Gary Hamel - Leading The Revolution Part 6 - podcast episode cover

Gary Hamel - Leading The Revolution Part 6

Apr 22, 20251 hr 10 minSeason 31Ep. 591
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Episode description

Welcome to the finale episode of our exploration of Gary Hamel's groundbreaking book, 'Leading the Revolution.' In this episode, Gary Hamel joins the discussion to delve into the timeless principles of innovation that have maintained their relevance despite evolving business landscapes. This episode is packed with insights on creating wealth through revolutionary design rules, fostering new business concepts, and the importance of low-risk experimentation for long-term success. We examine case studies from companies like Disney, Apple, and Shell, highlighting the practical application of these principles. Get ready to be inspired and equipped with actionable strategies to lead your own revolution!

 

00:00 Introduction and Overview

00:42 The Role of Top Management in Innovation

01:08 Introduction of Guest and Positive Feedback

01:50 Complexity Theory and Simple Rules

04:29 Unreasonable Expectations and Stretch Goals

11:17 The Importance of Elastic Business Definitions

20:02 The Power of a Noble Cause

26:09 The Need for New Voices and Neurodiversity

32:09 Creating a Market for Innovation

36:40 Shell's Game Changer: Internal Innovation Marketplace

38:46 Challenges of Low-Risk Experimentation

39:48 Commitment to Learning and Experimentation

41:43 The Importance of Patience in Innovation

43:47 Cellular Division: A Model for Organizational Growth

47:22 Connectivity: Learning from Other Industries

50:50 Re-engineering the Management Model for Innovation

57:17 Wealth Creation Index and Innovation Metrics

01:00:05 Balancing Big Bets and Learning in Innovation

01:07:01 Final Thoughts: Embracing the Age of Revolution

Transcript

Welcome back to the finale of this brilliant book Leading the Revolution. So many people have been in touch to say how this has not aged. The examples may have changed, but the principles have not changed, and I can tell you what today's episode will absolutely nail that point. I'm gonna start before I introduce our guest with a little intro, because he says that "order emerges out of deep but simple rules.

Too many executives have spent too much time working on this strategy and not enough time working to create the preconditions out of which new wealth creating strategies are likely to emerge. Assembling grand strategies in the corporate tower is a futile undertaking in the age of revolution. This doesn't mean that top management is irrelevant. Far from it, he says. Top management's job is not to build strategies.

Its job is to build an organization that is capable of continuously spawning new business concepts and reinvigorating old ones. To do this, you need what he calls design rules. And today we're gonna look at the eight design rules required for gray-haired revolutionaries. It's a great pleasure to welcome back our guest author of Leading the Revolution, and all these behind me on the shelves. Gary Hamel, welcome back to the show. Thank you Aiden. Nice to be back.

Looking forward to our conversation. I'm telling you, there's so much positive feedback from people saying, oh my God, this is gold. They hadn't heard it, which is exactly why I did it. 'cause when I stumbled upon. These books. I was like, these are gold. They need to be dusted off and brought back out again. I know you've built on it and I'm so grateful that you've given us the time to go back into them, so we'll get stuck into these ideas of the design rules.

Maybe before I start and tee you up for each of them, maybe you'll give us an overview of what this chapter is about. Yeah, I think this chapter, I wrote it at a time when I was quite curious about kind of complexity theory. I was talking to people who were at the forefront of that Stuart Kaufman and others.

, and it was clear that in our world, and of course the internet is an example of this as well, but it was clear that, there are a lot of things that are quite complex, like watching geese in flight who will root around objects or, vary their path for the wind or so on, or regroup if one falls out of formation. These things happen without a CEO of the gaggle without, they, they happen because of very simple rules.

And you can use these to simulate, in, in the same way the web, with all the complexity and the variety of what has happened across the web was built on a few simple rules about how networks would connect together, A few simple protocols, redundancy, and so on. And yet it create, it spas this incredibly complex ecosystem with ebusinesses and communities and so on.

And so the question I was really thinking about is, as a leader or something in a fairly large organization, you cannot put your hands in everything that's going on. You shouldn't try, and it would be impossible in any case. So the question is, what, how would you create a few simple rules? How would you operationalize those rules over time in a way that supports innovation from everyone every day? And that was really the thought of it.

If you're starting from not trying to architect this out in a huge detail, but what are the principles? What are the rules? What are the values that we want to instill that would create an environment in which innovation flourishes? That was the idea. As I said, it's timeless stuff.

And the first one may surprise people because when we talk about strategy or oppor opportunity in organizations, people, as you told us before, they come from the point of incrementally growing because it's the most path of least resistance every year. Gary, I read a book that's like a model for reality type book quantum mechanics or something like that.

Something a real stretch for me, and in one of the books I'm reading at the moment by Vadim Ze, it's a Russian author who wrote a book called Reality. Trans surfing. And he says this thing, he says, imagine you land on a desert island full of savages, cannibals. He says, what's your choices? Choice one is to run away, try and escape. They'll probably get you an eat you choice two is to be try and appease them and give them gifts or et cetera. But then he gives a third option.

And when I say this to people now, and I was the same, I was like what? What's the third option? And he goes, pretend you're the king. Pretend you're a God that's arrived and let them be subservient to you. And I Was reading it at the point where I read this chapter, this design rule number one, which is to have unreasonable expectations and this idea of something that's way beyond your current reach. But in doing so, you don't know how far you'll actually get.

I hope that sets you up nicely because I thought of that when I read this chapter. Yeah, I think we with CK Prude I wrote an article that predates this book, but was called Strategy is Stretch and and Leverage, and of course, another article called Strategic Intent for Harvard Business Review, which really were based on this idea that, innovation. Tends to be born in the gap between aspirations and resources. And if you're a young company, there's a fairly substantial gap there.

You may be quite resource poor, but you have the stream of doing something quite big and significant over time, though, as a company grows and as the founders leave the stage and, you move from having a lot of creators to having a lot of administrators, that gap starts to narrow. And so you start to be quite satisfied with kind of just being average, with doing as good as everyone else. And that kind of an aspiration really does not motivate bold thinking. It motivates incrementalism.

And so, you have to be a little careful about this. There you want a goal that's bold and that has stretch in it, but it's not completely unreasonable. But few organizations have, an ambition that really motivates people that demands new thinking. And so, , you're only as good as your expectations. I think I, I say in that chapter that no, no organization is very unlikely for an organization to outperform its aspirations. So those aspirations set the upper limit on, what's possible.

And it's also, I think, largely determines why there's such a poor correlation between resources and success. Because, a company that has a large ambition, far and excessive its resources is gonna be forced to be resourceful. Not just about having but resourceful to be creative. One of the analogies I used to use was looking at the experience of the US military in Vietnam, where.

They dropped more ordinance, more bombs on, on Cambodia than they did on all of Germany during the Second World War. And still, lost. And I think the political logic for being there was very confused. There wasn't really a consensus in American society about why the US was engaged in that part of the world. And the Vietnamese on the other hand, were fighting for their survival and, but were very resource poor.

So, would build a bridges across rivers, just a few inches underneath the water lines, so you couldn't see them from the air or they would, build tunnels and so on. But they were endlessly creative in that sense, in a way that the US military wasn't. So I think, you have to ask that question like how high is up? How, what? And I, in the book, I talk about kind of several tricks on being, bolder. One of them is to think about. Not your certain market, but how would you redefine your market?

So it is much, much bigger than your firm. So the opportunity rises much much farther out there. But that, I think it, it starts by having that kind of intent to make a bigger difference and to aim high. And, I think that's also, life is diminished if you don't have goals like that, and I often, I ask my students, I ask executives, what goal is worth the scarce currency of your life?

And I might have mentioned it before in our conversations, but I really do believe life is too short to work on inconsequential problems. So find something that is big that, that forces you to think differently, that forces you to be curious, that keeps you motivated, that's worth striving for, working hard for but don't be content for it with incrementalism and mediocrity. Amen. Amen. Absolutely.

Part of the spirit of this show as well, not just on an organizational sense, but on a personal sense as well. Personal reinvention keeps striving as well. Life's too short. There's one caveat in this chapter, and you've kind of alluded to it there. If you do push these stretch goals on an organization, these unreasonable expectations, you say that some folks in the organization will search for shortcuts, a mega acquisition for HA, perhaps, or deep price cuts, rebates, et cetera.

And one thing that you see oftentimes in my own experience in media was sandbagging. So people would sandbag revenue and then assign it to the new opportunity, et cetera. Maybe you'll share a thought on that, because I'm sure you've seen it so many times when you worked in organizations. Yeah, there's ways that I think we'll talk about this again at some point, Aiden, but there, there are a lot of ways to try to create the illusion of vitality without, the reality.

It's, like ozempic you, look thin and whatever, which is probably a good thing, but it doesn't mean that you can, that you can run a marathon . Whether that's relying on deals to prop up the top line or share buybacks and so on.

There are all kinds of ways so what I really like to look at, and I talk about this in the book, one of the ways of looking at this historically is to look at a company's market value as a share of the market value of kind of the entire industry in which they compete. And 'cause that's hard to fake, right? You don't, it's hard to make a company more valuable and then you can adjust that for acquisitions without really having to grow.

Because market value is just expectations about future growth and cash flow. So, if a company is losing relative value share, that's a really, really bad sign. I remember, I, I got in, in, it was about the time this book came out. I got in some trouble because IBM had been in a deep, deep crisis. They hired an ex McKinsey guy, Lou Gerstner, to come and turn them around, and he did it right. There's a lot of downsizing.

They laid off, a lot of people sold off businesses, including the personal computer business and shifted into services and so on. And, and he was celebrated for that. And probably rightfully so., he probably saved them from death perhaps. But what was interesting is over his basically decade long tenure there. IBM went from being 50% of the global IT market value to being less than 10%. And you go like and for a decade they missed every new opportunity on the horizon.

And that's when, Dell came along and Accenture and all these other companies. So, yeah, you turned it around, but like you missed a lot of opportunities. So I think yeah, you have to use metrics, focus on organic growth, focus on market value as a share of the market value in a fairly broad domain. And, if you're focused on growing those things, then you'll be less inclined to take the shortcuts and be satisfied by 3%, 4% gains, which most companies that's, that's enough.

But I, I would never wanna work for those companies. then you reject the innovators or you don't attract them in the first place by having those type of goals, which is part of what the next one is. So design rule one was have unrealistic expectations. Design two have elastic business definition, and we have spoken about this before. We talked about it in competing for the future as well. But this principle is timeless and so necessary where too many companies define themselves by what they do.

Rather than by what? They know their core competencies and by what they own their strategic assets. Thus they become prisoners of their business, their existing business concepts. An example you gave in this was Disney and again, timeless Disney's because since this book, Disney have gone on to do more and more beyond the theme parks, beyond the attractions to Disney Plus and tv, et cetera. Yeah, I think, this is a complicated case because, over the last few years, I think they've struggled.

They made a whole, a long series of acquisitions of other film companies and have kind of been, reissuing action movies, one after the other, and I think their audience has gone, got tired of that. Having said that, if you look back through Disney's history, yeah, there are a lot of times when they took a very broad definition of what they do. We're very good at storytelling, for example.

And so they have been, I think, and probably still are the largest, most profitable theatrical production company in the world, right? The Lion King has been all over the world, and their other theatrical productions they built a cruise line, which is, basically Disneyland on the water. So yeah, it's not only about thinking about your core competencies, that's important, but it's thinking about what does the core function, what is the core value you're creating? And if my value is Disney is.

We entertain families. There's a lot of ways to do that or storytelling. There's a lot of ways to do that. Quite an interesting example, I think I also mentioned in the book, what the potential vulnerability of traditional universities to online learning. Because if you think of, if you think of we just grant degrees or we're a physically embodied university at this particular place, MIT, Harvard, Stanford, something else. That model is gonna last a long time.

But it goes back to the point you can say, well, like why would, online learning is gonna be perhaps this small thing. People are still gonna wanna come and have the in-person experience. Why do we really have to worry about this? And in a sense that's probably true. And there's, I think, an important point in there. And then I want to give an example, Aidan, I think that.

If you don't have a broad, , ambitious sense of opportunity, you could be very satisfied just to stay where you are and where you are. May be okay for a very, very long time. But like, how much fun is that? Right. Managing the status quo? So the, I think in the United States, the largest online university right now is called Western Governor's University. And it was created by a group of governors of western states who wanted to make university education more accessible to people.

They have 155,000 students. It's basically a newcomer, an upstart. And what makes it, and you pay a fixed amount each six months for tuition. It's very modest. It's probably a quarter of the cost of an elite university. So you pay a fixed amount every six months and you can do as much coursework in that six months as you can handle. And there's no fixed calendar when you've mastered a subject, they call it a competency unit. When you've mastered that, that's done. You go on to the next one.

So if you can put more time in or, you learn faster, whatever. And so you know, you can say, well, what the hell does that have to do with, , a big state university or an elite? Maybe not. But how cool is it to help 150,000 people on their educational journey? And if you're a university that has all these resources, the teaching, the training, the curriculum, why wouldn't you think that's something that would be interesting to do?

And if you look at the top, certainly in the United States, you look at the top online universities, they're all relatively newcomers or relatively small universities that saw this as an opportunity. And so if your mission is to educate people, why wouldn't you see this as something interesting? On the other hand, if your mission is to sit comfortably in an ivory tower and whatever, then you're never gonna see this as an opportunity.

So you have to go back and say, like, Disney, what is it that we do? What do we care about? What's our passion? And where in the world can we take that? , and it still has to be tethered in some sense to real skills and capabilities. But you know, you want to always believe you live in a very opportunity rich world, right? You always, because.

One of the things that paralyzes firms, if you don't see a lot of compelling opportunities, if you don't like, man, we don't even know where to look next. Like, the world is so filled with opportunities and new things to do. If that's not the ethos, if you're not, thinking about that, then you just become very satisfied with the status quo and are unwilling to take risks and try new things. So you always have to have a really deeply optimistic view of the future.

And one in which like, it's like there's so many cool things to do, we just have to like, choose. And we'll get to this, most companies don't have any kind of a process that regularly throws those kinds of ideas up.

I often think about, and you've made me think about this even further and we'll go into this particularly when we talk about Humanocracy, is like you said, the type of person who's running the company when it's stable, when it's got found out, what it does is not the type of person that started that company. It's not entrepreneurial. There's a book called From Barbarians to Bureaucrats, and it's like the Everett Rogers curve where you have this kind of.

Initial entrepreneur who finds the opportunity, goes after it, not very good at managing, then they get fired from their own company or somebody's brought in to put manners on them. And I wondered about that, right? You get to a point where the company's run by administrators or bureaucrats for stability. The world changes and you're stuck. What happens in those cases? What? What have you seen that was well managed in the past?

Well, yeah, I think there's a typical kind of shift that goes from, , when a company is young, it's the engineers, maybe the marketing people, the operators the innovators, the scientists, the technologists who are in charge. And then as the company grows, you try to get, quote the adults in the room to manage growth and complexity and so on.

And within a few years it's the analysts and administrators and finance people and managers , are running the organization and that, and we have it the wrong way round, right? I mean, it's not that some of those skills, the managerial administrative skills are not important. They are, but they should always be subservient to the people who are there to create and to build and to innovate and so on, and have the deep technical expertise or the deep market expertise.

And that, that's, and, and, and partly because, if you think about that organizational pyramid, it really is, it's an administrative pyramid and, you get this crazy thing where you know, if you wanna advance in most organizations, at some point , you have to move into a managerial role. Like there's no other way to get ahead or a greater salary. It's just like insane. That, we have the administrators running the show they should be kind of a service function.

But that happens, again and again, and we'll, in, in later episodes we'll talk about like why that happened and the historical roots of that. But, most of the companies that I profile in the book, companies like Charles Schwab, which today is maybe number one or number two, still the largest asset manager in the United States and Virgin and so on. These are companies that were, when I was talking to 'em, they were still run by their founders mostly.

And so they still had that buccaneering spirit. And so, at some point, obviously those founders are gonna leave the stage, or perhaps you're an organization that's been years or decades since you had that kind of a person. So the challenge, all right, I may not have that skillset as a CEO. I may have never built anything. I may not be an innovator.

But what I can do is I can work to create an organization, which those people get ahead, they get rewarded, they get, they get investment and they thrive. So that's that's the story of Haier and Zhang Rumin the CEO, I don't know that he was a great technologist or product creator, whatever, but he said, I'm gonna build an organization where those people are the ones who run the business, not the dam accountants. . And just a reminder audience for those who have stuck with us.

We talked about that with Schwab and it's fascinating how Schwab recognized and rewarded those people who did take risks. And as you say, Gary, it's so backwards. So many of the listeners of this show, you're going cap in hand with your idea. That could be the next big thing for the organization, and you're trying to find resources and it usually gets shut down, taught that you're crazy or gaslit outta the organization.

It's so backwards and o obviously very psychologically damaging to many people as well. They don't try again. But you alluded to this one, the having the founder and having the founder's story. Energy and them talking about a cause is really what design rule three is to have a cause, not a business. And Gary tells us gray-haired revolutionaries.

That term by the way, just to remind you is old organizations or legacy organizations or a ancestor organizations, and they draw much of their strength from their allegiance to a cause that goes beyond growth and profits, A cause that goes beyond themselves a cause that is truly noble. I thought about that, Gary, with what you said about in Vietnam and the bridges below the water, and you studied many of the military strategists.

Von Kitz was one who talked about this concept he called moral force, and he believed that in addition to physical force, best armies in the world had spiritual and moral forces, such as dedication and a sense of sacrifice. I always think about that with sports, that the teams that win and dig deep when they go and get tough or the teams that have this, they're fighting for something bigger than themselves, and it goes the same for companies. Yeah, I think, I think it's true.

I think that, ambition, , having stretch is important, but , you need a goal that is also , as you said, there a goal that is noble. I. A goal that deserves sacrifice. And, , we've had a lot of conversation over the last few years about, purpose but I think every great business, , has a purpose or can have a purpose if you think deeply enough about it.

I, I talked about Cemex, the Mexican cement company, and not everything they do, but they're super motivated by how you create housing for the poor. And they did a huge amount of research, a huge amount of innovation focused on that problem. So I think, you have to ask, are we giving people anything that speaks to their hearts? And that can't be some, bullshit sloganeering. It has to be like this real commitment. I think.

I think at the time I was writing , this, the CEO of Charles Schwab said, we are the guardians of our customers financial lives. Well, I haven't met many bank tellers who think that way, right. Or, or investment advisors. But it's clear. And the risk swab took when they moved from offline to online, which immediately decimated their margins, was like, is this gonna make it easier for customers to manage their financial lives? If so, like, the question's not, do we do it or not?

We can debate how, but we're not gonna debate whether this is the right thing to move. And, a lot of other traditional brokerages took a long time to debate that. A long time to get online , gave Charles Schwab a clear field to run on. , but that courage came from the fact that you really were starting with, what, what do we do that's gonna make people's lives better?

And, our primary allegiance is to that, not to shareholders, not to stakeholders, not to, but to making that difference in people's lives. And then it's up to us. To figure out how do we do that profitably. But I think that's just a huge, a huge miss in most organizations is that the people who show up to work every day are not continuously reminded that we have a higher purpose.

That, , we are in a sacrificial profession where, you know, we are gonna sacrifice where we need to for the good of our customers and improving their lives. That just gets missed or gets very trivialized in some kind of a slogan. But I think it is key to having the courage to change, right? If you don't believe there's something that's truly , you're doing truly, God's work in some sense, you're not gonna have the courage to change when you need to.

I love that and you've set me up beautifully here. There was a quote I pulled from this chapter. That I just had to share. You say gray haired revolutionaries must periodically shed their skin. Every time they abandon a decaying strategy or jettison an out of date belief, they leave a bit of themselves behind. The most unsettling thing about the process of renewal is the need to write off one's depreciating intellectual capital.

To a great extent, an individual's worth in an organization is determined by what he or she knows. Business concept innovation, however, changes the price tag on every bit of knowledge in the firm. Some knowledge becomes more valuable and other knowledge less so. Absolutely love that. And it consolidates what you talked about. You talked about Schwab in here, and I'm not sure do you cover a blockbuster in the future, but I thought about that Schwab's willingness to go.

I know we're gonna lose a fortune on this, but it'll probably save the company. But when you look at somebody like Blockbuster, the unwillingness to let go of late fees, for example, when it, there was so much money derived from that and eventually part of the decline came from that. Yeah, if your profit model, , is based on exploiting customer ignorance or perhaps in that case inertia that's a bad thing, right? If you're taking advantage of the customer that way.

We, we talked a little bit about Ryan Air, I think, in an episode, and, and maybe they've strayed a little too close to that line sometimes, but Don't mention those guys, Gary. They're in the shame of Ireland. Yeah, , I used to argue, the core competence of banks , was complexity and obfuscation. And in that, they can hide their fees. And that was too, like for many brokerages, early on in my broker, I always asked like, okay, I wanna know what your incentives are in this, right?

You're selling me this thing. What is your commission? What does the company get out of this? You? Like, you can't, you have to be transparent. You have to be honest. And when you're not, or when you're forcing customers to pay for things that they don't really want. That's just like a bad business model and.

I can understand why it may be hard to change it, but you have to be on the right side in that sense, because if somebody else is gonna figure out how to do this without taking advantage of customers or exploiting a lack of knowledge, and of course largely that's, the internet has been a huge force for good in that sense that it's created a lot of transparency, easy to compare, and and as a firm, you really have to compete then on value and doing great things,

not on, the fact that you're hiding the ball and away from the customer. design rule three was this idea of having a cause, not a business design. Rule four. We touched on this a little bit before, was the importance of neurodiversity or the importance, as Gary says here, of having new voices. More often than not, industries get reinvented by outsiders, by newcomers, free from the prejudices of industry veterans. Yet in most companies, strategy is the preserve of the old guard strategy.

Conversations have the same 10 people talking to the same 10 people year after year. No wonder the strategies that emerge are as dull as dishwater. There's three distinct groups you mentioned here, the young, the peripheries, and the newcomers. Yeah, I mean, again, if you look at the vast majority of startups, and I talk about some historic ones like Amazon and Jeff Bezos or Pret-A-Manger in the UK as a guy, Julian Metcalf and Sinclair Beam.

These are almost, people who start from outside the industry and they have none of the prejudice. And, and sometimes that lack of experience can be a disadvantage, but often, there's a lot of fresh thinking there too. ,  Pret-A-Manger is one of my favorite places to eat when I'm ever in, in the uk it's fast, it's pretty nutritious, mostly organic. And they, they ask a simple question like, why can't fast food be healthy?

In fact, you can get in and out of a  Pret-A-Manger , I think, fast than you can get in and out of a McDonald's. And and their profit per square foot is higher than McDonald's, even though they're open significantly fewer hours. Their production model is very different for one employee, makes the whole sandwich from beginning to end. It feels like this is my thing that I'm putting on the shelf.

So you have to recreate, who is the Chinese philosophy talked about, or maybe the Japanese philosopher talked about the beginner's mind, right? You have to recreate that in your firm. And one way of doing that is to make sure that on kind of any important conversation. To grasp. so they need to be overrepresented. You need to have people out on the geographic periphery because they're more likely to have fresh thinking than, people are in the Vatican, so to speak.

You want people out on the edges of the organization, , and then you want people who've spent time in other industries who haven't spent the last 20 years working in whatever business you have. And, ironically, those are the people who are often least well represented in, in, in the strategy conversation. And hard to get a look in. One of the, one of the little devices I saw some years back, which. Again, what, once you start to say how do we bring these voices in?

There's many ways of doing it. But one of the clever devices some years back I saw was a very large kind of food and drink company. Everybody would know this company. They were doing kind of their annual strategy update with their top couple hundred executives. So some fancy hotel, and they're going through, here's what we're doing, here's our priorities and so on. all quite senior people.

So what they did is they took a group of young employees and they live streamed this thing to them and they said like, tweet about this as we're talking about it. And so as these senior executives , are making their pitches, there's a screen up on the side which all has all these incoming tweets. Have you thought about that? That doesn't make sense. Like, whatever. And it was just , leaders are used to really controlling the conversation, right?

If leader means, you know, if leadership means anything, it's like you get to decide what we're gonna talk about. But here you have like, this whole other side stream and a lot of quite interesting ideas came out of that. I talk about another organization in the book, again, a simple device where they established a shadow executive committee.

So you take the top 10 or 12 senior people, they had a similar group of much younger people who sat in on all these meetings, had their own point of view, would meet independently to review and then come in with their kind of shared point of view. But just saying like, how would somebody look at this? Who. Didn't feel they had to defend the past whose emotional equity is invested in the future.

And so, making that a super conscious thing that you do that in every strategy conversation on every important issue, you have those groups overrepresented rather than underrepresented. I mean, I've done this in every piece of work through my life, and the dividends are just extraordinary. You just get so much new thinking that, is those ideas, are there any already often, but, but never, never got to kind of, never got the microphone.

When you told me about that, I wondered if they were anonymized, the people doing the tweets, would the answers be even better again? Yeah, well, pro, pro, probably so. And so I don't know if they had to log in with, I can't remember that log in with action name, where they could create a avatar of some sort, but.

Yeah, I mean, it's and I, I see this often, I saw this often in my career where, you'd have a young group of people, you'd take 'em offline, you'd work on some new idea set of ideas, they'd be super passionate about it, and then you'd put them in front of, some senior group that would just decimate them and and tear their ideas apart and try to hang the idea by kind of small details rather than looking at the bigger opportunity.

So you have to be, and I don't know, can't remember if we talked about that, but you have to be super careful about how you manage the power dynamics in all of these conversations where you have young people maybe uncertain about themselves, are not used to standing up in front of, very senior leaders. You have to like, like make sure leaders are asking way more questions than giving advice.

There's a whole set of things you have to do to make sure that those new ideas just don't get, pummeled into the ground by people who are eager to kind of show off their ego or their power. But so it's not as simple as just let's bring young people in the conversation.

You gotta really think about the power dynamics and how you give those people the courage to speak up, the courage to fight for their idea, and how do you keep kind of, the attackers on the back foot until at least they've learned a little bit about what you're trying to do. So, some subtlety there, but the, the point is, is absolutely, absolutely key.

The likelihood that your organization intercepts the future is absolutely dependent on the extent to which you have those new voices in critical conversations. Beautiful and design. Rule five then is what you. You later called a platform for innovation, which would be like what you do in Haier, but you call it then a market for innovation.

And you said if innovation is gonna flourish in large organizations, if new ideas are going to compete with old on equal footing, if resources are going to flow quickly and fluidly to the best new opportunities, then companies are going to have to become more like markets and less like hierarchies. And here you mean markets as in the open market, like a venture fund, for example. And you say Silicon Valley has been a refugee camp for revolutionaries who couldn't get a hearing elsewhere.

Yeah. It's interesting. I'm literally looking out my windows here over Silicon Valley. I live on a hill up, kind of above the valley, and this part of the world has created more wealth per capita than probably any. Similar geographic area in human history. And and it's not something magical in the water or air.

There's a lot of historical factors, having great universities, having, early pioneers like, like Hewlett and Packard who came out to this part of the world and started to build, attracted other entrepreneurs. So there's a lot of things that are not easy to reproduce necessarily, but at the heart, Silicon Valley is three markets. It's a market for new ideas. It's a market for experimental kind of capital and a market for talent.

And so these things are in this, like ever, moving dance where resources are pursuing ideas. People want to work in the most exciting startups where they have the biggest upside. And so there's constant reallocation of resources going on, right? Ships in capital and talent and so on. And there's no CEO of Silicon Valley, right? This is all unscripted. Having said that, a lot of these people are. Kind of connected, with a few, one or two degrees of separation.

But but that's, but it is the market, right? And we know from a lot of data that markets outperform hierarchies. The New York Stock Exchange over the last 50 years has outperformed every company on the New York Stock Exchange. And yet, the average company, if you look at the way they allocate talent and capital, it looks more like the Soviet Union than Silicon Valley. And particularly the problem is that resources are controlled by people.

Who are running the legacy businesses and they have the seat at the table, they're the ones who are debating, where do we put our money? And so my argument here is you have to create, in a large organization a market where capital and talent flows quickly to the new ideas. And where people proposing those new ideas are not at a constant disadvantage in terms of their capacity to attract resources.

So one of the, one of the biggest challenges, and I'm gonna use a slightly academic word here, but in, in most companies, there's a monopsony one buyer. That's one monopoly is one seller. Monopoly is one buyer. There's monopsony on new ideas. So if you have an i an idea, there's literally only one place to go for capital. And that tends to be up the chain of command. And if your boss or your boss's boss says, Hey, this isn't our strategy, I don't believe in this.

Like, the idea dies there and nobody knows about it. And, and to think about how stupid that is. Imagine that in Silicon Valley you had like one angel investor or one VC firm, and if they weren't willing to fund you, that was it. The average, the average startup is going to talk to two or three or four VCs before they get funding. And yet in our organizations, we haven't done this. There's only one source of, of, of, of, of capital.

And then you look at the way we make our resource allocation decisions, in most companies you have to have like a 90% sure thing to have any chance of getting funded. And obviously any new thing does not start with that, does not start with those odds. And Jeff Bezos, I think said this, I'm not gonna remember how, I'm not gonna remember the exact quote, but he said, I'm, I'm definitely willing to take a big bet on something that might be like a hundred or a thousand times return.

So, That is more likely to fail, but there's a much bigger return that's out there. So you have to look at these new ideas as a portfolio. If you're a venture capital company with maybe a dozen firms, a dozen startups and a fund you expect that eight or eight out of 10 will will fail, and one maybe will just me be mediocre and maybe one becomes, the next Google or, or open AI or something else. So, but that's not how we do it.

We, we take one investment at a time, look at it, expect like, ba you better have a 90% chance of succeeding. And then like, yes or no, well, you'll never do anything new if that's the way you think about resource allocations. So, yeah. markets outperform hierarchies you need to create, whether you do it through internal crowdfunding. I describe what we did at Shell where I think we built maybe the world's first like internal innovation marketplace called Game Changer.

It still, it still works very successfully, but we're any employee. From any part of Shell's world operating across more than a hundred countries. If you have an idea, there's a place to go. And it's not up the chain of command, it's a group of your peers who are selected because they're, they're creative thinkers and they look at that idea and go like, Hey, that has a chance. We'll give you a first small tranche of capital. And equally critical, Aiden, it's not only the funding, it's the time.

And so it's giving that person an idea, a little bit of experimental capital to get started, go out and test some of your core hypotheses. But it's also saying for the next 30 days, like you don't have another job and it's up to your boss to backfill. Like, we're not gonna worry about that. 'cause we have to, we, we, we wanna invest in, in the future. So let them worry about that. You now have a charter to spend the next 30 days pushing this idea forward.

So these are not complicated things to do particularly. But very few organizations. I mean, shell Game Changers still, I think, quite unique. I wish it, I wish it weren't but, but it still is. But you have to, you have to make it easy for people to get experimental capital get time to, to do new things, and, and where the resource allocation the funding cannot be controlled by a bunch of old goats. Man. Oh man. It's so backward though, with what actually happens. Like I've been there.

You feel like you're stealing in a way because you're taking time. You're trying to do this thing on Company Dime. You're trying to figure out a way that's actually for the benefit of the company, and you feel like you're. In, in some back room stealing something and you're actually, all you're doing is trying to get time to, to focus on these things.

Even reading Gary, even even trying to expand yourself and read beyond your industry to have new ideas feels like you shouldn't be doing it, and the company makes you feel like that. It's so, so backwards. And then the other thing, linking it to design rule six, which is low risk experimentation, is that if you are responsible for a small bet, even a small bet, you have to go through an Excel process to actually get it over the line, not tell a story.

And then if it fails, you're tarnished with that failure, even if it was tiny. Yeah, I think the idea of learning as you go or experimenting is still, I mean, and again, there's been a lot has been written about this I'm trying to think of the guy at Harvard who's written some great Tom Key who's written some great books on experimentation. So you'd hope this kind of thing is, is, is is getting out there. But, what are the, what are the challenges in, in, in a typical company business?

they think about commitment in terms of resources. So if you ask somebody, how would you know if your business was really committed to, pick whatever it is, AI or some other new thing or a new product, how would you know the answer's gonna be like, well, we've put a lot of people on it, or look at how much we're investing. That is a really, really poor definition of commitment. Commitment needs to be intellectual, right? We think there's something really important here.

We are dedicated to learning about it and understanding, but we're not, we're not gonna put a lot of money in it necessarily until, until we have more information. So you have to think about, and, and that's, I find when I ask senior leaders, like, can you tell me what are the 10 most important experiments you're working on across the organization right now?

Things that are not yet having a lot of resource, but things that, you know, like there's something, there's a. There's a pony in here somewhere, right? There's something that's important and potentially big, and we're gonna understand it. They can't tell you what those things are. They don't have visibility to them, so they can't protect them. They can't make sure they're getting the best people. So that's, first you've gotta separate out commitment. It's not about resources.

It's about, Hey, we think there's a, there's a real opportunity here and we're gonna understand it. Clearly your ability to experiment depends a hundred percent on how much it costs to learn, right? And, and I think, large organizations, they fail big and they risk big because they can not, not because they have to, but that's just like, like, we have the resources, let's go out and like, let's really be good serious about this.

And so what you find often, and I could give you examples from Cisco and, and all kinds of companies where you get your investment way in front of, of your learning. And like, that's a failure mode because you've missed critical assumptions about the consumer, about the economics and whatever. And then you learn that very hard. And so, it's, it is a subtle balance. I, I want executives to be really excited about the new opportunities and be willing to mentor those teams.

On the other hand, I I don't want them so mo emotionally invested that you're like pressing the accelerator too hard and, and, and, and taking risks you don't need to take. And I think there's, there's just an assumption in most organizations that something radical is by definition risky. We, we see those things as like the same thing and it's not the case. I, I, I look at, lemme go back to pre share. It's a very old story, but quite a lovely one.

When, when those two guys, I think they met at, at university, decided let's try to do this kind of healthy, not, not fast food, fast food. It was five years from when they opened the first pret to the second. And that wasn't because they were slow or because they were dumb. It was because there's a lot to learn. Everything changed when, when, when you're sourcing every ingredient, every day fresh rather than like, super tankers of frozen french fries circling the globe.

If, if, if, there was just like so many things to figure out and so many mistakes that you had to make. And I could just see, if they had too much money too soon and were trying to push the pedal down, you might have never elaborated that out. You might have never figured out the subtleties of doing this. And so something then is gonna say the worst situation, well, that was a stupid idea, right? Like, you like, and so like, why would you ever do that?

So yeah, patience being as clever about de-risking as you are about the idea itself. How do we explore this at minimum cost and minimum time and so on. Just like hugely, hugely important. And I. I think it's a skill that maybe is still not taught. I don't know what percentage of employees in a typical company would've been taught about rapid prototyping, for example, and kind of, the, the, the principles behind that. Not, not very many I suspect.

Very few, very few , and even heads of innovation. Gary, I was one and had no idea about so many of these concepts, which is, was the origin of doing the show is to share all this great knowledge that's out there. And I mentioned earlier on this idea of quantum mechanics or quantum universe in a different universe. I actually, I went after trying to get the Pret A Manger franchise and they just go, we don't franchise. They wouldn't franchise.

In the early days, there was only a few of them in London and I was living there and I was trying to take it to Ireland and they went to New York. Obviously next there's a bigger market, but like you man, lovely food. And there's a few of them now here around Dublin in Ireland. Let's move on to design rule seven, which is cellular division, and I'll give a little bit of explanation here because Gary tells Gray haired revolutionaries are not monoliths.

They are big companies that have been divided into a large number of revolutionary cells. A human embryo grows through a process of cell division. A single cell becomes two, then four, then eight, then 16, and so on. Some cells become lungs, others, fingernails, bones, tendons, and all the other organs and structures of the body division and differentiation. That's the essence of growth. The same is true for organizations.

When companies stop dividing and differentiating innovation dies and growth slows. Yeah, I mean, just almost by definition, monolithic things are not very adaptable, right. , The dinosaurs are gone, bacteria are still here, and, and we'll be forever until, the sun goes out. So I think there's like a lesson in that.

, if you have a very large business, a core business that is 70 or 80% of the company, or maybe a couple that are very large within those, there tends to be monolithic thinking, right? There's one business model, one way of going to market, and so on. And not not a lot of scope for people to be entrepreneurs because everybody's just feeding that one beast.

It's gonna be hard for some of our listeners, to maybe credit this, but if you go back 30 or 40 years, Hewlett Packard was ranked as one of the most innovative companies in the world. I think it was in I think Tom Peters wrote about it and in search of excellence. And at that time, and I'll, I might get the, the data slightly wrong here.

It's been a long time since I looked at this, but at the time, as I recall, anytime a business got to $50 million, they split it up and said like, no, like, let's, let's, we want new thinking. We want more entrepreneurship. We want opportunity for new general managers to emerge. So let's split the thing up. And so they grew by that cellular division. Now at some point they stumble on a giant business called printers.

And obviously that's gonna be you, you may not be able to kind of decompose that in that way. But I do think, you often, because, because there's some natural limit to the size of any very large business, you're gonna hit that. So if you don't have a way of dividing the organization up and trying new things and giving people freedom to go after kind of underserved or unexplored markets, you just, you're just gonna run out of, you're gonna run out of headroom at some point.

So kind of paradoxically, I think you often, at, at some point, the only way to grow a company on the outside is to get, to get bigger on the outside, is to get smaller on the inside. And we'll talk about Haier, probably in depth at some point, but. That was the genius of what they did. Taking a very large organization with some, big brands and big businesses and splitting it into more than 4,000 micro enterprises. And, that presents its own challenges. And we'll talk about those later.

Well, how do you connect all of those together and how do you still do things at scale? But, but the principle was, hey, we want to be a swarm, not a monolith. And I think that's just like way more nimble. I mean, even you look at what's happening right now in the way we think about defense with, with new companies like Andril and others who are going like, well in the future you're, we're gonna win by numbers, not mass. Right?

It's not gonna be like we have the biggest aircraft carriers in the world. It's gonna be, we have the most nimble drone fleet. , You wanna be careful to divide. When a business gets too big redefine the market pull 'em apart, let them focus on their own things and have more upside than you would in a very, very large, large business and more, more new thinking. And one of the parts of new thinking is design Rule eight, which is connectivity. And this is not digital connectivity.

It's getting outside the building, meeting new people, meeting new industries, et cetera. And an example you give here is in developing a strategy to compete with its tough. Japanese rivals, swatch went to Lego in Denmark to learn how to make watches out of brightly colored plastic, and built a design center in Milan to serve as a lightning rod for the artistic talents that would ultimately make Swatch into a fashion icon.

So this idea of mixing ideas, finding interesting skills around the world, different assets, and. Is key and the last of the design rules. Yeah, I think, you wanna look at the world as a reservoir, a warehouse of skills, competencies and ideas, and make sure that, that you are not, . having same conversations with people mostly inside of your industry. , one of the things that I think got quite dangerous is the whole consulting industry is now organized around particular verticals.

So, if you're a bank, you hire in a bunch of consultants who are working with other banks, right? If you're a car company, car company, and , maybe there's times when that's valuable. I'm sure there is, but, it's of no value to innovation, right? And in fact, I, I would say, a typical company has almost nothing worthwhile to learn. From its own industry that it doesn't already know. You've been in that like Malo for a long time.

You've talked to the consultants, you read the trade rags or whatever's out there. So that's of no help. So if you want to learn something new, you have to be looking at companies outside, outside your industry , and that's what you should be looking for. Partnerships. Again, this is very much what Haier is doing. Most of the new things they're doing are cross industry boundaries. They're now thinking about how do you re-engineer, like entire industries.

Like they're re-engineering the auto industry parts of that. So , you just won't see those opportunities until you go have the conversations. Right. And it is a kind of prospective investment. You can't be sure, but man, if I've had new ideas, Through the years in my work, and I hope a few, almost all of them have come from talking to people who never had an MBA who certainly weren't business school faculty.

But were out there on the fringes and complexity theory and biotech and quantum mechanics in politics. That's your only chance of being inspired. Which is what I love about doing this show, man. It's such a great way to learn. It's consistent learning. So that's chapter eight. That's the second last. Chapter and we're just gonna cover quite briefly, and I highly recommend chapter eight alone is worth the price of this book. Chapter nine is Absolute Gem, could be a book in itself as well.

And it's called The New Innovation Solution. And it talks about, while those design rules, we talked about all eight and the principles of activism are parts of the innovation solution. There are many other equally important components. Four I'd love us to talk about, and Gary, I'll show on the screen a diagram for those people watching us on YouTube. And Spotify are skills metrics, I.T., which may now be taken for granted, but still some organizations still have huge amount of tech debt.

They don't have the right IT systems, they're not agile enough. They're monolithic in their IT approach. And then the last one is management processes themselves. So I'll show on the screen here for those people watching us, and maybe we can talk to these.

. Let me start by saying there's a kind of myth around innovation perpetuated in part by innovators that, innovations is like really rare, amazing act that comes out of like some brilliant person's head and it's not reproducible and unless you're exceptionally wired, like you're unlikely to ever be an innovator. Like obviously I think that's nonsense. , and my work through the years , has proven that. So that's one point. A second point is.

There are times over the last many decades when companies have really worked hard to change themselves deeply. If you look at everything that went into re-engineering or then went into digital transformation, these tended to be all encompassing a lot of effort changing a lot of systems and processes. But in almost every case, the goal was, cost efficiency speed and so on. What I'm arguing in this chapter is we have to re-engineer not so much the operating model, the business model.

We have to re-engineer the management model. So it facilitates innovation. And that is not about running a few workshops. It's not about building an incubator, it's about looking at every single thing in the organization and saying, does this facilitate or frustrate innovation? And we've done this in some fairly large companies where we've involved thousands of people in this work. But lemme just kind of try to break down this little diagram.

The first thing is, have we taught people how to think like innovators? Those are the skills. And you might call it design thinking. We have a kind of, I think hopefully a broader way of thinking about it than that, but where you're really teaching people, how do you get at those unarticulated customer needs? How do you become attentive to the nonverbal cues? , how do you avoid dismissing the frustrations that you're creating for customers and see instead the opportunity there.

How do you think about the deep competencies we have and where else we could leverage them? How do you understand deeply the revolutionary potential in emerging technologies and avoid the temptation just to look at that as like, how do we use that technology to make a small difference in what we're already doing? You can teach people to think this way, and it's not that complicated. It can be done in a few days, and you give people the tools , to do this.

And I think I mentioned this before, I think one of the reasons that a lot of leaders. Have little confidence in the innovation capacity of their people is they've never invested in helping those people learn how to do it. Right. And so if nobody's ever taught you how to hold a golf club and how to swing it, watch out, don't, you wanna stand way behind them, but, with a little bit of effort, somebody can get the ball up in the air. So I think it's, that's number one.

I think, let me go to the management processes. Almost all of the processes in most companies, resource allocation planning, performance review, project management, and so on, were basically built around stability, predictability, precision, accountability, control. And so all of those processes are very heavily weighted to one set of outcomes. They don't encourage innovation. So you have to look at every one of those processes and say, , they, they serve a role.

It's not like we're gonna blow this thing up. But is there a way of tweaking this thing? So it creates more of an incentive for innovation. So you might say, well, let's look at our hiring criteria. Are we hiring for creativity? Do we, is it explicit? Part of like, what, what project in your life has given you a chance to exercise your, creativity? , are we selecting for that?

, in promotion you might say are we going to promote people who've brought some new product or business to market who have some track record of innovating and succeeding despite a lot of perhaps internal barriers. So is that something we want to make sure that all of our senior leaders have in common? You might go back to resource allocation and say. Um, all right. Should we create our own, like, shall game changer?

Should we take 20, 30, 40, whatever million dollars pounds a year and, and set that up so it can be distributed through a peer process for new ideas that would not otherwise get a get funding? So you have to look at every single one of those management systems and processes , and think creatively, how do we retune this? So it gives innovators a chance. So this is not happening despite the system, but we're facilitating it in terms of metrics.

That means, starting to look at both inputs through puts and outputs and measuring innovation like you would anything else? How many ideas are we getting into the funnel every year? What's the quality of those ideas? How quickly are they progressing? What share of our total funding is going into ideas that meet some tests of being truly innovative? How much executive time is being spent mentoring new ideas? If you don't have those metrics.

And you don't hold people accountable, this is not gonna happen. And finally, it, there are a lot of things here that can help. We've built through the years, collaboration platforms, internal innovation markets, all supported with technology. Unfortunately in many companies it is a barrier on innovation. If you wanna do something new, really, really hard to do because of it, and you have a long delay in getting some new piece of software built and so on.

So you have to look at that as both something that can facilitate innovation through the right kinds of platforms and internal networks, but also if you wanna experiment, that cannot be a barrier. People need to be able to go outside to get the IT help they need. So, you know, it's really simply saying, Aidan, you gotta take a systemic approach to making this a capability.

And I think, we'll talk about this later, but if there's anything senior leaders should be accountable for is building new capability, new institutional capability. And, and I think innovation ranks pretty near the top of the list in terms of a critical capability to build. So it's quite curious, to me again, this hopefully just sounds like pretty straightforward and logical.

Nothing, and yet the number of companies that have done this, I could probably, that I know of, I could count on one hand. And that's another conversation about why. But Haier has done it. Intuit, the software company has done it. We help the depart of Adidas do this so it can be done and the results tend to be pretty spectacular. , but as long as you believe that innovation is this esoteric thing that comes out of just the way you were wired.

And you'll never go to the effort of making this thing kind of systematic. As you say, Gary, , you can't. Build a lightning bolt, but you can construct a lightning rod. I love that. So you can create the culture to make these ideas happen.

There's a piece I'd love to share, which is the wealth creation index, and I hadn't heard of this and I shared it with some people I know working in big organizations , who are trying to drive some type of index for innovation some type of metric to go, look, we should invest in this. This graph I'm showing on the screen here is fascinating where Gary calculates wealth creation indexes, WCI for organizations like Home Depot, Sears is in there. It shows how they weren't innovating anymore.

It shows Amazon in 1998 as a 0% wealth creation index, 2.6 in 1998 and Infinity in 90, 88 to 1998. And for those people who are lucky enough to invest, you know how much that did go to infinity. Maybe you'll talk us through this, Gary, a little bit. Not just the graph, but the concept of wealth creation.

Yeah, this is a little bit , what I was referring to before when we were having the conversation about IBM, where their kind of wealth creation index kind of declined precipitously over a decade. And it's probably never really recovered. I would argue, again, this is looking at not my market share, because you can always be quite clever in defining market share. I sell to Blue Eye people on Thursdays through Channel X or whatever.

So, people can game that, but , you'd wanna take a fairly broad, whether it's, and I think in this case it's looking at all of retailing, but then I try to, select some pairs of companies that perhaps were, were somewhat alike. So, the first column, what you see is in 1988, this was the percentage of market value of the, of retailing in the United States. So Walmart was like 20% of the total retailing market value , in the country.

And then you can see, come back a decade later, 1998, and some, like the Home Depot, a big DIY store were growing very quickly the gap and so on. But by the way, a lot of the companies like GAP and Home Depot have probably, coasted since then. But I think it's just important to be able to, have an objective measure of how good are we at creating enterprise value within this broad whatever broad education, retailing, financial services, telecommunications, whatever it may be.

And , it tends to get rid of the bullshit about, well, it's a mature industry like nobody's growing, or, yeah, we're really good. Like we have 80% of our certain market. It forces you to take a broader view. It forces you to be honest about who's really creating the new wealth here. And then like, how are they doing that? What do they believe? What are they doing that's different from what we're doing? So I just think it's a pretty good discipline to think about it in this way.

There's loads in this chapter that I'm not gonna go through. You talk about how to create a portfolio for ideas, how to measure those ideas, how to not mistake a marathon for a sprint. I thought this was really important. You did allude to this, but I really wanted to nail this idea, which is not investing ahead of learning. So this is where you make the big bet.

Or you make too small of a bet or you don't make any bet at all, and you say here, building a first mover advantage requires impeccable timing. If a company invests faster than it learns, it will overdrive the opportunity and end up with an expensive and embarrassing failure. This is the fate that befell Apple's pioneering handheld computer, the Newton. Maybe we'll use that as an example and maybe we can give an example of a big bet that was totally crazy and then how you should be doing it.

Well, I think, apple is, is an example for all the successes of this in a couple respects. I think, the idea that we would have handheld powerful devices was a great idea, right? And and now, we can't live without our smartphones. And so in that sense, the vision was correct. But I think, , the device, the Newton device , was super limited, hard to use, overpriced. Not a lot of functionality. Now you could say maybe they learned enough out of that, that gave 'em the courage to, do the iPhone.

I don't know. But they didn't need to fail in that way. Like, it's just like, for sure they didn't need to fail in that way, so that's kind of an example of overdrive it. And again, I don't know what happened inside of Apple.

I do know they're famously secretive and so, they may have been drinking their own bath water and convinced like this was like super great and hadn't put it in the hands of hundreds of users and who came back and said, no, this thing is clunky and like, I'm not gonna be carrying this thing around. Or you come, 30 years later and you look at, them behind Tesla and EVs Atlas the big project inside of Apple to try to create an Apple car. I dunno how many billions they poured into that.

And apple has this philosophy which kind of works, but it's, that, it's often better just to be second. And maybe that came outta the Newton experience. Like, let's wait, let somebody else do it and then we'll come and do it really, really good. Well that works as long as the person in front of you never does it really, really good themselves, right? And kind of Tesla did.

And so, you look at Tesla and then you look at the Chinese coming in at the low end, very, very hard, I think to find, you're just too late, right? China's go going crazy and investing Tesla's already the world's largest. Like, okay, so that was probably under driving it. So it's a, it's a, it's a tough, tough, but it means being super tuned in to who's investing where, how fast, what are they learning and, but you better have that opportunity.

In your mind years before, because it's too late after, after test is built their second plant, it's probably too late to say, well, let's just come and do this better. So you'd have to know like, Hey, this is clearly an opportunity. Vehicles are gonna become software defined. We are, if nothing, not, if we're not one of the world's greatest software companies, this is clearly an opportunity. We have to be looking at it carefully. We have to be experimenting at low cost.

If it looks like the cost of batteries is coming down, other things make this possible. We have to be ready to jam the accelerator down. But It does no good to jam the accelerator down when somebody else is already across the finish line. And have you seen any examples of somebody who just went like crazy, like bet the farm decision. Well, yeah, I look at what Boeing did when they made the transition to composite fuselages and which is a huge kind of, almost bet the company risk.

And almost sunk the company. It ended up being years late and much more complex. Nobody out in the world had ever done it before. Was there a way to manage that, you know, in a smarter way? I don't know. I mean, there are times I think, when you do have to make those kinds of bets, right? But even there, you wanna, I, yeah, you, you wanna have a lot of data.

You want to find the lowest cost way of experimenting with that and not get, make sure your urgency is an urgency to learn, not simply an urgency to get it done. 'cause then you rush into stupid mistakes. , back to our earlier conversation, one of the challenges an innovator has is if, if, if a company kind of looks at innovation is all or nothing, we're like totally in and we're gonna do it or we're not.

There's a tendency then to overstate your case and to say like, this is so huge, it's gonna be amazing. This is like, the next cell phone, mobile phone, or whatever. And, and it's probably not. And so, you don't want an environment in which, you have to overstate something to get funding or to start. To experiment. And. I. Remember having, this conversation with , people.

At Intel years ago, where, somebody said to me Gary, we're not gonna look at anything that's not a billion dollar opportunity, multi-billion dollar opportunity. And I said like, well, how would you know if it was a multi-billion dollar opportunity? Because somebody's already done it. Right? Okay, so that's called Taiwan Semiconductor, right? It's maybe now too late.

So you have to, you have to have a view of a whole range of opportunities that are not yet necessarily feasible, but may become so, and you're tracking what are the gating factors in allowing that to take off. And so you know when to be serious about it and when not. But if your goal is, well, we're not gonna really go after it until somebody elses done it. Like, good luck with that. That's like, that's a loser strategy.

I thought about what you said about like, you're walking through the forest and on the floor there's all these acorns. You're like going, that one will make it, that one will make it. No, no, no. Don't put that one back. And you have, those people on the fringes or the, the younger ones going, Hey, this one, I think this one's the one you're like going, no, from my experience, that's not gonna make it.

And you kill, you kill all these possible Well, one of the, one of the benefits of kind of doing innovation in the way I described where you, you bring hundreds of people together, you train them, you generate thousands of ideas, is, and then you start to evaluate them. And some are just definitely not ready for prime time. But then , you archive those, they're there. You understand why somebody came up with that.

And you can say, yeah, but this particular thing, we just like, we have a regulatory hurdle, or there's a technology hurdle, or there's a big, in fact, I, it's not in this book. I can't remember where I wrote it, but I have a whole set of things that you look at to decide pace. Pacing factors. So you may say, okay, we're not gonna invest in that now, but we all know that's like potentially very, very interesting. Let's keep an eye on that.

And instead we just tend to say, okay, well it's, we're not gonna invest, it's not ready. And, and we forget about it, it disappears. And then five years later go crap. We thought about that. Yes you did, but you had no process for tracking nascent ideas and watching it when it's when we should actually be putting resources in , And the person who came up with the idea, went and started it, and is now a competitor.

Gary, I pulled a, a line final words from the book that I thought it would be a nice way, a fitting way to finish this brilliant book. I'm gonna quote that and then I'm gonna hand , the mic to you to finish on this book because I'm sure you've never done as in depth an interview on it before, and I'm very grateful that you gave us this time. I loved how you finished this.

So, your final words in the book were, this book with a simple observation that , for the first time in history, our heritage is no longer our destiny. Our dreams are no longer fantasies, but possibilities. There isn't a human being who has ever lived, who would not want to be alive right now at this moment.

So pregnant would promise among all your forebearers, among the countless generations who had no hope of progress you are the one who stands now on the threshold of , a new age, the age of revolution. You are blessed beyond belief. Don't falter, don't hesitate. You are given this opportunity for a reason. Find it and lead the revolution. Beautiful. Gary, what's your final words, man? I, I don't know that I can do better than that.

But I do think it is reminding yourself and all the busyness and all the things that are pressing down on you, reminding yourself that we do live at, in the most extraordinary time in the world's history. That it's a world that is just like ripe with opportunity. And therefore, whatever's going on around us. Like optimism, needs to be our default setting for all of us as human beings.

And , it's so easy to lose sight of that fact and, not just feel extraordinarily blessed to be alive right now where so many things are possible. , I think back. An average village in Ireland or in the uk in the mid 18th century, the standard of living was no better than it had been in Egypt 4,000 years earlier in terms of calories, life expectancy, education, right? And in fact, some people have done this.

If you look at, income per capita for the last million years, for the first 999 whatever thousand, nothing changes. And then in the middle, 18th century starts going like this. And it's been on this, kind of, geometric curve ever since, how lucky we are to be alive right now. So don't squander that. Don't squander that at a job that sucks. Don't squander that by, just polishing what all exists. Don't squander that by spending your life kissing up to somebody else.

Like, find an opportunity inside your organization, outside your organization. You may win, you may fail. I failed at more things than I've succeeded. But every failure is still a blessing 'cause you learn something and you're driving your own destiny, not somebody else. Beautiful author of Leading the Revolution, Gary Hamel. Thank you for joining us. Pleasure, Aiden. Brilliant man. That was a beautiful way to finish.

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