Blowing Up Best Practices feat. Geoff Tuff & Steve Goldbach

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This is Greg LeBlanc, and I'm here with Geoff Tuff and Steve Goldbach, who are senior leaders in the strategy practice at Deloitte. Also the author of these 2 books, Detonate: Why and How Corporations Must Blow Up Best Practices, and more recently, this one, Provoke: How Leaders Shape the Future by Overcoming Fatal Human Flaws. So, Geoff, Geoff and Steve, both of you are in the business consulting practice, and in your first book, you talk about blowing up best practices. And as consultants, consultants are sort of in the business of promoting best practices. And so is this sort of meant to be a provocative— I guess that's what you're in the business of— a provocative title where you're saying, hey, let's blow up best practices? Or is it really like, hey, we're living in a world where best practices have to change and that we've got a new set of best practices that have to replace the old best practices. There are best practices that are designed for a world of continuous change, and there were some old best practices that worked in a more static world. Or are you basically proposing something where there are no best practices and that every company is more or less n equals 1?

Yeah. So I, to your question of whether we're trying to be provocative or actually challenge best practices, I'd say it's probably a little bit of both, quite honestly. There's multiple different angles on that question you just asked. I'd say one of the most fundamental premises behind Detonate, the first book that Steve and I talked a lot about, is that for a long time, actually, best practices made sense. They were a decent way to get ahead as a company because there existed in the world, and it varied by industry, but there existed some degree of information asymmetry and not everyone had access to the same information. And so actually, if you look at the history of the consulting world as well, for a long time, The job of strategy consultants, of consultants generally, was to make sure that information asymmetry went away and clients could catch up with the leaders in their industry in a way that might actually create something that resembled advantage. That no longer is our operating condition though. We no longer live in a world of extreme information asymmetry. I think we generally assume that most of our clients have access to the information they need to make decisions pretty readily. And therefore the old theory of best practice being a source of advantage no longer makes sense because by definition, if everyone's working with the same information and everyone is working with the same best practices, and they are not best practices, they're average practices. And so what we write about in both Detonate and Provoke are not necessarily new best practices, but new operating rules for anyone that wants to get ahead in a world that is increasingly impacted by exponential change.

In fact, Greg, what we'd say is for some things, it's perfectly fine to use exactly the same thing that your competitors do. And the example I like to look to is payroll systems. You can use one of the many providers out there, and it doesn't make a difference to whether your customers choose you or choose your competition. Then for that, use identical systems, go for it. But for anything that you think is super important, you need to be distinctive from your competition, not the same. We think you need to be looking for ways to be different that are meaningful to your customers. And the orthodox is that if I only could adopt all the best practices that my competition are using, then I would somehow be as good as them. The reality is you probably won't.

So you mentioned this term orthodoxies. This comes up quite a bit in, I think, Detonate. And you mentioned that you have to question orthodoxies and This is really kind of a behavioral thing. It's an organizational thing. It's also a behavioral thing. And you do emphasize mindsets, you emphasize behavior, and you emphasize how kind of organizations discourage the questioning of orthodoxies in part because a lot of people aren't aware of them. But then if they do become aware of them, their questioning is not the thing that's rewarded. Are best practices and orthodoxies— should we think of these as the same thing? Or are they different?

I don't think they're the same thing, but they definitely are related and probably very closely related. So the premise behind Detonate, the first book, was that for a very long time, for really the history of business, and especially for big-scale successful companies in established industries, we learned collectively how to operate things. And as we learned, we drove more and more efficiency into our operations and we set up competitive models, which were about moving quickly, trying to get out in front of your competitors, making better access to information like we talked about before. And in the course of that, we either explicitly or implicitly created playbooks for operating, and we all learned the rules of the game. And our premise is that in a time of linear change, which is what has governed the history of business forever, that's fine. And what you need to continue to do is just operate with those playbooks and operate by orthodoxy so that you can be efficient and you can do what you've always done. We are now living through, Steve and I believe, a time where we're shifting from a world that's governed primarily by linear change to one that's increasingly governed by exponential change. And with that comes a different set of operating rules where the old playbooks just don't apply. The only way we can break the habits of operating by rote using the playbooks is to get people to recognize when they're being impacted by orthodoxy, meaning just the kind of conventional wisdom of the way the place operates. If we can just make it discussable so that people, anyone in an organization, whether you're a senior executive or first day on the job, can pick up their head and say, you know what, maybe this isn't the way we have to operate around here. Maybe there is a different way of doing things. That's how we can advance in the face of the changing nature of change itself.

So I mean, I think what you're saying is that the problem with a lot of these practices is that we've forgotten why we chose them in the first place. If we were to surface the justification for them, then we would recognize that the justification is no longer valid. Is that really what questioning orthodoxies is all about, is understanding that these things existed for a reason and that reason might no longer be valid?

I think that's one possibility. I think it's entirely possible there was Never any justification. It's just someone decided and that's the way it was. And then nobody decided to question why that might be or what other possibilities might exist. It could be what you say, which is we've moved on. And there's an important behavioral element to that, which is when you make a decision, it's really important to write down the logic for that and the discipline. And that's a discipline that I think is lacking. And there's a concept that we talk about in Provoke where one of the leadership characteristics we think is really necessary is we in jest call it flip-flopping, which is to go back on a prior decision when the circumstances have changed. Now, it's really important that a leader provide context on why to do that, but we don't want to get so stuck in our leadership decisions, which is a cognitive bias that we all have. And I will say that this idea of orthodoxy around feeling comfort in best practice is a learned behavior. And the way we learned it is by promoting and rewarding those kind of conservative, no one ever got fired by blah, blah, blah, whatever the blah, blah, blah is in your organization. And that person gets rewarded, then the people who follow in their footsteps say, Boy, I want to be successful too, so I should just do that same blah, blah, blah thing instead of challenging or asking about the logic. So write down the logic and then resurface it at times of decisions is super important.

Yeah, I work at a university and, and I think university's probably an extreme example of this where if you say, why are we doing it this way? Usually the answer's often to the honest answer is we don't really know. It's just the way we've done things forever. But oftentimes people feel compelled to offer some kind of justification. I think it's kind of the organizational response similar to what you mentioned when you referenced Tim Wilson's work. Tim Wilson talks about how humans don't really know why they're doing what they're doing. They usually come up with some ex post hoc justification for why they're doing what they're doing. And I think organizations do this. And partially it's because the process by which the decision was made may have been really a political one. It may not have actually had a formal logic to it in the first place. And, you know, if you're trained in law, like I am, the judges have to kind of explain the logic of their decision so that you can, when next time some situation comes up, you can say, well, does this conform to the logic or not? Is it worth abandoning precedent or not? If you're going to make decisions, how do you make the decisions more explicit? And how do you make the process of decision-making more transparent?

I will, Geoff, I'll give this one a first shot. I do think it's really critical to say, here is the, like, to first start by articulating the decision and communicating it clearly. We're doing this and we're not doing that. I think that's actually a practice that I don't see strongly in the universe that I've resided in. It's just a simple communication of a clear decision. And then secondly would just be a basic logic for it, right? Because we believe that customers will do this and we believe that we will be positioned in this way relative to competition. And here are the things we're doing in support of it. It's a basic logic structure. And it's just a discipline to say, to do that thing. And it would be even better if you could say, and we decided not to do the following other 2 things, which we considered for the following reasons as well. And that at least provides— and I love the comparison. This is the first time I've thought about it, the comparison to judge setting precedent, because that provides someone in the future some rationale for saying, has something in that logic changed such that I will need to make a— it would be appropriate for me to make a different decision? Or if someone comes with an idea and you say, we made that decision, and does it change the logic? If the answer is no, we say it doesn't change the logic. And it gives a basic— it just creates that infrastructure that needs to do, but you just have to get to the infrastructure.

And the interesting thing in that, Steve, as I hear you describe it, because I completely agree with you, that would be a better way of operating and communicating. Just how difficult that is for the average executive, especially at some of the world's most successful companies where we have historically revered hierarchy, respected tradition, respected expertise. And for a whole variety of different reasons, it gets really difficult for the quote unquote experts, most senior executives to make their logic clear and to actually lay it on the table open to be challenged. And a lot of what we talk about in the book Provoke is Just the fundamental human realities about why that is so difficult and what makes it feel dangerous to do the types of things that Steve just described.

Well, you talk about how people outside of meetings might say, speak more freely. And then when they go to a meeting, there's this expectation that you have to go along with things, that there's an expectation of consensus. And it's a risk aversion. It's not just an organizational risk aversion. It seems to be like a risk aversion on the part of the individuals in the organization. That these provocateurs or potential provocateurs are concerned for their careers. This can't be intentional, right? Organizations don't start off by saying, hey, let's make sure that we squelch the people who are going to question things. So how does this logic get ingrained? How does the systems get put into place, which fundamentally reward the perpetuation of the status quo and discourage the shaking up or the questioning of the status quo?

How it starts, I'm not entirely sure, but we certainly can see the self-reinforcing cycle that makes it really difficult to break. And so I think a lot of what, as we talked about before, the learned behavior behind orthodoxies and playbooks and what have you, that for years and years rewarded companies who learned the best practices, put them in place. That's how these practices emerge. To challenge them though means acting against your human instincts because human instincts do ultimately, as, and these are the fatal flaws that we refer to in the subtitle of Provoke, they make it really difficult to, as we've talked about before, lay the logic out on the table and expose yourself. So we talk about some of these individual fatal flaws, things like the availability bias, where we as human beings, and we know this from the work of behavioral science and behavioral scientists, it's, this is nothing brand new to the world, but we as human beings tend to place a higher prominence on data and information that is more readily available versus data and information that's more difficult to get. And because of that, we kind of assume that the information we have around us all the time is the right information that we need to be using to make decisions. And therefore opening up the information for challenge or opening up one's logic to challenge feels antithetical to making good, efficient decisions. And that's just one example of many, both individual and organizational biases that we think work together as a system to prevent change.

Yeah, Greg, the thing I'd add to what Geoff said is If I think about what's different about a startup company versus a scaled company, when you join a startup, you're pretty, everybody's pretty clear on the risk-reward payoff, right? Like I'm joining a startup because I think that I'm gonna, we're gonna create this cool new venture that's eventually gonna have Some kind of a, an exit and we're all gonna make a lot of money. And I think the promise of a startup is really super clear. It's like we gotta get to that state and everybody's really clear on what they're giving up and what they're putting in order to do it. There's a trade-off that comes with joining an enterprise of that sort. As you get beyond the startup phase and you get into a scaled organization, every individual human being has a slightly different, cuz we're all individuals. We have a slightly different version of what success looks like for us, right? And there's a concept in Detonate that we talk about called, we're not all in it to maximize shareholder value. We're all in it to maximize Me Inc. And as you scale an organization, everybody's maximizing Me Inc. in some slightly different way, subject to our own individual biases and the things that make us comfortable. And rarely do organizations talk about creating a system where you can simultaneously maximize all the many different me-inks and make them all feel psychologically safe and create a place where those can all be maximized and I can solve the problem most effectively. And that's a pretty tough system design challenge that we think needs to be addressed.

Well, I mean, you guys both are big fans of behavioral economics, and I think at one point in, in one of the books, you highlight some data that suggests that companies that are familiar with these concepts do better. One of the things I think you point to is this desire for control and people are uncomfortable. It's uncertainty avoidance. And so they avoid uncertainty oftentimes by just pretending it doesn't exist, right, through strategic plans. I think psychologically we can all understand why that might make sense from an individual perspective, but as from an organizational perspective, what is it about, why do we have these systems which enable us to pretend that the world is more understandable than it is, right? Why is it that we have these strategic plans? Steve, you're Chief Strategy Officer at Deloitte, and I've met a lot of Chief Strategy Officers, and they do these 5-year plans and these 10-year plans, and they have these very— these plans that you liken to deli meat, right? Where they expire after a while. And I think you guys argue that 90% of that process is probably misguided and wasted effort. So why do companies Do this? You say that they spend a lot of time focusing on the ROI. Do they ever do an ROI analysis of their strategic planning process to figure out whether it actually is worth all the time and energy that goes into it?

That's probably a worthy exercise. I don't want to sound flippant in this, Greg, but the reason they do it is because we come from a world that has been more understandable. Okay, let's just— the thing that has led to all of this learned behavior is the reality that we just haven't been living in a world where things have changed that much. And therefore, the job of good decision-making, the job of executives in an organization has been make the least risky decision possible to achieve the objective of their organization or of them as individuals. The best way to do that in a world that is moving reasonably slowly and reasonably predictably, and I don't want to be overinterpreted here. I'm not trying to say that historically everything has been predictable and it's been perfectly linear, but that's basically been the reality of how change has worked up until about 6, 7, maybe 10 years ago. But the way you did that is you gathered more data, you took your time, you made good measured decisions, and you would take risk out of those decisions. And so when we look around at all the operating norms within companies, those are all about taking risk out of decisions. One of my favorite ones to comment on is what traditionally is called a stage gate model for making decisions, where especially in new opportunity development, you go through multiple different stages of development. You have gate reviews along the way, and you use data to make decisions about whether to continue to progress a project. The reality is if you use systems like that in a world that's increasingly unknowable, meaning that the change is accelerating and it's being impacted by exponential more than linear change, you are literally deluding yourself that you're making a good decision. And so our premise is that whether we like it or not, we are increasingly faced with uncertainty in our markets, not risk. And risk is measurable, therefore manageable. Uncertainty is not measurable. And the only way you can actually add contours to uncertainty is to go do something. And so everything that Steve and I advocate for in both Detonate and Provoke is to delayer all the decisions we need to make when we're facing the uncertain and to try to encourage acting before you have perfect information, because that's increasingly the world we live in, as we've all discovered living through this pandemic. Yes, there's been some risk involved there, but that's been a highly uncertain world that has given us new muscles to exercise.

You know, it's kind of like when I, I teach a course called Data and Decisions at the beginning of the MBA program, and then I teach a course called Strategy at the end of the core. And And it, they're completely different mindsets. So in the data and decisions class, we do hypothesis testing and then we'll say, okay, you have an alpha of 5%. And until you are convinced, until the alternative hypothesis has been demonstrated, right, it's fulfilled its burden of proof, you know, just stick with the existing knowledge. And I think when it comes to the advancement of scientific knowledge, that may actually be a legitimate way of doing things. But if you're a business decision maker. If you have to wait until you are convinced beyond a shadow of a doubt that people are moving to digital media consumption back in the year 2000, then you're always going to be behind the curve. What's the proper balance between waiting for the data to prove you right and making those risky choices? I think in the book Provoke, it's really all about understanding these early signals, right? Where You know, the if becomes the when.

Yeah. If only more senior executives really understood p-values, we'd all be in a better place. No, I agree. And I think the, you know, as a Canadian, I'm very fond of the saying to skate to where the puck is because it allows me to talk a little bit about hockey.

Well, you want to skate to where the puck is going to be, right? That's the Gretzky quote.

I have to say that I think you just blew it as a Canadian, Steve. Yeah, that's a fellow Canadian. I almost called you on it.

Let's break Well, I was never a great hockey player. But the point though is absolutely correct. You can't— there is no data about the future. All data is by definition retrospective. And, but I do think there is a distinction between just using data to make decisions and incorporating testing into your strategy development.

And there, majorly different.

If you wait for all of your decisions to have a burden of proof that is absolutely bulletproof, then you will be too late on everything, right? If you can't be moving. So, you have to be in a mode, in a world that's changing, of constantly testing the boundaries of the uncertainty to learn faster. And there's an absolute role for real market tests. With alphas and p-values and all of that data-driven kind of science to see whether your alpha is better than your beta in this particular case, or vice versa. But what often executives do is wait for the preponderance of the evidence to be clear, and there's just not time. There's just not time to do that. And these are some of the changes that we've tried to institute at Deloitte. You noted that I was Chief Strategy Officer before, so we've tried to adjust what we do in our own financial plans. There's no Deloitte strategy anymore that says this is our 2025 strategy or 2030. We have scenarios about the world that contemplate what the world might look like in 2030. And then we create a single strategy today that is our strategy, not our 2025 or 2030 strategy, because we can't possibly know. How long our decisions will last for, and then when we create a financial plan, it is a directional financial plan that looks at our potential revenues and costs and investment over a relevant period of time, given the time it would take to execute our strategy choices. And we look at that as the economic hypothesis of our strategy to say that if we're successful, this is what we should expect, and is it worth it? Do we get a sufficient return? And if we don't, should we go back and rethink our strategy in the future? So it's not so written in stone that we create budgets out of it every single year and we come back to it in 4 years and say, this is what we do. And so we're trying to design our processes to mimic that reality. And as we implement things, we do them with testing in a small way first and then in a bigger way. And it's just, but it's, we're a large organization like everyone else. So it's, we've gotta make people more comfortable using those techniques. And sometimes that takes a bit of time.

Yeah. I mean, one of the things you mentioned in the book is that there's this cult of failure, right? There's a lot of lingo out there in the business world where fail. We certainly here in Silicon Valley, we always say, don't be afraid to fail. And this is, you know, I think it's certainly a, a valuable counter to the risk aversion that you see, but indiscriminate failure is probably worse than total risk aversion. So you have to fail in a very, very selective way. And a lot of that discussion reminded me, even though I think you weren't explicitly saying it, but that companies have to think more with a venture mindset, right? When they're approaching new opportunities that they have to, the stage gate process has some similarities with what venture capitalists do with milestones and so forth. It's just that it's, uh, the venture capitalists do it in a much more aggressive way and they do it in a much more I think careful way. They're trying to elicit much more information earlier on in the process. How is this process of using kind of minimum viable moves with the purpose of uncovering the information you need in order to decide what to scale and when, how does that differ from something like the traditional stage gate process?

At its heart, I'd say it is a, and I actually want to come back and comment on a word you said before and then tell you the rest of my answer. So the word you said before is balance. Okay. Balance is really important. And I think sometimes people overinterpret, especially the name of the book, Detonate, as to suggest that Steve and I are saying you gotta blow up everything and change your business model completely and what have you. That's not what we're saying at all. What we're saying is you need to be increasingly aware that you have to strike a balance between running for cash today and executing on today's business model and building for tomorrow. And that increasingly we're going to want to shift more and more of our proportions to focusing on tomorrow rather than today because of the accelerating rate of change. And so I'll go on record as saying there's room for both types of thinking. There's room for stage gates still in the processes we run. I think most stage gate systems at most companies are over-engineered and they drive people crazy because there's too many meetings and they take too long. But the core premise holds true for some portion of the work we have to do today. When we're looking towards tomorrow though, if you believe the notion that we are not in the job of taking risk out of decisions, we're handling uncertainty. Then you can take that notion of a minimally viable product, which I think a lot of people know about as applied to new product development and apply it to any sort of management decision. So the key notion behind minimally viable moves is that if you can take anything you're doing down to its smallest testable hypothesis and move quickly to go try it, to provoke a reaction in the market, whether you're talking about an external market or an internal market, then by definition you will not fail. And I, at the risk of dragging us into semantics, I believe, and I think Steve believes that You've only failed when you have exposed yourself to undue either financial or reputational damage. And so if you can actually turn the process of moving forward away from managing risk-averted decisions to one where you're taking small steps in order to understand how the future is unfolding and continue to learn in a series of feedback steps along the way, then you're not going to fail and you will actually achieve the goal that you set out to achieve at the outset. The last thing I'll say on this, and it's actually an analogy that still works for me even 4 years after we came up with it. We likened the journey through uncertainty as being like a walk through the woods in the middle of night in the pitch black. And what we talked about in Detonate is imagine that you're in that situation and your objective is to get out of the dark woods and you can't see anything. So let's pretend those dark woods are the pandemic. For example, we have no clue how this thing is going to resolve or what the path through is. We're not going to take— in essentially facing blindness, we're not going to take big lunging strides forward. We're going to take small steps. We're going to feel a little bit about what's in front of us, and then if it seems like stable ground, we'll take the next step. If it doesn't seem like stable ground, we'll probably do a very minor course correction until we actually achieve our objective. That's what it feels like to act in the face of uncertainty, and that's why we advocate for those minimally viable moves.

Yeah. And I want to pick up on your First part of your question though, Greg, which is this concept that we don't like this failure, the celebration of failure. I think the thing that Geoff and I hate about that concept is that it seems to be increasingly posterized and used as an excuse to poorly design tests and not articulate hypothesis and just get and be generally lazy about getting stuff wrong. And it, and then people just shrug themselves and say, oh, whoops, we were wrong. And oh, what are you going to do? And we just failed fast. Thank goodness. Let's celebrate it. I think if you're really disciplined about designing a test, when you get the answer wrong or when your hypothesis is proven incorrect, it's not a failure, it's learning. And that's a big difference between failure and learning. And what we don't want to do is have some notional concept that's not well understood, the reason for laziness in design. And what the VCs get right, by the way, is the best ones don't apply a rote process to every investment. They look at it in a detailed way, in a qualitative way, and say, and try to assess, what do we have here? And is this likely to succeed? And are there some questions they ask? Yes, but it's not a, The trouble with stage gate is it's so rote, it's so rotely applied often that only the most mundane ideas can get through and you can't, therefore some of the riskier ones tend not to. So we advocate that minimally viable move approach to be able to see the goodness in some diamonds in the rough that can't be quantitatively proven before they exist.

Well, I like one of the metaphors in that book I really liked was this idea about poker playing. And I think, you know, you were using this metaphor more narrowly to describe how you learn about consumer behavior and the ways to actually engage somebody in a game of poker. And if you just follow a formula, you'll never actually learn anything about the person you're playing with. But I think that this concept is one that has much broader applications, right? That if you're not out there engaging the external environment in an active way, that you're not going to actually learn about the external environment. You won't be able to develop a strategy going forward. But you also made this other point, which was that a lot of companies think about this type of exploration as being an edge activity. And you referenced the Deloitte— was it the Center for the Edge, which is kind of itself an oxymoron of it, right? You say that, listen, you have to integrate this type of learning behavior and learning activity and experimentation and the concept of minimum viable moves. This has to really be at the core of your business, and it can't just be for the new product developments or new market developments. Do companies think too in a bifurcated way where they're like, okay, like BCG matrix, we've got our core business and we're just going to rinse, wash, repeat on that side of things. And then we'll have this other part of the business, which is all about kind of new stuff. Do some companies do maybe do okay in the latter part, but they don't fail. They fail to bring it back to the center.

I think there's applicability in the concept of a minimally viable move to all parts of an organization. And let me give you a couple specific examples. So, as we're doing our own strategy for Deloitte, and we're implementing some strategy changes, the way in which we implement changes to our core business, what we might choose to do is instead of saying we're going to rip off the Band-Aid and redesign a bunch of management systems That are very different. We've been saying we're going to try it in a few parts of our business first to understand the execution risk associated with doing that particular change, and then apply that to a greater piece of our business, to a greater piece of our business, effectively using the concept of a minimally viable move to continually adjust our core business. I think we then similarly can take the learning from the Center for the Edge and say, to truly do stuff that is outside of your core, you have to establish and separate them from systems that to some extent are governed to run your core business, that you can't use the same systems. I think that's an appropriate separation, but you can use the core concept of minimally viable moves to both. I also want to just pick up on your poker metaphor real quick, because I think that's To some extent, the central theme in Provoke is related to that, which is we believe that in a world that is governed by uncertainty, you won't get good data unless you force some kind of reaction by— in poker, it's your opponent, so you force them to respond to a bet. And in the world of managing uncertainty, it's trying to either get a customer to take or not take an offer. Or to respond to a prototype or to do something in the face of it. We think that elicits much better information. And for what it's worth, I think the poker metaphor— we wrote that, and then Annie Duke wrote a— who's a professional poker player— wrote a terrific book called Thinking in Bets that talks about the failure of evaluating a decision by outcome, right? Did you make a good decision based on a probabilistic outcome? And that'll—

Yeah.

A low probability event happened didn't mean that you didn't make a good decision. So I think that there's a lot in that poker metaphor for your listeners to chew on.

I teach a course on data strategy and I think a lot of people think, look, I've got all this data and it's all kind of streaming in. Let's do some analytics on it and figure out what to do. But the, they leave out the most important part, which is the strategy for data acquisition, right? Like how are you actually manufacturing data? How are you actually making sure that this new data is coming in that will, will kind of guide you in the future? And In the book Provoke, it's a lot of it's about finding these early signals and understanding how to interpret these early signals. And one of the quotes that I like to use in my class is that, and I don't know where it's from, but no one ever changes because they see the light. They only change because they feel the heat. And I think that what you're saying is don't wait for the heat to come to you. Go figure out where the heat is so that it doesn't sneak up on you. Right. Is that a fair summary of the Provoke book is like you have to go and look for the trouble so that you can Verify where it's coming from.

Look for the trouble or look for the opportunity. And this really is at the heart of Provoke, a belief that, and you have to believe that we're being impacted more and more by uncertainty these days in order to buy into what Steve and I argue in the book, but that the reality is uncertainty resolves. It just does.

Okay.

So at some point, every uncertainty resolves. Sometimes uncertainties just flit away. They were nothing. They were interesting hypotheses that I've been increasingly Thinking about what we were collectively thinking around Y2K and the possibility that we were going to have some major meltdown because of computer glitches around the world. That was uncertain, didn't happen. That one flitted away. Other uncertainties do resolve. And when we say they resolve, they go from being a question of if they're going to happen to being a question of when they're going to happen. We may not know everything about them. We may not know the landing point. We may not know the rate of change, but as they resolve, from being a question of if to being a question of when, they go through a phase change. And we talk a lot about the notion of a phase change in the book. The best provocateurs, the ones who actually can act before they feel the heat, to use your term, or to act before they have perfect information, are able to position themselves to see the phase change earlier, to act earlier in the phase change to create advantage, and to act in a way that's aligned with what they're trying to achieve in the world. And so that the outcomes that they end up influencing are outcomes that are advantageous to them. And so we, in the second half of the book, we talk about the 5 different modes of provocation or the 5 different provoke strategies that allow you to do those things. But ultimately it is about being able to act sooner in the phase change and with more purpose through the phase change than anyone around you.

And so to be a provocateur, this requires not just a different mindset and a review of the biases and so forth that they have as individuals, but it really requires a rethinking of career paths and career trajectories. And you spend some time both books talking about this. We graduate people from business school. Historically, we would go and achieve some entry-level position and then climb the hierarchy. And oftentimes the best way to do that is not to make any trouble. Right. And, you know, you say that not only should we get rid of that view of career trajectories that we were working with before from the individual perspective, but organizations need to toss out the career path that, you know, hierarchy and sequence, because these roles and jobs are constantly in flux. Does shaking up the career path open up the door for people to become provocateurs because they're less worried about climbing the greasy pole, so to speak?

I think you gotta create a system where people feel psychologically safe to be provocateurs. And what we use to create that psychological safety over time was some notion of a career path that if you stay for 10 years, you will become an X level in this particular organization. Every organization had one. The problem is that if you believe that we're living in a world that will require constant evolution, then that career path isn't worth the paper it's written on because things are gonna change substantially. Over the next while. So I think the moral contract between organizations and their people needs to be rethought. Instead of saying it's about achieving a particular level in the next X years, it's gotta be achieving a particular set of skills, not akin to Liam Neeson's, but akin to the kind of skills that are gonna be relevant in the marketplace. And this is what you will be able to say that you can now do if you take this role for the next couple of years and have each role that you take on have a learning contract associated with it. And I think companies and their people need to be less focused on moving up a ladder versus what am I building? And that goes all the way up to the senior executive ranks. So I think that that's the way you're gonna build the capabilities that will create provocateurs. But you gotta have an honest conversation, 'cause if people don't feel safe, they won't engage in an authentic dialogue about how to change the world.

And you also talk about the need for diverse perspectives in group decision-making. And you talk about how perhaps there are too many MBAs, or at least, you know, MBAs have too narrow a set of skills when they're coming into the workplace. How would you, if you were crafting kind of an ideal team or an ideal, maybe individual coming out of school, what would that person look like? Can you teach people to become provocateurs or is the teaching of formal methods inevitably going to constrain their capacity to be provocateurs? I mean, we have classes in design thinking. I teach a course on behavioral economics, which is all about understanding how to make better decisions and understanding how to debias yourself and so forth. What kinds of skill sets do individuals need to cultivate? And then what kinds of teams should companies be assembling to make sure that these systems don't become ossified?

Yeah. So I, once again, you're asking a very good and wide-reaching question. I'd say the answer to both sides of that question is similar, but how you approach doing it is different. So diversity of experience is ultimately what ends up mattering because diversity of experience usually brings with it diversity of perspective. And that's the only thing that can help an organization overcome the, what we call the fatal human flaws that we think serve as organizational blinders as people consider a much more wide-open aperture in terms of possible outcomes or possible things they could be pursuing in the market. And so the, again, going back to some of the core ideas in the book, These days, a lot of people understand the nature of uncertainty. They understand the nature of exponential change and how it impacts the markets around us. They understand that they need to have a much wider field of vision as they consider their path forward, but they inadvertently apply these blinders because of the fatal flaws, the behavioral science-oriented biases that we all as individuals have. And then we take and we collide them together in organizations and really weird stuff happens. So the only way to remove those blinders, or at least the most effective way, is to introduce cognitive diversity into teams. And usually cognitive diversity is enabled by real diversity. So to your question, how do we think about that in the MBA system or as we think about our education system? I would say vary up the style of teaching and the nature of learning so that people get diversity of experience as opposed to just diversity of thought or diversity of course load. That's one really important way to enable that. And I think we are seeing it some of, if we just think about the MBA world right now, we do see at some of the best business schools these days, a lot more experiential learning, And a lot more kind of immersive learning in a variety of different settings that make people better able to think laterally as they come out of business school. How you do that broadly in an organization and how you assemble the right team, that's what Steve was talking about before. That's what he's done historically on his team is he's tried to think about the strategy for one of the world's largest and most successful professional service firms. So Steve, maybe you want to comment on that.

The thing I'd say is that I think business schools need to create the preconditions. They need to create the basics, but they can't necessarily create something that's fit for purpose in an organization. So I think the thing that's lacking in business schools is an appreciation for curiosity and creativity and multiple answers. So I, I like that you're teaching design thinking. I'd love to hear more learning about in things like ethnography and appreciation for anthropological kind of studies, looking at the human being. And then courses that emphasize integration of different concepts. I think what tends to happen in organizations, it's a collision of different silos who don't understand how to integrate financial with human capital, with the marketing. And we need more integrators. in the world who can think across those different streams. So I think those are 2 things I'd look for from business schools. And then an ability to listen carefully and empathetically and to really leverage the power of inquiry and a lot of what Chris Argyris taught in his Productive Interaction. So those are some things that I'd, I'd look for from business school grads.

Now, the story that probably will, I'll remember for years after reading it is the one that you begin your Provoked book with, where I forget, I think it might've been you, Steve, were talking to an executive at a senior media company and trying to warn him that there were these people called cord cutters out there. And I think they represented less than 2% of the market at the time, but they're all, they dominate now. And the business leader thinks it's trivial because it's only 2% and is Not thinking that this is sort of the beginning of a huge wave. As practitioners, how do you get people to listen? As a professor, it's great because people, they're paying you to basically listen to you so you can tell them stuff. But then the minute you go into a different venue, people don't want to listen to you. And your job, you get brought in by companies to presumably tell people things, but the human nature is we don't want to hear things that we don't want to hear. So How do you implement organizational change? How do you actually pull that strand on the sweater that causes the thing to unravel? And you mentioned that change management is difficult and that it's very much about kind of mindsets. Should organizations, do they have to start with shifting a mindset or do they have to start by abandoning these practices? Do they get rid of the budgeting process, get rid of the meetings, get rid of the strategic planning? Do you start by shaking things up? Structurally and in terms of the calendars and so forth? Or will that be enough to jumpstart the mindset? Or how do you get an organization that's full of these outdated orthodoxies to become one that's more capable of learning and changing?

So I would say the answer is yes. All of those things are plausible tactics to use.

The—

I think every organization is a product of its own history. And so the specific tactics that you would use at a company like Deloitte are gonna be different than I suspect a company like, or a leader like Elon Musk would use at a, a new but also scaled organization like Tesla. They have got different orthodoxies, different tactics that they've grown up with. The common denominator is, I'm gonna use language that you used earlier, Greg, cuz I really loved it. Which is you've gotta be able to feel the heat. So a good leader figures out a way to design a system where people feel the heat before the fire is raging outta control. But there's some way, there's some system and process that you've built that enables your people to feel that heat so that they want to make changes. And the real problem that we wanna resolve is That the status quo unfortunately is very risky in a world that's moving really fast. Unfortunately comes with the characteristics of not feeling very risky, right?

Mm-hmm.

Yet doing something different has the opposite. It feels really risky, but actually trying something different in the face of uncertainty is actually a pretty pragmatic thing to do. And so a good leader figures out how to design a system in her organization that will cause the organization to feel differently about that equation. But I, that's the fundamental problem that needs to get resolved. And sometimes it's a question of blowing up longstanding orthodoxies. Sometimes it's just a question of asking different questions in meetings. So there's not a rote answer to how to do that.

But, but I do think, Steve, and you and I have talked about this a little bit in the past, the common thread across all of those tactics is probably some push to be, to have any choice or any sort of challenge feel less abstract and feel less distant. So in other words, the more proximate you can make someone to the choice that they're making, the more likely they're going to actually act with good judgment as opposed to old playbooks. So I've often thought about the caricature of the opening to Provoke, and Steve actually assures me that's not a caricature. That's actually the way the guy was, but he was sitting back in his fancy executive suite and listening to the consultants with the data and looking at data sheets. Imagine what might've happened had we taken that executive and put them in the living room of one of the cord cutters. So he's actually watching the behavior and thinking to himself, geez, I wonder why they're doing that. Are they looking for a different experience or are they valuing different types of things? That's a different compulsion to act and a different compulsion to think than looking at a market research report, for example.

And I think you end pretty much every chapter in the Provoke book with do something, right? And so it's really a bias towards action, but then at the end of the Detonate book, You say, look, if you change the questions that you ask, then you're going to change the outcome that you get. And maybe the just do something begins with just asking different questions and starting conversations, which will then enable you to make these, take these actions. Are you saying that the bias for action can be ignited simply through the posing of questions? And can people who are not at the CEO level, can they jumpstart organizational change through Provocation from a lower level?

I think Geoff and I have come to the conclusion that the answer is yes, but it's really hard. I think that, like, the notion of provoking from the middle is a really daunting and difficult task to ask of those people without the support of senior management. And so, it's made at least an order of magnitude, if not 2 or 3 times easier, When you've got receptive senior leaders who are paving the way for you. And the way that they pave the way for you is by not asking questions that typically get asked in meetings that they're attending, which often talk about investments and budgets that kill genuinely new ideas. Like, is our competitors doing something similar? Or who's done this before? Or how do we know this will work? That's why. My least favorite of all, how do we know this will work? The answer is we don't know if it will work. But if you keep asking those questions, we're going to keep trying to sharpen the saw until it's entirely dull and we're taking no risk whatsoever. So if you want to get the organization to act, what the senior leaders need to do is flip the questions to make them— make the people on the other end of them not feel like they're getting pummeled into submission, but actually feel like they're being engaged in a dialogue About honest risks and minimally viable moves.

And that, by the way, doesn't mean that all change has to be top-down driven. It has to be top-down enabled, but the actual, the changing of behavior and the small-scale detonations, which is what we advocate for in the minimally viable moves, has to happen lower in the organization. And that the simplest way to provoke, the simplest way to do something, and this can apply to anyone at any point, whether they're talking up, down, or sideways, is to simply turn to the other human being across the table and say, What do you think? Just engaging someone else in the conversation about what they believe and seeing if they want to challenge your belief system and the information you're bringing to the table is probably the best small step forward to get people thinking again, as opposed to executing on the playbooks.

Final question. You guys mentioned this idea of the dumb principle, the Richard Thaler idea. And when we do that, we're always thinking in terms of bad leaders. We're thinking about how CEOs fail to make the decisions or ask the questions that jumpstart change. But all of these folks, they work for somebody else, right? They all work for shareholders. And, you know, when we look at these wind-down firms like Blockbuster, right? The decision-makers that set them on that path, they were all hired and retained by boards, right? They were all trying to satisfy boards, right? When they're creating all these metrics and trying to satisfy all these KPIs, it's because they're all trying to maintain their position with the boards and ultimately with the shareholders. Shouldn't the impetus for change have to come from ownership or from boards? Do you think that boards fail to understand these issues? Do you think boards are the ones that if you have to educate somebody about this, educating CEOs doesn't matter if they're going to be penalized for making these changes? Do we need to rethink how boards operate? Do we need to figure out how do we educate boards to evaluate bosses and leaders differently?

I think that there's a role for the board in creating a system of change that would result in the outcomes that you're describing. I think I've seen examples where you've got a strong enough CEO to overcome a board who is not as in tune with the ideas. And I've also seen boards similarly drive these ideas into a weaker senior leader, a set of senior leaders. I think you would get the best outcome if you could redesign a system, because if you think about what boards are up against, they're made up of people who show up for some between 4 and 10 meetings a year and don't get the benefit of being in the soup day to day. And really, it's a daunting task to be on A board of directors. And there's only so much, I think, in the construct of what the board is that you can design it. You can set some of the metrics, of course, but I think there's culpability on both sides. And what the question has to be, how do we design a system across the senior leadership spectrum of boards and chief executives who have different roles and responsibilities to create the preconditions for the outcomes that we're describing, to challenge orthodox To look at measures that go beyond it. But I don't think either of them could own it on their own. I think they both have important roles to play that are different given the nature of leadership and governance in the corporate world.

And I hope in that, Greg, what you're hearing is our core belief that this is not an individual's problem, even though it can be solved by an individual. It's a systems problem. And ultimately, if we're going to impact the system overall, we have to impact all parts of the system. And that's part of why we write about the breadth of topics that we do in both these books.

Well, Geoff and Steve, I think we barely scratched the surface of some of the provocative ideas that you have, no pun intended, in both of these books. And there's some fantastic insights, some wonderful anecdotes, and really some great questions that kept me thinking for quite a bit and will keep me thinking. So again, we've got Provoke And we've got Detonate. Check them out. Thanks so much for joining me.

Thanks for having us. It was fun.

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