It's with a little bit of sadness that i bring you the last episode i don't know if it's sadness for our guest peter compo welcome back
This has been a great number of sessions we've had. I've really appreciated the time you've put into this.
it's great man and there's the book for people the emergent approach to strategy i'm sure if you're still with us you're into this stuff so, great to have you and speaking of being into this stuff i have this idea on the show where.
If you have questions when i have a multiple time guest like peter here please send those questions to me and i got sent a question like that and for full disclosure i know this guy ed melvin, send me in this question said can you ask peter this question i said why don't you ask him send me a whatsapp video of that and ask him yourself. So i'm gonna play that video from Ed.
Peter's gonna answer that and if in the future for example of a series coming down the line with henry Mintzberg another series come down the line with Gary Hamel send your questions please do. i might not get to them all but send them by video and i'll include them on the show as well so you can feature on the show. Peter i'm gonna play this little excerpt here from ed and Get your answer Ed Melvin, CSO: Peter, I'm a big believer in the emergent approach.
The question I have relates to strategic leadership and what guidance you can offer on holding the line with emergent strategy. I found often stakeholders can be spooked because they've agreed in theory to the emergent approach, but in practice it can feel reactionary. It can feel off strategy. So that's when in my experience, trust in the leadership is vital. So what advice can you offer strategic leaders on ensuring the team holds the line on emergent strategy? Thanks.
It's a good question because managing by the principles, managing by rules is much harder than managing by goals. Okay. You didn't hit your goals, so we know it was wrong. Well, managing by by rules, by the theory of the case, is, is much harder. And I think the number one thing is to engage the people in the design in the first place, that what it's really about is internalizing, internalizing the reasons for, for the theory of the case, the reasons for the strategy.
If everybody's on board for the reasons, if everybody has been part of that design, if they've worked through it, the struggle. Then it becomes their design too. And if it becomes their design too, it's not just the leader who has to say, Hey, wait a minute. This is what we said was the truth about this. We got to hang in there. We got to stay with it, even though we've hit some road bumps here, even though we've hit some turbulence. So I think.
That is by far the single greatest way to get people to be able to work in an emergent way versus a deterministic planned, type of thinking involve everyone. The way I say it in chapter 11 is. Make it the people's design.
And one of the key ways to do that is you have to extend the process in time, extend in time to make it the people's design, because so many of the important people in an organization on the front lines, in all parts of the company, can't drop everything and just go work on a five week strategy process.
So instead, extend it in time, make it part time, develop it as an organization, then everybody will be in the process, will feel like their voice was heard, they've heard others, they've been part of the design. And when it's your design, you can live it. You're better able to live it. You're better able to stick with it during the turbulence.
and you become positive version of the ikea effect where you fall in love with this thing because you were part of building in the first place. i wanted to add a little adjunct there, there's a little bit of call it the blockbuster late fee. dilemma where it's like i know my customer doesn't like this thing but i make a lot of money from it so what i would hear also there from Ed this is not i'm not indicating this is what he was saying but what i would see. say.
You hire a media company who offers strategy the old approach was they would come to you and go we want a strategy to enter the market this way, can you go great and your expertise and what you charge the money for like the late fee is to go away and come back and go to that with a strategy. And that's, that's one of the challenges and this actually speaks to something we might mention later on is the rewards problem.
It's the reward or the recognition of where the value is that actually needs to be rewritten.
Well, on your first part that they come in with their expertise. There's three levels of consultant work, right? There's, there's the ones where they do it for you. And even worse is the ones where they do it to you. I, I, I felt that way often. It wasn't even doing it for you. It was, it was like putting it on you in a way that You weren't even part of the thought process, and of course, what we want is with you, that consultants bring it with you.
And it may involve complete different views of what's valuable and what's important. That's a whole question around how consultants can do the best work for companies. And it depends on a lot of things, how you might approach it. Unfortunately, most consultants, especially the well known ones are very expensive. And the last thing anybody wants is for them to hang around for a long time. And then when I would say to them, Hey, wait a minute, instead of so, okay, if money's the issue.
Why don't we just spread the time that you're, you're with us over a longer period, charge us the same and make it eight months instead of eight weeks. And they said, well, it's really difficult to schedule that. We got all of our our young people that sleep on the couches and stay overnight and, and, and order in food, and I'd say you guys. are billion dollar consultants. You, you, you advise the biggest companies in the world.
You advise governments, you advise militaries, and you're telling me you can't figure out a way to spread out your workforce over time?
That idea of extending time is key. There's only so much mental capacity people have for change so many items of change they can handle at one time, and that becomes even more pronounced and i want to mention this before we get today is about execution and practice. We're not gonna get through all that we have on the slate but will get through as much as possible.
You really have to read the book and you really have to take your time and extend in time like we did with this episode as well i want to say as well that's why, peter was so gracious to allow me to read it extend in time because it's not a book that you read.
On your holiday in a week it's a book that you read over a long period of time and you need that opportunity to let the concepts marinate and to try and really learn them it's a it's a book that you learn that way it's a playbook you do a great job with anecdotes i'm one of those is this idea of how do you manage things when things get, into crisis mode or you're under stress and, As you said a huge factor that separates people organizations who are brilliant and
execution from those who are average, is the ability to keep working and stick to disciplines in the heat of the battle. Brilliant execution means maintaining discipline, despite the stressors of mental and physical fatigue or emotional conflict or fear, and I say that for a couple of reasons. I'd love you to expand on it is. Most organizations wait until change is thrust upon them rather than actually going and getting ahead of that change. And the mindset is totally different.
You're in fight or flight mode, literally, and your decision making is flawed versus you do it when you're going to be more open to the flaws and the missteps that you make as you emerge your way towards
I think you've said it very well. Crisis is the easiest situation so many times because you have no choice. You have no choice to take action and your actions might be flawed, but who's going to argue? At least you got to do something, right? I was recently involved with a, board and a CEO was new coming into a financially difficult situation. And everybody was saying, boy, this is the toughest thing to come into something like this. And I'd say, I, I think it's quite the opposite.
You can come in and say everybody else was a moron , and just say, okay, now I'm going to fix it. Oh, everybody else got into this mess. I'm the one who's going to make it right. So crisis , is such a gift in some ways to leaders, isn't it? But who would argue that leaders who see things, before, who try to dig into the reality of the situation and the potential for bad things to happen ahead of time and design for that and prepare for that. Who would argue that that's not a better way to lead?
It's just tough to do. It's very hard to do. And especially when you've got a board and you've got stockholders and numbers have to be what they are. It's a great challenge, but I think this is a true leader, one who can see it before it happens, who can help the organization see it, or even better help the organization learn how to see it for themselves. To become aware of what's going on and the potentials for things to be bad, worse or better , than they are.
And this is, this becomes an ongoing process of strategy work, of an ongoing process of learning. Not a magic six to eight week strategy program where you create your PowerPoint charts and then everybody goes back to their office. No. something where there's an , ongoing struggle.
And as you say, and I think this is so important that stressors can also come from success. And I'm going to quote this. I loved what you said here. " Euphoria seduces people away from execution as easily as duress. Military strategist, Colin Gray quotes Klauswitz, warning of the perils of our parents success and shows how military success can drive countries. Sorry, I'm after skipping too far ahead. How military success can drive countries down the wrong road, calling it victory disease.
I absolutely love that. Or Thom Yorke, the leader of Radiohead for people who know who that is said in a much more direct way as soon as you get any success you disappear up your own arse.
If you consider execution to be the discipline of staying with your theory of the case with staying with your strategy framework until there's something clearly is wrong with it. So you have to modify it. Well, then I believe it absolutely true , that success can destabilize just as much as duress. How many people have had a good thing happen by chance out of the blue and they think that's it. They did it. They created it.
And now that's their new world versus saying, well, let's live with this a little bit. Hey, put it in the bank. and let's see what happens the next year and see if it's the same. So, this all gets to what is execution. It's not getting good results. It's not operational excellence. It's the discipline to stay with what you said was the truth, your truth, strategy framework.
It's funny man i was thinking about this the other day. Was running a workshop for a group of eighty people and. So i had so many great compliments afterwards and people like on how did you did you didn't look at any notes or you didn't look at your slides and around the day from ten until five pm. So i had so many great compliments afterwards and people like on how did you did you didn't look at any notes or you didn't look at your slides and around the day from ten until five pm.
And they were like, how do you do it? And because of our conversations, I was thinking about that. I was thinking about what we talked about sport. Or about charlie parker i didn't say i didn't comment and go i just said thank you but actually it's the discipline because everyday i read everyday i write everyday i talk to great people like yourself i'm having conversations in this world and that's the discipline that then makes it look effortless.
When you're running a workshop all day because that's all people see that they see the friday night lights but they don't see, the dirty training that you're getting down and doing that you know sitting over there and that pointed over here to my chair read, i'm doing the work right now so i don't see that they see the front end stuff and i was really just helpful to see that. After our conversations gave me a new lens to see that as well.
But to your point i don't anytime i have a successful thing like that i just go great chalk it down as the all black say, celebrate your victories but forget them quickly remember your losses more than your wins.
I love that mantra because it's actually this idea that don't become complacent and it speaks to one other thing you said i love you to riff on you said experience as pedestrian as boredom, can drive people away from the discipline of execution especially when processes are proceeding smoothly.
Yeah, , I experienced that myself often where If you're trying to create things, writing I write music and I write, I'm writing scientific work. I'm continuing to write on strategy. It really becomes a chore after a while, right? The drone of this constant editing and writing and drafting and editing and writing. I think it can take you away from a discipline. I think it can take you away from being sure you're writing what you really, really need to say.
and being sure you really are saying something meaningful and not just filling up the strategy world with more noise and, and more of the same. And in businesses, perhaps this is also something very, very true. It's very hard to be repetitive and stick with it properly. And I'm sure in sports, you could give many examples of the repetitive nature of training. Where it's tough to get off. It's easy to get off your discipline, because of how boring it really is.
i tell my kids this with maths like you learn the seven times table so you don't actually have to ever think about it and you come in at the level above it and then you learn that level above it and then you go up and you make them implicit and then you don't have to ever think about them and that's actually
. That's the beauty of the discipline but as you said then you can get bored and gonna go i want a bigger challenge because we're designed that way i thought we better you said about the discipline of repeating the same idea over and over, what are the things that you apologize for is birthing a new tla three letter acronym which is
the SAM.Now the SAM was, The focus of the last episode and one of the things we wanted to talk about was evolving the SAM and i want to the segway between that and scenarios the first i heard about scenario planning was actually a guy called Art Kleiner i had on the show with it was one of the first multi part series we did. And he wrote a book , called the age of heretics. And he talked about shells scenario, impresario, Pierre whack. And he, he, he wrote this little piece.
I thought I'd share with you as a little bit of color. He said "scenarios were supposed to be fictional and playful, not some sort of rigorous The point was not to make accurate predictions, although like all futurists, he'd love to be right, but to come up with a mythic story that brought the point home, that narrative quality was one of the things that impressed most people back then. One of the things that he saw. That he could bring to shell.
So shell were one of the companies that brought the whole idea of scenario planning to life. Shell managers needed to understand the forces that have been produced to, create a sudden upset of the libyan oil crisis they needed an intellectual maverick, who could speak to shell managers throughout the world to help them learn how to be prepared before the crisis struck. One of these people works in paris is the director of economics research for shell française the french operating company.
He was unique within shell. A former magazine publisher, train in spiritual disciplines and government familiar with japan and india and knowledgeable about shells business problems. He was also a magnetic man the sort of man who people intuitively felt they could understand his name was pierre Wack.
Now i did an episode on pierre walk but i just wanted to share that because was interesting cuz i was like on i covered scenario planning before i look back on those notes and then i overlap both and i said they overlap nicely there's lots of threads in there that peter can pull on and then mix with the other peter pierre Wack.
We should just quickly say that Shell Corporation was one of the early adopters and developers of scenario thinking, but Rand Corporation, I give a little history in my book. If you're interested in reference, Rand Corporation, where the nuclear. Environment was having them explore possibilities and for example, mutually assured destruction was one of the scenarios that they were studying. So it came from two places, interestingly enough.
And, and the other background I would say is that, so we talked about the SAM the emergence approach practice, the way to design strategy. is an emergent method, but it's built around a strategy alternative matrix where alternatives to consider are inherent in the process. And another thing, is that scenarios are inherent in the process.
And what I want to say about the most important point I want to make about scenarios is that I believe leaders treat them as something only for these huge questions, these big deals of not, not nuclear war for them, but, 25 year macroeconomic questions, or what would be the impact of war in the Middle East, for example, these kinds of questions. And I'm saying, yeah, those might be important to you. I don't know. They may or may not be important.
But scenarios can be used in a much more down to earth way. I used to say often, Hey what about next Tuesday? Are we sure about everything coming up by next Tuesday? Scenarios can be made practical, small scale, not a big futurism discussion, but down to earth questions around things like, are we sure?
Our strategy will be robust interest rates or that it would be robust to a competitor action that's different or whether or not market interest changes for our products, you name it, but simple things. What's been missing, I believe, and something that I believe I've, I've, solved or, or brought back into strategy is how to bring scenarios into the strategy matrix.
It's very easy to conceive of big scenarios and to do a scenario planning process, but they tend not to be part of a real strategy process, where Scenarios are inherent in evaluating your alternatives, your strategy alternatives. And so I think my number one message on scenarios is that it is inherent in all work, that there are going to be multiple plausible futures and it doesn't have to be a big futurism study get them to be part of your thought process.
i'm gonna share peter on the screen to the sam and the sam becomes three dimensional. When you add scenarios and again all these diagrams are on peters website the emergent approach dot com and also in the book. Peter maybe you'll take us through this just again with a bit of empathy for those
Yes, so on the left hand face of this cube, you see the basic strategy alternative matrix and the essence of that is you have alternatives. That you're considering that will bust your bottleneck. That will solve what's in the way of achieving your aspiration. And then you'll see fitness criteria by which you evaluate those alternatives. Now strategy matrix is not a brand new thing. The emergence approach has a strategy matrix that is not all numbers and not all words.
And has very, very precise design criteria. design principles and design criteria by which you can construct it. But it remains very simple. One of the dilemmas in using scenarios is that in principle, they do create a third dimension, meaning for each strategy alternative that you would evaluate, you have to evaluate it against different environmental futures that you would be living and working , and implementing it. But until we develop some fancy software, it can be simplified.
And I give many examples of how to simplify this to keep it two dimensional and keep that third dimension from making it seem like a wild, science project there. But the important point is that, It may, it does add effort to ask the question. For each one of my alternatives that I'm considering for my strategy, how would they play out against these various scenarios? Even if you have two that you want to look at. High and low interest rates.
If I had said this three years ago, people would say, ah, interest rates, who cares? They're they'll never be high again. Right? How many businesses or, and stock prices change dramatically because of the interest rate change.
One of the things that you say you should not do is create a strategy for every scenario and we've been advised the opposite of that. i thought about that as i go on going through scenario planning alone. Is a
Oh,
cognitive load on an executive and then to have to create a strategy for everyone of
well, but actually we're saying you said it right first time, right? The idea that each scenario gets its own strategy is missing completely the point of scenarios. And I give the example in the book of gambling, right? It would be like saying, okay, if anybody knows the game of craps, if you roll a seven or 11, you win right away. And if you roll a box, if you win, if you roll a a snake eyes, you lose right away. Right.
And then if you don't roll any of those, you got to keep rolling until you get, get what you need. The idea of each strategy gets its, each scenario gets its own strategy, but would be like saying, I'll bet. After I find out whether, whether I roll a 7, 11 or a 2, you, you don't have the right to wait till the outcome to find out what your strategy should be. All strategies, your, your strategy is at the mercy of all future scenarios.
whether you discover them, whether you articulate them, whether you even care, because there's many cases that you could create a strategy that says, well, if interest rates go up, it might have this effect, but I don't care. I'm going to accept that because I think if we plan for it, if we, if we put in something that reflects that, it's going to hurt us elsewhere even more. So, This is, I think, often said, I've even found it said in the literature, create a strategy for each scenario.
It misses the entire point. The entire point is that you're going to have to walk down the road and the world you walk in could be different things than you thought. so your strategy has to consider that possibility.
You say then as well you can choose a strategy alternative that ignores all but one scenario, Futures don't go away just because they are ignored.
Absolutely. And, and again this will come to leaders who are scared away of thinking about scenarios because they think it's a big futuristic process that doesn't really connect with their reality, do a quick process. Get a few people who know something about the market. Have them list a few things that they think could happen, even fairly low probability 5%, 10%, is that so low? You can choose to dismiss them, but at least you wrote them down. At least you said we chose to dismiss these things.
Put that on your dashboard. Look at it once a quarter and say, well, did we do the right thing? By choosing to ignore these?
we often just plow on, don't we? , it was one of the reasons I was telling you Annie Duke was on the show about better book thinking and bets, and I thought it was useful to release that in the middle of this series. And the reason was, one of the exercises she does with executives is get them to vote exactly to your point. And to capture that vote and importantly, she uses an electronic way of doing that. So nobody can see, I'll wait to see what Peter says. Does he say yay or nay?
And then I'll cast my vote. So it takes away groupthink and it takes away also the pressure, the social pressure that comes sometimes with, I better vote for what my boss voted for, whatever it might be, but most importantly, then to revisit and go.
What did we think would happen and then what happened and then to examine why they got it right or got it wrong we just go on we just go on with life like you said, you might have the hot hot hand fallacy you might think oh i made a great bet and one of the things she said which is brilliant it was, people thought they were brilliant at property development buying old houses doing them up until i wait and then i wait changed all of that, i
and i think that what Annie does is bring to life kind of fundamentals of, what essentially in some ways are scenarios, you, you get a hand. If you've ever watched her play in there's so much of this Texas Hold'em on, on, on YouTube or whatever and, and you start with a hypothesis, about what everybody else's hand might be or what or how you should play your hand based on what they possibly could have.
And then as you get more information, You, you start to, you start to formulate your, your theories even more, more clearly. What I'm trying to do with this very simple strategy alternative matrix that it can incorporate scenarios and that stays on one page. It's not a 55 page PowerPoint deck, stays on one page and you much more talk and debate and less writing. How to incorporate that kind of thinking that she's bringing to executives into your actual strategy process.
That's really very much the nature of, of the SAM as I've laid it out.
One of the last things I wanted to share, Peter on this, and we'll move on to bottlenecks again, back to bottlenecks, is to avoid probability distributions. And just to explain what you mean by that
I think it's very tempting for people to think in terms of most likely cases. They want to be able to say, all right, sure. There's variants. Sure. There's possibilities, but come on, let's be tough business people here and pick a most likely case and then we'll get to work, right? First, the first one here is showing, even if. The case is the most likely case. That doesn't mean it's very likely at all. There could be a whole lot of cases that are almost as likely.
And , if you put a spinner on this, right, and roll the dice on that with that probability distribution, you have the probability of getting many. You have the high probability of getting many different roles. And then, of course, if you've got cases that are bimodal, for example, will a regulatory law get put in or not? Could change your world dramatically? There's no most likely case there. Unless you can argue that it's a 2 percent chance that that regulation won't go in.
But what if it's a 20 percent chance? then now you have a bimodal probability. And I, I, I think that, we've got to move away from most likely thinking and move to the possibility of multiple plausible futures that even if it's 10, 15 percent in your mind, you have to ask yourself, if that happens, is it really going to be to the negative? And should I design a way to live with that? You don't have to. Again, there's nothing that says you have to design for all futures.
Sometimes you just want to say, I think greatest probability is this, and I'm going to design for that. And I'm going to take my lumps. If it doesn't happen, that's a very fair, rational process.
The lumps, the, I think when I was reading about that, I thought about how. Once my son when he was on a baby came home and we were doing coloring he was only like five or six so he's just in school with this new teacher in school who was a battle axe of a teacher she had the kids terrified so. He was coloring and he pushed over his sheet to me for me to color. I was only coloring with him. Now I have to say I enjoyed it a little bit, but I was coloring with him.
The whole idea is I was with him. I was present. I was mentally present and he pushed over a sheet. Will you finish mine? Cause he was looking at mine going, and I was like, maybe I'm doing it a bit too well, and I'm making him feel. Like inferior in some way but actually what he was afraid of i got to the end of the teacher had the class fearful of leaving white spots and she had this line it's an irish she spoke in irish and she said, no spotaí bána no white.
spots and i was like i thought about when i was reading this that came to mind and i was like on that's because in organizations you put your neck out. And you go, here's my scenario that I think might happen. And if the organization is of a, of a spotty bonnet temperament, they're going to make you feel like crap for that. And then you're going to take your lumps and then you're not going to put your neck out again. And then the organization wonders why people aren't being innovative
Isn't this part of what Annie was, is trying to teach on a very fundamental level someone makes the case and that it could even be a 40 percent probability, of course, nobody knows the exact probabilities a belief, a rationale, a story. And it doesn't come true. Did you fail? Well this is again the whole question around execution.
If you had a really good theory, if you really worked that theory and got the right people involved with it, and you stuck with it, and it turned out not to succeed, did you fail? Or did you, did you play the probabilities and, and, and the dice came up, came up wrong? If you only got one shot, you can't take a chance. or whoever gets a situation where you're guaranteed of success. Of course, this is nonsense. I think I say it all the time.
This, this nonsense of failure is not an option is, is just pure idiocy. I I document that failure is not an option in, in the U. S. intervention in Iraq. It was written in the strategy for Iraq. You can see this in chapter eight. What do you mean failure wasn't an option, getting back. If you're playing the percentages. It's assumed you're going to play many times, many hands, right?
And execution is to stick with that and not be seduced and, and change the game plan if you see that there's a fallacy in it, which is a big part of strategy work. you see a fallacy, go back and modify it.
So true man, , from battle axes to bottlenecks. So we've established that bottlenecks are the glue that holds frameworks together, , especially well, any framework, but especially the emergent approach that Peter talks about bottlenecks are discovered and articulated, not designed. I think that's such an important line. They exist, whether discovered or not, they are a property of the dynamics of the system.
There is no simple discovery formula and the only way to be confident of your bottlenecks is to evolve the sam as a whole or even begin implementation, you gotta play that card in order to start to discover the bottlenecks maybe you'll evolve on
Yeah. Could i before we talk about bottlenecks specifically, could I just give a comment about the overall spirit of designing strategy and designing the, and using this strategy alternative matrix to discover. The strategy alternative that you believe to be right. The theory of the case you believe to be right. And that is, I liken it to a puzzle. It's not a recipe.
It's not following sequential steps where you say, do an environmental scan, pick a goal, choose a goal decide on what might be in the way devise plans, devise a strategy, devise metrics and you see these things in chevrons or in boxes with arrows on them. The approach I, I teach here is to think of it much differently. Think of it as a puzzle where there is no exact start point. You can start almost anywhere.
It's a matter of slowly finding pieces that fit together, but it's a real life puzzle, unfortunately, where you'll never have all the pieces. That's the old joke about sometimes you have to make a decision without all the data. Oh, tell me a time you ever made a decision with all the data. There is no data from the future. You'll never have all the pieces. Sometimes pieces change shape. You don't know exactly where the boundaries are and they may change.
Sometimes somebody comes up and crumples up half the puzzle and says, sorry, wasn't right. And most of all, there's no picture on a box top that tells you what you're aiming for. You have to discover it. You have to find it. And, This, I believe, is a much more compelling image of how to design and how to be creative and how to innovate than following prescribed steps.
And what holds it together as a process is design principles, the definitions of the framework components, and how they relate to each other, and all that's laid out. And one that's perhaps the most important, as you brought in, was the bottleneck. What bottleneck are these strategy alternatives aiming to bust? To take away, so that we can achieve our aspiration that we believe to be. the aspiration we want to achieve.
And, you said that it was the glue and I believe it very much to be the glue that what strategy and innovation and making change is all about. Is the relationship between several constraints. An aspiration is a constraint that tells you the space you want to be in. And some features of that space. The bottleneck is the system constraint. That's in the way of you just thinking. Having it. You can't just have an aspiration.
If strategy was just a matter of articulating an aspiration and everybody agreeing on it, we're going to grow in this country, or we're going to improve profitability, or we're going to win more games. We wouldn't even need the strategy industry, right? So you can't just do those things. So yeah, you ask what is constraining us? What is keeping us from having that?
And then the strategy being a self imposed constraint and enabling constraint that attacks that bottleneck to achieving the aspiration. And I call that the triad. We talked about it in previous sessions, but that's really the heart and soul of the strategy matrix as well, because you're constantly asking what strategy alternative would bust the main bottleneck to achieving our aspiration. And then the rest is all tools for doing that. and design principles for how to find that.
share a couple of things you talk about some of the ways you find bottlenecks through five wise fish bones lean six sigma, and heat maps you also share where to look for bottlenecks
and those examples you gave of techniques you can use, there's many more. There's some great things that consultants bring , and people who help, with strategy process and, kind of creativity sessions. There's so many that can be used, but yes, there are also some principles around making sure. You've got the right bottleneck. There's several, one of them is it can't just be a restatement of the aspiration. Our aspiration is our cost has gotten out of control and we need to control it.
We need to reduce our costs. Our bottleneck is that we're in the bottom quintile in our industry, in cost. It's just a restatement of the aspiration, adds no information. Another rule is, the bottleneck cannot be impossibly hard or ridiculously easy to bust, or else you're wasting your time. If it's impossibly hard, There's nothing you can do. Now you can debate that. You can discuss that and maybe someone will be right. Someone will be wrong about that.
But if you conclude it's impossible to bust, then why bother? The example I always like is the Navy has to reduce its cost. The Navy is being demanded they reduce their budget by hundreds of millions of billions of dollars and the Navy says, yeah, but look at all of these theaters of operation you expect us to work in. If you would reduce the number of, Places we have to be.
we have to be in every ocean and every great sea, the Mediterranean Sea and the Middle East and the North Atlantic and South Pacific. Take one away and we can reduce it. And then, of course, the politicians would say, sorry, that's not on the table. Well, then you can sit in your office and complain about how that bottleneck of having too many things you have to do is keeping you from reducing your costs, but it's a worthless exercise because you can't change it.
Now you can try, but you got to decide whether it's worth it. Too easy is the example of we've got to reduce costs. The bottleneck is we haven't told everybody yet. Well, just tell everybody, do you really need a thing for that? But, but then the subtlety in that one is what if the organization is used to every quarter or every half a year that we have a cost emergency and that we've got to do something now, maybe it is a bottleneck.
Maybe the bottleneck is not that we have to tell everybody or , everybody doesn't know it's that they're so sick of hearing about it. that it doesn't mean anything anymore. Now we have to come up with a strategy that would get people to believe. That it's really going to happen. There's other features , of bottlenecks that, are important to, keep in mind.
I would say another important one is it's crucial to, think of people when you're thinking of bottlenecks, that it's not just assets, it's not just the lack of money. I think theory of constraints there's a great alliance between theory of constraints and the way Goldratt originated that process and that model of the world and the emergent approach.
There's a great alliance because we're both focused on that central constraint, that system constraint, what I call the bottleneck, what he called the system constraint. But they limited themselves often to measurable flow quantities or measurable asset quantities. And yet, I think anybody knows that in a business, emotional things, people issues, complexity, understanding jealousy, conflicts of interest, conflicts of how you look good or not look bad. All these things are true bottlenecks.
often in a company and those have to be addressed by strategy or your strategy that's addressing some technical issue around products also has to address the fact that people have all of these feelings and all of these emotions around the company is moving forward.
i love that you said that a bit the people thing and peter gives loads of examples in the book for example, your sales team are underperforming the misdiagnosis is often. Oh they're just underperforming and you go well maybe they don't have the right training etc etc so you go exploring for the bottlenecks, i'm gonna share peter if that's alright another example that you have from the book so this is.
Is a great example that peter uses throughout the entire book of this made up company called courier incorporated and again i'm showing on the screen here. The aspiration bottlenecks strategy and how that would work and how you'd actually map this because when you see it like this and again a little bit of empathy for those people who are just listening peter
this is that triad I was referring to the aspiration bottleneck strategy triad. And imagine in your head on the right hand side is the aspiration. In this case, it was this company courier that was trying to consider how to enter a new market. And that was their aspiration. As is shown throughout. You can't, because you can't directly achieve aspirations. You have to work backwards to all of the possible choices that you might have to do that.
All your choices in marketing, operations, legal, financing, HR, hiring, you name it, all the things that are involved in a business, countless choices. And as argued earlier in our sessions, a strategy is that central rule. That's designed to bring all those choices together in a coherent way to attack the bottleneck. And what this picture shows is that you can start brainstorming.
You can start thinking about, well, what's really in the way of moving to this new market by listing underneath this bottleneck label in this diagram. And I, I forgot to add that the diagram unfolds from right to left. So imagine it like a big V on the side with the closed end on the right side and the open end on the left side. And that represents this influence diagram where you go from a single aspiration and it leads to countless choices.
And what we're now overlaying on that is let's think about all the possibilities that have what's really in the way to this aspiration. And so some of the ones here, uncertainty of drone approval for love potions. Okay. I walked into it here. I even use a silly example of their, their transporting love potions and whether or not regular, whether or not you will be allowed to use drones for love potions. We don't always have to. to be so serious, so serious.
Do we costs of a V of a vehicle fleet competitive response, uncertainty of regulation. All of these things are possible. The real bottleneck that the strategy must address. And then you can on now at the end of this V where you would have all those choices and where you need a strategy that will bring them all together to be coherent, you could start talking about. What your central rule might be that could bust the bottlenecks.
Now here, you're just exploring possibilities slowly, but surely you got to solve this puzzle and you can now transfer these three possible, you can transfer these possible strategies and pick a few of these bottlenecks and explore them in the SAM. And fight it out. How do you we have a section on fitness criteria and then there's a section on assessments. How does everybody in our organization assess these bottlenecks and these potential strategies against what we care about?
How do the people on the front lines, how do the people in the various organizations of the company? We need to take the time to get everybody to internalize this and to figure out what really is. What really is the issue? So yes, summing up, the aspiration bottleneck strategy triad is really the heart and soul of finding your strategy framework. Your framework will include other things, plans and goals, sub goals and metrics and forecasts and scenarios, but this is the heart of it.
And you, you can solve a puzzle with these tools. And the bottleneck truly is the the magic to finding the strategy. The bottleneck is the glue.
I've one for you. And this is live for me at the moment. So I was telling you, and I haven't announced it yet, the reinvention summit. com. So we're doing this next year, April 29 and 30 Dublin, the Royal Dublin convention center. Seth Godin is confirmed. Charles Conn, chairman of Patagonia is confirmed. Elvin Turner, myself, Nadya Zhekzenbayeva, who's my co founder in this. Aspiration. I've been using the tools you've been giving me live here.
So the aspiration is to create an event that is not just talking heads. It's not just inspiration. It's learning. It's coming away. It's at this interface of inspiration and action.
And I was thinking about the bottlenecks and I was like going, am I confusing sometimes bottlenecks with, hurdles so what i mean there is like some of the bottlenecks i sketched and for myself would be getting executive time or an abundance of events that were competing for that executive time, then the possible strategies is like your unit talking about marketing you talking about gorilla marketing etc is that the right way of thinking about that because i'm using this live.
I think those are potentially, I think your aspiration to do something different immediately in my mind, if I was on this, in a session, In a design session with you, the first thing that probably would come to my mind is even if you came up with a great, and I'm sure you are, came up with a great format to to achieve that, that it's not just a bunch of talking heads. How would you be, how would you convey to people that that's true? Because it's going to look on the surface like.
a lot of other meanings, unless you find a way to convey that it's different. And that may not be so simple. Now I would start and say, well, that's one possible bottleneck. That's, that's a big issue. And by the way, very important point. Some people will say, how can you say there's only one bottleneck? I'm not saying there's only one bottleneck. I'm saying that There is one central, there is one dominant bottleneck in a system.
Almost always smaller bottlenecks can be managed with tactical rules. So for example, let's say a second bottleneck in your, in your program. And I, what was the other one you gave? I want to go with the ones you, you did.
so executive time would be a huge one competing
Okay. So getting, getting executives to, to, to come, maybe that's very heavily related to the marketing. I don't know. Maybe a third, maybe a third bottleneck is getting all of the presenters to agree on how this would work because they're used to doing their thing, right? So another bottleneck would go on the list of how do we make sure we're coherent? How do we make sure that they've bought into this process? We're not going to trial it. It's going to be the first time we do it. Here we go.
Say you believe that to be the central bottleneck and that you really had to invest time in not only working with these people before the meeting and and designing it in a way that they could accept and feel good about. That doesn't mean that the marketing and convincing people. that they should spend their time and that this is different, isn't a bottleneck. You would solve that with a separate set of, of work. And it might even be what we call nested strategies, right?
You have an overall strategy for, for the program design, and then you have another strategy system for addressing the bottleneck of how are people going to be convinced? that this is different when we all see a huge number of advertisements for sessions like this. So I, I really want to be clear that the dominant bottleneck doesn't mean there's not other bottlenecks, but usually there's one that really is the most important. And discovering that is so much a part.
Of strategy effort and strategy design and innovation in general. What's really in the way. So I think very connected to what you were just showing. If I was on a design team with you guys, it would be, okay, we, we want to, we, we have this vision, this aspiration to do something different here. know we think we know we can do it. Okay. Let's start asking what are what's in the way.
And we, and you already articulated three really good, really good things that, that have to be addressed in some way.
I knew recognize one which is huge which is it is how do you say that true the medium of a powerpoint or pdf because people are gonna go yeah yeah yeah everybody's different and. There's a lot of trust and relationships that needed to be built in order to be able to get sponsorships over the line get speakers over the line and to your point as well as that you may nail it on your one.
But that doesn't mean it's gonna translate into your to so this is where all this is so helpful when you actually bring it to life i wanted to share what are the thank you for hearing me on that peter i just,
It really is.
yeah i'm by the way we might get peter my convince peter over for those so let me know if you want peter over if you're willing to sponsor him to come over. Get in touch moving on this one just spoke volumes to me i worked in an organization very briefly and.
I was head of innovation and i didn't do my homework didn't go in there i believe the hype about a drink the kool aid about this place is trying to change its efforts that happens hundreds of people, every year they go into these jobs transformation officers etc and i pretty much discovered i was like on this place it's not ready for innovation. It actually needs a red wedding. Do you know that idea of the red wedding? The Chinese,
Tell me, tell me.
you'll love this man. So it was brought to life in game of thrones, but it's, it's actually a true story where the different states were in such battle with each other. That one family brings all the families together and decides to make peace and goes, let's have peace. Is this daughter's wedding? And then.
Slaughters everybody and the whole idea was like you have to start from scratch so in my exit in my exit interview is asked what would you do that what would you do in a second well i'd i'd orchestrate a red wedding and then i read and
They didn't
the guy laughs.
often in Exeter Reviews, no.
No, they didn't hear the truth too often. But this is when you say, okay, what happens when the whole system is broken? So you look for the bottlenecks and you discover, oh my God. These are not bottlenecks. This is bags of snakes and you need to find the root causes.
And what Peter says here is "systems in which many bottlenecks are seemingly in play and many symptoms of failure are visible can be called systemically broken everything is a mess and leaders may be caught in a perpetual game of whack a mole dealing with symptoms as they arise in such situations and maybe challenging to discover the real cause the root cause of the problems and therefore what is the bottleneck to fixing that root cause."
Maybe you'll describe a little bit there what do you do if you find yourself in that case and it's more common than we give credit to. This happens a lot for organizations. Leader comes in and goes oh i wish i could just. Begin this time all afresh
it is more common than we might think. I often think about a plant site, where quality is bad and work stoppages are bad and waste and yield are bad and, and, safety performance and environmental forms. They're all on the edge and going in and out of success and failure and the plant manager is all they can do is, is, is address the, the next wave that's going to hit them, right?
As they're trying to get up on the beach and, and, and take a look around and really try to do something systematic and, and they can't, right? Because, every other day there's, there's an event. Obviously the bottleneck is. Is something much deeper about either the discipline of the organization, like immediately I would jump, I jumped to, is it, are the procedures right? Are the standard operating procedures right? Is the technology right? Are the safety procedures correct?
And we're not following them? And that it's a systemic habit of the organization to be lackadaisical and think they don't need to follow the rules. Or is it the standard operating procedures are outdated? they've never modified for, new products and new raw materials and a new type of workforce that doesn't have the same experience. Whatever. We can make up so many different cases, which of those two, like start there, which is it?
Is it that it's not clear what to do or is we're not following what to do? Right away, I would jump to the bottleneck is at first, I don't even know what the problem is. The problem is certainly not that our quality's bad and yields are bad. That's all symptoms now, right? My first bottleneck is I don't even know what the real problem is. And can I bring somebody in here to help me? Or is there somebody in the site that can help me figure that out?
But of course, there's an enormous bottleneck there too. No one's got time to do anything like that because you're busy solving every emergency, right? So then maybe you appeal to the business leader and say, can you give me some resources to figure this out? Are the standard operating procedures correct? Are we really following them and, and approach it this way? I think systemically broken does not mean there isn't a central bottleneck.
It's just that that central bottleneck, that dominant bottleneck is at a much higher level, much more abstract level.
Then, well, we don't have a good test for quality, and therefore that's why our quality keeps coming out of spec, or we don't have a good controller on the reactor, that's why our quality is out of spec that could be the bottleneck, might be, might be something very, very hard to do, actually solving that bottleneck requires a big strategy, that's not a systemically broken problem.
We originally said we'll do two episodes and. I still have tons of notes here, but I'm not doing it to Peter. We're going to part ways, but hopefully we'll connect again in the future. Maybe, maybe in April next year, Peter, if you're, if you're around Europe as well. And it's been an absolute pleasure, man. There's, there's so much more we, I wanted to get through, but I actually think it's easier to read it.
Which is stuff there's stuff in there on generic strategies you go further into fitness criteria about understanding numbers and don't be have an uber love of numbers which kills so much innovation, putting financial metrics on this traditional metrics on innovation absolute killer. There's loads in here it does take time to read it i do think, reading it and having the accompaniment of a show and then peter's notes is a great way to learn it. It is a game changer if you actually get this.
i showed it myself there with the reinvention so much has me thinking in a different way, i'm peter before we wrap where is the best place for people who don't know when find you and find out more
Of course, the books available on amazon. com and other online retail outlets around the world. You can go to emergentapproach. com for supplemental material, examples, and also test sets that bring to life. this puzzle building that we've talked about. And I'm going to mention we're working on bringing them out as a, as a paper book with added examples and more guidance on how to, how to do this puzzle.
And then you can find me on LinkedIn Peter Compo, LinkedIn, and I post often and give little vignettes on, on these topics that we've covered. And you can contact me there or through the website. Glad to hear from anybody. Positive or negative feedback always makes us better.
absolutely and i love it if you could get away with this have no have no picture on the cover of the book.
You know what? That is a great idea. I I, I, why didn't I think now you're showing your skills. I should have thought about that. A book with no picture.
I wouldn't have thought of that at the start. I wouldn't have thought of that at the start.
my guys that.
Man, do you know what? I, she, I probably got that idea from, I'm just looking for it there. Carol Tavris. I had Carol Tavris on the show and her book is called mistakes were made, but not by us. Mistakes were made, but not by me. I can't see the cover there, but essentially the cover, the cover is upside down on purpose.
As a gag,
Oh, it's printed wrong on purpose. Yeah, exactly.
There's no picture what is it then,
well, I wondered, could you have emergent, like the writing kind of emerging as in it's not faded or something it's faded left to right or something, I don't know.
You gave me a great idea.
Man, I just want to say. Absolute pleasure. And I want to tell our audience behind the scenes, Peter, absolute legend of a guy, great guy, a brother from another mother. , I've connected with him over the airwaves here like this. And it's been an absolute pleasure. I'll also link to everything, all his music on YouTube, everything. So all these pieces make the man as well. So Peter, thank you for joining us over the past few weeks.
because you you put your heart and soul into this and you you allow it to go into depth and you allow real issues to come out. And that's really a valuable, a valuable offering.
Thank you, man. Thank you very much. I'm going to press stop now. See you soon.