A new way to think about strategy and business | Roger Martin

if you're taking a sample from the past it is not representative of what you're trying to understand which is the future and so what Aristotle said in that part of the world that part of the world you must imagine possibilities and choose the one for which the most compelling argument can be made [Music] Alex cleances and today we're back with Roger Martin who's one of the leading strategy thinkers in the world Consulting with companies like Procter and Gamble with Lego and with Ford and who's the author of 12 books including playing to win how strategy

really works and today we'll be talking about the concepts from his latest book a new way to think hello and welcome back Roger it's great to be back thank you for having me again yeah I'm excited about this one because there's so much content in these conversations I really really enjoy them but let's get straight into it this book is a little bit different to the rest of your books it's a bit more high level it's a bit more snack as you go but where did you get the inspiration for this book well I I

got inspiration in part I should give credit where credits to my hbr editor David Champion with whom I've done my last like 23 or so hbr articles sort of noted that I had a theme that went across a bunch of Articles he said you have to sort of step back and say kind of really Roger a bunch of your articles are about the prevalence of an existing model the missing way of conceptualizing thinking about an issue where you say here's why even though it's dominant it doesn't really work and here would be another way a

better way to think about it uh and he said you know what we should write a book on that theme and and I was motivated what is one of those things where you know you know what a good idea is one that sounds obvious after after and only after you heard it so it was sort of like gee David that sounds like a great idea because it does sort of make me sad when I see Executives managers and anybody at any level kind of swearing almost this undying feels to a model even if it doesn't

work and they sort of blame themselves they say oh well I mustn't have put enough effort into it I mustn't have tried it hard enough I mustn't have done it just quite right instead of stepping back and saying maybe it just doesn't work right maybe this is a dumb way of of uh Prosecuting this issue or or uh question so I wanted to give encouragement to that in general and then give a bunch of specific examples and you're right it is snack if you go in the sense that you can read the 14 chapters in

any order you you uh please and that is a departure all my other books are here's a theme that I developed throughout the book here they're more they're more examples of the phenomena 14 different examples of this phenomenon of the dominant model I don't think works and this is really really good right because what's interesting is that you can choose the area to think about first but before we go into some of the examples yeah choose 14 models right now you're one of the leading strategy thinkers in the world so I'm sure you've seen a

lot of kind of areas where you can see that the way is outdated but so before we go into some of the models why do you think the current models are outdated is it because they started so long ago and they haven't changed or is it for some other reason you know I I think it's more for another reason than the outdatedness I think a bunch of them were always a dumb idea right um so so it I I could say it could say some have have maybe the the river's been drained somewhat and uh

or water levels down and some more rocks are showing but others right like you should the purpose of the company should be explicitly to increase shareholder value or maximize shareholder value that's been around only since really the late 70s and it really took off in the 80s and during its entire time it was wrong right uh it just sounded like like it was the classic seemed like a good idea at the time uh but as as you get more practice with watching its results that's I think the temporal aspect of it it's not that the

model it was it was less and less suitable for the landscape it was more that as the data became more apparent it was easier to see that's a dumb model it just doesn't work I think that's more what happened and what's interesting is that you talk in your book about the fact that if you actually analyze the performance of some of these models you wouldn't be doing it but there isn't a lot of analysis of these models it's just a commonly accepted approach yeah and how do you think these things become commonly accepted and they

don't have proof that they actually are better than something else typically they've gotten got a sort of a sensible sounding story behind them right we should align the interests of managers and shareholders as stock based compensation that way if shareholders do well so will Executives right that sounds good or we should separate our activities into strategy that's formulating the decision and then executing that sounds a whole lot like the human body our mind thinks and our arms and legs do and so so each of them I think has a story you know this is a

big complicated organization unless unless we make sure we control and coordinate from on top it'll all kind of blow apart and be a you know uh castanado as they would see in Italy um and um and So within the kernel of each of the existing models there's sort of a sensible sounding story but if you probe into the story and ask well how does that actually work what you find out is for example stock based compensation puts shareholders and Management's interest directly at odds with one another it's supposed to align them but it does the

opposite but you only sort of figure that out by saying let me step back for a second here and not assume that this is an awesome model and just ask does it do the thing that it was supposed to do or not um yeah so I think I'll quickly go through the models there's some which I'll I prefer than others but but that's funny because you prefer my friend but we'll see if we can go through them all and sure but what because I'm just trying to get the context for the audience yes because what

it seems like is that there's a general agreement for how things should work and then people who learn these ideas at school have to do this for 10 15 20 years before they get to the level of say Mastery that they can start questioning a model right so it's a really interesting Dynamic that we find ourselves in that it's almost not the blind that are letting the blind but it's like you're taught the thing that the person ahead of you has assumed is correct and it's like it's perpetuated um Through Time right and so I

think it is challenging it's sort of a self-sealing yeah and it's sort of it's sort of self-sealing loop too it's sort of like well my boss is more senior than me and he controls my you know progress and whatever and this is the model that he sure is right so I will use that model it's like nobody gets fired for buying IBM it's sort of well I don't get fired for using my my boss's model then I become more practiced with that model and then it becomes the easiest thing for for me to do and

and if it's not working quite the way I thought well I'm just following boss's instructions so all of those things I think do again cause the perpetuation of something that that doesn't deserve it it didn't it didn't earn it fair and square so I I hadn't thought about it that way before Alex but I think I you you raised it and I think you're right that that that there is that kind of self-perpetuating cycle to these uh to these models yeah and it feels like it takes some courage to go against these proven models because

at least if you follow the proven models it's like hiring IBM can't get fired for that you can get fired for flipping something on its head and going let's go that way but what's interesting is that like you know all the case studies of all of the best CEOs have done the best things in the world have done it against status quo oh wow you know CEO of um the Chrysler Corporation he changed everything and because of that like he was a success story but then there's all the other car companies that still existed everyone

in those companies still worked everyone in those companies still had a career you know so but I digress um let's go but it's I I just think you're you're making a very uh you're making a very good point which uh which is which is that it's it's easier the book in some sense is designed to help that problem right so that so this is to say well here's an argument against that that dominant model and hopefully you know uh argument from a credible credible management thinker who will will give you some if you will sort

of top cover uh to to give it a whirl so you're not doing it 100 on your own so that was part of the rationale of the book to help people ever have more support for taking dead aim at the existing models that don't work yeah and that's good because it does require somebody like you to put some credibility behind some of these ideas so okay let's start to jump around and I'm not going to do them in any particular order because that's boring I'm going to go in different places um the customer in an

organization is level below them in the organization I think that you talk about start um it starts with the customer at the front line and basically as you go up in the hierarchy of an organization of a corporate structure the customer is the next level up or is the next level down is that right so the next level explain that one please sure well generally the view of of a big sort of multi-business Corporation and most big companies now are in a bunch of businesses would be that it's the job of the higher uh up

levels of the company to control and coordinate the ones below and so the ones below are there or have to report back and how we're doing and making sure they're they're doing what they're they're supposed to and I say that's just the model for in my view failure and that's one of the reasons why so many big companies blow up or get torn apart by by uh by Raiders instead it should be flipped right which is which is I believe that corporations at the corporate level don't really compete in the minds of the customers right

so you don't ask that was the question should I by Dasani by Coca-Cola or Aquafina by PepsiCo right I don't know any consumer who says that they're just they're just playing those two off against do I like the taste of this do I is this one more available there's a consistency of of this one so competition really takes place at what I call the coal phase that's the that's the cool face of competition so the only thing a higher level at Pepsi or Coke can do that's actually useful is help the business at the coal

face compete better right compete more so if Coca-Cola's got better vending machine uh networks so it can have a it can have Dasani within an arm's length of you more more times than Aquafina it's helped you it's helped you make yourself be more competitive in the in the true market and so any level that's above Dasani should be asking itself the question am I helping Dasani win not am I controlling and coordinating Dasani that's that's that's just not very useful right are you helping and if you can't help you should be gotten rid of right

if there's a level above uh that that is not helpful at all you should just get get rid of it uh and only have levels above where competition takes place that explicitly help the level below and if you have multiple uh levels if it's if it's you know if it's uh Coca-Cola Australia uh or Coca-Cola uh bottle water business Australia then then Australia's Got to be helpful to the modern Water Business uh the global has got to be helpful to Australia the beverage business in general business unit has to be helpful to to Global bottled

water which has to be helpful to Australia bottled water and that's just generally not how those people think they say I'm the boss they just got to be the boss exactly and they should obey my orders but as I say that's not what makes a company competitive what makes the company competitive is Dasani beating Aquafina what did you do to help that uh happen or Coke beating Coca-Cola or coco light beating Pepsi light that's how you have to think about it the opposite way around yeah and it's just more about just ensuring that every I

guess hierarchical in are the organization is thinking about the customer but they can't think about the customer at the coal face because there could be six levels away or three levels away so it's just about the next level down ensuring that they are getting the most support strategically and through resources and through anything else to ensure that that can be passed all the way down and sometimes that doesn't work right because sometimes it's more just well there's levels of let's say um the middle management that may not be adding the value that the customers see

absolutely and and that's again I think why why scale is not as much of an advantage in the business world as you'd expect right you'd expect scale economies to be more determinative last advantages last longer uh and I think they they don't because what happens is you know bad bad behavior where it is control and coordination is top of mind for uh for people uh near the top rather than helping out is is uh what the the jobs uh is of the people at top I mean I there's some things about Jack Walsh's career the

late Jack Walsh's career that I like and uh and others that I don't like so much but one of the things I did like is he very much embodied that he embodied that what can I do to help the businesses and all the businesses wanted him wanted him to come and help them sell because he was an awesome uh salesman just awesome uh uh salesman well that's a mini example of I'm here to help you compete not I'm here to make sure you're doing what I S what I say so it flips on the head

which is and look there's 14 of this so I'm just like I'd I could spend the whole hour on each one of these so I'm gonna keep going on right the next one is the unconscious habit that's the goal instead of Customer Loyalty let's talk about that one sure if you could sure and and this is this is one where kind of modern science has sort of revealed something that that just wasn't understood before and so so we've long said the thing to do is to engender customer loyalty and that's that's not unimportant and and

what we mean by loyalty is the person feels good enough about a given product or service uh that they say I will go back and be loyal to that it's a conscious decision and what turns out is all the behavioral research of the last 20 years says says the conscious and unconscious have a relationship like the like an iceberg the top the tip and the underneath of the iceberg the unconscious is the below the water line the Consciousness is above it dominates uh the the conscious and so that what that means is you need to

develop a habit because the conscious the unconscious mind loves comfort and familiarity more than anything else so if you've used Apple products the last five five times you bought a bought a PC or a or a or a Smartphone when you're making a decision the next time right and you're and and you wander into a Samsung store your subconscious will literally be screaming at you saying Alex what are you doing what are you doing this other the other one like we know exactly how it's going to work it always works I'm comfortable with using it

and and you're you're going and imagining that something else uh would work uh would uh be as good you're making me nervous please don't do this so the unconscious it drives you without you thinking about it to repeat what you're doing so what what that means is lots of things that are consistent with with with uh loyalty you gotta have an awesome product and an awesome experience and the like but The Habit side of it says be really really careful about changing it right be careful about changing the color if it's a if it's a

consumer package good uh product because the subconscious will be saying well that where's mine where's mine I don't see mine uh here you're making me nervous now um and so don't change the colors don't change the the the the features keep it as consistent as you as you can if you need to change change slowly not super quickly and I have to tell the story of my sports out I'm sort of a sportsaholic and I have a sports app uh that I that I long used and every once in a while those clever people at

my sports app uh which would be an American CBS sports.com would decide they're going to do a refresh and I could put up with it my subconscious hated it because you have different Navigation different look and feel and then okay okay okay but then they did this really big fundament that they trumpeted like crazy so like we've totally redesigned this completely utterly when you say words like that the subconscious is like cringing completely utterly like totally oh my God oh my God and it was such a pain in the ass to to learn the new

navigation that I did what you often do in situations like that I said I said my app is gone that's what my subconscious said it's gone it doesn't matter that it has the same name cbssports.com it's gone and I I went and and then looked at each of the sports apps uh played around with uh with them and made a new decision which was ESPN uh uh so now now on my home screen right on my home screen you will find espn.com uh as my my go-to sports app and so they were trying to engender

loyalty by telling me they're doing all these things for me they're improving it and it'll be awesome and whatever but they broke they snapped my habit and have given up and now espn.com has got to do that screw up in that way for CBS to ever have a chance that's favoring loyalty and features that we believe are about loyalty over habit and that's a loser and I think there's um one example which pops out to me there is Amazon's website Amazon's website it's maybe gotten incrementally better over 25 years but it's kind of the same

as it was 20 years ago right and this is the company it's one of the biggest companies in the world from um Can the market cap perspective they don't have a change in look and feel they've got the same structure the same layout they're not trying to change things and I think we can learn a lot from that and I think you know this applies in so many more places than you know than just an app or a website this could apply to the to the pricing to that's the availability to like you know it's

and this is I think comes back to your previous well two two the previous point that we spoke about about just making sure that all the layers in the organization the customer uh the customer is uh the department or the section um that is below them right because what can happen is that somebody higher up they have an idea absolutely I'm going to change the app I'm going to change the app I'm going to change this thing I love it because of yeah because of something in the ux space or there's some new trend or

there's something else and they change it and then ah that didn't work yeah and the way you should think about it is the reaction of your subconscious is you took away my thing if you change it enough this is the I I referred to this as the Hansel and Gretel effect right you've got to keep the breadcrumbs close enough together so that you can follow the breadcrumbs from the old to the new and if the breadcrumbs are too far apart you know the wicked witch eats you uh is is the problem in and you're right

there are some companies that have done this brilliantly I would say Amazon I would say Facebook how much does it look and feel of the Facebook page changed over time very little as compared to Myspace which they you know we're competing against which changed like crazy it never never stayed stayed constant Google's home page kind of also like if they if they if they created a home page at Amazon like home page it would be a disaster it already hurts me hearing about that right yes yeah because everybody says that's Google that's Google and that

that's comfort and familiarity do not mess with that that's why magazine and newspaper new refreshes tend tend to be disastrous uh and and negative that's why you know there are these you know famous famous cases again uh in the U.S when Tropicana changed its its uh look and feel uh of of the of the packaging it was like an immediate disastrous effect that cannot be explained by loyalty right it's still Tropicana pure Florida orange juice everything is that should not offend loyalty one iota but it offends the subconscious that says where where it you took

it away it nowhere I don't see I don't see my product anywhere and so what if you've got habit going for you the the way I think of that is is you are competing in a 100 meter dash right and all the other competitors start at the start line you start at the 90 meter line the gun goes off who's going to win you will walk across the Finish Line the the 10 meters to the to the finish line and win without working up a sweat no matter how fast they they ran for me that's

where CBS Sports was sitting on the 90-yard line every time that there was a potential competition and they decided unknowing to them because they didn't understand have it they decided why don't we go back to the start line with those other guys like why why if you're a complete and utter glutton for punishment sure but there's no other reason than you know being a glutton for punishment that you would ever do that yeah well the reason was is that that's not what anyone spoke about which is why this book is starting to change that because

you know it's something it would be hard for a lot of people especially you know um the people who are in the first day five to seven years of their say for example to their careers to make these kind of decisions right hey look I've just studied I've just got all these things I've done all these courses I think we should change this now I've been promoted I'm now the GM of the country I have to make some changes yes so I can show that I can get that next promotion and if I just you

know just you know just don't touch it and leave it yeah what have I done right so there's a again there's a courageousness to just to letting it be I think that's part one part two if you're a marketer you know as a marketers love changing things oh absolutely absolutely got to get them to the next step and so what you're saying is just just stay out of their way stay out of their way try not to change too much if you're already successful if you already have market share you know try not to mess

with them is that right is that just like no that's absolutely right and and you bring to mind a a sad episode in my in my life I was uh on the board and and in fact chair of the board for a few years of tennis Canada or the the equivalent of the Australian tennis Federation that runs tennis and we we are super successful uh CEO who and he got uh hired Away by the lawn tennis Association in the UK and we brought in a new CEO and she had a marketing background this is what

triggered me when you said when you said that and she had a marketing background first thing she does is say oh our logo is terribly old-fashioned uh looking and we're going to create a kind of a new logo I've brought in this marketing expert and they spend hundreds of thousands of dollars on on a total Rebrand uh to a logo that bore nothing similar to the to the to the old one and I kept saying in board meetings uh you know this there's there's no rationale for this right other than you feel like doing it

and here's here's the problem but you know no and then she was sacked within within two or three years and it's because she was wasting time and money on making customers kind of more confused rather than rather than feeling all cheery about uh the uh the new uh logo stuff and and I remember when at the board meeting they handed those you know the new swag here's a sweatshirt with it on you know I couldn't take it with me I just left it because I was like this is a horrible error but that was closer

to 10 years ago and some of this Behavioral Science wasn't as well understood and so it's hard to get the board behind the idea of Noah let's stop the brand new CEO from shooting herself in the foot and she shot herself a foot and you know the rest is history tangent and again I knew this was going to be hard to come just to put it all into one episode um but if you have a product and it's like in the top say five or it's um the top product in the category yeah what do

you do then if you want to stay away from changing kind of habits are you just trying to reinforce kind of the brand messages are you just tracking performance and just seeing if things change like if you don't want to mess with people too much in terms of in terms of their habits what are the activities actions that you know a department or you know a section of the company should focus on if they're trying to not really change habits sure the main thing is just to change change habits as kind of slowly and carefully

as possible even if it's major so I give Netflix huge credit of understanding habit right so Netflix starts an existence kind of mailing DVDs to your to your home and then they go to being a being a streaming service whoa that's really different but look at everything else about about Netflix during that period same logo same color uh schemes same way you interacted with them because even before they started shipping you on uh uh you know digitally uh directly to your your uh uh TV you interact with them online and that online interaction didn't change

at all so they understood I believe and I wasn't I wasn't part of the effort or anything but I believe looking at it from outside that they understood that if they're going to make this dramatic change from mailed DVDs to streamed services everything else had to be comfortable and familiar for the for the customer to say okay this makes me a little nervous a little nervous but I like it like it sure as hell is easier than than taking that DVD and having to mail it back to them and all that it sure sounds better

but thank God it's it's Netflix it's the same service the same way they charge me the same website the same look the same deal etc so that is what I would say I would say do the things you have to do competitively to to advance to move forward but do them with an eye to how can we maximize comfort and maximize familiarity while making the shift so Step One is establish uh the unconscious habit and step two be really careful on the things which you change as soon as it's hit a level of success because

at that point it's going to run on its own it's going to go don't mess with it try your best it's like the home page that someone says well this site it really converts well but I've just been looking at it every day for five years it's like stop looking at it it's working don't touch it step away customers like it and you're not the customer so that's a really good um yes yes right you are not the customer that's a very good line Alex yeah and so okay I mean it's important to repeat to

yourself you are not the customer especially senior people in business um who generally what's it called um a confirmation bias right um they look for things that prove the things that they believe but the customers probably not going to be them the majority of the time and I think it takes a very experienced senior leader get to the point that they realize that because in the beginning you think you know everything you're very very confident you know you're you're extremely overconfident and you've just let all these topics you think that's exactly how the world works

and then you need someone like Roger Martin to go you know learning for 20 years you know maybe there's a better way yeah so I think that's um this is a really good chat next point this one is a I think this one is almost a kind of a controversial one but correct me if I'm wrong I think yeah I think it is making decisions that are based on data versus imagination and I think you had a lot of information in here about yeah about the Innovative process so I'd love to talk about this one

now for a bit because sure one loves data an imagination seems to be you know that strange person in the corner you know so that's right with the funny hairstyle and the weird dress yeah no I so the the point of this the of that chapter is is just the limitations of of data and for this uh chapter I go all the way back to uh Aristotle who invented data analytics like people don't realize it but but that came 2500 years ago where he was the first philosopher scientist to to say what I'm up to

is trying to understand the causes of the effects we see and the way to do that is to observe make observation of what's going on to be able to figure out this causes of that so you analyze the data to to prove that this causes that and and and you know his work analytica postiora is sort of the foundation of all science any history of science course would probably he'd read that uh kind of uh first even though people think bacon Newton Descartes Galileo created the scientific method they more accurately formalized the scientific method that

Aristotle uh created but Aristotle as much as people pay attention to analytica fostera in the father of science they don't pay attention to a warning he issued and what he did was he he issued a warning that said this method is only for part of the world and it's only for the part of the world where things cannot be other than they are right so so if I hold a pen in my hand and let go of it what happens it drops I did a drop last week yes did it drop 10 years ago yes

if there were pens around 200 years ago it dropped N2 uh will it drop next week yeah 100 years from now yeah uh Australia yeah Florida yeah that is what uh Aristotle meant by the part of the world where things cannot be other than they are because it's a universal uh permanent Force called gravity that pushes everything down and we could study it and analyze it and figure out that things accelerated 9.8 meters per second squared and and all that good stuff that's going to be around forever the key point though is is that is

that a fundamental premise of data analytics is that the data you're analyzing is a representative of the phenomena you're trying to understand right so you can't go out and say and interview a bunch of a bunch of guys to figure out what people want in their electric vehicle right you know what are people going to want their electric vehicle no that's what guys want if you want to figure out what people will want you better have a random sample of guys and gals uh it's got to be representative and so what Aristotle understood was that

your sample of data and I remember 100 of all data in the face of the planet is from the past as the as of the time you analyze it is from the past that sample is representative of the universe because future data and past data are identical so you can you you can do that and use it but what he said is there's another part of the world it's part of the world where things can be other than they are right if you said I'm going to analyze all the data on smartphone usage in 1999.

right to be able to really understand it going forward you'd say oh usage is non-existent because there are no smartphones now there are 4.4 billion of them that would be what aerosol called If part of the world where things can be other than they are and that's the part of the world where sort of human beings interact with one another and create things and things change and and happen and what the father of science the father of science one of the Geniuses of the entire history of the world said in that part of the world

do not use my scientific method he didn't say oh use it carefully I use it sparingly use it someone he said don't and the entire business world the entire business world has ignored the father of science yet uses this method right it's ironic right we believe in him so much we use his method slavishly but we ignore the user manual where he said for this use it for that don't why why does it make sense well it's because if you're taking a sample from the past right it is not representative of what you're trying to

understand which is the future and so what Aristotle said in that part of the world that part of the world uh you must imagine possibilities and choose the one for which the most compelling argument can be made so the father of science felt that in a big big part of the world and I would argue the dominant part of the world for business that imagination and logically arguing about your ideas back and forth so that so that the best idea emerges that is what management should be there so the modern world has gotten just way

way out into the Wilderness on on this front and it's getting deeper into the Wilderness kind of with every passing day as the coolest thing is data analytics right oh data analytics machine learning all of that no it's just it's utter misuse of a technique and the the ironic thing for me Alex is in business school programs like virtually all MBA programs now would have a required first-year stats course statistics course and that statistics Professor would would you know make it chapter and verse on how you have to have a representative sample your if you

do analysis without a representative sample you'll make terrible mistakes so that's absolutely key to any analysis you do it's got to be representative sample Representative Sam so you walk out of that class and then go into your strategy class or your marketing class or your economics class and you get taught in order to make a strategy decision you've got to analyze the data to in order to make the choice foreign to me right I mean they are teaching the opposite thing back to back it's and and so it's no wonder that Executives out in the

world will say the only good decision is one Based on data analytics it seems it seems that the growth of the Behavioral Science category seems to be the offset to the data analytics category because well from what I understood of it so far right and I'm still kind of not I'm nowhere near like an expert yet right but you know they talk about the fact that you can't there's so many examples in the world of things that didn't make sense until they were launched and oftentimes they are counter-intuitive but they work right the mind is

not a spreadsheet you know like it's complicated it has these kind of the deep and what's it called um the motivations triggers and so on right and so I think I think in our last conversation um you talked about first car the first car if they created that according to the data that have to just make more horses right so there's an area where an after a horse yeah horses what would people what would people ask for a faster horse for sure for sure because they couldn't imagine another way of of transporting yeah I mean

sorry please no no I was just going to say yeah I mean I would say down through human history the the great Innovations came without analysis right without data demonstrating it and there's a great American pregnancies philosopher a really crazy guy but super super smart Charles Sanders purse who who said well no new idea in the history of the world has been proven in advance analytically that's quite a statement right because how many times probably in your career you've had this happen to you've come to your boss and boss boss I got this great new

idea I think it can be huge and your boss says well you know Alex you know that's that's sounds intriguing but uh you don't have you know you don't have the data to show that this will work so if you can just get the data to show and I'll I'll invest in this the boss thinks he or she is doing the right thing being rigorous and would never imagine unless they've read Charles Sanders purse which almost nobody has that they're asking poor Alex to do something that has never been done in the history of the

planet it's just this offhand just get the data right um and that's why that's why I think we have an uh sort of an innovation crisis in the big companies today where they're all saying you know it's two two kids in a garage that have no money no nothing are going to beat us right and that's because the two kids in the garage don't have a bunch of rules about it's all got to be done with uh with data and the big companies say well the board will need a lot of data to be able

to approve this and it's and it's just sad it's just sad to sad to watch they are they are right you know on when it comes to Innovation they're taking out a large shotgun aiming it at their feet you know kind of pulling the trigger and then wondering why their foot is so bloody well you shot it off right that's why yeah it's I think the theme so far of this podcast um is courage because again you know um again this is the book again it's a great book but courage because there's safety in data

in waiting for data oh but the data wasn't there that's why it failed oh okay well everybody just agrees that data is you know the Arbiter right it's um and so it's the deciding for us it's the deciding Force so hey you know cool so I didn't have any data so that was okay and we failed but the data wasn't there versus you know what Apple did with the iPod right or what Tesla did with electric cars right or you know it's like everyone looks at these companies CEOs you change everything and they're so inspired

by them and there's case studies and there's books and they study them and then they go into a job where it's literally the opposite of that right and so what do you think it takes for a company to be able to use imagination to make some decisions and not have too much at risk at the same time because it feels like you hear about the success stories if you don't hear about like everyone um who dies in The wastelands right absolutely no no I I think it's I think it's a very important and valid point

what I'd say is that companies have to get good at the sort of running the process of discovery if you will so I don't think Aristotle would would say imagine possibilities choose the one for which the the uh uh strongest argument can be made and then bet the company on that right what what I think he would say if he was around around today was a lot stupid uh no figure out how you can create data going forward because the the way I think about it is there's a big data problem having to do with

the next 12 months and what's the data problem there isn't any right that's the bad part the good part is in 12 months there will be lots of data about those 12 months right so what you have to do is Imagine possibilities choose the one for which the most uh compelling argument can be made and then figuring out how you can make progress in that direction and the way you make progress is you use your argument to make a forecast of what you think will happen based on your argument your possibility or your argument and

then measure the data right that happens going forward against your forecast and if it is heading in the right direction do a little more invest a little more still if it's heading the wrong direction then you can say well that was the best argument we could come up with but looks like it isn't good enough and then say how can we tweak it so it is it is essentially saying how can we prospectively create a trail of data that helps guide us and navigate us toward what we want to see if instead you just say

well we're going to try something and you don't make a prediction about what you think will happen then you have no idea right whether it was successful or unsuccessful when you do have the data right so so I think it's just shifting it around to say this is risk that we simply if we want to be Innovative we have to take on but let's take it on in the most intelligent way and let's let's make sure that we don't take a shot a torpedo below the water line in in our first attempt because then we

won't live to to to have multiple more attempts and that's one of the things I like about design I like you know David Kelly uh you know co-founder of Ido who's sort of ido's sort of the uh credited to the greatest extent with this rapid iterative prototyping kind of methodology and I asked David you know the origins of it and whether it was Aristotelian whatever he said no no no it's just something we sort of thought up so so but I but I think it has all sorts of wisdom in it and that if Aristotle

were around today he'd say yeah rapid iterative prototyping is is what you should do to continually test and refine your your your new ideas that's a great answer and I like to thinking behind it so it's fine to make a decision but be thoughtful be careful be intelligent and then you'll get the data so that so the data will come it just doesn't have to be there to make the decision to start with because you need some imagination of how the world could be not kind of how the world has been and I think that's

the big difference there and and I would say that if you list it off Alex the top 10 kind of innovative business moves you've you've ever seen or kind of read about I think in each case the success would involve making something true that wasn't true at Inception so so Steve Jobs said you know what I'm going to sell a little white MP3 player with a wheelie on it for 3x what other MP3 players uh do and if you ask the question was that valid or true at that point in time hell no right and

if you'd have launched it that way it wouldn't have but he said and the way to make that true and the way to get 60 market share at 3x the price is to give them a unique way to get the songs they want onto that little wheelie device so he made something true that definitively wasn't there was no apple music uh at at that time he had to create it to make something true and that's and that's what you got to leave yourself the opportunity to do not say we're only going to do things that

are true now nope we're gonna make stuff true and that's that's again why why jobs you know sometimes his viewed as not consumers it's like they don't know what they want you know whatever you know I don't do consumer research that it's completely false he did all sorts of research he just did it in a different different way but he understood that he had to make things true that consumers didn't kind of know could would be true and he had to convince them they will type on glass we'll get them to type on glass we'll

have such a compelling other experience that all the awkwardness of typing on glass rather than a keyboard for the for the first little while will go out the window right it's we're going to make something true that isn't true that is the absolute Beating Heart of great innovation Roger yes sir at an hour so yes wow this has been such a great chat um I don't think we have enough time to go into another one so for listeners you've got to get the book it's fantastic I mean it's got a quick summary at the beginning

and then it goes into all the chapters in detail but just quickly before we end the conversation you know it's which are the best of the models to begin with right or that are the most powerful like ah so have you got a personal tendency preference to say look from all the companies I see in the world these are the ones that seem to be the biggest frustrations to you personally right because again yeah it's your brain um it's your experience um it's your thinking and it's your words and I'm just trying to understand the

areas which you're most passionate about that you think require the most amount of change um I I think it's the imagination versus data and familiarity trumps Perfection would probably be the two if you started if you started there it will it would free up your native creativity rather than put it in a box and would have you focus on the right thing about about customers I think I think those would probably be the uh the two that I would suggest you start with yeah and there is a theme throughout the book that is about the

customer and I think that's a theme across all of your books actually yes um it is to focus on it is to to focus on the customer and I think especially the bigger an organization becomes the less it becomes about the customer because of all of the noise in between which is why I started with like the departmental approach because I can see that happening everywhere you're really interesting no and and again uh concluding thought to leave people with is like all organizations are pyramidal to some extent and and the way you should think about

it I would argue is what do you get better at as you go up the pyramid what do you get worse at right and as you go up the pyramid you get better at understanding how the pieces of the whole organization fit together right that's that's what you have proprietary knowledge the people down at the base of the company have no idea of of that because they're engaged in their piece of the business uh but what gets better as you go down is customer understanding because you just spend more time with the customers even the

CEOs are really customer oriented don't spend as much time as the sales people so what what you should be thinking about is what's your role based on your your advantage and I would argue that the farther down you are your advantage that you've got you've got to bring to bear is I spend more time with customers and the people farther up the organization have to listen really carefully uh to those those people but conversely the people at the bottom of the organization when the people at the top say we can't do that over here because

it would mess up this over there it may be irritating to them but they don't see that as well as the people above and so there's sort of a a kind of a specialization of of of Labor that that uh that goes up goes on and so the big companies can overcome the problem you're most worried about by making sure that information flows up as seamlessly and quickly as possible uh rather than saying I'm more senior than you I know what the customer thinks right which which unfortunately you get a get a lot of I'm

the boss I say what the customer thinks no because you're the boss you do not say what the customer uh uh thinks more so than people at the at the bottom of the organization what I think is interesting is that complex and it's challenging and it takes courage to run a successful company that endures the test of time right you might be successful five ten years but can you be successful for you know for 30 50 100 years right and I think you know it's such um it's such a fantastic book um to just get

you thinking about kind of all the parts of your organization and it does touch on pretty much every part of a company so the books available on Amazon um so how do people actually get in touch with you or how do they start to subscribe or to sure so uh yeah my my uh my website was website is just www.trailmartin.com I'm Roger at Roger L Martin um I write a weekly piece on medium so if you're a medium uh person just just look for my name or playing to win as the kicker that all the

Articles uh uh go uh go back to and I'm at Roger L Martin on Twitter I'm on LinkedIn so any of those are great venues if you want to have a conversation Roger thank you again for coming back onto the growth Manifesto podcast um these conversations as usual fly by with a ton of fantastic content I'm sure all the audience or the listeners um have gotten a ton of value out of this so thank you for coming on the podcast today thank you for having me again I'm honored that you would have me back so

and let's do it again sometime I would love that thanks Roger take care thanks for listening to the growth Manifesto podcast if you enjoyed the episode please give us a five star rating on iTunes for more episodes please visit growthmanifesto.com forward slash podcast and if you need help driving growth for your company please get in touch with us at webprofits.io