Transcription:
Intro:
Sohrab:
All right, welcome, everyone, to our next edition of the Agile Insights conversation series. I'm again being joined by Roger Martin. He has just too many good chapters in his book, "A New Way to Think." Today we're going to talk about innovation, but before I get into there, Roger, welcome back to the show.
Roger:
Thank you, Sohrab. This feels so nice and comfortable, to be doing it again with you. I have fun every time.
Sohrab:
Thank you. Thank you, thank you. And today, you don't have your usual background. You mentioned to me earlier you're in another time zone again. You're not on the East Coast of the U.S., you're in Hawaii.
Roger:
In Hawaii, yeah. In January, my wife and I, Marie Louise and I come to Hawaii, and I try to get some writing done. So, that's where I am here, 'til the end of January.
Sohrab:
It's not like the weather where you usually are in Florida would be bad, right?
Roger:
This is true.
Sohrab:
You just go to a better place. And I'm stuck here in Cologne, Germany, where it's like, almost freezing, and raining now for over a week. But okay, good for you. Roger: Yes. And isn't half of Germany in Greece and Spain at this time of year?
Sohrab:
Yeah, if you don't have kids that have to go to school.
Roger:
Oh. Oh, okay.
Sohrab:
As long as you have kids that go to school, you can't go anywhere unless there's school vacations. But I'm not going to complain, I'm off to enough vacations due to the kids having so many school vacations, and life has been good.
Roger:
Excellent.
Sohrab:
So Roger, today...we've talked about decision making, we've talked about strategy, we've talked about a lot of other things, but today I want to focus our conversation on innovation. Innovation is a big topic for many organizations today. Innovation is a big topic for organizations where I get engaged, because usually when they want to apply some sort of agile way of working, it's usually with the intention to make the organization more innovative again. Otherwise, they probably don't need all of this agile stuff that I try to help them with. And you wrote a whole chapter around this topic. It's not, like, the thickest chapter in the book, but it's super interesting. I was just reading it again yesterday as a preparation for today's conversation, and I want to focus this conversation on that particular topic.
And you start out... Or maybe before I get to where you start out, when I work with organizations, in many cases the question comes up, what is actually innovation? And I want to start our conversation with this question towards you, how do you define innovation? What is it, from your perspective, the strategy guy?
Embracing Uncertainty: The Bold Pursuit of True Innovation
Roger:
I guess I think of it, in really short form, as creating that which does not now exist. Now, the "that" could be a product, a service, a way of working, a way of interacting in the company, it's creating something that does not now exist. And I want to contrast that with benchmarking, right, where you take something that exists, fully formed somewhere else, and just replicating it at your organization. That, to me, I do not think of as innovation.
Sohrab:
Even if it would be new to that organization? So taking products and services aside, you also brought up the concept, like new ways of working. So if we think about new ways of working, and we don't have them within our organization, but we see some tiny startup doing that probably, wouldn't you consider that as some kind of management innovation, using Gary Hamel's terminology, when we apply it to our own organization?
Roger:
I think it's great, and I would encourage companies to do it, but I don't think of that as innovation. Now, you could make it a matter of degree. So if it's analogy, so to me, analogy is innovation, this thing has been done in a completely different context, but even though it's a completely different context, I think it could be done here. It's like the famous Jony Ive saw colorful cameras...
Sohrab:
Cameras.
Roger:
...20 years earlier, and used that as an inspiration to innovate in PCs by creating the iMac. I'll call that innovation because it isn't here's what another computer company did, I think we can do the same thing that they did in our computer company. So, I'd call it a...I'd say there's a spectrum. But for me, the key to why it's a different thing, and it's a hard thing, is it is accompanied with a situation where you simply cannot prove in advance that it'll work, right?
Sohrab:
Yes.
Roger:
You have pretty good proof, right? If you're, I don't know, Bank of America, and you see JP Morgan Chase doing X, exactly X, and you say we don't do that, we can do that too, right, the person going to whatever executive committee to get the $100 million or $500 million to do it has proof, an organization just like us, in just the same situation does this thing, this is exactly how they do it. There is no reason to believe we can't do it too, therefore give me the money, right? That's very different than going to the executive committee to say, you know, we've been thinking about customers, and what they really, really want and need.
Let's take the great Canadian bank, TD Bank, TD Financial. They stole a march on all four other major...there's five big banks, and they stole a march on them by somebody saying, you know, we've talked to customers, and what they hate, and they have this expression for it, "banker's hours." Banker's hours are the hours where it's convenient for banks, and inconvenient for us. I'm at work from 9:00 to 5:00, they're open from 9:00 to 5:00, I could do banking from 7:00 to 9:00, and from 5:00 to 7:00 on my way to work, or on my way home from work. And so, some brave person at TD said, even though nobody else has hours other than 9:00 to 5:00, nobody has those hours, and adding four hours to the workday is mega costs, we think this will be transformational to our customer service, and our reputation for customer service, so we're going to open 7:00 to 7:00. Like, I can imagine the board of directors saying, you want, what, $2 billion, or whatever it was, $1 billion in added staffing costs? Where's the numbers that will prove that you'll get this many more customers, etc?
So, that's innovation, right? And it turned out that when they did that, the entirety of Canada said, we thought this was impossible, but there's a bank that cares about us, and their customer ratings went through the roof. They stole a march on everybody else, and now, I think that was now 20 years ago, they're still considered, even though the other banks are opening longer hours, the only bank that is open longer hours. That's innovation, because you could not prove in advance that it was going to work. Not possible, because there's no data, it's speculative, it's about the future, it's about making a change, you can't know. You've got to bet, you've got to believe. That's why I think that is innovation.
Sohrab:
I think that's really good. And that connects so much to the topics that I work on, because whenever I work with organizations, they're like, in what kind of situations should we apply this empirical process control? Which is basically agile ways of working.
Roger:
Yes.
Sohrab:
Like, in all of those areas where you have high levels of uncertainty, where you cannot plan for long periods of time into the future unless you're planning on a high level, right, stubborn on the vision, flexible on the details, but you need to bring in this because you have to frequently and systematically reduce that uncertainty. And your definition of innovation, right, building that that doesn't exist today, and what you follow up with on that is it's really all about doing something in a context with high levels of uncertainty, right?
Roger:
Yes.
Sohrab:
And no matter whether you succeed or not, right, innovation can be an unsuccessful innovation, but it takes a whole lot of guts to do that in the absence of data, as you don't know because nobody else has done it before.
Roger:
That is right. That's right.
Sohrab:
Yeah.
Roger:
And in some sense, what I would say, and I talk about it in the chapter, is that you deploy something similar to what I suggest in the chapter, which is a process for helping the people who you're trying to bring a change to to kind of think their way through it, and gain confidence in it, right? So I would argue, Sohrab, if you went to one of your clients and said, you know, never done this before, but I kind of think that maybe, you know, kind of working in a different way, and I'm going to call it agile would be a good idea, they'll sort of say, are you out of your mind, right? But if instead you're able to say, well, there's this methodology. Let me help you. I'll take you through kind of what about human nature and uncertainty and whatever causes this to make sense, and then here are other situations, other analogous situations to yours where we've done this, then you have a fighting chance. So you have to have a bunch of those tools to essentially give them, build enough confidence that they are willing to try something.
And also, you know, I think you have to help them understand that let's say the worst happens, and this just doesn't work, it's not a torpedo below the waterline. I'm not asking you to spend $1 billion on this, without having any road marks along the way, and that at the end you realize you're bankrupt, right? All of those things are things about what I call the intervention, you are intervening. You're an interventionist, Sohrab, in your regular life. You take companies that are in state A, and are trying to take them to state B, and you have an intervention for doing that. And thinking really carefully about it, if you just say it's agile, go do it, I think you fail. If you have a way of introducing them to trying it, sampling it, you know, kind of all those things, that's a planned out intervention that increases the chances that they'll say, even though for us this is something new, I feel comfortable enough about proceeding.
Designing for Success: Where Innovation Meets Intervention
Sohrab:
Yeah. And this feeling comfortable enough, I think this is a very important thing. But let me take a step back here. You already brought up a term which I had heard before, but I hadn't heard it in the combination with innovation. You basically named this chapter "Innovation," and then the subtitle is "The design of the intervention is as critical as the innovation itself." And you walked us a bit through, like, what these interventions would be, but maybe you can elaborate a bit more on why you believe that the design of the intervention is as critical as the innovation that is ultimately created through those interventions itself.
Roger:
Sure. Well, you know, the reason for kind of writing about this is what I find with people who are innovatively inclined is they are that way because they have a fascination with creating an artifact. So let's just say you're an architect, you know, you're Frank Gehry, or Calatrava, you're one of the world's most famous architects, the thing you're trying to create is an artifact, the Bilbao Guggenheim. And so there's lots and lots of focus on the artifact, and making sure the artifact has all the cool, innovative things about it that you hope or wish, or as we were talking about iPhones before, you're going to come up with the next, you know, real step function change in the iPhone, or the iOS software for it. And I understand that, right, because...and it's important because I think it's what drives somebody to do all the hard work to create the artifact.
But what I often think, paradoxically, they don't think about as they get enthused and excited about the artifact is the more enthused and excited they are about the artifact, and the degree to which it is really different and breakthrough, right, the Bilbao Guggenheim, it's like a wild and wacky looking building of the sort that the world has never seen before, right? To the extent that it is more of an innovation, it's going to make people feel more and more uncomfortable, the people who have to adopt that into their life, right? And so, no innovation is going to make it anywhere unless people adopt it into their life, you know? Unless a company adopts agile into their way of working, they're going to keep working the way they've always worked. So in the end, that innovation has to essentially find a home somewhere, or it'll be like the tree falling in the woods with nobody there, right? You know, nobody hears it, it comes and goes. And the world is littered full of things that people brought to market, and are gone, right?
Sohrab:
So, just for me to quickly...sorry to interrupt, I just want to clarify for myself.
Roger:
Oh, no, please, please.
Sohrab:
You talked about, like, we have this artifact, and it's not only about creating this artifact, it's also thinking about the adoption of that iPhone, of whatever product, service is out there. And initially when I was reading the book, I was thinking that when you talk about intervention is as important as the innovation itself, it's more about the process, the approach of how we create that innovation. And you bring up the examples of IDEO, working with, I think, MassMutual and other organizations, right, and how they break down the innovation itself into the process of creating that product through rapid prototyping and all of that, the product creation, or the product itself, which is then the innovation, but also the customer adoption. And now, from what you explain, I just want to make sure that I get this right, the intervention piece is not only about the process of how we get to the innovation, but it's also what happens after this product is created, in terms of adoption. And MassMutual, you brought it up as an example, did something incredible to make people under the age of 40 become interested in life insurance, as the one that you provide, right?
Roger:
Sure. Absolutely. Yeah, and so if we sort of split that into the two pieces, to the point, getting the intervention to the point of getting it greenlit, if you will, and then the intervention, getting it used by the target group. For getting it greenlit, to me the best approach, and this is what I kind of love about what David Kelley and the late Bill Moggridge, the founders of IDEO did, was popularized the notion of doing rapid prototyping, rapid iterative prototyping. And I had this conversation with David Kelley, he's a good friend, I said, you know, you always talk about that as getting all this customer insight. So you go and show the customer, what do you think about this, with a rough prototype, they say, well, I like this, I don't like this... And then you fix it more, and then you go back, and they like it better, and they like it better, and they like it better. I said, I understand that that makes your artifact a whole lot better, right, and then it will also aid in that adoption of it, because the customer, the users of it have told you all the things that will make it helpful.
But I said, David, I said, David, did you ever think about the fact that you guys were consultants, IDEO, working with teams at companies? Did you ever think that, you know, because you're working with a team, and that team sees the first prototype, right, and sees the consumer the user saying, well, you know, it's okay, whatever... Then you go back and that same user is saying, well, now that's really interesting, and then you go back again and they say, this is really, really great, if you could only do this, and then you go back the fourth time and they say, this is just awesome, did you ever think that that is a mechanism for growing the confidence of your client in saying, yes, we have a winner here? And he said, no, I actually didn't, but I'll steal that idea. So, he did. He's a good guy.
But that's, I think, in fact why I believe IDEO is successful as they are. I'm not sure... Like, they have this outsized reputation, they're the most prominently known design firm kind of in the world. That outsized reputation, I think, comes from the fact that they inadvertently had a really clever intervention design, as well as an artifact design. So the rapid prototyping helps make the artifact better, and helps build confidence in the company that's got to sell the artifact, in saying it's worth investing in. And so, I think we can generalize from that to say, if you can have a process for creating the artifact that builds confidence in the people who will have to greenlight it... Because some time, at some point, somebody's going to have to say, we're going to put this thing into production, right, and that's going to be, you know, the disproportionate amount of costs, typically, how can we design an intervention that will enable them to build their confidence? And what I think often people who focus entirely on the artifact believe, right, is that I will create such a fantastic artifact that people will say, oh, wow, that's so great, I will do it.
And if you go back to Frank Gehry, so I was living in Toronto when he did...he is actually from Toronto. People don't realize Frank Gehry was born and raised in downtown Toronto. And he was doing a redesign of the Art Gallery of Ontario, which is kind of the MoMA of Canada. Not the Met, it's sort of like the MoMA. We have a Met kind of thing, and a MoMA kind of thing. So Art Gallery of Ontario, and it was a redesign of it, and he came up with the first redesign, and it was sort of, kind of a renovation, and building on. And there was a giant, giant, hue and cry about it because one of the major donors to the Art Gallery of Ontario had an atrium named after him in part of this old historic building, and the Gehry design contemplated demolishing that part of the building.
And so he went nuts, I'm going to resign...and you can understand it. Like, I don't blame him for it. And everybody was like, oh, my God, there's a crisis here. Like, you know, how is this going to be resolved? And Frank Gehry just came out and said, that was just a prototype. I had to figure out, you know, kind of what it did for us, and what the problems were. This is a really big problem here on that, so we just ain't going to do that. And everybody was like, oh, my God.
Sohrab:
That's possible?
Roger:
Yeah, yeah, that he's not just saying, oh, you know, screw you, you're not artistic. It is part of Frank Gehry's process, is just to do a whole bunch of iterations, where he tests it out with the people, you know, people who would, you know, be visitors to the gallery, in this case kind of a donor... And I would argue one of the reasons why Frank Gehry has all these famous buildings is not only about the artifact...they are brilliant, you know, the Disney Concert Hall, the Bilbao, the AGO, all these others, it's I gained a greater insight into his process, which is a process of building people's confidence in the artifact. And in this case, making sure that along the way, there was an important constituency that was alienated entirely by the concept, was an important part of, you know, a public, charitably funded kind of building, you know? That's a complicated intervention design.
So thinking about that, like, and I think Frank Gehry's a good example of it, you would think he's all about the artifact...
Sohrab:
Well, I would add to what you just mentioned. So I like the point, right, in addition to the artifact, his interventions resulted in people building confidence, and that created some kind of buy-in, right?
Roger:
Yep.
Sohrab: I would also add, the artifact itself, not only the adoption of the artifact, is a result of that process.
Roger:
Yes.
Sohrab: Because through the rapid prototyping that he does, right, or the prototypes that he built, the outcry that he creates, or basically that outcry is also one sort of feedback...
Roger:
Yes
Sohrab:
...he also learns. And that learning informs the decisions in terms of the next prototype, and the next prototype. And through that, he not only builds the comfort and the confidence in other people to adopt the product, the buildings that he's creating, but also makes that product that he ultimately creates become something that is actually based on what more and more of his customers or users of that product actually need.
And we see the same thing when we talk to people that are in product management, right? The ones that constantly build or have conversations with their users, they not only build the confidence in the user to adopt that product, as they see that their voice matters, that they're being involved in the evolution of the product, they also build better products.
Roger:
Yes
Sohrab: So it's not like they were going to build that product anyway. No, that product was fundamentally shaped by the feedback they received from users early on. And when we think about organizational change, and you talk about corporate strategy in that chapter as well, and I want to go back to that...
Roger:
Yeah, before...
Sohrab:
Yeah, go ahead.
Embracing Falsificationism: The Art of Unlocking Innovation Through Continuous Feedback and Agile Adoption
Roger:
...you know, just wait, because you spurred me to think of something important, and I just want to add that in, which is, and you learn about what steps that user has to take to adopt, right? So I think you not only make the product better, you get hints for what we've got to do. And I'll give you another example.
So, I had the great pleasure of consulting on strategy to Herman Miller during the time...this is the office furniture company, for people who don't know, that created the Aeron Chair, which is basically the best-selling and most famous chair in the history of office furniture. It's the one with the mesh back, and now all office chairs look like an Aeron Chair, because they changed it, they changed the perception of the industry. But when they were doing user clinics during the development of it, they got some really negative feedback from users, and the feedback was, how dare you waste our time, bringing us in to sit on and give feedback on an unfinished chair? And they're like, what? Well, their perception of an office chair was it had padding and leather, right, seats, and the Aeron, of course, has a mesh background, they thought this was the skeleton of a chair, not the chair, right?
But then, when they got over that, they were like, do you like it? Oh, my God, this is so much more comfortable...because it had breakthrough lumbar support, and the mesh was to make sure you're backed and did not get all sweaty while you were sitting in the chair, the adjustability was like nothing that had ever happened before ergonomically, so it was a total breakthrough. So when they got over that, and they sat in it, they said, this is a fantastic chair. But what Herman Miller learned, right, is that we've got this challenge now. We know it's a great chair, they love the chair, but the first reaction is, it isn't a chair, right? It's so freakish looking... And so, in the release of the chair, they knew what they had to do to help the user get over their initial 'this is so frame-breaking, it makes us nervous'.
So that's the other payoff, Sohrab, the product gets better, you build more confidence in your organization to go ahead with it, and you get clues as to what journey the user has to go through to adopt this new thing. And so the way they sold and marketed it and whatever took into account those people who said, it's an unfinished product.
Sohrab:
It's an unfinished product.
Roger:
They could joke about that. Like, they could kind of say, while this may not feel like it and look like it, the reason it's this way is it's so much better for you not to have all that padding that'll just make your back...right? So, they knew how to sell it. So, just one more benefit of having [crosstalk 00:29:24.486] intervention design.
Sohrab:
I think it's brilliant. Yeah, I think that's brilliant, because this is then exactly about the adoption, about the messaging that you apply in your marketing material, how you lead conversations when you're at an exhibition, how you create your sales... Like, all of those things are informed by this one clue from this user clinic.
Now, may I ask, Roger, what year was that? Because...yeah, go ahead.
Roger:
1993 or 1994. It was released in one of those two years
Sohrab:
Yeah, 1993, 1994. So back then, and maybe even before that, that company, Herman Miller, was already doing user clinics, right?
Roger:
Yes. Yes.
Sohrab:
And the reason I ask this is to this date, and I get to work with a lot of organizations, many organizations don't have anything similar to this. So one element in Scrum, one of those frameworks around agile that I teach about, is a so-called sprint review. Which at the end of a short iteration, basically a sprint, you bring in ideally not only internal stakeholders, but also external stakeholders. And there are so few companies that do this on a regular basis, it is actually the exception if we find an organization doing this. But at the same time, you're saying Herman Miller was doing this in 1993, 1994, maybe even before that, and through that intervention, they got those clues to make this, as you mentioned, maybe the most successful office chair in history, right?
Roger:
Yes. Yes. And this links, Sohrab, to something we talked in one of the previous presentations about, this whole notion of justificationism versus falsificationism.
Sohrab:
Yes.
Roger:
So you would not bring in customers early on if you were a justificationist, because you'd say, if I just think hard enough about this problem, I'll come to the perfect answer, and then I can convince everybody of the perfection of my answer, and I will be so confident of my answer because I've thought so hard about it. That is this, I can find the absolute right answer if I work long and hard enough at it, and then when I have the right answer, I just have to defeat all opposition.
The falsificationist view says there are no right answers, there are only better ones and worse ones. And so, we're on a journey where even if we create the Aeron Chair, which is the most successful chair in the history of office furniture, eh, there'll be another one that's kind of even better. And since we're just on a journey here to make better, why not get the users in on that journey early on, because they'll help us make it better, and we won't feel offended if they say...right? The justificationist will be very offended when you show it to somebody and they say, well, what about that? The falsificationist will say, seriously, if we fix that, you'd feel even better about the chair? This is so cool, right? They view that feedback as sort of manna from heaven. It's a gift.
And so, I think to have somebody adopt Scrum agile, in some sense you have to help them understand that falsificationism is a better way to become better over time. And the key thing to not...you just cannot take offense at is somebody saying, well, what about this, couldn't you do that, wouldn't it be possible to do this, right? Can't we make it a little bit harder, or softer, or quicker, or whatever? Because you're not going to want to do agile, in my view, if you're a justificationist.
Sohrab:
Oh, it's a nightmare.
Roger:
Yes, it's a nightmare, it's painful, it's kind of hurtful to you. So it's sort of this fundamental reframing, from hurtful criticism, to a gift. But maybe...you're the agile expert, you probably have seen that in action, yeah.
Sohrab:
No, I 100% agree. I 100% agree. Now the question is, and we'll go into corporate strategy a bit later, now the question is, I think it's not only about making them understand that falsificationism is, in this case, better than justificationism, it's also making them feel comfortable becoming a falsificationist.
Roger:
Yes.
Sohrab:
Because as you were demonstrating the reactions of a justificationist and a falsificationist to feedback, the one, like, super excited, oh, thank you, if it's just that...and the other one like, oh, yeah... And helping them make that transition, helping them become comfortable with not only asking for feedback, but appreciating especially critical feedback. So, a lot of people are okay asking for feedback when they feel comfortable that that feedback will be good, right?
Roger:
Yes. Yeah.
Sohrab:
You get a tap on your shoulder from your teacher, like, oh, yeah, I did something great. But it is actually the art of asking for feedback when you believe you're wrong.
Roger:
Yes. Yeah.
Sohrab:
And you want to be sure that you're wrong, but you want to understand why you're wrong, right? And having that courage, going out there, getting that feedback, building on top of that, getting out there again, right, not letting yourself get knocked out, but actually doing this over and over again, this is the hard stuff. And I think this is also why so few organizations manage to consistently innovate, right? There's not that many Apples out there.
Roger:
Yes. No, no, no. Now, here's a question for you, from your long agile tradition. I can imagine a problematic situation that would be as follows, you convince a software development team to do agile, and they do agile, but their bosses...and so they become sort of falsificationism and whatever, but their bosses are highly justificationist. Does that ever create kind of a problem?
Sohrab:
Yeah. All the time.
Roger:
Because when they go forward, then the bosses are, so you're telling me this is perfect, right? This is as good as it can possibly kind of be? And they're saying, no, no, it's the best it can be today, and it'll be better a year from now, as we get more feedback. And then the boss is saying, so you haven't brought me perfect stuff? Is that what you're telling me? And then they get into a food fight. Does that happen, or no?
Sohrab:
Oh, all the time. All the time.
Roger:
Okay.
Sohrab:
So, we have to work throughout the organization. And the example you brought up earlier, with Herman Miller, the customer is getting in there, like, why you brought us here to give feedback on something that's unfinished? And I mean, in their case, it was finished, it just wasn't...the customer thought it was unfinished.
Now, when we're working in an agile way, and we build products in small increments, right, those are by definition unfinished products. I mean, that feature set in itself is finished, right, we call this done, but the whole product isn't finished. And we ask the main internal stakeholders to get in there to give us feedback, for many of them, initially, that's completely irritating, why are you wasting my time? It is clear what we want, why should I even provide feedback?
Roger:
Ah, okay. Okay.
Sohrab:
I told you what I want, right? And then you engage in conversations. And what I always do is I ask them, how often have you built products that over time had to change in scope, cost way more than you initially estimated, and took much more time than you thought, right? Or on the other hand, how often have you built products where you're fixed-scope, fixed-time, fixed-budget, and actually turned out to be correct? And they're like, uhh, never.
Roger:
Uh...yeah.
Sohrab:
And that's good. But that's good, you know? At least we're honest to each other. Now let's try to fix this, right? Everything we do here is a framework with the intention to fix exactly that problem.
Roger:
Yes.
Sohrab:
Now, what we need for that is an approach where we systematically and frequently reduce uncertainty, and one part of reducing uncertainty is your early involvement as a stakeholder.
Roger:
Yes.
Sohrab:
We don't want this to be a black box for you, we want you to be part of that development. If you can't make the time, let's figure out together how we can include your feedback. But it is tremendously important that we get your feedback, because only through that will we build a better product, in a better way. It might turn out to be something else than we initially thought because we're learning, right? You remember those change requests on all of those other projects? They're like, yeah, I do. I'm like, all right, so let's do this together, right? We don't want to go against you, we want to do something that's also in your favor. And when I articulate it this way, not 100% of the time, but in many cases, people realize, all right, all of this blah, blah around certain, like, new rows and all, this has the intention to fix a problem that I am perfectly aware of, I was just not aware of that particular solution. So, let's give it a shot.
Roger:
Yeah. I mean, that resonates so much with me, and it's interesting, the degree to which I've embedded that in the process that I use to do strategy. So I say, if you're a manager, and let's just think between management and the board, but this could be the same between a business unit president and a corporate president. So let's say, so I say if you're a CEO, and you go to the board with your strategy and say, here's my strategy, I'd like your approval, I say, A, you're nuts and B, you deserve what you get, right? What you should instead be doing at the very start of the strategy process is to go to the board and say, we're about to embark on a strategy process. Here are the big problems that we want this strategy to address, and we want to get solutions to these as part of our strategy. Board of directors, are those problems that you think are the top problems that we should be working on? If not, what are other ones that you would put at a higher priority? Have that conversation, and then come out of that board meeting agreed, okay, so the strategy work is going to work at these problems. Nothing about what the answers are going to be, just working these problems, right?
Then I say, you've got to come back when you have possibilities. To solve problem one, we could do A, B, or C. To solve problem two, we could do A, B, or C, D. And say to the board, those are the possibilities that are now under consideration. If you're totally allergic to any one of those, tell us now, because we won't do any more work on it. And if we're missing a potential solution that you see, but we don't see, tell us now, because we'll work on it, right? Then you go away and work on them, and you come back and say, well, here are the things about each of them that we think are potential problem areas, that might knock this out. And here's the kind of testing that we plan to do on that, the analysis and testing work that we plan to do to see whether this is viable or not. Do you think of those as tests that would kind of convince you, yes or no on this, or not? Get their feedback on that. Then you go away and do all this enormous amount of research and work and testing and whatever, and then you come back, and you're now with the board the fourth time, essentially, in the cycle, and they're like, yeah, yeah, yeah, okay, no, I remember that...I mean, yeah, that was a problem, that was a possibility, yep, we were all worried about this. You've gone out and done some consumer research, yeah, I feel more comfortable, go... Instead of, well, have you thought about this, have you thought about that? Oh, no, no, I'm not really comfortable with that.
So in a similar sort of way, you need to build that user feedback. Like, who's the user of your strategy? The board, right? Unless that user buys your strategy, your strategy is useless, because it ain't ever going to happen. Get their input at least those four times before the final one. That's what I tell all these CEOs who are like, oh, God, I couldn't get it. We wanted to do this thing, but the board said no, or the board kept us going back, rework, rework, rework, right? Like, think about it. You get to the end, you've done six or nine months worth of strategy work, and the board says, yeah, but have you thought about this? What about that? What's that, what would Deming call that? Rework. And it takes time, and money.
Sohrab:
Yeah. And it's not only that you need to get input, you need to get input in the way that you laid it out, right?
Roger:
Yes.
Sohrab:
Start with the... Because if you go, you could say, oh, we're going to get feedback from the board. So first session, here's the perfect strategy, with all the research back. The board is like, I don't like this, I don't like that, I don't like that, I don't like that. Next session, again you spend, like €1 million with McKinsey, even more like [inaudible 00:43:08.807] the board, again, doesn't...you're not learning.
Roger:
Right. Yeah.
Sohrab:
But the way you laid it out, let's start with the problem. So in the case of product development, it's again, let's start with the customer group that we want to address, and the problems that they're facing. I always say when I work with teams of product managers or product owners, how we refer to them in the agile space, I say, if you're an inch apart on the vision of your product, which includes the customer, the need that they have, the product with its, like, most important features, not in detail, and how it contributes to our organization's strategy, right, how it aligns with that, if you don't align with your stakeholders on that, so if you're an inch apart, you will end up miles apart on the solution. It's not good. Not good for you, not good for the stakeholder, not good for the team who worked on this, not good for the customer. Nobody's going to be happy. So, you need to create alignment. And in the case of corporate strategy, as you were laying it out, I was like, if you're an inch apart on the problems, right, you will end up miles apart on the strategy.
Roger:
Yes. Yes.
Sohrab:
You really need to build the alignment on the problem first, good. Then go to the next thing, then go to the next thing, then go... It might take three, it might take four, it might take five sessions, but at least each of those board of directors and CEO sessions is a productive one, moving the organization forward.
I was on a board of directors myself for three years, and every time we asked the CEO to come up with a strategy, they immediately came up with a strategy in the next meeting, with a full strategy, not a set of problems that they had defined. And there were always, several board of directors, including myself sometimes, who didn't like that strategy. Now, what happens next board meeting, we get presented a completely new strategy, right?
Roger:
Another one, that's right.
Sohrab:
Again, without the questions. And now, as you were walking us through this, walking me through it, I was like, oh man, that approach would have been so helpful back then. And it is in total alignment with what we teach about product development, it is the design of the intervention that is as important as the innovation then itself, right? That's why you named it this way.
Roger:
Yeah. And one of the interesting things, Sohrab, that I find, is that often when I explain this to a CEO or a management team, they are extremely nervous. They'll say, oh, but if we don't come with something really great, right, the board's going to think we're lazy, kind of can't do our own work, we're making them do their work for them, and so they'll think of us badly if we do this. And I have to say, just try a little bit of this. Just let's...you don't have to go all in, but let's just try a little bit, and see what their reaction is.
And so I had this fun thing, this was about a year and a half ago, a CEO had just taken over, this was his first board meeting. The board had sort of, you know, kind of ousted the previous person, or at least got them out faster than they thought, and they were really snarly and not happy, and I convinced the guy to try and have this kind of conversation with the board. Literally, literally his feedback was, this was the best...the director feedback, this was the best board meeting we've "ever had." Ever had. So, he was happy to continue with that because again, it's the opposite of what people think. People think the board wants everything buttoned up. No. The board wants to have a productive role in which their skills and capabilities are utilized to the maximum, not utilized to the minimum. Like, why were you on that board? To be useless? No. You wanted to be on that board to be useful. And if they're going to say, the only useful thing you can do is to be like a trained seal and nod your head, right, you know, who wants to be on that board, right? And you want to be a thinking person.
But it's, again, interesting how the alignment here between a good strategy process and a good agile process is... I find every time I talk to you, I find that there's a tight connection there.
Sohrab:
It is so closely connected. Now, I would build on top of what you just said. I mean that newly hired CEO not feeling comfortable themselves, right, because of the uncertainty to do this in the board meeting, how can they design that intervention? My recommendation to them would now be, hey, you don't have to wait until the board meeting. You can have one-on-ones with the chairman of the board, the vice chair of the board, the different other board members. Ask them what did they like about previous board meetings, present them what you want to do in this board meeting, get their feedback even earlier, right?
Roger:
Yeah. Yeah.
Sohrab:
They are also prepared, they don't feel suddenly surprised. Because the element of surprise, I mean in case of a surprise party, it's great, but in other cases, in the business context, sometimes it makes us push this thing away.
Roger:
Absolutely.
Sohrab:
So if you take that out of the picture because you've involved them early on in a one-on-one, they know what's coming, probably it's going to be even better. You've created another intervention to make your innovation, in this case, successful.
Roger:
Yes. You got it.
Sohrab:
Yeah.
Roger:
But again, it is the duality, right? If you're really good at your craft, it's because you produce good artifacts. But don't let that obsess you, think equally intervention, artifact, intervention, artifact. And then the very best thing you can do is to have the intervention. As you identified earlier, the intervention that you use actually makes the artifact better than it would have otherwise been. Like, that's the win-win box, right? The lose-lose box is you have a crappy intervention, that makes sure that the artifact goes nowhere. That's the lose-lose box. The win-win box is your intervention approach both makes the artifact better, and ensures that it will go to market and be successful.
Empowering Decentralized Decisions: Bridging Strategy and Execution for Corporate Success
Sohrab:
And be successful. Now in the case of strategy, I want to, like, build this a bit further.
Roger:
Yeah.
Sohrab:
You mentioned your ultimate user, the one that pays for the strategy, is the board. I agree with you. Now in the case of the strategy, the implementation has to be done by someone else. And that's the same case for many products. You have someone that buys it, but you have other people that use it, like enterprise software.
Roger:
Yep. Yep.
Sohrab:
Now, you laid out the process...we're going to stick to strategy. You laid out the process, how do we get the board involved, how do we get the board to buy in, how do we make the board happy? When do we move towards thinking about the implementation of our strategy? Which is, as based on our previous conversation, execution and strategy, the same thing, how do we get all the other people in charge of those daily strategies, being the execution, how do we get them on board? How do we make it comfortable for them, especially when it's something completely new, unknown, uncertain?
Roger:
Yeah. I would say that...I'd break it into two pieces, Sohrab. One is while you're doing what you're doing with the board, you should be doing... And so, this is the corporate team that's doing this with the board, the corporate team should be doing the same thing with the next team down. Here are the problems that we're trying to solve, that we think are most important to solve. Are they the important things that you feel are most important to solve?
So let's just say, for the sake of argument, it's a diversified company, and you've got a top management team, and then the next is the business unit leadership teams. And let's say, I don't know, you've got five business units, sort of five business unit leadership teams. I'd be going down to them at the same time that I'm going to the board, and saying, what do you think of the problems? And I'd be coming back to them and saying, what do you think of these possibilities? And I'd be coming back to them and saying, do you think the analysis that we're doing to try and resolve these things is the right analysis or the wrong analysis? So you toggle up, and toggle down. Now, can you toggle down forever? No, right? But at least toggle kind of one level down, and take the feedback of all of them. Like, it could be that, you know, business unit three says that doesn't matter a whit to us, and this other thing that matters enormously to us, you're not even talking about at all, you didn't mention it. Well, then you've got early warning. Like, think what would happen otherwise. You go ahead, you do it, you come in and business unit president three says, you haven't dealt at all with my problem... So toggle up, toggle down.
But then you have to have in your kind of DNA, you develop the notion that after we make choices at this level, you're going to need to make a set of choices at your level. We are not making all the choices for you. We're making choices that set the context for your choices, and you should repeat the same thing. So let's say you are that business unit president three, you should be able to say, the CEO should be able to say to them, okay, you know, we talked to you about this strategy, and this is the choice we made, this is the implication for the choices you need to make. You need to make a set of choices in division three that reinforces the decisions we've made. And I'd like you to treat this the way we've treated it, so you should be asking us whether the problems you're trying to solve are the problems we want you to solve. You should be asking the people below you that, you should be going back and forth, and you should be making a set of choices that are independent of ours in the sense that they're your choices, not our choices, but they fit with and reinforce my choices, because you're part of a corporation, and it all has to fit together. So you establish the notion that they are choosers, not implementers, and ask them essentially to follow the model that you've illustrated for consultation consideration, before you go racing off and doing a bunch of work and deciding.
Sohrab:
Yeah, it's really cool. So, you also model being a falsificationist.
Roger:
Yes.
Sohrab:
And they just have to do the same thing what you did, right? And you can probably coach them even on how to do this going forward so they do it, the next level does it, the next level does it. And that's again connecting to our previous conversation, that makes strategy and execution the same thing.
Roger:
Yes.
Sohrab:
Because it's just making choices or decisions on different levels, but it's still about making decisions, right, that determine what you offer.
Roger:
Yep. Yep, no, no, and it's consistent with what you've always told me about agile. Like you take an agile team that's building a piece of software that's going to integrate into a big software suite. Well, is that group building that piece of software making no choices? And if the answer is yes, they're making no choices at all, then call it execution. But last time I checked, they're making all sorts of choices, well, we can do it this way, we can do it this way, this would enable it to run faster, this would make it more robust...which is more important in this situation? And we could make it plug compatible in this way, using this interface, or that interface, choices, choices, choices, choices, choices, there's a million choices there they're making.
And this is why, again, you're very convincing me on this, it is decentralized. So if you do not have a process that accepts and embraces the fact that it is in truth decentralized, then bad things are going to happen. And I think the modern corporation, you know, in some sense, is living in a world where the choice requirements are highly decentralized, and they try to centralize, and it's delusional.
Sohrab:
Yeah. Well, while we're...
Roger:
And the capital markets are noticing it, right? The capital markets, what have the capital markets been doing over the last 20 years? It's been breaking up big companies, because these companies are delusional. They think that they can have centralized choices, and the capital markets are saying, well, you aren't demonstrating that you can, your performance sucks, and we're going to split you apart. Even, you know, fabled General Electric, healthcare is now gone, you know, power and aviation are going to be split up, there's going to be no General Electric left. Why? Because it was delusional.
Sohrab:
Yeah. Unless you set it up differently, right?
Roger:
Yes.
Sohrab:
As companies like Haier are demonstrating out there...I mean, even a company like Amazon demonstrates this, and demonstrates this in many cases, Apple demonstrates this in many cases, where centrally you create alignment, but that alignment allows for decentralized decision making.
Roger:
Yes. Yeah.
Beyond Knowledge Workers: Embracing Choice Creators and Decision Makers in the Modern Organization
Sohrab:
And while you were speaking, I was thinking, like, we need to maybe change the wording that we use for knowledge workers.
Roger:
Yes.
Sohrab:
Because knowledge workers, they're not only people that apply their knowledge to do certain things, they're actually choice creators and decision makers.
Roger:
Yes.
Sohrab: That's what they are. And it doesn't matter whether they have an academic degree or not, right, in today's world, maybe, but even if you are like a blue-collar worker, it doesn't matter, right? All of those, we want every person in an organization to be someone that creates choices based on the problems that they see, and makes decisions to address those problems, right? That's what we want. And we want them to do this systematically, we want them to do this in alignment with the goals of the organizations, and we want them to do this in a way that also works with all the other business units and individuals that are doing this. So, collaboration also a key thing. So just calling them knowledge workers probably doesn't make it any more justice.
Roger: Yeah, no, no, I mean, and it's a good...and it's a good example of how kind of knowledge advances, right? Which is, you know, Peter Drucker, the most important business thinker in history, in my view, had coined the term in 1956, "knowledge worker," and that's probably, like, just the idea of saying workers have changed, and it's about knowledge, was a huge, huge, innovative thought at the time. But now you're saying, why do we...do we have to leave it at that? Or has our understanding of what knowledge workers do advanced in the interim period enough that we can say, we have to, like, have a more specific term about what they do? And so I think it's the advance of knowledge on this subject, we know what they do to a greater extent, and can characterize that usefully. And I do think it is choice makers.
I mean, I've always used it, I've always sort of used the term, I've used it when people used to ask me what I did, I said I'm engaged in strategic choice architecture. I help people, just like an architect. They want a building, people want a choice, and I help them figure out how to make that happen. In some sense, everybody is a choice architect, right, and they're either good at it or bad at it. They either make really, really grand, gigantic buildings, or they make a little house, lower down in the organization. You might work on the architecture of a room, right, or even part of a room, but you still have to make that part of the room fit in the house. You're designing bathrooms, well, it's got to fit, or a kitchen's got to fit. And there's people at the top of the organization who say, I have to figure out not only kind of the house, but on which lot we're going to build it, in which county, in which territory, right?
So the architecture is on different subjects, but they all are kind of nested like a Matryoshka doll. They're kind of nested within each other, and figuring out how to make sure that people understand that that's their job, and coordinate them together, that's the modern challenge of management in the large corporation.
Sohrab:
Yeah. Yeah, I think there's a lot of work to be done out there, Roger...
Roger:
I agree. I agree.
Sohrab:
...in helping organizations do that. So as we're at the end of our time box, as usual, thank you so much for sharing your insights. We went, I think, way beyond the initial topic of innovation. I mean, it was still connected to this, because it was all about these interventions. And we can see that this can be applied in so many different areas, not only in products where we traditionally think about innovation, but in corporate strategy, and how we develop our organizations, all of those areas.
So thank you, Roger. Very much looking forward to our next conversation. Not sure yet what the topic will be, but this book here, "A New Way to Think" definitely has enough topics in there where we'll find one which we will debate on. Thank you so much.
Roger:
Thank you. This is always a pleasure, Sohrab.
