Innovation, XBox and Your Financial Plan (SB1645)

Summary

The Stacking Benjamins Show: Innovation, Xbox, and Your Financial Plan (SB1645) – Summary

Release Date: February 17, 2025

Introduction

In episode SB1645 of The Stacking Benjamins Show, hosts Joe Saul-Sehy and OG delve into the intricate relationship between innovation and financial planning. Joined by special guests Dean Carignan and Joanne Garbin from Microsoft, the discussion explores how structured innovation can transform both corporate strategies and personal financial approaches. This episode, titled "Innovation, Xbox and Your Financial Plan," offers valuable insights through real-world case studies, particularly focusing on the development and evolution of Microsoft's Xbox.

Understanding Innovation: Structure vs. Spontaneity

The conversation begins with Joanne Garbin addressing a common misconception about innovation being purely spontaneous. She emphasizes that while breakthrough ideas often seem to appear out of nowhere, successful innovation requires a well-structured approach.

"Structure and innovation, yeah, they seem like opposite sides of a coin, like they never shall they meet." — Dean Carignan [14:16]

Joanne counters this by highlighting that without structure, innovative ideas lack the reliability and confidence needed to bring them to fruition. This balance ensures that creative concepts are systematically developed and implemented.

Case Study: Xbox – From Basement to Market Leader

A significant portion of the episode is dedicated to dissecting the Xbox's development as a prime example of structured innovation. Dean Carignan shares anecdotes about the early days of Xbox, where a dedicated team faced skepticism within Microsoft.

"Rabbi Bach and other leaders of the first generation Xbox had to go into that office with Bill Gates and Steve Ballmer and say, 'We're going to do it this way and if we do it any other way, it's going to fail.'" — Joanne Garbin [20:03]

The team advocated for a fundamentally different device and software stack, resisting the inclination to make incremental improvements. This bold stance was crucial in differentiating Xbox from Microsoft's traditional software-centric identity.

The BXT Framework: Business, Experience, Technology

Joanne introduces the BXT framework—Business, Experience, Technology—as a cornerstone for making informed innovation decisions. This framework ensures that every new idea not only has a solid business rationale but also enhances user experience and is technologically feasible.

"Any new idea or new direction had to have a rationale that had three components, B, X, and T." — Joanne Garbin [27:53]

This approach prevented the team from getting swept away by what was possible, keeping them anchored to what was necessary and valued by customers.

Navigating Failure: Learning and Adaptation

The episode doesn't shy away from discussing setbacks. The launch of the Xbox One serves as a lesson in what happens when business and technology priorities overshadow user experience.

"One of my favorite lines is the B got ahead of X. We saw a business opportunity that made so much sense. It wasn't a bad decision." — Dean Carignan [29:48]

Despite the initial failure, leadership under Phil Spencer focused on rebuilding trust and refining the innovation process. This resilience exemplifies how learning from failures can lead to more robust and customer-focused products.

Fostering an Innovative Culture

Dean and Joanne stress the importance of creating an environment where innovation is everyone's responsibility. This involves:

• Diverge-Converge-Synthesize: Encouraging exploratory thinking before narrowing down ideas.
• Double Loop Learning: Continuously reassessing and updating assumptions to stay aligned with reality.
• Ambidextrous Leadership: Balancing structured operations with open-ended innovation efforts.

"Innovation is very loopy and you just gotta keep moving through the loops. You'll fail a lot less if you do it that way." — Dean Carignan [30:15]

Applying Innovation to Financial Planning

Joe bridges the discussion to personal finance, suggesting that financial plans can benefit from the same structured innovation principles used in corporate settings. This includes:

• Regularly Scheduling Financial Reviews: Like innovation sessions, setting aside time to evaluate and refine financial strategies ensures they remain effective and adaptive.
• Tax Management and Asset Allocation: Implementing creative approaches to taxes and investments can significantly impact long-term financial outcomes.

"Make a deliberate effort to innovate. Not only schedule that time, but also change your frame of reference." — Joe Saul-Sehy [59:37]

Practical Tips for Innovating Your Financial Plan

The episode concludes with actionable advice for listeners looking to enhance their financial planning:

1. Institutionalize Decision-Making: Use frameworks like BXT to evaluate financial decisions.
2. Embrace a Growth Mindset: Continuously learn and adapt your financial strategies.
3. Leverage Community and Resources: Seek advice from financial advisors and engage with supportive communities to stay informed and motivated.

Conclusion

Episode SB1645 of The Stacking Benjamins Show masterfully intertwines corporate innovation strategies with personal financial planning. Through the lens of Xbox's evolution, listeners gain a deeper understanding of how structured approaches and resilient leadership can drive success. By applying these lessons, individuals can innovate their financial plans to achieve greater stability and growth.

Notable Quotes:

• "It's like getting the best ideas and building them into something tangible and repeatable." — Joe Saul-Sehy [35:04]
• "Tell us how you got to where you got to and great, that's what we're paying you for." — Joe Saul-Sehy [34:23]
• "Helps you bring in more money." — Joe Saul-Sehy [05:06]
• "What you value in the customer and what can be delivered, you know, profitably." — Joanne Garbin [27:53]

Final Thoughts

This episode not only highlights the importance of innovation in large corporations but also exemplifies how these principles can be seamlessly integrated into personal financial strategies. Whether you're a small business owner, an individual investor, or someone looking to optimize your financial future, the insights shared by Dean Carignan and Joanne Garbin provide a robust framework for achieving your financial goals through innovative thinking.

For more detailed discussions and resources, visit StackingBenjamins.com.

Transcript

[Joe]

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[Joe]

You guys about ready to start yet? Been sitting around so soon? Waiting for you. 32 minutes ago we were supposed to start this recording, and yet I sit here waiting patiently. It's absolutely horrible.

[OG]

This isn't me. This is all Doug.

[Doug]

You're baiting us.

[Joe]

It is Doug.

[OG]

Joe is such an expert master baiter. Yeah, he knows how to, like, just really get us all involved.

[Doug]

I mean, he might as well wear that, like, Dickensian lamplighter costume where he's, like, going down the street lighting all the.

[OG]

Any of those words are.

[Joe]

Well, I did use a sentence that. We know. What are you talking about, Mr. 1800.

[Doug]

Dickensian. Too many syllables for you?

[Joe]

Dickensian.

[OG]

Could I have it in a spelling, please? I have country of origin.

[Joe]

Don't be so Dickensian, Doug. Yeah, we got a show to do.

[Doug]

You're such a Dickensian.

[Joe]

All right. We got to salute the troops because we do that every week. Number one, because they talk about people that deserve to be saluted. On behalf of the men and women at Navy Federal Credit Union and the men and women making podcasts in mom's basement with a rusty voice today. Hear that?

[Doug]

You kind of like it, don't you?

[Joe]

I kind of do, yeah. It's kind of neat. Turn over a new leaf.

[Doug]

Finally hitting puberty, having an awesome voice. It changes your world, man, when you have a great voice all the time. 24. 7. Dang.

[OG]

Oh, boy.

[Joe]

And on behalf of the men and women at Navy Federal Credit Union, here's to the people keeping us Safe. Thank you so much. Let's go stack some Benjamin together.

[Doug]

Now here's a right proper Dickensian salute to our troops.

[Joe]

And now we're British again.

[Doug]

G'day, mate.

[OG]

So confused. He's the type of guy you get halfway home from the theme park before you're like, oh, where's Doug?

[Joe]

Oh, no, we have to go back.

[OG]

My wallet's in his fanny pack, so.

[Joe]

Oh, do not feel bad for Doug.

[OG]

He's terrible. Every time he tells a story somewhere, a child loses a balloon.

[Doug]

Live from Joe's mom's basement, it's the Stacking Benjamin Show. I'm Joe's mom's neighbor, Doug. And how innovative is your financial plan today? With case studies from Microsoft to help you innovate on the job and with your planning, we welcome innovation scientists Dean Carignan and Joanne Garbin. Plus, in our headline, one big Wall street firm just lost another judgment, but this one's different. What's going to change with your money? Maybe a lot. We will share. And there's absolutely no way that I'd let you leave without gifting you a piece of my incredible trivia. And now two guys who love compound interest and long walks in the park together. It's Joe and O Jaja Juja G.

[Joe]

In the most Dickensian way possible.

[Doug]

Which one of you has the parasol over your shoulder?

[Joe]

Probably OG hey, everybody. Welcome to the Stacking Benjamin show. Yeah, got to protect that. That skin, right?

[OG]

Or sunscreen every day. Got to wear sunscreen every day. How do you get this glow otherwise?

[Joe]

Man, speaking of glow, we got a great show today because we are talking about innovation. And oh, gee, while you may not want innovation in your financial plan, certainly figuring out ways to innovate at work to be on the projects that matter at work, help you bring in more money.

[OG]

Take innovation in my financial plan. Why not?

[Joe]

Well, we're going to talk about that whether, you know, your financial plan is the old fashioned way, but innovating in your life, I think so your plan is more robust is something that is really a great analogy. And by the way, they're going to talk through case studies, Dean and Joanne at Microsoft. And the good, the bad, the ugly of things that happen. And I'm going to want to walk through those a little bit because nothing I like better than a good case study to dive into our own personal situation. How.

[OG]

How are you this morning, OG I'm coffeeed up halfway. Anyway, got a new coffee.

[Joe]

You are trying to return a tablet.

[OG]

Well, I mean, that's a whole different you know, it's an ongoing project.

[Doug]

Let's get into it because it makes you so happy to talk about.

[Joe]

Well, it is annoying though when you're trying to do the right thing and be a happy customer. And the company proved to everyone that their really not interested in helping you do the right thing and return the product.

[OG]

It seems to me that a lot of tech products have a lot of margin built in and I could be completely mistaken there, but I was looking at the stock price of Apple recently and I surmised that they might have profit built into their, their model. And this isn't an Apple product, it's a different product altogether. And I don't want to shame them publicly because I think it's a good company. But isn't it a lot easier just to, you know, every once in a while where there's a problem with a customer, just solve that really quickly, like be known as the people that solve problems as opposed to being known as the company that makes you jump through 10,000 hoops to return your $500 product that they probably made $300 on.

[Doug]

You know, except that you're. Look, the $300 you're thinking of is just on the cost of that unit. But you got to factor in all of the R and D and product development it took to get that into your hands and they got to make that all. But it's like pharmaceutical R and D and the cost of drugs, you got to pay all of that stuff back. Somehow you got to make that money back.

[OG]

I mean, it's kind of like pharmaceutical drugs. I bet, I bet it's very much similar. You know, I'm sure they spent $10 billion curing cancer and are selling it to me for $500 a piece.

[Doug]

There's like four stages of testing. The government's involved. Yeah, same same, but rare earth materials.

[OG]

Same same, but different. Nevertheless, there's a solution for this. And the solution is you just skip the middleman, charge this crap on your Amex card and when it doesn't work you just call Amex and then they make it go away. You know, so there's a lot of downsides to using credit cards and like the extra fee and all that sort of stuff. Sometimes you got to pay, but every so often your ability to just call amex and go, this crap that I bought doesn't work. And they don't freaking want to return it correctly. And I'm tired of playing their games. And the fine people at American Express go, no problem, sir. Credit received. And it's done, the problem goes away. And yeah, I had to pay a little extra for that. But what's my time worth?

[Doug]

What's all the, you know, you said skip the middleman. It reminded me of a great meme I just saw where it said my favorite part of going to the farmer's market is the part where they take out the middleman and the vegetables cost twice as much.

[Joe]

I'm still happy helping a farmer and I feel good paying twice as much.

[OG]

Absolutely.

[Doug]

At the farmer's market, bro, it was still funny. I mean, it is funny. I like the notion of helping out the small farmers too, but it's true. And it's funny because it's true.

[Joe]

It is funny how even in our open today, we talked a lot about innovation and process and really you can't, you know, think about innovation in your life. And I think Joanne has made this point in their work before. You can't just trust serendipity when it comes to innovation. You got to be thinking ahead of time about how do I get that done, how do I create a process, how do I create a system? Because all of financial planning is a system. And if we can get more of that done, well, then it's going to be a great day. Let's talk about today's Monday Mentors. Man, I love our Monday mentor segment. Dean Kerrigan and Joanne Garbin. Dean Kerrigan worked for a little company called McKinsey & Company. Never heard of them. He was in their advanced technology practice, but he's been with Microsoft at 20 years guiding new businesses like when we're going to talk about the Xbox. Multiple AI efforts through their very first growth phases. Most recently, he's been leading AI innovations within Microsoft Research in the office of the Chief scientist. Joanne Garbin was the director of innovation in Microsoft's cloud business and guided her team in developing billion dollar opportunities, including the regenerative data center of the Future. And in 2024 she founded Regenerous Labs, a collaboration committed to creating cross sector transformation. Something else that's interesting for anybody that's a student. Joanne's degrees from Villanova, Mechanical Engineering and Philosophy. And I think if you want to be involved in innovation, coupling a classic liberal arts curriculum with something like mechanical engineering, that's a, that's a cool place to be.

[Doug]

That is pretty good cross section. Yeah, I like that Ganttra or that Venn diagram.

[Joe]

Yeah, cool place to be and great forward. I don't know if she was forward thinking or just like both of those things, but those two go really well together.

[Doug]

But. But let me guess, Joe. You saw Kerrigan's resume and saw the word Xbox and you're like, I'm having him on. I don't even care what he talks about, I want him on.

[Joe]

Truly, truly that this is just a ruse to talk about the Xbox on the podcast. Dean and Joanne coming up next. But first though, we've got some sponsors to make sure this is free. You don't have to pay for any of our mentors or any of the Stacky Benjamin Show. We're going to say a big thank you to them here for a moment and then Dean Carignan and Joanne Garbin talking innovation with us on Mentor Monday. Small Business Owners State Farms there with small business insurance to fit your specific needs. Whether you're starting a new venture or growing an existing one, State Farm helps you choose the right coverage to protect what matters most. Working with a local State Farm agent helps you understand your coverage options, offering local support to help you achieve your goals. Focus on turning your passion into a thriving business, knowing your insurance can change as your business grows. State Farm here to help you succeed with your business. Like a good neighbor, State Farm is there well staggers. This episode is brought to you by Navy Federal Credit Union. At Navy Federal, our mission is to help members of the military, veterans and their families achieve their financial goals. And that's why we offer great savings and investing options like our certificates. Certificates come with sky high rates and some even have the flexibility to add money anytime during your term. Whether you're saving for a home, a new car or your future, our options could help you get there. And certificates are just the beginning. Navy Federal also provides financial advisors to help you manage your investment portfolio, along with online tools to guide your savings plan. With our support, you'll have everything you need to take charge of your finances. So don't wait. The sooner you start building your financial future with Navy Federal Savings and investing options, the better off you could be in the long run. Sign up@navy federal.org Navy Federal Credit Union Our members are the mission Savings products insured by ncua. Investment products are not insured, not obligations to Navy Federal. It may lose value. Joanne Indeed. Welcome to Mom's Basement. Thanks for joining me.

[Joanne Garbin]

Great to be here.

[Dean Carignan]

So fun.

[Joe]

Joanne, I think I'll start with you because I was watching a video where you were kind of talking about the thing I thought when I first heard about your project with Dean, which is on one hand we've got innovation, which seems so like, you know, I'm in the shower and I have an idea and that creates innovation. And it comes at me in these weird places, in these weird times. And then you talk about structure and talk about organization. These two things, Joanne, don't seem to go hand in hand at all.

[Dean Carignan]

Structure and innovation, yeah, they seem like opposite sides of a coin, like they never shall they meet. If your innovation isn't structured and reliable, you're not going to build confidence with the people that fund the innovation. And then you can have the best idea in the world, but you're not bringing it to life. Whether or not you believe it can be structured, it has to be because you need to be able to get better at it over time. You need to be able to teach people how to bring it into what they do and bring them into what you do. So all of that demands that it becomes structured. And it just so happens that when you study decades of innovation in super successful places like Microsoft or from my world, the entrepreneurial world, it is structured. Nobody's betting their mortgage payment on serendipity. Right.

[Joe]

I hope I have an idea in the shower tomorrow, right?

[Dean Carignan]

Like, oh man, mortgage is due. I better get an idea. It's like, no, you can't do that.

[Joe]

Well, indeed, the other way that we think about innovation too is there's this person who's the innovator. You know, let's take another company. Not Microsoft, Apple. Right. Steve Jobs. The mystique and the mystery of Steve Jobs. And then everybody at Apple apparently makes Steve Jobs innovation happen. But really in this project you're talking about, everybody's an innovator. Are innovators born or can you create innovators? Somebody that thinks they're not an innovator. Turn them into one.

[Joanne Garbin]

Yeah. One of the things we observed is that many companies try to sort of carve out innovation and put it in a dedicated group or a centralized area and say that's where we're going to get our innovations.

[Joe]

And then like their Skunk Works team or whatever.

[Joanne Garbin]

Exactly. Or an innovation hub or various ways that people try to do this. And what we've found through external and internal observation is that is really hard because you may come up with really good ideas, but the adoption by the rest of the company is problematic because the ideas were probably developed in isolation. They may not have buy in and support. They may not actually solve an important customer problem, which you would be more likely to solve if you brought up the ideas and innovation within the company, within the actual divisions that are going to build and launch the product Important pattern is what we call innovating with everyone and making innovation everyone's job. So that when you do have that breakthrough idea, you have the buy in of the operations team that's going to have to stand it up, the marketing team that's going to have to sell it, the sales team that will actually be out on the front lines bringing it to the customer. When you bring all these teams together earlier, you're going to get more diverse and unique ideas because you have diversity of thought, but you're also laying the groundwork to bring that idea out into the world. And so those are some of the things that we discovered in the research and tried to articulate in the patterns.

[Joe]

And I thought too, Joanne, you were talking about, you know, in the entrepreneurship world, I mean, Dean's talking about a big operation like Microsoft, but this even works for a team, let's say four or five people I would imagine.

[Dean Carignan]

Absolutely. Dean, hit it on the head. You're going to have better ideas the more perspectives you bring to complete the full business and customer experience view of whatever you're trying to solve. You don't have to put it out in the world and find the holes by people being unhappy with you. There's no time for that in the world now. People expected to be good when you deliver it. So the way to build better things and services is to have those perspectives included from the start. So if you're a two person startup, call all your friends that have jobs in different domains and buy them pizza and beer.

[Joanne Garbin]

Right? Right, if I could. And pizza and beer solves a lot of problems. But to build so many problems. Joanne's comment is. Jen has this wonderful analogy that explains why this is hard. Right. And she says companies, especially big companies, are kind of designed to be like a river. They go efficiently from point A to point B. And boy, you don't want to be in the path of that and trying to stop it. But innovation is more like the ocean. It's got currents and movements and swells, but it's not really linear. You don't know where it's going to end up. And somehow you have to bring these two things together in a single group or organization and you have to have the organization capable of doing both. And we have a huge training investment at Microsoft to teach what's called ambidextrous leadership. So at one point you're doing the operational side of all the defined, structured things that your group has to do to run its day to day business, but you're creating these processes that are more divergent and open ended in that same context where you can innovate and discover new things. And it's really hard. And we have, you know, multi year investments to train people to do that, especially managers. But we think it's just the way innovation will have to get done in big organizations.

[Joe]

What a great skill for people to have and what a great way to keep people excited about coming to work every day. If I know that innovation can be right next to me, or heck, even me, then I'm super excited. I learned best, by the way, through case studies. And what really I was attracted to about your project initially, before I dug in, was just the idea that I was going to get these fantastic case studies. So if you don't mind, let's take one of them from the book, which is the Xbox. I got Xbox sitting right over here. I don't get to play it as much as I want to, but I'm a big fan of Xbox. And you introduce this this way. You say the early days of the Xbox. And by the way, Joanne, you said something earlier which kind of is wild about the Xbox because you're like, if you can't present it to the higher ups in a way that they're going to like it, you're not going to get funding for the thing. So let's talk about something that maybe shouldn't have gotten funding because Microsoft said Bill Gates is a software company. There's this team. It feels like we're in mom's basement. It feels like you're in a basement in Redmond making this thing. Right. You write that this is duct tape and chewing gum. Sometimes the product works, sometimes the prototype doesn't work. The team's about to go meet with Bill Gates and Steve Ballmer about this. And what are some of the things that they say to these software people that they want to create?

[Joanne Garbin]

Yeah, maybe I'll jump in on that if you. Yeah, and I'm so glad that resonated with you because the reason we started the whole book with that anecdote is that a lot of innovative histories get told in retrospect and they get condensed down to a very clean story. Some very smart person thought of some really smart idea and it changed the world. And the reality is just infinitely more messy and convoluted and iterative. And so what we wanted to start the book with was a depiction of how much courage it really took Rabbi Bach and other leaders of the first generation Xbox to go into that office with Bill Gates and Steve Ballmer. And say, we're going to do it this way and if we do it any other way, it's going to fail and it's too important to fail. Framing that challenge and the courage and the risk was an important way to start the book. There's another great anecdote from the Xbox case we like to talk about.

[Joe]

But could we, before we get there, Dean, let's talk about exactly what they were going to say. Because this is what, hey, this is a software company. We want to make hardware, by the way, we're not going to outsource it, we're going to make it. It isn't our, quote, core skill. Right. This is going to be something new. They're absolutely certain that Bill Gates is going to say, okay, so where's the logo go? Yeah, we need street cred. So we're not going to put the Microsoft logo on the product. Are you kidding me? And then, by the way, oh yeah, we make money how on this thing? Well, we're going to sell it in a way where we're not going to make any money on this deal, so we're going to make money later. It's like, what's that joke? We lose money on every deal, but we make it up in volume.

[Doug]

Right, Right.

[Joe]

You got to explain to these people all these things are the antithesis of what Microsoft is at the time. Joanne.

[Dean Carignan]

They hit on two core ingredients of what will give your innovation a lot of success or better chance of success. Because anything could fail for any number of reasons. But on the one hand, those early team members were gamers. They knew what the experience needed to be. They knew what they hated about the current platforms. They knew what they hated about the current game development platforms. They knew who the players were, both playing the games and creating the games. That was intel, that when you're not that deeply connected to your product, you gotta go out and get those people involved. But the other side of it was Bill and Steve and the rest of leadership may have been like, where's the logo? Where's the this, where's the that? But more important was Sony. Sony's presence in the living room. And their growing presence in technology in the living room was a threat. And I had a sales leader once tell me, they're like, people buy things for one of two reasons, fear or greed. Or you could say it nicer. Loss avoidance or opportunity capture. Right. The Xbox team just stayed true to what they knew as gamers would rule the market. They had the luck of the fact that at that time, Microsoft was Afraid Sony would displace them in the house.

[Joe]

It still was a testament to Gates and Ballmer that they still said yes to the project. But this is totally something that isn't Microsoft's wheelhouse. Yeah.

[Joanne Garbin]

There were two things I wanted to say is one is the other thing that's beautiful about the Xbox case study is it defines the difference between incremental innovation and transformative innovation. And really the easy thing would have been to walk into that room and say, it's going to be Microsoft branded, we're going to run Windows on it. Which was not the proposal and not the outcome. And it would kind of be a high end gaming PC that would have been an incremental improvement. And the team really stuck to the vision that only by building a fundamentally different device with fundamentally different software stack can we transform this category. And it speaks volumes about Bill and Steve. And they're famous for these sessions where you bring in your idea and they grill you for hours and ask every conceivable question, but when you've answered it and they see your conviction, they write the check and off you go. And I think there's two characteristics of Microsoft leadership that come through there. One is the willingness to ask the hard questions, but then make the commitment. The second is to not take success for granted. We see that throughout the company's history that it has consistently appreciated the position it's in and the vulnerability of that position. And there's periods in the history where it will become a little overconfident and not responsive to threats, but it learns from those experiences and it comes back stronger. And yeah, that was kind of the point I was going to make about Xbox being able to constantly do this and shift and reinvent itself.

[Joe]

You have a piece much later in the book where you really dive into this and I want to do more of this later. But while we're on this topic, you write much later to build like a who, what, why statement around the idea. Right. So I'm thinking, Joanne, the who, what, why? Here is the who is Sony. They're coming for us and either we go on the offensive or we get our lunch eaten by them.

[Dean Carignan]

That could be, yeah. From the business strategy perspective from you, honestly, you write a lot of those and then you synthesize it down to be something directional for what you're going to solve. But more times than not, you're trying to identify who's going to value what you're doing, what is it that you want to create, and then why are they going to value that? Thing because too often we start with the how. We're going to do all of this and you shouldn't be talking about how for quite a while in innovation, how comes later in a support role, it's the who, the what and the why that you really need to start with. And to your point, one case would be for Bill. He's the who, the what is kick Sony's butt. Why? Because we want to kick Sony's butt.

[OG]

Right?

[Joe]

Because it's the marketplace and we want to, we want to win that. It's interesting that we put that right there. And I kind of did that a little bit on purpose because you talk next about the Xbox really hits its stride with the 360. Man, I remember those days. I remember buying this add on which people may or may not know, called the Kinect. This fun toy attachment gets rid of the controller. My wife's 80 year old uncle is in our living room bowling without a bowling ball. With my twins. They were just having, we were having a great time with that thing. I remember when Netflix came and now I can just stream Netflix right from my Xbox. Like this was, this was an amazing thing. How did they get the 360? So right from beginning to these add ons? Dean?

[Joanne Garbin]

Yeah, there's two pivots they made kind of coming out of the earlier generation. One of them was to get rid of something they called the bums, the business unit managers. And early on they had grown big enough that their business was developing.

[Joe]

You're literally going to throw the bums out. Yeah, you're literally going to throw the bums out.

[Dean Carignan]

I love that they threw the bums out.

[Joanne Garbin]

And what they found was as soon as people had P and L control for a certain aspect of the business, whether that was games or hardware or peripherals, they started optimizing for their silo as opposed to for the holistic user experience. And so that was, and we see this over and over in our research, that when you want to innovate, you need to innovate not just the product, but how you build the product. You need to think about your organizational structure, your reward system. And so they fundamentally pivoted to a single P and L dedicated to serving the customers. And they saw this change in behavior that followed with it. The other thing they did that I think was really smart was any new idea or new direction had to have a rationale that had three components, B, X and T. It had to have a B business rationale X for experience. It had to benefit the user and it had to have a technology component so we know that it's feasible. When you do that, you prevent yourself from getting really excited about what's possible, as opposed to what's needed and valued by the customer and what can be delivered, you know, profitably. And so this BXT framework was this beautiful and intuitive way to approach every big innovation decision and make sure you had a really sound rationale for going after it.

[Joe]

So Xbox really starts just smoking, starts really owning a big piece of the market every few years. The system upgrade. The next change comes if the bxt triangle is in place. Then they bring out the Xbox One, which anybody that's an Xbox fan knows was not well received. How did Microsoft then get it so wrong with the Xbox one when things were rolling so well with the Xbox 360?

[Dean Carignan]

Yeah, one of my favorite lines is the B got ahead of X. We saw a business opportunity that made so much sense. Phil shared. He's like, it makes total sense in a PowerPoint, in a board meeting. It wasn't a bad decision.

[Joe]

Phil Spencer, the guy that runs Xbox now, right?

[Dean Carignan]

Yes, that guy.

[Joe]

Yeah. Okay.

[Dean Carignan]

Yeah. But in hindsight, after the reaction, the community pushback, the core gaming community, it was clear. It's like, oh, you gotta lead with X. You cannot let business and technology come ahead of your user experience. You've gotta serve your customer and figure out the way to deliver that in a business, in a technological way.

[Joanne Garbin]

I love what Phil told us about what happened next, because many organizations finger pointing could have gone on. Someone's head has to roll.

[Joe]

I remember from the outside looking in, Dean, There was a ton of finger pointing going on from the outside. It was this person. It was this person. It was this leader.

[Joanne Garbin]

And the thing that hurt as much as the failure of the launch itself was just the reaction of the community because it really is an organization in Xbox that cares deeply about gam streamers and the gaming community. And to walk into the office the day after launch was a horrible experience. It was the mood and the tenor. And so when Phil Spencer then kind of took over, and he uses this term I think we included in the book, he told us my job was to rehire the team. It wasn't what to point fingers or fire anyone or lay blame. It was to convince them that we were 100% dedicated to making things right by our customers and by making this the same great place to work that it was before we went off this cliff. And he spent a huge amount of time communicating and essentially rehiring the team. And then one of our Very first interviews made the point that Xbox came back stronger from that. It came back with a renewed sense of mission and customer focus. And they change again. It's not just you don't just think you're going to change, you change systems and structures and process. They completely rebuilt their engineering process to be more of a monthly release to the console hardware so they could be agile, they pulled in customer signals so they could actually be responsive to what the gamers were saying. And they really made that pivot in a meaningful way. And it's a great example of failure is part of innovating. What's important is how you learn from and respond to the failure. And that's kind of how we tried to show that case as a big miss. But ultimately a good job learning and coming back.

[Joe]

I thought that was such a great point because, Joanne, if you're going to have innovation, people have to be, to Dean's point, not afraid of innovating. And I know a lot of people at a lot of big companies go to their job every day and my, my number one goal is not to lose my job.

[Progressive Insurance]

Right.

[Dean Carignan]

That sentiment of me creating safety and you know, the psychological safety is the buzzword for it. But that actual perceived my job is not in jeopardy. That wasn't something that the leadership after Xbox One let everybody assume. They came out and said it. They're like, we will undermine our innovative capabilities if we roll heads for this. This is part of the process. We want you to tell us when product isn't ready or when we haven't hit the mark or you're not happy with what the end product is. So we don't want to ship it. And another great moment from that interview was Phil pulled a demo device off the shelf behind him and he's like, team worked on this new version for a year, but it didn't hit the performance and the price mark they wanted. So we took the learnings from it and we never shipped it.

[Joanne Garbin]

But he's got it displayed on his shelf right behind him in his office.

[Dean Carignan]

That's putting that culture into practice. Right. And just reinforcing it for everybody that make good decisions. Tell us how you got to where you got to and great, that's what we're paying you for.

[Joe]

That is definitely top down leadership. What we believe second you talk about is reliability. I think you're going to get innovation more reliably. If people feel like I can take a chance and not only is it going to not make me lose my job, maybe it'll be in Phil Spencer's office in a place might be a trophy that, hey, look, I swung and missed. But how else do you get reliability into this process? What's kind of the machine that you use with either employees or yourself to create that innovation, Joanne, that you were talking about? You know, not in the shower on a random Tuesday, but we're cranking it out on a daily, weekly basis for years and years.

[Dean Carignan]

It is exactly what you said, a process. It's having structure, knowing where you're at in the process, having tools to support that process, and then building the habits that go into that to use the tools. And one of the foundational elements of it is this very simple thing called Diverge Converge Synthesize. Just the idea that you brought up, the who, what, why statement. Yeah, I have an idea. Okay, great. But don't go forward from that. Step back from it. Diverge from it. Ask your who, your what, your, your why, learn, and then converge. And you'll probably start in a very different place than that idea from the shower. So it's, it's those little building blocks and you put them into this continuous adaptive cycle and you teach it to everybody and everybody gets better at it. And as everybody gets better at it, it becomes this unconscious competence. And now you got an innovative company instead of an innovative product.

[Joanne Garbin]

If I could just build. I think this Diverge converge synthesize paradigm is so important. And the idea of the diverge phase is I'm not landing on an answer. I'm exploring and understanding. I'm talking, I'm gathering information. It's a very uncomfortable process in a lot of corporations because there's so much vote. You're in the river, right? You're just going, you're getting things from point A to point B. And so the most innovative groups we found specifically find time and place and permission to think divergently. Whether that's a one week hackathon where you go and try new ideas, or the company used to have something called a think Week where you were encouraged to write papers on new ideas. But creating the space for that and telling people it's okay, that actually is part of your job. You're not shirking your real responsibilities, you're actually engaging in another aspect of your job. And if you don't create that space, you'll get incremental ideas and some new and slightly better ways to do things, but you won't get the breakthrough ideas if you don't create that space and permission for divergence.

[Joe]

Who is the gentleman, Dean, that you Guys quote in this work who talks about terror, you kind of want to do things that frighten you. And frankly, I think he's the same guy that came up with the idea of like backward compatibility for the Xbox where now you can play the old games, which by the way, huge loss of revenue on the front end. Then for Microsoft who could repackage those games to put on the new system instead, saying you're going to have access to all your old stuff, you can upgrade and it's going to be fine.

[Joanne Garbin]

Yeah, that's Karim Choudhury. He, he ran emerging tech for Xbox for many years. Literally, those are his words. And he would say that in a very fun and joking way to his colleagues. But he said, just so you know, every six months or go, I'm going to come up with something that's going to terrify you. Then we're going to, because it's so revolutionary and it's so new and it's so unexpected, but then we're going to work together to land it in a predictable and repeatable and responsible way. And I think that is so critical because absent that and absent a few scary figures, the tendency to get back into the process and the day to day is very high.

[Joe]

You have this, I guess I'll call it a flowchart, which starts with discover. Next is design. Third is develop. During develop. Joanne, you talk about speed and you emphasize speed and how important speed is in any organization, how important it is for innovation. You don't love the phrase though, fail fast. Everybody in the industry, it's become this buzz phrase, fail fast. You don't like fail fast.

[Dean Carignan]

How come Failure is just one way to learn. And so disconnecting failing fast from first learning, you're just missing the point. Like there's so many different ways to learn that don't involve failure and they're cheaper and faster ways than failing. Plus you don't erode customer confidence and trust and brand reputation. So yeah, don't jump to failure.

[Joe]

Learn fast, it sounds like, is what you're saying.

[Dean Carignan]

Learn fast. Experiment. Yes, learn fast.

[Joe]

Dean, one practice that you like to do, you write, is write out all the assumptions you're making about the world as you're innovating. Can we talk about this? Because I, and it's funny, when I was reading you writing this and I was imagining you writing this, I felt like you were writing directly to me because it's always the stuff that I assume this is where I get stuck.

[Joanne Garbin]

Thank you. I'm so glad that resonated and it's an element of a broader practice called double loop learning. And the idea is in most learning cycles, we start out with some assumptions about the world, but we may not make them explicit. And then we define a course of action based on those assumptions and the course of action either fails or doesn't fail. So we'll often then try another course of action. In double loop learning, there's an extra step where you go revisit the assumptions about the world and you say, well, maybe we learned that some of these are invalid or they need to be modified, or the world doesn't quite work the way that we think it does, or customers don't have quite the same demand profile as we thought going in. And so you reassess the assumptions before you start that next round of experimentation. And it's particularly important in innovation because there are so many unknowns and if you're not constantly revisiting your assumptions, you can just make decisions that compound on a set of beliefs that may not be true and that you might be systematically disproving but never revising. And so that discipline any major effort, write down our assumptions and then every time we have a learning moment, go back and update the assumptions.

[Joe]

I love that team because it's this growth mentality thing that your CEO talks about all the time and you know how much he loves Carol Dweck and I do too. And just this growth mentality of where am I wrong? Where am I wrong? Tell me you know, where, where am.

[Joanne Garbin]

I not getting this and acknowledging that it's okay to have been wrong. And in fact that's why we experiment and we learn. The way Satya has framed it so many times is that he wanted to transform Microsoft from a company of know it alls to a company of learn it alls. And I experienced both eras, by the way. And learn it alls is both more productive and more pleasant to work in. For sure.

[Joe]

Being a guy that back when I was a financial planner and knowing the culture then versus what I see from my son now, you could. It's a night and day different workplace at Microsoft than it was then completely.

[Joanne Garbin]

And so much more comes out of it and, and people enjoy the process more.

[Joe]

Joanne, I want to end on this because I also found this very poignant, which is you write that there are some activities you need to truly ask yourself, should we be doing this at all? How do you institutionalize that process of going, yes, this is a project we should be spending time, resources, money on versus no, we shouldn't be yeah, this.

[Dean Carignan]

Is fundamental to launching a business or running one. Why this? Why now? Why us? Right? Do we have the knowledge, the resources, the network to do this? There's a couple of different things we talk about. One of them, though, is at the very beginning of whatever you're undertaking, create your guiding principles and turn it into a decision matrix so that you have this pseudo quantitative qualitative framework that once you get into the ideation and you're falling in love with the cool thing on the board, you got something that you set up way at the beginning before you fell in love with anything to check back against and go, oh, no, that's Phil taking that off the shelf and going, it didn't meet our price and our performance spec. That was a decision matrix put in action. Take the learnings, put it back into that double loop. What did we learn? What are our assumptions? Try again, right? Innovation is very loopy and you just gotta keep moving through the loops. You'll fail a lot less if you do it that way.

[Joanne Garbin]

And maybe, Joanne, if I just add, because it made me think there's a certain humility that's needed in innovation, right? And this willingness to acknowledge the things we don't know. The fact that we may not be the right people to deliver this, even though we're excited about it and we see the opportunity. And the why now? Question is so profound because we came across many innovations in our research that were good innovations just ahead of their time. And so the willingness to pass on an opportunity because either the market's not ready for it or the supporting technologies aren't there, or the point in time within your company isn't right is really critical. And it's only when you have answers to all three of those questions that you want to move.

[Joe]

Well, thank you for walking me through one of the case studies in the book, the Xbox, because I've been a big fan forever. Wish I could be playing Xbox more. Although I have Indiana Jones and I have seen a little time lately, it's been pretty fun. By the way, some of the other case studies, the one on Bing for me is also phenomenal. The book is the Insider's guide to Innovation at Microsoft. And I'm assuming, guys, it's available everywhere.

[Dean Carignan]

Everywhere. And all proceeds are supporting STEAM education nonprofits. So you're not only learning for yourself, but you're helping anybody else in the queue that wants to learn.

[Joe]

Oh, that's awesome. That's absolutely fantastic. And we'll have links stackers on our show [e-mail] Dean Joanne, thank you for being our mentors today. I appreciate it so much.

[Joanne Garbin]

A pleasure.

[Dean Carignan]

Thank you. This was really fun.

[Joanne Garbin]

Thank you.

[Doug]

Hey there stackers. I'm Joe's mom's neighbor Doug and I just love those case studies. Didn't you? I could totally relate. Heck, I've been innovating in the art of podcast announcing since you were. You were only yay high. That's right. I mean way back in 2014 I was saying phrases like haystackers and I'll be back right after. But heck, by this time my I'll be back is probably more famous than Arnold's I'll be back. Check out how expertly I read this trivia question. Alright, here we go. When it comes to innovation and investments, few products are as revered as the index fund. What well known index fund lover actually very much disliked One way to buy index funds the extra oops. How about that you caught a rare mess up by the world's greatest announcer guy. If you'd like, I can. I can autograph this section of the show for you so you can brag to your friends about how you caught the one time old Doug messed up. So let's do that again. Three, two, one. Steve. What well known index fund louver. Oh, I'll be twice. I mean that never. That never happens, right? Okay, Steve, let's. I know we don't usually have to do this, but we're gonna do it one more time like the pros do. What well known index fund lover actually detested one way people buy them the index. My God, Joe, that's.

[OG]

I thought you were an expert at that.

[Doug]

This sentence is like bass ackwards and I'm having a hard time with the structure of the sentence.

[OG]

It's called reading left to right. Group two words together to make sentences.

[Doug]

Yeah. All right, you do it. 3, 2, 1. What well known index fund lover actually detested one way people buy them the exchange traded fund. See, there you go. You're welcome. I'll be back right after I go smile in the mirror for a while. It helps me enunciate. How high is the interest rate for the new Laurel Road high yield savings account? This high.

[Joe]

The air is really, really thin up here.

[Doug]

The Laurel Road Very high yield savings.

[OG]

Account Variable annual percentage yield APY is subject to change in anytime. No minimum balance required. Fees may reduce earnings on the account. For full terms and conditions see laurelroad.com savings Laurel Road is a brand of KeyBank member FDIC.

[Progressive Insurance]

This episode is Brought to you by Progressive Insurance. You chose to hit play on this podcast today. Smart Choice. Progressive loves to help people make smart choices. That's why they offer a tool called Auto Quote Explorer that allows you to compare your Progressive Car Insurance quote with rates from other companies so you save time on the research and can enjoy savings when you choose the best rate for you. Give it a try after this [e-mail] Progressive Casualty Insurance Company and affiliates not available in all states or situations. Prices vary based on how you buy. I can say to my new Samsung Galaxy S25 Ultra, hey, find a keto.

[Doug]

Friendly restaurant nearby and text it to Beth and Steve.

[Progressive Insurance]

And it does without me lifting a finger so I can get in more squats anywhere I can. 1, 2, 3.

[OG]

Will that be cash or credit?

[Joe]

Credit. 4 Galaxy S25 Ultra. The AI companion that does the heavy.

[Doug]

Lifting so you can do.

[OG]

You get [e-mail] compatible with select apps. Requires Google Gemini account. Results may vary based on input. Check responses for accuracy.

[Doug]

Hey there stackers. I'm broadcasting legend and guy who doesn't like to brag. Joe's mom's neighbor Doug. Ah, the index fund. Like a good lover back in the 90s. It's there for you. Trusted friend, compassionate companion. YOL index fund.

[Joe]

A couple. Come on dude, just.

[Doug]

All right, okay, okay, okay, okay. Speaking of legend, one legendary investor said he wasn't a fan of the exchange traded fund, commenting that he preferred that people were better off getting one price at the end of the day and leaving their money alone. That man. It's the legendary vanguardier Jack Bogle. See kids, that's how you do it. Then you finish with a flourish like this. And now two legends in their own meat.

[Joe]

Gah.

[Doug]

I did it again. It's a crazy day. Let me take another run at that, Steve. And now too leaky son of a mother big. Anyway, back to these holes.

[Joe]

Wow. Chose violence.

[OG]

OG I'm so confused. What happened?

[Joe]

I have no idea.

[OG]

Disjointed and unprofessional. I don't even know.

[Joe]

Disjointed and unprofessional. Five stars.

[Doug]

You try it. It's a workout some days, man.

[Joe]

Speaking of of workout, how about working through some of these lessons about innovation? OG Because I said earlier you may not want your financial plan to be innovative, but you really question that? You're like, no, your financial plan could be innovative. What innovation should we be looking for in our financial plan?

[OG]

Well, I don't know that there's anything in particular, but the tried and true Stuff of save money, don't spend too much and don't go into debt and all that sort of stuff is super important. But I think there's opportunity at the margin for thinking a little bit clear around taxes and tax management and asset allocation. Adding a little bit of extra flavor in asset allocation has a pretty profound impact to risk and return and outcomes. If you have international, that's great. But if you add a little bit of emerging market, that adds a little bit of flavor, so to speak, to your portfolio and helps change the risk return profile a little bit. There's benefits to taking that extra step or doing some research and trying to find different ways to save. Even just a little bit in taxes, you know, adds up over a long period of time, you know, and I.

[Joe]

Was glad that Joanne did bring this up. Like I was hoping. The fact that, you know, you can't just try to sit around and hope for innovation to happen. A lot of this stuff, oh gee, I think you can, you can schedule, you know, one of the great things for you and I about going to strategic coach is that once a quarter on the calendar year headed to Chicago, you know, and you've got two days scheduled in your calendar, which truly are for not just innovation, but I think innovation is a product of next level thinking, you know, not just being in the day. I got to go run to the bank, right? That's a financial thing. I got to go run to the bank and do whatever the bank thing is. But actually going, how do I do my banking and why do I do it that way? When you start asking those questions and then you calendar those discussions, like I'm thinking, when you're talking tax strategy, why wouldn't I sometime in November have on my calendar, this is my day to begin looking at tax loss harvesting, number one. Number two, also to examine if there's any year end tax planning options available for me that I can, that I can do, like putting that in your calendar. So it just automatically comes around every year. I don't have to think about it. There's some innovation right there.

[OG]

Yeah. I mean, I would submit to you that tax loss harvesting happens throughout the year and charitable giving point can happen at any time. But just reframing it I think is the important piece, whether it's a scheduling thing or, you know, what we've been really harping on in the last two years and people are tired of us talking about it, I think is if you do any amount of donation to charity and you have a brokerage account, you have to do it through donor advised fund. You should never, ever, ever write a check to a charity if you also have a brokerage account, because why wouldn't you just swap out those investments with your new cash and give the charity your appreciated shares of whatever you just had, Even if it's an insignificant amount in the grand scheme of things, like $1,000. You can set up a donor advised fund for a thousand bucks and you capture all of the tax benefits of doing that transaction, plus some opportunities to like, simplify your tax planning of. I don't have to keep track of contributions anymore. I don't have to keep track of all those little receipts that all those places give me. And. And it's just reframing how you think about donating money. So instead of saying every week at church, I'm going to write a check, you send a check every month from your donor advice fund.

[Joe]

And that can be automated.

[OG]

Oh, 100% it is. But what's really funny is, is that, you know, and having these discussions with people who do regular charitable gifts, they say like, well, I don't know, what do you think they're going to think about that? You know, if you don't. If you're not the. Maybe, you know, I just use church as an example. What do people think if I don't put my envelope in? Yeah, that's what we do. We put the envelope in. Like it's okay. Who cares what they think? You're still doing it. Talk to the. Talk to the treasurer.

[Joe]

You know, I think you're focused on the wrong stuff. If you're looking around the church going.

[OG]

Hey, look at this, look at me. Maya. Envelopes really thick. I don't know if anybody notices this or not, but, whoa, it's so heavy. You better have two people carry it.

[Joe]

Bring one of those Publishers Clearinghouse checks.

[OG]

But people say that that's what's going on in their brains of like, what do I do when the school has a fundraiser and I don't. I don't reach in my pocket and pull out 20 bucks or I don't put 50 bucks in it. It's like, you can still do that. Just do. First of all, sending a check that says OG charitable fund to a charitable organization is a way cooler baller status than an envelope of 50s. I gotta be honest. You know, just like, whoa, oh, gee's got a charitable fun schwab. Let you name it whatever you want. You can, you can. As long as it's not Doug. No, you can't use swear words. I Already tried. But anyways, it's just reframing how you think about some of this stuff that can simplify it seems like a hassle to set up, but it's like anything, when you set up a system, you put a lot of energy up front into creating that system and, you know, kind of testing it and fine tuning it. And then once you're good with it, it runs automatically. And that investment of time and energy will save you so much time and energy on the back end. And you know, tax loss harvesting, for example, if you're doing it on an annual basis, that's great. You can look every year, you can look every quarter, you can look every six months. But the fact of doing it is the time effort, right? Like the schedule and sitting down and looking through your brokerage account and going like, okay, this went down this year, I can sell this. What fund should I buy to replace it with? But I really want the fund I had. So I have to remember to come back in 30 days and swap that back. You know what I mean? Like, there's a step. But you save so much in taxes by doing that. Why, why wouldn't you do that? Or Roth conversions or automatic increases in your 401k. There's all these things that you can do that will make little changes, small changes every single day or every year, you won't even notice them. But big impacts, long run.

[Doug]

Great points, OG and sparked A couple of thoughts.

[OG]

Thank you.

[Doug]

Appreciate that you were looking for that affirmation from me.

[OG]

I mean, anything you can do to bolster my ego helps you get through the day.

[Doug]

Because, I mean, I know you're fragile.

[OG]

Fragile.

[Doug]

Italian, A couple of thoughts, one of which has already been made. But innovation, a lot of people hear that word and they think, I mean, I'm not going to come up with a different way that nobody's ever thought of before to do this thing. But that's not necessarily. In fact, in most cases, that's not what innovation is. You're not coming up with new science, new chemical compounds put together. They're going to, you know, manufacture some completely new thing that has never existed in the world. It just needs to be new and different for you. And whether that's your process about how you go things as you guys talked about, let's schedule, you know, some time to look at the example, use tax loss harvesting and opportunities for that, or maybe new components of some of your investment vehicles to change up end goals or end results, I should say. But another thing that. Joe, you kind of Touched on a little bit, which is make a deliberate effort to innovate. Not only schedule that time, but you know, what a lot of large, large companies do. I help facilitate innovation sessions for people like Coca Cola and Anthem Healthcare. They're not Anthem anymore, but, you know, some of the larger ones, Capgemini, these huge companies, they actually will build innovation labs. They call them labs. And there's specific office spaces set up that have completely different decor, some different technological tools, and different furniture. Walls that are erasable so people can just write on the walls wherever they want. But it puts none of that. You could do all of the things you do in these innovation labs you could do in your own regular office. But going to a new place, getting. Sometimes you have to get on a plane to go to a new place, go into a different office, have different people act as facilitators to challenge the way you're thinking can lead to things that you would not otherwise do. Yeah. Could you do it all sitting at your desk or on your sofa or in your kitchen? Of course. But making the effort to schedule time to go someplace else can really change your frame of reference.

[Joe]

I think that's the magic of strategic Coach, frankly. I think it's as much about getting on that plane and being in a different area that does that. But, hey, just for a lot of us, to your point, Doug, just putting it on your calendar and not trusting the fact that I'm gonna all of a sudden have this aha. That makes my financial plan better is an important step.

[Doug]

Yeah. And I mean, what I'm advocating for is convincing your partner that you do need to go to Aruba to do that. I mean, I think it makes a lot of sense to go to a Caribbean island.

[Joe]

I don't think there's anything wrong, OG I don't think there's actually, you know, Doug's K. But I don't think there's anything wrong with that. If we're going to have this, you know, financial meeting, let's do it someplace fun, if we can afford it. I mean, if I'm going to Aruba and I'm maxing out the credit cards to get there, that's horrible.

[OG]

But that's also a lesson you can learn. Don't do this.

[Joe]

That's right. We're going to teach ourselves a very important lesson.

[OG]

I'm going to try in first class. Boy, that was a rough lesson to learn. You should learn that again.

[Joe]

We got to learn that again in.

[OG]

Let'S say, two weeks, seven years when I pay off My credit card bills. Well, there's a reason why Steve Jobs would only take meetings while walking. You know, that sort of thing. I mean, just having your brain's ability to think broader will have a pretty profound impact. I mean, there's a reason why you have great ideas while sitting in the shower. Yes, there's science behind it. And so if you are in the same environment, to your points, both of yours, the likelihood of coming up with a new thing is pretty rare. But if you're, you know, do a thing, cycle or go outside or go play basketball or do something that you can do, but your brain can do other stuff, you know, you can't do this likely while driving. Right? Because your brain, you need the processing power to drive, but if you go for a walk, your brain doesn't need a lot of energy to walk.

[Joe]

Two more places where this has been applied. Number one, Doug, I love what you said earlier about it doesn't have to be completely new on earth, like nobody's thought of it before. New to you is really what you're looking for. And 99 of the time, that's exactly it. We began this year with a guy named Alex Hermosi, for people that missed it, about how to make more money in 2025, specifically $100 million, but who's counting? That's episode 1625 and 1626 that we met with Alex. But what did Alex say? He said somebody's already doing this thing. Somebody's more innovative than you are. You're paying, what do you call it, an ignorance tax. You're paying an ignorance tax by not knowing. And so by setting time aside and just going, what do these smart people know that I don't know is a big key to winning? You don't have to reinvent the wheel. You don't have to do anything eye poppingly different. There's things people are doing with their system and their process to make this all easier that you may not be doing. The second one is just a couple weeks ago, Benjamin Brandt, when he was on og, talking about when you're pre retirement, treating your vacations, treating your life like you're a lab rat, like I am. I'm checking to see what it is that lights me up now so that when I get to retirement, it's not this, you know, this starting line of oh, guess what, I'm gonna go try a bunch of stuff. And oh, by the way, I just figured out I hate all that. I truly don't want to do any of this stuff. I remember these clients that I had when I was a planner that, that both retired from General Motors on the same day. They bought an RV that in today's dollars would cost over 350ish thousand dollars. I think in today's giant class A1, it was going to be the, the best thing ever. And they were going to spend their entire retirement tooling around the United States in their rv. And a year and a half later, they're in my office and Gail is telling me that if they don't sell the rv, she's going to choke George out. She can't stand being in an RV with her. She loves her husband. Just RV life is not for them. But they didn't know. Yeah, because they waited. And so I love what Benjamin said about innovation as well about innovating. I think during your everyday existence to figure out the future is a pretty exciting, pretty exciting place to be. We're going to dive more into innovation in our newsletter, the 201 that Kevin Bailey does a phenomenal job of curating for us every week that comes out stacking Benjamins.com201 and Kevin looks for the best links all over the Internet so that you can dive even deeper into innovation and your financial plan. But for now, let's do a headline. Hello, darlings.

[Progressive Insurance]

And now it's time for your favorite part of the show.

[Joe]

Our Stacking Benjamin's headlines headline Today is not going to take that long, OG which is good because I really want to spend more time talking about Dean and Joanne's time here. This comes to us from investment news, though, and it's written by Bruce Kelly. Morgan Stanley loses an $843,000 investor claim stemming from a Gold Bar scam. Did you see this?

[OG]

Nope.

[Joe]

This is interesting because often on this show over the past 15 years, you and I have talked a lot about lawsuits that are happening. This one's, this one's pretty interesting. An elderly Morgan Stanley client in Florida who fell prey to a so called quote, gold bar scam won $843,000 in damages two weeks ago from Morgan Stanley after she claimed it failed to follow industry rules designed to protect senior investors. What's amazing about this, OG Morgan Stanley did nothing wrong. Morgan Stanley did not scam her. Morgan Stanley's people did not scam her. Nobody inside Morgan Stanley was acting at all as a nefarious player. What happened was this woman, Marjorie Kessler, was being scammed. Finally, after a lot of, a lot, lot, lot of back and forth, they actually got access into her Morgan Stanley account and they called Morgan Stanley pretending to be affiliated with her. And the person gave them information that allowed them to take $1.6 million. And all of a sudden at her house one day, gold bullion bars worth More than $1.6 million show up. The scammers then were showing up in a truck so they could transfer the gold bullion to her quote, escrow account.

[OG]

So she got a box of gold and then somebody else showed a bathroom, she got 1.6, said, hey, we'll take that off your hands.

[Joe]

$1.6 million worth of gold shows up at her house, and then the scammers take it away in a truck to put in her quote, escrow account.

[OG]

I mean, I wouldn't say Morgan Stanley didn't do anything wrong here. Sounds like they didn't do a good job of verifying who the account was.

[Doug]

Well, but if those scammers had done it, sounds like Joe was saying that there were a lot of pre conversations back and forth before that happened. So my guess is those scammers were doing what's called social engineering and they were getting little bits of information out of this victim that allowed them to portray themselves as the victim to the firm. And there's not much they can do if that person's giving them all the answers that they're asking. There's not a lot more they can do.

[Joe]

This is what the statement of the claim was in writing. During repeated phone calls during a two week period, the scammers convinced Ms. Kessler that in order to protect her savings, she had to rush to convert her money into cash and gold bars to be delivered to couriers and cryptocurrency clearly safer. I'm sorry, that. That part was me. Which would be deposited in a U. S. Treasury account under her new Social Security number, according to the statement of the claim, despite clearing red.

[Doug]

What?

[OG]

Yeah, you do need to get the new one.

[Joe]

Yeah, you gotta get the. You haven't seen the thing about the new Social Security numbers.

[OG]

Mine's seven.

[Joe]

Despite glaring red flags and obvious warning signs of financial exploitation, Ms. Kessler's financial advisor authorized and facilitated Ms. Kessler's sudden withdrawal of 2.09 million in funds from a line of credit and the liquidation of assets from a life insurance trust during a nine day period in July and August of 2023. The claim alleges.

[OG]

Yeah, I mean a lot of companies now have, and you might start seeing this in your brokerage account or you know, your ira, an option to fill out a thing called a trusted contact. And basically the Trusted contact is nothing more than an additional person that somebody can call. So from Morgan Stanley or from Fidelity or wherever your money is, they can call and just go, everything okay with mom? You know, like, have you checked in on her? It sounds like there's some weird stuff going on. We just want one more, one more set of eyeballs on this.

[Joe]

Oh, gee, the very next paragraph. The financial advisor authorized the withdrawals despite the fact that Kessler specifically asked him to keep the withdrawals, quote, secret and not to disclose them to her son, who had been directly involved in every major decision in his mother's investment accounts during the prior six years, according to the complaint.

[OG]

Yeah, I mean, rocking a hard place there, right? If your client says, you know, whatever. But see, here's the thing. You have a responsibility to the client, right? You have a responsibility to, to do what they say and it's their money. However, I think that I would much rather risk pissing off mom and making sure that it's a transaction that's legit than run the risk of something crazy happening. And obviously this was the case. I mean, it's out of the norm for, you know, whatever the age this woman is. I don't imagine she's young, so, you know, she's early.

[Joe]

A 76.

[OG]

Yeah. So, you know, if this woman was frequently moving half a million dollars at a time in different places and whatever, that also, by the way, would raise some ire suspicion. But if it was like a business owner who's doing large transactions and they're like, hey, by the way, I need to do this $2 million thing. That's a pattern, right? You say, okay, I've seen that before. But the 76 year old who has her $3,000 a month RMD sent to her checking account every single month like clockwork, calls you up and says, okay, I need to take all 2 million and I need to convert it into cold bars that have it sent to.

[Joe]

My house and crypto.

[OG]

Yeah, I just hang the phone up, prank call, click. But that's what that trusted contact form is for. And it sounds like you said Morgan Stanley did do anything wrong here. I don't think they did anything wrong, but they certainly didn't do anything right.

[Joe]

It sounds, I totally agree with that.

[OG]

Like, listen, bro, the money's already gone, right? She's moving it for whatever reason. What's going to happen? You tell the son and she gets extra pissed off and takes more money, like, whatever. Like you're already.

[Joe]

The $843,000 award, by the way, was 100% because they fell short in following the industry's trusted contact standard that you're talking about.

[OG]

Yeah.

[Joe]

So I think the lesson here is for all of us, make sure we've got that on our account. Yeah.

[OG]

I think a lot of young people don't for, you know, probably safer not. I mean, if you're. If you're involved in your money all the time and that sort of thing, probably fine.

[Joe]

Doug's like, if you would like me to be your trusted contact, I feel.

[OG]

Like anything else, you got to kind of read the room a little bit. And if you're at the stage where, you know, you're talking to mom or dad a little bit about money and you're starting to get into their checkbook and make sure that the bills are paid and, you know, that sort of thing, it's probably also the time that you have that conversation with their, you know, financial planner and say, hey, by the way, is it okay if I'm involved in some of the. Can you CC me on the emails? You know, mom, can you make sure that when you have a meeting, like, let's, you know, send me the summary? You know what I mean? Like, start getting involved in that without inserting yourself too much. And maybe if this broker makes a phone call to the son and says, hey, I'm not supposed to tell you this, but mom's taking 2 million out of her account, putting it in gold bars and Bitcoin, he might have headed it off at the pass. And then what happens is, Mom's like, wow, thanks for saving me. Yeah.

[Joe]

You and the lawyer say exactly the same thing. The lawyer for Ms. Kessler said if Morgan Stanley had called my client's son, nothing would happen.

[OG]

Yeah. Especially if she had the trusted contact form on there. It's one thing to try to figure that out. It's another thing to. Like you said, the son has been involved in every conversation for six years, and now all of a sudden, Mom's like, don't tell him I'm taking all the money out buying Bitcoin, like, no, you're not. Just say no. My mom taught me. Knows the complete sentence. Like, no.

[Doug]

Click.

[Joe]

They actually said this was a weird award amount, but the lawyer for Ms. Kessler said that he thought the reasoning was simple. They gave Morgan Stanley a pass for the first one out. Oh, gee. Like, okay, one time we'll give you the pass, but the second time, when they came back for more, that's when. Yeah, that's when we needed to penalize the firm.

[OG]

Okay, don't convert all your money to gold. And if you do, just keep it yourself. You don't need anybody else. Just get your own arm to guards. You have gold, for God's sake. You can just pay them in little shavings.

[Doug]

Get your pocket knife, one of those.

[OG]

Like potato peelers and just right off and be like, here you go, young man, watch the gold.

[Doug]

Use a potato peeler.

[Joe]

Getting your cheese grater. Take your cheese grater with you.

[OG]

I have a cheese grater. You're like, you got the gold bar and you're just against the.

[Joe]

Is that enough to buy a pair of Levi's? Oh, you need a little more. We will link to that on our show notes@Stacky Benjamins.com hey, time for our last part of this show. We call it the back porch and we shine a light on some things that our stackers are doing. What's. What's going on the back porch today?

[Doug]

Joe, as always, lots of great discussions happening in our basement. One that I want to point out happened a couple of weeks ago, actually.

[Joe]

And the basement, by the way, just to clarify, for anybody who's new here, that's our Facebook group, stacky benjamin.com basement we'll get you into the discussion.

[Doug]

But anyway, yeah, I mean, I think they were actually physically in our basement for this one, but maybe they also posted on Facebook, I don't know. But James showed up in the basement and asked a question which a bunch of people happened to comment on in the Facebook group too. So it was kind of weird how all that happened. But. But James said, I really enjoyed the recent episode on early retirement. One of the notes that was made a few times was that if you want to move to a new location, it's tough to build a network and feel connected. I would love to hear the show or people in this community share any insight on how to build that network in a new location during that stage of life. Taia. He signed it with. I don't Taia. I don't know what the heck that is. All caps T Y I A thank you in advance. I mean, I suppose it could. I also maybe he has a secret language. We don't know. But there were lots of great comments on this. We had, you know, Jennifer and Eric and Jane all chimed in and gave some thoughts on how to do that and how to make those connections, which is just such a great use of our community in our basement.

[Joe]

Well, I think the important thing here, and for people that missed Benjamin Brandt the second time that we've discussed that Episode just a couple weeks ago, that was episode 1639. Benjamin talked, speaking of innovation, about melding the current into your future and so being scientific about maybe where you go on vacation. And the problem here for people that missed it is that often people will retire and we'll go to a community where we know nobody, we have no support network. And studies show so many people die of loneliness. And so you go to a place because you think that you deserve it. You deserve to be in this beautiful beach location, but you've never lived there for a moment. Or you go where your kids are. You know, maybe you've got grandkids, you go where your kids are. Your kids have a busy life. They can't be around you all the time. And so you get discouraged because the kids don't want to see as often as you had thought in your head. And you have no, no support network. So Jennifer says, I've lived in the same place for 25 years, but maybe try to join a group or club related to something you're interested in or take a class, you know, that is cool, Doug. You can look at communities online, enjoying their online community to try to get the feel of the place at a time. I think that's a bonus of being a bonus of being online. Jennifer also says to volunteer when you get to a place. Yeah, Wes Moss said that the average happy retiree volunteers with three different groups and they formally belong to one. Like either like a Lions Club, a Rotary, maybe a religious group. But they're deeply involved in volunteering for at least one and they volunteer for at least three. Eric agrees that this is a topic not talked about enough on podcast. I swear to God, Eric, you and I are on the same page because it frankly lately is all that I that I think about. Jane chimes in saying the easiest way outside of work interest, go and take part in meetups. I love what Xander says. Didn't think about it too. Even if we're in the middle of it right now, there are people who make friends easier. But I feel the other half of people move for a job or tax purposes. Don't take this into consideration. That is a problem. Og when people are being. What do they call it? Location arbitrage.

[OG]

Yeah.

[Joe]

Ooh, I'm going to go with a place with lower cost of living. Not think of do I even like anybody? Is there. Am I going to like this community?

[OG]

I gotta like anybody here in the middle of nowhere.

[Doug]

Probably all jerks living in Savannah, Georgia losers.

[Joe]

Sucks in in Texarkana. So great Discussion. James, you guys are hitting the road this week, right?

[OG]

Thank God. Looking forward to it.

[Doug]

We're actually literally on the road right now. No, I'm on the road right now, tomorrow. Not me. I have a multi stage trip it's going to take me.

[OG]

That's because you're like what would be better? Driving 20 minutes there and getting on an airplane or driving 7 hours to get on an airplane and you're like, you know what? I like driving. I'm going to drive down the street snowiest part of Michigan for seven hours and pray to everything that's holy there's no lake effect. That's way better than jumping on a plane right in my backyard. But I'm saving $200.

[Doug]

No, it's. It's only partly that. Oh gee. But the other thing was to get on the flight to get to Reno at the time you also wanted need to get to Reno. The flight leaves O'Hare at like 7:04 or something in the morning.

[Joe]

Driving from Northern Michigan to O'Hare.

[Doug]

Yes.

[OG]

Because that's like Joe quality travel plans right there, bro.

[Doug]

And is. But be honest, there's no Greyhound buses involved in mine.

[OG]

No Tuk tuk.

[Joe]

Don't knock it till you've right that.

[Doug]

You know I will have a mule. There will be a mule and a cart though.

[Joe]

Yeah.

[OG]

God forbid you actually fly to Chicago the day before and stay in a hotel right next to the airport.

[Doug]

Stayed in a hotel the night before. But I'm driving to that hotel. I'm not. I'm not flying.

[Joe]

All right, tell us how people get more of this goodness of my travel story. The Meetup.

[Doug]

Oh, the meetup. Oh, okay. Because I mean I can keep talking about that.

[OG]

Yeah, we've got a couple people registered. I don't know what the website is, Joe. What's the website? StackingBenjamins.com Meetup.

[Joe]

Meetup.

[OG]

Who knew?

[Joe]

Yeah. Isn't that wild?

[OG]

Way smart idea. Who thought of that?

[Joe]

URL. Innovation. Innovation for the week during the podcast.

[OG]

Yes. Wednesday this week, 6:00 local time. We'll be there from 6 to 8.

[Doug]

And then that's February 19th. For people listening late because I don't want them showing up like in April.

[OG]

Well, I mean you can show up in April.

[Joe]

I might hear some rando day in July. Because you said it was this Wednesday.

[Doug]

MCP's Taphouse. February 19th, 6:00. Oh geez. Credit. I mean, come have drinks with us.

[Joe]

All right.

[OG]

All that is true. 802. I'm out.

[Joe]

Don't get there at 801 because you will miss.

[OG]

We will pass at the door. Like, I will be holding the door, and you'll be like, hey, aren't you. I'll go, no, probably not. Wrong guy. Wrong guy.

[Doug]

Nothing to see here, folks.

[OG]

Nothing to see here.

[Joe]

On that note, what are the big lessons we should have got out of today's show? Doug?

[Doug]

Well, Joe, here's what's stacked up on our to do list for today. First, take some advice from Dean and Joanne. Think about your life innovatively. How can you systematize the stuff that doesn't matter and create the most innovative life for yourself? Second, calling your advisor for money. Be ready for a bunch of questions. But the big lesson, while I am a legend, I'm not too big for my britches, as Joe's mom likes to say. And she would know. That lady's got some huge britch.

[Joe]

Ow. Ah, damn.

[Doug]

She hit me with her slippers from across the room. How'd you do that? I was gonna say huge personality, Ma. Promise. Oh, gosh, you got me again. Thanks to Joanne Garbin and Dean Carignan for joining us today. You'll find their book full of case studies called Innovation at Microsoft wherever books are sold. Beginning tomorrow, we'll also include links in our show [e-mail] this show is the property of SP Podcasts, LLC, Copyright 2025, and is created by Josal Sehive. Joe gets help from a few of our neighborhood friends. You'll find out about our awesome [e-mail] along with the show notes and how you can find us on YouTube and all the usual social media spots. Come say hello.

[Joe]

Oh, yeah.

[Doug]

And before I go, not only should should you not take advice from these nerds, don't take advice from people you don't know. This show is for entertainment purposes only. Before making any financial decisions, speak with a real financial advisor. I'm Joe's mom's neighbor, Doug, and we'll see you next time back here at the Stacking Benjamin show.