it is my pleasure to be hosting with rob siegel as he shares with us the 10 key attributes that organizations will need to drive success over the next decade and as products and services combine digital and physical capabilities rob researches strategy and innovation in both large and small companies as well as the opportunities and challenges that technological change brings to these firms specifically he explores how companies combine digital and physical solutions for the customers and at the stanford graduate school of business robert teaches product management and product development best practices and methods as well as entrepreneurial finance over the life cycle of growing companies rob go ahead and take it from here thanks so much anita good morning good afternoon or good evening wherever you may be uh it's wonderful to have all of you here virtually at stanford university what we're going to do for the next 45 or 15 minutes is we're going to spend some time looking at a topic near and dear to my heart about how the leading organizations in the next decade or two are blending the best of digital and physical there's this notion of this idea that we have companies that started with a physical dna or a digital dna and they stay very separate and what we're seeing now in all the companies that i study at the stanford graduate school of business is the best companies seem to be blending the best capabilities of both areas what we're going to do is we're going to walk through a framework that i call the brains and brawn framework which is going to look at five digital or brain attributes and five broad or physical attributes and we can see some best practices of companies who are doing great things in each of these 10 areas and in fact when we finish you'll be able to look at your company and figure out how you're doing on these vectors and then in the second part of the talk we're going to talk about systems leadership these are the attributes of the leaders that need to be able to help guide and lead organizations over the next decade or two going forward so with that i'm going to dig in we're going to master this not so digital transformation and first who am i so i'm rob siegel i'm the short ball guy on the other side of the camera i like to say that i have two full-time jobs and no life i'm a full-time member of the gsb faculty but i'm also a venture capitalist here in silicon valley where i'm involved in investing in a variety of companies both very very large and very very small when i was in operating roles i actually worked at intel corporation and i also ran a division of ge so i had time spent in some very large organizations but i was not always in big companies i was also a many time entrepreneur i started a company that made the world's first digital picture frames that was called weave innovations and it got bought by sony and then i worked for a company called pixem that was spun out of the engineering school here at stanford and that company made image sensors and image processors i did my undergraduate work on the other side of the bay university of california berkeley i did my graduate work at stanford i actually do own a tie and i have no idea where it is and once upon a time i used to have hair now this picture of me with hair has nothing whatsoever to do with anything we're going to talk about but i try to put it up whenever i can just to remember the good old days all right let's see if we can talk about reframing what it takes to win in a business context because i think the way that we've looked at things in the past is not necessarily what it's going to be like going forward first and foremost we're dealing with a new world order a new world order where every product is connected between the healthcare industry in the financial services industry the mobility industry really isn't a product that's not connected i mean the fact that i am teaching you today from my home office here a lot of this was shaped by the pandemic where i now have basically a television studio at home and i'm able to reach people all over the world in ways that i couldn't do before it's much more than digital transformation and every industry is going to have to combine these attributes of brains and brawn and in conjunction individuals are going to need need to be able to lead and lead in new ways that it couldn't be done before and the skill sets that made us successful for are not what's going to be uh enough to help us on a go forward basis one of the examples i like to talk about is we think of two companies airbus and uber and i'll often ask people i'll say who's the digital company and who's the physical company and it's actually a trick question because inevitably what happens if someone says ah airbus that's the physical company they make big airplanes uber uber's the digital company because i order the app and order the car on my phone because it's an app that i interact with and one of the things i like to highlight is that when you used to get on airplanes before the pandemic and by the way you're going to get back on airplanes again soon any flight you take that aircraft might generate a terabyte of data and uber at this moment in time is moving people we're all made of atoms and not bids from one physical location to another physical location and what's interesting about that is if you think about it both airbus and uber are both digital and physical and yet given their dna each one has various strengths and some various development needs airbus very good at systems engineering government relations quality assurance manufacturing not as good at knowing how to make information of data that comes from the asset not a lot of good digital talent natively uber on the other hand is great at data and great at logistics not so good at driver relations not so good at managing the government and this is the thing where you think on a go forward basis each of these organizations have pluses and minuses that will give them strengths and development needs now if we think about how products used to be developed in the old days in fact even when i was at ge the left upper left side of this picture kind of shows what it was like you know you think of a company maybe in the american organization walmart what made walmart great as an early retailer is they owned assets and had a great supply chain they were analog products they knew had if they could have high cell they could deliver lower cost to consumers product life cycles for products you know used to take three plus years but in a world where everything has a digital component we see the nature of how products are developed they're changing now we can rent assets again look at uber where they don't own those assets they actually the drivers actually own the cars that are used or db in china same sort of thing network effects become increasingly important the more people you have on a network the more data you have on the network the more valuable the network becomes daily product updates we think of companies like yelp yelp doesn't have a quality insurance department because they send out a new version of their software every four hours what companies have realized is being quick and being responsive can actually serve customers better now you don't always want to build products with you know agile and scrum and some of the newer ways of looking to design products you actually want aircraft engines to be designed in some of the old methodologies but even aircraft engines are being designed on how you blend some of the old ways of doing things with some of the new ways of doing things and if you're designing your products differently you've got to think about how do i organize my company and how do i do that differently so for example in the old days at six a ge i was a six sigma black belt i knew my p values and i knew quality numbers and i knew i had to make sure that i could measure everything decisions and organizations were done intuitively and you had a hierarchy from the most senior people to the most junior people inside of the organization i t i t was seen as a cost center but now in a world where everything's connected you have to think about how you're going to organize your company differently it's about responsiveness and pushing down capabilities and decision making authority to those who are closest to the customers and that can be in a region or in another part of the world you need to be thinking about designing for upside do i have a product that's flexible that i can sell new products and new services to people think of a tesla if you want a tesla or if you know somebody who owns a tesla there are times you wake up and there's new features and capabilities in your car you just don't see that with volkswagen cars or toyota cars or general motor vehicles and then finally i.t is seen as a revenue generator i.t is seen as we need to have ongoing contacts with our customers so the whole mindset about how we organize and how we think about where we put people in the resources that we fund in our companies becomes very very different than a world that is blending digital and physical now the next two decades will bind us both and the physical incumbents will add digital and the digital disruptors will end physical but today's competitive advantage will be the companies that combine the best of both of these and we're going to walk through some examples uh to show so i can show you this on this slide here what you see is i've studied over 70 or 80 organizations many of whom have been guests in my class or i've done research on them or i've written cases on them where they really understand that data can have a huge impact on their ability to serve their customers better and everything that i'm going to talk about in the next 35 or 40 minutes is based upon two of the courses that i teach at the graduate school of business the industrialist dilemma and systems leadership both of which are also available online through stanford's digital transformation certificate program all right what i want us to do is i want us to think about the brains and broad framework and this is a way for us to kind of give some context and structure for how we're going to look at things i want to start first with the brainy attributes and i'm going to explain what they are let's think about it our brain the left hemisphere that's how we use analytics the right hemisphere that's how we manage creativity the amygdala that's how we control the empathy that we have for others in our in our ecosystem and in our lives the prefrontal cortex how do we manage risk think about fight or flight the lizard brain finally the inner ear how do we balance partnership versus what we're going to own and i know what you're thinking you're thinking rob don't you know the inner ear is not part of the brain i do know the inner ear is not part of the brain but it's kind of close so cut me some slack on the physical side the brawny attributes what do we want to do on the physical side our spines how do we handle logistics in an organization that keeps everything from going and flowing so that the body and the organization can work our hands the craft of making things can we manufacture well muscles do we have size and scale when can we operate on a global basis hand-eye coordination can we drive our ecosystems and then finally stamina can we survive for the long run and the best organizations can use both brains and brawn to be successful in serving their customers now one of the things as we go through this i want you to be thinking about your organization where you work and as we go through these 10 attributes you can give your company a one to ten rating on all five brain and all five broad attributes and at the end you'll get an overall score now one thing i want you to keep in mind no company is going to get a 10 on all of them probably the one that i think scores the highest on all of these as we think about it right now is amazon amazon does a great job the purpose of the framework however is to allow us to see what it is that where we have where we have strengths and where we have deficiencies and think about how we might be able to invest to improve our scores all right let's talk a little bit about specifics of each of these 10 attributes number one let's talk about the left hemisphere using analytics everyone wants to talk about how data is the new oil and how data is so important but it's much much more than just the ability to have a lot of data in fact what i found in my research is the companies that did the best in understanding how to use data data was a tool to serve their customers better one of the companies that i spent extensive time looking at was charles schwab the large american financial services company which has about seven trillion dollars in assets deposited at the uh the organization they become a real powerhouse inside of financial services united states one of the things that they always do and they always talk about is looking at what customers would want through clients eyes anytime they take an action one of the questions they will ask themselves is what do our customers want and how would our customers want us to use that data like here's a great example if it's possible that somebody goes onto the schwab website and might type in what happens to assets during a divorce schwab might know exactly that you might be headed towards a marital change now they could then use that data to their advantage but they might not think that that's the best thing that the customer might want and as i studied schwab and i looked about how they use all of this data they collect every time then when they would ask about what to do with this data is what would the customer want us to do with the data to serve the customer better perhaps the best juxtaposition showing the opposite of this is i'm going to argue facebook facebook's question seems to be with all of our data what can facebook do that's good for facebook can they sell our data can they give it to other people so that they can sell us things and so that they can improve their bottom line with never once asking what might the customers want if facebook were asking those questions of what customers want they'd be making very different choices about privacy and our ability to control the data now if you can be good at data you can be much much better than people who are in your industry but on the other hand and this is what's also tricky about this if you think about those companies who are good at data those might be people who could enter your industry when i spent time with the leadership of schwab there was a lot of speculation of what happens if companies like google or facebook or amazon enter into the financial services business they will also have a lot of data and data in areas that you won't have so the great thing about the left hemisphere and thinking about how to use data is every company needs to become a data company but the best companies that we studied used a kind of almost north star about what was the metric by making sure they were using data responsibly ethically and for the best purposes of the customers all right let's talk about the next part of the brainy attributes let's talk about creativity creativity is all about things that allows us to kind of come up with brave new ideas but sometimes it's not just kind of something new like a lightning bolt that hits us out of the sky sometimes it's kind of grinding creativity and it can be and we'll all call unsexy markets you know you're gonna have creativity on a variety of various attributes the mindset a creative mindset are you open to new ideas do you try to develop new technologies how do you think about your markets and your customers can you change your business model can you figure out how to grow your organization in ways that you couldn't do before and also how do you think about creativity to defend yourself how do you think if i were going to attack my company how would i attack my company if i were a startup and i wanted to come after my company the best company that we set in the space on creativity strangely enough was a company called align technology align technology makes the invisalign uh teeth straightening these plastic molds in fact here's mine because i'm actually finishing my my teeth straightening right now these plastic clear aligners replace braces right the brackets and wires that we put on our teeth and what a bunch of uh pretty pretty smart people who graduated from the stanford graduate school of business in the late 90s what they figured out is that plastic can actually be used to change individual teeth inside of our mouths and then we're much safer and more convenient than putting brackets and wires in our mouth because those are kind of clunky and ugly and if a wire breaks it really hurts it can poke the side of your cheek and the great thing about the plastic aligners is it can be very very very precise in the movements in our mouth that it creates so every solution that they create is highly customized and what a line does is they digitize a picture of your mouth and they can actually come up with a cad model that will move individual teeth and give you the exact smile you want and what they learned was that smile might vary in terms of what's attractive depending upon what part of the world you're in strangely enough as i was studying this i learned what people in north america might find is an attractive smile is different than south america it's different than southeast asia it's different than europe it's different than australia there are certain cultural norms and what we found was that a line can actually give you a highly customized smile but they did something even more interesting not only did they have a new technology to figure out how to straighten people's teeth but they went after a new business model because they made it so simple to straighten people's teeth so simple to straighten people's teeth that actually they now start selling through dentists as well as orthodontists in the old days dentists and orthodontists were in different parts of the market the orthodontist straightened our teeth and the dentist cleaned our teeth and what a line figured out is their product was so simple they could actually expand their market on their channel sites so that dentists could add revenue to their business and that's an example of the kind of the creativity not just thinking about how do i build a better product but are there better ways to deliver it to people that can help us grow the market all right third what's another good brainy attribute yamagawa the power of empathy empathy is something that's talked about a lot in modern culture today the importance of empathy the value of empathy and it's more than just putting yourselves in customer shoes it's also about managing and aligning incentives between you and your customer the best example i ever saw of this was kaiser permanente the verbal vertically oriented care company here in north america where in the case of uh other companies kaiser's unique they are both hospitals doctors and insurance company they own the whole dollar of health care for their members and what they figured out was the way for that company to be the most effective and most successful was that if they could keep their pay their members alive as long as possible and healthy as long as possible they actually made more money think about that healthy life years was the figure of merit and is the figure of merit for kaiser permanente so they figure out how to measure and align incentives for their customers and they put that throughout their whole organization to make sure that doctors nurses people on the administrative side are understanding what is the figure of merit by which they're measuring their success it's almost this notion of radical empathy for all the ceo who i got to know was a gentleman named bernard tyson one of the most amazing and compelling leaders that i ever met unfortunately bernard passed away uh last year was just an absolute tragedy he left us way too soon but i remember when he would come to class he could hold the students in the palm of his hands and talk about what it was like dealing with patients dealing with doctors dealing with the government and he always felt he always felt that he had an understanding of where the other side was coming from and it engendered a fierce loyalty from many of the employees there and our students like we're like god i want to work for that guy it was an amazing thing to see all right what is the fourth brainy attribute that i want us to talk about making risk right sometimes we want to take smart risks and you got to do that if you're going to be able to innovate and try something that will transform your company and one of the things that we talk about is you've got to run towards the disruption you cannot be afraid of a disruption that's coming after your industry oftentimes we get conservative in times of disruption we're afraid to run towards the disruption because we want to preserve ourselves on the other hand if you don't run towards the disruption you won't get to the other side in a leadership position you've got to be thinking about how might things be different and how can we leverage that for success we have to learn to let go of the past how can we get more data and use less intuition and realize that it's personal my best example of this is abndab the large world's largest beer company carlos brito who is actually also in alum of stanford was actually in 2015 he got in a lot of trouble with his board of directors this wonderful organization had been built through a series of acquisitions and they've gotten so big they weren't doing innovative things they kind of had this this business model of acquire and drive out cost and so burrito was really just getting hammered by his board that they weren't trying new things craft beers were coming up bud and budweiser were you know budweiser light were less popular with people and so he realized that he had to make some changes and he went to one of his top lieutenants a gentleman named pedro pedro work and said pedro i want you to become the chief disruptive growth officer and pedro looked at burrito and said what does that mean and burrito looked at him and said go figure it out you need to figure out how to make us more innovative earp then had to figure out what does it mean to how do i build an organization for innovation that doesn't even exist inside of the 60 billion a year company and then culturally how do i make that happen and he thought about it some more he went back to burrito and he said breta how do i know if i've been successful i mean even if i take five years that's not going to have that big of an impact on our organization he said you'll get the ball rolling and the most important figure of america that will know pedro is that if your job is no longer necessary because you have infected the thinking into the dna of the organization about how to be innovative basically that's when we'll know you succeeded when your job no longer exists and irv had to sit there and say okay i've got this rocket ship career going on at ab indepth and the ceo wants me to do this new job and i only know that i'm successful that was about managing risk the upside for dealing with this was he realized that if he could really impact the organization and change the organization it was going to give a b indep the opportunity to grow and thrive in the next couple of decades and in absence of it they were going to die but he also knew that if he succeeded he was going to be out of a job and he would have to trust that burrito would take care of him in the future this notion of managing risk you have to take smart risks and what pedro realized is that if he didn't go in and do this the company was going to be in trouble and so one of the things that i want you to be thinking about with your own organization is how are you managing risk inside of your organization as a company and even as an individual and are you taking the bold steps of what abn bev did they actually set up a whole division called zx which is does corporate venture capital you know there's a there's a venture group inside of it there's an innovation group they work very closely with the business units across the company and it's become one of the fundamentally most important parts of the business it was not easy to set it up but they got it done right the next thing i want us to think about in brains is that balancing partnerships with what we do on our own one of the ways i like to think about is if you think of a castle you know how castles have walls and moats to keep people out one of the questions that companies need to think about is where are they going to put their castle walls how far out do they want to have stuff inside of the castle and what do they want to have maybe be part of the surrounding kingdom but not inside the castle walls should you go it alone should you partner and you know how are you going to think through what do you want to own and what do you not want to own instacart the grocery delivery company inside the united states i think does an amazing job of figuring out where to partner and what to own they have to deal with a bunch of key different constituencies and they've got four key constituencies they have to manage they have to manage their shoppers people who actually go into the stores and buy the groceries they have to deal with the grocery stores themselves they actually have to work with us as consumers if we want to shop at instacart and then finally they partner with the consumer package companies and the cpg companies because they understand as instacart across across a wide variety of stores and locations what products are moving in what areas and how is that changing based upon the buyers they get a granularity of data that the cpg companies are very excited about and one of the things that as instacart has grown they went from you know in the early days being a startup that didn't have a lot of power and influence over people to actually be very very powerful especially in this space and so they had to figure out what did they want to own what do they want to partner with people and that's a very delicate balance when you're dealing with these multiple constituencies in your market the thing that i would say that was interesting when we studied instacart that i found fascinating is sometimes there were benefits to not being amazon if you think about instacart they had this great relationship with a company called whole foods whole foods got bought by amazon and that was instacarts like key clients and then all of a sudden some whole foods got bought by amazon and the ceo of whole foods called the ceo of instacart and said yeah amazon bought us we're not going to do business with you anymore click the ceo of instacart said yeah that was the worst day he ever had in business but the next day was actually the best day he ever had in business because grocery stores you know chains two through eight all called them up and said hi amazon just came in our business we need help delivering groceries to people houses and suddenly instacart's business tripled overnight that's the ability of how do you figure out how to turn a headwind into a tailwind all right those are the brainy aspects those are the brainy things we've talked about again left hemisphere right hemisphere amygdala prefrontal cortex uh and inner ear let's talk about the brawny side let's talk a little about logistics three american retailers that have survived and maybe shouldn't have let's look at best buy and home depot and target all of them kind of figured out that they needed to embrace e-commerce but figure out how to benefit from having a physical location and actually having great logistics was the way that served customers better yuberjoli the former ceo of best buy he started calling everybody in the abyss you know he should have gone out of business best buy should have gone out of business like other american electronics retailers but he started calling all the people who were making these connected products he called apple he called amazon and he said hey how's business and they're like business is awesome right you know we're loving this everything's connected it's great and so jolie tried to figure out how did he redefine what best spy is and he realized that if you're in a company you're in an organization you've got an i.t department but inside of your home you're now working with a bunch of products that are connected and you don't have an i.t department so best buy realized if they could become a company that we go to as consumers when we want to figure out why is the internet not working on the television why is it not working on this particular device he believed people would buy the consumer electronics products from best buy but they'd also come to them for the service side which would give an ongoing relationship and he said these headwinds where people were able to buy an e-commerce and shop prices if he could figure out how to turn that into a tailwind where he could make shopping easier and he could service his customers better that's what allowed best buy over the last seven years to be a retail success story and when he retired a couple of years ago you jolie went out as one of the leaders of american business in the last eight years who really turned around a company home depot craig mini are the ceo one of the things he taught us is that people want to shop online by the way he came to this conclusion before the pandemic he's like don't fight the inevitable don't fight the inevitable if your customers want to start the shopping experience through their computers right you know the good news is a sync does not ship well through amazon prime so they figured out that if they could give customers a better interface on the digital because that's what the customers want to do and they could have you know lumber or something people want to buy for a home improvement available at your local store within two hours that would be a better consumer experience and logistics became the competitive advantage that's allowed home depot to boom hugely over the last five years finally target brian cornell the ceo would talk about blurring and blending that it's not this notion of e-commerce versus physical commerce it's just commerce and people are shopping together the ability to shop online and you can have the groceries and everything you buy at target delivered into your car for curbside pickup this is this notion of blending digital and physical and we've seen it at retailers and the key to make it happen was amazing logistics now sometimes there's some great new technologies that are coming in hands the craft of making things manufacturing is transforming hugely on a global basis right now as labor becomes a lower and lower component of manufacturing right this notion that you're going to want to be able to use new technologies whether it's robotics or additive manufacturing like what desktop metal is doing which is now you can build a product by like depositing layers of materials it can be metal it can be composites in ways that you couldn't do before you've got these machines and you can put the machines wherever you want them there are companies for example some of the large oil companies that will put these machines actually out you know on on on oil platforms in the middle of the ocean that have apart breaks they can print a new part and smoke as opposed to having to fly in a replacement part it changes the notion about how we think about making things and we have the ability to have higher quality products with new manufacturing capabilities when actually lower delivered costs to customers humans need to be part of the loop on this and so what we found was that it's not that humans are going to go away but how humans will work in manufacturing it changes it goes from being kind of a low-cost labor arbitrage opportunity to now needing highly skilled people to understand how to work the machines how to program the machines and how to really understand how your customers are going to be using the products that you make for them and everything is going to be connected and we're going to move to a world where you have high volume and high value and high touch as opposed to the overall where we have high volume and low cost or high value and high touch now we're going to get the best of both the third attribute in physical is leveraging scale operating on a global basis think about this i know there were over 2 000 people signed up for this webinar and i have no idea where in the world you are you could be anywhere since the pandemic has hit i have run from my home office here seminars for people in riyadh saudi arabia in sao paulo in brazil in cologne germany in chicago basically jakarta you know there's not a continent that i haven't touched in doing this and this idea that you can operate at scale is becoming increasingly important you uh i foreign ago who is the ceo of michelin the french tire company taught me the phrase glocal where you have a global footprint which you have the ability to customize on a local level for michelin the way they think about it is they have a material science platform and competency that can be applied to different types of tires for anywhere on the planet but the tires they sell in china versus the tires that they sell in north america versus the tires they sell in europe can be customized to the local markets based upon the needs of the local market and that ability to operate at scale it's not just about having a lot of data where you can feed the machines to be better but can you operate physically at scale on a global basis but customize for local markets this is one of the things where we're seeing some similarities by the way between brains and brawn and by the way where they can be positively reinforced the digital advantage can really change the nature of what it is that you can do and the reach with which you can talk to customers all over the world all right fourth let's talk about hand-eye coordination we often about sports and hand-eye coordination best example i've this that i've seen is google and in particular their android division for mobile phones the complexity of their ecosystem is staggering they have to deal with carriers who you know deal with the networks with which our calls and our data run on the phone the handset manufacturers the application developers who build the apps on top of android they got to deal with global governments right because governments are concerned about privacy and data customers we have to use the products advertisers because that's all part of the the how google makes money and the component suppliers that actually the the people who make the chips and the like that go into the phones these are all part of the android ecosystem and all those parts interact with each other one of the things to think about as you think about all of these people in the ecosystem is what is your influence on these various parties and what's your dependence on them and really in a perfect world you want to have high influence and low dependence right because there you have the ability to kind of influence what other ecosystem partners do and you know if you're not dependent upon them and you have options you will have choices but there are times when actually you're going to be dependent upon somebody and you're going to have very low influence and when that happens you will have less power so if people talk about ecosystems and wanting to build an ecosystem you actually need to think more strategically about what are the dynamics behind an ecosystem versus what companies can do inside of that ecosystem and by the way the government yeah whether you do or don't want government to be your business partner government's going to be your business partner this trend was already being accelerated by you saw a lot of the geopolitical tensions in the world right now maybe at one level exacerbated the most by the tension between the united states and china but the pandemic has just made that even more intense if you look at the amount of stimulus that is happening on the global basis where money is being pushed into the economy governments are getting more and more and more involved with business business becomes about national industrialist policy and given that every country is going to have an industrial policy for the needs of jobs and employment for people in a particular market companies are going to need to know how to work with various governments all over the world and understand the differences of what the incentives are of governments all over the world lastly on lebron thing let's talk about stamina and how do we survive in the long run my favorite example of this is johnson and johnson the large pharmaceutical company they are driven by this message of what's called the credo which talks about the four constituencies that they serve by the way the first and most important one is the patient and the last one is the shareholders they are often talking about bending their business lines so they're not dependent just upon one on one product or one kind of grouping of products that actually if you have a various set of adjacencies you can survive more over time in the ups and downs of economic cycles you want to nurture ongoing innovation on ongoing innovation needs to be something that's built into the dna of your company and you need to build resilience to the culture and your values all right those are our brains and broad attributes if we look at them here's the summary again on the screen of what i talked about let's actually look at a couple of companies we can look and see i actually analyzed two companies and talked about how they're doing first daimler the very well-known and very successful german automotive company when i wrote my case on daimler i looked at the five digital attributes the five brain attributes and you can see the scores that are up there actually not that good they were not that great at analytics creativity okay at least on the physical side the amygdala empathy not so much right you know they were not they didn't really seem to understand a lot of what was happening in the ecosystem and how things were changing and how they would react to it risk taking they were pretty conservative the inner balancing partnership versus ownership they seem to want to hold on to a lot of things themselves of course on the brawny side they were great like this is a company that makes beautiful cars that are really really well built and you see they got a final score of 65 out of 100. another example 23andme which is an american company that actually does uh sequencing of human dna and now they've moved into the pharmaceutical business in a collaboration with gsk i mean analytics they they have 12 million samples of people's dna and they can understand what are trends about how people shape who we are and what we do creativity and empathy they're great at it or they're not as strong as manufacturing they obviously don't know how to make things they work very closely with gsk for drug manufacturing and they when we added up all their numbers came up with 82 out of 100.
now it's not that this is going to be a permanent evaluation a number of these companies but you can start to get a sense of why might a company be doing well why why my accompanying company be struggling because you can see how they do on these attributes of brains and brawn and so this was an example of how you can come up with a total score and you can think about it for your own company all right that's brains and brawn let's talk about the system's leadership side what do you need what skills do you need as a leader the world requires a new cent type of leadership for this systems leadership i define is the ability to understand the interactions between various groups and be able to master strategies from different perspectives at the same time you can't just stay in a particular function like marketing or sales or engineering or manufacturing and rise up and be an expert in that and then not really have expertise on what's going on you need to understand how you simultaneously manage for the short term and the long term at the same time how do you understand what's happening inside of your company between functions and also how your company is interacting with other groups that are outside of your company you need to blend iq and eq and you need to make sure that you have the big picture of what's going on but you also need to be on top of details kind of in the old days we were able to keep these things separate but i would argue in a world that's blending digital and physical where things are more inexorably intertwined you have to be able to do the same thing here where you've got to be able as a leader to be able to do both of these things let's look at some best examples of how we of great leaders that we studied the first column that you see in in france this is gets to what i call the duality of the systems leader the digital thinker these are people who come from silicon valley they think platform and horizontal they think software they think winner take all employees or gig the physical thinker vertical asset based continuous improvement you know work very closely with a customer systems leaders combine the best of both of those things they understand both hardware and software they understand that again like i talked about in the context of michelin a global platform that can be applied locally or even like we saw with align technologies with the teeth straightener right they have a platform that can straighten teeth anywhere but each set of plastic aligners that they make is customized for the individual you think about being balanced with a view towards government this is what systems leaders need to be able to do on a go forward basis and they have to be able to drive change in their organization they need to be able to recognize patterns discover intersections between things that weren't there previously they need to figure out how to adapt their business models optimize more structure all while taking actions figure out what technical stack what technology you're going to have in-house how are you going to organize your ecosystem and how you're going to sustain the business over time and by the way the hard part this right now is you have to do it through times of incredible disruption and uncertainty like i was trained to be a teacher like being a teacher like it's an apprentice business with what you're all going through in the commercial side there's much less determinism and much less dependability on what's going to happen on the other side some of the best things we learned is the great leaders that we studied were preparing for the future of work they were thinking about you know from a technical side of all of the technologies on the left side of the screen you know robotics autonomous ai and ml and then they thought about different parts of their organization they thought about different parts about you know what it is that they needed to be doing about it in administration and on manufacturing et cetera and then they had to make decisions what were we going to make and what are we going to buy what are the id source and what are we going to outsource what are we going to share what are we going to not share by the way how are we going to retrain our labor force one of the things i want you all to be thinking about is the displacement of labor and capital that happened with globalization 1.0 we all could have anticipated it the communication and collaboration tools that we're using even here right now and all of these things are just going to continue we know there's going to be the next set of jobs that we know are going to be disrupted and the question is what sort of training will you do for your labor force because if you think about your company i bet you can guess what jobs are going to go away in the next five years and my question for you is what are you going to be doing to help your teammates systems leaders think about stuff like that all right i want to talk about bias we are all biased every human being on the planet is biased we are a function of all those things that we learned and our experiences and how we grew up our culture the way we were trained etc one of the things i find that great systems leaders do is they are not only aware of their bias and by the way bias is not a bad word it just is what it is but who are the people outside of the company who are the people outside of the company that will tell them the truth do you have trusted partners outside of your organization that you can go to and say hey here's how we're looking at the world does that align with how you're seeing things how does your company look at what's going on these are some of the key things about how you manage the constraints that we have as leaders and the blind spots that we have as leaders by making sure we have people outside of the organization who can help us truth truth is an important thing right but truth is actually facts plus context let me say that again truth for your team and your audience are facts plus context look facts are facts but context is the way in which we understand these things let's think about globalization globalization in the old days was great right we we make things and we do work in certain parts of the world where people have a competitive advantage we all benefit from better products that maybe cost less but in today's world the context about this is it's not just about lower priced products but it's about what happens to jobs what happens to our fellow citizens and that's become the truth in the narrative and what i would argue is that systems leaders have to be able to communicate truths by understanding both the facts and the context by which you yourself and your employees are understanding how the world is changing and how all this data is understood and the systems leader really needs to have the grasp of both the facts and the context so that she or he can help communicate truth to their team there are four ways that every systems leader needs to know i talked a bit about technology i just want to highlight four of them that i think are critical that are impacting every industry artificial intelligence additive manufacturing desktop metal as an example analytics and data and finally automation these four trends are shaping every company on the planet you need to have an opinion on these four trends and how they're impacting your company you don't have to be an expert in any of these things you don't have to be able to be sling code but you better be conversant you better be able to understand what these technologies are and what the impact it's going to be on your company systems leaders need to sometimes understand the big fundamental changes that are happening technologically to us and what the impact is going to be on the companies in which you work given all these changes and given that the world is changing one of the things that i learned from katrina lake the executive chairman of stitch fix and the co the founder of stitchfix is she asks herself and her team every two years would you rehire yourself for your job today that if your job was an open job wreck would you hire yourself that's a very scary question like you have to ask yourself have i kept myself current am i on top of the latest things going on systems leaders know that they would make sure that at the moment in time they are at least competitive if not the best person for the job that you have oftentimes we get constrained because we got rewarded by all the things about how things were done in the past we got promoted we got paid more money we got bigger job titles we got a bigger office because we had done certain things and then the world has changed on us and the best thing for you to figure out is that if you're not bringing the most current skills make sure that you know that before anybody else does and if you've got to keep yourself fresh in fact maybe that's why you're listening to this webinar make sure you're asking yourself would you rehire yourself for your job today and if not what are you gonna do about it all right a couple of final comments before we wrap up leader know thyself great systems leaders know their own strengths and their own development needs in my case my greatest strength it's my passion and my energy oh my goodness you know i'm in front of the classroom i like to run up and down the aisles i can't wait to like get back in the class they even put me in front of a camera i can try to create a bunch of energy and wave my arms around and try to have some fun even though i can't see you i'm just looking into a camera but my passion can also be my greatest development need and i think the best example of that is when i was younger when i was younger i used to send the most amazing flame emails that you could possibly imagine like i would see email that would come in right and it would just get me angry and i'd hit reply all and i'd start writing and what i would write everything i write it was they were it was accurate it was sarcastic it was cutting and it was always ineffective always ineffective i had to realize wait a minute my passion that which gets me going and can actually be a real benefit can be a real hindrance if i'm not careful so i've learned as i've gotten older as my beard has gotten more gray that if i see an email that kind of gets at me and triggers me i have to learn to back away from the keyboard and not react in fact one of the things that i remember learning earlier in my career was that leadership is the ability to constrain a response to a given stimulus and for me those emails that used to make me so upset those were the stimuli that used to really that i have to learn not to respond to okay now we finish this we talked about brain brawn and the blending of digital and physical we talked about the needs for systems leaders now you might be looking at me and say okay so now what what do i do about it all right i usually ask when i talk to clients or i talk to large organizations if i'm doing executive education i prompt people more questions what do these changes mean for your customers don't start with yourself start with your customers and the people you serve what's happening to them if you know what's happening to them that will help you with that empathy capability right if you understand what their business is and where are they under stress secondly where can your company develop an unfair competitive advantage like what do you already do that you don't want to let go of what do you want to kind of hold on to third what is your company not doing today that it needs to be doing i bet you already know what your company needs to be doing that it's not doing and then finally as a systems leader how will you change your leadership behaviors and actions as we go through this world as we go through these changes one of the things i want to leave you with is the following you can do this there's nothing that i've talked about that can't be done you know there's this notion sometimes people need to have this great technological innovation breakthrough like you need to bend light in a way that light's never been bent before that's not this you can do and make these changes of what i'm talking about it's a choice and you just have to decide if you want to make that choice or not what i know when i work with companies and leaders all over the world most of them can do it and want to do it and they have to start that process of moving forward with that i've been talking for the last 50 minutes so we're going to leave 10 minutes for q a so i'm going to ask anita and or the team if we want to kind of now go to the q a part of this webinar so anita or whoever's going to help please jump in now excellent uh rob thank you very much from excellent presentation very exciting we do have many questions um so let's go ahead and get started with the first one and let's see here do you have suggestions for how to implement these approaches and concepts in a small company versus a large company you gave a lot of examples about very large companies um but say you're maybe not a mom and pop but a smaller company trying to make it big what do you suggest it's a great question you know i i think that the in the early days we talked about in startups right and i have a multi-time entrepreneur you don't have time for discipline you're moving fast and breaking things and and what i would say is that a lot of these behaviors kind of get baked into the organization kind of in the earliest days so for example are you thinking systematically about kind of what's happening in your market it's not just about a technological innovation or it's not you know even if you're in a non-technical business are you understanding kind of what's happening in the broader baby if you've got a a retail store what's happening in the broader area who's your competition there's also making sure you're hiring teammates who have complementary skill sets you could be starting to think about well what data do you have in your company my guess is your company has some data are you starting to think about how to use that data are you starting to think about um you know where are you going to take risks and where you take smart risks and where not what creativity things can you come up with i think if you look at the 10 variables and the 10 attributes you know even some of the the companies that you say they're large but they started some of them started pretty recently instacart's only been around less than a decade uh 23 in me it's 15 years desktop metal eight years so a lot of these companies are fairly recent but they tried to figure out how to use these these ways of thinking and doing things to actually drive scale so there's a bit of a chicken and egg thing the question is not necessarily what how what does a small company do i guess i might say how can these tools perhaps create opportunities for growth that you might not be exploring or understanding today so again these are by the way with everything i say use what you like and ignore what you don't these are tools and try to see how these tools can help you change your own personal behaviors or think about ways in which you're running your business super thank you um we actually have a few questions that are related back to slide 38 that was the radical transformation when you were doing the comparing go ahead and if you want to go and switch the slide yeah um this one and yeah yes and a number of questions of how to make the assessment more objective how to do the calculation um and what process would one take um to make it more again objective yeah you know it's kind of like grading my students when they hand in papers that there's some subjectivity that's going to come into this i do know for example when a student writes a paper did they cite the readings did they talk about what we talked about in class you know were people actually doing it so there are heuristics that i use i think with each one of these things you know if you broke it down for example analytics let's look at daimler and and 23m i know the nature and size of the database that 23andme is using and how they think about it for customer outcomes and i don't and i also know what daimler is and isn't doing for and at least when i wrote the case what they were doing with all the data that they had or if they were working on data but only in a small part of the business maybe just the manufacturing side or performance side but they completely ignored any customer data or or you know how they were shaping the information on the the quality and service to design products better for their customers creativity you know this kind of got to what are the things that i studied in organization what did they do that i thought was unique and outside of the box and then were there multiple examples of it um versus were some worth people being very constrained in their thinking so you try to figure out you can try to think through and again this is i talk about it in in some of my writings but you know you look for examples of things that people are doing in these things and are they doing a lot of it or a little of it and so and by the way not everybody's going to be perfect at everything but you you know and sometimes you kind of know when you see it when you say okay look let's talk about empathy um other companies that do empathy really well sas there's a software company uh that is known for making taking care of its people uh patagonia same sort of thing um so you can kind of like you know it when you see it and then you can say well if that's the best practice that i've seen somewhere else what are they doing you can write it down and then you can say well what are we doing or what are we not doing like you can kind of like you can make up your own scale like give it a score like you can say i think this company's at a 10 and a third of 10 were the six the thing about this don't don't worry about false specificity don't worry too much that you've got to get the score perfect what you're going to find pretty quickly is that if you're thoughtful about how you go through each of these things and you kind of like define a 10 and define a one in your industry and then you rate yourself by the end you're going to get to an overall score that's going to be pretty close to accurate so if diet is should daimler be 65 or 68 or 62 okay fine they're going to be in the 60s similarly with 23andme should it be an 85 and 82 or 78 we know that they're doing well on these attributes in a variety of areas and we can compare them to others in the industry so we know that whether or not what the absolute score is can be also based upon what the relative score is versus the competition great thank you um one other question we have and this has come up a couple times is how does one bring these concepts ideas approaches to the other people in the organization whether it's a company a department you know how do you know i i take these courses i learn the material but how do i then bring them to others and then implement real change well actually it's interesting that's a two-part process that i that i heard that question anybody the first is the successful one is is like i often think of it as sharing i read this really interesting article here are the top two or three points that i learned from it here's the rest of it if you want to learn more so you you share the information in a positive way maybe it's an inspiring way um and and you you give kind of like people like the most important message of what you think you know stands out and what applies to your company and then you give them the ability to go deeper if they want to uh and know everybody loves somebody who's an energy giver versus an energy taker like so if you're excited about something this is awesome because the first is kind of deliver the message in a positive way and make it kind of digestible for your teammates driving change is a hard one right and it gets easier in some respects the more senior you get because you have position power and authority but it can also be harder because you can be more isolated and so you're going to have to figure out how to work with your teammates and your colleagues to actually get these things going on you want to build consensus with some key teammates so that you don't have to do it all alone uh you know one of my sayings i like to say individuals don't win championships teams win championships so with that kind of mindset can you build some natural allies inside of the organization who will start to see things the same way you do so the entire burden doesn't have to be on your shoulders excellent thanks well we are um running out of time and this was a great way to end of talking about how to bring in groups of people right it's not just yourself it's it's everybody involved rob i want to thank you for having time make the time to join us today and share with all of us these great concepts ideas approaches as we all you know enter this new world of digital transformation um with that again i want to thank everyone for joining us today it has been an absolute pleasure and we wish you a great rest of your day you
2021-05-21