 Good evening, good morning, good afternoon. Wherever you are joining us from, this is Abhijit Bhaduri. I work as a leadership and executive coach and I also help organizations and individuals work on their social media strategy. Well, today I've got a person who, let me just start by saying a couple of different things. Now, you pick the one that impresses you the most. One, this person has got four patents. Okay, not impressed. Okay, let me give you another one. He worked with Andy Grove for his book, Only the Paranoid Survival, he was the lead researcher in that. I say, I'm not impressed. Third, he's been a VC. Okay, you are not impressed. Fine, he is part of Stanford's faculty, still not impressed. Then let me just say that he's written a fabulous book, which I think you should, should completely, completely read. And that book is called The Brains and Brown Company. But you know what? You got to wait for a second because all good things take time and that's what I'm doing. Rob, you've got so many things that I sort of dropped off to all the listeners and none of them were impressed. So you got to tell me, which one are you most proud of? Being a father and a husband, all those other things, not so much. It's just kind of, I think as we've talked about earlier, I'm not that important, but I know a lot of interesting people. And so the stuff that I've done, I'm just an average person trying to get through life one day at a time and now I'm almost spending my time as a teacher. All right. Do you have a book handing The Brains and Brown Company? The Brains and Brown Company. Here you go. How do you know that that's the digital and physical? Yeah, yeah. And you know, so this is funny because I read the digital version of it and I can't sort of hold my phone up like that and say, you know, this is what it is. But you know what? The physical world's not going away. Yeah. And you know, if I were to sort of really say that the book that you've written, The Brains and Brown Company, and we'll come to that in a little bit because I just think that it is so, so relevant. I absolutely recommend, you know, to all my listeners and readers that you should read that book. The reason is, you know, when you look at anything, I mean, you order something on Amazon or you order food on Swiggy, Somato, whatever you are doing. We almost expect it to magically appear in our doorstep, you know, and we are sort of saying, oh my God, it's taking four minutes. How bad is that? And you know, this, we forget how much of the physical world is really involved when it comes to creating a delightful customer experience. And that's what struck me because you talk about 10 competencies, but you know, I'm going to hold off a little bit more on that. But I would first talk to you about, you've talked about the dilemma, you know, tell me more about whose dilemma you're talking about now. So the idea behind the book comes out of two of my courses, The Industrialist Dilemma and Systems Leadership at Stanford. And when we started the course, The Industrialist Dilemma seven years ago, our thesis was that all of these disruptive companies coming out of Silicon Valley largely, completely reshaping now new industries, whether it was healthcare or banking, fintech, mobility, et cetera, with a whole new way of doing things. The way you used to develop products in the past was changing from the old world to new ways of moving towards Agilent Scrum, and how you had to organize your company became different. And so as products and services became increasingly digital connected, everything about how you ran a business was going to be different. And so the idea was we thought we'd study some incumbents and some of the incumbents, we'd see a few that were doing okay, but most of them would be struggling, and we'd see these disruptors coming in who were completely changing the world. And I got to tell you, boy, were we wrong. You know, what we really learned as we started studying about the 60 plus companies that have come to the course over the last seven years, was that a lot of the incumbents really understood a lot of the changes of digitization and how to apply it to their core competencies. And several of the disruptors really had a lot to learn about ways to work with government, ways to develop deeper relationships with customers, the need for customization. You couldn't just have everybody on the same platform. And so we really kind of saw this new world that blends digital and physical, and that's what led to the thesis behind the book. When you look at some of the things that you've talked about in the past, I had this whole thought that how do you manage this whole business of change, because organizations are essentially very different today, especially if you look at it in the last 10 years or so. Organizations are very different. They may look the same, but the core of it inside has changed a lot. What do you see as the most defining factor which creates the dilemmas that people struggle with, the leaders struggle with, which is really the thesis of your book, The Industrialist Dilemma. Well, if you look at what allowed people to rise up in organizations, they got rewarded for doing things the old way. They got promoted, they got pay raises. You put structures and systems in place in worlds that were either digital or physical, and they were oftentimes never connected. What's changed now as the leader has to understand digital and physical, this is where we get to this notion of systems leadership. Leaders today really need to understand what happens when functions inside of an organization interact with each other. What's the action and reaction? When sales sell something new to a customer base, what does that do to the manufacturing line? The people on the manufacturing floor really need to understand both the customer and the sales leader to understand what needs to be built. Similarly, if you're in finance, you've got to understand how your organization is interacting with other players in its ecosystem. You really need to understand what's happening outside the building that will drive and shape the behaviors that underlie the meaning of the numbers and the financial that you could be putting out. I think what's different is you need this duality of a systems leader, of understanding hardware and software, understanding IQ and EQ, understanding what happens when systems interact with each other. You can't just stay in your silo anymore that whether you are a mid-level manager or a director or a C-level executive, you really have to understand all of these things and understanding things like how do you make sure you hit your numbers on a weekly or monthly basis? And at the same token, how do you design an organization that can be systematically investing in innovation and disruption themselves? So when you looked at this whole notion of the change that has come in, you talk about 10 competencies and you worked in many of these corporations. You worked in GE, you've got some great experience in investing in different kinds of companies. Tell me a little about your work experience and background so we know that where you get all those ideas from. So I've been very lucky and very fortunate. I've worked for very large and very small companies. So I ran a division of GE. I worked at Intel. You mentioned my work with Andy Grove. I worked in the predecessor of Intel Capital and I was a product manager there. I worked at Sun Microsystems. I was also a multi-time entrepreneur. I started a company that made the world's first digital picture frames and that company was acquired by Kodak. I worked for a company that was spun out of the engineering school at the university here at Stanford, made image sensors and image processors and got bought by Sony. I was a middle-level executive in a company. We took public in the mid-90s, a software company. So I've seen very large and very small and so I've dealt with a lot of the issues that we deal with in the companies that come now to Stanford. If you're a disruptor, how do you try to drive change in the market? If you're an incumbent, how do you simultaneously hold on to that which has made you great but make sure you don't become obsolete? And so my background as an operator and then as an investor for the last 15 years combined with my work in academia has really given me a unique perspective from three different angles to kind of look at the companies and hopefully take some best learnings and best practices and then share them with our students, share them through the book or share them with companies that I consult for. Super. So what I want to do for the listeners today is to actually talk about very briefly the 10 competencies and I like the way that you've structured and I created it a little visual and I've shared that with the people on Twitter. It's just 10 competencies that are there, some which you define as the brain competencies and some which are the broad competencies. So when you say brain competencies, what are you really looking at? So I made a couple of notes which, so for example, your brain competencies, you talk about analytics, creativity, empathy, managing risk and also about the ownership and partnerships. So let's start looking at analytics. So what do you sort of mean by the, what is the possibility that analytics can do which people aren't already doing now? What do you see are some of the possibilities? And you talked about Charles Schwab as a company. So, you know, so we have some of our listeners who are sort of chiming in and Anish says, everything is going digital. So what's your point of view on the physical part of it? Let's begin with that. And maybe Anish will come back when we talk about the bronze part of it. That's where we'll talk about all the physical competencies and so we'll talk about address all your questions. So thanks for that question, guys. If anybody else has a question, please feel free to ask. But yeah, Rob, let's get started. So let's do analytics. So it's interesting, it's not everything is going digital. Everything is going digital and physical. We are still a physical species and even the pandemic has proven that. And so I think the thing I want people to take away is that the best companies are combining both digital and physical. You might call it mind and body. You might call it, you know, old world and new world. But the idea behind brains and brawn, if we think about how our brain works, the brain does actually many different things for us. So analytics, the left hemisphere of the brain. And this is the part where, okay, it's table stakes to have data engineers and data scientists. And every company on the planet needs that, whether you're Google or whether you're Charles Schwab, which is a fairly well established financial services company. But the thing about analytics, it's not just the ability to crunch the data. It's what do you do with the data once you have it? What is your North Star? And Walt Bettinger and the team at Schwab really impressed me with their thinking about it. Every question they ask themselves always is they have this data and this information and they say, what are customers want us to do with it? Let's look through client's eyes to think about what we should be doing with this information. There are over $7 trillion in assets that have been deposited in Charles Schwab. Huge organization, lots of responsibilities. And if one of their customers goes on to their website and goes to the pull down menu that says life events and then clicks on divorce. At that moment in time, Charles Schwab might know something that's happening in one of their client's personal lives even before their spouse does. And the question that Walt and the team ask themselves is, well, what should we do with this information? What would our customer want us to do with this information? And by the way, maybe the right answer is to do nothing. Now, let me juxtapose that with Facebook. We were talking before the show about how Facebook, the Wall Street Journal has written a lot of stories in the last few days about their ex-check and all these other things that Facebook is doing. And there's a conventional wisdom that we all believe, even if we use their products, that Facebook will use our data to whatever Facebook thinks is in Facebook's interest. Not what we might want them to do, but they'll do whatever, going back to Cambridge Analytica, they'll do whatever they think, if they think they can sell our data to make another buck even if we wouldn't want it, they'll sell our data to make another buck. So even with analytics, it's not just that you've got to be good at crunching the numbers. It's not just good that you have to understand the flow of communication that you have with your customers. But you have to ask yourself the human question, what can you do with it and what should you do with it? Just because you can do something doesn't mean that as a company you should do something. That's, you know, I think it's one of the ways that I sort of look at it in my book Dreamers and Unicorns. I talk about polarities, you know, so that you have to manage the polarity of when you are looking at analytics, you probably also have to look at the polarity which is ethics. You have to look at the polarity of understanding storytelling. You have to understand people's apprehensions about, you know, data. And again, I like that phrase that just because you can, you shouldn't do it, you know, so I think that's one of the pieces where we need to, and why, you know, we should, when we look at systems leadership, maybe one of the questions we'll sort of explore a little bit is what comes in the way of leaders actually making those ethical calls? We'll talk about that in a little bit, but I want to sort of move to the other piece, which is, to me, a little bit related, which is empathy, that, you know, maybe to have that sense of empathy with the listeners, which is what you define as, you know, the ability to connect with the customers and with warmth and generosity, that's the phrase you've used. Tell me more about that, you know, how does that play out as a competition? Well, you know, it's a great, that's actually where I was going to head next. The amygdala is another part of our brain which, you know, kind of regulates our ability to connect with others. And so the leader that we studied deeply in that book was a gentleman named Bernard Tyson, who ran Kaiser Permanente for many years. Kaiser Permanente is one of the largest vertically integrated healthcare companies here. It's about 80 billion US dollars per year. And Bernard would talk about having empathy for every part of the people that he interacted with. He talked about the importance of understanding his doctors and his nurses and the challenges that they were having. He used to spend one day a month just watching his doctors and nurses work. He would get out of the conference room, he would clear his schedule of meetings, and he would just watch how they worked. He would talk about obviously empathy for his members. I remember one time he came to class and he had just come from a meeting with family relatives of some of his former members who had actually died. And he was like listening to the family members and he kept asking himself, did we do enough? Did we do what we should have done in all aspects of managing customers dying years? Did we do a good enough job? He was always very touched by that. He even talked about empathy for the government if you can believe that. And Bernard had very defined political views. He had a view of the world. But when he was talking to people in Washington, whether they were Republicans or Democrats, what always went through his head was, no matter what this person is saying, this representative or this senator is representing my members, the men and women who I'm responsible for caring for. So I've got to listen closely because whatever they're saying, even if I don't necessarily think I agree with it, they're saying what they think because they think it's in the best interest of their constituents. And so it really allowed him to have a healthy relationship with government regardless of what his political views were. And I think this notion of empathy, which is oftentimes I think overused in the vernacular of business, it actually becomes really important just to try to put yourself in somebody else's shoes to try to figure out how to deliver great products and services that will meet the needs of other people and how you can use your fellow travelers in an ecosystem to maybe get to the best outcomes for what you want. We have Riya who joins us from Pune. So it says what is that country that in your view, what India lacks behind and being let's say some of the more digitalized countries or being more profitable, what makes the companies more profitable? What is your take on that? That's a question. So I think with profitability, if you look at the United States and China where most of the big tech companies have been clustered so far, a lot of it has had to do around infrastructure, large domestic markets where a lot of people can take advantage of it. In the case of China arising GDP and in the case of the US an already large GDP. And so I think India's GDP is going to continue to rise. You see this great nation which has actually spawned an incredible number of amazing tech companies so far. You have a highly educated population. So I think India, I'm actually very, very positive and upbeat over the next couple of decades as to what's going to happen there. China I think had a more what I'll call a controlled path towards its economic rise in the last two and a half decades. They systematically borrowed technology from the last incorporated in and they basically borrowed it. That was basically the ticket they did to give access to the Chinese market and they were able to do that because it was a very, very strong sense of government control. In India, you go 100 kilometers and you're going to be basically in a whole new cultural phenomenon of new languages, new food. And so India is a much more diverse country than China is. And so I think India will eventually continue to grow and evolve and the people will continue to have a rising standard of living just might take a little bit longer. But India as well on its path to I think becoming a global technology power and profits will follow from that. Yeah, so I would just supplement your response by saying that you know I think we've got a couple of you know what are called the Jam technologies, you know the Janta, Nathara and you know the Mudra technologies where you sort of you've got all the building blocks and I think a lot of the startups that are coming up now are building on those and because you have the biometrics in place, you have the payment systems in place, you've got the data supply in place. You've got cheap you know it's the lowest cost of data in the world. You know so I think you've got a lot of things which are going and I personally I also feel that there is going to be a lot more innovation coming out of India which is going to be there. And I also think that the next billion you are seeing a different class of entrepreneurs coming up in India which has you know has grown up in the tier three, tier four cities which is where the market is but they've also gone to the B schools such as yours or you know some of the other B schools around the world so they understand how to present the idea to the VCs, they know what it takes to make it profitable and they are also able to build it. So I think that I would sort of look at that as a very important element of you know the way we think you know it's going to shape up. I want to sort of really talk to you about harnessing creativity which is what you know you mentioned in your book which is the third competency that you talked about which is interestingly very unlikely example of you know the aligned tech which are people who make these braces which are invisible braces. I thought that was such a great example. I've never thought of that as a great example but yeah it really set me thinking about it. So tell me more. So you know creativity the right hemisphere of our brain which is you know how do we come up with sometimes what we think of as disruptive and what aligned technology did that I think is really interesting is they blended a technological breakthrough with a business model breakthrough. Now on the technological breakthrough if you know you or your children ever had braces you know the brackets and wires that are on our teeth and they hurt and there are no fun and they think they make us look ugly what actually a couple of graduates from the graduate school of business at Stanford figured out is that with plastic molds you can actually move teeth and do so in a way that is actually more specific and easier to do for the consumer it looks better and you can give a highly customized solution to everybody that's not kind of this what I'll call monolithic solution through brackets and wires. And what's really interesting about it is what aligned has done is they take a digital picture of your mouth and they come up with a you know a plan for moving the teeth they work with generally orthodontist but sometimes dentist will get to that in a moment and then they actually ship off and make these 500,000 units per day of these clear plastic aligners that we put on our teeth. In fact I'm using them right now and you can you take them out when you eat and then you know you put them back in when you're done eating and you wear them about 20 hours a day and you can get a highly customized smile and they can move individual teeth and the company is the world's largest user of 3D printers. I mean think about that they use the digitization to take pictures of our mouth they then like very very you know detailed make these clear plastic aligners they're making half a million dollars per day and they can give you a customized smile because what's considered an attractive smile in Southeast Asia is different than South America is different than Europe is different than North America and so they can customize smiles for each individual what they also did which was really interesting is in the old days you had you know orthodontist over here who straightened our teeth and you had orthodontist over here who cleaned our teeth this solution is so simple they were able to expand the market by allowing dentists to sell these clear plastic aligners so they with their creativity really blended a business model innovation with a technological innovation and the company is now worth 60 billion US dollars I mean there are a lot of people who are trying to do these clear plastic aligners no one on the planet has done it well as a line technology. There's such a brilliant example and and I think that you know it's one of the one of the hypothesis I you know I talk about in my book is that when you look at the greatest business models going forward are going to be based on emotions I mean this is one that it makes me feel more attractive and it's just such a brilliant example of how a line technology is sort of working and then you talk about managing risk and you know which is another one that is risk taking something that organizations need to sort of have fluctuate over and above you know what are some of the signals that you think they should be looking at when it comes to managing risk. What is that? You know the prefrontal cortex is the part of our brain that manages risk often talked about fight or flight and so the company we studied here was the world's largest alcoholic beverage company and beer company ABN Dev organization that grew globally started really kind of in Brazil and made acquisitions in Europe and North America and their method for growth was by companies at scale and then operational excellence and about 2015 Carlos Brito who was the CEO got kind of in trouble with his board because his board said you're not being innovative enough you're not taking enough risk and by the way there's no one else left to buy on the planet so how are we going to grow because we've already bought everybody and so he then took his one of his rising leaders a guy by the name of Pedro and said Pedro I want you to become our Chief Disruptive Growth Officer and Irp looked at him and said Brito what is that and Brito looked back at him and said you go figure it out and so Pedro is trying to decide should he take this job or not and so he comes back three days later and he comes up with this idea of what became what's now called ZX which is the innovation organization inside of ABN Bev. Now what's really interesting is before he accepted the job Irp looked at Brito and said you know Brito if I'm successful I'm going to have a very small impact on the business relatively speaking you know we're tens of billions of dollars a year and even in four or five years I'm going to have a very small impact how do I know if I'm being successful is this really a job that I should take you know Irp was running a country at that point in time he had thousands of people reporting to him managed a multi hundred million dollar your budget and now he was going to be kind of this little person on the side and he looked at him and said Pedro you will be successful when after five plus years your job is no longer necessary because what you will have done is infected our entire organization on how to think differently on how to operate differently and how to run towards the disruption right as consumers taste are changing and so we have to know where our consumers are and our customers are we have to operate differently your job is to infect the organization you will no longer need it now if you think about that Brito just told Irp his job is successful when he no longer has a job how many of you go to work every day and say good if I no longer have a job that's what Winnie looks like and so what happened is Irp had to take the risk inside internally himself taking risks I'm going to put my career at risk and I'm going to trust that the organization will take care of me towards the disruption it's not just something the company has to do it's individuals need to do it you need to realize that it's a personal thing that we need to do if we're going to drive an organization to change now in this particular case Irp did such a good job he got promoted to not only being the chief disruptive growth officer but he became the chief marketing officer as well because he knew and believed that Brito as the CEO would take care of him and that's exactly what happened oh my god you know what a perfect segue into the question that he just asked he just asked this question that all companies and businesses are doing digital marketing so is there any marketing we can do for businesses specifically in the context of my EdTech firm which what can be something which is unique that an EdTech firm would do and this is something that is there one thing that comes to your mind it's interesting here I am I've got a face for podcasts and I've become a television star in the last 18 months because of the pandemic I'm in my home office right now I've got the picture of the Stanford oval behind me you know my office used to have pictures of my grandparents and my wife and my children up and my parents and now it's decorated in Stanford gear and so I think what is happening in EdTech is you know I think that education is never going to be the same because of the pandemic and so if you look at our ability to kind of use very very low cost affordable technology gives us ways to reach customers and it can be very interactive in the case with students you know we can design interactive and educational systems and programs to be able to work with with the students by the way that's from students from 5 to 18 and then even at higher education so especially as connectivity becomes increasingly available to a wider audience I am hugely optimistic in our ability to be able to touch and educate people all over the world and so not only can you in your EdTech company you know educate people in your surrounding area but you should also be thinking what can you be doing outside of India not just in your large domestic market but in other parts of the world I teach people in Riyadh, Saudi Arabia Sao Paulo, Stuttgart and here I am talking to a group of people largely on the other side of the world in the evening in India while the sun is just coming up here in California I am a big believer that education is never going to be the same and so the trick is going to be not just marketing how do we reach them and you know social media channels are a way to do that but I think also the ability to deliver a rich experience in ways that we couldn't do before Shaheen Mistry who is the woman who founded Teach for India one of the most inspiring leaders I've ever met and you know I love how when I was visiting her in India last time I was there and she was talking about how what she wanted Teach for India to be empowering her people to go into whatever village that they were working with and kind of make it what worked there in that village not to have kind of a monolithic overriding architecture of how you had to educate the children and so I kind of like that notion of hopefully the digitization allows us to deliver customized solutions we'll talk about this in the context of systems leadership you need a platform, the internet which allows us to operate globally and customize the education for specific regions or specific areas so I'm hugely optimistic on the future of education and I think that the bold will be the people who will be able to drive how we educate people on a go forward basis and I also think that you know one of the things that I see happening in the world of education is that you will see the rise of you know people who are exceptionally good I mean the superstar educators will actually go global and they'll become global brands so you will see a professor of whatever economics or some such thing will become a global brand as much revered and thought about in Kenya as in India, as in US as in China you sort of see that you know because of the power of the internet to make everything boundary less so yes I certainly think that that's one of the pieces but I sort of want to switch back to the last of the brain competency which is partnership and partnership which I thought was one of the most powerful ones which is how does a company decide what do you own and what do you outsource you know how do you sort of take that decision what was your big insight on that there are a few things that we have to filter this especially in a world that's changing so rapidly no company can do it on its own now the counter to that is somebody will say Rob look at Apple, look at Tesla they do everything and I'm like okay if you're Steve Jobs or Tim Cook or Elon Musk there's nothing on your own if you're the other 7.5 billion people on the planet you better learn how to partner and so what you think really want to focus in on what are the core things that you want to own internally that really is going to determine your ability to deliver a great experience to the customer in the book I study Instacart Instacart has this four-sided market this four-sided market which involves the shoppers it involves the grocery stores and by the way Instacart delivers groceries to here and people in North America so you've got the shoppers you get the groceries the grocery stores themselves the customers should do the shopping on our phones and on our computers and then the consumer packaged good companies the people who sell us the goods that we use and so you have one of these situations where Instacart had to figure out you know where do we want to own things and they believe the digital platform that was their kind of core competency that they were good at but they had to figure out they couldn't deliver a great solution if they didn't have everybody else lined up as part of the solution and that they were allowing those other people to be able to get what they needed out of participating in the solution so you start with what does the customer want which we want to get our groceries delivered at home you figure out what are you going to own that you're good at and then how do you have to fill in those holes with other people and other competencies and other companies Instacart did a great job at this and I think they did a really what I really liked about it is they were very nuanced in trying to understand what the customers needed and you know they started as a very very small company and now they are quite important and quite large they're able to actually drive some of the interactions between the other players in their ecosystem but they knew they couldn't do it all by themselves but they didn't try the last example I'll give on this is Target Target the large American retailer in 2011 they knew they knew that e-commerce was going to be a big part of their business so they made a conscious decision IBM was running the Target website you know for e-commerce Target brought it in house they said it's too important to us we cannot trust somebody outside we've got to know how to do this even if we haven't started as a digitally commerce company we know that digitally commerce is part of the future we have to make sure that we're good at this and so I think knowing what you need like what your castle walls or something I talk about what do you want inside your castle walls that you need to own and you know where are you going to let other people maybe control other parts of the land but maybe hopefully you can do so in peace we talked about the shoppers the grocery stores the customers and the consumer goods companies what's the difference between shoppers and customers so it's interesting the customers are the people who end up paying you know Instacart you know the people who place the orders the shoppers are the people who actually go to the stores pick out the goods and deliver it to the customers and so just kind of the question for the shoppers is are the shoppers going to be employees are they going to be gig employees what's the relationship you want to have with those people and that's very very different from the men and women who are at home placing the orders to get the groceries delivered and so both are very very important constituents you know if you don't have both of those things you know working properly you don't have a business right if you don't have people buying the groceries you don't have people delivering the groceries there's no business for Instacart so Instacart had to figure out okay how do we want to work with each of them how do we make sure that each one of these groups can get what they need in shopping working with us and so trying to just really kind of put yourself in the mindset of those constituents is I think something that a Perva Mehta now the chairman and the former CEO did a really good job of and I sort of you know another way to look at it so you know whoever asked this question this whole thing that DoorDash you know used to they sort of had to pivot from really being a company which was delivering food because the margin on each of those food items was relatively small because the average order size and the amount of money they made on a $36 order was you know closer to about nine cents and they had to move this up you know so they started doing shopping and you know they again they found that it was that they would ask the person to go and pick up your groceries on the way as they are delivering food but that's a different conversation so that's really the distinction I would sort of really talk about. I think Prasad Chakravarti says that it's a great talk and he sort of gives a thumbs up so I think they await because this we are barely halfway through there's lot more stuff which is there you've just heard the brain part of it now we are going to come to the brawn part of it so for those who joined us late you know I'm talking to Robert Siegel who's written this fabulous book Robert please do show that again you know so those who didn't miss that you know because I only have the electronic version so brains and brawn company absolutely must read I recommend that you sort of do that and you know I want to talk about the brawn side of it which is you know the less glamorous side when you look at it I mean one of the one of the economist podcast that I heard this morning was talking about how the box has been such a game changer you know the logistics companies because the fact that they could ship a whole lot of things in one box on top of a ship and moving it you know on another system of the waterways all together is a game changer and you know what a long history and 200 years of refining and then finally being where we are today but you talked about logistics being a very important part of it talk to me a little more about that so logistics is this unsexy thing that's often in the back end and you know it's dirty and it's hard and it's grungy and it's certainly not sexy and very rarely do you see people who do logistics get written up in things like tech crunch or in fortune magazine unless you're doing where if you're Tim Cook it happens but like you know Tim doesn't count because Tim's Tim but yeah what's really happened now and I think this is the key thing let's think of like Amazon you know here in the United States for it to work logistics has now become not just a back end thing it's a front end thing the connection between back end and front end is critical like if we shop we want to know does the company have the product in stock and so we looked at three different companies on logistics like I refer to this as the spine on the physical side of the brawn and so the spine is what makes everything work and operate and so what's interesting is we look at logistics you know the three companies that I studied in detail were actually all retail companies so the first is Best Buy, Best Buy is an electronics retailer here in the United States which by all rights should have gone out of business but you bear Jolie the former CEO and Corey Berry the current CEO what they figured out was as these electronic products have become increasingly connected be it a camera be it a phone be it a television the it nature of these connected devices is very very difficult oftentimes for people in trying to make sure that all of this works in our houses and so they figured not only could they if they could sell the boxes but how could they like install them and service them to make sure that they're working properly and connected properly that became their competitive advantage they redefined who they were and logistics became a part of not just how I come into our store and buy the box and leave by say by the box by the television by the phone whatever it is but how do you develop that ongoing relationship with the customer you know the second example is Target who I talked about earlier they figured out as you know that you can shop online right you know they their phrases there is no such thing as e-commerce there's just commerce right it's some of its digital some of its physical if you're in the store you know you're using your phone to understand what you want to buy where to buy from where it's located in the store the next one is Home Depot Home Depot the home improvement company here in the United States Craig Miniard talks about don't fight the inevitable some of the established physical retail companies say well we've got these stores we've got this state we're paying for we've got to find a way to make it work and Craig was like our customers want to shop online how do we give them a better experience by allowing them to shop online and then get what they need in the stores in the case of Home Depot a kitchen sink or lumber doesn't ship well through Amazon Prime okay but what you do want to do is you can shop online and then they built 18 regional distribution centers across the United States that can deliver anything that Home Depot has a store near a consumer within three hours so they figured out how to blend digital and physical and logistics is the key to that logistics becomes the thing that enables that to happen and so and by the way when customers now need to have a kind of a visibility or a window into the logistics to know whether or not they can get a product that will deliver a better customer experience that when they buy it they know they can physically get it in three hours it doesn't necessarily have to be delivered to their house that's part of logistics but if you can use it in combination between the digital and the physical in a store that's when you serve customers better and you know I kind of I've put all those ground competencies which I've put there you know logistics manufacturing economies of scale managing ecosystems and longevity I'm going to let the not sort of spill out all the secrets because you know the readers must read this book I totally recommend this because I just learned so much in going through this book which is fabulous I want to actually take the conversation to another aspect of it which is what do we do as individuals to lead organizations in this new world where so many competencies are required by the organization what should that look like what can organizations do what can individuals do I sort of take the conversation in that direction in the you talked about systems leadership talk to me a little bit about you know systems leadership what does that look like so this was a the course I co-teach with Jeff Immelt the former my former boss in GE and the former CEO and one of the things that we really kind of started studying was this notion that you know when everything's connected you really have to understand that flow of what's happening back and forth between data with interpersonal interactions and so we saw that in the old days you know you used to be able to rise up in an organization you could be in manufacturing you could be in engineering you could be in marketing and sales and if you had teammates that handled the other functions everything was fine as long as you had good teammates but now leaders need to be able to understand not only their own area of expertise but they need to understand some of the other competencies inside the organization and what happens to it and the attributes that we saw great leaders need to be able to operate in intersections you know we talked about align technology the ability to understand a business model innovation with a a technological innovation you have to have the ability to basically be able to manage operational excellence but also know how to manage innovation be able to you as a leader you know in the old days you had the operating team and the innovation team leaders now need to be able to understand how to do both you need to be conversant in both you need to understand both global and local you know Michelin which is one of these you know the great French tire and material science company they have this notion and this idea that they've got a platform that operates globally you know in their material science competencies but they can customize tires for specific markets great systems leaders need to be much better communicators than they were in the past they need to know how to manage context you know truth equals facts plus context so truth for your employees or your customers equals facts plus context and so great systems leaders need to manage the context what do all the facts mean you know what you know what's right or good about what's being understood and so great systems leaders need to be able to communicate internally and externally well they need to have a product managers mindset they need to really understand like what do customers need how does a product get built and how does it get delivered they need to understand truth and by that I mean their own biases we are shaped by truth not only do we have context to manage how it's communicated but like what are our own blind spots and blind spots you know are not necessarily a bad thing we all have them and do you have trusted individuals who can tell you the truth or how you or your organization is being perceived and by the way sometimes those truth tellers don't rely inside don't lie inside of your organization we need people outside of your organization because the more senior you get in your own company basically you're never wrong in your own conference room like your employees will not tell you you're wrong and so you need people outside will say like no you're wrong obviously you've got this completely wrong and so like kind of the role that our spouses often play in our lives when they look at us and say no you're wrong on this one you need people outside of your companies to be able to help you with that and then lastly you know you've got to be asking yourself questions like have you stayed current you know Katrina Lake she's the chairman and founder of Stitch Fix here in the United States she asks all of her direct reports one question every year which is if you were hiring for your position today would you hire yourself like oh my god you walk into a room full of executives and ask that question watch all the color leave their face because have you stayed current have you stayed current with what's going on and if not what are you going to do to keep yourself current you've got to keep educating yourself and learning you've got to be conversant in things like artificial intelligence and automation and analytics and additive manufacturing like you have to have an opinion on how these things are going to impact your businesses you know and then finally how do you leave your times of uncertainty you need to know your own strengths and development needs in my case my strength and my development need they're the the biggest ones I have on each it's exactly the same thing my passion is my greatest strength like if I'm in the classroom I'm running up and down the aisles I'm getting in the students faces I'm waving my arms around I'm talking too quickly I mean I'm having the time of my life my passion can also be my greatest development need like when I was younger I would get these emails and they would make me angry and I'd hit reply all and I would send the most amazing the most amazing flame emails that you could possibly imagine I'd hit reply all and even add a few more people and my replies would be cutting and they would be sarcastic and they would be accurate and they were always ineffective they were always ineffective and I've had to learn to control my passion so that I can be effective in what I'm doing so I think systems leaders have to have all these things that we talked about the ability to operate in intersections a product manager's mindset know how to manage context be aware of their own bias and then finally you know what's going on inside in times of great uncertainty I like that phrase I mean what is a product manager's mindset talk to me about that you know just for the purpose of our listeners you know what is a product manager's role why is it so special and what is that mindset that you're talking about so who is a product manager really a product manager is usually the man or woman who is responsible for owning kind of the formation of the idea of the product the development of it commercial launch and even the end of life of a particular product and so the product manager's mindset what's really interesting about a product manager is they're responsible for everything and they own nothing so they've got to figure out how to get other parts of the organization to do what they wanted to do when they can't give direct orders my colleague Amir Goldberg here at Stanford talks about how product managers need to become what he calls the ultimate polymorph they need to be able to fit in to all of the other organizations such that all those other organizations think that oh this person's one of us so a product manager has to be able to do kind of the organizational jujitsu be able to kind of get the organization to move through influence through cajoling without being able to crack the whip and directly control the resources they need to have an intimate understanding of the customers and what's happening outside of the building they really need to know and have that deep level of understanding customer outcomes they need to know how a product gets built or a service gets delivered inside of their company so they have the respect of the operations and the engineering and manufacturing teams and then finally they have to be able to give the tools to the sales team to if you will operate customers from their money and so great product managers need to do all these things that's part of seeing the system and I'm going to argue and I do argue that systems leaders whether they're a C level executive or all the way down to middle managers need to have those competencies in that product manager mindset is the ability to know not just what's going on in your function but the ability to see the whole picture and kind of be at that hub and spoke of how you know work gets done inside of an organization what are you know of things that people can do starting tomorrow if they had to develop this mindset regardless of whether they are in a product manager role or not I mean I think that the mindset is pretty useful how do I build that in me you know what would you recommend or the great thing about the resources we have on the internet you can take classes to learn about some of the technologies that I mentioned do you understand artificial intelligence do you understand additive manufacturing so a lot of it's just kind of taking the time and the energy to invest in ourselves and make sure that we keep our competencies current you know educations and ongoing lifelong lifelong experience for us and that's acutely true especially as technology changes so rapidly I think the other things that we can do is trying to be open and honest with ourselves you know when are the times in our past that we've been successful that it was we were good at our jobs and when were the times in our past that we just got lucky and so can you understand the difference between skill and luck so you can understand okay this was skill this is maybe one of my superpowers I need to do more of this and I succeeded here but that's because a rising tide raises all boats right so how did I just get lucky it really wasn't about me and there's a self-awareness that comes with it and I think you know I talked earlier about bias knowing what our own bias is a great example of this in my venture capital business my partner was trained as a lawyer I was trained as an operator and as a CEO so we look at investment opportunities very differently he looks at it through the filter of well what are the legal aspects etc etc and I look at it of can I make and sell the product now those are biases right there he's got a legal bias and I've got an operating bias do you have people who can complement where you might have blind spots or skill sets that aren't yours but you understand what they are so I think that kind of self-awareness is really really important on an ongoing basis but that's so hard to manage because you're working with people who bring in a very different mindset you know this is one of the things that I certainly have struggled with a lot that you know how do you work with somebody whose style is poorer opposite of yours if you're a big picture guy and you know like looking at somebody who is a very detail-oriented person can be exasperating you kind of say oh my god I mean this person really forever you know looking at the nuts and bolts and putting the commas stops there but that's really what you need and you know it takes a lot of effort to you know appreciate that but we have a question here from you know Aditya who's asking this question that does a product manager a project manager there's a project manager required to have a deep technical understanding of a product in order to be successful or does the project manager require to have more of people management skills what do you think so it's a great question I have a very strong opinion of this and there are a lot of people who disagree with me so let me see if I can give you both sides Brian Rakowski who was the first product manager at Google Brian believes that the only product managers especially in a technology company have to have an engineering and a graduate degree he fundamentally thinks if you don't have an engineering undergraduate degree you are not capable of being a product and I think that's one of the dumbest things I've ever heard in my whole life Brian is 10 times smarter than I am and 20 times more successful than I'll ever be but I think that we have the ability to learn technologies if we are genuinely interested in it so I think a great product manager has to be curious about how things work and so you talked about the people skills that has to be what a product and a project manager has to do do you have to have had a training in electrical engineering or computer science or mechanical engineering I'm living proof that you don't my career in great and deep technology companies places like Intel where I had to earn the trust of Andy Grove I was able to do that because I really wanted to know how things work I studied political science as an undergrad that allowed me to learn how to write and my story behind that is I wasn't a very good engineer like I was average it was horrible it would have been great if I was a terrible engineer it wasn't that I was average that like to me was like the worst possible thing that I would ever want to do but I still love learning how things work and so when I think a great product or project manager has to love his or her product and has to like want to understand what makes it go that's about what we do inside like we all have brains we can all learn new things we just need to apply ourselves so my my long way that answered your question is I think great product and product managers have both Brian would say no no you have to be an engineer and I just think that's Silicon Valley bias so I disagree with them I think you know I would sort of agree with your assessment because you know I believe that eventually when you're interested in people you get curious about other stuff one of my hypothesis or assumptions is that people who are curious are fundamentally interested in people because you don't become interested in you know an abstract concept there's a person whose ideas really shape you or your thinking and that's where your curiosity begins and you probably learn much faster if you learn with a variety of people who are having you are having these conversations with so I think that's what I do and you know like for example this LinkedIn life for me is a really great way of having conversations with people who are much smarter than me and that's you know I thought Robert Siegel would be the right person to have on this show but yeah I also think that I want to know about how do you stay current what is your upgradation process like imagine you're an app what do you do to get new friends so I think I do two things that are kind of unique to my situation the first is I'm really lucky every year I get 500 new children my graduate students at Stanford and I call them my children even though they're adults but they're half my age and being around the younger generation allows me to see how do they look at the world and how is it different than how I look at the world my our debbies and my children are now 23, 21 and 19 so they're adults but when they were young looking how they interacted with technology was a great thing now through my ability to hang out with I really get to see how they look at the world and my students come from all over the world teaching at Stanford is like teaching at the United Nations and so you really get a global perspective I think the second thing is you know I try to push myself into my zone of discomfort before the world pushes me there twice in my career that I can think of specifically I got stale you know the world started to pass me by and I had to reinvent myself and those are very scary times in one's careers when you realize you haven't stayed fresh you're not up to speed on what's coming up so like right now what I'm in the process of doing is I'm basically shutting down of the six courses I teach I'm just shutting down five of them and I'm in the process of trying to develop five new courses so like trying to make that notion of disrupting ourselves and doing it before somebody else disrupts us it's a little it's a lot scary not a little scary it's scary like I right now I've got these classes that are in high demand and I seem to have a good rapport with the students and it's great and I'm gonna quit when I'm on top on those classes and try to develop new things so I think it's our ability and our desire and our willingness to push ourselves into into new areas I think that's kind of one of the key things that we can do it's hard it is hard there are times when I'm thinking like oh my god wouldn't it just be easier to keep doing what I've been doing because it works but I know that eventually that will become stale and I don't ever want to become stale so where do you gather your ideas from maybe what's your process of doing that I'm kind of a bumbler so there's this notion in the book that we call grinding creativity you know there's some people who get struck by lightning I just kind of like I'm always reading I'm always talking to people you know I try to surround myself with people who I disagree with as strange as that sounds like you know my new course on business and government my co-teacher and not at Maddie she and I could not be more different and how we do the world but being around her I've learned an unbelievable amount I mean she's amazingly brilliant and so kind of you know try to be around people who are different kind of gives me a different perspective I like to think that as I'm getting older I'm comfortable enough in my own opinions that have been formed and shaped over time but I'm always hopefully willing to learn and try to see how my thinking might need to evolve so I think it's reading a lot it's talking to other people and trying to kind of get out of our bubbles get out of our echo chambers and talk to other people and be open to what other people have to say so you know when you look at the future you know you are part of and okay let me step back and I'm going to ask you a politically incorrect question you know there's a lot of conversation about B schools becoming irrelevant you know because business models are changing so much and you know all that is happening do you think an MBA degree is useless going forward I mean is it something worth doing or it's not worth doing what would you say it's a totally legitimate question and I think what we have is there are a couple of forces that people are blending together that we need to break apart I think we had an oversupply of MBA programs and so it's a very very expensive degree which is actually I think one of the big risks and so I think spending a lot of money to getting a second or third tier MBA degree no you can actually get a lot of that information online so the cost benefit ratio may not be there but if you're lucky enough to go to you know a top engineering school no matter where in the world it is right whether it's in India or United States or Europe or other parts of the world you know you not only will get to learn from great faculty members but you're going to get access to a network of people and so that you know you'll get skills that you'll learn in the classroom you'll get access to a network and so I think the MBA actually is a degree now by the way the MBA degree is very different today than it was 30 years ago when I got mine you know it's far more experiential right you know there's a lot of more hands-on learning it's not just case methods you know you have the ability to get leaders from all over the world who will come in and talk about how to apply the blending of the academic with the practitioner I mean I'm a practitioner but I co-teach with academics and you see the blending of trying to how you use your brain to think but also how you apply it in the working world and so I think there's a lot of amazing things you get out of a great degree you know I think you're going to see some you know schools that will eventually kind of go away and we're seeing it right now on the other hand as long as the top schools continue to reinvent themselves and continue to meet you know the people who hire our students we give our students the skill sets they need to be successful yeah we'll be able to stay relevant but that's on us right it's up to us to prove ourselves that we're worth it so you know my big takeaway is if don't do an MBA degree from a second year or third year school do it from a top place and that's the unfiltered you know advice that we are getting from you so really you know Rob we are at the last minute so I just want to take a couple of minutes and say thank you very much thank you to all our listeners who've joined in for all the questions that he was because you know I count on your questions to really bring a lot more variety than just one person's point of view so thank you very much I'm deeply grateful look forward to another wonderful guest of mine who's coming up next week who's written another book that I really enjoyed so don't miss on that one thank you so much Rob just stay in the studio while we play this goodbye to you for our viewers