost came to this idea in parallel. We were both working with different companies. He was working with some big telecommunications companies at that time.

I was working with a company that, that I believe, still exists. Carrier. They were a leader in air conditioning and they were facing a decision on whether they outsourced. Some part of their compressors, which is at the heart of a air conditioner, refrigeration, whether they outsourced that, I can't remember, but to some form foreign company.

Well, we had already seen this little movie play out where a lot of American companies and consumer electronics had outsourced, production of televisions to, at that time, Japanese companies, perhaps Toshiba, Panasonic, and others who were a white label, you'd call it, OEM suppliers of televisions. And that started with very simple black and white televisions where their margins probably weren't very high.

But of course, these companies were eager to learn and eager to establish their own presence around the world. And so in, in becoming manufacturers they mastered the art of making at that time cathode rate tubes and doing them very efficiently with very high quality. And of course weren't content to just sit at the front end of the supply chain. They began to build their own brands and to come , around the mark and I thought this is likely to play out in a lot of industries, right?

If long term you don't control the underlying technologies, the skills that, that provide the differentiation in your product, that's a disadvantage, right? Ultimately, brands are not enough, or often are not enough to protect you particularly when you have hungry companies that are eager to build their own global brands. So I was thinking about that and I'm sure the advice I provided at the time was like, don't do this.

I can't remember whether they did or not, but it was clear this is probably not a great idea and you are gonna lose control over critical technology and therefore over over your destiny. Now, I'll skip forward a little bit. I think I. Some people, and maybe perhaps rightly so, have criticized the idea of core competence because they almost flipped our original argument on its head and said, , this is an excuse to outsource anything that's not really core.

And originally we were writing the article as a warning, don't lose control over what it score, but if you are interested in lowering costs and not making big investments and having an easy life it was very tempting to say, let's somebody else do this and our core will be something else.

But, the level of that with offshoring outsourcing in general, which, again, none of these things could have a simple rule, but one of the risks you take is whatever you offshore, whatever you outsource, will perhaps never again be a source of competitive advantage for you. Because now you're buying a service or a component or whatever it may be from somebody who's probably providing that to your competitors.

And once, once you get off that train of development, once you're no longer building and developing that competence very hard. If somebody else is learning fast and gaining scale and so on, very hard to get off and walk and then find that train still there to reboard. So I think some companies probably as a, again, bastardize the concept, use it in a very simplistic way as an excuse, gee, let's get rid of anything that's not core.

And we were really writing it to say, Hey, be very careful about, offshoring outsourcing. So that was a bit of the providence. So lemme stop there and then we can go a little deeper, but that's where the idea came from. Recognizing that, , over, in the short term, day-to-day, yes, it's about what brand, what product, what features in the marketplace.

But if you think of competition over a 3, 4, 5, 10 year timeframe, it's much more about who's building really deep skills that provide a lot of differentiation and the skills that are very difficult to replicate. And you wanna be, , you wanna make sure that somewhere you're making those investments and you're building that deep capability. Brilliant, brilliant context. And I just wanna remind the audience that I'm probably torturing Gary a bit, bringing him back to, to all this work and it's.

Years ago that you wrote this stuff and you're in a certain frame of mind. I thought it was so funny when Gary and I were planning the next book, he's like, I, I guess we'll be doing Leading the Revolution, which we're, we will cover in the future. And I was like, oh, no, no, no. There's another one in between. He is like, oh yeah, I forgot about that. So when you forget about a book that you read, that's, that's a good sign that you've created.

A lot of great content is out there and you, you probably don't remember this, but there's a beautiful forward written by Rummel and he said The idea of core competencies as introduced by prat and Hamel in 1990 has generated enormous interest. When it appeared both academics and corporate managers sense that this idea was important. There was an immediate and unusually broad resonance within these communities, the communities of strategic thinking.

This resonance owed much to Prahalad and Hamel's craft of persuasiveness, but it also drew on the audience's readiness for the message. After decades of seeing corporate strategy treated as a portfolio problem, academics and practitioners were ripe for review of corporate strategy that placed technology, skill and synergy ahead of cash flow and control. Beautifully written, beautiful way to tee us up to talk about that challenge that.

Up until then, corporate strategy had placed the very visible things, technology, skill, , and synergy ahead of that cash flow and control. And I don't know if you remember this, but there's a beautiful metaphor that you use of a tree and the concept of the tree that as a corporate manager, you focus on the, the very visible aspects, the leaves and the branches, but it's actually the roots. And the roots is where the core competencies is built over to you.

Yeah, I think that is and by the way, Dick was very thoughtful to write that and, and one of the great strategic thinkers for sure. I mean, it's interesting so often I. You know, a, a great idea is, is not always great in some deep intellectual respect, but just happens to be the right idea at the right time. And I think I think core competence was an enduring idea, but it was definitely the right idea at the right time. And yeah, corporate strategy become quite mechanical.

Unless you're a student of strategy, you might not remember kind of Boston consultant group and this kind of portfolio view. And I'll probably not even remember exactly the theory, but basically, you looked at a portfolio of businesses , by whether it was a cash cow and throwing out a mature business with perhaps not much growth left, or whether, I guess they called it a star, which is both growing and very profitable. And then you had dogs that were neither growing nor profitable.

And it was really, it was largely about making those portfolio decisions. What do we keep, what do we dispose of? And, that seemed. In one sense, sensible, but also wrong to me because I don't believe there are very many businesses where you can look at it at a point in time and say, this is forever gonna be a low growth business. Or, there's no way to gain any market share here.

And so it was a very static view of industries and of businesses as things that were either mature or not, or, profitable or not. And you've seen a lot of companies that have taken, mature businesses and reinvented them, revived them, brought new thinking to them. So it did, it seemed to us a kind of fairly simplistic static way of thinking about strategy. And , we knew there was something deeper here.

The other thing that probably got lost over time, at least I haven't thought about in a long time, is we actually thought of a kind of the tree was one metaphor, but another metaphor was think about a stack where at the bottom you had, individual skills, technologies. Systems, processes, and those got bundled together in a core competence, right? A core competence is always, it was meant to be something that was a blend , and integration.

That was, that's, that's what often made it difficult to copy. It was integration of multiple skills and disciplines. So you had all of these things feeding in from the bottom. Then you had this deep capability and then that often got translated to what we called a core product. This was an end, wasn't an end product, but an intermediate product that then went into an end product and created a lot of value.

I think one of the other reasons the idea kind of spread was that it actually posed a very simple, provocative question, what's her core competence? Right? And so everybody's like, well, this is probably a conversation we need to have if we haven't had it already. So I ended up, getting a lot of opportunity to talk to large companies and have this kind of conversation with 'em and help 'em think this through.

I remember one very well, I can probably say it now so many years ago, but I, BM was one of those companies. And at the time, IBM had a substantial division that, and I'll, again, this is my memory, so some can correct me if they like, but they had a large division that was making and selling computer chips, but they were selling them only inside of, IBM to that went into IBM products and then through IBM's distribution channel.

And I said, I think that may be a missed opportunity and you should be selling these to anybody. I like, why not? And of course, if the people running the business are kinda the marketing, the product people, they're saying, , we don't want to give anybody else access to this capability, but we don't, we want, don't want them to use , our chips and a way that makes sense. But what you're doing that is you're holding that internal capacity.

Competence kind of hostage to your own organization and your own products, and you might be better off if you're trying to drive volume and learning and investment to sell that more broadly. And so that, and I think in the end, IBM did that and it was, I think now where that business is today, I have no idea, this is 30 years ago, but I think this idea that, you have a core product that goes into an end product and maybe you wanna sell that more broadly.

, and of course that was what a lot of companies that we were tracking in, in Japan and other places were doing. And so yeah, that was a bit of the genesis of thinking about those layers and how do you invest in each layer and do you really want to only use a competence yourself or is it something you make as a business and you sell, core products to others?

I. So, yeah, I think, most companies ask themselves, many companies ask themselves that question, had never really thought about it before. How much did that change? I have no clue. I only worked with the companies I knew, but certainly the idea has stuck around. I think it's probably more important than ever because. It's easier to jump from arena to arena in different businesses than it used to be.

It's more difficult to build a competitive advantage that has a real fort around it today than it used to be. If somebody can capture this idea, can do really well in the environment that we're in today. I'll give you example, Aiden. You know, and again, all of these examples are products of their time. So what, what will the world look like in five or 10 years? I don't know, but obviously there's been a lot of attention on EVs over the last few years.

It looks like the growth of EVs , is going to plateau for a while, for all kinds of reasons. Partly because the electricity grid isn't ready to take a full EV world partly because the price of gasoline petrol is coming down and so on. Having said that a lot of the core competence of Tesla, I. Is around what you might think of software defined cars. So, software is paramount. You get inside a test, it looks like a car built around a giant smartphone, right?

And it's obviously key to full self-driving. Tesla's built this enormous database of all the data they've collected from their cars and so on. That's a huge challenge to German car makers. And to some extent to us car makers who really haven't invested in software as a competence. And, and Volkswagen and others have been scrambling like hell the last few years to hire software engineers to build that capability to understand how to get advanced software in their vehicles.

This is not something you do overnight and they recognize it might take a decade for them to catch up on that. So, the argument is still there. Tesla is also, vertically integrated. It's building really deep competence in battery technology. And still they buy some, they buy components and so on from whoever it may be, Panasonic and others, but they're, they've really focused on building , really deep expertise in these areas.

Again, to some extent you can, buy that from suppliers, but not always. And so if you look at a Tesla, for example, Teslas in general, , they give you more miles per kilowatt than just about any other ev because, and that reflects a huge amount of deep knowledge about how to build the whole systems around this that maximize. The efficiency of, of EVs. These capabilities are , very difficult to build.

And in kind of a parallel of what we saw years and years ago in, in Japan with the Japanese companies focusing on consumer electronics Chinese, companies have been focusing on that. Also, deep integration BYD Cherry, other Japanese EV makers, and building up a really strong indigenous battery industry now deeply subsidized by the Chinese government. It might be at, hence, the debate about tariffs. For EVs in Europe and the us but, that argument is still, I think, valid.

And if you're not looking forward and asking what competencies are we gonna need over the next few years and when should we start investing there? Again, super, super hard and expensive to catch up. Can be depending on the nature of the capability of the competence. I think you see the same thing right now , in ai, the competition between Microsoft and Facebook and Google and maybe Apple and a few others.

Recognizing, there's a lot of tacit knowledge, a lot of expertise takes a long time to build and there's a real competition who's gonna come out on top here. I was writing about this and I was partly inspired by reading your work.

The idea of, for example, , we talked the last day about JVC and Sony and the beta max versus VHS wars, and tying it back to something that you said is that instead of outsourcing those capabilities, , if you can find somebody who's willing to outsource the production to you, you can build capability on their dime. And I thought that was really interesting 'cause we saw that play out with the VHS wars.

And the same pattern is echoing today with the AI wars, is that if you can get access to somebody's willingness tooutsource to you, that's your opportunity, that's your sandbox to build those capabilities. Sure. And you can have a symbiotic relationship between a smaller company and a larger company. I mean, it's quite interesting that, many years ago , Microsoft used the distribution might of, of IBM to build the PC business. They partnered , with IBM.

They made the software, IBM, made the boxes , and sold 'em to companies. And you see the same thing now with, startups partnering with larger companies so they can build a deep capability. And sometimes those companies are acquired and sometimes not. So you can build a very deep proprietary relationship with a company, you may, maybe you don't have to build that capability in house.

The other thing I would say, a more recent development, and I saw this Aidan , just coming back from China and I was there as the guest of hire. We were running a big conference on. Celebrating really radically managed companies from around the world. More, I think about 70 of them. But one of the interesting things that hire is doing, , and this is also what I've argued when I worked with companies throughout the years, it's not just about thinking about what is your core competence.

It's about looking at the world not as a portfolio of companies, but a portfolio of capabilities and looking deeper at,, and then thinking creatively, how might we put those together, right? How, what if we partner with this company or that company and we could combine, can we do something that nobody else could do when we put those capabilities together? Well, this is taking a very practical expression now at, at hire.

They have a industry 4.0, an internet of things platform called Cosmo Plat, which would be one of the, one of the leading platforms in the world. I think GE has one. Maybe Siemens has one. , I think hire is thinking more. Strategically and probably moving faster than anybody else in the world on this. But this is now a platform where companies with different capabilities can find each other they can innovate together. They have an enormous database of consumer insights.

And it ha then has a simple way of helping companies define an opportunity contract with one another. Fine channels. And so you think about, a lot of the innovation over the last, couple of decades, and maybe we'll talk about this in another episode, has really been around one company re-imagining a business model. And Tesla was an example of that. Now you see, I think more and more innovation is going to come from really innovation across industry lines.

Because if you want to, there's a lot of problems in the world and a lot of potential solutions that can only be realized if you bring companies, organizations together from different industries. So, for example, one of the early examples of this at hire. Was reimagining the entire way. China manages its blood supply. So hire had a leg in there through deep competence in refrigeration, super advanced refrigeration that you need to do this to keep everything exactly stable and so on.

But it's not only that you need logistics, you need information companies, it and so on. And so using Cosmo Plat, it's quite easy-ish now to bring these organizations together to work together, to reimagine and come up with a ver a solution that is a , multi-company, multi-player solution to very complex problems. They're doing this in automotive retailing. They're doing it across healthcare in some amazing ways.

And so I would say as an example, hire increasingly you're not gonna see them as an appliance company. They're a company that helps industries around the world come together and solve new problems. And they get to play there. Their entree is both having that platform, which is a core competence, but also all of the knowledge they do have about refrigeration and so on. Which in most of these, new solutions , is part of the puzzle. And you need a partner that has those deep capabilities.

So I think the idea is only gonna have more resonance over the next, few years. And it may be less and less about who controls the customer, who controls the last mile, whatever. It's like, how valuable are your competencies to the solution? And therefore, how much profit do you extract out of the ecosystem?

There's a core thing you said which is, you need to understand the difference between core competence and non-core competence and also core competence must make a disproportionate contribution towards customer perceived value. And you gave an example of apple back then and the , Mac as an example. So maybe, we'll tell that the difference between the core and non-core. 'cause you mentioned this, that you weren't giving people an excuse to outsource anything that was non-core.

Yeah. And, and things that may not be core today could be core tomorrow. In fact, against the tests that we use, and I think there were three principle ones, if I recall. One was does it make a disproportionate contribution to customer perceived value? So it was a critical in the ultimate solution. And that sense, you know, kind of irreplaceable. Number two , is it fairly rare and difficult to copy? And number three, can you imagine redeploying it, , in, other ways, in other areas?

And interestingly, when we were working with companies, a lot of times they probably didn't have much that you could really, that meet all those three high tests. Well, that doesn't mean it couldn't become core. If you can further differentiate, it may become core. But you know, there are a lot of things that you need to run a business. You know, you need call centers, you need accounting systems, you know, you need hr that, that, that probably aren't gonna be core. I mean, you still need them.

They're not gonna be different. And, and there maybe you do outsource that thing. But again, you wanna really be careful because once you've outsourced this, it's pretty much gone. You know, you look at the difficulty companies are having at the moment, kind of, you know, onshoring things and rebuilding capability. Very, very, very hard. To do So, yeah, there's a lot of things that are non-core.

If I thought about my own core competencies, you know, there, there's, there's things that are essentially life breathing and eating. But I wouldn't say that's a core competence. That's just, you know, we all do it and you know, so there's a lot of things you find in a business that are necessary, but not not differentiating. Here's one for you. I saw this firsthand. So I retired from professional rugby.

I went into a media company and it was 2008 and people were figuring out what digital was, digital media, et cetera. So I was very lucky that I went in. As an intern in my thirties, but I, I, I built the core competence in digital. But this was one of the problems that , you said, for example, it needs to be, have a disproportionate value towards the customer. But what I learned then was that it doesn't end the early days. Oftentimes it's a fringe or an edge competence.

And as you were saying it, it could be like almost , the nursery or the academy for the future of the company. But because it has so little value in the moment, it's often, like we were saying about the tree, that they pull up the roots and they throw them away. They don't even know the roots are growing, which will be the future benefit to the leaves of the tree.

You have to look at a competency, not as, as I say, not, not just as a product, but you really have to think about what is the underlying problem this allows us to solve? What is the functionality? Be that, mobility be that intelligence be that heating or cooling, and then, take a very broad view of about where that might, may be deployed.

So you may have a company that, that has, as you say, the seeds of this steep competence, but if somebody in product marketing can't see, immediately where you create a product, you may not, want to continue to invest there. Which is why a lot of the traditional automakers got behind in EVs, right? It was like, interesting. Probably gonna be something. Can't see how we make money out of it right now. Like, why are we investing there?

So, yeah, you have to, , there's a whole strategic conversation there about how important will this be? How broadly could it be applied? Can we real, really build a position of leadership here? I think another thing that happened Aidan more recently is a lot of attention shifted towards kind of conversation about platforms, right? You need to have a, a platform and, you look at Apple iOS, that's a platform, right?

, most of the companies that have platforms, built platforms, whether it's Tencent in China, apple here, or so on, they also have , very deep competencies. I don't think you find platforms where a nodal company emerges in a position of dominance, controls the platform, extracts rents from all the other players that use that platform without having some deeper capability. , , itself. Certainly, you know, that was true for Microsoft. Ms. Doss Windows became a platform.

Many other software developers wrote on top of that platform, but I'd be Microsoft was a software leader with, , incredibly deep software skills and we're able to. Therefore attract a lot of other players into their ecosystem. So I don't think platforms are ever a substitute for building your own deep confidence that gives you the right to play within those ecosystems.

But, yeah, and that's, I think that's what hires now trying to demonstrate is that, yeah, we are becoming increasingly a platform company. And the platform itself may become a deep competence in terms of building it and solving all the IP issues, all the coordination issues, the collaboration issues, huge amount of technology and thinking that goes into building one of those platforms.

So a platform can, and, the underlying skills can also be a core confidence, but you wanna be careful separating those two conversations. What kind of platform can we build? And also what competencies are we could be, that could be the answer to the same question or they could be different for a particular company.

One of, one of the things that comes to mind then is, say for example, the Toyota and the Prius, so they're, they're huge success with the Prius is that often is missed with that, is they had been looking at that building the electric engine or the electric car for a long, long time before, and it, it brings to mind sometimes your strategic decisions you talked about there that when you're too early, if you're a change maker inside an organization, you can actually

lose all kind of credibility if you, if you, you're right about that future coming, but you're too early and you lose momentum and you can't connect it. Either the company gets fed up with you and, and press the eject button you sleek outta the organization because you were too early as well. I'm sure you've seen that play out many, many times.

Yeah, if, if you're not having a truly future focused conversation about strategy that that includes the top of the company, I. You're building that point of view. Yeah. The people who are ambitious, who see the future, who are working on cool ideas, they're gonna go somewhere that's more receptive.

If your organization's not thinking that way and, and, we'll have this conversation another point, but it's why I believe that the strategy process really always needs to be a very open and engaging conversation in a company. You've got a lot of young people in organizations who are close to the future, close to technology. They can see these opportunities way better than somebody who's in their fifties or sixties at the top of the organization. And I'll give you one example of that.

I may repeat this later, but it's, it's kind of an interesting story. I was working with a large Korean company and we had trained, this is now probably 8, 9, 10 years ago. We had trained a lot of young people to really think about digital technology and the kinds of opportunities that might be there, particularly around social media. Very large, fairly traditional Korean company. And these young teams have generated hundreds of really cool ideas.

And one team came to me, he said, Gary, we wanna share something we've been working on. We, we think it's a cool idea. I said, explain it. They said, you walk into a bar, a pub, a club, whatever it is, and you have all your social information, your profile on your smartphone, and, and you'll be able to see anybody else in your environment who maybe has, that same profile and you can share those and match, and then maybe you wanna meet this person, in real life.

I said, that seems like pretty interesting way of connecting. And so you know, to, to get approval for this idea, it had to run past their internal investment committee, which was mainly a bunch of late 50-year-old dudes. So we take this idea in, and the first question , from the older executives, there was so , if you go to a club, why are you on your phone, right? You should just be paying attention to your friends.

Now the, obviously in clubs, everybody may be on their phone, but they're all sharing it. Right. And have, but that was just like they couldn't get the hedge on. And the second thing was, well yeah, but if you meet somebody you wouldn't wanna like leave your friends and go be with like somebody else. Like yeah, you would, and your friends are gonna find this highly amusing, whatever. And so they didn't invest.

Right. And I think it was six months later that whoever it was, mark Dres and others invested in Tinder. Right. And here's the thing. If you have one isolated, team, one young person who goes up to a senior group and says, here's an idea. It is super easy to shut. Shoot that idea down. Now you imagine that we'd have this very open strategy conversation where that idea, we shared that among the whole organization and other people could say , good idea, bad idea, so on.

And suddenly you find out that there's a few thousand young people say, this is amazing. This would really be cool. I would like to have it. Well, now suddenly, like you have the kind of practical evidence or the confidence to say, Hey, let's experiment with this. Let's push this forward. Whereas if it's, one geezer looking at this thing so you never, ever want an organization in which one or just a very small group of people have veto power over new ideas. That's like just immense.

That's how companies miss the future, just immensely dangerous. I'm jumping ahead of my notes here because there was a brilliant line that you wrote in. It was in the original HBO article and just explain to our audience, you're. , if you're following along with us and you're reading ahead with us, which I encourage you to do, I, I've taken bits from competence-based competition that, by the way, Gary, I dunno if you know, that book's 180 euro now, if you have any copies lying around.

Not worth it. Oh, it's, well, it's, it's rare and it's, it's it's unique. I have also strategic flexibility, which is a similar, a similar concept. The book is a similar concept, so we're gonna cover that. We'll just cover that your, your chapter, your article in it as well. But there was a piece that you wrote about, which is the tyranny of the SBU and this, so, so this is your silo or your department inside an organization.

And I'll quote a little piece here to bring your mind back to what you were talking about, you said. When you think about this reconceptualization of the corporation, so the idea of competencies, the primacy of the SBU and organizational dogma for a generation is now clearly an achronism. Where the SBU is an article of faith Resistance to the seductions of decentralization can seem heretical.

In many companies the SBU prism means that only one plane of the global competitive battle, the battle to put competitive products on the shelf today is visible to top management. What are the costs of this distortion? Under investment in developing core competencies and core products, two. Imprisoned resources. As an SBU evolves, it often develops unique competencies. Typically, the people who embody the this competence are seen as the sole property of the business in which they grew up.

I absolutely love that. Those two things. But it's similar to what you're talking about, about these old dudes dismissing this concept of Tinder that the same thing happens in an organization and it everybody's siloed. So they're seeing everything from their own reward systems, their own communications, their own ownership, or perceived ownership of data or skill sets or competencies. And never the twain shall meet. Yeah, I think that's, you know, that's true.

I mean, the, the future seldom arrives perfectly aligned with your organization structure and the way you think about, you know, Your business unit, boundaries and so on. And that's why, historically a lot of companies missed opportunities that were kind of, I think CK and I use the name in the white spaces between, you know, the, the organization chart. I mean, I think one, one of the old classic examples we use kind of now, moribund.

What was MTV, you know, at, at the time, I guess it was Columbia had, had, there was CBS, it was a broadcast television business, and they also had a music business, Columbia Records, but they never saw the opportunity for, you know, MTV Music tv. So yeah, I think it's, you, you wanna be super careful that you don't see the world only through that lens. But you're, and you know, I, yeah, that you're looking at this deeper question of, you know, what holds all of this together?

What's the logic for this portfolio? Where are they sharing skills? And, and, that was just at the time, a very, very rare perspective and. Perhaps even today. But Aidan, let me, let me take you back to this conversation we were having about, the danger of, or, or, or this, this thought about looking at a company , as a set of competencies rather than a set of products. I'll give you a very current example of, of how, if you get that wrong, you can pay a very, very heavy price.

So if you think about Intel, for years they made their own proprietary processors, X 86, whatever, and that's how they thought about their manufacturing capabilities. We make chips, with our architecture to sell under our brand intel inside. Well, of course you had in Taiwan, you had Taiwan Semiconductor manufacturing company, which is now maybe worth three times as much as Intel, something like that, who said, , no, we are going to be a foundry for anybody. Right.

We'll make anybody's designs chips that go into all kinds of different products that don't have our, nobody even, the average consumer has no idea who TSMC even is. Probably one out of a hundred would know. And yet, being able to supply so many different companies, they're learning something different from every one of those companies that feeds back in their capability development.

They're creating huge scale that you can't do if it's only our end product and our manufacturing is hostage and our technology is hostage to our end product in our market. And Intel was years late into thinking about, we are, or were, they, were a world leader in manufacturing, right? If we wanna maintain that, we need volumes and a diversity of customers that we can supply given our particular end markets. Which was mostly PCs and servers and not mobile devices.

So, and I think literally as we're recording this, I believe there's a big debate now going on in Intel on whether they spin out a foundry business and how that might, coexist along with their proprietary silicon business. But, you don't want that competence or capability necessarily to be hostage of your own little sliver of the market that you have.

And, so again, a very complex strategic question, but a very contemporary example where a company that saw itself primarily in terms of its own products and its end markets missed the opportunity to serve others and build a much stronger underlying foundation. Great example, and I'm gonna bring it back a little bit to this article because I love the historical examples because what they show is that. . These are pervasive problems. These are deep embedded biases. We miss these things.

They're right in front of us. We suffer from the whole idea of the cobbler's children. We're great at talking about this strategy, maybe reading about it, and then when it happens to us, we go, oh, I didn't see that coming. You're going, you've been reading about this for years, so I really want to emphasize that.

But you, you talk about this great term, you call it bounded innovation, and the way you set this up, as you say, if core competencies are not recognized, individual business units will pursue only those innovation opportunities that are closed at hand. Marginal product line extensions. This idea of incremental innovation or geographic expansions, hybrid opportunities like fax machines.

You give the example of then laptop computers, handheld televisions or portable music keyboards will only emerge when managers take off their SBU blinkers. I thought that was a great line and maybe you'll expand on that. Yeah, well, I think that's, that's, you know, this point about seeing where else in the world you can , use a capability. I mean, a, a, a contemporary example, you look at Uber where, you know, you start out as a ride hailing service a peer-to-peer kind of taxi service.

But what you're really saying, and I think the founders early on, said. We want to build a different kind of logistics infrastructure, right? And that, we can have delivery of, , real-time delivery of products in a neighborhood. We can deliver food. But you're not thinking about this just as like, we're building a taxi business. And I think that's important. You know, if you want to have the broadest opportunity horizon, you have to take the broadest possible conception of your business.

And that's typically gonna be one built on some fairly, generalizable set of capabilities that you can apply across more than one market. And so if your perspective of, and again, I think if your self definition as an organization, as a business, if that self definition is primarily in product terms, I think that's almost always wrong, right? It's, or lemme say that differently. It's almost always partial. It's not wrong.

'cause that's, you wanna look at the world that way as well, but you'll miss a lot of opportunities. And of course what you've seen happen is often industries will get disintegrated when somebody figures out, I can build really, really deep capabilities here and everybody will rely on it.

So that was, , what happened to the computer industry where you ended up with, , Intel making the chips and Microsoft making the hardware and somebody else making Microsoft making the software, somebody else, making the machines themselves. And so, people started concentrating on where you can really build world class deep capability that everybody's gonna rely on. And that's not the only strategy, but you just have to take that perspective in a business, you know?

And it's dangerous if you don't, , it's dangerous because somebody else is either going to build that capability deeper, faster, or gonna exploit it in, in broader ways, which then drives investment, allows 'em to build it deeper. I find it very interesting, Aidan, asking what is the core competence of a business school? You know, is it, is it, is it really great instruction curriculum development?

Maybe but if it is, then you wanna ask, well , why aren't we making that curriculum available to the world? Right? Why aren't we, why don't we have tens of thousands of students? Why aren't we finding a way to, build better curriculum better instruction modules? But you have to ask that question, right? If you ignore it, you'll be surprised, probably in an unpleasant way, You've set us up perfectly. The pattern of, I build some type of competency, I build some type of competitive advantage.

I protect it then, so I get to a point of, , and on a, on an individual level as well, so this goes for professors in business schools. I have a formula that works or I'm a consultant and I've found out a framework that works for me. I sell it over and over again. The world moves on, it's outta date and I don't update my deck or my framework. That's one of the great benefits of doing the show, by the way, keeps me absolutely honest to, to go.

There's loads of new stuff out there, but you wrote this piece and I thought this was key. core, when competencies become imprisoned, the people who carry the competencies do not get assigned to the most exciting opportunities. skills begin to atrophy, it's only by leveraging core competencies. Can small companies in particular afford to compete with industry giants? So it's like use it or lose it. Yeah. No, that's, that's for sure. True. You know, another good example is if you look at Amazon.

And, you know, this immensely complex business of hosting suppliers from all over the world, managing logistics and the custom support around that. And if they had seen themselves they started out as an online book retailer, and then like CDs and whatever, if they'd see themselves as we're an online book retailer, like somebody else would've figured out how to do this at scale , and become the online Walmart or the online as whatever you want to use.

And so, they didn't see themselves that way. They said, we have this much deeper competence. It could be leveraged. , and you built something that is, for practical purposes, at least for the foreseeable future unassailable. So you know, again, I think, historical contemporary examples you can see, I mean, one of the things that drives me a little bit crazy even today is I, I think that us.

Yeah, US car makers suffered a lot from having this product brand, myopia and neglecting a lot of the deeper capabilities. They did it for a long time around quality and they've done it around powertrains, right? With a few exceptions. With a few exceptions. The engines in most US made vehicles really suck. They don't rev very high, they don't run very smoothly. You don't get that much horsepower per liter. And I have to say, Volkswagen and Audi have been better. Honda's been better.

And there's just, there was a myopia there of these things further up the supply chain really. Who cares about them? We just use them to put in an end product that customers are never gonna really care. They're never gonna notice. Never see. So. Yeah, , there's, you certainly want a brand and product perspective, but there are a lot of ways that can go wrong when that becomes the dominant perspective in an organization. You neglect other ways of thinking about the business.

There's a couple examples. You give Gary again, and I'm bringing us back in time. There was the, the Honda one, which has. Hasn't gone away. And as you say, core competence does not diminish with use. It actually builds like a muscle, it just gets stronger and stronger. And then you find other uses for that competence. But you give the examples of Honda and Sony and the, the Sony one for example, you focused on then was miniaturization.

I'd love you to, to, if you cast us back to those examples, I re, I remember the just coming out with product after product and it was, if you think about it, was because of this core competence that they could do. So and Honda did the same, including engines for other car makers, other Chrysler, for example.

Yeah, I think it was certainly, you know, when you're resource constrained as those Japanese companies were back in the, you know, sixties and seventies and eighties and you are trying to build a solid foundation under your business, you are going to look for any example to, to partner with companies that can give you the funds to build that deep expertise.

And so a lot of these companies did partner and they sold intermediate products and they built up volume and they built expertise in, in that way. So, you know, not necessarily surprising that they did that, given that they were hungry and they needed the investment. And that meant partnering and, and kind of if you can, if you get lucky enough, you hollow out your competitors in the process.

Yeah, but that's the way, you know, that's the way they, they, they view their companies and as, as, you know, a portfolio of capabilities, recognizing that that was gonna give us differentiation, and that that also allowed us to spread the investment there across, you know, multiple use cases, multiple product categories.

And if you're relatively small and starting out and you don't have the, you know, you didn't have the volume of a Ford or a GM or a vw, that's how you build world class competence, right? You know, and, and also it's why a lot of competitors dismissed, you know, early, they dismissed Hano. It was making motorcycles.

But if you looked at the rate at which they were improving that technology you know, you could see, well, maybe they think about themselves as a motorcycle company, in which case, you know, only Ducati or, Harley Davidson needs to worry about 'em. Maybe they see themselves as an engine company. Then you better think about what's their trajectory versus like, what's yours? And you know, that, that gives you a different way of thinking about them. The great example you mentioned there is Tesla.

Tesla is an energy company. It's not a car company like Tesla being, for example in insurance. And now Tesla, being in robotics, right? They've used a lot of robotics in their factories. You know, you've had, they've made enormous investments in machine vision, because, , Teslas do not have lidar and radar. They are, they operate with cameras , and machine vision. And so you say, well, where else can you use that? So, I mean, one level is so logical, it hardly bears you know, bears comment.

But again, , if you saw yourself as a EV maker, you don't see those other opportunities for, you know, running, battery farms that you can use to source solar energy or external power at your home or, robotics. You just don't see those as opportunities. But, if you understand how difficult it is to build some of these capabilities and you're looking to maximize your investment and your payoff, that this is how you think, you just think naturally about where else can I exploit this?

There's a famous interview with Steve Balmer it's with Charlie Rose, and he asks him about some of the great errors he made, and he said, for example, not getting into hardware earlier. And he goes, why didn't you? And the way he responds is he goes, when the name of your company is Micro Soft, he goes, we are a software guys. And he said that even Paul Allen had asked Bill Gates that they get into hardware and he says, no, we're software guys.

And they'd instilled it in, not only into , the mindset, but into the language, into the logo of the company, et cetera. And that's very powerful. Yeah. Well, and and to be blunt, they were not only software guys, they were Windows guys. So for a long time they missed a lot of other opportunities in software that maybe weren't accessible if what you're trying to do is sell the Windows operating system.

And in fact I believe it's historically correct, it was, , reported by people who were there at the time. But Apple was working on, or sorry, Microsoft was working on an iPad before Apple, and a very credible device. They showed it to a few IT journalists to get their feedback. The journalists were super impressed. And when this team went to get funding and a final sign off from Balmer it wasn't based solely on the window system, just like, the iPhone and the iPad don't run on Mac.

They run on something purpose built for a portable environment. And Microsoft engineers had done the same. And Balmer kind of went ballistic on 'em. He said what the hell don't you know where the Windows company? Like why would you bring something here that's not even Windows? So, it would've been good if they really thought about it as a software company. They didn't, they thought about themselves as the Windows company. And so anything that didn't fit that paradigm, was so, yeah.

There, there are so many ways you could become myopic. Certainly that's one, right? Having this narrow kind of product focused view of, who we are. Luckily, that view didn't prevail.

And when we have time, I'll tell you some more interesting stories in that regard about my experience through the years of Microsoft, truly a world-class company, but they also had their ups and downs and luckily we're able to broaden their self-concept and redefine themselves, after about a decade of going sideways under Satya Nadella so you know sometimes you see these things early enough or you have enough market power and enough resources that you can live through

the process of ignoring important trends, of being myopic for a decade. But, a lot of companies can't. I, I often think about that like a DJ with a really bad mix. Like you can hear the beats and they're all over the place. They're kinda going, that's a racket, and it's this intermediary transition from one phase to the next. Well, let's mention Microsoft there, because I remember not long ago, I mean this was.

In two, in 2010, say, going into Microsoft, the offices here in Dublin, Ireland, and I had to bring I had to bring a surface with me and I used an iPad, I used a Mac, I had to bring a surface and, I hid my iPhone 'cause there was, they were so Myopic and so anti Apple back then. But it was one of the things that Nadella did, isn't it? He softened up that approach. The software that would run on the products, the, the compatibility that, that all those wars were put aside.

And it's something we'll cover in the future when we talk about the Alliance Advantage, the other book that you wrote, what Yves Doz, but maybe you'll say a word on that?. 'cause you, you saw this play out in real time. Well, yeah, I mean there was about a decade where Microsoft was late or missed basically every single new development. They were late to the new user interfaces that you saw , with Apple.

Late into obviously missed the mobile phone thing, although they had a big run out of bought noki, but kind of were, were very late there. They were late into the cloud, but have now, made enormous strides there. They were late you know, initially onto the internet itself with their browser, versus Netscape and so on. And in some of those cases, again, they were deeply entrenched in large corporate customers had huge RD budgets and they could, they could afford to catch up.

But it was quite interesting. They asked, how do you miss everything? Like, for so many years or virtually everything. And again, it was just a very product-centric view of the company. And I may have told you this story, but I was, this was probably around 1999 or 2000. I had been asked to, I think I, I told you this story. I. But I had been asked to come make a presentation by Bill Gates to an annual CEO conference that Microsoft runs. They may still run it.

And it was maybe the most intimidating audience I'd ever been in front of, like say maybe the World Economic Forum or something. Because literally you have a hundred CEOs in the room of the largest companies in the world and you have security helicopters, overhead and so on and so on.

So I was, I gave a presentation and part of it was around thinking about the post PC world, the post personal computer world, and the fact that the PC just becomes one more device out there in the periphery, the networks at the center and so on. And I think the talk went pretty well. But at the end of it, some person came up to me from Microsoft that was clearly a little bit exercised by all of this some EVP and said Gary, at Microsoft, we don't talk about the post PC world.

We talk about the PC plus world. In other words, everything will be an extrapolation or a build on what we're already doing called the pc. And I struggled for a moment to know what to say 'cause they were clearly a little bit upset. And I finally said, well, the future is strangely indifferent to our preferences. You know, may work out that way, may not work out that way, but that the future's not gonna really care. And of course it did turn out that way.

In the same way, several years earlier, I'd given a presentation to the senior group at IBM called Information as Utility. And I couldn't say anything about cloud. I didn't know that word, but I knew like it was gonna be utility just like an electrical grid. And electricity is there and we don't all have generators. And when often the biggest advantage I have in a conversation with executives. It's like I am not embedded in their internal industry thinking.

I just look at it like, and sometimes that can make you seem really stupid and sometimes you are stupid, but sometimes, occasionally, it allows you to see something that's invisible. And so I think it was, it was very notice notable that one of the first things sat in, did what he took over Microsoft, was he disbanded the Windows division. Can you imagine like, that is the sacred cow, the central pillar. And he said, guys, like we're hostages here.

And he said for almost as almost a direct quote, he said, for far too long we regarded windows in the PC as the center of everything. So again, just like one more testament to the danger. Of thinking about, just the product and becoming hostage, that point of view. And, yeah, so now they're on a different path and one of the world's most valuable companies and they're filled with like incredibly smart people and they're look like they're gonna be one of the leaders in ai.

You know but only because of their size and their oligopolistic power and whatever were they able to survive, that decade. It's like a wealthy son, for example. I'm not gonna say who, who can afford to make mistakes with lots and lots of businesses and and still be seen to succeed, but being Yeah. up by all this bank of cash in the background. I. Yeah. And again, you know, you can't be you know, I don't want to pick out any particular individual here because.

You know, every one of us is human beings. We're vulnerable to this, right? We're vulnerable to looking at the future through the lens of the past., we're vulnerable at kind of overvaluing what is at the expense of what could be. You know, these are, these are just human foibles and tendencies and the, the fall doesn't lie with any particular person at Microsoft or any other company.

But where the fault does lie is with, you know, organization structures or systems or ways of thinking about strategy and planning. That don't really force us to work from the future backwards, that don't force us to think more deep about, well, what is, what is the very essence of our organization rather than a portfolio of brands and products that doesn't, force us to think about what are we delivering today?

What problems are we solving, and how might those be solved in a fundamentally different way 10 years from now? And therefore, where do we invest today so we still can deliver that solution or can still solve that problem for, for consumers a decade now, recognizing that we maybe based out a very different set of technologies or skills than it is today. So these are, you know, really profound, deep questions.

And if you don't have a an organizational structure or strategy process that creates time and space and encourages people to ask those, even when they're very uncomfortable, you know, you lose, Some kind of anti woke campaign or made this. Point maybe to gen Z are saying, you know, the facts don't care about your feelings. Well, the future doesn't care about your feelings either, right? It will be what it will be.

And you either can think broadly and creatively about that, or, you know, you're stuck, , in your silos and in your product definitions and so on, and you, and you don't see it coming. I love that line. The future doesn't care about your opinions or your feelings, but also I had the great honor to do a nine part series with the founder, visa Dee Hock, may you rest in peace. He passed away last year, but he had a great line.

He said, when's the last time Evolution called up on the phone and said, are you ready? Evolution doesn't care. It just ke keeps moving on and people clinging to their old ways. that was one of the things that I'm reading, preparing for Steve Kerr's book, of Rewards. So he wrote this book, reward Systems, the Folly of Expecting A and Rewarding B, and that, that's a huge problem, Yeah, I mean, certainly the reward structures are another thing that can lead to , this myopia.

Particularly, I would say, if you don't have, outsized rewards for people who build new things, in a lot of organizations you can do very well. You can get to the top without, with basically being a caretaker. With being an administrator with never having to be a builder. If the big rewards go to people who are managing legacy businesses and somehow not screwing them up, like that's a problem, right? Because everybody ends up playing it very, very safe.

Not wanting, not wanting to screw things up, not wanting to take risks. And yeah, so the reward systems absolutely can, can give you an entire company of careful, timid administrators who never want to be seen to screw up. So, you look at a company like Haier where if you build something new, you'll participate in that, equity wise you have the chance to, do extremely well. You have a lot of people wake up every day saying, how do I build something? How do I push the boundaries?

If you don't have that kind of upside or for, or if it's mainly reserved for people, , running existing businesses, then you won't have a company that's filled with entrepreneurs and bold thinkers. And again, I think, most large companies are constitutionally extremely timid. And they don't need to be, right? They have the resources to experiment and try new things.

If you thought about it rationally, large companies should be way more entrepreneurial and more experimental than small companies, but it doesn't turn out that way, right? So because that timidity percolate all the way down, right? So you may be four or five levels down and you don't wanna take a hundred thousand dollars risk, right? Or if you're little, you don't wanna take a $50,000 risk. 'cause if you screw that up, you get dinged.

So you just have, timidity ingrained top to bottom and, yeah, and no, nobody has the incentives to really think radically different. I had an episode a couple of weeks ago, Annie Duke, who wrote this book, thinking In Bets, and she said one of the problems that she sees is that it's the approach of. Of , risk towards a startup. If you think about a startup founder, they're expected to fail.

So the hedge funds, et cetera, the investors are like kind of going, , if it makes it great, you know, but whatever the percentage is fails versus a big company that the risk appetite is totally disproportionate, even though it actually can't afford like Microsoft to go through this period of that didn't work or I missed something, et cetera. And it's that aspect, that, that view of risk.

And I'd love you to, 'cause you mentioned the business school thing, same, Gary, for so many people, you lecture to, you coach you, you impart new mindsets to that. They also do this, they've built a persona inside a business and they're afraid to take, risks because it'll be a blemish on their career, or they'll perceive it that way. But it's actually the only way you need to fail yourself forward.

Yeah, I mean, you know, we all use that rhetoric about fail fast, fail cheap, fail forward, but the incentives that most organizations are not there to do that. And it's ironic because you can see at the board level where a company will do a huge multi-billion dollar acquisition. Let's say that, more often than not those things don't pay off. But we'll take some huge strategic risk at the top and somebody lower down cannot get, half of their time to work on a new idea.

Like, it's just extraordinarily screwed up that is the reality in so many organizations. And some organizations historically, I guess 3M and I today into it, some organizations and Google, whether it's still true or not, , said, let's let everybody take 5% or 10 or 20% of the time to work on new ideas. So that may be a blunt way of doing it, but you need to have a system where somebody has an interesting idea can very quickly, qualify that idea with a group of peers.

Is it completely fanciful or might it work very quickly get access to experimental funding and time to work on that, right? And so every organization needs something like that years ago. And I don't know in, in what, book, I might have told this story.

I wrote an article was did I write that with ck I can't remember, called Bringing , Silicon Valley Inside, which I think is maybe the most, that, and maybe strategies Revolution is maybe one of the most important pieces I wrote because I basically made the argument that if you look at how Silicon Valley works, it works on resource attraction, right?

There's not a CEO of Silicon Valley who says, let's put this much money into generative AI and this much money into cloud and this much money into, biotech or whatever it may be. You have entrepreneurs who are coming up with ideas and you have a network of VCs there that are eager to find the next thing. You have a thousands of employees that wanna work on the next hot thing. So you basically have a market for talent, a market for new ideas, and a market for experimental capital.

And it's this dance of them finding each other and funding these things and growing these things. And all these players have about one degree of separation between them. And now it's not only Silicon Valley, you find these clusters around the world, but, there's nobody sitting at the top saying, well, I think we should put this much money here and this much money, resources just flow. And my argument was, and is, it should be the same in an organization, right?

If somebody, whoever they are, whatever their providence, whatever their experience, if they have an idea that seems relatively promising to a small group of peers enough that, I can say it's probably not completely a brain fart. We need to make it super easy for that idea to attract some resources and attention. So we built, I think, what was the first. Kind of internal innovation market in the world for Shell in 19 92, 3, I can't remember called Game Changer still exists.

You can find it online now. I think it's more of an external platform where they're, try to bring innovation in from around the world. But it's a very simple idea that, , and again, sometimes I go , okay, I know this is a new idea. It should not be a new idea, right?

Like, this is like, so , how can, but the idea was that every single employee should have the same access to time and money to experimental capital as, the CTO or head of r and d or somebody, in the executive suite, because I don't know where the new ideas are going to come from. And so but what I do know is that most companies fail by Overinvesting in the past like that. I know. And so you better have a way of making it really easy for people to invest in the future, even in small increments.

And you think guys, that is so obvious, we should have internal crowdfunding and we should have, things that make it easy for people to start an experiment. Still, it is not true probably in 95% of companies that reality just doesn't exist. We can talk about why, but it's pretty insane. It's pretty insane. And I think that's, that's been the genius of hire is, from the start.

They've said, well, , from my experience with 'em over more than a decade, they said, we are actually building a platform for entrepreneurs. That's what our company is. And and not only our own entrepreneurs, you know, anybody out there who sees our resources, our capabilities, our network, our platform and thinks, Hey, I could do something interesting with that. We want them to find us. We want to be able to invest with them. We want to be able to fund that thing.

And, like, why do you think this should come from startups in any case? So I think the ability to build something internally that mimics Silicon Valley where resources flow very rapidly to new ideas where people who are outside your company will go like, wow, you guys really have some interesting capabilities. I think I can help you do something with that. So instead, a lot of these big companies will go buy those little innovative companies, right?

And, and then usually kill their innovative spirit like fairly quickly. Rather than, well, why don't you create the right kind of culture internally? So this is happening everywhere all the time. And, and that's Gary. You're talking to the exact listener to this show. Those people who are inside the big behemoths trying to drive change and, and just so frustrated. And it's one of the reasons, this is almost like a support group, this show for those people all the time.

I, I never told you this, this show itself actually was born outta that. I, I worked for the national broadcaster and I was told to come up with an idea and it was this show and it was rejected and rejected and rejected. And one guy who I knew, and this is the point, your point, it was only, he only gave me resources 'cause he knew me, but I had to record off company time. So I had to do it before work or after work.

And then it grew so big that my own boss corporately jealous and asked me to stop doing it. I, I was like, I don't think that's a good idea. And I ended up essentially getting, I. Fired. But it was made so frustrating for me. It was like, here's, here's a, a revolver and a glass of whiskey and a pen. So it was made so frustrating for me like that I left.

And I think, you know, it's interesting, you know, most people who create new businesses, these are not, you know, people's fresh out of business school with, with, with no job. These are people working somewhere else right now. So, you know, your people are already creating the future. You know, it's just whether they're gonna do with you or ultimately, you know, they're gonna leave because you've made it so difficult for them.

But it's not, it's not that you don't have people who are capable of doing this and are eager to do it and, and help you grow in new ways. And if you ignore 'em, that's fine. They'll leave, they'll take that value with 'em as they go. But you're already paying them to create the future, but maybe you're not gonna exploit it. We were gonna do way more. And I was like, I've brought Gary enough on , a trip down memory lane with this book as well, and, and it's, it is still available online.

It's expensive. It'll cost you a lot though. If you can find a second hand copy, good luck to you. There's not very many around. But if you're reading along with this series, the next book it's the piece de la resistance. It was , a bestseller for many years, won lots of awards. Leading the Revolution is the book that we're gonna cover next. Our guest is Gary Hamel. I'm very grateful to him for joining us, especially after his huge amount of traveling. Gary Hamel, thank you for joining us.

Thank you, Aiden. Always a pleasure. Look forward to continuing the conversation. Brilliant man. Thanks a million.

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