Managing Complexity w/ Ross Hamilton #24

Hello, everybody. I'm David Goldsmith, and welcome to another edition of Redefining Tomorrow. It's here where we discuss topics that may redefine your future, that may redefine how we live on this planet or any other type of redefining you might consider. A quote I've lived by for most of my life has been, you can't fix yesterday. You can only create tomorrow. Today we're going to be redefining tomorrow. The topic we're going to explore today is rethinking complexity, adapting to constant change. And with us, we have an amazing person, Ross Hamilton. How are you, Ross?

I'm good, thanks, David. How are you?

I'm doing great. So Ross has a background that spans from aerospace engineering, finance, mobile technology, e commerce, and enterprise software. Today, he's the COO of Space Network. Yet his background includes JP Morgan capital markets technology to Global Scott, which he is a. Which is a global network of Scottish development international. You'll hear from his accent. He's Scottish. So one thing I want to share with everybody, and I've had to add this because individuals didn't understand what was going on, they would often ask me, how did you know all these questions to ask of your guests? Let me share with you that I have no clue where Ross is going to take us. What happens is I find a guest that I think is amazing, and there are many that are turned down. And we then have a conversation about what would be valuable for us to listen to or hear about or that I wanted to explore. We then part ways and Ross comes up with his own outline of what he wants to bring us through from his experiences and our conversation. Often, just selecting the title can take anywhere from a half hour to the longest was six hours. So we discuss a lot to find what would be something that would be interesting for me and potentially for you. That said, we're all going on a journey together with Ross. So my question to you, Ross, is, do you have a set of bullet points or an outline?

I do. I think I do, yes.

So in the thinking, how many do we have? So I know in advance.

So I would say there's. There's. Well, in extension, there's probably eight.

Okay, so can you start with number one? I'll write them down and we'll have them. What's number one?

Yeah, first is talking about complexity. Just an introduction to complexity.

Okay, talking about complexity. Number two.

Financial options 101.

So options 101. Number three.

Real options. Ah.

Number four. F. The letter F. The letter F. Okay. Number five.

Do you want me to explain what F is?

No, no, no, we'll get to it. That's fine. I just, I didn't want to use too much ink.

There's going to be a pattern here. After F comes U.

Okay, so, okay, this is good. Number 6s. Okay. Number 7e. Number 8d.

Fused.

Okay, that's cool. I've never had over 400 interviews. I've never had anything that looked like that. So I'm normally trying to keep up. People speak them so quickly that I have to like, no, you gotta slow down. I, I was able to keep up with these in between the laughing. So let's start.

I really wanted to keep you guessing. Well, not.

Hey, it's, it's the complexity that you brought to this. Okay?

Reduce complexity, man, you've just, you've, you've.

Taken it off the charts. So let's talk about complexity number one. Where are we going with this?

Okay, just maybe a couple of introductory remarks, maybe talk a little bit of an example. And I just get into a little bit about what is complexity. Right. So complexity is one of those things people maybe don't necessarily have a good definition around. And before we get that, what this is all about is how you really approach complexity from a management standpoint, you know, dealing with the uncertainty that occurs with complexity. And so what we're really going to be talking about is a bit of a toolkit, right. I've we mentioned, you know, in my, in the bullets that we're going to talk a little bit about financial options and real options. And the reason for that is. And we'll get into this, but my background is in JP Morgan was in dealing in derivatives trading. And it really helps the mindset of how to navigate maybe complex issues around complexity. So this is why we're going to have options in here. And this, this fused is actually my own kind of framework of how I think about things and about addressing some of these problems. Right.

So before, before we get too far because you said, you said, I want to give you my background and we never really have spoken about the derivatives and the trading side. We had a little bit of a conversation. So you then talked about complexity and you've tied it to derivatives and trading. So can you, for me to understand, why do you look at derivatives and trading as complexity?

Well, can we get to that? Sure.

That's why I'm asking.

Let's break down complexity first.

Okay.

And then because there's a little bit of a side journey with the financial options, because I Want to do a little bit of like, what are options? How do they work? Because the mechanics of the options, which will explain what the financial options are, will help us think about creating optionality when it comes to a management perspective. Okay, that go.

Yeah, I'm just trying to figure it. So if you've got a pathway to take me on, that's great. Fantastic.

All right, so there's going to be a theme to options through this whole thing. So just before we kind of get going, have you ever heard of Paul Neil, Red Adair? Know who Red Adair was?

No.

So this guy been a bit of a. Bit of a. Kind of a hero, bit of a. Kind of something I've associated with. He was going back decades and decades. He was an American oil well fighter and he became really famous and well known for his ability to extinguish oil well fires. So over 30, 40 years, he extinguished like more than 2,000 fires and blowouts on land and offshore. There's a movie about it as well. I think it was. Who's it did the movie? There's a John Wayne movie, I think, called Devil's Cigarette or something. Right. And so his whole thing was he was the guy that was flown in to basically firefight these massive explosions. And he really became a leader in his field. He was bold, he was decisive. But the interesting thing was how he actually capped the stuff off. A lot of the stuff had never been invented before. And so he was very analytical, but he was very intuitive and he was profoundly about learning how the fires work and trying new fires, fire, trying failing things. And then mostly his leadership style and personally getting on top of these things. You know, he did some incredible things.

It's kind of an interesting expression. Getting on top of these things was stopping a fire is getting on top of these things.

Well, well, let's.

I mean, one of these literally, literally is stopping it. But I did look it up. The Devil's Cigarette lighter is a 1962 documentary film about the efforts of firefighter. Read A dare to. To extinguish an oil well fire in Algeria.

Yeah, Took him six months to put that thing out.

Yeah, that's what it says, six months. Burned for over six months.

And so, you know, he tried all kinds of things, you know, and he was experimenting and trying things. He would literally blow the head off an oil well to try and put it out. It was kind of counterintuitive. Right. You try and use high explosive to snuff this stuff out. Anyway, I bring all this stuff up because I in My career ended up with a nickname of Red, because when I was managing, it was a CEO of a fintech consulting firm at one point. And we would have client situations, we're building very complicated and complicated systems, and there would always be tension between our teams and the client. And I was the one when things blew up, I was the one that had to go in and solve the problem. So I got the nickname of Red.

Well, that's a good name then, right? It's a compliment.

Yeah. I mean, and so from ever since that point, I've always kind of used Red as a, kind of a, kind of a way of thinking about, you know, this was a good guy in history, but, you know, he was innovative. And so what's interesting here, didn't I bring this up, is that, you know, he was putting up very, very, he was putting out and dealing with very complex situations. I mean, we're talking about complexity here. You're talking about things that are kind of beyond, almost beyond control, but very interdependent amongst many, many factors. Right. So real legacy this guy had. So I kind of throw that out there because as we talk about complexity, which we're about to do, you know, just think about how he would approach that thing.

The question that comes to mind in my head, as you were saying it was I, I think I've seen them blow off the top of a, an oil well, so that probably came from him.

Yeah, but.

And I know it's difficult to get to it. There's heat, there's electric, there's pumps, there's systems, there's spills. I never really thought of the complexity of the fire. I've really thought of the, the damage of the fire more than I did the complexity. Did you. So my question is, have you researched the complexity of oil rig fighting or oil well fighting?

Not specifically, but it's kind of intuitively, there's an element that's really undetermined. And maybe this is maybe a little bit topical or too topical. But if you think about what's going on in LA right now, which is a disaster, there's a reason that we can't get on top of those fires. And it's because there's such a unknown, uncontrollable set of parameters that are intermingling with one another. Right. And so, you know, if you think about in those terms, it's a really large scale, complex problem to solve. Right?

Yeah, that's, that's a, that's actually an excellent example. And I don't, I don't Exactly. Remember our conversation that get to this title, because you and I, when we create titles, we don't go into depth. But in the project that we're working on, which is part of the project moonhot side, one of the things that I will often say, we got to where we are because of an interconnected set of conditions that are extremely complex and we tend to try to solve them with simplicity. Well, we'll put a software block thing. No, you've got to have multiple things happening simultaneously in different directions that intersect at different points into the future. And there's huge complexity. And when we bring things down to a simple form, it's not always the best answer.

That is exactly right. And that's why I'm bringing up the example, because there's a notion that we're going to talk about. It's path dependent. Right. There's like multiple variables running forward in the future and their paths may cross, they may not. Things may happen. You don't know. Right. And so complexity has these, some of these parameters around them. So that's why I bring up the red example and firefighting. I didn't mean to bring up the LA fires, but it is actually a good.

No, it's perfect. It's absolutely perfect. It fits and it's. It. If I was to say I can understand, I. I see an oil fighting, oil rig fighting, but that's not a common occurrence. No, the LA fire or the amount of fires and the Canadian fire last year gave off more CO2 than all of the United States did for half a year.

Yeah.

And when you think about the Aussie fires that happened a few years ago, they were just ripping through the entire ecosystem. So I think the current fires are a great example of complexity.

Yeah. And we can talk about this when we get into some of the later parts, but in emergency response in general and the military, they actually use a couple of frameworks that help them identify whether something is complex, complicated or just chaotic. Right. But we'll get, we'll get to that in a minute, shortly. So we've talked about. Let's just get into complexity. Okay, so would you say you kind of like alluded to it there, Would you say that Project Moon Hut is complicated, complex or maybe even chaotic?

Complicated, complex or chaotic. It's all of them.

Right. So I'm asking this question because I want to talk about quite an interesting framework, the Kennavin framework with David Snowden. Have you heard of this?

Heard it, yeah.

So this guy, he did this back in the 90s, I think with IBM, the idea is to help leaders, managers, decision makers navigate the complexity of the systems they operate in. I actually looked this one up. I didn't know this before, but kind of is actually a Welsh word that signifies multiple intertwined factors in our environment and our experience that influences so how we think, how we interpret, how we act in ways that we can never fully understand. It's kind of cool.

Yeah, no, it is.

But the nature of this framework and the core part, which I want to quickly run through, and then we can go back and answer. The question I just posed to you is it kind of divides up whatever your problem statement is into five domains and I'll quickly give you them and we can walk them through. Simple, complicated, complex, chaotic and disorder.

Okay, hold on. Complicated, simple, complicated, complex.

Yeah, was an excellent. Chaotic and disorder.

Disorder.

Okay, so let me quickly run through what that means. Yeah, okay. Simple. It should be pretty obvious is there's a clear cause and effect between things and when you can make decisions, it's straightforward. Nothing interesting there. Right.

However, in most cases, they are not really simple.

Well, that's the thing. So let's move on to complicated. Yeah. So it's the relationship between cause and effect that requires quite a bit of analysis or expertise. You'd bring an expert in to help you figure some stuff out. Complicated, hard, right? Get some PhDs and get some physics people in, get some lawyers in, whatever.

And get your grandfather who's done this without any of those tools for 50 years.

Exactly. Oh, my God.

I've been fighting that in my entire life.

Exactly, exactly, exactly.

Why do you guys need computers? Take a left.

So, I don't know, we'll come back to this one in terms of Project Moon Hut. But the next one is where we get into the complex, Right. In complex systems or problems or things you're trying to build, right. The cause and effect, the relationship between cause and effect can all only be figured out in retrospect. There's multiple interconnected variables, right. And you've got a probe. The actual wording that gets used is probing, sensing and responding. You got to really get your hands in there and figure out. And look. So it's path dependent, Right. You've got to do experimentations and see patterns and figure, oh, that's what happened. That's what's going on between that cause and that effect. So complex systems tend to have that kind of characteristic. Path dependent. I'm going to keep using that word because we get to options. It's going to be a word I use a lot Right. Chaotic, Just, just mad. Right. There's no clear relationship between cause and effect. It's confusing.

No clearly identifiable at the time that it happens.

Association between, maybe not even in retrospect, is highly turbulent and unstable and can be really unpredictable. So you could say firefighting is chaotic, but often what it actually is, it's complex.

Right.

Now the last one is disorder. That's when you just have a clue, you're unclear. But if any of the other ones don't apply, you're in disorder and you have no clue about what type of causality. There is total confusion, paralyzing, no clear direction. Right. If you're in disorder, you've got a real. It's where you go from chaos to utter chaos.

What pops in my mind are two things. One, it's based upon the historical, your own personal historical evidence or your history to determine where this sits in each one of those categories. So for one person it might be complex. For another person it might be chaotic.

Correct.

And at the same time it, the next thing that popped into my mind was that, how was I going to say it? The time and space that we're in. So something that was in 1700 or 1200, which they were witches today would be just doing chemistry. I mean, we do this in high school or in elementary school. It's simple. So time and time and space makes a relative difference to that same also, I think.

So when we say past dependent, you know, that's just not like kind of functionally how did things transpire. It could actually be a time component, time dependent. Right. Yeah. And so it's an interesting way of thinking about things. Right. And it's quite useful because how you manage each one of these things is kind of interesting. Right. So maybe talk a couple of examples. Right. So we talked about emergency response. Right. Well, everything from everything that FEMA does to what's going on with firefighting, whatever. Right. And so some of these things could be simple, could be complex, could be complicated or chaotic. Right. So managing natural disasters, it might go from chaotic, which requires an immediate crisis management approach. Too complex. Meaning, for example, the long term recovery or the rehabilitation after that disaster. You know, we don't know exactly how it's going to work out.

I don't know if you've ever heard this. I worked in an operating room, so we had emergency room. So we had all different types of this environment. But I remember someone saying to me once, if you're at a fire and you see firefighters running, there's something wrong.

Right.

Because a firefighter doesn't run. They know what's happening. And if they're running, it was what they did not expect was happening.

Right. So is that chaotic?

Have you heard that before?

I've heard conversions of it, you know.

But it makes sense, doesn't it? If the firefighters are scrambling, something went wrong.

So I've got my own kind of experience with it. I'm not a professional firefighter or emergency response person, but I do ski patrol upstate New York. Right. And I got my EMT certification. And you know, you learn, you know, there's a system, There's a system and an approach for assessment and how you deal with whatever the accident might be. Then when we're coming up on a, on someone who's maybe having the worst day of their life on the ski mountain, you know, could be, it could be a medical issue, it could be a really bad trauma, it could be a bad break, it could be bleeding, could be all kinds of things. Right. Could be multi casualty, could be all kinds of things. And so you don't know going into what's going to happen, but you deploy a framework and assessment to help you kind of get through that. And every emergency response organization is trained with frameworks and assessments and ways of dealing with things such that if the emergency response is running away, there's something really bad going on. And it's funny because one of the requirements, particularly for EMTs, paramedics and whatnot, is, you know, you've actually got to be. Don't know if the word right word is licensed, but you've got to have go through FEMA training. Yep. So that if you were brought into a big FEMA type, you know, situation, you know how they work, because you have to fit into the framework, whatever's going on in this thing. Right. So in those cases, they're more complicated rather than complex.

And again, I'm going to go back to if you probably looked at the solutions, and this is interesting to. In my mind, I'm chasing them. If you looked back to the approaches that were used in 1900 use the approaches that were used in World War I, World War II, you go all the way forward. Those frameworks evolved because people understood that they weren't as complex or they were more complex and had to evolve to meet those changing demands or specific demands, such as on a mountain as compared to near the beach.

That's right. And so for every one of those domains, there's, there's standards and there's standards of care and there's frameworks and you know, you get trained in running the process. You know, when farm firefighters run into building, they're not running into a building. They know exactly what they're doing, they've got a procedure, they've got backup and most importantly they're thinking about risk and their self health and safety. Right. So it's the actual fire itself is either the chaotic or the complex thing.

So my mind is racing, so sorry if I'm interrupting because I'm trying to figure out is when you're would it be useful for a firefighter, an individual, or is it better to have the visceral response where you've gone over it multiple times to say to themselves, is this simple, complex, complicated, complex, chaotic or disorder? Or is it that the individuals who are on the executionable part is their job to follow based on the plans that were created and not really get into complex, chaotic. It's the leadership's decision to say where they stand. Yeah, you know where I'm going with that.

No, I know where you're going with it. It's an interesting one. I think most people would probably tell you that it's the management oversight role to decide the strategy and the approach based on their assessment of the situation and but they're getting their information from the individuals on the front line now in a very micro way. Once a firefighter goes into a building, are they thinking, well this is complex versus complicated? Probably not. They've probably got more that visceral. Listen, I know how to deal with these situations as they're occurring and feeding that back. And that's where it's for the management or whoever's overseeing the scene to make deterministic determinations about what to do. So the answer is probably more on the management side, strategy side.

So interesting because I wonder when you.

Were doing your job, sorry, I'd like to give that input. Sure, firefighters. But that's what I would imagine would happen because you need people who are focused on managing the entire situation because remember it's multivariable. There could be buildings collapsing, there could be people in the way, there could be all kinds of other weather related, all kinds of things. So you need someone who's pulling all that together to assess the overall situation and then everyone has their job within that.

So have you, I don't know if you plan on going this way, but in the organizations where you were leading, would this have been a better framework where you said let's sit down and determine this. Have you used it in an environment the way you've kind of outlined it or Is this more of a definition and there's a different way to use it?

I would say it's a little bit of both. I think these were useful examples to kind of illustrate the point about complexity. I think in companies that I've worked in, you could argue that people say, oh, this is chaos. No company's really in chaos. But I would think that there's times where things are either complicated or complex, and particularly when they're in, like you're building a system or providing a service, it's a useful framework to think about how you approach it. I wouldn't say that the organizations I've worked in use it formally to a management level, but certainly I find it useful when I'm working with peers or other people to kind of like, you know, come up with a strategy, say, look, what are we dealing with here? Are we dealing with unknowns, path to bend stuff, or is it just complicated? We need to get the right experts.

In paid to think. And I don't know if you got to the chapter on strategy. There's a whole section on a new way to look at. We talk about strategy and tactics, and it's a very bad way to look at analysis. You really should start out desired outcomes, strategy, macro, tactics, tactics, execution. I think you got to that. The thing that I think that's interesting is if in that decision making at the desired outcome level or the strategy level, if you just had a conversation to say who in this room or who are. When I say room, it could be a digital room or any in the environment. Who thinks this is simple, who thinks this is complicated, who thinks it's complex, chaotic, disorder, because it would help to get a reference point for what that individual is thinking. Because to them it might be because they've never experienced it, but the person next to them says, oh my God, geez, I've gone through this at least 50 times. I can do this with my eyes closed.

Exactly. And so it gives you a framework to see, well, not just what is it, but how are we going to manage it. Because managing something that is chaotic is very different than how you manage something that's complicated.

I'm not going to say it out loud, but I was going to. I won't say it out loud. I was thinking about marriage, but I won't say that out loud. I won't, I won't say it out loud because I could, I could get some feedback on that. And I don't know if I want to hear that, but let's just, let's.

Just rule out the simple one. And hopefully people don't have disorderly.

Right, right, right.

So.

But that's what popped into my mind exactly. We, we try to put things into buckets and say, well, you know, you got married. No, no, no, that's. There's a version of all of this happening through your entire life.

Yeah. So there's, so there's a couple of other. Just quickly. A couple of other examples. Again, I just, I was just doing some research.

These are great. This is fantastic. This is very helpful, thank you.

So, you know, this is. Some military use this. Strategic operations use this. So commanders use the framework to think about different conflict scenarios. What's the most appropriate strategy and tactics it's used in business. It is used. Again, the genesis of this was originally IBM back in the 90s. I don't know if IBM use it now. I don't know. But if you think about when a business is going through innovation and product development, so when it's exploring new ideas, that's probably complex. You don't know yet what the dependencies are and whatnot. You're really figuring stuff out. You need to experiment. This is where. And we'll talk about it. Being agile and failing fast works really well. Whereas if you're building a prototype, that can be complicated, but you know what you're doing. And once you know what you're doing and you go to production, that's simple. I'm not saying it's trivial, but you know what you're doing. Right. And so when you're innovating as businesses, innovating like a startup is starting new things or an enterprise wants new things, you know, new ideas. Have you heard the expression of horizon 1, 2 and 3 in the context of innovation? So you hear this a lot actually with any companies that have got like an innovation lab or whatever. So H1, Horizon 1 is like now what's going on now that we can use and do stuff with? Horizon 2 is, you know, I don't know if the definition is exactly right here, say one to two years out, maybe one to three years out. So here's things that are coming up on the, on the Horizon and Horizon 3 is like far out. So when you're looking at trying to solve problems, quite often in the innovation world, they look at it in terms of H1, H2, H3. You know, I've.

I taught new product and service development in nyu and I didn't use this framework because what I would often say is, it's a relative term in, in, in Technology, in technology applications, you would say five years is really a long time.

Yeah, but right.

If you're talking about building a nuclear reactor, you could be talking 20 years. If you're talking about the energy sector, the energy sector typically is looking at a 30 to 50 year horizon. And I, and individuals, most students and people that I work with don't realize that you have to put frameworks around them.

Yeah, yeah, that's an interesting point about the timeline. You know, nuclear reactors and building a piece of software ain't the same thing. But you know, here's the question, maybe back to you is you build a nuclear reactor, you kind of know what you, what you have to do to do that. You know, you're not making that up. Yeah. So it's deterministic. Yes.

So when a per, when a person.

Says so that's complicated, but that's not complex.

No, it's not complex. A person will say, well I spent a lot of time thinking about the future and yeah, we're, we're building a nuclear reactor. We have to think about what we're going to do in two years. We're going to put the cap on. Well, that's not the future for you because you already know in two years because you had to order it six years ago. That's not a horizon.

So the relative in that case, in this domain, I suppose your H1 would be defined differently. Correct.

That's my point. And it's the. I did look by the way the name of your this domain thing, the five decisions. I look C, Y N E F I N Sin Nefin offers five decisions and simple, obvious, complex, chaotic confusion disorder. So yes, I just looked it up for the IBM reference.

Yeah, yeah.

The challenges individuals have. There's a term, and I don't know if you know this, I learned, I used to call it 5D length with time, length with height, time and location.

Sure.

And because what we do now, I'm sitting in my chair today, 10 years from now, in this chair is a different time and a different location. It's going to be different. The geography was different. I won't be sitting on the second floor. My son came in and said in mathematics it's actually called 4D and it location is considered zero.

Oh really? So 01234-1234.

Which I thought was an interesting thing. So in Paid to Think we called it 4D. My son told me I was wrong in the book. So dad, you don't understand what you're talking about, but he was absolutely right. It's called 4D.

Yeah. Time and space.

So yes, on these horizons. And that's great to have a reference point as long as the individuals that you're working with understand those horizons.

Right. It's completely context, right? Yeah, yeah. So, you know, you know, we're already running through a few examples, right. About, you know, whether it's business innovation, military, emergency response. You're starting to get the idea about why complicated and complex and chaos are actually different. Yeah, right.

Yeah. It's interesting. I hadn't thought about in that way and I like the context of the simplicity of three. The challenge is figuring out in what you're working on. What are those horizon markers.

Right. So let's just kind of round this out a little bit. Again, this is just a bit more of a, kind of a Kickstarter for talking about components.

No, no, this is great. This is fantastic because I'm relating it to. So you don't have apologize. I'm relating it to the platform we're building, the, the, the mining operations where we're talking about the immersive, you know, we, we've got the box of the roof and a door on the moon. I'm also thinking about all the other things. So each one of the items we're working on has completely different timelines of what we would consider horizons and complexity to that group might be to one group, unbelievably complex.

That's right.

And the other group says, what are you talking about? You know, we have the number one mining expert in the world on our team. We have the Most advanced with 41 patents in graphene on our team. So to those people, I've got 41 patents in this. I've seen it a million times. To somebody else it's, oh, my God.

But now you've got a language. Yes, language. Because what I said earlier was one of the things you do when you're dealing with complicated systems is you got to bring. You can figure out, I mean, if you've got the experts, they'll help you figure it out. Right. They're there, they'll do it, they'll tell you what to do or they'll figure it out. Right. But when you're into. And that's fine if you've got them on hand for mining or whatever you're doing, or nuclear reactors. Right. Yeah. But when you get into complexity, yeah, you're going to need experts, but you actually need more than that. Then this is where the management side of things and the strategy side of things comes in. Kind of like, it's kind of like that helicopter view, if you will, of like emergency response. Right. You need another operating system that lands over the top of that to make sure that we're dealing with the things that make complex systems complex. Right. Which we'll talk about. So think about where complexity comes from. Right.

I don't know. I don't know.

So, you know, there's kind of, there's. If you think about it from a company standpoint, there's internal, there's external. Right? Okay. So internal can be from, you know, organizational processes, policies, leadership, culture, workforce diversity. There's lots of things that happen that it's really hard quite often to put your fingers on. Right. A lot of that goes into defining culture. But there's external factors. Markets are shifting, financial markets are shifting or whatever. Any market for your products, goods and services, technology is changing at a hell of a fast pace. Regulatory environments, there's all kinds of interdependencies across that. These get complex very quickly. Right. And so there are internal factors and there's external factors. Internal factors you would think you can get your hands around a little bit easier from a, you know, executive, you know, standpoint, external, you're definitely in react mode, aren't you? Or it's harder to shift the outcome of what's going on outside of your organization. So a cultural issue in a company would be an internal, complex problem, a massive fire burning in a disastrous way that's got all kind of externalities going on there.

Yeah, yeah.

I think it's just useful because again, depending on your context and you're the manager or the person that's thinking about the problem, you know, is it complicated? Is it complex? Is this internal and something that we have half a hope of getting our hands around? Or is it external and we have to acknowledge that there's different things we have to do.

I'm going to give you a scenario, if I may, and then you tell me how you would define it. Because I'm struggling with the model, but not because of the model. I'm struggling because I had this challenge just recently happen, you know, that we are working on mining operations. I meant that a few minutes ago, but yeah, the entire Beyond Earth ecosystem talks about mining off on the planet. You got to go to Mars, you got to the moon, you've got to outsource it. We. It destroys our environment, yada, yada, yada. It's terrible. But yet our world survives on mining. Everything around us is mined. All the metals, all the materials, all the glass all the walls. And if it wasn't particularly mined, you had to use equipment such as trucks and, and, and, and rivets and screwdrivers and everything to make it so. And that's complicated and well, so everybody. It's a very big topic of beyond Earth that we have to do that. And over the past 10 years I personally have been looking for someone to help me to get my mind around mining. And we ended up meeting this guy. I mean is amazing. He underwater on land, high altitude in the moon. This guy, he's done over 700. I think it's 160,000 core samples. He's flown all over the world. He really knows his stuff. And I ran a rock quarry. So we hit it off when we first hit and our understanding of the complexity. I'm gonna use words, probably the wrong one was wow, we really understand each other. And he said he's been looking for somebody like me for 30 some odd years or 25 years. I don't remember these exact number. And getting to. I'll get to a point through this analysis. It really comes down to every single thing on the moon is on Earth because when the moon and Earth collided they ended up spraying it out and ended up becoming the moon that goes around the Earth. But more or less if you were to rip the Earth open and rip the moon open, you're going to find the same things.

Well I would say, I would say that's true from an element standpoint. But the nature of it might be different.

Right? The nature of it would be different. But if you're going to be mining, you're in your mining. Aluminum or iron is iron and iron is iron. It's always the same. So you might find it in different environment because of the style and approach that you would use. But if so then I, I don't know if you. The, the, the most mines in the world are less than 4,000ft. Most mines, the deepest we've ever gone is about 13,000. And the, the furthest we've ever driven a hole is 40,000. It's hot. It's difficult to go further and further down. There's a 1 degree Celsius change every certain amount of meters you go. There's a lot that goes on. But our, but our planet is 8,000 miles wide. So we've only gone 4,000ft. That means that there is so much more underneath us.

Yeah.

Than we can ever imagine.

We float. The top crust is just a tiny.

We're not even touching it.

We're just. We're just floating.

Yeah, we're nothing. And there's just. In the United States alone, there are between 250,000 to 500,000 abandoned mines. There's 1.2 million mines in the world today. So taking that aside, we've been working on. Because it's not as valuable to go to the moon. It really isn't. It's. You add this complexity or this difficulty and you have to ship rockets up and ship it back. But we could get it from right where we are if we had autonomous robotic mining and all sorts of things that we're working on. And I got on a call the other day with one of our teams. We have about six people on the call. And I mentioned that we're working on developing one mind. It's 120, 70 and 250 mines. And the person was upset that we weren't doing it on the Moon because that's what we need to do. It is on the moon. Couldn't understand the complexity or the. I'm trying to figure it out. The, the complicatedness or the chaoticness. I'm trying to figure it out. As you're going through this. Couldn't understand that. It's just, it's financially better if we could eliminate the chemicals that are used. We eliminate the process. We reduce the. We're going 4,000ft down. It's not like it's on the surface. But if the processes can be improved, it will improve life on Earth. And we'd have the supplies and tools and things we need to move into the 23rd century. So where do you put a. To me, I learned enough where I said, you know, we're not about the moon, we're not about space. We're about improving life on Earth. He had a lot of challenge because it didn't fit into his construction that you needed to do it on the Moon because that's where it needs to be done. Which is very much a beyond Earth space thinking type. You know, we have to do it because that's where it's supposed to be done. And I'm trying to add to this framework to say how do I get. This is a David thing in my own head. How does David. It is what our project. But how does David help a person get to the point. And I'm trying to. Maybe I'm trying to squash this into the wrong model. Get to the point to understand, hey, it's just the best way to do it. Do you understand what I'm saying?

Yeah, yeah, yeah. It's.

Am I trying to use the wrong model?

No. Well, well, I think you're, you're. I don't know if you're trying to use the wrong model, but I think you're dealing with a couple of additional things. Beyond complexity or when it's complicated, you know, everyone's got their own kind of like lane that they operate in. And, you know, ultimately, and we'll talk about this as well, you know, is what's the outcome we're actually trying to solve for. Right? So try this. The problem of solving, you know, drilling 4,000ft in the earth, right? That's a complicated problem, but it's somewhat deterministic. You know what, you know what the parameters are, right? Drilling three feet on the Moon. The problem's not whether you can get a drill bit up there. The problem is everything else around it. And the question has to be, why are you doing that up there? Why are you doing it up there and not here? Like, to your point, if you've got the same materials on the Moon, and I don't know if it's three feet down or 40,000ft down, I don't know, why are we doing it on the Moon? And so you're actually. But the Moon problem, the Moon version of the same problem is actually complex, okay? Because you've got other environment external factors. You've got things that you don't know yet. You don't know if you stick that drill bit, you know, 10ft down in the Moon's surface, what you're going to find.

And it's 16 gravity.

And we also told me this, David.

Like, by the way, the drill bits want, the drill bits won't work because they're designed for Earth with, with our gravity and our process and with are.

And I think, I think you told me that these drill bits have only ever done gone on Mars or the Moon, have only ever gone down, what.

A couple centimeters, about two and a half to three inches.

Is it a couple of inches? Right, so.

Right.

So my point is, and to your point is you don't have air. You've got what looks like a dusty surface. You don't know deep down what the makeup of that is yet. You don't have air. The, you know, getting the machines up there to work in that environment, you.

Need the mass, you need to understand how explosives.

It's just goes back to, I mean, I get it. The whole point about, you know, Project Moon Hut is if you try and solve that problem on the Moon, at least theoretically, if not in practice, those are then Techniques that might help you do better on Earth.

Right.

So that complexity that you're trying to solve on the Moon contributes down into something that's actually complicated on Earth.

Okay, so you're doing. That's what I was getting at. You're using. Okay, so could we. Because I'm looking at the diagram for the one that's on the web and it's. It's like four, five blocks. You've almost said that it goes from simple, simple to disorder. Disorder to simple. I don't. Is it linear? Like, I have to think about this. Does it. When it's disorder, then does it move to chaos? Then does it move to complex? Then does it move to complex, complicated, Then it moves to simple. Is there a. Is there a hierarchy?

I mean, I think there's a. There's a little bit, but I don't know that it has to be strictly linear because it's all about causality.

Okay.

Right. It's like there's a cause and there's an effect. Yeah. Can you predict that? Do you need to figure it out? That's complicated. You don't actually know until you've done something experimented. That's complex and you really don't know about it. When it's chaotic and you really don't even know the cause. And when it's disorder. And so I think it's kind of emergent. I think it really depends on whether it can quickly go from chaotic to complicated, skip complex. So I think it depends. I mean, again, but this is why using language like, do we know the relationship between the cause of the problem and its effect? If we do, it's complicated. Get the experts in, go and do your thing. If we don't, then what are we going to do about it? Can we look back and do experiments or we really don't know what the relationship is and therefore that's chaos.

Here's an interesting thing. Do you know what triggered me to think about that example? You wouldn't know. It's because you said, bring the experts in, and I cringed.

Okay. Why? Because for complicated? No, for.

Well, you just use the word expert. It was. It's just the whole model.

But I was specifically saying when it's complicated, it's hard.

Yeah, you did say that. But the word expert, because I lived in Asia for a decade.

What.

How they address a challenge is completely different than the next group. Who's to say it's better if you're working in. At a company in South Africa, working with wherever you are, the answers of what's considered an expert are different. It could be that your grandmother is really the expert and everybody else is giving you garbage. And we would say, I'm going to use the United States when it comes to medicine. We have unbelievable advances in medicine, but we're willing to poison people with the foods that we give them, which makes them sick, which might not be there. And someone like in Europe says there's 1200 chemicals you use in food in the United States we don't want to have. And so our bread is healthier, or this is healthier, or this is healthier. So you use the word expert. And that triggered me on that path.

I mean, I think there's. I think you're starting to touch, you know, into cultures and maybe the, maybe even the zeitgeist of what's going on these days in different countries. Right.

Well, it just was that you. Complicated and complex. I think that experts is even a relative term. And I think that all of these have a relativity. I'm trying to keep my mind about around the use case of it.

So it's like, you know, I actually agree with that. I never thought about it that way, but I actually agree with that because, you know, at the end of the day, right, if you have this small or giant problem and you're the owner of that problem, you could be the president of the United States, you could be Ross Hamilton building a system. You could be a founder of a company, you could be a chemical company in Asia. Doesn't matter. Right. Someone has a problem, there's still judgment required on who you want to bring in on the team. Yes. This doesn't talk to whether your judgment's good or bad about who you bring in and whether they're expert. It's the idea that the framework is different.

Yeah. That's what was fascinating when you said expert. It was. I mean, I love talking with you and working with you, and I love it because you bring a whole different set of expertise or context or relativity. That's the next person might not have brought. And you're. And you're. You're Scottish, but you live also in the States. You've had all of these experiences that are different than mine.

Right.

So I was applying it to that word expert, and that's where I went down that rabbit hole. I don't know.

No, it's good. It's good. I think, you know, maybe we can talk about that in a little bit later, because I want to talk about kind of culture and change management and organizational stuff later. But you Know, the psyche of innovators and the amazing stuff that goes on in Scotland is different than other places in the world and in the United States. And you've got to deal with the idiosyncrasies of that culture and that thinking. But nevertheless, if you're the CEO or founder or owner of a problem, you've still got to be clear sighted, clear minded enough to know what's the nature of your problem.

Yeah, it's still the. Still, the word still fit. Yeah, it's the relative word in context to where you are would be unbelievably different. Because of our backgrounds.

Yeah.

Our geographies, our histories, our age.

But it's also why you have. I don't know if this is a good example. You know, you have. I do kind of base this on a visit we had to Taiwan with a group I travel with 42 geeks. And we go and see other ecosystems and entrepreneurs, investors and local ecosystems, particularly emerging ecosystems and the mindset in Taiwan. And what they're good at is different than, for example, what they're amazing at in Tel Aviv and Israel. Yep. The cultures are fundamentally different. They are. And you know, not to try and, you know, stereotype, but the way that hierarchies work or where communities work or cultures and even religion in the case of Israel works, they just operate and think differently. Yeah, they do. And so you're right. I mean, the context is different. I mean, what makes Taiwan amazing at semiconductor manufacturing and having foundries. Right. It's a completely different culture than what makes Tel Aviv really good in the tech startup world.

You know, I lived in Hong Kong and you know, so yes, when you go to Tel Aviv, oh my God. And it's very different in Dubai and it's unbelievably different in Colombia.

So that actually, interestingly, this is completely not planned. That's an interesting segue into another thing to think about with complexity with it being what's called path dependent. We mentioned it earlier, right?

Yeah.

One of the things that makes something path dependent or a factor that helps you solve it is its historical influence. So what's been the history, past decision, past events, past things have happened that caused this to be in the state that it's in now. And so culture differences in culture between Israel and Taiwan has caused each of those ecosystems to evolve in a different way. It's path dependent.

So your definition, the path dependent is, I think of it like a string on the ground that's wrapped all over each other. The paths are never straight. So it's not a linear multiple strings.

Yeah.

Or multiple strings all tied together and.

Yeah. And so for those who have been in kind of financial services and think about. We'll get into options in a minute is you think about modeling the path of prices of stocks and whatnot. And you hear about binary trees and trinomial trees and stuff like that. And basically the idea is you can plot multiple pass through. At the end of the day you've got a starting point. Right. Ultimately you've got an endpoint. But the two of those, the relationship is complex. And I think the picture you're trying to pitch is that string was all tied at each other at the end, together at one end and then straddling back out. All of these paths have led to that knot. Right.

And every single point in time has that.

Exactly.

Every single point.

Exactly.

And what, what most individuals. Because I've done a lot of planning around strategic planning for organizations. They don't make. They make the. They make the plot after the. That intersection as a straight line. But it actually goes the exact same tree out the other side.

I mean this is the point. It's non linear. That's exactly. The point is like there's so many threads that happen in a complex. Complex system here.

Yeah.

Right. Not a complicated system. A complex system has all of these multiple variables in a nonlinear way that have had a history and have come from where they've come from. Right. But they also exhibit feedback loops where these past outputs. Outputs. Things have happened. Influence inputs to the next thing. Yes. So now what we're talking about are interdependencies that make the system inherently path dependent. So there's a nonlinear. Nonlinear part. You've heard of the butterfly effect, right?

Well, yeah, it's actually shared. Wrong. But yes.

Right. So you can debate whether you can debate whether this is chaotic or not. What's chaotic or whether it is complex. Right. But I think, I think you know what the butterfly effect is. Right.

Well, can you. So that we could just make sure that most individuals think the butterfly effect has to do with the butterfly in Europe and changes. It actually does not. The butterfly effect had to do with initial conditions and chaos theory and then it had to do with, you know, impacts along full ecosystems. It didn't have the story that's associated with it today.

Yeah. The classic story is the butterflies wings off the east coast of Africa causes a tornado in Florida. Right, Right.

And it's. Right. So everybody has one and it was a rainforest which originally. But then it went to other areas. So I actually researched this whole thing I'm not going to go into now, but it's, it's amazing how far off it is, what the original context was.

So. So I actually looked up the definition of this.

Yeah.

So I'm actually going to read this. Sure. I can't remember where I got it from. It says in complex environments, outcomes are not proportional to the inputs and small perturbations can lead to disproportional effects.

Yes.

That's the definition of a complex thing. You've got a thing that's happened, a perturbation, and it's got this ripple effect that's across different paths and different dimensions that you don't know what that end outcome is going to be. The only way that you know that that outcome happened was by looking back in time. Remember we said you've got to look at it in retrospect.

Yes, I agree.

So again, that reinforces this idea that in complex systems you don't know the outcome necessarily. You know, there's going to be feedback loops and things that make things interdependent and there's things that happen like culture, past decisions and events that kind of all feed into the mix, so to speak, whichever way you want to look at it historically, through feedback loops and interdependence or this nonlinear butterfly effect is path dependence. It's funny, I've been thinking about this in terms of what you and I have been talking about with Project Moonheart. There's so many things that could be done and you talk about, you know, the mega challenges and all this stuff. Right. They all have some kind of path forward.

Yeah.

Over 40 years. And you can imagine all the things that would need to happen to make that path work.

Yes, yes.

Truth is, it is, it is non deterministic what happens otherwise it'd be complicated and not complex.

So you're saying that what we're doing is complex or complicated?

I'm saying what we are doing is complex. There's absolutely things, there's outcomes you want, there's what looks like paths forward that are going to make an impact. That you won't know what will actually happen until it happens.

No, correct. And that's. It's funny because I'm trying to put these into context and we. When you're doing strategic planning, I've got my eyes closed and my hands are in front of me. I'm trying to say this in the right way. When you're doing, when you're, when you're in a role of leadership, decision making, your Role is to. To try to figure out the future to the best capability.

You. Yes.

And then to intersect it in the best way possible. Correct the challenges. It's often very, it's very binary. If we do this, that'll happen.

Yep.

And you can wake up tomorrow when there's a new law you can have. Well, look at the people in la. They woke up. I bet they had a lot of plans. The people in Los Angeles had a lot of plans about the next few years. They're not there anymore.

That's right.

And with what we're. One of the challenges we have in the work that we're doing, ranging from new materials to platforms to tech transfer, is that it's very, it's very challenging to get individuals to see the interconnectedness of everything.

Well, right. So you're actually making my point, I think really well, in the sense that there's desire for outcome and we know that there's going to be a set of dependencies, maybe even assumptions. We can talk about that as well. That would, that would lay into like a high level plan conceptually. But the reality is there's going to be all these wandering paths that happen and things are going to be discovered and invented along the way. This is where innovations, that H2, H3 horizon thing that we talked about is really important. Because what happens if in 10 years time there's this new thing that comes along and completely needs to change the path of getting towards that outcome? Well, and here's the segue.

This is what happened with the mining.

Right. But here's the segue. You need options. Yes.

Okay, so we're on financial options 101 or real options.

Right. So just to kind of round this bit out a little bit, we've talked about cause and effect. It can only be looked at in retrospect. So what do you do in terms of looking forward? You've got experiment. It's emergent stuff. Right. It's path dependent. You actually, in your book, you have a whole thing about learning. A lot of this actually speaks to this about you've got to get in there, you've got to understand the patterns. You've got to create an environment for experimentation. You've got to be adaptive as a leader. Those are all things that are really, really important to managing this complexity.

I think it's important that managing a lot of things, not just complexity, challenge the challenge. I think, and I don't. It's a long book. One of the messages, right. Is one of the messages in there is that if you're going to build, you always have to be growing because the future is changing right in front of you. And if you're not growing, the minute you stop, you slide backwards. It's like climbing up a sand dune. I give this analogy all the time. You climb up a sand dune on a certain slide and you're constantly, you can make a little bit of progress, but if you stop, you immediately slide back.

Sure.

And so you're always, if you're in a decision making role, you have to be looking into the future to figure out where you're climbing. What do you need, how do you make that? And that's why, I don't know, if you read the chapter on forecasting, which is completely different than anything I'd read before, is that the role of leadership? One of the roles, There's a series, the Enterprise Thinking set is to be a forecaster, not a futurist. A futurist is different. There's gonna be dragons one day on Earth. A forecaster is someone who says, what do I think in percentages or in, hey, I think this will happen in three years, I think this will happen in eight years, I think this is 20 years. But we're very good at doing that in certain categories. For example, you have children. You could tell me in five years how old your daughter will be. You could tell me in 20 years how old your daughter will be. You could probably even outline a path. She's got, she goes, she, she got born, she went to school, she went to high school, she goes to university, she then's going to find a guy, then she's going to get married, then she's. And she'll have a career and you can make that path. But we don't do that for most parts of our lives.

Well, I think there's, I would add to this.

Sure.

And this is where we get into. Everything we're about to talk about is essentially about scenario planning. Risk management, if you will, is all about obviously mitigating risk. But to do that, you've got to think. People use the word lateral thinking. And I know you and I have had a discussion about out of the box and what that really doesn't mean. But if you just think about the multiple paths that could happen and the probability of those paths, that is actually the fundamental concept behind options. That's the fundamental of how you price, how you predict probability of something happening. You can look at all the paths and say, what's more likely than the other? Right. But you need that forward look. But I would say importantly, you need multiple perspectives. Again, bringing, rather than talking about experts, let's talk about bringing a diverse group of people.

Yeah, it's a better word.

With various insights that can challenge each other's thinking. I know a lot of people would agree that diverse thinking, diverse backgrounds is better for everyone. I totally agree. I've seen how it works.

If in fact the people there are open to the diversity, well, but then.

Now that's a cultural thing. So it's creating that environment for experimenting, learning, being open minded, all that kind of classic collaborative problem solving stuff. Right. And so a leader, a good leader will do that to let them think laterally through all these things that can happen in the future.

So this is a challenging one. I'm going to give two examples, two points. Had someone on our call the other day, he's working for a major company and he got a really doubled his income to move to it. He said the way we work in this company is very simple. We all sit in the room, we all listen to what the few key people at the front of the room say, we don't have a lot of opinion and we go do it. So he is frustrated as can be. We can take many of the people who've been the most successful in the world and they've been arrogant, stubborn, opinionated, they don't listen. So they're, you know, I use this happened just recently. You know when you teach, when you have your children, you could sometimes being you're strict with them and someone will say why are you so strict? Well, because they need it, they need discipline, they need order, they need the controls. And that discipline forced your child or your just do something they wouldn't have done otherwise. We all have our history where someone has been mean, obnoxious, crazy, and it turned us into doing something we wouldn't have done that would be beneficial. At the same time, we have times where someone treats that person very nicely. You hug them, you kiss them, you tell them they're good, you tell them they have value, they're you're part of the team, we need you here. And they're right too, because sometimes in your career you could look back and say, hey, without that teacher, that parent, that whatever in my life, I would never have gotten here. The path of a good leader is not an easy one to determine because there's evidence to the contrary to every one of them.

Yeah, I mean listen, I, I agree with both points, you know, and it's ultimately I think most people would land on the point that you know, you need some kind of empathetic leadership. But you know, for those, I'm not sure who specifically you're thinking about. Maybe I don't know if Elon Musk is one.

You know, it could be a, it could be a Stephen Jobs, it could be a Mark Bayan off, it could be a.

But these guys are, they're successful, they're extremely bright. But I'll tell you one thing you know, is a couple, couple of pieces I read about with Elon is he's super smart, but not for the sake of being smart. He's very smart. He digs deep into solving problems. I think I heard his whole thing is that he solves. He looks to solve a problem like the number one problem, like every week. He digs in. He does that. Why does he do it? Because he's driven towards an outcome. But what he then does at the same time, he may get hands on, micromanage things, get all his sleeves rolled up and he helps solve the problem. But all the other stuff that's going on at the same time, he's got people who are motivated and self reliant and fulfilled because they're aligned with outcomes. And there's this idea, it was in my notes for later. Have you heard the expression strategic clarity?

Yes, but I'd like to know your definition of it.

So strategic clarity is like, if you think about everyone in an organization, why are we here? What's our purpose? And is it clear about what the role of the company is and my role in that company? And so if I'm building Tesla cars or putting the screws into a rocket engine or, I don't know, installing solar panels, I don't know. Right, whatever. There's a good amount of people that are very happy doing that job because they know why they're doing it. And the one thing that Elon does, again, you can argue about his style, and again, I don't have any firsthand experience of this with him, is he knows where to dig in and be active as a leader. And he, I'm sure he is a bully at times. I'm sure he is. And you know, at the same time he knows how to enable people to go on and get the job done.

You know, we. I wasn't allowed to do this. My wife didn't want it in the book. But when we talk about leadership, we tend to. People pick people like that. But you can also toss in Genghis Khan and Adolf Hitler. You could talk in Stalin. I mean, whatever they were doing there's no, leadership isn't, doesn't have to be defined as good to bad. It's the ability to get people, individuals who are engaged in something that pursues a certain pursuit that they all believe in, at least enough. So you jumped and you said that the people who work at Tesla who put the bolt on the car, their desired outcome might be, I have a, I have a sick person at home and I will follow the rules that I need to maintain this job. And my real, real strategic definition is to maintain my job and do the job that I need to do so I can take care of my mom. Even though that we think it is, or they want to believe that it's a company.

But there's a, but there's a, there's a piece that's missing to that. Okay, let me add to that. Okay, right is. Let's see, that person that's putting together the Tesla car sees a problem and it's a blocker. What do they do? Do they down tools? Do they try and solve the problem themselves? Do they go to their management? What do they do? How they act right is a function of their strategic clarity. Okay, so if they're like, I'm just here to get a paycheck, I'm member of a union and I'm down tilling. Well, that's one way of acting. Right. The other way of acting could be, you know what? I love this company. I'm not going to stop this production line we're believing in. We're all together and making our monthly numbers and I thought of a way of maybe solving this problem.

They're not to me, they're not mutually exclusive in that way you can have a person who really doesn't love what they do. And there's actually two schools to thought of this many schools. But I'm going to put into two. Some people believe do what you love because it drives you.

Yep.

Some people, and I've heard billionaires say, you don't do what you love. You do what you're good at. You make the money and you do the things that you can so that you can do the other things that you're interested in. And if someone's on a job site at let's go use the Tesla example, and they, they don't love cars, they're just good at what they do and something they see they can fix so it will maintain the line so that the money keeps on flowing and that they're avoiding all the pressure from leadership, yelling at the team. And the line Being shut down. If they can make that run smooth and they're innovative enough and they apply it, they're applying the principle of, I guess, the strategic direction of the organization. But I wouldn't say that it was because it's always because they care, love, or in sync with the organization. They're just doing their job.

I mean, I think that's probably fair. But what needs to happen to enable that is the style of leadership.

Yes, yes, absolutely. Or I would say the end or inclusive of the interview process.

Well, yeah, and. Or actually the culture that's fostered organization wide and within departments, teams and in lines.

You know, I'm laughing here. I was like, am I doing okay with you or are you giving me some messages? We've had a lot of calls together. David needs to learn these things.

I'll let you make that assessment.

Oh, screw you.

No, I think it's a broader point because, you know, if you take it all the way back down to startups, for example. Right. And so we. Over the last 10 years.

And I do love you, by the way. I think you're amazing. I just.

Well, hey, hey, listen, you set that one up on yourself.

Yeah, I know, I know, but I was sitting here saying these are. This is good conversation for us because you and I evolved in our relationship to a point where you are really finding interesting ways to be able to insert and move and grow yourself within the organization. And at the same time, you're pushing back on me. You've got some new, very different ideas. You had your daughter come back with feedback that I would never have thought of doing it in that way. And I think I was open to it. I think I listened to you, so I'm loving it. At the same time, I'm kind of like, is he putting a little, well, messaging through?

We're not on camera, but I do know you're taking notes, so that's a good thing.

Yes, I am taking notes. I got. I actually AM probably like 12 or something.

Yeah. So, okay, so what I was going to say is we've done, over the last. You know, you mentioned Global Scott in the opening. So kind of one of the founding members of this network of either Scots or people who are connected to Scotland, basically to help Scottish companies kind of go to market internationally or to help bring investors into Scotland. And through that work, we've met a lot of startups, particularly Scottish companies who want to go to market. And so you spend a lot of time, you do advisory work, you just help them because it's an Altruistic thing. And one of the things that's really common is not the issue about whether they're technically great or not. It's actually what's the culture of the firm and how they think about getting what I would call an outside in perspective. Meaning if you're looking to go to the States or you're looking to bring in money or whatever you're looking to do. You know the old adage, you know, if you want money, ask for advice. Right. If you want advice, ask for money. Yep. You know, all that's about is about getting the right people outside perspectives. And I think it's true for any upstarting company that may or may not have managerial experience or business experience. How that culture evolves in the early years will absolutely have a correlation to the future outcome of that firm.

I believe, however, sorry, it can change drastically in moments.

Let's rip out a CEO and you bring in a good guy, a bad guy, a good girl, a bad girl, and it completely changes. But I'm telling you that the leadership style affects the culture of that company.

Absolutely. So I thought of Ballmer and Gates and what's his name, who runs it now. And then I went to Twitter and how that changed drastically. Or you take out a government, a person in a government position that in the United States you've got Biden to Trump. So there's all sorts of transitional conditions that make that organization change. It could change on a dime or not.

Yep. There's something that again, maybe a little bit later, under the E topic for later, you know, we'll talk about culture and kind of change management a little bit.

Yep.

Because at the end of the day, it is actually about managing people, culture, leadership, you know, etc.

Okay.

Okay, cool.

So anything more with the strategic definition or with the scenario playing?

I don't think so. I think just going to reinforce the fact that it's this path dependent thing. It's absolutely a mindset thing that we're talking about here. Right. And if we can create the right language about what complexity is and we think about leadership and culture, it helps us move through complexity.

And having lived in Asia, my mind is going through the people I've worked with in Asia who have completely different perspectives on leadership styles and why they do things and work with the CEO of Infosys and Nandan Alakhani, Ajim Premji, they have different, completely different styles and approaches. So my mind is racing through cultural definitions. The I worked with the CEO of Maersk and their executive team. Very different Very different. The Danish way style of living as compared to the Japanese style compared to the China.

And even within Europe, you know, northern, northern European versus, you know, Southern European is very, very different.

Germany versus Italy.

Absolutely. Absolutely. Yep. Okay, so that's complexity. Wanted to move on to the next one, which is financial options.

Okay.

So a little bit of background about why I wanted to introduce this in. You said to me, you also want to be taught something. So I thought what David do that he doesn't know? I'm like, there's a lot I don't know. We'll give this a go, eh? Okay. Okay. So here's the reason why I'm bringing this up. Right. So beginning of my career. Yes. I did aerospace engineering. I was going to work for Rolls Royce Aero Engines and then I got hired by JP Morgan in London. So I ended up getting into capital markets and ended up in New York in 94, 95. Right. So I'm someone who studied aerospace engineering. Problem mindset, bit of a quant kind of capability. I had no financial capital markets expertise, so I was kind of thrown in the deep end. And so I get exposed to all types of financial instruments and approaches to risk management and operations from a finance standpoint. Right. Ultimately ended up spending a lot of time in the foreign exchange business. So the global foreign exchange derivatives business, options business. Right. And I really think that that has fundamentally in one way shaped how I think about complexity. I'm going to get into it in a little bit, but this is my first professional memory of dealing with complexity, but also with user experience and with first principles thinking. I didn't know it's first principle thinking at the time, but it was right. When I look back on it. So again, I don't know if you, how much you know about, you know, derivatives and you know, options and things of that.

I'm not, I mean, I know, I know surface, surfacery. I know surface level, but not enough to. I, I'm not, I can't even be dangerous.

Right. Well, we'll, we'll talk about some definitions because it can be useful for later. Yeah. Anyway, they're complicated, Right. And for someone who's not a master in financial services, it was very complex. Right. For me. Sorry, Complicated for me. And so I was tasked with rebuilding the user interface of this system used by all the global traders and salespeople around the world. Right. Very complex system of the entire global foreign exchange portfolio of trades of derivatives. I was basically re. Redoing the front of it. Right. To help them trade book, manage These things. And at the same time they were making up new stuff, they're making up these new options, all these fancy. This is the 90s, this was like a arms race, right? You know, he or she who had the best options was going to beat the market. Right? It was like, it was mental. It was mental. And so what I had to do was go back to first principles thinking and say, how am I going to do this? How am I going to re engineer the entire business, front office business workflow while supporting that business. And meanwhile we've got these complicated things that we need to do. And what it gave me was when I went back to first principles, thinking was, okay, let's look at all the types of things they do now and maybe all the things they do in the future. What are some of the common elements? So thinking about reducing complexity, commonality, things like that, what are all the things that we can do that are components of all of these derivatives? What are the things that are the exceptions and what are the things that we don't know? And let's build a framework that can basically be modular, if you will, and build this thing back up again. And so what it did was it taught me about options and how they actually work, but it taught me about kind of first principles thinking, the natural extension. At the time, we didn't have SDKs and fancy software development tools or testing tools. We were coding in text, right? And it made you really think hard about your time. Where's your impact going to be? But also, what am I actually doing? What am I really doing here? And so when it came to options, you're like, okay, now I understand how options work. I can recompose this system in a way that they've never seen before. Long story short, I did it, rolled it out to the rest of the world and it worked really well.

Well, that, that's, that's this, that's the good story.

That's the good story, yes. There's some bad stories along the way.

It does happen. I mean, Oppenheimer put in a system that within one month, the entire system, I won't say which system was. They put in a system within one month, the entire company, they worked on it for several years and millions and millions of dollars and within one month, no one was using it and was out. So the fact that yours is working, I mean, that is a compliment.

Put this way, I couldn't screw up because every single trade in the world had to use it, right? Yes.

There was no option.

Yeah, there was no option. And I'll tell you what, there's another little rule that again will come up later that's in my toolkit, is never cut corners when it comes to quality. It's a rule that you can see in the agile world. But if you cut quality, you rather cut scope than quality. Do slightly less, but do it better. And actually that was, now that I think about it, just offhand, one of JP Morgan's, when you join the JP Morgan, this is back in the early 90s when it was just investment bank. It felt that you got the chip inserted in your neck and it was like the mantra of JP Morgan was doing, was it again, first class business in a first class way. Always doing the right thing by the customer, but doing it in the right way in an ethical way. But it was also for me in terms of what my day job was, it was quality. Right. And so that was, and I love.

That you're using JP because JP Private banking has been unbelievably supportive of Project Moon Hut. So yeah, I'm, I'm, I'm, I'm smiling from ear to ear.

Yeah. I mean, and I think probably everyone has the same experience hopefully of their first employer in a positive way. I know that's not always the case, but you do kind of like have that ingrained connection, if you will, to your first employer. And there's no question that the people I worked with at JP Morgan in the 90s were just phenomenal people, lovely people, ultra smart, but they're all motivated to do the right thing in the right way mostly, I would say. So that was. Anyway, that's a little bit of a side aside. Right. Point is I get into like options. So we're building options, very interesting ideas which we'll talk about in a second. Which then led me to this idea of real options, which we'll also talk about, which is our third topic. Okay, so here's our side journey. This is not talking about complexity, this is talking about financial options. Okay, so let's talk a little bit about what they are and how they work because the nature of them is what we're going to use later. So an option is. So for example, a call option is just if you buy an option. So let's talk about stocks. I was in foreign exchange. Let's talk about stocks, right? Let's say you want to buy IBM shares, right? And you could buy it now, that's called spot. So you're buying it now on the spot or you could buy it later, right? Yeah. You could also do and you can take that risk. Right. What you can also do is you can buy an option. And if you buy an option, a call option, which I'll define in a second, a call option gives you the right to buy that stock at a predetermined price later on, on a certain day. So I know it was at a certain day. Well, it depends on the type of option. So with it, with what's called a European option, on a specified day, you can buy that asset, in this case IBM stock, at a certain price. It's called a strike price. Right. And you pay a premium to me now. And you have the right to do that. Now, what happens is if the market goes above that price, you win because you get to buy that cheaper than what it is. Right. If it's below that price, you lose, and I keep the premium. So think of it as either an insurance policy. So let's say you're a CFO of a firm with cash flows. And this is real. I mean, like, you're a CFO firm and you've got exposure to IBM stock. You've got exposure to, you know, Japanese yen or some foreign kind of, you know, cash flows. What you say is by the end of the year or the end of this quarter. And this is only one way of hedging it. But I can say I know roughly how much exposure I'm going to have to yen or to that stock. I'm going to buy an option so that on that date, if the market moves against me, I can exercise this option, and I've hedged the move by getting me. So you use it for hedging, for mitigating risk. You can also do it to speculate for fun. And people do that. Dangerous. But you can do that, right? Yeah. And so it's a way of like getting to something at a favorable price based on certain conditions in the future. Yeah. So a call option, so is where you, the buyer, has the right to purchase something at a predetermined price, called a strike price, before the option expires or on the expiry date. I. If I'm selling it to you, maybe you're buying it from me. I have the obligation, so you have the right to purchase, but I have the obligation to sell that to you if you exercise that option. Does that make sense?

Yep, makes perfect sense.

So a put option is actually the opposite way around, is it gives you, if you're the holder, the right to sell something right at a price. For example, if you're imagining the market's Going to go down the way. It allows you to sell a price higher than the market. So you're hedging downside risk. Yeah. And if I sell you that put option, I have the. So you have the right, but not the obligation to do that. You don't have to exercise that option.

But you would have. You have the obligation to.

I have the obligation in the case of a put to buy that from you. I'm committed. Yep. Okay. So an option is the right, but not the obligation to buy or sell something at a price sometime in the future.

Yep, got it.

Okay. So there's a premium. You pay me some money, I keep the money. I don't ever give you that money back. I get to keep that. That's how I've priced the option. That's how I make money. There's a strike, which is the price in the future, and there's an expiry. There's this concept I mentioned, European options. So that's where you have the right to do this in the future on a given day. There's a thing called an American option, which is you can exercise it any day up until that expiry date, but that's going to be a higher premium, gives you more flexibility and it's more favorable to you. Right. But you can do that. So you have the right, not the obligation, to exercise it up until some point in time.

I like how it's called European and American. Now let me ask you, is there an Asian, is there an African, Is.

There a South African? No, no. Well, actually there is an Asian option, but something different. But there's a thing called a Bermudan.

Option, and that's when you just give the money away in a disappeared.

A Bermuda option, which is not as common, is actually somewhere between, funnily enough, between an American and European option. It's where there are specified dates, there's.

Terms that have been established, pre established, and therefore you have a range that you could work with.

Yeah, exactly. Exactly. And you know, even if I was Bermuda, it might disappear.

I just went to the triangle and just said, just give the money and it's gone.

Okay, so we're good so far?

Yep, I'm very good.

Okay, good. So it gives you the right to do stuff at some point in time. So you can kind of probably see where I'm going with this. So a couple of quick things. There's. So these are. These are very simple style of options. So yeah, I had to build this system. But then you get all these crazy conditions that come in so you get things called knockout or barrier options, which means, yeah, there's a strike and there's a day that you can exercise it. But there's this other level. If you have, if you hit it, if the price of that thing hits a certain or passes this barrier, it can get knocked out or terminated. Cease to exist. Yeah. And then you actually get knock ins. So it doesn't exist until some threshold's been hit. Start to get this idea where you've now got option to opt in, to opt out, to exercise, to buy, to sell. Right. You're getting the idea here.

Yes. You've got a, you've got to pick the pathway that you think is going to be the most optimal to get there.

There's things, and I'm just going through this kind of quickly. Binary or it's called digital options, which is, it's a null or nothing, which means either pays out or it does not. So at a particular date, if it hits a particular value, it's in. Or you either get it or you get nothing. That's called binary. It's pretty straightforward. Right. Now this is where it gets interesting and to answer a question about Asian options, right. We get into things called time and path dependent options. Path dependent, We've been talking about that already. Yeah, right. This is, this was kind of part of the inspiration by why we're talking about this. So time dependent options are where, you know, the features where the value, the strike price, if you will, or the barrier changes based on something that happens over time. So an Asian option, they're also called an ASRO average straight average strike rate option. What it's doing is it's saying over time it's looking at the average price, the path this thing is taken and the strike becomes the average of what's happened in that path. Don't ask me why it's called an Asian option.

No.

Yeah, but yeah, at JP Morgan we actually call them Azros.

Okay. But yes, it's just, it's calculating the average across it instead of going for, from the extremes so that you've got a measurement. We see that when we see a blue line through a graph. This is the average through the whole transactional series.

That's right. And the reason to do that is this averaging, it kind of reduces the impact of volatility over time. Anyway, that's an Asian option. Things called time triggers, which is kind of a similar idea where certain triggers happen on certain dates. Yeah. So a certain threshold, meaning a certain price relative to the strike happens at a certain Date, then it triggers a payment or whatever.

You see those in movies all the time. Yeah, you know, it's, it's hit the threshold or it's hit the. You have to make, you have to make that decision and you either do it then or not.

So all of these are, all of these are things that you do to hedge a risk, mitigate a risk, or to speculate or cover insurance or whatever. Right. And there's a time component to it. So it depends whether you're thinking three months out, two years out, 10 years out, four years out. Right. I'll give you a hint. Someone's probably not going to write you a 40 year option for project Minhot.

But we had someone last week call and they asked us to speak on Saturday. We ended up going for about two, two and a half hours. They, I threw together a deck that fulfilled their needs. They loved it. And we said we were looking for 150 million. And they said, that's it?

Yeah.

And they said, no, no, no, we're looking for like the whole thing. So we ended up speaking on Monday. There was an exchange that went back and forth, forth at the later of the day. And she said, you don't understand, David. We want to know what this would cost to roll that out. And so in this one area, I said, well, it's between. And I did the math. I actually spent is about four or five pages of math. And I came back, I said, it's about 150 billion to 200 billion. And they said, oh, that's great. I think we should go in for 10 billion on this loan.

For a loan, right? Yeah.

And I was, okay, Anything else you're working on? I said, do you want me to open it up? And yes. And yet that night I had about three hours. I had to put together the platform, the box with a roof and a door on the moon, the logistics, the new materials, the tech transfer, the immersive, duh duh duh duh duh duh duh duh duh duh duh. And nothing. They wanted small. So yes, there are heads inspect, but they're not looking. They're not looking 40 years, but they are looking five to 20 years.

No, you wouldn't. I mean, in financial terms, people generally wouldn't write you an option.

Right, but we're talking five to. They wanted to know what it would take to do anywhere from, from two years up to 20 years.

Yeah. And you can, you can do all kinds of complicated things, strip them together.

You know, it also, I mean, Remember we're talking about, for example, mining. I mean when, when someone finds a mine, you hear it on the news they found $23 trillion. Well, for first of all, the world is full of that. The second is if it's the bottom of the ocean, we don't have the technology to get it. And the third is if you were to make a mine, a mine takes 10 to 15 years to be productive. You got to go down 4,000ft, you've got to put the equipment in, you've got to get the permits. Power, I call it P3 power. Papers and permits. Power was it. You need the power on the pumps. On power pumps and permits and papers, and you need those in order to operate. So when someone says we found. Yeah, that's 20 years from now. So it depends. Again, going back to what we said earlier, time is a dependency on every project we're working on.

That's right. In the case of options volatility as well, like the path dependency, whether things drift one way or another or back again or to an average or there's an outlier. So option theory looks at probability of pathways over time. That's how they're able to kind of price the premium and when they set that strike price. So yeah, there's all kinds of crazy other things you can do with options as you, you can put them together in different ways. And that was the problem I was originally solving was how do you put these into different ways in a way that we can actually trade them. Right.

And you're giving tools to the, to the decision makers to be able to use the best tool to take advantage of the trade.

Yeah. And to be, to be really honest and to give credit where credit is due. You know, we had a lot of real quants who had the mathematical models. Yeah, I was just putting like the actual interface for the traders together in a logical way.

I mean, me smart, not so much.

Right, right. So as I said, aerospace engineers in my case didn't come in being able to write financial quant models. Some did, but not me. Anyway, so the whole point about this is that options are a useful way to think about complexity because having optionality is useful. It forces us to think about scenarios. It forces to think about the paths that things could take up down. It forces us to think of the value of time and learning, observing the path, because that's what you have to do with complex systems. It tries to put a price. Well, I mean, it does in financial cases, but it tries to put a price on the decision or the exercising of that option. And so this is where we're starting to move into real options, where I'm going to quote some of your stuff around economics of timing and economics of thinking. Because there's a natural inherent value to not buying that stock now versus buying it later, or to making a strategic decision now versus delaying that decision, which I think, I think you can probably.

Yeah, it fits right in economics and timing. Economics of thinking, absolutely.

So that's, that's the sidetrack on financial options. Does that all.

Yeah, no, that's. That's kind of cool. I didn't know. I know there are a lot of tools and I think, I think you and I are both handy. I've got all the tools in the world. Black pipe, copper, electrical. I've, you know, I was just working on something. I've got all different types of drills, chop saws, grinders, you name it. And it doesn't matter if it's for roofing, it's for tree trimming, but you want to be able to pull out the tools when you have that in front of you. So the way I'm looking at what you're giving is helping me to expand my thinking of tool basis. And it might not be only in finance, but in other places when we're looking at optionalities.

Right? That's right. That's exactly right. Okay, so we're now going to our third topic, real options. So I'm going to read two quotes from your book.

Okay. Hopefully I did a good job.

You tell me. I'm about to read it back to you. I know you had about a thousand edits of this thing, so I'm assuming it's good. So, economics of thinking. And tell me if I've got this right. Simply put, the better able a leader is to think through an idea before committing to action, the greater the chances an organization has to achieve higher returns, all while mitigating risk and reducing expense. That's economics of thinking. Yep. Economics of timing. Every decision has optimal trigger point and it's your job to determine the best of your ability where that point is for you at any given time. You then say further down the chapter or whatever it was, the higher your position within your organization rests, the more likely your decisions are to carry greater weight, incur greater cost, meet greater risks, and yield greater benefits of consequences. Okay, so when I read that, I'm like economics thinking, this is real options. What the hell is real options? You ask?

I'm asking.

That is the question, David. Ask me the question.

What are Real options.

Great. I'm glad you asked.

It's funny because you don't want to read your book again and I spent 12 years writing it. So as you're reading, and I'm saying it actually did cover those, those comments did cover the multitude of optionality that happens when in an environment. And it leveraged time, location, role, culture, position. It did give that. It was. I give some credit to my wife here too. She took my garbage and helped me turn it into something. There's, there is that sense of, yes, you can follow this and understand that if you are in that position wherever, you might have a bigger budget, you might have a bigger team, you might have a bigger say, but you might not have a bigger budget, meaning you might be the person who selects the bank and you select the wrong bank. And while that's the only decision you made, that was an important decision for 400 people or 4,000 people. And so there, I think it, I think, I think it did a good job. So tell me, what are real options? I'm nervous.

So real options is a theory, it's a concept. Right?

Okay.

But it provides a strategic framework for decision making dealing with uncertainty and complexity.

Okay.

So you don't know the path forward on stuff. Right? Right. By definition, complexity is that. Right. It's uncertainty, it's complexity. Right. And so quite often strategic leaders, when they're making our traditional decision making, quite often you have to make a full commitment up front. And what real options, or economics of timing or economics of thinking, what you want to call it, allow you to make incremental investments while maintaining flexibility? Yeah. Right. So it allows you to treat your investments, and I've used that term very loosely, could be a project, it could be a company, it could be starting something new, whatever, is to treat it as an option that can be exercised when certain conditions are met, therefore incorporating the flexibility and some strategic decision making in response to changes in the environment. So what you've written in your book, I'm now putting into financial options terms is like, I've got a thing that I might want to do based on a certain condition, therefore, I'm going to buy that option now, but not make the decision. Because I have a right, but not the obligation to do that in the future. And the way I think about my portfolio as a CEO or portfolio manager or.

And portfolio to us is all the activities we're engaged in, the organization, whatever.

You want it to be. If you think of everything that you could do in your job, all your projects, they're all options, yes. The question is, how do you think about that in terms of when and why you would exercise that?

I'm going to take a jump for a moment and tell you what goes through my mind because one of the things that individuals on the team often, there are some of them who dislike this, but I think you'll understand why it's being done is I tend to start things very early. People think it's immature or not immature, but yeah, premature. Not immature. Premature where someone will say, well, David, we're not going to get there until January of next year. And I say to myself, well, if I start now, it's going to take me. I want to get Ross on the line. And Ross is busy and he's going to say, david, you know, I'd love to talk with you, but I'm not available till March. March will be a good time. That's when these projects roll up. I want to talk in March. I get on call with you and you say, I love this, but I need to bring in two other people. And we don't get that conversation until April and we start playing with it and the idea is not fully matured and we've got some thoughts and, well, David, because of the economic cycles, we want to do this in Q3, not in Q2. So let's bring a team together in Q3 and by the time you're done, we get to January of next year and we've had 5,50,000 options to play with where everybody else is starting in January. It gives. When I think about the economics of thinking, I often share the idea of if you've ever written a letter at night to somebody, important letter, and you've said, I'll send it in the morning, I want to sleep on it.

Yeah.

I can almost guarantee you if I was to do a billion people the next morning, if it was easy, they didn't have to rewrite it like it was a computer version or they even they. They would change a word, a set of words, add something. So you always make a change. But that change doesn't have to be huge, but it could be the difference between take and share.

Well, the other difference is what you've done is you've given yourself an option based on time.

Right?

Yes. You know, the thing needs to get sent. You can send it now and fire, forget and hope, you know, or in the morning you say, look, I don't need to actually send 10 o' clock the next morning.

You even have the choice of not sending it.

Right.

But if you didn't start the letter until the morning you needed to send it.

Yeah.

Then you lose. Not just a small. You're losing a factorial set of options.

Well, you're losing. Yeah, absolutely. You're losing flexibility, meaning whether I send it or not. You're losing the time to whether maybe pull someone in, ask an opinion, ask a comment, ask feedback. Right. And you could time or not to think about what the impact of that email or that ask is going to be.

And yes. And those are great. And if you want to tie it to the work that you and I and everybody we are working on is we are not very public and a lot of individuals want us to be public. And I feel like I'm holding reins back.

Yeah.

Because by not being public, even though people do know about us, what we've got is the option of quietness.

Well, here's the challenge is I don't know if this is just a. The zeitgeist of like where people are with social media now and dopamine hits and wherever else. Excuse me, but sorry is people want certainty or often want certainty. And a lot of people can't deal with uncertainty. And I mean, you're right. You've got to make that decision. You know, the other thing I would say is the value in waiting to make a decision. It's not you're waiting and doing nothing, is that you're continuing to monitor what the paths are of all the things that you're monitoring, the complex things. And once you see a pattern emerging, meaning remember complexities, looking at emergent patterns. Right. Is you may make a different decision about whether to do that in the future. Maybe there's a new innovation, maybe there's a new technology, maybe there's a new idea. Maybe there's something just a higher priority or a better idea. You don't know. This is the point. You don't know. And so the idea of a real option is to say, where can I give myself optionality to ultimately. And here's the benefits of real options. Right. I'm giving myself the ability to adapt to new things that emerge. I'm potentially saving company money. Yeah. I've got a phased investment approach that adapts to the circumstance. I've got better planning that gives me more flexibility because I'm not committing to stuff now. And I'm actually creating value because I'm going to capitalize on favorable conditions and not exercise during unfavorable conditions. Right. And so it's a hard thing for people outside the organization or maybe even inside the organization to understand is that if you apply option theory or thinking or real options thinking to your strategic decision making, you're doing it to create value, reduce cost, increase in agility. And as we'll talk about the communication of that strategy, it's not that you're not making a decision and you're a bad leader. You're absolutely, you're making more decisions, you're making concrete decisions and you're determining when certain decisions need to be made.

It also. Right. It takes out also some variables of human behavior. You and I meeting is not a rush. We can have a conversation about diverse thinking to find where those answers are. The less time or less knowledge or the less thinking, you limit your options.

Right?

And that was where I gave. That was the example of the mining on the moon. Everybody says we have to mine on the moon. And I'm thinking, why? Why? Well, because no one really had. Not no one I've met over these years has thought, has really looked at the equipment we need. Every picture you see is these huge pieces of equipment. I ran a quarry. That piece of equipment would take 40 rockets to get there. And not only that, you would need loaders and you'd need backhoes and you need all sorts of a piece of equipment to operate around it because they don't operate by themselves. So the decision that we're working on by taking our time allows us to make a stronger decision. So, yes, playing options. I'm going to toss one out. It's. I think it's in the book. A person walks onto a piece of real estate, looks at it and every. And he says, or she says, I'll take it. And everybody says, wow, that CEO makes, makes instant, just knows how to make those decisions. No, that person has been looking for 15 years. Analyze the conditions, knows the traffic flow, knows the density, knows the weather patterns, has been looking for the optimum condition, walks in, says, I'll take it. But that was not an instant decision.

So it's interesting, I'm just looking at a couple of my notes here, and what you just said just speaks to, you know, couple of, couple of things I'd written down here. Four things, right? So limiting downside risk while preserving upside potential. So that's what we talked about, that with the options, you know, enabling learning and adapting before major commitments. So in your case, this guy's been learning for 15 years about what he wants, right? And figuring it out, he's created competitive advantage by being strategically flexible. He hasn't made that commitment before. So he's reserved the capital and now he's making the commitment. He's probably planned for it and he can exercise his option on that because it's now, he's now in the money, so to speak. And then he's probably thought through resource allocation, you know, as they've thought about making staged investments or I'm going to.

Relate it to your strings. It's thought about not the not, but post, not all the things that have to happen after it, which is often left out. Someone plans a conference and they do everything to get the conference, but they don't plan what happens after. After the conference, 24,000 attendees.

Yeah, yeah, yeah, yeah. So we've got, what's an expression that we've used at Space Network? We come up with this expression. It was like off cadence or something, like off cycle. That's what it was. And so yeah, we're going to go to, we're going to go to events. Right. We're all about promoting the commercialization of space. You're going to go to the events. Right, but what you actually do is you invest beforehand and after. You've got to think off cycle.

Yes, absolutely. And that's not done by. I would argue that in most strategic planning that I've been involved in worldwide, the post event is not thought of. And I think you saw the chart in there where it says the cost of the wrong making decisions. It was a decision chart and then one of them, them at the cost of the wrong decision is disastrous.

That's right.

So the post impact is detrimental for sometimes for decades to come. So moving the decision making earlier, giving yourself the time to cyclonically think to be able to do what you're saying, create options by bringing individuals who think in multidimensional variables, different skill sets, you create options.

Right. So there's some interesting real examples of real options. Right, okay, so I'll just go through them quite quickly. Right. So one is the option to defer. A retail company thinking about international expansion or maybe a startup thinking about international expansion. Excuse me, defers entering that new market until maybe, I don't know, regulations stabilize or they can get visas or whatever. So they're deferring, expanding until they know that it's better conditions to do so. A startup delaying product launch until after seeing what a competitor's release has done. Right, yeah. So your option to defer, option to expand. A restaurant chain starts with a single location, but designs its system to support rapid expansion successful. So Rand is building the restaurant, it actually designs it in A way to say okay, we're going to set this up now so that if this is successful we can quickly expand.

Yes.

And that's exactly the same where more my background in a software company are building a system with a scalable architecture. You've. You don't bolt on scalability later. You've got to get scalable. Thought about upfront. It's this exact same about quality I've been going on about is quality is going to be in the DNA of the construction of that software or that product. You don't add quality on later.

No.

So it's all about that option to say look, if we do it now then we can exercise our own option to kind of grow and expand. Right. Same thing on maybe a supply chain which is the option to contract manufacturing company design a factory with a very modular production line or a service business structures client contracts with flexible termination clauses because maybe they've got the problem with service businesses. I run a or I didn't run. I was head of delivery for a financial tech consulting firm and sometimes you've got challenges with resources and you get challenges whatever you want. The ability to contract reduce like a knock. Remember we talked about knockouts and knock ins. A knockout would be a pharmaceutical company has got its research structured with a clear go, no go decision point. Maybe the trials didn't work. Or a venture capital firm invests in startups and it's staged financing and so what it's doing is giving itself the option to stop funding. That's the option to abandon or it's called a knockout option as we talked about or the option to switch you change fuels and your energy company or again maybe a manufacturing plant wants to switch product lines or whatever. All of these are options but you've got to think about it up front consciously because the complexity that's coming your way, you don't know about it until it's happened necessarily. You don't always know the cause and effect. Remember this idea that the cause and the effect you actually don't necessarily understand that relationship yet.

Absolutely.

So being mindful and having again bringing diverse perspectives and it's important to help you think about where do I need optionality.

I don't know what we'd call it but there's the option to take advantage of an option.

Yeah sure.

And that's one that's not. I told you that this billion dollar program and I wrote to the team and I said look, this might not go anywhere. I mean in money terms you don't know who you're dealing with. And there's kyc, aml, everything that's got to be done. But we did get another call from one of our teammates in the uk, Someone I knew in Hong Kong. I didn't know, I didn't remember I knew her in Hong Kong. I had met her in Hong Kong. She had a copy of the book signed. So. So we had a laugh because I didn't remember I had said the exact same words to her seven years earlier that I said to her. Extremely bright. I said, you're an extremely intelligent person. But she had called me for a reason. And during that call, we connected again. And she was sitting with a firm that is putting on a. It's an ultra high net worth, high net worth. It's family office type event. And she's. It's actually coming up in two weeks. So she had met with this person, told her about what we're working on on the philanthropic side and the project. And the person wants to meet tomorrow, talk tomorrow. And they are talking about potentially us speaking and presenting at this event in two weeks. Now, if you present, you need your decks, you need your outlines, you need your tools. So all we have these things in place, which took a long time, but we have the option to take the option.

Right.

Someone might say, we can't be ready in two weeks. I was on a call with Kyle on our team and Rick and I said, it's two weeks we have to have. We're 80% done. Let's push it over the line. And he was able to say, we can get that done. And I said, but I don't want it done. I can't. Because if I'm presenting it, I can't have it done the day of because I have to go through it in my head multiple times to make sure it works. And he said, we know you already, David. You have to have the tools. But that option to take an option, I don't know if that fits into the other categories.

There's really, I think, option option. But you're also talking about a knock in or a knockout. You know, like, you know, we either you can. It could be a regular option where you just say like, yes, no, are we going to do it? That's like a binary option. Yeah. Or you could say, well, at some point we're going to exercise, but if certain things happen before, we're either going to knock it in or.

Yes.

So it's like the knock in knockout barrier option.

I think tomorrow I have to make that call. If this person Says, we'd like to have you. I have. It's a binary. I can't say. Maybe they're putting on a conference. I don't know how many people. It could be 200, it could be 300, it could be a family, offices. They do have a few, few individuals in the billion dollar category from exits that they've had or run organizations. You can't say to them, maybe no. And so I've already kicked some of the kicked, meaning I've noted out. I didn't kick them. I don't, I don't kick people. I kicked out to them, hey, this is the possibility. And every single person on our team said, we'll get it done. Every single one, without a question. And it wasn't a demand. I didn't say, could you. I said, this is what's coming up. What do you think? And every single one said, yes.

You're asking for a go, no go when you say go. Everyone now knows exactly what the desired outcome is, the delivery of this presentation. And everyone has the role and they'll move forward.

It's actually not for the presentation because I have to build that. It's that if someone walks up after the not after the not, they hear what we're working on and they say, tell me more about the platform. Tell me more about how Maple structured the organization. Tell me more what you're doing in Luxembourg. And we have the tools.

Sure.

We have 127 or it's probably about 132 videos now. You've seen them. Someone asked, send a video, it's done. Which there did you get? The one on the finance and how we're structured? I think you did.

Yeah.

That was created two years ago or three years ago. It gives us the power to take the no go go or the option or the knockout knock in. But the option to take the option is.

And again, the option in this case is let's think through the plan and what it would look like rather than actually building it.

Right.

You know, it's like, it's like, you know, it's like, you know, starting up a business.

This.

Right. You can say, well, we're actually going to start building it or we're going to write a little framework of how we're going to build it. Then we're going to build it.

Yeah.

Think through it a little bit. But chances are you want to move fast. But what are you. And this is a recommendation we have for every startup. Right. Is move fast, fail fast. Right. Speed is better than getting it Perfect. Because you know if you try it and you fail, okay, well, I failed. We'll learn, we'll move on, maybe we adapt. But if I don't try it, I won't know. But on the other side, if you completely plan the whole thing out right, in a deterministic way, chances are you're going to fail. Because that's not how it's going to work out for you. Because you've got to deal with market conditions and other factors and people and whatever else. So build your optionality into what you're doing it. But it means do it incrementally as well.

Right.

So you can have time to look back and learn. Yes. Because you did not know going in. This is complexity. If you knew, it's like building a nuclear power station example. Right. Someone or some group of people know exactly how to build that. It's complicated, it's not easy. You know how to do it. Building a company is more in the complexity realm because there's stuff you do not know yet.

My gut reaction as I'm hearing this word complexity is that for the. This is a terrible way to say it, but I can't think of another way to describe it.

So I'm going to use it just.

For the sake of timing because I probably could find a better word. Is that the word complexity is scary.

Yep.

And so if I was to describe this, this scenario, I would probably talk to somebody not about complexities, but I would talk them about options.

Sure.

Not options in the financial word, but real options. What are options in your life that give you this possibility? And I'll give you an example. One of our teammates just wrote that. And I won't use gender so that it's not there. It's that my blood levels, I was. My blood levels are out of whack. I have an anemia due to. And I don't say the word S T R E S space because when you say it, you feel it. I don't say that. And the highly active lifestyle that I'm leading right now because the business and what they're involved in and the. For me to talk complexity would be a challenge in this environment. So what I would say. And that's what I did. Right. I said there are some things you might be able to do. For example, next time we talk, remind me to teach you about the wall of life, which is a technique. Things that I've done with people who've really. In challenged ways that can improve their next steps. And so I'm asking myself as you said, the word complexity hit me kind of like STR does.

Yep.

And I'm saying, what is a better word? So I think options is. Options softens.

Does. It's. It gives consideration to the fact that there's multiple paths, and it gives consideration to the fact that you got to think about it, meet people where they are. Right. Think about timing and whether a decision needs to be made or not. So an American option. Yeah. You can make decision anytime you want, so that might be more appropriate in this case. But a European option is by July 31st.

Yeah.

We have go, no go decision, and you're either in the money and we've got all of our ducks lined up and we're ready to go, or we're out of the money, and it doesn't make sense to exercise the option.

It's interesting that we could potentially create a language internally, culturally, because I think you've seen some of the documents we have that help do this. There could be a language that's created so individuals can call on the language. What we're talking about here is.

Or just to double down on your analogy, put on the language.

Right? Yes, Correct. Yeah, absolutely. It would be. So that would be that you and I are talking and we've had some great conversations where you would say, I put this in the category of a. Of a deferred or expand or a con. We put it into a language that would then also help to relate to the. The structure of simple, complex, chaotic disorder.

Because you are. I mean, if you look at the crazy map that's behind your. Your. Your desk that we always look at, Right. It's like there's some, like, you know, mad scientist stuff going on in there. But when you really look at it. Right, you've got paths and dependencies in there. Yes. And what's not illustrated on that or in any of your diagrams, actually? Honestly? Well, I can think of two that are. But you don't have a time component. Right. You know, I know you've got the four stages for the project Moonheart.

Right.

I know there's. That's a. That's. That's a sequence. Right. First, second, third, fourth stage of what you're building or trying to build. Right. But when you look at the complexity of the portfolio. Yeah. You need to look at it both in terms of priority and what the options are, the paths are to get to those points and the dependencies. And you need to look at it over time.

And so they do exist in CPM charts, and they do exist in A different way. And I'm glad. I'm glad.

I'm glad we're going to be talking about that in re.

So let me give you a little touch on that. It's that you have to bring people on a journey, and if you throw things out too fast for them, which I did with you, if you realize I didn't give you too much. Too much, because it would bury you, is that you have to take people on a journey. And someone said to me, this is a common phrase. Well. And I'm trying to think of how it sounds. It's something to the. Well, we. They made the. They. They made the bad decision. It's not that it's. It'll come to me, but let me give the answer to it. When someone. No, it's the opportunity. Well, this is. This is the great opportunity. Oh, God, it is. I'm losing it, but it's part of it. So when someone says, oh, I can give an example. Maybe it'll jar my memory. People would say that the. With a Kindle. Not the Kindle the Apple released the book with. Scully. That was. It was bad timing. And I say really was something different. That product was a good product, but they didn't account for the timing of the market. They could have said, this is great. What if we launched it in seven years? But because they were so concerned about bringing a product to market, it was launched at the wrong time. Oh, they'll say that. You know, the bad timing. No, it's bad planning. That product wasn't ready. So within the work that we're. We're working on, I do have some of the. I do have those frameworks, but the complexity of it changes. Using the word changes with the way in which the world is operating.

Yeah. And that's that external factor again.

Yeah, it has to be because. Well, someone on our team the other day is going to do some work and his words were, we need to. And he's American, so I'll make that very clear in this regard. He said we need to wait to the new administration. They'll be more friendly to this.

Sure.

This was only like two days ago.

He's asking for optionality. Correct. And assess. No. Then based on a number of factors.

So. So yes, there are those dates and times and numbers, but they're put into other tools that might be too overwhelming for an individual in the beginning.

Does that make sense? Yeah, it does. So maybe that's a segue to our next section.

Yep.

Okay, so I gave you the fu. The se. And The D. Yep. Why did I do that? Why did I do that? So talked about complexity, we've talked about options, real options. Fused is just my dumb way of thinking about things. And the idea, I'll tell you what it all means right now.

Excited to learn?

Oh, excited. You got your pen.

I actually circled the number four three times. Four times. Put two lines under fused and I got a hash mark next to it. I am, like, waiting with bated breath. Wow.

We've got you there. We've got you there. Okay. You'll see the method to my madness in some. At some point. So I was thinking through and you challenged me. I know. Two months ago, whenever it was about, you know, don't tell me, you said, don't tell me what you know, but teach me how you do it. Yes, Something like that.

Yep, it is. Exactly. Because everybody teaches what they know, but they don't skip how you got there and what does it mean and how did it evolve?

Yes. Yeah. So this is. This is my little framework for how I think about things. Right. So if is future and forecasting, strategic planning, basically. U is usability and user experience. S is supportability and sustainability.

So hold on. Support, ability and sustainability. Okay.

E is execution and excellence. Yeah.

Next.

D is distribution and differentiation. Now, I'll run through these. Right.

Before you do, I want to say share something that I. You said future and forecasting, basically strategy. And I'm saying. No, I'm saying all of these are strategy. Well, forecasting and future are a piece of strategic thinking.

So I'm with you. Okay. And I agree with you. But what I was also going to say to you is, as we go through this, these are not linear. Yep. They're very iterative. They're dependent on one another, and they're often paired with one another and it.

Would be difficult to go. So that's why you have two of each. Because I couldn't say. We couldn't say it.

So that's why I just gave you the letters. That's right.

Yes, I.

But the point is, it's a toolkit. And once you go through it, you realize you've actually got to think about all of these at once.

Yep.

So it's not bucketing strategic planning from delivery from distribution. They all go together.

Yes, all of it.

Right. Okay. So they're interdependent in themselves. Okay. So let's kind of run through what I mean by this, because this gets to some of the tools that I think are useful for thinking through some of the things we've Talked about. Right?

Yeah.

So in the future and forecast bit. Right. It's a couple of things. It's about some strategic visioning. It's about. And building on some optionality around what are the strategic decisions we need to make for when some of it is about. It's kind of like strategic planning, but it's like, it's like pattern recognition.

Okay.

You talked about that probe sense response thing earlier for, for that you use for complexity Y so you look at what's going on and you sense it and you respond to it. It's about thinking about technology, investment, staging and whatever infrastructure. So that's kind of like this visioning. There's these components of what are we doing. We're planning, we're looking for patterns, we're looking for options. And then the last kind of toolkit part that we've not talked about before is this is where I put okrs, objectives and key results. And this is for me, in my experience this is probably one of the more powerful, very adaptable frameworks. I'll tell you why. Right. So you're probably familiar with okrs, you know, the work you've done. But let me just, let me just kind of reiterate why I think it's important. Yeah.

I want to hear your interpretation. Absolutely.

So objectives and key results are very different things. Objectives are very stable, long running, qualitative strategic outcomes that you're after. So you're a company and you want to, you know, have the best product line. You're a pharmaceutical company and you need to bring this product to market in five years time. Yeah. That's not changing in five years. Key results are changeable, adaptive, shorter duration quantifiable and team based metrics. Meaning that if you're looking at a five year vision, what are all the things, outcomes that we not activities, outcomes that we want to see along that path towards that objective. Right. The reason that that's really important is the objective gives that overall that strategic clarity thing we talked about. It's a long term outcome the whole company and everyone can align around. So 40 years we're putting a hut in the moon. 40 years or 10 years we're going to get a mining operation up there. Whatever. These are objectives and everyone aligns to that objective. But the results are every quarter, every six months, every year. There's key things we want to hit and we can measure whether we're on track to win that thing. Now the reason I find it's really important is that you split, you can split the kind of the mission, the high level decision making, the strategic decision making in a different way, or you use it to use the OKRs to inform your decision making, put it that way. So it's really important when you're dealing with really complex things and complicated things where you've got multiple teams, maybe teams of specialists or we're not using the word experts, but diverse perspectives. Everyone's bringing their stuff to it, but ultimately everyone's contributing in their way. And what you can actually do with okrs is you can actually float from the top down through departments, teams, into the individuals. Right. And so they can all have their own results that moves the ball forward in their own way in an incremental basis and it's measurable.

I'm gonna, I don't disagree that you need these type of tools. So I'm not, I'm going in a kind of tangential, I don't know if it's. Tangential is the right word, but just a different question. And I'll give you an example of it when I give the question is how. If you could see what other people can't see, which often happens when you're building, like when you were running your, building your software application and the interconnectedness of everything, you saw the whole picture where people only saw pieces like the elk biting the elephant, but you had to see the elephant. How did you, when you knew that it wouldn't happen the way everybody else thought, give that messaging. So let me give you an example that might be clear. I'm going to use the one in the book. It's very common. When Watson and Crick were doing the DNA sequencing, they had said that it would take 15 years in halfway through they had only sequenced and I believe this is the number, don't quote me, a 300,000 pair. And everybody said, see, they're not going to make it. They were off. They didn't understand it, it's not going to happen. And I would argue that if there were 100% of the people, I would say 92% of all the people thought they would never make it. Other people had confidence in them, thought they were great, yada, yada, but it didn't mean that it would come through. What they didn't account for was the fact that in the first seven years they were learning about techniques, style, approach, how to be able to separate, how to be able to evolve. They had different, different people, they had culture that to be built, but they ended up finishing the year and a half earlier. And just the other day something Happened and I don't know. I've got to believe. In Scotland. You saw the A team where the.

Lovely team in the 80s. Yeah.

When the guy would say, I love when a plan comes together.

Yep.

And someone said something to me and I looked at him and I said, I love when a plan comes together. He said, you knew? I said, I knew this three years ago. But why didn't you tell me? I did. You didn't listen to me. You always argued. Oh, oh, no. But David, you didn't know. I said, yeah, I did. I mean that's my exact words. And then every like I've sent it to him four times. I love when the plan comes together on text messaging because I want him to know that there are pieces here that are. My role is different than that person's role. And that's it. It's not that I'm hiding something, it's just that we have different roles and I can't share everything because then you'd have to live with me. And my wife doesn't even want to know everything.

But this is this thing where like, you know, sometimes people feel they want to know all the details. And this comes back to my argument about OKRs is like providing, you know, everyone's in the right mental place in terms of like wanting to do the right thing. Right. Just, just make an assumption that we've got no evil characters in here. Right. Yeah. Yep. When people get themselves aligned to an outcome, can be long term objective or it could be a short term key result and they're enabled, this is the culture bit where they're enabled to go and do it without needing to tell me every micro detail. Then you start building a very productive, very creative environment. And the thing you have to align on isn't the deliverable, it's the outcome.

You have to be careful in that statement because there are certain environments. For example, let's say I'm dealing with, dealing with nuclear material. I don't want you to be creative, I don't want you to be innovative. There are laws and regulations. There are other times that there are. And there are also people who don't want to be involved in that level. And that's one of the things with building a nonprofit for profit. If you want to say in that way is I always share with everybody on our team and I think I've said it to you that when people work for a non profit, everybody works for a fee. No one works for free, but the fee is not monetary. So you have to really get to know the people, you have to learn about them. You have to be willing to participate. You have to pick up the scraps when they don't happen. It's a whole different leadership style. And if you can find that, and that's part of my role. There are people on our team who are doing it because of religious reasons, involved in the project. There are people involved in us because of the medical reasons. There are people involved in with this because they want to put their thumbprint on the world. There are some people who are involved with us because it's their expertise and they feel they can contribute. But if you went around and asked everybody, I don't even know if we'd find a singular, a singular point that everybody say, oh, we're doing it because of this. No, they all have a fee.

Even you do. I would. And I would may push back on that a little bit. I don't disagree with what you're saying. However, what if whoever select people you choose to bring in from diverse perspectives, you chose to pick, I don't know, three, four or five big objectives. Define them quite formally and they're not going to move. And as you push that down through the different entities of Mars and whatever else, and then you push that down through teams and all the way down to individuals, everyone can have their own objectives. Correct. And as long as the key results, the outcomes at an individual level, whatever their motivation. At a team level. Yeah. Organization level, entity level, whatever. Level. As long as they ultimately ladder up. Yes. To the top level okrs.

Correct. I agree.

Then you set a spine, you set a framework and you let people be creative as appropriate. Yeah, sure. I get the point about regulations and nuclear stuff. Sure. You don't do stupid stuff. Right.

In the United States it's itar, EA or cfius.

But there's rules. You follow the rules. There has to be accountability, for sure. But when it comes to intrinsic motivation, if you ladder this stuff. Right. And this goes back to strategic clarity again, if my role versus someone sitting in South America versus sitting in, I don't know, France or you name Korea, I don't care. We all got our own things we want to do. But as long as, particularly for nonprofit, but it's very true for a commercial entity. As long as your work aligns up to a higher objective or a higher key result, we're all should be in somewhat sync. Now. I'm not saying I completely agree with you, but I'm not saying OKR is the only solution. I'm not, I'm just Saying there are tools.

No, and I completely agree. The challenge when you build something that I've learned in a non profit because I've done this three times is you, you can't just use money to get something accomplished.

No, no, no, no.

And you have to really, really understand what their alignment is to the project. So I had a conversation with someone recently and I was surprised because I had learned about a lot about this individual and, and when he gave the answer, he said it was religious. And so his orientation to the project aligns with us to reach the okrs. I don't disagree. What I'm saying, what I was trying to do is add complexity, right? The okrs.

That's what I was doing 100% and this is why okrs live here in the future. Forecasting, what are we trying to accomplish? Things. But they're also going to show up down in the execution side as well because you actually use them to get work done.

Okay, yes, I agree.

And so on. This is this pairwise thing where I'm not just talking in a linear way, but it's an important tool as we'll see further that doing that allows you to build in optionality around the key results, the outcomes that you want on an incremental basis. Yeah, I want to do this thing, you know, you heard people talk about 30, 60, 90 days or they'll do quarterly planning. Each quarter you take a look at the results, the key results of the things you wanted to do. You look back the way and you say, how did we do? Did we do well? Did we not do well? Hopefully we set some stretch goals. Maybe we did, you know. However, now what we're doing for the next quarter, are we going to take that adapt, move forward? Are we going to drop that key result, that outcome? Are we taking an option to cut it or are we taking an option to extend it or an option to do whatever. Right. And so you can start to see where, when you've got the rigor of quarterly or whatever frequency of reviewing outcomes you build in optionality.

Do you know why I think you do from the video you would have gotten this. Do you know why we have entities? Why did we take the work that we're setting up and create entities? Because they add a level of complexity. Why do you, why did we create them?

So, so I'm going to, I'm going to take a half a guess because it's been a while since I read it, but you're dealing with different flows of investment and money and whatnot. You're also dealing with people coming from different perspectives and what their outcomes are. And so you've built a model that handles stuff on the nonprofit side, which then can lead to commercial entities. You've also allowed flow to come in, for example, from investors directly into entities.

Yeah.

Because their intrinsic motivations are different.

Yeah, you're, you're. That's very good. I will add another few layers to it. If you were to do what we're working on or. And I've owned multiple companies, so it's no different is you have to make choices about how to be able to move something forward into the future. So years ago, it was very apparent that if we were going to build something large with our platform, a box of the roof and a door on the moon, obviously not cheap. We were going to have this immersive side. We were going to work on all the activities you've heard about. There's something about a culture, A dynamics, KPIs, OCR, OKRs that are intrinsic to the building and working in that environment. So it wasn't designed for people to say, oh, we're separate. It was kind of like saying, well, this team, which, by the way, is gonna need funding, which was good structure can have focus and tools that are not distracted by the other sets of activities. So when individuals hear about our entities, they're saying, oh, well, you're building this. No, no, we're still building the same thing, but for capital markets and for focus. We've given a name and give it an opportunity, but we did not design it because that's what we wanted to build. It was a piece of the larger puzzle. Does that make sense?

Ajahn? All of these things roll up to overall objectives, and they're all going to have their own key results as appropriate for the audience they're intended for. Right.

The desired outcome you'd like to accomplish across. Yes, absolutely. So I was just adding a little bit of let's of texture to that, because people do the role of the executive. And I'm trying to follow with what you're saying. The role of the decision maker, not object, because it could be in different capacities, is to think what would be needed in the future, which is a theoretical construct that you would have to intersect with and work sometimes for months and years to get to so that that would happen. So creating the entity took two years. When we filed for our copyrights and trademarks, one of our trademarks we fought for for 18 months.

Right. But here's the thing. But here's the thing. You Know whether or not that was the right decision to do that. What you've given yourself is an option. Yes. Because you might find out you don't need that entity. You can throw it away. Yes, you've lost some money in time, but if you decide to move forward, you've got something of value and you can move fast.

And by the way, it was the Mirth name, right? That's 18 months. A French company that barely used it has the rights. We negotiated for 18 months, we ended up getting it. And that's a foundational piece of what we're working on.

But let me just interject, you have, I mean this in the most charitable kind way possible. I mean, I'm serious, you've written yourself, you've paid yourself a premium using options language to have a future option to do something. Right. That was a strategic decision. You've got an outcome in mind. And the key result ultimately was getting that entity so that you can now have future options to move fast if that entity continues to have value for you.

Correct. Move slowly to move fast.

Slow to move fast. And so when you again use the language, you may not have known it. Building yourself options.

Yeah, building options. And again, I'm going to add that layer of time. We didn't start it last moment, we didn't need to do it immediately. And we were able to play the game for 18 months.

Right. And I bet you that path to getting Mirth was non deterministic. Define was it complicated or was it complex?

To make sure. I'm going to look at my notes to make sure it was. I'd say it's kind of, I'd say it was a little bit chaotic too, because. Because they were arguing a point, that would be a moot point because it trademarks in Europe, you have to show proof of use within five years. They're three years into it and they haven't even started initiatives in those categories. So by the time we were done negotiating, we were going to get them anyway. So there was a chaos to. Like, why are you arguing for something you're not going to work on?

Well, chaos implies you had no ways of looking at the cause or the effect.

Yeah, we had no way of understanding anything inside because we were talking with lawyers. We have a lot of lawyers on our team.

I would, I would downgrade that from a chaos to complex.

Okay, I'll take the complex. It was, it was a negotiation that went back and forth and back and forth until they agreed to what we would have. Yet I would say that we Started it early. We had the time, we had the resources. Our team. One of the guys on our team, Adam from MuchSheelist, was the key person behind it. And we have 17 law firms around the world doing office actions with us. But we had that. If we were rushed, if we had started to make this structure later, we might not have had options.

Right. And you may have found that later. It wasn't complex. It might be complicated, but it wasn't complex because it was deterministic and you needed all these laws to make it happen or not. Yes. So anyway, it's kind of interesting the way you start reusing the language. Right. In terms of how you think about things. Okay, so we talked about OKRs. We're in the future forecasting thing. We've kind of talked about this a little bit. But we're building in options to stage, get investments to defer things, expand abandon. There's a time premium because the value of the flexibility. So you're creating value that way through having that streak flexibility. So that's the future bucket. I want to leave that there, move on. Because.

Usability and experience.

Okay, so what do you think the difference is between usability and user experience?

Usability is the functionality behind the mechanism that allows what you're looking to accomplish to happen. It doesn't mean that it's easy. It just gets what it needs done. The user experience is the mechanisms or the systems and structure put in place that allow for the person who's engaging in it to have the A, not an easier. That's a bad word in terms of reference. It allows the individual to achieve their desired outcomes in a way that's not obstructed.

Right.

Is that kind of okay?

Yeah, it's pretty good. So I was thinking about this like in my work at Lab 49, when we did UX driven work for all these banks, for all these fancy trading systems. And we did this at Northwestern Mutual when we're running the. We're redesigning the digital face to the customer right across the company. So we did a little bit of thinking about this. I would say usability and I'm sure some of my UX friends would probably shoot me for this definition, but this is what we're going with. I'm reserving myself the right to be wrong here. Usability, I think, is actually about the product and the features and does it work or does it not? And does it fit the market? Right? User experience is how does the user feel about using that product? Is that a shitty experience? Is it a Good experience, whatever. But the actual usability is. Does the features actually do what it's supposed to do? Right. Market fit versus feel.

Yes.

Again, some of my friends may argue with me on it, but you express.

That in your language, which I appreciate.

Right.

This is new product and service development. When you're building the infrastructure to make something work or using the ui, you what does that experience? When the individual comes, you know, they can't find the button. And this just happened the other day.

We were.

We were declined on something and it took a month. And they don't realize that they have a button that I didn't realize if I hit the X, it would open up to the screen that I needed to use. There's a. We were declined. We were rejected. So if you look at your screen, it said rejected. You had this tab on it, and on the top it says, click here if you want to learn more about something else. And on the far right, there's this tiny X. And so I was trying to contact them. I don't know how to change it. How do I resubmit? Because you're wrong. Everybody else has accepted us. I don't understand this. So I'm emailing back and forth, and one day I'm on it, and I click the right hand, little tiny X, and right behind it's the screen to submit.

Well, that's bad design.

That's the user experience.

How did you feel about that?

I wrote them and I sent them a video saying, you wasted a month of our time.

So a good user experience is you're happy. Right? A badger's experience is you're writing to complain. Right? So it's how you felt.

And I always say to people, if you're doing a very, very. If you're doing a good job, you don't need a customer service department because everybody can answer the questions. They can get what they need.

I mean, that's the ultimate. And that's arguably where AI may or may not be helping us in the future. Right. I mean, I think there's probably bad side of that as well. Sometimes we still need some human comfort, I think. But the reason I kind of brought that up, the reason it's here, is whether you're designing or producing a physical thing, writing a SaaS application, designing a service. Right. You've got a customer. Right? And getting the right thing to that customer is difficult and requires a lot of iteration. There's a lot of feedback. You do a lot of research, hopefully some lateral thinking. You know, it's a whole Thing, Right. And it's funny, you talk about the X thing. It reminds me of a thing that a good friend of mine, John, who's the head of ux at Lab 49, used to say. When they're designing all the wireframes and we're designing all the interfaces for customers, he used to say, navigation is the first and the last thing you design. The first thing is you can lay out the flow, the user journey, whatever else, but you always go back and make sure that the navigation actually works. It's kind of interesting. So it's very iterative. Right. And so I don't really want to get into UX theory again. It's not my area.

It's not the point of this.

It's not the point. The point is when you're creating product or whatever, the thing is you're creating can be anything, right. You've got to think about this human centered side of thing, but you've actually got to, you can actually put options logic in here as well. You're always wanting to create a great experience, a consistent experience. How do people normally measure that?

They look at the complaints.

Sure. Have you heard of nps? NET Motor Score?

Which score is that again? I know that.

Net Promoter Score.

Net Promoter score. Yes, absolutely right.

So NPS is a way of saying, do customers like your stuff? Means on net, on net, would they promote your thing to someone else? So high NPS means things go viral. Low NPS says you're calling your customer service to complain. Right. In simple terms, okay, the thing about NPS is it's one of those long running things over time. So almost like an Asian option, say, oh, we did this feature and it was good and we did this feature and it was bad, but the navigation was good and then this next design was not good. So as you have different releases of this thing, right. Your NPS is actually think of it as an average of the feedback over time. And your Asian option, the thing we talked about is on average, has this become a good thing that's adding value to us or is it not a good thing? So it's important that when you are building stuff again, it could be products, physical products, software services. Yeah, you're going to measure the key results in a short period of time. You do need to look at it on a medium length as well. And because you need to know where you're going and whether you're actually adding value. So Asian option thinking, kind of useful for thinking about, you know, user experience.

And then you've got your different Horizons if you want.

Absolutely. And another thing is, you know, you know, rollouts feature rollouts or stages of building things. Again, it could be anything from a, you know, as you said to mine to a, you know, Mars rover to like a lollipop, you know, whatever. The thing is, right, is that over time rollouts happen and you have gates. So what are you doing? You're thinking about, okay, we get the feedback, how can we improve? How do we move forward? These are key results. They're outcomes that are measurable that you use to look back and say, how did we do and what do we need to use to make forward? So that's a thing that we need to look at. The other thing is really important when anything you do think about accessibility. Right. So particularly with software. But other physical things, it's like a binary option. It's like if you're doing the right thing, there is a certain amount of regulation and compliance around accessibility and you either meet it or you don't. The payout is did I meet it and I move forward and have a successful business or did I screw it up, in which case I need to actually go and meet specific standards. When you're building this goes back to this kind of like with future planning. If I'm going to be building a product and we know it's going to release in a year, two years time, am I building in my own factoring on accessibility or non functional requirements or whatever, am I building that in and what happens if it works out or if it doesn't work out, what's my scenario? What option do I need to give myself if I screw that up?

People don't do options well. They don't do the scenario planning well.

Right, Exactly.

Because they're always optimistic.

Absolutely. In fact, there's something I want to talk about, but I'll just talk about it now. Is one of the most common gaps in planning, whether it's high level planning, low level planning, detail project planning, program planning, doesn't matter, is people do not write down their assumptions. People make all kinds of implicit and explicit assumptions. And when you ask someone to write them down, most people do make it will acknowledge they'll make some assumptions. Right. Because you don't know what the user thinks or you've not done this, that the next thing or whatever. When you ask someone to write down their assumptions, what do you think happens?

They can't because they don't have the clarity of focus.

Right. And what happens if they can or they do?

I want to know why they didn't solve them in the first place or.

If you knew about them, meaning they're explicit in your head. If you've written them down, why didn't you factor that in to the scenarios of what's going to happen when we start building?

That's what I meant is why didn't you do it if you already have them? There was this one individual in Asia that I worked with, probably one of the most amazing people. She didn't write things down, she didn't do a lot of the things you would anticipate. But this woman, she's one of the most impressive people I've ever worked with. On top of every single thing, never forgot a thing, always delivered on time every time. And with her I had to say to myself, okay, my expectation of what needs to be done, which I had, we go through this in time. I never met a person like this. So I have to be very careful that the way I like to digest information and the way, the way she likes to digest and work are different. And personally for me, I think I shared this with you. I like to learn first by listening, by talking to somebody, then I like to read it. I don't like to read it first, then talk about it. We all have preferences. So I would agree with you that people don't write them down, but if they don't write them down, they don't know, there's no clarity. And then the opposite, I completely agree. People who write them down, you say, well why didn't you address this earlier? You knew it, right? Where's the balance?

So let me bring it back to complexity. Remember the whole point of complexity is you don't know what necessarily what the, the connection is cause and effect, right? And it's path dependent. But you've got some idea about what could happen. Write them down, share them with a bunch of people and maybe you'll write yourself some different options, maybe you'll plan differently. I'm telling you, I am. I've got a 100, what's it, 1,000 strike rate, whatever the baseball term is. I'm like, I'm perfect on this. Whenever we used to run teams who were designing really advanced stuff for these banks, there were Wall street leading systems that had never been built before. They were institutional e commerce systems and they were complex or UX driven. They were very cool. We're all very proud of it every single time. I said, okay, we're planning this thing out, write down your assumptions. I would either get don't know. And I said, well go back and rethink the question because you actually do know. Write them down. Every single time people wrote down assumptions, we changed our plan. Yes, every single time. Perfect. Right? So this is really important when you know something's intrinsically complex and you need to know your options, you need to know your scenarios, write your assumptions down.

Well, I would tie that also to education in a different context. We have a tool in the book in Paid to Think, which is, it's called redefining. It's probably the most powerful tool in the world today if you are going to use it for strategic thinking. That I have found. And I'm not saying it, I've tried it with tons of people and they were shocked at how quickly it brought people to a level of understanding. And I, I've tried all others. So I'm not saying that ours is the best. It's just this was pretty powerful. And what happened was I would share it with people and they would, oh, I do that. I do that. David, David, I would do that. The next group, I did this twice. Next group. I said, everybody write down how you strategically think. I mean, I let people go for an hour and I, I barely saw a tool out there.

No.

And so when I say, okay, now do you identify that you don't have one? And almost, I would say 60%, this is just a toss out number. 60% of the people had something that says and do it again. Like an arrow that goes back to the beginning. Like if it feels right, do it again. Like if you have that, you're not doing it right. And when I said to people, okay, let's draw it out first, people listened to the process.

Yeah.

And what you're saying here to some degree has that same flavor. If you've never written it down, you really haven't thought about it well enough. But if you write it down, you're going to find that you're going to change things because now you've got clarity of expression.

Yeah. Well, it's also why you have whiteboards. It's easy just to like, you know, draw things. I'm a visual person and so when I'm thinking through a complex thing, kind of like your thing that's behind your desk. Right. It's like you've got this mental map in your head, but at some point you've got to be able to articulate a plan or a strategy. Right. And so, you know, there's lots of ways of doing that. There's diagrammatic ways, there's classic program management ways, there's you know, there's tools for doing, quote, you know, listing things. But. But I still. I still fundamentally believe. And you've got to do that. You've got to write that stuff down. But if you're. I'm coming back to F again. If you combine this idea of like, you know, mapping out, like, say, the user journey and write assumptions down and you're making a plan and you combine it with okrs, you will think differently about how you rate that planet. Absolutely you will. I've just fused F and U together.

Yep.

Okay. One last thing on usability. Sure. This is more for fun. I think I've mentioned this to you before. I love Edward Tufte stuff. I don't know if you had a chance to look at any of that.

No.

Edward Tufte does this amazing body of work on visualization of information. He does a really, really great job of saying, okay, everyone knows how to use Excel and PowerPoint, but what he does is how to visualize quantitative information and do comparative data analysis. It's just something that is really inspiring to me because you can read that book, you can read half the book and you're able to write and produce better presentations, better graphs, better visual things by removing chart junk and whatever else. It's one of those things that is maybe out of place for this conversation. But if you're trying to articulate something visually, read Edward Tufte's. The visualization of quantity of information is. It helps you draw better things.

Yeah. Yes. By understanding. You've seen all the charts and things.

That I draw, but you've got an artistic sensibility because that's kind of what you do. Right. You've got a creative side to you, so you know what looks good and bad and whatnot. The key thing is eliminate what he calls chart junk. Charts have got, like, grid lines and all kinds of crap on it. But even when you give like a nice chart or a nice plan, keep it simple, keep it focused on the content, not on the graphical side. And it really does help simplify things for people.

Yeah, I just looked. I pulled them up on Amazon 1997. 197 pages. And yeah.

Looks like he's got multiple books which have got just a lot of pretty pictures. It shows you just beautiful.

It's the visual display of quantitative information.

Yeah. So it's all about maximizing dense data density, but keeping it clear anyway. Top tip.

Cool.

Read that stuff. It really helps articulate visual stuff that's complex. Okay, next.

S.

Supportability and sustainability. So when I Think about supportability and sustainability. I'm thinking about it from the perspective of building businesses. I'm not talking about climate change, I'm not talking about that side of sustainability. I'm talking about building sustainable businesses. And to do that, you've got to think about a whole range of things up front. We kind of touched on it already, having the right DNA up front, the right focus on quality, scalability, all that kind of stuff. Right. And so when we were built, particularly when we're building complex things or things that ultimately become complicated, really important, whoever, whether it's technologists or quality people, or business analysts or executives, there's a tendency for people to want to run very fast, which I don't have a problem with, by the way. I'm okay with failing fast and moving on and learning. But if you're not focused on quality and you're not being mindful of your assumptions, you're probably going to fail at some point anyway. So that's not going to be very supportable. If you're building a system right. You're not going to be able to go back and fix it very easy. You're not going to be able to sustainably scale your business very well if you don't have that built into your team. But the other thing that we talk about is there's a difference between functional and non functional requirements. Are you familiar with what that means?

Again, I love to hear how you're thinking about it.

Okay, cool. So functional requirements is ultimately what do we need the thing to do? Right. So nuclear power station, all kinds of things it needs to do to kind of actually produce energy, Right. SAS product. Well, we need a login and we need it to do this and we need it to do that and we need it to do this chart and whatever else. It's the thing you experience, right?

Yep.

Non functional. Sometimes people call it performance metrics. It's the things that make sure the thing actually works well. Okay. So it's like security, cybersecurity, Big, big thing. A non functional requirement would be this thing has to be secure to this level of standard. Right. Or it has to respond to the user in this number of milliseconds. Or it has to be able to scale across these server farms in this. Well, think about space, right? Yep. You know, you know, Starship has to be able to lift this amount of stuff off the ground and then push these satellites out, put this, you know, put this, you know, lunar or Mars lander on. Right. That's a total requirement. But the actual Power requirements, the pressure it operates at, how the fuel operates, the performance of the engine, those performance metrics, that's what people call non functional. Some rocket engineers might say that's functional, but it's to do with the performance. It's building sustainable models. Sustainable businesses is balancing those two. You know, I've got to get this thing done, but I've got to take care of these other standards and they.

Happen and they often have to happen parallel. So even though you're, you're focused on one, you have to make sure the other things are happening. For example, filing the documentation that takes eight months to get approval so that you can have access to something that's, that's more of a performance thing that has to be accomplished, I would say because it just needs to be accomplished, but it's not the whole function of what needs to be performed. Did I say that right?

Yeah. Yeah. So maybe another example is. Let's use your mining example. Right. Functionally I need to be able to produce this or output this amount of stuff from my mine. Whatever the performance metric is at this temperature in these environments under these stress conditions.

Yes.

It's the difference between what does it do well, what's the engineering standard behind it?

Agreed.

Understood.

No challenge with that.

So that's what kind of supportability and sustainability is all about. And there's lots of, lots of factors in here. The reason I built, reason I want, reason I pull this in is that it's a factor to that. Forecasting, usability and how we're going to build it. It's an important factor and you have options in there. And the reason I bring that up is we might decide we want to build the biggest and best mining machine on the moon. I don't even, I'm making this up. I don't even know what that might mean. Right. Yeah. But functionally it's got to fit in a spaceship to get there or it has to be built up there by robots, however you want to do it. Right. But what's more important, the biggest mind that's just kind of big and whatnot, or a productive mind, the most productive mind works within certain performance constraints. You're balancing functional versus non functional requirements all the time. All the time. So you're always thinking about options for scalability. You're thinking about the option about quality. I think quality should always be thought about upfront. But that's my own beef. Thinking about how do you protect downside with security? So let's say we have a security breach. How do we Deal with that. What's the scenario there? Is there a put option? Is there a put option we can buy? If something happens, we can do something to protect ourselves anyway?

Yeah, no, I can. I agree that there's. You're, you're balancing the differences between both of them. But like in all of the categories that you're tossing out, they all have a balance. You have to weigh whether one has. If it has too much weight, you might not get there. So when, when someone says but the design is not perfect, and you say, but the cost of getting that design perfect is four times more than the product itself. And the customer would be unbelievably, as you would say, I got to go back to the page. Where's the page on that? Where they would be. The user experience would be unbelievable, amazing the way it is and it will be usable. Then why do we have to do that extra level? Because there's no competitive advantage to it.

Right, right, right, right, right. And so far we've talked about how we think about setting up the future, the forecasting the options, what the user side of it is. We've now thought about portability, meaning what's the functional and requirements we have to think about to make this thing actually work. The next one is E, which is execution and excellence. Right. This is like how the hell are we actually going to build this thing? And what does good look like? And I'm going to reinforce this point about quality, about excellence. Whenever we do stuff, you don't have to be perfect. I mean, there's this famous saying, don't let great get in the way of good. Which is fine functionally, but from a quality standpoint, never cut corners. If you're going to cut anything, cut scope, not quality. I'm sure there's a bunch of examples we can think that's not 100% the case, but as a general rule of thumb when you're building stuff, quality over scope.

I wonder, let's say you were feeding hungry people and you have the chance to deliver it. And beautiful dishes and beautiful display and on and on and on and on and on. But you also have the. That's going to feed 50,000 people. Yeah, but if it wasn't beautiful, it wasn't a fabulous package. It was just made of a cardboard. It will sustain itself, it'll get to the person and you could feed 250,000 people.

I think you're. But I think you're actually talking about functional versus non functional requirements. Functionally, I don't give a shit how it's delivered.

I just don't want the food poisonous in this case.

Right. It's gonna be good quality food. Okay. I mean, it doesn't have to be filet mignons, but it can't be, as you say, it can't be off.

Well, I was talking about packaging and the, the, you know, you want the exit, you want the delivery of the product to get to where it needs to be so it's safe and secure. So that would be quality.

Well, that's also part of your user experience.

Right. That's where I was going with it. But if, in fact, there's a cost to that quality that supersedes the benefit of the desired outcome, which is to feed more people, you might say, look, I don't need that. It would be the ultimate, but I don't need that. What I need is 250 people, thousand people fed.

But what if I said to you there's an option in there, that if you could get that, would you exercise it and what price would you pay?

And if, yeah, if there was an option that would be viable, yes. So I'd be willing to listen to it. And then decision making is to decide.

What'S the best, I think, I mean, that's a strategic decision you can make and a scenario you can run. I think where actually, in your example, which I haven't really thought through terribly deeply, is what happens if the quality standards are not net? What are the ramifications and what you're going to do about it?

Okay.

What options do you have if you deliver bad food and people get poisoned?

Well, yeah, there's a standard, so I don't know if I use quality or standards.

Yeah, depending on which industry you're in, you might use it.

That's why I went there. I went to something that could have wallet and a standard. So the standard is the food is fresh or fresh relative, meaning it could be frozen and then not frozen, but it could be. It's not going to get people poisoned. It's going to make them healthy. They're going to be able to eat yada, yada, yada. But the packaging, something to be, you know, it's just not pretty. They, they should have put the logo on the side and on and on and on.

Well, I'll tell you something that might be more complicated or complex is the method by which that food was transported and delivered to them could be substandard and has created a problem that you don't yet know how that happened. So the classic one is like, you Know food getting trucked across the states and refrigerated vans and all of a sudden there's a problem with lettuces in New York. Was it the lettuce problem? Was it refrigeration problem? Was it the transportation? What actually happened? Right, yeah.

And it's figuring what that is.

I tell you, I tell you a funny little anecdote that always think, I think it came from my father. I always think about dad when I think about quality. People talk about, oh, that was a quality blank, quality dinner. That was a quality experience my dad would like. What do you mean there's no such thing as quality? Like what do you mean? He goes, well that is low quality or high quality, there's no such thing as quality. And his point is quality actually needs to have definition around it or standards.

Okay.

I've always think, when I hear quality, I always think of my dad, is that low quality or high quality?

And that makes sense. And I would agree with that in that regard.

Yes. Okay. So when we think about implementing stuff, this is about execution. We've talked about, about being incremental, we've talked about, you know, being retrospective. This is where you get into agile. And again this is not for everyone, like for example, building a nuclear power station. But I'm a big advocate of iterative development and there's various flavors of it and it's really important I think, particularly when you're dealing with complex things and you're needing to like experiment, which is kind of what we said you need to do to deal with complex things is being able to iterate and importantly retrospect. And even more important than that, we need to be able to bring people together, align on outcomes, bring diverse cross functional capabilities to bear and we act as a cross functional team. Those are the most productive teams when you see it done well and you're able to navigate complexity and path dependent problems. So quality is important. Being agile is important. I'm going to throw okrs back in here again because it's that strategic clarity. What are we doing, guys and girls? And how are we going to motivate everyone to do the right thing for the right outcome? So I've just fused F and E together.

Yep, got it. And I do, and I do agree and it's a balancing act. All of these are balancing acts.

Sure. Okay, here's the big one. Right. That what I've been mentioning before that I want to get into is actually around culture and change management. There's a quote, you might recognize this in actuality, people don't repel all change, only that is negative in some instances, when change is perceived as negative because it simply wasn't expected. Who wrote that?

I don't know.

Some nutter.

Yes, people. People say all the time, people don't love change. And I say, yes, they do. There's four types of change. There's change that is positive and positive, positive and unexpected. There's positive and positive and unexpected and change that is negative and negative and unexpected. We like positive change. We like change that's positive and unexpected. You're winning the lottery, a good friend drops by, you got it. Something happens. What we don't like is change that is negative, but even worse, negative and unexpected. So negative and unexpected. Breaking a bone, finding out something went wrong and you have to deal with it. So. Yes.

I don't know where. I don't know where you found that. Where? I got this quote from some madman who wrote a book about thinking stuff. Yeah.

Yes. I love it.

I thought you would like that. So we have a laugh about it. But it's actually really, really important because getting anything done particularly complex and complicated things is a team Sport. Yes. It's 100% a team sport, just by its nature, because of. We talked about diversity of perspectives and all the, you know, the different paths and whatnot. You know, the way to think about kind of change management. There's all kinds of schools on how to do change management and I've seen it done well. I've seen it not done well at different enterprises, but kind of the interesting thing about change management is this idea I've actually written about before called changing while running.

Okay. While you're in the middle of running.

Yeah. You go for a run, try and change your clothes. Yeah. It's quite hard, isn't it?

Yeah.

You might even fall over. You might.

Probably would. Yes.

Particularly changing your shorts while you're running.

Absolutely.

So change management is hard. It's complicated. I'm not saying it's complex, but it's complicated. Right. What is complex is the culture that goes along that. Something I think is useful to talk about is when you're putting these plans together, we've talked about having all these options, we've talked about forecasting, usability and blah, blah, blah, blah, blah. Ultimately, we're making change in the world or we're changing a business or we're making a new product or we're doing something right.

Yes.

I think this speaks to quite often what you talk about with the mega challenges. It's really hard to get people along for the ride.

It is.

I'm not saying we're going to solve this right now, but there's a couple of bullets I wrote down I thought are useful to talk about a little bit. We talked about OKRs and that gets alignment in terms of outcomes. We've talked about having diverse perspectives. Very important. An important part is the idea of psychological safety. So creating an environment where you can openly have diverse perspectives and we can challenge each other in a safe way. We encourage experimentation. Those are encouraged. These are all things that is needed from leadership to flow down and to encourage and to stand up for. Right. And within that. And this is also what Agile teaches, is about creating a safe environment where we can fail and learn. Right.

Supposedly Agile. Supposedly.

But you've really got to lead that from the front. And you know the best way to do that I found is it's, it's leading by example.

Yes.

You've actually got to put yourself into the situation yourself. You've got to. What's the word term. There's a phrase for it. It's where you show your own kind of fallibility.

I think people take that terminology a little bit too far. I would say that you have to be human.

Do you have to be human?

Because showing your, your flaws is sometimes done intentionally and it's, it's fake.

Yeah. But you do it in a way. There's a, I'm sorry, there's, there's an expression that, that, that isn't coming to mind which is around putting. And I agree. You've got to be real about it, you've got to be human about it. But you've got to go in there and be yourself and show what it means to like not know what, what all the answers are and to lead people into a conversation with you.

Yes. If you're willing to ask the questions to. I mean if you think about this interview, the one thing I said was I want to learn from you.

Yeah.

So I have to be open to learn from you.

Yeah.

And if you think about our dynamics as running Project Moonhot, I want to learn from the. I'm learning from the team around all the time.

Yeah.

And I'm willing to say I have no clue. That's the growth. And it's not an easy thing to be. It's not an easy thing to be fallible if that's the way to say.

Well, it's not the word. My HR friends around the world will kill me for not remembering this term. It'll come back to me.

But you know what I'm saying you have to be. It's not fallible. It's. You have to be. I'm looking for the word too. Where you're willing to allow. You're willing to expose yourself in areas that other people can say, oh, wow, if that person can do it, I can do it. And that's even a subset of it. Yeah, I'm. I'm looking for it, but I understand what you're saying.

Yeah, yeah. I mean, I think that's just important part because we have to communicate out to all stakeholders. But you've got to do it from a perspective of we care. We care enough, and we've listened. But this goes back to something you were saying earlier about how do you communicate a strategy without necessarily having all the answers? Whether you're talking about using optional complexity language or. And. Or you've brought all these diverse perspectives together. Your communication is really important in terms of the language you use. But it's got to come with this kind of. I'm getting closer to what the expression is. Something about candid and honesty. I'm getting closer.

It's not an easy. I know what you're saying. I think.

Oh, I know what it is. I've got it. It's called radical candor.

That I wouldn't have come up with. It was on the tip of my tongue. It's on the tip of my. That's exactly what I was gonna say.

Radical candor. That's the one. Candor is like you've got to be open and honest and you've got to do it in a way. I mean, it's not. It's not. Do it in a kind way, but you've got to be able to really put it out there. You know, we don't teach these things. No.

They're not part of our language. They're not part of our culture.

Part of MBAs and all that stuff. It's just real stuff. It's real human stuff. Okay. Just a little bit on this kind of execution side. Yeah. You've got to have a culture to be able to manage change and uncertainty. There's something that you mentioned earlier about critical path analysis. Critical path management. I think that's what you said, right?

Yes. CPMs.

Yeah, CPMs. So I was thinking about this in terms of complexity. Let me back up the comp that you're ripping up your notes.

No, no, no, no. I've been ripping. No, they, they. You haven't heard them. I'm surprised. I bought this new pad. I bought this new Pad of. I use single page papers, you've seen it. But this one came with it on one side where they glued it. So I get to rip them off one at a time. So I'm surprised you. There's been 15 of them or 17 of them. So I'm surprised that you haven't heard them being ripped, ripped off.

I think, I think, I think that one, that, that one was ripped off with more radical.

I was, yes. And I was angry. I was angry. So I'm sharing my anger with you.

So, you know, we're talking about, you know, executing stuff and you're needing the right culture and all this kind of stuff. But you know, the thing that's always been a big thing for me is risk management. You know, how do you manage risks, how do you think about scenarios, how do you think about options? And options ultimately are about mitigating risk, aren't they? But you know, if there's one thing that comes out to me every single time about risk management, it's actually you could change that word to dependency management, even path dependency management. Because think about dependencies between things, assumptions, critical path analysis, it's all about how things are connected, isn't it?

Yes.

And so what I found, interconnectedness of.

Every decision, everything that's happening.

I mean, what I found really useful are two things. One is, you know, you can do it multiple ways, but let's say you use using a critical path type approach is that you run things forward. I've got to do this, I've got to do this, I've got to do this, I've got to do this to get to an outcome. Again, it's outcome based. Right. And then you run it backwards from the outcome. I run backwards to say, okay, what's the dependency to get there, what are the scenarios would make that happen or not happen, and what options do I need to make sure that I can manage it right? So I find that having a way of managing dependencies and assumptions we just talked about it can cover 80% of any project plan, any strategy, because it's all interconnected. And when you think about complexity, which is path dependent, as we've been talking about dependency assumptions, critical path analysis are really useful. A really useful tool is, you'll be familiar with them. Ishikawa diagrams. Yes. Also known as fishbones. They're generally used for root cause analysis, cause and effect. Remember we were saying complexity, you don't always know the relationship between the cause and the effect, but they're still a useful tool to bring People together and saying, quite often it's used for problem solving. The head of the fish is the problem and you can work backwards to what caused the problem. They are useful for complicated systems.

I tend to build my CPM charts and I, I don't know if you've seen the videos, I tend to build them very differently than the way they're structured. And I, what I do is I start off with a page, I use Excel, I don't use system, these other tools because they become more complicated. And what I do is I make a block and then I make 25 blocks and I say, what are the things that I need off the top of my head? Bump, bump, bump, bump, bump, bump, bump. And I come up with 30 things, things. And I say, okay, now let me put them in order. Well, this goes before this, this goes after this, this comes after this, this comes up. Oh, I forgot that, I forgot this, I forgot that. Let me add it and I build it out from a central core of what do I know needs to be accomplished and then how do I take it from there?

Yeah, so I mean that's, that's, I mean it's funny, you can do it with mind mapping and all kinds of tools as well. Right. You know, it just, you slide things around and create paths and because again, I'm visual, I tend to draw it. And so yeah, it's all kind of mind mapping tools for doing that. But again, I would encourage people to do it however you want to do it. But go back and really think about your assumptions and really think about your outcomes and go back and think about those non functional things that need to happen as well. It's all connected, right?

I wouldn't have said it in that way. So you, I mean you're making me think, do I do this? And I will, I don't know if I do, I'll have to think about it the next time I'm working on it. What I, what I say to myself and I don't say, what are the assumptions. I say to get from there to there. Is that really how it would happen? And a critical path method chart takes these sequential, sequential steps.

What you're doing, what you're doing, and I agree with that, you're running that forward. You're saying, I need this, then that, then this and that.

Oh no, I would do it the other way. I would say if in fact this was supposed to be done. Going backwards.

Yeah, yeah.

Did I have everything there? And I'll say, oh no, I missed something.

Right. So eventually Run it forwards and backwards. Right.

I'm going forwards and backwards. That's what I was saying. I put them all down and I say, oops, I need something to the right of that. Oops, I need something to the left of it. Oh, if I did it that way, I'm going to miss this.

What are you doing? You're building up, it's literally in the word. You're building the path, right?

Yes. And that's, that's what they're called, critical path methods.

I don't want to reduce this entire conversation with complexity saying you have to build a critical path tool.

No, no, no. And I wouldn't say that and I.

Don'T think you were trying to say that. But it's a really important tool that I see a lot of people not doing. I mean classic, classic Project Management 101 people will build dependencies in their tasks and they'll do the critical path analysis and you can look at where there's, you know, last to first and first to last relationships and last to last and first to first relationships. Classic project management. Great stuff. Right. But I'm going to come back to this point. You've got to stress test it with scenarios and options and paths that the alternate path.

I would argue with different, I would say that the majority of people don't do any of this.

Maybe I'm being a bit more, you're being, I'm being more charitable than you.

No, I, I, I will say, have you put this in. If they do, they use a Gantt chart. The challenges that I have with Gantt charts is that you can take one number and change it and move everything out. See for me, the way that I'm using the CPM chart, this critical path method chart is I'm saying this has to be done here. If in fact a variable changes, if I learn something, if there is a change, I still have to get it done.

Right.

So most people don't. What they do is they take a CPM chart or GANTT chart and they hit the number, extend out this three blocks which extends it. Right. And then it just moves it all.

So this is why, this is. You know, I've heard the expression waterfall planning.

Yes.

So that method of planning is kind of like a waterfall method and very different than agile planning. But if you kind of extract away from the two of these, there's, there's a time in place for waterfall, like building a nuclear power station. Like it has to happen in a certain order in a certain way. It just like building A bridge, right? Yes, it's already on. Building a skyscraper or a bridge. So there's an element of critical path analysis, project management and these guys are amazing at it. That's what you do. Right. But there's other places, particularly software and in other places where either they're horrible at it or it's actually not appropriate. You should be more agile in all of these cases. I've never really seen people doing a great job of consistently planning their work in terms of the outcomes. No, and this is my point, this is my point is like between the outcomes okrs, between the path dependency, the critical path analysis and looking at dependencies and assumptions. You need those to come together to actually think through and creating yourself options for executing with high quality.

Yes, absolutely.

That's my, if anything that's my headline.

And part of the challenge is it's very difficult and I don't know how to, I mean I tried as best I can is to get an individual to see the value add that comes from it.

Yeah.

And you don't.

We've been talking for a couple of hours now, a few hours now, and we've just got to this point so.

Well, it's, it's not a, it's when reading paid to think. I hope you got an understand. You know I write a certain style but my, my. I see the words more of a maps type person. Not that I'm completely like I want to go to the grocery store, I want to list there are times and places. But my wife really writes things well and she's more descriptive. So what she would take is she would add in her style of learning it. So if you saw through the book what was happening was we'd give you an example but maybe the example was colored a certain way. Then you saw another example colored a different way. But we were going through like a sine wave up and down and up and down. Give you an example. You show you this, give you the data, give you a graphic. There's 187 graphics in that book. They took eight years. The average took eight years to create. They're not complicated. It's just that every word, every line had to mean something.

Well, you're actually being very Edward Tufty in that regard. Do you Less or less is more.

Yeah, but it takes forever to get to that point.

Yeah, yeah, yeah. I mean you're also writing something that you don't know who the audience is given day. And so you've got to be able to bring it from a couple of Perspectives. I mean, that makes sense.

And that's challenging. Yeah, that's unbelievably challenging.

Okay, should we move on to D, the last thing?

You bet.

So covered a lot. You can see how fused all gets fused together. The last one. We won't take too long on this, but it's just really this idea about when you're building a product and a service, you got to think about distribution. How do you roll out, how do you go to market and differentiation. So that's what the Ds are.

Yep.

You know, we see this classic, classic with many, many startups is it go to market planning isn't thought through. Well, they either don't understand the target market, they're not focused enough. They don't understand the culture, they don't understand the culture of where they're selling into. So from a geographic expansion perspective or a segment expansion perspective, this is an area that people I think could do a lot better at.

They leave it for last minute. See, it's they, they work on the product and then they say, well, how do I bring it to market? And I no, you have to do it simultaneously.

And this is why I'm saying this thing isn't linear. It's like you got to factor that in up front. Because understanding what that market wants or when they want it or how they want it sold has to factor into your strategy.

Yes.

And so you need, again, this is maybe not a great analogy, but you need calendar spreads, you need options on when you're going to roll stuff out and why. Right. You need to go build in. When are we going to do this research? When do we get the results of that research? How does it factor into our usability? How does it factor into our supportability, how we're going to build it, how we're going to execute it, that distribution, that getting to market comes all the way back up to our planning. I, you said it very well. This becomes a bolt on and it should not be a bolt on. Yeah.

I have a picture that I draw with people. I always do. I draw an oval and I say, okay, this is what you're working and building it. And then I put a circle at the end and I say, okay, so now this is when you take the time. How are we going to sell it? And then I take an underneath and I draw an oval and I have an oval that's shifted, you know, 10% over or 15% over and it's the same oval. I said, because bringing it to market and understanding what's necessary and being able to communicate with the team that's developing the product has to be in sync.

Yep.

And they're not normally in sync.

Yep. And so we get into this way of like, you know, the way we communicate with people has to be researched, getting clear. Yes. No decisions on our outcomes. Almost like a binary option, if you will. You know, how we stage gate or explain over time the value proposition of our product, goods or service. You need to test it. It needs to be outcome based rather than feature based. And so coming back to outcomes again is it's not the outcomes for us, although our outcome would be profitable business or whatever is the outcome for the customer. Right?

It's. Yes.

And how do we back out? If the customer needs that outcome, what do they need to make that happen? And so it's the same kind of mental model of understanding that path to that outcome.

Yes. And it's. All of these are the, the challenges of leadership.

Yeah.

It's prioritizing all of this, the separate activities that have to be done and putting them into an order that makes sense for what's happening around you. And the challenge is often it takes a lot. It takes just a lot.

It does. So let me ask you.

Sure.

I'm going back to the beginning. Is Project Moon Hut complicated or complex?

Complex.

Okay. Why do you think it's complex?

Well, I'm going to say because in my role, in my role, the way I am bringing pieces together for other people, it might not be, but there's. You're. There's a cause and effect to all the work that we are working on that you have to extrapolate out to say if in fact these pathways happen, which I do all the time, what would be the outcome if that happens? So let me give you an example. Let's say we are going to work on something that we expect to be done in six months, but we find out we have a trademark issue and now it's pushed out, but the deadline at the end is not. So therefore the options always have to be available. What do we have to change which More money, more time, a different pathway. And I use this one regularly. I don't know if I've ever done it with you where I'll say to somebody, when you're thinking about solving a challenge, let's say your. Your think of someplace 20 minutes away from you. And I say, okay, it's 20 minutes away. You get in the car, you can get there. Let's say I gave you 15 minutes. Person says, well, maybe a motorcycle. And I Say, what if it was 10 minutes? Motorcycle, what if it was 12 minutes? And I keep on going down. At one point I have, I would say 70% of the people say, well, if you say three minutes, you can't do it. And I said, I didn't say you physically had the be there. I said you had to be there.

Yeah, the zoom call. You jump in a zoom call, jump.

On a zoom call. And so by having. You have to be able to take the same parameters and redefine them constantly, and that is challenging. And then, then you have to do it across a complex set of conditions that are being happened simultaneously in other activities. So I would say it's complex.

I. It is complex. And the other thing is you're also looking to do this potentially beyond our living lives. And so there's no fixed timeline. There'll be interim outcomes and deliverables that we would seek, but you actually have a lot of flexibility about what gets done when the key is to align people on the mission and the outcome and have the diverse perspectives such that we can adapt. But most importantly, we understand optionality along the way.

And that is why we spend a lot of time creating the videos and the content like you've gotten, so that you could spend the time digesting it, come back and deliver new options. You're very bright at what you do. You know, you've got a much different background than I do, and you bring a diverse set of new experiences. And my role or the role of a person in leadership is to find what those options and capabilities are and then allow them to excel if they can do that independently, and if they can't do it independently, find the resources to help them to be able to have it achieved. Because it might be a great idea, but it's not their capability. They're not the person capable of making it happen.

And I would add to that, sure. Is that not just your role, but your leadership team, if you have such a thing, is to create an environment, a safe environment, an environment that enables people to bring their best from whatever perspective they have, whatever motivation they have, and hook into what these outcomes and key results are that are basically the kind of the skeleton, the architecture for what you're trying to do.

And the leadership has to be willing to play the role 100%. And I once watched this video of a guy who was giving a tour of a factory and he'd always give his tours to new people and he'd walk up to a machine and he'd say, well, I really don't know how to use this that well. And he did it very nicely. And he was trying to show humility in the device. Well, he actually had designed the whole thing. No one cared. Later when they found out he built it because he did it so nicely. So one day I was putting in a 30 horsepower screw compressor and we had a new person starting and she had to be 164. Five foot three, five foot four. And we, we walk up and I say we put standard procedures on everything. Everything. And so I walked up and followed the standard procedures. Even though I knew it by heart, I followed it. Do this, do this, do this, do this. And then I turned the machine off and then I stepped back and I said, try it. She didn't remember what I said. She just followed the standard procedures. The standard procedures worked. She felt comfortable. That machine went on every single morning at the the time it should. And prior to me putting in that 30 horsepower compressor and everything else, it didn't happen that way. So I'm not going to say it's a humility, but it's an understanding of human nature to make something happen. I don't know if that kind of falls into that same bailiwick of Europe.

It's an enabling thing and it's. Look at. I think everything we've been talking about today has been about understanding the nature of the problem, complex versus complicated, etc. But what are the tools that leadership have to be aware of in their toolkit? Right, It's a toolkit. There's no set formula. There's intuition, there's good leadership, there's bad leadership, there's character traits and whatnot in there. But I found that you can cut through a lot of frankly, you know, rubbish if you can align on some of these core ideas.

Yes.

You know, particularly on. It doesn't even have to be okrs. But it's outcomes. It's too many people. And this maybe, this is. I think I maybe said this a little while ago. People tend to focus on features over benefits.

Yes.

If you design a feature, that's fantastic, you know, you've got to create the feature. But when you're selling something or you're trying to, you know, bring someone else in, people typically buy the benefit, not the feature.

Yes.

An outcome is a benefit.

Well, and that's where when someone comes to Project Moon Hut, they all say, what, what I have to do? And you were the same thing. And I said, no, I want. What are you interested in? What's the value to you? And you And I have been on a journey to find what that application is. And I hope. I mean, I know this is public, but I hope that I've given you the opportunity to explore, to express yourself, to learn and grow so that you feel that there's a culture that is positive. I mean, you're still around, so I'm gonna put myself in, like, 30% on the S column. But I'm hoping, and I honestly am sweating right now as I say this, I'm hoping you feel that there's a comfort level, that there's an openness to learn, and the leadership style is conducive to make some of these things happen. You're gonna give me a 33, right?

Not a 30. I'll take a 30 and I'll upgrade you. No, I mean, I think the important thing for all of us involved in this is you've done an amazing job of articulating a vision, the ideas. There's, like, papers, there's videos explaining stuff. All great, great stuff. And I can't believe the amount of stuff you've actually covered as long as you've been doing this. But I think there's still an opportunity to take a step back and say to the wider world, when it's time appropriate. And as you're looking to bring other people in is, let's think about dealing with the complexity of it and explaining, really, the outcomes and what are the kind of results, quantified results that would move the ball forward, that people can lean into wherever they're coming from, meet them wherever they're coming from. But, you know, do explain the nature of the complexity. I think some of the language we've talked about today, some of the terminology would be useful, you know, because there's so many paths that can go through, and there's options and gates, but there are standards we talked about. This has to be sustainable. This has to have quality. We have to be mindful of culture. And I think we've got to kind of lay our stall out a little bit and say, this is the kind of. I know what the right word is. Call it initiative, program, whatever you want to call it. This is the kind of thing we are. Yeah, we've got nonprofits. Yes. We've got commercials. Yes. We've got investors. But there has to be a unifying thing that people can clearly articulate. And one last thing, and you and I have kind of talked about this before, is we've got to think about this across generations. One of your opening sequences about explaining this is adding 40 years to ages. Right?

Yes.

This is inherently multi generational. This is about creating a legacy. And I do feel, I would love to hear this story told through the lens of. Of different generations.

And the interesting thing is we do have all different generations involved in different capacities helping us. The timing of each of the engagement with individuals is based upon their position as the way they see the world today. If you went back to when in 2014, people weren't listening because the world was amazing and things happened. And it's funny, as we added details and tools and videos and content and so for set up the structures and. And we had KPMG, Deloitte, PwC, EY, Kirkland, Ellis Maples Group, White and K. And they came in and helped us with all of these tools. We have 68 videos on the recordings on the podcast on one side. On this one we have. I think this will be like. Like 25. And as they build it makes it easier and easier and easier for people to get involved.

Yep.

And that DNA sequencing type thing, it's happening just faster and faster. So, yes, the generational side, Duke, spend a lot of time thinking about it and making sure that our delivery tools and mechanisms can meet them where they are.

That's right. That's right.

And it's not an easy task. And I'm going to say all the way. Yesterday's call, I was on with someone who's a 75 dynamo. And then we have people in our team who are in their 20s.

Yep, that's great.

And it's, it's. You have to listen. The hard thing is listening. And then you have to be culturally aware because, for example, one of the people is the daughter of a person in Singapore. She's out of Monaco and she's in the art ecosystem. And so, yeah, you get different sensibilities. Right. And then you.

Right.

And then you get these Scottish people who never know what to do with them.

It's the ongoing enigma, by the way. We are complex. Yes.

Well, I would say that my wife thinks I'm worse than complex but chaotic.

Or is it disorder?

No, that's why she locks the door from the outside. She puts me in the room, she feeds the food under the door, she tells me not to jump.

I don't know, that sounds. That sounds awfully simple, David.

Well, maybe I am simple and I'm some VR system just to keep me occupied. No, I appreciate, I appreciate you, my friend, Ross, I really do. I appreciate you being a part of what we're working on. I appreciate this experience with you. Because I now understand another level of the complexity in way you analyze or understand or think through something, which is really a gift because now I think us working together, when I hear how you articulate your messages, I'll better be able to understand you. And that will allow us to accelerate the growth in the areas that we're working on. So I think that's fabulous. I'm privileged to have you on our team.

Well, it's been fun and is a privilege to work on something so aspirational, but hopefully that's all I got.

That's all you got. Trust me, when we talk again, there will be more.

Hopefully my little fused framework made sense.

It does, it does.

It's all kind of fused together. And hopefully it was kind of fun going back and kind of taking a slightly more formal run through how options really, and real options kind of affect some of this stuff.

Yes, absolutely. So with that said, I would like to thank you for being on this call. I truly appreciate it and I want to thank anybody out there who's taking the time to listen in today. I do hope that you learned something today will make a difference in your life and in the lives of others. And Ross, what's the best way to connect with you?

Honestly, the best way is probably on LinkedIn. You can find me. It's Ross Hamilton. My handle is actually New York. Scott. That's probably DM me. Connect with me. Follow me. Happy to talk to anyone.

Okay, so with that said, I'm. I'm again, great guy, Ross. He's on the team. And what I would say for any of you, if you're interested in reaching out to me, just remember that, you know, you can can't fix yesterday. You can only create tomorrow. So in order to do that, you can reach a David to davidgoldsmith. Com. You could reach at Instagram. There's Mr. David Goldsmith. You can go to our Project Moonhunt website, LinkedIn, Facebook. I'm out there. So that said, I'm David Goldsmith, and thank you for listening.