← Digital Disruption with Geoff Nielson
Digital Disruption with Geoff Nielson
Forces That Will Radically Transform Society in the Next Decade
00:57:57
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- [00:00]
Jeff
Hey everyone. I'm super excited to be joined today by John Rossman. He's a former Amazon exec and a best selling author and he's got with him the recipe that can be used to turn mediocre organizations into real juggernauts. Not only that, he's used it with corporate execs to completely transform what they're doing. What I like about John is he's not one of these authors that has one neat trick, but really has a comprehensive look at the mindset and tactics that we need to change everything. Let's find out.
- [00:31]
John Rossman
Foreign.
- [00:36]
Jeff
Thanks so much for joining me here today. Maybe for folks who don't know, can you give us just kind of a quick background of, you know, who you are, what you've been up to?
- [00:43]
John Rossman
Yeah, Jeff, thanks. Great to be here. Quick background. I'm, I'm old, so it's hard to do a quick background. But I was an early leader at Amazon. I helped launch the marketplace business and I've made a career out of solving hard problems, solving hard problems for customers, solving hard problems for operators, solving hard problems for business models. And I love solving hard problems. And that's, I do it with an integrated mindset, meaning not one tool, not technology, not just communications, not just process flow, not just incentive systems. I use all the tools that you can kind of put into the, the tool bag to help get to an outcome that's meaningful for customers, operators and shareholders.
- [01:39]
Jeff
Right. So when we think about hard problems in, you know, a context of 2025, what are the hard problems that, you know, you're hearing about as you're doing your rounds? And are, are they the same hard problems from, you know, two or five years ago? Or like what are the hard problems that people are grappling?
- [01:56]
John Rossman
Yeah, I, I, I, I, I, I think the hard problems are durable. Some of the tools that we have are, are maybe in flux a little bit. But you know, growth is always a challenge, right? Like how do we maintain competitive advantage and continue to outgrow kind of, you know, our, our growth, our relative peers in our, in our industry space? I think scale, which is different than growth scaling is always kind of the hardest thing to do. And what scaling means being able to do more on an improving unit cost or efficiency basis. Right. So you have to actually get better at what you do. Driving hard change. Like at the end of the day, at their best, companies are good operators. What they don't tend to be is both great operators and have a system for how they innovate, how they Grow, how they change. And so change becomes the elusive core competency. And we wrote Big Bet Leadership because this game of creating transformation is primarily a game that people lose at. I don't believe that you have to. And this skill is going to become even more and more important in the future. And that's why we wrote Big Bet Leadership specifically for senior executives to help them understand what do we personally need to do differently and in order to tip the scale in our favor of winning at these major transformations.
- [03:45]
Jeff
Right, so. So, you know, change, you know, I'm, I'm sure you're not the first person to say like that, you know, change is important right now, but it's, it's such a critical, you know, it's such a critical component of the way we structure ourselves. And, you know, is it the. What we do about it is kind of the hardest part. But I wanted to get a sense, you know, what has changed about change, I guess. And one of the things, you know, you've talked about is the notion of us being in this, you know, you call it a hyper digital era. What does that mean? And what are the implications for, you know, change?
- [04:21]
John Rossman
My belief is that we are entering an era that's driven by three mega forces, not one. Right. And so, you know, a lot of people would say AI is the mega force. Well, I believe disruptive technologies are a megaforce, but not the only one. The other to the other one is kind of the, that the aging of our workforce, which is a combination of both kind of the aging of our workforce and the decline in birth rates, which is going to create an even harder burden for companies to retrain and attract skilled talent. The third mega force is the indebtedness of our countries. And, you know, in the US it's projected that by 2050, 75% of our federal budget is going to have to go towards either debt service or, you know, programmatic spend, like indebted spend. And the only way out of that is to actually grow the economy faster is to innovate. And what those mega forces are going to do is it's going to put incredible pressure on, on changing productivity within companies. And I think what's going to be the hallmark of this next era is that while we've seen really great customer experience change and business model transformation in the past 25 years, if you look at back office productivity, it's been relatively flat. And I think that's what's going to change in this next era, which is equivalent productivity is going to have a 10 to 100x change relative to the companies of today. And that degree of change is going to create both a lot of opportunity and a lot of disruption. And so the companies and the leaders who I think experiment early and often and realize that it's a journey, not a one time transformation versus those that are reluctant in building the capacity of being able to know how to change, they're going to be the losers. And so there's both opportunities and losers. And I think some of the losers will be some of the winners of this past digital transformation era. But you know, that's, we, we, we, we don't, we didn't write this book for everybody. We wrote this book for the leaders who realize what a tricky game this is and are looking for a playbook to help digital senior leadership do this job of transformation better. Because obviously they don't today.
- [07:03]
Jeff
So you bet. You mentioned some of the, you know, I tend to think along the same lines of like who, who are going to be the winners and losers and what do they have to get right to get to the winning path? You mentioned some of the winners may, or sorry rather some of the losers may be previous winners from the last wave of innovation. Why do you say that? And you know what, what's kind of at stake here, I guess.
- [07:26]
John Rossman
Yeah, yeah. Well the reason I say that is, is because past success is no, no guarantee of, of future success. Like the game is always on, right? And you know, just as an example, let's take Google as an example, right on one hand, the world's best business model ever, you know, and everything, right? Like Incredible gross margins, 90% market share of search. They've, they've defined and grown the search category for the past 20, 25 years. Well, you know, they're still being under indictment for, for monopoly and unfair practices, but yet, you know, there's now real threat and competition in their business. How they respond, are they able to respond? How the past puts them in a trap and in a tricky situation to be able to actually not just technically respond, but from a business model and from a culture and from an incentive system be able to respond. Who knows the answer to that? But that's an example of a company that has clearly been a winner in the past digital era. You know, two years ago nobody thought they were under threat. Today I think they're clearly under threat and they're trying to respond to it.
- [08:56]
Jeff
So when we think about that response, one of your kind of key messages has been that like it's as much about avoiding traps in some senses. As it is about doing the right thing and there's, there's so many traps you can fall into. And you know, to me this is extra interesting when I look at this backdrop, which is that when you look, you know, this is kind of common knowledge at this point, but like digital transformations, these large scale transformations fail at like just a really alarming rate. So why is that? And maybe at just kind of the cursory level, what do we need to do to avoid some of those traps?
- [09:36]
John Rossman
All right, so I'm going to unpack this a little bit if that's, if this is okay. So, so, so add in at any point through this. So first of all, what's a big bet? Right? So a big bet is any strategy, plan, transformation initiative that has both the potential for high impact and it comes packed with risks, dependencies, unknown unknowns, factors outside of our control, right? That's what a big bet is. They get called many things within a company. You get, it gets called a new product introduction, it gets called a digital transformation. An AI strategy. A re platforming initiative like in M and A is definitely a big bet oftentimes. But that's what they all have in common is high ambition but tons of risks and unknowns. What you said is absolutely true, which is across all of those different types of big bets, they have incredible failure rates, right? Anywhere from 80% up. One major study of hard large projects said that 88% are over time, over budget, but only One half of 1% are on time, on budget and deliver the expected impact. And that's what typically happens in organizations, which is I got to deliver on time, on budget. So they start retracting scope and ambition and they let go of the actual like reasons why we were getting after this. But what we know is that incrementalism, just doing incremental improvement won't differentiate your company long term or short term. Right? So, so that's a tricky proposition. On one hand we're saying, hey, the vast majority of these things, these initiatives, these big bets are going to fail. But on the other hand, you have to do them right. It's the only way to meaningfully move forward in creating competitive advantage and capacity and capabilities. But it gets even worse than that, right? So here, here gets to be the answer to your question. It gets even worse than this because they don't fail for a simple or short number or predictable number of reasons. They, they, they suffer death of a thousand cuts, right? And so some of the reasons they fail, just some of the reasons they, they fail is we don't really understand the problem that we're, we're, we're solving. We don't really understand what we, our hypothesis is for the future state. We don't communicate in a strategic manner around them that helps people and helps the journey. We underpower them in terms of leadership. Even though we know it's not a technology transformation and we say we're not going to lead it as just a technical initiative, we end up leading it like it's just a technical initiative. We don't truly grok, grok what the real risk factors or assumptions that we're making in this and we don't test them until we actually launch and find out after we've gone big. That's just the start, that's just the start of the major reasons why these fail. Right. So it's a really, really, it's a wicked problem to solve wicked problems. Like it's the mother of all wicked problems here and everything. Right. So, so my co author Kevin McAffrey and I what our experience in working with companies who have been successful and not just successful ones, but systematic in a playbook, an approach to winning at big bets. And so you know, those companies, those leaders are Jeff Bezos, John Ledger of T Mobile, Elon Musk of many companies, and Satya Nadal of Microsoft. And what we deduce is that those leaders have three habits relative to transformation that most really good operators don't have. And those three habits are they create clarity, they maintain velocity, and they accelerate risk and value deferring out commitments until they've de risked it. And while those maybe sound, obviously actually practicing those and putting them in place is not obvious. And that's what the whole book about is how to put those habits in place, in play for systematically becoming the, what we call the big bet shark. Right? Like the shark at the table. So that you make better strategic moves and you're able to take bolder ambition while managing against the downside risks of these.
- [14:34]
Jeff
Right. And I want to dig into that a little bit deeper and there's so much there. So I'm going to back up for a second and share with you, John. I mean, I did read your book. I've got it here actually. And I'm trying to not like shill the book too hard on this, but I am a fan of it. Just go headlong into shill mode. No, I was going to say I am a fan of it. And the reason I'm a fan of it and we've actually talked a little bit before about this is I'm a big skeptic of business and leadership books in general, and I'll tell you why, and I think you agree, which is that too many business and leadership books these days are at best like a Harvard Business Review article masquerading as a book, right? Like, they. It's either a sentence or at best, like, four pages of interesting material that's been expanded to like 200 pages. And you're like, why am I still reading this? I get the idea. You're just hitting me with the same idea over and over. What I like, what I like about yours, and I'm trying to not just be effusively positive and try and have a balanced approach. What I like about yours is that while a lot of these ideas, not all of them are, you know, here for the first time ever. You know, there. There's stuff here that's, you know, people will read and say, oh, yeah, I've heard this before, but there's so many ideas here, and they're packaged in a really kind of interesting and valuable way. And. And that really caught my attention. And I was actually just telling one of my producers before this, like, yeah, I'll leave the book behind. You know, you can read it. I was saying, I read it. I read it on an. At an airport before my flight took off. Like, it was just, like, it's a brisk, really interesting read. Sorry, I feel like I'm going on a bit of a tangent here. What I was going to say about all this, though, is I like the way it's structured. And there's a few. There are a few things I made notes of here that do challenge conventional wisdom that I wanted to talk about. And one of them, in terms of avoiding traps, is you are, you know, if I can call it this, anti lab. You've got a section of a chapter against Innovation Labs. And I think even to this day, Innovation Labs are pretty popular. And so I wanted to, you know, get from the horse's mouth, like, why is this a bad idea? And what's a better alternative?
- [16:53]
John Rossman
Yeah, yeah. Well, first, thanks for reading it. Thanks for. For that. And, you know, we call it a playbook for a reason. Like, I don't. I don't use words lightly, Right. And especially words in titles like, I worked that super, super hard. And what we wanted to do, we wrote this specifically. So Kevin ran New Business Incubation at T Mobile. He served the CEO. And we wrote this book for Kevin and for the CEO of, like, you need a playbook in order to do things that you don't normally do, right. T Mobile's case, it was to, to create new businesses outside the core. So anyway, thank you. So the lab. So it, it, it's like so many things. It's like it's not the lab per se, but it's the constraints and the culture that tends to pervade these innovation or digital labs or AI labs within companies. Because what they tend to breed is what, what we refer to as kind of the all hat, no cattle approach to innovation or transformation. Meaning like it's all about show and none of it's to, to actually, you know, dish out business value. And so in throughout the book, what you've noticed is we've always been trying to balance competing risks and we, the way we typically combat those things is both by being specific about what to do, but also putting constraints in place, right? Time constraints, people constraints, length constraints, all those types of things. Because you have to create a sense of urgency. And that's what tends to be lacking in an innovation lab is a sense of urgency in order to test and prove things out. Yay or nay, Is it a winner or not? And should we proceed? And it's that level of accountability that tends to be missing. Now it's not all the lab's fault, right? Like or the people within the lab. It's the, the environment, the constraints, the leadership, the mission, the tools that they get at their disposal in order to accomplish the mission. So it's a system that has to be put together correctly so you can have a lab if you do it right. But at the end of the day, the team needs to be led by a high judgment senior person who has some pretty lateral capability of being able to make decisions. They, this person has the wherewithal, the, the, the gravitas to be able to make things happen across an organization of scale and really across an ecosystem of scale. They need to be given, as I said, kind of lateral decision making capability. Because speed, speed to learning, speed to testing is the thing that we are trying to optimize for. It's not unit cost, it's not some other policy, it's speed. And just grocking that understanding. We are optimizing for something different. It's speed to learning, not speed to launch, not speed to revenue. It's speed to learning. And we have to engineer whatever we do, whatever sort of team or environment or lab we set up, that is what we are optimizing for. If I can get that across as one of a few key Points. Okay, now we're making progress. We can accomplish the principle in a variety of ways, but you have to truly recognize the problem and have a principled approach to solving that problem.
- [20:38]
Jeff
So it's less about, you know, having a centralized team, but more about being able to be responsive. And if I can mix metaphors a little bit here, it can't just be an ivory tower. It has to be close enough to the front lines that you can get real responsive feedback and figure out if this thing is going to, is going to fly or not. That was, sorry, that was like, exactly.
- [20:58]
John Rossman
In fact, we say like, having a small dedicated team is the critical manageable factor of being successful. Not the only thing, but critical. It's just, you know, to, again, to draw attention to the point. I poke fun at most labs because they aren't set up for success in this way.
- [21:21]
Jeff
Right. And you mentioned something else which is being able to be responsive. Right. And you know, I have another note here about decision points for leadership. Right. That you have to, you have to be able to make clear, clear decisions. Can you unpack a little bit about what that means?
- [21:39]
John Rossman
Yeah. So, you know, across the, the lifespan of any one big concept or a portfolio of concepts like, you know, there are these high stakes moments where you're making a decision, right. And the decisions tend to be do we fund, do we proceed, do we pull back, do we pivot, do we kill? And so we wrote a specific chapter about this. I think it's my, my favorite chapter title, which is Kill, Pivot, continue or confusion. Right. And, and it's the, or confusion that tends to happen most of the time. And so, you know, the key is a, recognizing oh, this is one of those high stakes situations we are running into and B is you have to design the meeting to do the job that it needs to do. So the chapter is packed with kind of the framework of how do you design a high stakes meeting to do the job that it needs to do and avoid the many biases that come along in these meetings. And the job to be done is to make the best clear eyed going forward decision for, for the business, not for the team, not for the individuals, not for whatever we've done, not for anybody else. For the enterprise. Your job is resource allocation. You need to make a great investor based, calculated risk decision, knowing that we're not going to know everything because we're talking about the future of things here. Right. So that's, that's the meeting you have to design is to help senior leaders do their job in that moment and we, and people get it wrong all the time, right? Like they fail, they fail that type of meeting in so many ways. And that's what we kind of recant in the book, give some funny stories and again suggest here's the principles to follow, here's some activities that help put those principles into play.
- [23:44]
Jeff
And that, that, that chapter really resonated with me personally, I must say, because I've been, you know, for transparency, I've led innovation and product development teams, I've been in those conversations. I've just candidly like I've tried to shoot and kill projects and products and failed and failed because you know, individually or collectively, we just don't have the audacity to admit something didn't work or admit something is dead. And so, and so we let it kind of limp along. So how, how do you deal with those situations where you have, I don't know, I guess through decentralization or through individual voices, a lack of will or a personal attachment to these projects and actually just let them die graceful deaths and move on to the next thing?
- [24:37]
John Rossman
Well, it back to one of the first points made like there's a lot of little things that are problems and a lot of little things that you need to do. There's not one quick fix. But a couple of the key ones are a, if you've designed whatever experiment you're running well up front and you have a, you know, the very core framework of the book is called a big bet vector, right? A big bet vector is a well understood definition of the problem we are solving and, and our hypothesis for the future state. So if you've done that well, you have a big bet vector and you've designed, hey, here's the experiments that we are running and what we think success criteria is going to mean, well then you have a good baseline to take in into that meeting. Secondly is you, you need to write up as clear eyed critique as possible as far as like what, what we've learned and why. Right. So again this habit of writing things out, sending them to people before the moment because this sort of stuff you want to process, right? You want to, you know, do the figurative sleep on it a little bit, right. And, and I don't think good decisions like get this, like this get made in one meeting. They get made when people have been thinking about a little bit. So you need to give them the, the material, the fuel to be thinking about beforehand. And then the next thing is just kind of the agenda and how you execute the meeting. You need to Prepare people like, here's the meeting, here's the decision that needs to be made. Sometimes you have a recommendation, sometimes you don't. It depends on the situation. But be super clear about what the job to be done is for the meeting. One of the problems that sometimes happens in these meetings is for some reason it hasn't gone right. So people are on the defense and participants are on the offense of essentially auditing. Why didn't this go right? That is not the job for this meeting. Maybe there's a separate occasion to, to do a postmortem reflective of like, why didn't it go well? You know, and everything. Right. But that's not this meeting. Right. This meeting is about what do we do going forward. And then finally just like be super clear about the decision that's going to be made and communicate that effectively and the why behind it to the stakeholders that need to know. Right. So prep, execution, post meeting, follow up. That's the magic recipe for, you know, designing a great, a great meeting. Like many things and these meetings are high stakes meetings, so you really need to put effort into thoughtfully designing and executing them.
- [27:31]
Jeff
No, that, that, that, that's great, John. And it's such a, it's like such a microcosm of kind of the approach you bring throughout the, the playbook here to these things that it's, it's so well rounded. It's not, it's, it's not silver bullets. It's really kind of of checklists of, of activities and, and as you said.
- [27:49]
John Rossman
Like none of these things are, are new or revolution. Being able to integrate it all together, give real examples, real stories. You have scars, I got scars. Being able to wrap it in a story, but then give principle and actions to take like that to me is like what makes an actionable business book.
- [28:14]
Jeff
So I wanted to speak for a second about not new and I mean this lovingly, but when we talk about the briefs or the pre meeting. You're a memo guy. I learned you're a big memo guy. And this is, you know, again, I learned kind of an Amazon thing that it's not PowerPoints, it's memos. I've never gone down that road myself, but you know, I'd love to just hear briefly like in defense of Memos.
- [28:41]
John Rossman
Well, what a great title. So the one appendix in the book is called why Memos? Right. And it's kind of the lightweight research about all the benefits of writing and working in memos. Right. I mean, it makes you happier. You think clearer. You have, you have Tactile feedback, that is those that is so important. So yes, Amazon is a company that has really absorbed and created their own version of how to work in memos. You know, that's the whole working backwards technique. But they're not alone relative to this practice. If you think about how most investors do investment, it's through memos, it's not through PowerPoint. Legal briefs don't get done as a PowerPoint, they get written as a memo. It's because substances, matters of substance, require subtle communication and they deserve clarity. Right. The first leadership habit we talked about is create clarity. Clarity is both simplicity of thought and completeness of thought. When a situation is difficult, complex, PowerPoint is a horrible medium in order to help your audience do their job. Right. And that's why, you know, you can do it in things other than memos. But at the end of the day, memos are a great way to both get the best out of a group of people who are thinking about a situation and, and communicate it to others who need to understand it, whatever degree that they need to understand it. It's portable. You can work asynchronously. There's just all sorts of benefits to it versus, you know, the medium du jour, which is PowerPoint. That works for simplistic, well understood problems and situations, but it does not work for complex situations.
- [30:42]
Jeff
Right. So this really just forces additional structured thinking, clarity of thinking. And for you first, I guess, for your team first, and then ultimately for the audience.
- [30:52]
John Rossman
Yeah. At the end of the day, you're both thinking for the group like, okay, what do we believe in? What's the problem? We need to get figuratively on the same page. But then you have a job to be done. Right. We need to help other people either participate and make decisions or give their input to it, or they need to understand and participate. Well, there's different varieties of this that you do for different audiences, but they all flow from the same substance, which is kind of this big bet vector. Right. Like what's your problem and what's your hypothesis for the future state?
- [31:27]
Jeff
Got it, got it. There's, there's a piece I want to unpack here a little bit that we've, we've talked around kind of, which is the leadership, the you, the people with gravitas. There's a phrase you use which is extreme accountability, which is a nice little bit of marketing, but it's also a notion that a little jocko willink right there.
- [31:52]
John Rossman
Right?
- [31:54]
Jeff
Nice, nice. It's a notion that sounds really good and you know I'm sure you have some of the same scars that I do where as much as we can get on the rooftop and, you know, wave the flag of accountability, there's organizations where there is a, you know, it's more receptive to a culture of accountability and ones where it's just people, you know, maybe from the top down kind of bristle at accountability. And so can we unpack that a little bit? Like, what do you unlock when you get that? And, and, you know, if anybody's listening to this and saying, oh, you know, that would never fly, you know, in my organization. How do you kind of pave that road?
- [32:32]
John Rossman
Yeah. So rarely, I'll say never, but rarely is a initiative of substance solely stovepiped within an organization. Right. So, so an initiative always, you know, organizations are organized in silos. Big initiatives, transformation, changes cut across an organization. Right. And so, so they're always messy from a structure standpoint. And having a leader who is driving an initiative is key. But that's not enough. Like, again, you actually have to equip them with the tools to, to do that job. So back to memos. One of the tools that you write, once you understand the problem you're solving and your, your journey that you're going to be taking, is you write a future press release. And this future press release announces to the. It's a, it's a fictitious press release, but you use it internally. It announces, hey, here's the journey we're going on. Here's why we think this is critical to a customer, what the most important essence is that we're bringing forward, and here's the hard problems we're going to have to solve on this journey. You don't necessarily say how you're going to solve them. You just get them on the table. And, you know, what Jeff Bezos did for me when I was launching the Marketplace was he made it clear to the organization, hey, here's the mission statement. If John comes to talk to you about the mission, we work for the mission, you know, and everything, right? So we're cutting across org structures and job titles, and we work from missions versus for a job title or for siloed objectives. And if you can do those two things, which is both put a good leader in place and equip them with essentially the, the permission slip, the orders from the general that like, hey, here's my. I'd been ordered by the general to get this done well, then you can have better, you know, we'll call it negotiations. You can have better discussions and Drive quickly what needs to be done versus all the escalation up and down an organization in order to get like one thing done across an organization. So that's an example of the kind of extreme ownership that I think is if you can equip it, it's like a catalyst. Like it truly means, you know, if you know what a catalyst is, it's a substance that in a chemical equation, if you put in a catalyst, it requires less energy to get to the transformations, you get the output. It's the same thing here. If you can do this, it will take far less energy to get through this transformation than if you don't operate in this manner.
- [35:28]
Jeff
So I'm, I'm, I could not agree more. Like, I, I'm, I'm totally bought into that model. And one of the, you know, one of the things we hear about more and more, especially when we talk about, you know, the nature of change and the need to be responsive is you mentioned that, you know, traditional organizations are still very siloed, right? There's all these groups, they're, they're, they're designed in a way that's almost antithetical to adaptive change, right? Like everybody does their own component and they get really good and specialized at that. And if you want to change everything at once, there's sort of this built in resistance. And your world, you're saying like, okay, well let's get the mat. Whoever's doing this, you know, big bet needs a master key that they can, you know, they can work with everybody and change this. There's an alternative in my mind that may be harder, maybe not, which is, do we just need to change the operating models of order, organizations in general, and say like the organization of the future is going to in some way abandon these silos? Is that realistic? Is that totally fanciful? And where does that fit in your mind relative to this model?
- [36:36]
John Rossman
I don't think it's completely fanciful. And I think that there, there might be kind of a dual mode operating model and organization that fits in. And I'll kind of talk about that in general, but one of the notions I try to resist is having a transformation in order to get to the transformation, you know, and everything, right? And so, and so if somebody says like, hey, we need to, to do something new, but in order to, to even test those concepts, we have to go through an 18 month technology replatforming on like, either we're going to find a way to not make that a dependency or I'm not in on this deal you know, and everything, right? Because you will lose steam. It just won't be there, you know, by the end. Right. So you have to find a more clever manner of defining and at least testing these concepts before you go through all the other dependent transformations that you think you need to go through. So that, that's, that's one answer and that's really what I'm trying to do and we're trying to do here is like, you know, let's not have to go through a big org reshuffling in order to situate ourselves for the end game transformation. We want, you know, let' work backwards on this. But I think that there the, the organization of the future in some cases could be something that parts of Amazon model which is, you know, you've heard of service oriented architectures, right? Soa, which is like encapsulated capabilities in software that are meant to be more independent and create less dependencies across other components of software architecture. Well, I think that there's, there's an equivalent to an organization that the service oriented organization at Amazon, they call them two pizza teams, right. So it's small teams that own independent capabilities that integrate and can be used across the organization in a self service manner. So I think that that model in some cases might provide both like the continuous operating capability that's like what your business has to do at scale and allows for easier change and transformation processes going forward. But even in that case, transformation is messy. I do believe that if a business is primarily like you have to be both a world class operator and a systematic innovator. I think organizing around being the systematic operator makes sense and then creating compensating mechanisms to put in the systematic transformation change that probably is the, is the, is the mindset for most companies. But you know, I'm open for, for other ideas on this and everything, right? Like there's not, you know, my version or no version on this discussion.
- [39:42]
Jeff
No, it's fair. And I mean you had me at like not transforming for the sake of, you know, a transformation. So that I think that in many ways tells the whole story. And I really like that you did veer down an avenue that I wanted to follow though around the service oriented architecture and I wanted to talk about it in general because you had a very damning sentence that touched me personally, which is that you said something along the lines of it is going to end up being the greatest tactical challenge to any large scale transformation because of all the nature of legacy technology. And your proposed solution was kind of IT systems be Damned work around us. Find some way to ignore the legacy stuff. Get a just kind of good enough parallel, alternate, parallel universe that you can work in and make it work until you're ready to scale. And John, I come from a world where I've done a lot, a lot of work with CIOs and this is one of the kind of existential challenges for CIOs and for IT departments right now, which is they're left holding the bag for all this legacy technology, whether it's a mainframe system or you know, God knows what else from the last, you know, 40 years. What, what's kind of your outlook for this entire function and how we bring this along for the ride? Is this just, is this just like an organizational curse that has to go somewhere or should transformational and change oriented organizations have a better approach for how they, you know, kind of unlock technological capabilities?
- [41:32]
John Rossman
Yeah. Yeah. So a, you know, thanks for inflaming rage from all the CIOs against me here, you know, and everything. Right. But, but, But I think CIOs have the world's hardest job, right? Because on one hand they have to provide highly available, highly consistent auditable systems of record to run today's business. And supposedly they're equipping the organization to be able to make changes. And oftentimes they're put in the forefront of like, you know, you're our thought leader in terms of, of innovation and tech and disruptive technologies and there's probably a few other things that they, that they have to do. And you know, you have to safeguard the perimeter from a cyber security standpoint and all these things. Well, that's a, that's a brutal job description. And what typically is going to happen is, is the organization and the team is going to fall back like, okay, job one, keeping systems running of today and maintaining the security perimeter around our business. Right. And so it's like if anything is, if I'm going to fail on any front, it's going to be on the other side. Agenda items that we just walked through. Well, in the short term that's a great, that's a great lens and a great decision. But over the long term I actually think that that's the wrong priority. You know, you have to do it all, you know, and stuff. Right. And so I think the challenge for CIO is how do we actually do it all? And that takes, that takes resource commitment from the enterprise. So the whole investor base and executive team and alignment has to be created where you know, we are going to not just fund, but we are going to participate with this team in these other agenda items of innovation and, and equipping our organization to be much more of a digital first organization or AI first organization. Not just a company that uses technology to execute its trans transactions today. And that takes, that takes a multi talented leader to be able to pull that all together under one umbrella. So I think in a lot of cases I would think about a two umbrella situation here because I think that that's a hard agenda and it's a hard leader to find to be able to do all that. But in either case it's an enterprise commitment relative to that agenda. And the, the thing that I think we both are antithetical to and, and will call out is, you know, when you say one thing, but you do another thing. You say you want to be innovative, you say you want to leverage AI to reinvent a business, but then you starve it from resources. You ask people to do five jobs at once. You won't make quick decisions relative to policies that slow everything down. Like you won't do the incumbent things in order to live that headline that you want published out there. And I think that's the situation I find most companies in is that, you know, they kind of for PR purposes internally and externally, they say one thing but they actually act completely differently.
- [45:10]
Jeff
Right. And yeah, I mean I think that we keep coming back to this. I think you and I think very similarly. But when I think we're a little bit outside of your realm now, but when I think about how to actually do that, and you said a few pieces of this, that, I mean one piece is making sure you get kind of investment mix right where you have, you know, budget unlocked for doing the things beyond the base, beyond the basics and getting, you know, the senior leadership team bought in to the fact that you need to be doing that. But the other one, and you mentioned this as well, and I want to beat it up a little bit, is either what you call the two umbrella situation or you know, to me one of the major kind of faux pas here is CIOs or technology leaders who are sort of armies of one and are saying like this is what technology the organization needs and kind of declaring that this is the answer. What I found, and I'm curious on your perspective as well, is almost, almost implementing some of the playbook that you've got where it's how do I start to partner with other senior leaders who are either partners or sponsors and get a sense of what they need, what their Big bets are and how technology actually enables that. And so suddenly I'm not the lone CIO CTO saying, I've got the secret to tech. It's no, this is the business challenge, and this is the business challenge that tech can solve. Now you're not funding technology for technology's sake. You're funding a solution to a business challenge that involves tech. Do you buy that? Would you change anything about that?
- [46:50]
John Rossman
I do. I wrote more extensively about this in one of my books called Think Like Amazon. But I think this notion of kind of distributed technology ownership as close to the edge as possible is a really good notion. Again, you have to architect it really well. You have to have a set of standards in which you organize across the company for. But empowering the business and the operators that are closest to the edge I think is a powerful way to think through, you know, solving for. For some of the things that we're thinking about here and everything. But I, you, you know, I said like, one of the issues that comes along on these is that we say this isn't a technology initiative, but we actually operate it like it's a technology initiative. Right. And, and that's why I would hesitate to structurally have kind of the big bets team as part of the IT organization or at least solely within the. Again, you can solve with it in many, in. In different ways. And it. It clearly depends upon kind of the role that the CIO would have within the organization. I know a few CIOs who could pull this off, you know, and everything. Like they are the operator in the business and everything, but typically having it, you know, like Kevin McCaffrey. Kevin was part of the enterprise strategy team. That was a, that, that was a good alignment of kind of this, this team that was set up to go across the business and just by operating mo like people were used to. Oh, the strategy team kind of pokes their nose into everybody's business and they speak for everybody and they understand the whole business really well. They were well set up to take on this new agenda item of new business incubation. I would look for, in general for an alignment that's like that versus being solely within, you know, kind of a technology organization. You know, unless the business itself is core technology, then, you know, in, in. In a lot of companies today, you know, the technology function is still the IT function. And, and they're both equipped. What they're measured by, how everybody sees them is like, oh, you know, they provide our core transactional systems of today and kind of run some new Technology upgrade projects, like, that's kind of their core competency. They're not equipped to rethink the business and to make calculated risks in terms of, like, what the business of the future is. They're just not set up for that.
- [49:39]
Jeff
It's a completely fair point. And it's, I think, frankly, a really concerning one for a lot of CIOs who think about their own careers. I mean, we've seen this happen again and again over the past, you know, 10, 15 years where they're not. And they end up, you know, kind, you know, I hate to say, babysitting a lot of this core technology, and then groups like Enterprise Strategy get the approval and the budget for these, like, sexier technology ventures. And what sort of triggered me in a really powerful way, you know, for better or for worse, is when you did. You used the phrase alternate universe, like the alternate reality. Right. And there's. Because there's a world where the alternate reality is actually the valuable one, and it's what the business needs, and the real legacy reality is what the CIO and the team are left with. But it's like, oh, we don't care about that. We just have to have that. Right, right. It's not valuable. It's just must do. And suddenly, you know, as it. You've lost your mandate to actually do anything exciting. And so, yeah, I mean, looking at it from the other side of the.
- [50:47]
John Rossman
House, let me add in to this, which is, it's not just the CIO who suffers from the. From this. This challenge, right? So a P and L owner or a large divisional owner asking them to also reinvent their business. I don't think that tends to work either. One of the great Canadian business authors, Roger Martin, has written extensively kind of about this challenge of the incentive systems. And it all comes back to, you know, the incentive systems and these operators are set up like, you got to deliver revenue margin, customer satisfaction, and everything is driven across that, asking them to also, like, oh, yeah, and, you know, help create the business of the. Of the future. There's so many challenges and biases involved in doing that and everything. It doesn't tend to work out well. So I. I think that that's the challenge for assigning any big operator in a company this mandate. That's a problem.
- [51:55]
Jeff
Yeah, it's a. It's a really good point. And it. It reinforces, again, how you structure this. And, you know, again, I'm not gonna. I'm not gonna be able to summarize everything you've got in the, you know, in your model and kind of one pithy sentence.
- [52:10]
John Rossman
But the simple thing is, is work backwards. Work backwards from like what's the mission we're trying to accomplish? What do we think the main challenges and biases for like why, why would we be successful? Or why would we fail at this and set it up, design it in a purposeful way to counteract the reasons that we know these things fail. And that's essentially what all of Big Bet leadership is doing is like recognizing these challenges and creating an alternative to principle based approach that has tactics and really works if done correctly and done as a system to counteract those very human nature based challenges and organizational challenges that we've been talking about here.
- [53:02]
Jeff
No, it makes complete sense.
- [53:04]
John Rossman
It does make complete sense. But yet we know that the vast majority of people will just proceed in their, their normal like PMI driven approach to how they do projects and large scale initiatives and they think they're going to be the exception case of somebody who can actually plan these things extremely well. Again, like simple notion, big bets. Big is the size of the ambition. The bets are actually a recognition that we don't know the future, we can't play for it completely. So we have to accelerate the things that should be tested early, test them out before we proceed with big commitments around it. That's the Big bet playbook.
- [53:51]
Jeff
For sure. And there's a piece I want to, there's another piece I want to push on a little bit because we talk about why these things go wrong and how we get set in our ways. And you touched on this. But senior leadership buy into this. Having a very senior sponsor who can structure this, is bought in and make it happen and is willing to do, willing and able to do things the right way. Like this is must do, right? Like the. To me, there's a dirty little secret here which is if you're, you know, a line manager or you're someone stuck in the guts of the organization, even knowing the right thing is probably not going to be enough to affect change unless you can, you know, kind of share the gospel. Is that fair?
- [54:35]
John Rossman
I mean, I get it's completely fair. That's why I specifically say this book is for senior leaders and teams that serve senior leaders. Because I won't proceed on these types of situations unless we have a path to getting CEO, president, board, senior executive team lined up behind this. Not just like tacitly going like, okay, I understand, all right, let's go ahead. Like if that's the attitude. No, no, no, no. We're not proceeding until you are either like, yeah, I believe it and I get it and I will be a cheerleader for this. Or they go like, I'm still not convinced. Great. Then we still have further work to do before we proceed because it is at the end of the day, if there's one thing you need leadership to be successful at these things, right? Like it is specific. The mission of these transformations requires a different set of leadership skills in order to be successful at it, period.
- [55:36]
Jeff
Very, very, very well said. John. Before we kind of leave off here, I did want to ask you, one of the things I like to ask everybody on here is whether it's technology trends or business trends, what are some of the trends you're hearing around, you're hearing now that you know, you think, you think are BS or, or you think are way over?
- [55:57]
John Rossman
I'm, I'm not convinced yet that agentic AI is either anything or anything new. Like I, I, I, so, so this is one I will likely be proven wrong on, but I either haven't seen where it's something demonstratively new or that it actually works. So that's one that comes to mind is kind of agentic AI.
- [56:27]
Jeff
I love that one and I'm glad, I'm really glad you went there because I feel like I'm of the same mind. I would love to see it succeed. I would love to see organizations either internally or with their customers, transform what they're doing in this way that seems a little bit ill defined and you know, they can kind of massage it into whatever they want it to be. But I agree, I feel like it's not, it's, it's not quite there yet.
- [56:54]
John Rossman
Jeff, do you remember what the last piece of advice I give in Big Bet Leadership is? The last piece of advice I give is to be an active skeptic. Right? Active meaning like, okay, I'm skeptical about this. Let's go learn about agentic AI. But be a skeptic, meaning like prove it before you buy into the hype. And I think that that is extremely applicable advice on these, these potentially game changing, interesting things, but I don't quite get it yet. I haven't quite seen it yet. Don't just write it off, but also don't buy into the hype. Play the middle ground. Be an active skeptic on it.
- [57:36]
Jeff
I love that. I love that. I think that's great advice. John, I wanted to say a really big thank you to being on the show. This was really, really insightful and interesting. Great discussion.
- [57:45]
John Rossman
Well, Jeff, I appreciate your preparation and easy conversation to have, so I appreciate it.