#97 Roger Martin: Forward Thinking

Transcript from https://podmenti.com/t/f955bf84f17ab27f

It feels as though all of this.
Siloization of education.
has made people think that I can apply some narrow perspective on this, and it's the only perspective
that is worth it.
Uh and if somebody
applies a different perspective to it and comes to a different point of view, it's because they're either stupid or evil.
Right. Like that's the explanation.
Rather than saying
Now that's interesting.
What do they see that I don't see?
Is there a way I could integrate?
Some of what these
Yeah, see
into what I see to come up with a better better idea.
We don't seem to be taught the curiosity.
about that we're taught to evaluate.
Is my idea better than his or her idea?
Yes, no. If it is, then I should beat them into submission, right? Or if it isn't, I should say, Oh dear, uh they're right and I'm wrong. I kinda feel all terrible about being being wrong. It's uh there's there's
Just not enough.
Curiosity about a better
A better way.
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My guest today is Roger Martin, who in twenty seventeen was named the number one management thinker in the world.
He's the former Dean and Institute Director of the Martin Prosperity Institute at the Rotman School of Management.
at the University of Toronto in Canada.
We talk about the hardest skill to transfer in decision making, patterns of good leadership, and also self-sabotage, the role of narratives in taking bold actions.
and integrative thinking.
You'll walk away from this conversation a better leader, decision maker, and have a more connected view of the world.
It's time.
To listen.
And learn.
You had an amazing mother growing up. What are some of the biggest lessons you learned from her and how did you learn them?
Well, it's maybe just by osmosis. She w she was uh an awesome, awesome
uh lady but I think the most striking thing about
Um how I learned is
Is she would
Answer almost no question.
If you asked her a question, she would typically ask a question back.
For example.
If I'd asked your mom, you know, have you seen my
I used to play with Tonka, those little metal Tonka trucks. Um you know.
Have you seen my
You know, blue Tonka truck.
Instead of her answering.
She would say, Well, Roger
What's the last time you are absolutely sure?
That you can remember holding it in your hand.
Uh, and then I'd I'd think a whole lot about it and too. And then she'd say, Well
Why don't you go?
To where you were when you last can remember having held it in your hand.
And sure enough, it you know it would it would be there.
But
She didn't say
Check your bedroom or check this. She would always be
Uh a a return return fire with a with a question. So she
taught me
That you kinda have to think your way
uh out of things and and you have the power uh to do that.
And that may seem fairly simple, but as a four or five year old it's sort of sort of a powerful lesson.
It's something that we're we're missing today in a lot of ways, don't you think?

Yes, I I think so. I mean I think the
Education.
system, you know, has got a fundamental
uh assumption that
The job is to
Yeah, it's
Ons at the top of your head and pour knowledge in rather than
To teach you how to think.
Um now there are
awesome teachers, uh, and we work with a whole lot of awesome teachers in our
I think uh program, uh, for example.
Who I think are attempting
uh to teach the students how to think. But there's just too much of it is that is is
pouring in knowledge and assuming that that is that somehow makes you more effective.
And a as the former dean of the Robin School, you're you're in a position to know that you you oversaw some of the most significant changes there in a in a long time.
Um what would you say is wrong with sort of like business e education specifically?
Well I yeah, that one
Unfortunately there's a big, big problem and uh
Uh and it's that
Business.
Schools do not
Teach.
the fundamental problems of business.
I mean that's that's pretty bad.
Right.
What they teach are
finance, what they teach us, marketing, uh to teach us HR.
And as the great greatest management thinker of all time, Peter Drucker said, there are no marketing problems, there are no finance problems, there are no accounting problems, there are only business problems. And these are problems that
slothily span across a bunch of uh domains uh in business education uh has abdicated.
It doesn't even try.
to uh to teach how you think across domains and and that's
really problematic. And and it's consistent with
with a lot of the huge problems uh in the world is thinking that you can
decompose uh things into into little pieces and and somehow add them up together and they all add up to the whole that you wish
doesn't doesn't happen and and business education is is uh
critical impediment to that, uh as it currently stands.
So is it right to say that part of teaching people to think better is trying to t teach them that everything is connected to everything else in the world?
Yes, it is.
And and
That's a more daunting task. So like I understand why.
business education abdicates that. That's a m that's a more daunting
uh task and things are
Le
Easy to prove.
Right, it's much easier to prove as as you would well know, Shane, right? U You've heard the guy all else being equal, this the causes that, right? And and you and you and you know all those other things that you have to assume are are equal are not.
But
If you h do hold them all constant, then you can develop
uh and prove a causal relationship between two things. So it's sort of easier to write a paper, do a study, all of those things if you take a narrow, narrow lens.
But that's
Just not helpful to the world.
And and so
Yeah, I I think
business education.
uh draws in.
Lots of people who
would have succeeded without it. Uh th they're the ones that small percentage of people who can integrate, who just learned
early on in their life one way or another, long before they got to business school, how to think integratively.
Uh then they go to business school, then they go out and think integratively despite what business uh school taught them, and then the business school says see
Like we made that person, right? And uh and I just
I just don't think that's the that's the case. Wh where should that start, that integrative sort of teaching and what should it look like? You you sell you strike me as somebody who's thought about this a lot more than the average person.
I think I have and and I've been taught things that I didn't
I for sure.
didn't expect or or understand. So as as you may may know, I introduced this concept of integrative thinking. I wrote a book on it and introduced the concept uh of it to uh to business education, to the Rockman School. Uh, and I had a student
A wonderful student by the name of Elie Avichai, uh, who uh came from an unusual background.
primary education. She was a school teacher before coming and doing an an MBA.
She loved integrative thinking and and
Sa
To me uh uh as she was graduating. Hey, Roger.
I think you can teach this to younger
people than MBAs.
And I said, Okay.
Let's see and we m arranged through uh through a friendly friendly person to test it out at uh
And all girls, uh high school.
Called Branksham Hall.
And it was
Spectacularly successful.
And it was an eye opener to me because these
girls who were uh grade ten
Girls.
So they had
Definitively six fewer years of formal education, right? Grade uh eleven, grade twelve, four years of of undergrad compared to our MBAs. And our MBAs on average have about four and a half years of work experience. So they have ten and a half less, yeah, fewer years of life experience.
And their ability to come up with integrative answers.
was a hundred percent as as good as uh as the MBAs.
And so I said, Whoa, whoa, whoa, whoa, whoa, what does this mean?
Yeah, this means that that additional six years
In ten years.
Oh less experience.
is good for
nothing in making making you better at at doing uh doing this thing. So that was a real wake up call. Then we started teaching teachers, high school teachers, because we had this conception, you know, how foolish we were, we had this conception that well
you know, high school was really pushing it, that that you know, your intellectual development was was just maybe barely ready. Now that wake up call was no your intellectual development is really ready. And some primary school teachers came to our our programs.
And and our first reaction was, Oh, no, no, no, no, that's silly. They you can't teach it to to kids like that. I mean that they're just too young to really understand this complicated tech technique.
And bless the the teachers. The teachers were uh I think we'll be the judge of that. And they started doing it. And so we now have t teachers in the s in the school system in Ontario teaching as young as as grade one and two students uh how to do this.
And here's the cool thing.
They're really good at it.
It is just charming actually to watch these these uh kids work on solving uh kind of either or
challenges and and we have all sorts of fairs at the school they come in and I'm I always get weeby listening to them.
Um in the
The bottom line is is that
They don't need to be untaught anything.
Right. So that's their gigantic advantage.
uh they're easily smart enough and they don't have a view already built up that life is full of either or choices where you it's the devil or the deep blue sea and you know you just have to suck it up and choose one bad choice over another. They don't understand that.
So when when you say, Okay, there's this there's here's this choice. Do we do this or do they do uh that, but here's a technique for figuring out something better, they're like
Sure, let's go do it and they're great.
Like really good at it.
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Gutes für alle. You had a four step.
uh methodology for teaching that. Can you walk us through that a bit?
Uh sure. So you uh start with the notion of taking the two models, let's say, and and we often use the Toronto International Film Festival as as an example, you say there are
Two models of running a film festival like Toronto, the community oriented film festival. Anybody can go, there are not uh, you know, uh velvet ropes all over the place. There's not a jury, it's just a friendly community film festival, then there's con on the on the uh on the other side. Rather than saying, let's think about
uh something in in between right away you say let's
Push those to the extreme.
the completely exclusive film festival, the completely inclusive film festival, right?
And then you lay out how they work.
How d do the do each of those work?
And produce the out outputs uh that they pr uh uh produce. And we asked how does it work for the various
uh players involved. So uh how does it work for the community? How does it work for the uh film industry?
How does it work for the
Festival itself.
Right. And you lay that out and you say, Okay, here's how here's how this one works and here's how con works and here's how TIF or Sundance or or Tribeca
Works. So that's one. And then you ask yourself the question
What about
These things do we love the most? What features, what mechanisms do we love of uh both?
And then ask the question, th third step is do what we call these integrative moves, because what we've uh noticed is that there's three kinds of of integrative moves. And in the case of the uh TIFF, it was what we call a double down. So pierce handling.
uh who was running uh t Tiff at at the time uh
loved everything about the uh inclusive community oriented film festival. Loved what it did for the community, loved what it did for the the industry.
But he loved one thing.
About
Uh con.
And that is the buzz that it created that brought the attention of the international media, which made it a wonderful sponsorship opportunity.
So
Evian wouldn't pay a whole lot of money to make sure that a bottle of Evian's on the table when every Starlit gets get gets uh interviewed.
Right. And so what uh what Pierce did is say uh is come up with this uh this brilliant notion, which is
We can make
uh the inclusive film festival
even more inclusive in a way that gets us the one thing we want from the other model.
And that was the People's Choice Award, right? So the People's Choice
award said we will create buzz around who's gonna win the prize, but the prize won't be an exclusive prize of an exclusive jury that'll make the audience well it's them that's all about them. It's actually all about us. So it made the festival more inclusive and got the one thing he wanted from the
uh the other model.
And now TIFF is the most important film festival in the world.
That's the third step. The fourth step is you've got to try it, uh try it, experiment with uh with it to see if it works. But that that is indeed what they did. It's worked better and better every every year, and now it's the most important uh film festival.
In the world, maybe not the most famous,'cause con's been around for so long and famous for so long, but anybody in the industry says
Toronto.
is the most important uh film festival in the world.
That's integrative thinking and
Quite
Quite frankly, we've we've gotten to a place in the world, it feels to me, where
We're presented all the time.
Uh with things that are either or look at US politics right. You're either uh you know a uh a Trumpian or a uh Biden guy and
We just take sides and you know, battle and and you know you know, fire missiles at one another.
It it feels as though all of this
Siloization of education.
Has made people think that I can apply some narrow perspective on this, and it's the only perspective that is worthy.
Uh and if somebody
applies a different perspective to it and comes to a different point of view, it's because they're either stupid or evil.
Right. Like that's the explanation.
Rather than saying
Now that's interesting.
What do they see that I don't see?
Is there a way I could integrate?
Some of what they
Yeah, see
into what I see to come up with a better better idea. We don't seem to be taught the curiosity.
about that we're taught to evaluate.
Is my idea better than
His or her idea.
Yes, no. If it is, then I should beat them into submission, right? Or if it isn't, I should say, Oh dear, uh they're right and I'm wrong. I kinda feel all terrible about being being wrong. It's uh there's there's
Just not enough.
Curiosity about a better
A better way.
Yeah, that's really interesting. I mean, one of the things that that strikes me about that, I always ask myself when I see somebody doing something that I wouldn't do or strikes me as odd, I'm like, what would the world have to look like for that to be
the option that I was engaging in. Right. So Oh that's good that's good. That's that's a that's sort of a variant of the question I asked in strategy, which is the most powerful question in strategy is what would have to be true, not what is true. What would have to be true for that to be a great idea.
'Cause that that gets you kinda noodling around another logic.
And and
It is possible that
By taking pieces of another logic structure you can come up with uh
With a better idea.
I wanna come to strategy in a second, but uh just before we leave integrative thinking here.
Yeah, are there limitations to this idea? I mean, it sounds very
um novel to be faced with a hard choice with trade offs and come up with an option that sort of like mixes
This either or thinking and w where do you see this falling apart and where do you see it really under applied?
Well I see it underdeplied in the world in general, right, uh I guess is is uh uh is my view.
Lots of people just ask me, you know
Yeah, uh about limitations and should you do this all the time and and the like. And I say
It's in
If the choice is is between
Kind of.
lying on the beach or getting kicked in the groin.
You don't need to use integrative thinking. I'll take lying on a beach, right?
Uh but it's when it's when
You feel like
Oh I I I hate
I hate the fact that I have to uh that I apparently have to choose here. So you don't love
either option, either choice and and you and
That's the time. That's that's when a little light should go off in your head and say uh uh uh stop.
Don't choose.
Because you don't like
uh either.
But I mean I use it
Mm-hmm.
All the time. I mean I'm feeling all cheery these days about
Tennis Canada.
Uh because
Uh this Monday
in the rankings, the the men's rankings in this case in in this case. We're doing well on the women's side too, but in the men's ranking, uh Canada had three
players in the top twenty.
Interesting fact is that
This is the first time in Canadian history that we had the most
players in the top twenty.
We're tied with Russia. Russia's got three. We've got three. US, Spain, all these other powerhouses uh have have fewer.
before
Two thousand and five when we put in place the Tennis Canada strategy that's resulted in this, we had zero in history.
What was the magic
solution uh that transformed us from a nothing country literally a nothing country that was irrelevant to a leading tennis nation where everybody says, How is it that they've got so many great players from a little country that's got snow all the time? And uh and the answer is
We we looked at the French system.
which is a more control oriented uh uh system in the US system, which is a you know wild west kind of system, and said, How can we, rather than choose between them, come up with a better solution. So
I you can apply integrative thinking to create
Incredible
outcomes.
Left, right, center. I did it at the Rothman School too. Uh that was a product of integrative thinking choices. So I I
Yeah.
You mean maybe I have a hammer so every every uh darn thing looks like a nail, but I do eat the dog food, right? I apply this uh to all the tasks that that uh that I have. Um and it
It's proven to be extremely valuable.
I uh interesting backside, I mean I I sort of hit on this as well. I went to business school in two thousand and seven and I almost dropped out because I was just so disappointed in what I was
I come from a world of like Charlie Munger and sort of like interdisciplinary thinking and I got to business school and I was like this is ridiculous, right? Like none of these subjects are connected to each other. Oh really? So that uh good. I'm well, I'm I'm glad you figure that out. Most people don't. They they they become
indoctrinated into that notion.
Right. They come in indoctrinated into the notion that my job as a business person is to figure
out into what category this problem that I'm facing falls and then apply that tool. Ah, this is a finance problem, so I will apply the capital asset pricing model, or this is an HR problem, so I'll apply theory X, There Y. They they're they're a tool matcher.
Right. And that's and that's why MBAs are viewed widely as these incredibly narrow minded people.
Oh, that's so fascinating. Uh have you seen I wanna come back to that in a second. Have you seen a lot of changes in terms of
the incoming students, like with these girls that you sort of went back to in grade ten and you taught them integrative thinking, have they had
Like tangible or quantifiable sort of results that are different as a result?
They it's more anecdotal, but yeah, lots of them lots of them
you know, come back to us and tell us tell us stories of what they what they've done and what they've been uh up to, although or or they'll go back to their teachers and and and and tell them. I mean it it is something I'm encouraging the I think people to do is is start collecting more data to show the the effectiveness.
Of it.
Oh, we have some great stories. There's one of our uh absolutely fave teachers teaches grade
three and four and she was teaching grade three in a big school, right, that has a bunch of classes of of each.
And uh the grade four teacher, you know, came up came up to her at you know, at at at lunch and said uh, you know, in the first week
Uh let me name bunch of names.
And you tell me
uh whether they were in your section.
of grade three and she goes a you know, A B C D E F D G and and uh and our and our teacher.
It's like well.
How do you how do how do you know that?
And uh and uh
uh grade four teacher just says.
Hurt like
The
behave completely differently.
They ask a different set of questions, uh, you know, they do this, this, this, th this this, and then our teacher was sort of like, Hmm, you know, that's good. But she was a hundred percent
accurate in w without without knowing. She was a hundred percent accurate in identifying our our our teachers, uh graduates. And then that teacher became a fanatic about it too, because she said that they're just better. They're just better. So good.
Uh we were talking a little bit while we were um before we started recording about sort of model match in the MBA and how one of the problems that I have with the MBA is it was so siloed and you're given these models, here's a finance model, here's a strategy model, here's a decision making model
And we don't think of integrating those models. Can you sort of riff on that a little bit in in terms of how that impacts and the role of models
being maybe the best model we have at the time, but not the only model.
I the way I think about uh business education is that it's it's yeah, you got things visualized like one of those little red toolboxes, right? You care you you come in as a student with that empty.
And
And you get a bunch of tools. You get a hammer and you get pliers and you get a screwdriver and whatever put in your in your in your toolbox and you're taught.
to size up a problem.
And ask the question.
Is this
Is a hammer best for this? Uh is a is pliers best uh for this? Is it a screwdriver best for this? Is a wrench best best for this? And so it's this job of matching
A bunch of narrow models.
To
Real world problems.
And that's why MBAs, unfortunately, get get you know uh get criticized for being these sort of, you know, we had an MBA here and he did this silly thing and the silly thing if you analyze
w w what way the person criticized what the MBA did.
it typically falls into the category of they apply one narrow model to a broad uh a broad question.
And I understand why they do it. That's what they're taught.
That's literally what they're they are taught.
And
You know, you can recall this from your own MBA, you know, when you do a case study, uh uh the case
has been written.
to illustrate a tool.
Right. The answer.
comes from applying a given tool. Like and you and and we're made to think, oh, these are just general business situations. No, they're not. The the the the writing of our business uh school cases has evolved to this art form, which is to write a case that illustrates one narrow uh tool.
That's what the business school world
uh spits out and and it spits out spits it out into a world that's organized that way.
I always found w
working with uh MBA is a a bit
sort of difficult afterwards because
They want these packages very much like case studies and and what you're sort of reinforcing without, you know, unconsciously, I think, is that
all the information in the package is all the information that you need to make this decision or all the information that's relevant and pertinent. And that is so often in real life it's not the case at all.
We get
Absolutely what we educate for. There's no
No question in my in my own mind.
Yeah, you know, it's a good thing.
there are a thousand partial equilibrium e economists for every w a single j general equilibrium economist. And so we have economists who who kind of
Uh know everything about
Yeah, whatever fiscal policy, but nothing about
labor policy or labor economics or or environmental policy or or the like. They
Uh in the in the
Do that.
Sure.
I'm not gonna think about all those things, but I'm gonna I'm gonna think about the thing that my model covers.
And it happens in in medicine too. Uh uh we had a we had a uh a wonderful lady work with us on applying integrative thinking.
to the medical field.
Which has been very val valuable and and worked out well. And she was talking about her

Saying things like Could you check on the liver?
in r in room two seventeen.
Right. It's not
Check.
How
Mrs. Smith.
Who has got
uh kind of liver problems and it's literally check the liver, right? And and she said
You know, it's it's down to that sort of
kind of narrowness. We're not even gonna talk about the person, we're gonna talk about uh, you know, one organ.
uh in in the body. And so we're we're sort of teaching from from the word goat not to think holistically, to think to think
as narrowly
as uh as possible.
And it causes blindness, right? Like we miss obvious things'cause we're just looking for something to fit this model and then we we want to apply this model that we know. And I I found this with my I had a computer science degree and then went into
sort of the corporate world, and then you know, you start managing people, and all of a sudden most of my computer science degrees are relevant, right? Computers do what they're told to do. You know, if there's a mistake, it's always with you. People are biological systems, they're much different. And and I found a lot of the education that I had learned just didn't apply anymore.
But the way that I tended to approach problems was very based on this comfort level with this is how I was taught to approach problems in school and this is my experience. And then you carry that with you.
Absolutely.
And it's a very interesting thing on on on kind of people.
A huge difference. So our MBA is
uh at the Rodman School have about four, four and a half years of work ex experience. Our executive MBAs have about fourteen or fifteen years of work experience. So the MBAs
Take
On average less than one second year.
uh course in the entire OBHRM field.
I
They just don't think that stuff is important.
Uh at all.
Right. They they load up on finance and strategy courses more so than any any other courses.
The embassies.
Have an insatiable desire.
for OBHR uh courses because they they have the learning that you that you had when when you got into the into the real real world. They've been working in the real world for fifteen years and they realized that
There we are.
Everything is a people, uh people issue.
Yeah you know, I I don't think
we do a good enough job in in in business school and helping these students understand that
Taking courses in that field.
understanding more about the di the people dynamics is important. Uh but
they those courses as you well know, uh from having taken it.
Are less
replete with with very formal models where you can calculate something.
Right in finance.
you can calculate yield curves or sharp ratios or or whatever, and you can do a five forces analysis or a Nash equilibrium in your strategy uh uh course.
Uh so they feel more comfortable learning a model because they wish the world would behave according to models, uh like that quantitative sort of mechanical uh
model. So they're more comfortable with w with uh that.
We we do that in the workplace too, and I notice this with policies and procedures, right? Procedures are basically like an algorithm that you apply given a certain situation, certain inputs.
And what I discovered is that it just eliminated thinking.
Um, because people would go, Oh, there's no procedure for the slight deviation from what would happen and I can't respond because
At first you can, but you lose that ability over time to actually apply judgment. Well, maybe I shouldn't apply this procedure in this particular case and I have to do something different. And that's where this this teaching thinking and teaching judgment sort of comes in and
I find that when we get into organizations we actually reinforce this modeled siloed
predictable way of solving problems.
Absolutely. I I and there if and if we want to go on this this vector, it gets even worse than what you've described. Oh go on. Which is which is we we dramatically, vastly
overuse science
So
What
What business what you were taught in business school, and you tell me if I if if I'm wrong wrong on this, is that
A good business.
Man or woman.
business man in your case.
If you're gonna be a good businessman, Shane, you will make decisions based on analysis.
Yeah, right.
You'll do the analysis and make a decision. You're some kind of a corporate floozy if you're just going making decisions without without
The analysis uh behind it.
Yeah.
So you can ask the question, where does analysis come from? And the answer is from Aristotle.
uh for twenty four hundred years ago, uh fourth century B C, Aristotle.
essentially created science. Uh the book is called Analytica Postioria, where he where he sort of was the first
man in the world to say, here's how you can determine and w what he uses the terms he uses this here's how you can have a rigorous methodology for determining the cause.
of a given effect.
Right, you experiment, experiment, watch, watch, collect data, and you can say aha, this
causes that.
all of the the future of science is based based on the uh Aristotle's understanding. We think that science came from the scientific revolution, Bacon, Newton, Descartes, Galileo, they formalized what Aristotle uh did two thousand years uh uh before them.
So the guy who invented science
though pointed out something about size.
Uh he said, he said.
science, this methodology I've used is for the part of the world where things cannot be other than they are.
So we got what does he mean by that? Well
If I let go of this pen.
What'll happen.
Yeah.
Uh, if I let go of this pen ten years from now, what's gonna happen? It's gonna fall. I if if I let this go go of this pen in Antarctica.
It's gonna fall.
That's the part of the world where things cannot be other than they are.
And and so wo so there.
It makes a whole lot of sense, right? If I observe all pinfalls that have ever happened in in the past.
What's it a pretty damn good predictor of?
Future. Penfalls in the future, right? So that's the part of the world where things can uh cannot be other than they are. And and he said
That's what you sh need to use the scientific reasoning uh method to be rigorous about understanding because you know, at w at one point we thought it fell because
all objects like to be closer to Mother Earth and da da and and eventually we figured out that no there's a universal force called gravity that pushes everything down.
That's the development of of scientific knowledge.
But the guy who invented science
Warned.
Do not use the scientific method.
Why would he say that?
In the part of the world where things cannot be other than they are, science.
Analyze data.
Collect as much data, analyze it rigorously to determine causes of effects.
In this other part of the world, imagine possibilities and choose the one for which the most compelling uh argument can be made. And he said
The job of human beings in that former world.
is to understand the causes of the effects that we see so that we can optimise the world to that.
Right.
We observe all these people who smoke getting lung cancer, so we can optimize
against that by trying to stop people from uh from uh smoking.
Uh he said in the other part of the world.
Human being's job is to be the cause of the effect they want to see.
Right, to change the world in in a in a better way by imagining possibilities and making those those new things uh come true.
What we've done
Is said
that
is for
You're bad.
floosy type uh type people, the good ones are the ones who always apply science. I like that that way of thinking in in terms of like how you're explaining it.
We we are taught these models, we apply them as if they predict the future, but the reality is we're in a constantly evolving and changing environment.
And our ability to predict the future is more limited than we think it
it it actually is. I mean we if we were able to predict the future, we would have seen COVID come in, we would have seen a whole bunch of things coming.
I and that sort of relates to your your latest book about how we
We hyper we predict this
I almost think of it as this beam of light. We predict this beam of light into the future as if that's the only possible future. And then we optimize for that particular future. So we we
take away margins of safety in the supply chain. We I I sort of think of it as you know
We take margins of safety and we turn them into money, which is what business school in a way has traditionally taught us to do, right?
Uh you know, you don't need
And just in time inventory is better because you have less inventory on the balance sheet.
uh all these buffers and the slack that we sort of develop, but these buffers and the Slack allow us to position for multiple possible futures.
They allow us to easily pivot when the world doesn't work the way that we we think it was. The problem I see with this and and the pushback that
I I give myself when I think like this is that
In the moment
Being inefficient and
positioning for multiple possible futures.
is always sub optimal.
to somebody who's hyper efficient for this one particular future. So in the short run,
We're always looking like we're behind, but in the long run, we always win.
And then we have to deal with this sort of like timeline difference. If you're the CEO of a company, I mean, what's your average tenure? It's a couple of years, right? So you have to sort of like get in, do your thing and get out. And you're not thinking about it from a long term point of view, but I'd love to hear your riff on this.
Well, I mean I I can't do much better riff than you, right? I mean I think your diagnosis is is uh is bang on
And this is this is why.
I think
Uh great.
A CEO
And I've talked a lot, uh you probably know Paul Pullman. He's a he's a friend of a friend of mine. He's always nice enough to say that I taught him a strategy when he used to be at Procter and Gamble, but we talk about it is that the part of the CEO's job
Is to create enough of that discretion.
So that they can do those things.
Right, that uh that they know are going to be in the interests long term.
like in your case, building up some slack, you know, for the for the bad times.
Uh because if they don't build that up, they will be forced
into the
a hundred percent efficiency now and that'll kill them sometime in the future. Now it may not kill'em during the time they're CEO, uh, but they won't won't have shown great stewardship for their organization. So so I think you're I think you're right. And
And it's one of the
challenges of the modern capital markets, right? Modern capital markets say gimme, gimme, gimme, right?
If you're not using the money uh, you know, uh buybacks uh shares or or or dividend uh back to me, lever your lever your stuff up so you have a more efficient capital structure, all of all of those things are uh are taking away
that optimal amount of slack that that CEO has
To make
decisions that are good for the company for the long term to invest in things for for the future.
That's one of the reasons why I I think, right, that
America.
had a huge advantage over
the rest of the world for probably
thirty, forty, fifty years somewhere between nineteen thirty and nineteen eighty, where it had the best capital markets in the world for helping companies grow and prosper.
Uh, I think in twenty twenty now America has got uh a capital market that is a detriment to American uh competitiveness.
because it is causing companies to behave in ways that aren't good for the company, its employees, America over overall.
Oh, double click on that, go deeper.
Talk to me about that.
Well, I d think what what we're what we're getting is this taking away of s uh of uh managerial uh slack
driving managers as much as they can to managing for the short term for the uh this quarter. Now you have CEOs who stand against that
But the
Pressure.
Is
is in
In that direction.
And it's and it's dramatic.
uh pressure and
And it's causing all these bad things, right? There are you know studies that say CFOs, you know, uh forty percent of CFOs freely admit uh uh that uh they will they will not
make an investment that they know is NPV positive.
Uh in order to make
this quarter's uh uh guidance.
Right. So all of all of that stuff is causing companies to to perform less well.
Then they could.
And that's a capital market problem.
That's that's why I think I think
We're gonna look back.
twenty fifty. We'll look back on this period nineteen
forty ish, thirty five, forty ish to say twenty twenty five or thirty.
uh as this insane period where we thought the widely held publicly traded corporation was the optimal form.
And we're gonna s we're gonna look back and say, What were we idiots thinking?
You know that that's crazy. It it it
Didn't work.
uh it created created all the wrong uh the wrong incentives and we're gonna be to be into a a world of more controlled
uh companies. Yeah, doesn't this create like an arbitrage or almost competitive advantage for private companies or companies that are largely owned by one shareholder? When I look back and I I look at Berkshire Hathaway's like track record
One of the things I ascribe that to is that Buffett and Munger controlled about forty percent of the shares until recently, so they could sit on cash and not do anything and not worry about an activist investor or you know, and what they were really doing, I think, personally, is they're positioning for multiple possible futures because they don't know what to do.
They have no degree of certainty in what the future looks like tomorrow. So we're just gonna sit here and position for all of these possible futures. The same thing they did in March when people were like, Why didn't you deploy all this money into the stock market? Well, that's easy to say looking back with hindsight of what what the stock market has done since then. But at the time, it's like
Well, cash may become the most valuable thing in the world. So we're gonna sit on it and position for multiple possible outcomes, but it's always suboptimal.
And so you need this control, which is comes from a private company often, or family controlled, or
you could even probably get away with it with a super charismatic CEO, but these companies will actually, uh given what you're saying, if that's correct, they'll have more of an advantage over the next thirty years because they'll be able to
build up the balance sheet because they have extra inventory and they can take advantage of sort of
call it the professionalization of management.
uh in terms of model thinking, which is eliminating slack, eliminating
Uh and and preparing for this
next quarter and being hyper efficient on this next quarter.
an article on this subject coming out in the January, February HBR
on what I think is is the
we're approaching the tail end of the domination of the widely held publicly traded corporation as the corporate model. It's just got too many problems.
That are
Arguably getting worse, not uh
Uh not better.
And and you know, th it's one of these things is there are so many things in life where it's like how
How
Unearth.
Did the logic structure
Hold for so long.
Right. So
The view of a board of a widely held publicly traded professionally managed company, right, is that
We need to have the board, you know, and Mike Jenton, uh, as you as I'm sure you know, wrote wrote about uh this with agency the agency theory that that managers are imperfect agents, right? They have self control problems, they are not necessarily gonna manage on behalf of the shareholders.
Right.
And and so we have to discipline them.
Right, to make sure that the that the agency costs are not too high. What's our tool?
Well
They report to a board of directors who represents uh who represents shareholders.
in and they can discipline them.
Now did anybody ask the question?
What exactly are
those board members.
Would they not be
Agents.
Just like management.
And so
What you're saying is that our solution to the agency problem is to put a Fox
in charge of the hand house. That's our solution. Yeah, yeah, yeah. That'll really work well. I mean it's like where where on earth
Did this logic
uh come from.
Right. There either is
An agency problem, in which case we have put foxes in charge of the the the henhouse.
Or there isn't.
an agency problem, in which case we shouldn't be bothering with any of this any of this crap. But the idea that that a board will discipline
Management is is just an absolute fantasy.
And that's a core kind of element of the logical structure.
That guides.
the workings of
the capital markets, the equity markets, and and the widely held publicly traded uh companies. It's just theater.
It is theater. Oh my God. But it gives us comfort because we're like oh the board's watching out for us and you know, like yeah, I totally agree with you. Yeah, but I mean I I I think I think of boards of directors as being uh like fire insurance that works except when there's a fire. I think they can work, though. Like if you have um
I I think what I love to see on boards is it's not necessarily a large ownership of the company, but a high percentage of the person's net worth involved sort of like
really invested people, but they don't meet all these requirements that we're starting to see in terms of like the ideal board according to the stock exchange and the ideal board
According to sort of
i if you're a person who who might think and apply a little bit of judgment to it are often two very different things, right? I agree. I I I mean I honestly think that uh
w a good versus bad board members the the key
criteria.
Or
Kind of psychographic ones. Oh expand on that.
Well they're attitudinal. They're they're they're what does the person think of
his or her role in life, right?
It's things like that, not
Are they a sitting CEO or were they a CEO or do they have financial expertise or whatever? It's it's how do they how do they behave? How do they think about their job?
You know, I've I've written about this too. I think the only
The only
useful reason for wanting to be on a board.
uh is uh is that you think
uh a well functioning board is integral to the success of uh democratic capitalism.
Now how many people
Think.
that that's the reason for being on a board, not not many.
Like
And and most of the reasons for wanting to be on a board are bad.
for the effectiveness of the board.
Right. So one reason for being on the board is it's good pay.
Well, if you think it's good pay then you will not you will not do anything to sacrifice good pay.
uh being on a board is prestigious. Well, you're not gonna s do anything that'll sacrifice the prestige. Uh is uh good camaraderie with other interesting people. Well you're not gonna do anything that sacrifices the camaraderie. I mean they're all they're all bad reasons.
For being
uh kind of on a board. Again, one of my theories in life is if you're
Putting something together you have to think.
Oh
What is it?
that would cause a person
Of the sort you need.
To fill the chair.
That you have designated.
I I I talk about this in terms of uh bond bond rating.
Right.
We s we said.
uh in the global financial crisis.
What what on earth were these bond raters doing, rating things triple A like with like, you know, uh infinitesimal uh kind of uh probability of default uh and and they were defaulting a hundred percent uh a hundred percent. W you know, w w how can this possibly be?
Well
You've got to ask the question.
What
would cause somebody to willingly sit in a chair called
bond rater at
uh Moody's or or uh or S S P
Uh
And I think the only logical answer you can come uh come to is that they are the only reason they would be in that chair is that they're not particularly good at rating bonds.
Right. Because if they had a skill set that made them good at rating bonds.
What chair would they be sitting in?
They'd be either sitting in a chair at Goldman or or or Morgan Stanley or their own b or Apollo or their own b their bond fund. So the only people
who would would think of
being it Moody's or S P
Right.
Rating bonds.
The only people who will do that.
are definitively less good at rating bonds than the people who are running the b the the bond market.
And and sure enough, you know, they they came up they came up wanting, but that's that's this fallacy.
Of of we identify jobs for people.
create that chair.
And then don't think.
About whether
It is possible to get somebody to sit in that chair.
that can actually do the job that we need them uh uh we need them to do.
Like think about stockbrokers, right?
Th there there's only one thing you can know absolutely positively without a shadow of a doubt about a uh a stockbroker.
The only thing.
For sure, you don't know if they're male or female, young or old, and but what you know is that they're crummy at picking stocks.
'Cause if they were good, they wouldn't be a stockbroker.
Yeah, but th this is sort of why I like to see boards with significant personal ownership as a material amount of their wealth, because I think
You know, maybe it just gives me another narrative for why they're on the board, but I think it also gives them a lot of investment in terms of the success or failure of the business. And it takes us away from the short term planning cycle of sort of thinking about it in quarter by quarter basis and start thinking in sort of like
decades uh and what you have to do and the investments you have to make to make this company not only sustainable, but position it for multiple possible futures as things change.
Yeah. Yeah, I mean I'll give you an example for my own life. I was on the Thompson Reuters Thompson and then Thompson Reuters uh board for fourteen years and and
A guy I love who is on for all the time I was uh on is Vance Opperman and the Opperman family owned West, their legal publishing company, the best
the best business in in Tom. It's just uh Yes. A gorgeous uh business and and
Vance, you know.
A was in it for the long haul. Uh last time I checked, he's still on the board. I've been off the board for like six or seven years. So he'd be on the board for twenty or twenty five years by now. And and uh I don't know how much the
Opperman family has in Thompson stock, but I think it's still quite a you know quite a bit from from the the from the original
Transaction and yeah.
He takes his job.
deadly seriously and thinks about the long haul and and uh and is a
Awesome.
uh director. He you know, he's probably one of the best directors I've
uh witnessed in action. So I I I I agree. Skin skin in the game is
a good thing, uh, to be sure.
You know, it it's sort of like it's three times so you know, they must own stock that's three times annual board fees or that that's
For those people, unfortunately that's trivial. That's trivial. Desired outcome happens, unfortunately, and only a s uh a small amount of uh the time.
Totally agree. You you study, you've worked with, you've write a lot about leadership. Are there common
patterns to success that you've seen across leaders other than integrative thinking.
I mean the the
tend to relate to relate to integrative thinking. I mean I I I think you know great leaders are
Yeah. When somebody says something to them.
That doesn't
agree with where their head is now, the model that'cause we all we model everything and we say, I you know, I'm uh running this company and and uh you know and I think you know I think this is the best the best product that we that that we offer and somebody somebody uh comes up to you and says
Roger.
Yeah.
That is going south.
That sucks.
I don't know why we're investing so much in that.
A great leader's first reaction is
Hmm.
Say more.
Tell me more about why I want to understand why you think that. What you see that I don't see. Yeah.
Yeah. And that's
Uh that's because
You know, ha it has this like
Super big knot like knock on effect.
Right. So one
It causes
your subordinates.
To all
Think.
That if you've got an interesting thought.
I'm open to open to uh hearing it. I don't I'm not gonna just shut that uh shut that down because it disagrees with me. So everybody kind of is more inclined to to think about things and think about things uh uh differently and not be a not be afraid of that.
And you just get more raw materials.
Because what we learn in integrative thinking.
Is is if we go back to that that TIF example.
Unpacking
how the inclusive festival works and unpacking how they
Yeah exclusive festival works.
All that unpacking gives raw materials.
Which you can kinda recombine in entirely new ways. In associative ways, right? Yeah, exactly. Exactly.
So when I say this is our best product and we are gonna win on the basis of this
That's only a set of raw materials that relate to that theory.
And if I can incorporate in an a whole whole nother huge pile of raw materials, there's a just another pile of raw materials I have access to, then then I can then I have a chance of coming up with a much better, much more powerful uh solution. And the person might be wrong, right?

Actually
There's a weakness in in in this product that
by using that person's uh thinking we can get rid of. And so we end up going with the product anyway, but in a in a in a different way uh than before.
That to me is key. I think another thing that is that is key is
Is and this this may s this may sound a little funny, but it is
You could say it contrasts with my view of possibilities, but
I the other thing is that they are kind of deterministic.
Right. So the great leaders
Are able to say
If this happens
And then this and then this and then this and then this were screwed.
Or if this happens, it's happen it will be on will be in the Kingpin' seed.
like the less good leaders sort of just say, Well we're just gonna sort of bob and weave our way down the field and and see what see what happens. They're not they're not deterministic enough.
I I think stronger leaders are willing to have a hypothesis about how they think things are gonna play out, then be open to seeing seeing changes in that.
But
that
gives them the boldness to make decisions.
Right. Because you have to
Commit.
Assets
Irrevocably.
Two decisions.
to be great as a c as a company.
You can't just say, Well, we'll do a little bit of this, a little bit of that, and we'll shift and change. You have to say at a cer certain point in time.
This
is worth investing in.
And we won't be able to get the money back because it'll be invested in a building or invested in a piece of software or invested in these in these in these people. And so they they are willing to make those those choices because they say
Unless we do that, we're not gonna get
Uh to this place.
And I guess the la the last the last one is just uh I I just don't know.
Any
what I think of as great, great leaders who don't love other people.
I mean if if you think people are annoying.
And you have to put up with them.
And put up with their foibbles.
Rather than you genuinely love them.
Then I d I I think it can only be so good.
uh of of of uh of a leader.
I wanna come back to sort of taking bold action here and I I think
fear often prevents us from taking bold action. We might do a little of something outside of the ordinary, but not too much, because if we fail and we do something that's far
deviant from the norm, we're moving out of this Gaussian distribution and we're going to the fat tails. And we've been taught that we don't want to be in those fat tails unless we're extremely successful, right? But uh this way, if we're wrong, we're not too wrong. And one of the reasons I think that we we like to keep within this narrow, maybe call it one standard deviation band is fear. And
I'd I'm curious as to your view about how we develop
Courage in the face of fear and the role of narratives um in the story we tell ourselves and our employees. You're absolutely right. And you know, I've just written a written a post on this or the first the first of a three part post on
Fear. I called it fear rules because fear
rules us and there are rules for managing managing fear. But it is it does
Come to to tell ourselves
a stories I mean we we create
uh fear or make fear go away depending on what story
We tell ourselves.
And my you know my observation is that the the people
understand this and understand the debilitating aspect of fear. And that's why I that's why I I argue that in Hollywood, the number one box office
Star.
who uh of every era of movies played one character.
And that is somebody who faced fear and didn't act.
Uh, fearfully.
Charismatic.
Unblinking
Well dressed James Bond sort of S. James Bond, yes. Or Tony Stark, right?
or Arnold uh Schwarzenegger or or Humphrey Bogart. It's sort of the they they all play the same character.
Right, which is ha ha ha
I can wisecrack my way through this and and it's it is and it resonates so deeply with people because it's a if I if only I could do that in the face of uh of fear, I I would be s successful and instead I am ruled by uh by my fear.
I think
most fear we create ourselves.
Right? We we produce it ourselves as a as a as a reaction.
uh in trying to tell yourself a story.
Of
How you can
Sort of deal with that.
is important and
You know, people think of my think of me
As having been a successful dean at at at the Rottman School, bless him.
But
There's some things they they don't they don't know. Um we
Like well.
We created a completely different
economic model.
That enable the school to go from
having a budget of
thirteen million in the last year before I got there to a hundred and thirty million in uh the the last year I was Dean, we needed a new economic model, because the University of Toronto economic models were nuts. Uh and so you couldn't plan for the future.
And I went to
To Rob Pritchard.
The president uh who hi hired me and I'll send her the
Provost who hired me and s and said after about three or four months is you hired me to make this a great school. We can't, sorry. Uh we can't with the current model. And the current model was every year the provost decides how much revenue you have.
Right. Yeah.
It's not not things you can do that build revenue. It's like they allocate you that I said, I we just can't do that. I here's what I'm gonna I'm I'm gonna do. I'm gonna
double the size of the program, quadruple tuition, quintuple the endowment, quintuple executive education, and get this much m uh money to spend and we'll have a we can have a great business school, but in the current economic model.
that money won't flow to the the to the business school, so we can't plan plan for it. Uh and I said I I'd be happy to be
uh pay you a tax.
And right now our tax is of about, you know, two or three million dollars a year to the to uh of thirteen million.
under this plan.
You can have a forty million dollar tax.
But
We need a different system.
And they both said, Okay, okay, okay, and let's and and uh we'll work on that.
And uh and I said, In the meantime, can I spend the way I I was planning to spend? And they said yes.
But this was just verbally. And so
I thought they were gonna work this through the governance process maybe in six months or nine months. It took four years. Yeah.
And in those four years.
I because we had to go into massive deficit.
fourteen million dollar accumulated deficit, which we then g came came out of uh completely the whole plan, had paying it back so that we were that we were uh plus
But
For each of those
Days, nights, for f for four years.
I had to go to bed.
with the recognition that if Adol Cedra the Provost lost faith
in his ability to get this different a different uh system through governance, through governing council and all on all th those people.
And said.
Roger is running an
Unauthorized fourteen million dollar deficit.
my career in Canada would have been over.
I would have been fired.
uh I would have been on the front pages of the Globe and Mail as having kind of illicitly spent fourteen million uh dollars and I would have probably had to
leave the country and go back to the the states where I where where I had been living.

Not only that,
I couldn't
Tell a soul.
This.
Because if I told anybody that and they started to act that way, it would encourage Adult to believe that I believe that he might not actually actually do it.
So I had lived for four years.
with the sort of Damocles, literally.
I literally went to bed and the sort of damage was above my above my my head.
But I mean I told myself
A story which is just
Roger
Are you doing the right thing or the wrong thing?
You know?
Is this good for the school, good for Canada, good for University of Toronto, or not?
Yes.
Did you actually ask for permission and they gave it to you verbally? Yes.
Could you
Go back.
to the states go back to your old job and pick the pieces pieces uh up. Maybe you could never get come back to Canada again because you'd be such an embarrassment, but but uh how how bad is that?
And I said, Yeah.
It's it's worth it. It it
It you know, it doesn't won't kill me.
It's worth it.
But that narrative is what gave you the power to sort of maintain the course.
Yeah.
But I could have told m told myself the story You will be crushed.
um you're a Canadian, you're an Ontarian, uh this is your home, you would be you would be embarrassed thoroughly, your family would be embarrassed, everybody would be uh uh embarrassed, uh and I could have focused on
on that and I would have probably
Caved.
Uh and gone back to
Addle and Rob and say we gotta work our way out of this, uh and uh, you know, we'll uh change directions and I'll stop spending and
You know, I don't know. And and the Rotman School wouldn't be the Rotman school it is it is today.
Well, luckily it all worked out, right? Like had it not worked out, I'm I'm curious to see if he would have thrown you under the bus or sort of uh I guess only
Only you would know that and him, but uh.
And I gotta say.
Adle, who then went on to be uh president of uh
University of Waterloo is great man and he didn't. Like I had I had
my faith properly properly placed. He followed through and it was hard. He got a lot of pushback. Are you doing a special deal? And the thing that makes me happiest is is uh then David Naylor, when he became C uh president of University of Toronto, he applied
The Rottman system.
to the whole university.
as a better system for for being able to plan for the long term. So so I yeah, I I wanted to make sure Adle stood a hundred percent by me.
Coming back to sort of the leaders that you've worked with, we talked about common patterns of success. Are there common patterns of failure or self sabotage that you see repeated over and over again in otherwise smart, decent people?
Yeah, yeah. Uh I mean a lot of it has to do with this not being
Not having a uh a sort of a deterministic enough view.
So the failure mode I see probably more than anything else.
is
somebody who is what I think of as not strategic, right? Which is that which is that they believe that they need to always keep all their options open.
not make big choices
uh and sort of see what see what evolves and and and then just react to
What evolves.
uh that's probably
That's probably failure mode number number one.
If that's connected to and I don't really like people.
Uh that's a that's a sure thing, right? That's a
That's a certain disaster.
And you know, it's the three things I talk about, and if they're just not curious.
uh if somebody comes to them with disconfirming kind of data, they want to suppress it rather than rather than absorb it and mine it for for everything they can uh
They can get.
Interesting enough, that tends to c you know, those two things tend to be linked. Like it is a big system, right? Which is you tend to like people.
If people are this repository of stuff
You can't see and you're constantly learning and yeah, you're very curious. Well then they're good then they're good. But if instead they're a threat.
Yeah.
people around who are keep on threatening your your prevailing
point of view and the one you prefer to just keep.
and not be kind of messed with by by anybody. So those two things I think uh end up being linked. And they're probably I haven't thought about this, you you raise a good good question gets me thinking is probably it is linked to the sort of the non deterministic to if your model is sort of impoverished.
because you aren't absorbing building in other things, the chan it'll be harder for you to come up with
with things that you can be confident in to say, you know what, I think it is time to
Invest here, go here, let's bet on bet on this. So they pro probably all those three things are are either deficient together or or they're together and and kind of self reinforcing.
You mentioned strategy. W what is strategy and what's the difference between a good strategy and a bad strategy?
Well, I think about strategy as a a set of choices that
Enables you to invest
In a given place.
uh to win.
whether that's geography or business or whatever. So it it's that set of set of uh uh choices. And what do I mean by winning? I mean in the field of play that you choose uh
You have a better
value proposition for the customers in that space than uh than anybody else.
And
Yeah, um
A good strategy is one that has a logic
That
holds up.
To that.
Yeah.
When
When you
put it into into action, you
Do.
get a better position where you've chosen to play than uh than any competitor.
And a bad strategy is one where you you're sort of
I is it you're chasing multiple things, you don't understand your sort of flywheel of
Success. Like
It can be any any of those things. It it's d one kind of bad strategy is a little bit of everything. Uh you know, we're gonna do a little bit of here, a little bit of there, another
your kind of crummy strategy would be one where we're
the economics don't enable you to continue it.
Right.
You can start on it, but it's not.
a remunerative enough model for you to be able to continue to invest behind it. So it sort of uh withers withers away. Another is is kind of bad strategy is just trying to do the same as everybody else and assume that you're gonna win anyway. You know, that's that's the that's the great managerial conceit.
We don't have to do anything unique or different, uh and we will s and we will have unique success. I l I love that. It's uh uh I I often think of this
quote from a friend of mine, which is if you do the same thing as everybody else, you're gonna get the same results as everybody else. So you have to sort of deviate if you want to deviate results, but you need to create
an advantageous divergence. You have to not only
Diverge from what everybody else is doing, but you have to be correct.
And that's extremely difficult. And when you have it you need to like
go all in and run with it. A lot of
companies today seem like they have a bit of innovation and be like they wanna be the one to create the iPhone or go zero to one and just create new markets like Facebook or Google.
And
There's billions and billions of dollars being thrown at these problems in R D and hiring and
Uh the results don't seem to be super effective. Do you have any thoughts on why?
Yeah.
It gets back to what we talked about earlier, Shane, about science.
Charles Sanders Peirce, who's one of the great American pragmatist philosophers with John Dewey and that that uh
uh era and William James.
Pointed out that no new idea in the history of the world has been proven in advance analytically.
Just think about that for a second.
No new idea in the history of the world.
has been proven in advance.
Analytically.
Why? It's linked to what Aristotle said.
Right? You can't.
Prove something.
New and different that hasn't happened yet.
Analytically.
And most
innovation processes.
in the world of big companies.
Right.
Insist on proof before doing stuffing.
This whole notion of like fintech and all this d uh disruption by little little technology firms.
Is all
Kind of self induced.
And and that comes back to sort of the models that we're taught it if you want in school and the way we look at the world, you come to somebody in an established business and you say
uh I need to spend, you know, twenty million dollars to prove this idea.
And you know, if fifty percent of the time it's not gonna work. And then so you say no, well, there's no proof that it's gonna work because it doesn't fit these models. And then they go and start a startup and you end up acquiring them for like two billion dollars five years down the road.
Uh but you're you're only seeing the successful results and you're not willing to tolerate the failure internally. Exactly. Exactly. I mean in and
Yeah, and and in some sense, right, the
Yeah.
That
Enemy
Like there's an infinite number of enemy that just keeps pouring over the over the, you know, your moat, right? And a bunch of them drown in the moat and whatever, but it only takes it only takes kind of one to get across.
And that's the problem. So that if
If you have an internal system
that makes that sets up
That we won't do anything unless there's
Proof.
Right.
Then
You won't do any of those things, and there will be an infinite number of these uh these startups. And it's interesting, you know, James March is one of the greatest.
I I think management. Think thinkers. Yeah. And he he wrote about about the importance of delusion.
And then'cause he said
the economy is underpinned by delusion.
In in that.
uh we do know that nine out of ten
kind of startups.
expire with a hundred percent of the the
uh resources kind of wasted.
If anybody's a
Thought.
Those were the odds that they personally were facing. They wouldn't do it.
But they everybody
is deluded, self deluded into thinking they're gonna be the one.
Not the nine.
Uh and because of that.
Ten people do try.
And
the economy gets the one success, but it's only because it's only because there's massive amounts of delusion. And so so I mean it is one of the a cool things about about the uh the economy is all these deluded people who think they're gonna be the one keep trying and sure enough, that spits out enough successes to
change and transform the economy.
But I think the big companies sit there with their hands behind the uh tie behind their back and say
We don't allow delusional people here.
We actually actively try to eliminate them through the hiring process, through the promotion process, through everything.
Absolutely. I I call that uh it's interesting. I think of that as the stormtrooper problem. And we saw this at the intelligence agencies where I used to work.
Yeah because
post Bradley Manning and post Edward Snowden.
what they really tightened up was sort of the hiring process and then to get in to get into the agencies and to get a clearance, you sort of like increasingly there's this narrow background you could have, right? You couldn't have
You couldn't have gotten in much trouble. You
You know, you went generally went to a great school, got good grades, uh, you didn't sort of stand out in any, you know, crazy way. Interesting. So they viewed this as the way to reduce security risk, and and it might in fact be, but
The problem is you get these people into an organization, a large organization, then you give them a checklist for promotions. You need to do these 10 things and then you'll get promoted. And then all of a sudden they wake up at 30 and they're given a problem that you can't Google, that there's no procedure for, that hasn't existed in the world before, and you're told to solve it.
And the problem isn't any one particular person, it's the collective, because now what happens is the collective group of people in the room look at that problem through very narrow lenses.
And you're not getting sort of the what I used to call the misfits or the deviants or the the people that aren't necessarily a security risk, but might have more of a checkered pass'cause they got in trouble or they did something wrong when they were in high school or
Uh and and once you eliminate those people, you can't creatively problem solve. And then you have to buy your problems. And I I think we're witnessing that.
actually play out with intelligence agencies once that is so fascinating. That's fascinating. I had no idea.
But I agree I agree entirely with uh with uh uh your
Your hypothesis.
uh maybe that it's wrong, but the labor component is going up in intelligence agencies because you're requiring more and more people to solve a very similarly these are scalable problems, right? These aren't often one off problems. And then the contracting uh budget, I bet you, is getting much higher to outsourcing
um to the misfits to the people that are are solving the problems. But uh those would be interesting indicators that that is actually playing out.
Yeah, yeah. No, that is that's fascinating. And it I mean it's just such a good example too of of
It is a complex adaptive system and y and you think you can pull a lever.
And and and just not affect anything else. Yeah. Yeah. And yeah, and somehow somehow everything else is gonna be exactly exactly what you want. No, you've gotta
You've just gotta think these things through. Now, some of them you can't think through, and you just have to accept the fact that
Different things are gonna happen than we think and then be alert to those. Well, often they know what they're doing is probably not gonna have the results they want, but it then it's it's sort of like doing
Um what's defendable versus doing what's right.
And uh especially in politics, you end up doing what's defendable versus what you know is right.
Um because you're you're never gonna fail if you do what's defendable.
Yeah, you don't get fired for buying IBM.
That's a big universal thing. Yeah. And that's again
that comes back to fear, right? If if you are motivated by fear of being fired, then that's
Uh gonna happen.
I mean I mean I remember I remember uh interviewing
AJ Lafley, you know, the famous CEO of of of Proctor, I interviewed him for my work on integrat integrative thinking. And uh and I remember like one of the things that really sort of propelled his his uh career because it was such a big success was going from
I don't know if you remember this going from big fluffy detergent, a tide would be in a big box fluffy detergent to compact uh detergent, which he saw happening in in Japan and said, Hmm.
Well, we wouldn't want them coming here with that innovation. And so so he led he led a a an effort to study whether to introduce it in the in the US. And he introduced it despite the fact that the data didn't support it.
Uh but the verbatim did. The qualitative stuff d uh kind of uh was supportive enough, but
he he described
the spend the spending of two hundred he got two hundred and fifty million dollars to do the first thing and and I'll always remember him describing it as a fireable offense.
So hій knew that if this didn't work.
He he was done.'Cause it was a straight up fireable offense. It wasn't a
two to one blind winner, and he wanted to do it uh anyway.
And it turned out to have made them just and it just was monumentally s uh uh successful. It it it just it actually destroyed Unilever's US uh uh position so much that they r they exited like it was so monumentally successful that propelled them, but he described it
whatever it was, twenty years later as a fireable offense. He would not have objected to being fired, but he wasn't
So overwhelmed by the fear of being fired that that would have stopped him from from doing it.
I love that sort of advantageous divergence, right? Um let let's talk a little bit about decision making. What's the most valuable thing that you've learned about decision making that's hard to transfer to other people?
I guess I
Think it is
Patience.
Giving yourself the time to roll.
ideas around as long as they need to be rolled around and not feel the n the premature need for closure.
when I'm making a decision imagining a variety of possibilities and not stopping until I have a good diversion set of them.
Then asking about each one of them what would have to be true for that to be a good idea.
And then yeah, see each element.
of the things that would have to be true, how how likely do I think uh they are true now?
If they're not true, how could I how could I maybe make them true?
uh you know, it's part of the part of the world where things can be other than they are. All those things tend to slow it down. And it's not as though I want to be have a whole lot of process
But I because you can do it.
doesn't have to have many days elapsed, but I think people often have this this real desire for closure fast.
Uh and and I I
I don't.
Though often I surprise people, like I I I say if I had if I had to make this I if I couldn't think any more
Uh I would do this.
And they're like, Oh my God, Roger, you've jumped to that conclusion. I said I said, you know, sometimes you have to, right? Sometimes if if you know it was it was either decide now or or I shoot you in the head.
You uh decide.
But then I'm still open.
You know, tell me.
Tell me what about that is is problematic and let's think about it some more. So I guess
I guess that's that's it. I've learned, I guess. I mean, this is a very good question because I hadn't thought about this, but I would I would say that I've taught myself a process
Of thinking
That slows me down.
enough for me to absorb
greater variety and greater c greater logical pieces. I think of little logical subroutines. A big decision is uh is stacking together a bunch of logical little subroutines and and I
I have a process for for giving myself time to play around with those. Oh, I could put this one here and this one there, you know, and and that helps me come up with with what people often think of of the things I do as as wow, how do you ever come up with that creative uh solution, Roger? Well
I kinda slowed down.
uh is is I think the answer.
And
I mean I think I I think I have a decent
kind of track record of teaching if anybody wants to learn it, I can teach people to do that.
How do you teach them? How would you teach me?
I would just
work with you.
I th I I think practice is is l is the absolutely the best.
That's what I've gone to with the companies that I work with. I just say
What's what's a choice that do you think you're facing?
And you say, Oh, I really need to decide whether we're gonna invest in this thing or that thing.
Uh I say good. Okay. And then I would just I would just work you through a through a pr uh uh process the way I would I would do it.
Uh and then and you would learn by
uh doing. Now I'd explain to you why. Why are we doing this? Why, you know, you'd say, No, Roger, it's either this or this. And I'd say
No, it's not. Uh that's not enough.
Uh variety. I want variety.
And if you can't come up with the variety, that's no problem. Go ask ten people in the organization and and uh don't stop until you can come back with at least five, six, seven.
That includes your t uh two, but I want another three to uh three to five.
Right, and and I'd explain to you why. I'd I'd say you don't have enough raw materials.
I don't like either of your choices. Uh, and the reason you haven't made a choice now is because neither of them are that good.
If one of them was awesome you would have already made the choice you wouldn't be asked to be. So, Shane, uh we need more raw materials. So go go get'em. And then then when you come back, uh I'd
Teach you how to play with the raw materials.
To make a better choice.
And then hopefully.
You would.
The next time without me involved in the room, you would have slowed yourself down in a similar similar way, not thought those are the only two uh two go for raw materials to ask these what if kinda what would have to be true type questions.
I have a friend, uh, Randall Stuttman, who gave me vocabulary around how I use uh approach decisions and and I never had vocabulary around it, but he basically
Said you decide as soon as possible or as late as possible, but never in between
And I was always known for sort of deciding at the last moment because I wanted to keep all my options open. And if I didn't have to decide, like why would I force a decision, I can get more input, I can get more insight into the problem, I can see how the environment's changing and playing out.
And I think that plays to the patient's answer that you gave, which I I I think is really
an insightful sort of response because so many people just get stuck in the middle. They don't make the decision right away.
They make it.
uh, you know, in the middle because they just wanna get this sort of Damocles over the out of their head or they wanna stop thinking about it.
And it's then when you make these really bad
decisions, I think, because you you've made a premature decision, so you're missing all the input or you're clouding all the input that would come afterwards.
And you're only doing it to get rid of it. You're not doing it because you need to make the decision at all. You're just doing it because you don't want to have to think about it again. And there there's also ways that you can do in your mind where you just sort of like put it down and suppress it, but you're constantly gathering new information about like, am I right? Will this prove me right?
Where the where's the disconfirming evidence that, you know, my hypotheses on this is gonna be wrong.
And you can see the world through your actions too. So it also allows you to make a decision possibly, but not communicate it, which is you saying, I know what I would do if I had to decide right now. And then you can see the world through those eyes, had you made that decision, which allows you feedback as well in terms of what that looks like. And I think that that's a really
Interesting way to frame it. Yeah, I you know, I hadn't I hadn't really thought of it that way. That's good good insight in some sense.
When you force yourself to say this is what I would do.
If I had to choose now.
That's the moral equivalent.
Of
Putting a prototype.
out into the market. I hadn't thought of it that that way,'cause then then you can s then you can say, Oh, this happened
That that would have made mine a clever decision. That happened. Oops. That wouldn't have been so
It's like a
It's like a
A prototype.
And when you do that, you all the information you receive at that point you interpret through you having already made that decision, which allows you to see the world in this you can sort of like take a step through this door and say, What does this look like?
Yeah, no no no that's I mean that's so powerful because otherwise because again
Yeah, people talk about data as if data is sort of this sort of very kind of
Yeah, I don't know what intrinsic thing it's not.
Data is only data.
Uh
Like it it floats straight by your head.
If you if if you're not looking for it.
what I interpret you saying in part is
you will actually create data out of nothingness, right? So stuff you would not have paid attention to and wouldn't have collected as data, you now collect as data because it's uh because your choice, your proto choice, yeah, your proto choice
makes that
that phenomenon relevant uh data and you collect it and then have the ability to use it that you wouldn't have before because it would have flow
Right by your ear.
Uh
That's intra that's a very interesting
Uh thought machine.
Gee, I've I learned something from uh from this. I'm glad we're chatting. I loved I've learned a lot. So uh I I wanna finish up with one question. I'm experimenting with this question, so you you can
Tell me your thoughts on it. Which is when you're ninety, what is it you want people to say about you?
Uh he was a voice
That we will miss.
Plain and simple.
Thank you so much for an amazing conversation, Roger.

Thank you. You're awesome at this. Uh I would happily do this any time, my friend.
We'll do it again sometime, I'm sure.

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