 get out with a sort of a word of warning and that is that you might realize that you're working in fact for a highly ineffective company. This is more of a where do we want to go, should I've been pondering over and over again over the last couple years like seriously. And this is a community I invested the whole lot of time and energy and I've traveled around the world, I've spoken, I've run training, I've been in this community for more than 10 years but what have we really achieved with Agile? Maybe we've fixed the IT departments, but have we fixed organizations as a whole? These guys were the sort of one of the most biggest success stories of Agile and Scrum adoption in the early 2000s, tens hundreds of teams working together. Everyone wanted to be like Nokia in the early 2000s. Same thing, tens, hundreds of teams across the entire organization yet these two companies haven't really taken over their market have they? Here's the share price of one of Australia's most admired Agile sort of listed company and five of its peers. You get no bonus point for guessing which is the Agile organization. It's the worst performing organization. So have we fixed organizations with Agile? Well the answer is at least not always. So what is this highly effective organization? And why is it important? And basically one of the only things I could come up with is sort of organizations that are prepared for the realities of the 21st century. But what's so different about that 21st century? And basically it's a massive increase in uncertainty, unpredictability and complexity. These are three massive things that are very, very different than the business reality of the 20th century. But I really want to focus in on that last thing, complexity. It's what is complex and what's complexity. And we often sort of use it interchangeably with the word complicated. We use the words complicated and complex sort of interchangeably to sort of mean the same thing, this thing that's hard to understand. But they're two very, very different things. And basically what I use sort of gaming analogies. Chess is a complicated game. The rules are very simple. And we need to sort of analyze and predict what our opponents are doing. But we can analyze things. We can look at the board, figure out what's going to go on, predict what's going to go happen, and then sort of make our moves. Which is contrasted to poker. Poker is a complex game. It's a very different game than chess. If you pay Texas hold them, so you get two cards. Everyone's got two cards. Looking at those two cards, there's no amount of thinking and analyzing that you can do that will help you playing poker. And that's the most important thing. Poker is about learning, as Richard was saying earlier in the keynote, sort of creating that learning organization. That is because we're dealing with complex organizations. We're dealing with complex problems. And they're very different than complicated ones. It's no longer sufficient to be able to analyze and think things through. So a complex environment is an environment where sort of cause and effect are only obvious in hindsight. With unpredictable emergent outcomes. And what that means is emergent outcomes means that we will figure out what the solution is while we're solving the problem. And that's very important. So while we're solving the problem, we will figure out what the solution is instead of working out in advance. So if you take sort of the two sort of chess and poker again, whoever is the best at predicting will win chess. Whoever is the best at learning will win poker. If you look at the top poker players, top chess players in the world, there's no overlap. But we've built all of our organizations around that complicate problem solving that we don't have anymore. The only way we can make chess matches interesting is put a time limit on them. Because otherwise people would just take days to make a move. Chess would be take as long as sort of cricket would probably be about as exciting. That joke doesn't go well on Australian. I figured it wasn't going to go very well here. But one of the most important things to do is we have to go from scaling efficiency to scalable learning. Massive, massive change in mindset from scalable efficiency to scalable learning. Now, a metaphor I often use for our current organizations are eggs. Eggs and people don't realize eggs are some of the most robust structures you can find. If you sort of go home, grab an egg, you will find it impossible to squeeze it in your hands. And that's what our current organizations are. They're sort of optimized for that one thing that we know. An egg only has to withstand two things, falling out of the chicken and a chicken sitting on top of it. And it's very well suited. It's very robust for those two things. Known forces. Yet we all know what happens when unexpected things happen. The side of the bowl. And our eggs break. And that's what we see over and over again in our organizations as well. So I want to talk really quickly about this thing we call end of fragility. And Nicola Talib coined the term anti-fragile because what he realized is that the opposite of fragile isn't robust. And that's what we think a lot. The opposite of fragile is robust. And that's not the case. Robust is just less fragile. It takes more force and more sort of adversity to kill something, to destroy something that's robust. What he figured out that there were things that get better the more problems there are. And this is a picture of the MSRA bacteria, which is known as resistance to all known antibiotics. Precisely because we've tried to kill it with all known antibiotics. We've all heard of Netflix, I imagine. I'm sure they've rolled out in even India by now. They made it to Australia. So I can only assume the rest of the world has Netflix by now. But they've introduced this amazing thing called chaos monkey. And chaos monkey is revolutionary on a sort of, not just a technical level, but also on that sort of anti-fragile thinking. So basically, Netflix has one of the most complex IT infrastructures on the planet. It's absolutely massive and the scope is mind boggling. And what they've very quickly realized was that it couldn't plan that big an infrastructure. It was too big, it was too unwieldy. They have hundreds of services serving millions of customers. They couldn't plan the thing anymore. So what they did is they wrote this thing called chaos monkey. And basically what chaos monkey does is it goes around and it randomly kills servers in production. And that's the insane bit. So chaos monkey literally goes around and kills servers in production. Because their infrastructures build in such a way, designed in such a way that that should be possible. But they go around and it's random. It's not sort of they picked. So during office hours, chaos monkey will go, I just killed this. Not I'm about to kill this. It will say I have killed this. And the operations engineers sort of figure out, did anything go wrong? Nope. Cool. Awesome. And every now and then something will go wrong. And then they'll figure out what went wrong. And they'll fix it. So Netflix has introduced that adversity to increase the resilience of their IT infrastructure. And it's exactly that sort of thinking that we need in our organizations as a whole, not just our IT infrastructures. The only competitive advantage left in the 21st century is adaptability. We need to be able to adapt much quicker. And that's what the seven habits are all about. How do we get that learning, adapting company? Now, as William Gibson famously said, the futures are right here. It's just not very easily distributed. There are a few really good companies out there. And when you're start looking at them, you're start seeing the same patterns over and over and over again. And that's sort of what I'm calling the seven habits. So all the examples I'm talking about are doing all of these things very well. So the first category is people. And the first, a lot of people seem sort of, it's a bit obvious. You have to trust your people ever like, Oh, cool. So trusting people is important. So at work, do you get to decide where you work? When you work? Maybe do you get to decide how you work? Less likely with whom you work? Who's on your team? On what you work? Do you have a company credit card? Why not? Because you're not trusted to want to or be able to make the right decisions. And it's that simple. So trusting people is very, very hard. What I often see is how we trust our people. Well, until they screw up, she's not really trusting people. We talk about the screwing up part later. I quickly want to talk about a company called VELV software. VELV is a gaming company on Bethesda. And they have a very interesting problem. Now one of their biggest problems is it takes new hires about six months to realize that there's no one there telling them what to do. That's your biggest problem. It's a pretty cool problem to have. So what they did is they wrote they wrote this thing called the VELV employee handbook, which is an absolutely amazing reading. You should go go ahead and read it. A fearless adventure in knowing what to do when there's no one there telling you what to do. Now one of my favorite passages from the employee VELV employee handbook is the glossary entry for Gabe Newell. He's the owner of VELV. And it goes of all the people at VELV who are not your boss, Gapes the most not your boss. Which I find really interesting. I want to talk about VELV, everyone I talked to, like execs, managers everywhere, they go like, Oh, yeah, but that's fine. That it's easy. It's easy for VELV. They're a gaming company, there's a cool company. They've got highly skilled developers and designers, and it wouldn't would never work here. Like as Richard says, wouldn't work here. Morningstar is the largest tomato processor in California. And they do it with the factory workers, they do it with farmhands, they do it with people that have absolutely no education, and are just just processing tomatoes. Definitely not a cop out to start trusting your people. If you're the reading person, after every habit, I'm just gonna put three sort of suggested readings on there. Don't try to scribble them down. I'll make sure you guys get the slides in there on there. So number one, trust people. Number two is not just tolerate. This is important, not just tolerate failure, you have to embrace failure. Again, as Richard was saying earlier, it's about failing fast, right? How can we very quickly figure out that we're on the wrong path? And some experts on failing. I haven't failed I've found 10,000 ways that won't work. I love this Michael Jordan quote. I've lost almost 300 games and 26 times I've been trusted to take the game winning shot and missed. I have failed over and over and over again in my life. And that's why I succeed. Amazing quote. And then there's all the lines that anyone has never made a mistake has never tried anything new. And that's why when we're talking about sort of companies, we're talking to companies and we're like, Oh, we want to have this sort of innovative culture where people sort of take charge and show initiative. And then we punish everything that doesn't go as planned. We have to not just allow for that failure, we have to sort of embrace that failure. We know we're going to fail. That's what a lot about Richard presentation, you know, like we know we're gonna we're nowhere wrong about stuff. We just know we don't know which stuff we're wrong about which stuff we're right about. Awesome company that sort of takes us to the next level is Spotify. Spotify at one point wanted to introduce a bonus system, paid bonuses. And obviously, in a company that trusts people as much as Spotify, that whole manager, the whole sort of manager upon your bonuses thing couldn't possibly work there, couldn't possibly work. So what they did was they experimented with a thing called sort of pure bonus. And basically, everyone was given some money to give to someone else as a bonus. And what's this awesome idea that completely utterly failed? The guy who wrote the sort of awesome iOS thingy got all the bonus, and someone in the basement watching log files cut absolutely nothing. So they scrapped it. And their way of scrapping it, they went out to the office and treated everyone to cake. Like, we're sorry. This wasn't an experiment. We really thought it was going to work, but it didn't. And that sort of failure cake has sort of transformed into the thing they call the fail wall. This is the actual sort of whiteboard, the fail wall at Spotify, where we sort of chuck in stuff that we've learned, things that went wrong and the things that we learned from it. Because that's the most important thing. What can we learn from the things that are failure? So three awesome books about how to feel smartly. So number two is embrace failure. The second sort of categories sort of the organization as a whole. And one of the most important things to do there is to be brutally honest with yourself, with ourselves as a company. Being that brutally honest. Does anyone know what this is? Any guesses? The media player? No, it's not a media player. This is indeed, this is the first digital camera that was invented by Eastman Kodak in 1975. That's right. 30 years before they were all but put out of business by the digital camera, Kodak invented the thing. This is mind boggling. So Kodak invented digital camera in 1975. And they spent millions and millions on research on it. But they were never able to bet the farm on it. The only reason they're still alive today is because of that patent portfolio. Nothing else. Now we all know how this famous battle went down. Netflix versus Blockbuster. But this is not the thing I find very interesting. This is the battle I find very boring, except for the fact of course that Blockbuster had the opportunity to buy Netflix for 55.5 million and turn them down. And they were a little over 40 billion today. Told you so. But this is not the interesting battle to look at. This battle is much, much more interesting. Because the thing that we fail to realize is that Netflix make money off DVDs as much as Blockbuster did. DVDs are these sort of silvery sort of route things with movies on them. Netflix make money as much money off DVDs as Blockbuster did. Like 100% of the revenue came from mailing out DVDs. But Netflix was able to see where this whole streaming thing, this internet thing, I think it might catch on at some point. But that wasn't this one off thing that worked for them. They did it later. They screwed up majorly when they wanted to split their DVD and their streaming business. And they called one quickster. They rolled it out in the US. And it was an absolute disaster. Absolute disaster. Customers hated it. No one liked it. But they spent millions and millions on sort of making the split, branding, everything. And then their CEO sort of re-hastings goes, we're sorry, guys, we went too fast. This was too early. We're going to integrate them. And they're now Netflix and Netflix again. And this is what I mean by being brutally honest with yourself. They spend a ton of energy, a ton of money on this decision. And they had made it, it was publicly. And for them to go, we're sorry, we're gonna roll back that thing. Pretend it never happened. Brutally honest with yourself. That's number three, brutally honest. Number four is sort of the silver bullet of all of the habits. And it's allow autonomy at all levels. Now this guy might not look like it. But this is the most sort of forward thinker on 21st century management. And his name is Helmut Moltke. And he was a sort of general in the Prussian Army, which tells you that it's a long time ago, because we haven't had a Prussian long time. But sort of what happened in his lifetime was sort of a technological sort of invention, combined with a whole host of other problems and changes, changed the way war was fought in Europe. And one of those technological inventions was the invention of the rifle. Before the rifle battles, especially in Europe, but also in the rest of the world were fairly sort of simple. You had two armies that met on the field of battle. Two commanders on either side, who directed their armies, you basically sort of charged at each other. And the first army to run away lost. That's sort of warfare nutshell. But that radically changed a whole bunch of reasons, but the rifle being one of them is it now gave defenders an advantage over attackers. Completely changed the way warfare worked. And that's sort of what Helmut spent his time on is in this new reality, because they were the perfect army, the Prussians have the perfect army. They were highly trained, highly disciplined, professional soldiers, and they were up their ass handed by Napoleon. And again, someone being brutally honest, how does this happen? How does this work? And he wrote one of the most amazing quotes in 1862. And it starts with the tactical result of an engagement forms the base for new strategic directions, the decisions, because victory or defeat in a battle changes the situation in such a degree that no human ecumen is able to see beyond the first battle. So basically, what he's saying is you cannot roll out a strategy. How many people have been a victim of the roll out of a strategy at some point in their careers? We all have. So in 1862, this guy realized how that didn't work, can possibly work. So he completely redesigned the way the Prussian army approached everything. And he called it outtrack tactic, which is sort of translates into a sort of mission command. And his revolutionary idea was, we should we should stop telling people what to do. And we should tell them what we want them to achieve. Absolutely revolutionary in 1862. And I'm afraid to say it's still quite a revolutionary in 2016. What Moltke realizes that this sort of isn't true, that it isn't sort of alignment on one end, and autonomy in the other. So this is what he realized. This isn't true. This is false. What indeed happens is high alignment allows us high autonomy. So there are not two things on the opposite end of the spectrum. So if you sort of going your sort of top left corner, where we have high alignment, we're all sort of thinking the same thing. And high autonomy, and low autonomy. So high alignment, low autonomy is your sort of command and control organizations. So the thing is, we need to cross the river, built me a bridge. Or if we have the opposite, if we have high autonomy and low alignment, your sort of your startup cultures, and the reaction is more along the lines of, I hope someone's working on that river problem. Whereas what we want to be, is in a situation where we go, we need to cross the river, figure out how. Allow the team to display creativity and original thinking and context dependent on how we cross rivers. Massive, massive change. And one company that really gets that is a company called Svenska Hansenbanken, which is originally sort of a Swedish bank. They're now, they've got offices all over the world. And Svenska Hansenbanken is one of the best banks in the world. It's one of the most efficient banks in the world. It's one of the most profitable banks in the world. And it's got some of the most loyal customers in the world. They want best bank in Sweden.