A new way to think about strategy and business

00:00If 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. You're listening to the Growth Manifesto podcast, where we host in-depth interviews with business leaders, authors, industry experts, and entrepreneurs with a singular focus around business growth. At the end of each podcast, we want you to walk away inspired, to think bigger, and to have actionable takeaways you

00:33can apply to improve your business. Each episode is like a masterclass on a key topic, so make sure to browse the episodes to find the topics that are most relevant to your biggest business challenges today. This podcast is brought to you by Web Profits, a digital growth consultancy that helps challenge your brands drive growth in a complex and fragmented digital landscape. You can find out more about Web Profits at webprofits.io. Now, let's get into it. This is Alex Kleanthus, and today we're back with Roger Martin, who's one of the leading

01:07strategy thinkers in the world, consulting with companies like Procter & 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.

01:38It'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 got inspiration in part. I should give credit where credit's due. 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,

02:10the 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. and he said, you know what, we should write a book on that theme. And I was motivated. It was one of those things where you know what a good idea is, one that sounds obvious after and only after you heard it. So it was sort of like, gee, David, that sounds like a great idea because

02:42it does sort of make me sad when I see executives, managers, anybody at any level kind of swearing almost this undying fealty 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. Maybe this is a dumb way of prosecuting this issue or question.

03:15So 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 please. And that is a departure. All my other books are, here's a theme that I developed throughout the book. Here, there are 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?

03:47because what's interesting is that you can choose the area to think about first. But before we go into some of the examples, 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?

04:22You know, I think it's more for another reason than the outdatedness. I think a bunch of them were always a dumb idea. So I could say some have maybe the river's been drained somewhat and water levels down and some more rocks are showing. But others, right, like the purpose of the company should be explicitly to increase shareholder value or maximize shareholder value.

04:53That'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. It just sounded like the classic seemed like a good idea at the time. but as you get more practice with watching its results. That's, I think, the temporal aspect of it. It's not that the model was less and less suitable for the landscape. It was more that as the data became more apparent,

05:26it 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. And how do you think these things become commonly accepted and they don't have proof that they actually are better than something else?

05:59Typically, they've got a sensible sounding story behind them. We should align the interests of managers and shareholders with stock-based compensation. That way, if shareholders do well, so will executives. 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

06:37is 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 a casanato as they would say 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.

07:16it'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 yeah so i think i'll quickly go through the models there's some which i i prefer than others but that's just me. Do the ones you prefer, my friend. But we'll see if we can go through them all. Sure.

07:48Because 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,

08:18that it's almost not the blind that are leading 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 through time, right? And so I think it is challenging to change. And it's sort of a self-sealing, yeah. It's sort of a self-sealing loop too. It's sort of like, well, my boss is more senior than me and he controls my 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.

08:50It's sort of, well, I don't get fired for using my boss's model. Then I become more practiced with that model. And then it becomes the easiest thing for me to do. 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 cause a perpetuation of something that doesn't deserve it. It didn't earn it fair and square. So I hadn't thought about it that way before, Alex, but I think you raised it and I think you're right that there is that kind of self-perpetuating cycle to these models.

09:28yeah 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 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 the Chrysler Corporation he changed everything and

10:01because 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 let's go no but it's I just think you're you're you're making a very uh you're making a very good point which 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 to say well here's an argument

10:33against that that dominant model and hopefully you know argument from a credible credible management thinker who will give you some, if you will, sort of top cover to give it a whirl. So you're not doing it a hundred percent 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 let's start to jump around and I'm not going to do them in any

11:07particular order because that's boring. I'm going to go in different places. The customer in an organization is level below them in the organization. I think that you talk about start, 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 down, that's right. Can you just explain that one, please? Sure. Well, generally the view of a big sort of multi-business corporation and most big

11:42companies now are in a bunch of businesses would be that it's the job of the higher up levels of the company to control and coordinate the ones below. And so the ones below are, they have to report back and how we're doing and making sure they're doing what 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 raiders. Instead, it should be flipped, right? Which is, I believe that corporations at the corporate level don't really compete in the minds of the customers, right?

12:20So you don't ask the question, should I buy Dasani by Coca-Cola or Aquafina by PepsiCo? Right. I don't know any consumer who says that. They're just playing those two off against, do I like the taste of this? Is this one more available? There's a consistency of this one. So competition really takes place at what I call the cold face. That's the cold 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 coalface compete better, compete more.

13:03So if Coca-Cola has got better vending machine networks, so it can have Dasani within an arm's length of you more times than Awkwafina, it's helped you. It's helped you make yourself be more competitive 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 just not very useful, right?

13:35Are you helping? And if you can't help, you should be gotten rid of, right? If there's a level above that is not helpful at all, you should just get rid of it and only have levels above where competition takes place that explicitly help the level below. And if you have multiple levels, if it's Coca-Cola Australia or Coca-Cola bottled water business Australia, then Australia has got to be helpful to the bottled water business.

14:13The global has got to be helpful to Australia. The beverage business in general business unit has to be helpful 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. I worked hard to be the boss. I worked hard to be the boss. Exactly. And they should obey my orders. But as I say, that's not what makes a company competitive.

14:44What makes the company competitive is Dasani beating Aquafina. What did you do to help that happen? Or Coke beating Coca-Cola or Coca-Lite 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, hierarchy in the organization is thinking about the customer, but they can't think about the customer at the coalface

15:15because they 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 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 for these levels of, let's say, the middle management that may not be adding the value that the customers see. Absolutely. And that's, again, I think why scale is not as much of an advantage

15:51in the business world as you'd expect. You'd expect scale economies to be more determinative, advantages last longer, and I think they don't because what happens is bad behavior where it is control and coordination is top of mind for people near the top, rather than helping out is what the jobs is of the people at top. I mean, there's some things about Jack Welsh's career, the late

16:29Jack Welsh's career that I like, 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 the, 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 salesman, just awesome 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 say. So it flips on the head, which is,

17:02And look, there's 14 of these. So I'm just like, I could spend a whole hour on each one of these. I'm going to 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. And this is one where kind of modern science has sort of revealed something that just wasn't understood before. And so we've long said the thing to do is to engender customer loyalty. And that's not unimportant.

17:36And what we mean by loyalty is the person feels good enough about a given product or service 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 the conscious and unconscious have a relationship like an iceberg, the tip underneath of the iceberg. The unconscious is below the waterline. the consciousness is above it dominates uh the the conscious and so that what that means

18:12is 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 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

18:45screaming 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 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

19:17about it to repeat what you're doing. So what, what that means is lots of things that are consistent with, with, with loyalty. You got to 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 packaged good a product because the subconscious will be saying, well, that where's mine, where's mine?

19:51I don't see mine here. You're making me nervous now. And so don't change the colors. Don't change the features. Keep it as consistent as you can. If you need to change, change slowly, not super quickly. And I have to tell the story of my sports app. I'm sort of a sportsaholic and I have a sports app that I long used. And every once in a while, those clever people at my sports app, which would be an American

20:24cbssports.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 OK, OK, OK. But then they did this really big fundamental that they trumpeted like crazy. or 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

21:01that. 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 went and looked at each of the sports apps, played around with them and made a new decision, which was ESPN. So now, now on my home screen, right? On my home screen, you will find ESPN.com as my go-to sports app. And so they were

21:39trying 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.

22:12And that's a loser. And I think there's the 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 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.

22:42And I think we can learn a lot from that. And I think this applies in so many more places than just an app or a website. This could apply to the pricing, to the availability to like, you know, it's, and this is, I think, comes back to your previous, well, to the previous point that we spoke about, about just making sure that all the layers in the organization, the customer, the customer is the department or the section that is below them, right?

23:14Because what can happen is that somebody higher up, they have an idea, I've seen it, I'm going to change the app. I'm going to change the app. I'm going to change this thing 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, Oh, that didn't work. Yes. 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,

23:45I 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 is the problem. 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 were competing against, which changed like crazy.

24:17It never, never stayed, stayed constant. Google's homepage kind of also like if they, if they, if they created a homepage, an Amazon like homepage, it would be a disaster. I think it hurts me hearing about that, right? 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 to be disastrous and negative.

24:50That's why there are these famous cases, again, in the US when Tropicana changed its look and feel 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

25:23that says where, where you took it away. It meant nowhere. I don't see, I don't see my product anywhere. And so what, if you've got habit going for you, the way I think of that is, is you are competing in a hundred 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

25:54finish line, the 10 meters to the finish line and win without working up the sweat, no matter how fast 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 on knowing to them because they didn't understand habit 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

26:29other 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 would be hard for a lot of people, especially, you know, the people who are in the first, say, five to seven years of their, I'll 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.

26:59I 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 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 marketers love changing things we're

27:31to change. Got to get them to the next step. And so what you're saying is 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, try not to mess with them. Is that right? Is that just like- No, that's absolutely right. And you bring to mind a sad episode in my life. I was on the board and and in fact, chair of the board for a few years of Tennis Canada, or the equivalent of the Australian Tennis Federation that runs tennis.

28:05And we had a super successful CEO who, and he got 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 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 spent hundreds of thousands of dollars on on a total rebrand uh to a logo that bore nothing similar to the to the

28:44old one. And I kept saying in board meetings, 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 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 the the uh the new uh logo stuff and and i remember when at the board meeting they handed

29:17out 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 no let's stop the brand new ceo from shooting herself in the foot and she shot herself in the foot and you know the rest is history quick tangent and again i knew this

29:50was going to be hard to compile 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

30:20change like if you don't want to mess with people too much 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

30:51Netflix huge credit of understanding habit, right? So Netflix starts in existence kind of mailing DVDs to your home. And then they go to being a streaming service. Whoa, that's really different. But look at everything else about Netflix during that period. same logo same color uh schemes same way you interacted with them because even before they

31:24started shipping you on uh uh you know digitally uh directly to your your uh uh tv you interacted with them online and that online interaction didn't change at all so they understood i believe 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 customer to say, okay, this makes me a little nervous, a little nervous, but I like it.

32:08Like it sure as hell is easier than, than taking that DVD and having to mail it back to them and all that. It sure as hell is 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 feel, et cetera. 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 the unconscious habit. And step two,

32:44be 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 homepage 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 okay i mean

33:16it's good to repeat to yourself you are not the customer 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 customer is 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 learned all these topics you think that's exactly how the world works and then you need someone like Roger Martin

33:48to go you know those models which you've been learning for 20 years you know maybe there's a better way yeah and 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 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 one of those data and imagination seems to be, you know, that strange person in the corner, you know?

34:25That's right. With the funny hairstyle and the weird dress. Yeah. No. So the point of this, of that chapter is, is just the limitations of data. And for this chapter, I go all the way back to Aristotle, who invented data analytics. Like people don't realize it, but that came 2,500 years ago where he was the first philosopher, scientist to say, what I'm up to is trying to understand the causes of the effects we see.

35:02And the way to do that is to observe, make observation of what's going on to be able to figure out this causes that. So you analyze the data to prove that this causes that. And, you know, his work, Analytica Postiora, is sort of the foundation of all science. Any history of science course would probably read that kind of first, even though people think Bacon, Newton, Descartes, Galileo created the scientific method. They more accurately formalized the scientific method that Aristotle created.

35:35but aristotle as much as people pay attention to analytica postiora and 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 Did it drop last week? Yes.

36:05Did it drop 10 years ago? Yes. If there were pens around 200 years ago, it dropped 10 too. Will it drop next week? Yeah. 100 years from now? Yeah. Australia? Yeah. Florida? Yeah. That is what Aristotle meant by the part of the world where things cannot be other than they are because it's a universal permanent force called gravity that pushes everything down. And we can study it and analyze it and figure out that things accelerate at 9.8 meters per second squared and all that good stuff. That's going to be around forever. The key point, though, is that a fundamental premise of data analytics is that the data you're analyzing is representative of the phenomena you're trying to understand.

36:48So you can't go out and interview a bunch of guys to figure out what people want in their electric vehicle. What are people going to want in 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. It's got to be representative. And so what Aristotle understood was that your sample of data, and I remember 100% of

37:19all data in the face of the planet is from the past, 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, 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,

37:53you'd say, oh, usage is non-existent because there are no smartphones. Now there are 4.4 billion of them. That would be what Aristotle called the 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 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

38:25my scientific method he didn't say oh use it carefully i use it sparingly use it somewhat he said don't and the entire business world the entire business world has ignored the father of science yet uses his 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

38:57don'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 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

39:28part 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

40:01right oh data analytics machine learning all of that no it's just it's utter misuse of a technique and 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 chapter and verse on how you have to have a representative sample if you do analysis without a representative sample, you'll make terrible mistakes. So that's

40:36absolutely key to any analysis you do. It's got to be representative sample, representative sample. 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 in order to make the choice. It's stunning to me, right? I mean, they are teaching the opposite thing back to back. And so it's no wonder that executives out in the world will say the only good decision

41:14is 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 counterintuitive but they work right the mind

41:50is 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 they'd have to just make more horses right so there's an area where faster horse yeah faster horses what would it would people what would people ask for a faster horse for sure for sure

42:25because they couldn't imagine another way of of transporting yeah sorry please no no i was just going to say, yeah, I mean, I would say down through human history, the great innovations came without analysis, right? Without data demonstrating. And there's a great American pregnancy philosopher, a really crazy guy, but super, super smart, Charles Sanders Peirce, 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,

43:01you've had this happen to you. You've come to your boss and boss, 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 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

43:37that has never been done in the history of the planet. It's just this offhand, just get the data, right? And that's why I think we have a sort of an innovation crisis in the big companies today, where they're all saying, you know, it's 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

44:08a 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 they're foot is so bloody oh 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 this is a great book

44:42but 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, and so it's the deciding force. 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,

45:13right or you know it's like everyone looks at these companies ceos who 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.

45:50If you don't hear about like everyone who dies in the wastelands, right? Absolutely. No, no. 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 say, imagine possibilities, choose the one for which the strongest argument can be made, and then bet the company on that. What I think he would say a few years around

46:30around today was a lot of stupid. No, figure out how you can create data going forward. Because 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. 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

47:04possibilities, choose the one for which the most 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, your argument. And then measure the data 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.

47:38If it's heading in 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 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?

48:18So 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 make sure that we don't take a shot, a torpedo below the waterline in our first attempt, because then we won't live to have multiple more attempts. And that's one of the things I like about design. I like, you know, David Kelly, you know, co-founder of IDEO, who's sort of IDEO is sort of credited to the greatest extent with this rapid iterative prototyping kind of methodology.

48:56And I asked David the origins of it and whether it was Aristotelian or whatever. And he said, no, no, no, no, no. It's just something we sort of thought up. So, 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 what you should do to continually test and refine your new ideas. That's a great answer. And I like the 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.

49:30So 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 I would say that if you listed off, Alex, the top 10 kind of innovative business moves 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.

50:04so 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 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.

50:41So he made something true that definitively wasn't. There was no Apple Music at that time. He had to create it to make something true. And that's what you've got to leave yourself the opportunity to do, not say we're only going to do things that are true now. Nope, we're going to make stuff true. And that's, again, why jobs, you know, sometimes is 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.

51:12That is completely false. He did all sorts of research. He just did it in a different way. but he understood that he had to make things true that consumers didn't kind of know could would be true uh 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

51:44will go out the window, right? We're going to make something true that isn't true. That is the absolute beating heart of great innovation. Roger. Yes, sir. We're almost at an hour. Yes. Wow, this has been such a great chat. I don't think we have enough time to go into another one. So for the listeners, you've got to get the book. It's fantastic. 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, which are the best of the models to begin with, right?

52:20Or that are the most powerful? 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, it's your brain, it's your experience, 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. I think it's the imagination versus data and familiarity trumps perfection would probably be the two.

53:00If you started there, it would free up your native creativity rather than put it in a box and would have you focus on the right thing about customers. I think those would probably be 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. it is to focus on the customer.

53:31And 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 right. It's really interesting. No, and again, concluding that to leave people with is like all organizations are pyramidal to some extent. And the way you should think about it, I would argue is what do you get better at as you go up the pyramid and what do you get worse at? Right. And as you go up the pyramid, you get better at understanding how the pieces of the

54:07whole 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 that because they're engaged in their piece of the business. But what gets better as you go down is customer understanding because you just spend more time with the customers. Even the CEOs who are really customer oriented don't spend as much time as the salespeople. So what you should be thinking about is what's your role based on your advantage? And I would argue that the farther down you are, your advantage that

54:44you'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 to 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 kind of a specialization of labor that goes on.

55:17And 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, rather than saying, I'm more senior than you. I know what the customer thinks, right? Which unfortunately you 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 thinks more so than people at the bottom of the organization.

55:50What 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 5, 10 years, but can you be successful for 30, 50, 100 years, right? And I think, you know, it's such a fantastic book 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 book's available on Amazon. So how do people actually just get in touch with you or how do they start to subscribe or just to connect with you?

56:26Sure. So my website is just www.rogerlmartin.com. I'm Roger at Roger L. Martin. I write a weekly piece on Medium. So if you're a Medium person, just look for my name or Playing to Win is the kicker that all the articles 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.

56:58Roger, thank you again for coming back onto the Growth Manifesto podcast. These conversations, as usual, fly by with a ton of fantastic content. I'm sure all the audience, all the listeners 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.

57:33And if you need help driving growth for your company, please get in touch with us at webprofits.io.