Amie Devero w Francis Wade 2 A Quantified View of the Future

Okay, so if the team has gotten to the point where it's generated the scenarios, they have chosen one, and now we're asking them at the end of a long day to convert the words that describe the scenario into numbers. And we've already asked them to do all this heavy lifting, and this one is just equally as hard. Any tricks? Any shortcuts?

Well, I mean, we have all the numbers from the present reality that we've got all kind of outlined. So it's, it's actually, I don't find it that hard to get that first column. Wow. Yeah, the first. So if we go out, let's say we're going from 2020 to 2035 or 2040, it's not that hard to get the numbers for 2040. Well, because 2040 is still kind of imaginary, right? Right. The hard part is where you start bridging them.

Oh, for sure, for sure. But, but, but I find that they, apart from the CFO and his or her financial numbers, right, they're not used to thinking of their company as a set of numbers. They're not— they're not my clients. My clients, I can only speak for the ones I work— they're not, they're not used to thinking of a collective numeric picture of the company. That, that, that is where they sort of struggle to say, well, the headcount and the, the production and the revenue and the— because they usually, they're not used to seeing them all together on one page.

Relationships.

—into relationships, right? They get sort of really twisted up trying to think, but if this is that high, wouldn't that be much lower?

Like, this is the first time. I think this is a place where my experience with legacy companies sharply diverges from my experience with startups. For one thing, because startups are largely digital tech companies, so headcount has a much less linear relationship to outputs than it does in most legacy companies. Like, there's absolutely no reason why a billion-dollar company needs to have, you know, 50,000 people unless it's Amazon that has, you know, drivers and warehouse workers and this kind of thing. But most of my clients don't have anything like that. You know, their entire business takes place in zeros and ones or quantum computing. On this thing, you know. And so the headcount will have something to do with what they can see as the number of streams of separate projects necessary to propel the future. So there will— what will happen, I find, is usually— and this actually happens, I think, in legacy companies also, just a little bit more slowly— is that people start to work out a background algorithm. Mm-hmm. Like, they start to figure out, okay, revenue seems to be tied to headcount in this way. Mm-hmm. Like, this seems to be the arithmetic relationship between these two, and then they can extrapolate a number from— if you can get those first couple numbers, you know, what's our revenue, what's our profit, What's our number of widgets, or, you know, number of subscribers, or volume of production, whatever it is. If you can get those first few numbers up there that, that exemplify the scenario come to life, then you can get their brains working on what are those arithmetic relationships that allow for the extrapolation of the rest of the numbers. And thank goodness, because otherwise you'd be there until, you know, the next—

forever, right? Right. And I think, you know, I think in a startup, because they're inventing these relationships from scratch, they're very present to these connections. And I think in the legacy companies, you come in and you're trained to do a job, and your job isn't to answer questions around interconnections unless you're the CEO. Your job is to do your job. And all of a sudden, here we come asking you, what's the connection between what you're doing over here and what he's doing over there? I said, what? Yeah, I don't know. I never thought of it before.

There's a question that we really didn't address that maybe is germane to this question, which is, who should be in this room? You know, like, I am fairly I am not agnostic on who should be in the room.

Me neither, right.

You know, and so I don't really want people in the room who don't have some kind of global view of the company. If you're just a functionary in the organization, just doing your job like this, you're really not playing at a level and not likely to play at a level that has you belonging in this room, right? Which may be why I run into a little less of what you're describing, right?

Right, right, right, right.

I try to, and then, you know, yeah, we get, we get overruled all the time.

So they tell us, no, no, no, IT has to be in the room. Oh no, IT has to be there. I met the IT guy, right? Like, he's more at the fix my laptop kind of level than he is a digital strategist. I know, you sure?

'Cause in my world, I'm like, oh my God, IT has to be there.

Well, if he has the global view or she has a global view, right? Exactly what you said. If they have the global view, then they have every right to be there because they're gonna contribute a lot. I was at a retreat where they had a digital strategist and he had been hired for about 4 months. So all he'd been doing, he'd been thinking about the future. So when he spoke, the whole room just got quiet because he was so brilliant. I mean, he wasn't— he was smart, but the quiet didn't come from his smartness. It was the role he was playing that was so unique that none of them, none of them had been playing that role. Nobody could speak to what he was talking about because it was like Greek. He was like talking about something on some language they speak on Mars. It's like, what?

But that's so interesting with the digital strategist who was thinking like that.

It was a wonderful disruption because he forced them to contend with the stuff they really had to contend with, but they really couldn't in their day-to-day jobs. This was a real first moment or point of contention, and he had to be dealt with. He couldn't be just kind of nodded— you could nod his head at him and, okay, let's move on, because that's what they were doing in meetings with him. They were just kind of ignoring But they couldn't ignore him for the sake of the exercise. Right. But, um, so what was the train of thought we were on before we went off of that?

We were trying to capture the numbers of the scenario in the future, right? Whatever the horizon— well, it's not really the horizon, it's that, that far distant thing, right? And, um, turn it into numbers and turn it into numbers and then start walking it backwards.

All right, let's talk about the walk. You have a really great way of doing this that I'm absolutely stealing.

So you talk about your way.

Okay, right. So our way of doing what we call the Merlin Process. So if you're listening to this inside of Dynamic Objectives, you probably know that we advocate this process of starting from the future and then working back and developing a— usually it's a spreadsheet of numbers, a matrix, yeah, which show how the numbers change going back from the future to the present. And then the initiatives that drive the change in those numbers underneath it, all lined up in this one nice beautiful chart. And I, I think a long time ago we used to do this as a big group, like I did like 6 months ago, 50 to 20 people.

But you know what, still young and stupid enough to think that was a good idea.

It was really hard because It's really a hard piece of work. It takes the best thinkers. So we always have the CEO and the CFO. That's like our requirement. What we've done, and this really happened because our clients said that they couldn't afford 3 days of strategic planning consulting fees. So we came up with a 2-day version. But what had to go was the Merlin process, and where it went to was into the evening.

So that just tells you it used to take us the better part of a day. Oh, and every argument over every segue from one year to the next year. No, that's too fast. No, well, what happened? Because we'd have to add it into the scenario, like, well, how did sales jump by 200% in 27— you know, 2027?

Like and it's just, it's just too— the exercise is just too difficult for a large group to undertake. So, so the, the innovation was to have a small group do it in the evening, and that's how we could squeeze the whole thing into two days. Over— the worst case that I heard of was they went for dinner and then decided to meet after. They didn't end up until 2:00 in the morning. That's the only time. From now on, we tell them, bring dinner in, or forget about dinner, or do dinner after, but do not leave the exercise, go to your room and relax, take a nap. Do not do that because you'll be up next. Anyway, they made that mistake. But the exercise is extremely challenging, as you know. It is the heights of— because you're bringing together everything that's been done that day. Into a measurable outcome result, a complex measurable result.

It's not just a measurable result, it's actually an entire measurable trajectory of an organization. So you have to be able to explain that trajectory. So you're not just filling in columns and trying to make them sort of, I don't know, sort of logical. Right. Look pretty. Yeah. You're trying to tell an actual story with those numbers. Right. And that story has to be coherent. Right. And I mean, I'm telling you, I'm convinced this is why I look 15 years older than you, even though I am not. Yeah. Because I did not have that innovation and I have suffered through too many of these and attempted to mediate all of the arguments arguments about how in the world, you know, sales jumped by 300% in 2027. Why? Because we're tired.

You know what? A number of decisions are made overnight that I think are just a function of people turning into pumpkins because they're so tired and it's so hard. And, but it's okay because they would have done 80% of the thinking. And when they come back the following morning and discuss it, I mean, they themselves— this happened several times— they themselves, as they put it up, they realize, no idea why, sales jump by 300% in one year.

What in the world were we thinking there?

We're thinking we need to change that. So as they put it up for discussion, they're like, oh, that's not gonna work, and on. I don't know where that came from, but the discussion— that's the best part of the retreat from my point of view, is that the discussion about trajectory, that movement from today to this point in the future. It's the highest point of creativity and logic of people, humanity, and of wishful thinking and futuristic possibility, commitment. It all comes together in that moment. But then again, that discussion, I always warn them and tell them, the morning after is going to be the most tear-down, rip-apart discussion you ever had as a professional. But lately, not so much. I don't know why. Maybe because I warn them.

I actually think that by virtue— a lot of the things that we have done for years and years and years are now kind of in the ether. People know what pre-mortems are. They know what scenario planning is. They know what backcasting is. Yeah, they may not have done it, but they have enough familiarity with these approaches and these sort of ways of thinking that I think people have a little bit more willingness. Yeah, you first of all just kind of like make a little bit of a leap of faith. Yeah. And also, and maybe this is partly our sort of aging and getting a little bit less attached to purity of the process, I'm not sure it matters that every step of the Merlin process is logical, as long as they get to a horizon that is— like, if the— if it has to be logical from the horizon back to the present, whatever the horizon for the strategy is back to the present, that has to be coherent. That has to be coherent across dimensions. So I can't have the one where the headcount is 70 with, you know, $5 billion in revenue. What? Yeah, that can't happen. And if that horizon back to the present is completely coherent, then, you know, from the horizon to the, you know, the sort of Merlin start point, not too worried about that because we're not really working on the Merlin start point.

We're working on the horizon. Mm-hmm. But it's the reason I warn them, though, isn't because of the coherence per se. It's a disagreement, right? It's the lack of alignment that, you know, the team went away and they thought of all these great things and they came back and look, there are no— this actually happened in one. They came back saying that the company will be bilingual in 15 years, the entire company. So the half that weren't— the ones that weren't in the birthing process were like, you've got to be crazy. —right?— it wasn't the coherence. It was that we, we don't want to invest that, right, in that. We don't want that outcome. So it was a pure disagreement. But even then, I'm not seeing sharp disagreements.

That's really hard. I mean, and you see that in companies all the time, except it's buried under the day-to-day minutiae, right? I mean, you know, I probably see it in sharper relief in my work because— I'm dealing with— yeah, it's very immediate. And if a company is going in a direction that, you know, the CTO finds reprehensible, you know, like he signed on for X and now we're doing Y, right? And he's seeing it every single day with each new launch that he's having to do of each new client that's coming in. He's feeling demoralized a long time before the strategy work, right? He's already in the presence of his sort of abiding protest against the direction the company is going.

His resume is out there, maybe. Maybe. Or he's checked out. He's checked out, more like. He's already decided that he's going to do something, something different and it's going to flop. What I see in the legacy companies is, and it baffles me, but it's explainable. I see people surrender, and they, they, it's like they say, well, that's somebody up there, that's their job, isn't it? And I say, well, no, because the people up there in your board, or whoever you think is up there that's making these decisions, they don't have the information that you have. They don't have the day-to-day. They don't have the data. They don't have the knowledge of the industry. They don't have, they don't have anything that you have. And to expect them to become so expert that they can make a decision about your company. I said, it's just asking way too much because they'll never, they'll never become that. You, you've got to inform them, which means you've got to take some risks in saying what you think, where you think the company should go and why, and be able to stand up in front of the board or the chairman or whoever you, you have the most fear regarding and say, say the truth, right? That little bit right there is the part that legacy companies are very slow to develop.

Yeah, and I think part of what, you know, what you and I have successfully done, both in our work together and separately with legacy companies, is to, to give those people who heretofore believed that their voice is meaningless— excuse me— or that their input is unimportant Yeah. The courage. Yeah. To stand for what they see and what they believe. Not like Rosa Parks standing for what she believed, but more like actually saying, like, look, I may not be the captain of this ship. Right. But I'm up here at the top of the mast, looking out, and I actually see, you know, the torpedoes being launched. Right. Right. You know, and I've got on radio the guy in the engine room who's manning the defenses. So, you know, by all means, generals tell us which direction to go, but, you know, we're rubber meeting the road right here.

I've mixed about 47 metaphors, but you get what I'm saying. No, it's fine. It's, you know, I actually think it's a little bit of Rosa Parks because I worked with a transformation— transportation entity in our government, transportation.

And Rosa Parks was kind of a transportation transformation. Here we go. She started, right?

So this is apropos. And I played— so I tried to get their attention. I played the video of the Challenger explosion and all of the conversations afterwards. And I said, And they had a whole reenactment of the whole thing. I mean, it was, to me, it was devastating. It was— this is— given what you know better—

Challenger disaster was like our failures writ large, like every organization's failure to listen, right?

That killed those people because of organizational nonsense. And I say So there's people there who knew better and they didn't say anything and they didn't say it loudly enough and they weren't insistent and they didn't this and they didn't that. And the word never got up to the right people who could make the decision to save these people's lives. And I said to this particular client, I said, each of you around this table are the people at that table. When you don't speak up, people are going to die. You could hear a pin drop and it lasted It had the effect for about half an hour. Business as usual kicked in.

It was all the way back. That's kind of, you know, I think that's pretty much the lifespan of a breakthrough moment, you know, and then you have to put in structure to keep it going because, you know, life swoops in, our humanity swoops in and kills it pretty quickly.

And then it's like, I have bills to pay. I have a kid to pick up from school. What are you talking about? Right. But, you know, I do actually believe that at times this is exactly what happens. This is— this magical moment comes and some groups step up and some don't. Remember we had a banking client that stepped up and saved the bank from ruin. That was the purest example I've ever seen in— work that we've done, which— yeah, they stepped up and saved the bank from, from disaster. And that was incredible. That really was incredible. People from disaster. But anyway, that's the Merlin, Merlin process and the Merlin chart. How about the final step though, strategy mapping?

Well, so first of all, we choose a year for the horizon of the strategy map, which is in some ways arbitrary, but it can't really be 22 years. Like You can really only work on strategy for a couple to 5 years, right? You know, like actually work on stuff, right? So you choose that horizon, and that then populates the strategy map. The beauty of the strategy map is really in the questions that it poses along the way. And what I always tell clients, and I know that the folks on the Dynamic Objectives Group already know the logic of this. But the real elegance of the strategy map is several things. One is that you build it from the top down, and the second is that you execute it from the bottom up, which sounds so sort of trite when you say it, but it's so extraordinary in practice. So By building it from the top down, you're actually taking these abstractions that are lagging indicators, things like shareholder value and revenue and sales and profit. And the reality is you cannot work on any of those. Mm-hmm. You simply cannot work on shareholder value. Go push on shareholder value. Go make calls to make more shareholder value. There is nothing to do there. Mm-hmm. All right. You have to begin to build that map and ask those subsequent questions. So what is our customer value proposition? So if we are to produce these financial results, who must we be for our customers? Now that's not a question that companies ask, not posed in that way. That's a very unusual question. Who must we be for our customers? You know, I think about who must we be as strategy consultants for our clients such that we produce our own outcomes. I mean, we have to be the, the kind of voice of pressing them into their greatness. That's what we have to be. Who we are for our customers is we are the wall against which They cannot shrink. They cannot, you know, cower, and they will rise to the occasion.

We won't let them do otherwise.

We won't let them do otherwise. That's who we are. And, and by being that, everything else falls out of that. Everything. And the same thing happens in the strategy map. So when you ask these questions, you pose the question to the client Who must you be for your customer such that you produce 200% growth next year? Mm-hmm. They really have to think about it because you're not saying what's your customer value proposition, you're saying who must you be. Mm-hmm. You know, and that's a different kind of question, right? And then once that question has been answered, and this is a really hard answer to come up with because The reality is, is that every company has to be competent in all of it. You can't be incompetent at operational excellence, right? But that's a whole different thing. Competence is a whole different thing than this is who we are, right?

Right. I think most companies, they chase, they chase after that basic kind of problem-solving competence. Like, that's just— that's their normal way of being. Their thrown way is just to chase after— chase after problems and try and fill holes. But that doesn't get them the overarching answer, the overarching question. It— and it's— I haven't found a company yet that when I ask that question, they articulate it. It's— it's a foreign question. Yeah. And I guess you would see more of it though, because they have to ask that question to survive, right?

Yes and no. Um, they ask it as, what's our value proposition? They ask it in the way that you would need to be asked it by a VC in a pitch, you know, asking for money. So what's your differentiator? What's the value proposition? What's, you know, what's unique? Um, and so they've answered it in that way, but when you actually give them sort of the buckets you know here's operational excellence, here's regulatory you know how, here's customer intimacy, here's product— and you say choose one!

No no no no no no no we have to do all of them Aminah, you don't understand right? We need to do everything and be everything for everyone.

Right but actually no. Right. You're not, you know. And so a lot of my clients end up choosing customer intimacy, but later on sometimes it doesn't turn out that's who they are, you know. It gets really hard to be customer intimate and be an e-commerce kind of plugin.

Yeah, yeah, because your mind naturally goes to you know, how do we get the software right?

So, well, but in truth, most of my clients are software. Oh, okay. Yeah, but software has all different kinds of functions. I mean, you know, Facebook's— if you ask who is Facebook for its customers, I think they would say something like customer intimate. Mm-hmm. If you force them into that conversation, you know, I'm sure they didn't have that exact conversation, but Or if you were to force Jeff Bezos to ask that exact question, he would say we're operationally excellent, right? You know, whatever you need at any time, 24-hour delivery, no matter what, you know, operational excellence.

But it's, but it's not— it, it's— those two examples are clear for the founders, but I wonder what if you were to ask the people who work for them. I wonder what they would say.

I think if you posed the— if you gave them the structure inside which to make the choice, right? Because remember, it's not just an arbitrary choice, right? You can't choose from anything in the universe, right? You have to actually— I mean, now there may be 5 buckets or 6 buckets that we've not yet distinguished, but for sure there is not an infinite number of buckets, right? You know, right, there are a few, right, and I'm completely willing to believe there are many that have yet to be distinguished, certainly by me, right, or by us, or even by anybody we know, but that doesn't mean that, you know, anything is up for grabs, right, right.

So that makes it all the harder because you're Whereas Bezos and Steve Jobs and Zuckerberg and other CEOs would have decided the answer to those questions somewhere early on in their startups, that doesn't mean that the people who report to them, who weren't necessarily there at the beginning, would now see it that way. Right.

They might be— Or that it's even still true.

Or it could even have changed, right? Right. It could even be—

companies do alter, they evolve.

I suspect Facebook, for example, could be about operational excellence at this point, perhaps, rather than customer intimacy, which is where it started.

It may actually be about product at this point.

I mean, product innovation. Yeah, could be. Yeah, could be. I don't know.

They mostly copy other people, so I don't know. They copy a lot of, you know, they buy up things and then use that technology. Right.

Are we running out of time? Yeah, we just got a 10-minute warning.

We are really like slow talkers, Francis. We could have led a strategy retreat.

Well, actually, we haven't gotten any questions from Kelly. So Kelly, if you have any questions, you can just add them into the chat. The chat is at the bottom. It's that green— no, it's the white sort of— I don't have one, so I— You don't have a chat? I'm going to put questions for us and I'll just lift the microphone.

Oh, there's chat. Look, we have one.

That's you. Okay, that was me, right?

Got it. Oh, I see. I just opened up the chat window. All right, I guess Kelly doesn't have questions. Not yet.

Okay, about 10 minutes left. Um, so the strategy map, how have your clients used it? So mine, some of mine have used it to— this is the way we recommend it, which is to explain the strategy to the short-term strategy to their employees. So they'll talk about the, the, some of the results of the Merlin process, but they wouldn't show the Merlin chart because most employees would have a heads that explode if you showed them— so the average employee, that level of problems. Um, and they use it to sort of give an idea of what the short-term focus should be. They also use it in some cases, a couple cases in which I've worked, they've used it to develop the scorecard, which then gets translated into performance management system.

I usually recommend they do the latter as part of what they ultimately do. Um, but most of my clients use the strategy map as a guide for truly what to— what projects they need to be working on, what technological innovations, where their budget dollars need to go, what areas of human resource development or technology they need to be focused on. I mean, I really very much counsel my clients to truly use it as a map. From the bottom up. So they really go to work on mastering or adding those skills, technologies, core competencies, and values that are at the bottom, right, so as to fulfill those processes, invent those processes, and produce the result. And, um, we do— and, and, and maybe this is just my— the luck of the draw— many of my clients, um, perhaps by virtue of their backgrounds with MBAs and so forth, um, are sort of the technorati, you know, they're, they, they are very comfortable with cascading things into metrics and utilizing those metrics to build individual performance review matrices. And so most of the individual employees within my client organizations have some kind of performance plan that is tied to the strategy explicitly, right?

Well, their whole existence is tied to the strategy, right? Right. And so, um, you know, many legacy companies, their performance management system, they may not have one at all, right? If they ever had one, it's either been forgotten or it's been turned into mush. So they, they really are just going through the motions without giving any real kind of feedback. Um, and, and along we come and we say you've got to measure the contribution to strategy.

Well, and you've got to measure the strategy's hypothesis. I mean, let's find out if this thing is BS.

Yeah, let's, let's actually track it. Yeah, you can actually— there's one client that I know that I think— I'm not sure how it ended up, but I left them doing something that I wanted all my clients to do, but it was to have one person manage the assumptions. Weird job, but it wasn't her whole job, but it was a part of her job. So she was there for the— she wasn't actually— she was in the retreat, but she was a brand new employee, so she didn't really have a lot to add. Mind you, she was very— she was so smart that the few things that she said were brilliant. So it was one of those situations, but right But her job going forward was to— would be to manage the hell out of the logic of the strategy map and the Merlin chart and to be the one who raised the flag when something changed. Right. So she actually had also had the job of therefore scanning the horizon. Right. Which imagine how interesting that would be.

I think that's amazing. I mean, that's really what a chief strategy officer ought to be doing. But the thing is, is that it's not just the assumptions. I mean, one of the things that often drops out of a strategy is that a strategy is a hypothesis, right? It's a theory, and theories can be wrong, right? And if you're doing strategy right, you are scouting the horizon for evidence that your theory was wrong. Why? Because if you find out that it's wrong, for example, If you fail miserably at doing every single thing the strategy prescribes and you're producing the result anyway, your strategy didn't do it. Something else did it and it wasn't the strategy. So throw out that strategy and start again. Maybe start with what worked. On the other hand, if you're doing every single thing the strategy prescribes and your results are in the toilet, Your strategy doesn't work. And these things happen all the time and nobody takes a step back and goes, whoa, hang on, we're wrong. Right. Let's stop beating our heads against the wall. We've been doing this thing for 2 years. The horizon is 5 years. We're not advancing the ball down the field whatsoever. Right.

Restart, restart, you know. Start all over again, right? Yeah, right, right. I suspect it's an ego thing that stops.

I don't think so. I actually think it's more like Sisyphus. I'm just gonna keep— if I just keep working harder, if I—

you just forget it's a theory, and the theory could be totally wrong, you know? It's like inertia, but in the inertia of pushing the border of the hidden.

It's true because it's a map and it looks true.

It's really impressive. I mean, we spent 2 days on it.

Yeah. And you spent money and you got the consultants, you got us. Therefore, but it's still a theory, right? Right. You know, until discovered otherwise, people thought humors made people sick. Right. That was also a theory. Right, right, right.

That's a new— I have said that before, but I don't hammer that home. I don't leave it with them to carry forward.

I've dropped that part. I think we're also guilty of drinking the Kool-Aid with respect to the strategy. And I'm not saying that that should be senior in your mind, right? But every year when you do a strategy review with your client, or when your clients do their own strategy review, one of the things they should be sort of, you know, pressure testing is, all right, are we advancing the ball down the field? Are— is our balanced scorecard reflecting that we're successfully fulfilling our strategy? And if we are, what are those top-line numbers? Is there a progression being made? Because at some point you have to call it. Right. Right. Now, I don't think you go into every strategy review going, oh, it was probably crap.

Like, probably— that's usually not the case. There's usually wins and losses. Right. A mixed review.

Yeah, there usually is. Yeah. We have less than a minute, Francis.

Yeah, we do. Ami, thank you so much for spending time with us here at Dynamic Objectives.

Well, thank you for having me. It's been ages. What a delight. Oh, I know. I don't think I've seen you in a long time, so.

That's true too. We talked a lot. We've laid eyes on each other, right? But not actually. And to our audience, thank you so much. Kelly said she didn't have any questions, but she enjoyed the conversation, and it's been great presenting it. Thanks.

You're gonna post it so it'll be available, right?

Right, it will be available. Thanks to you, me, and thanks to our audience and Kelly, and take care, guys. All the best.