Digital Disruption

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GEOFF NIELSON

Hey everyone! I'm super excited to be joined today by John Rossman. He's a former Amazon exec and a bestselling 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.

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GEOFF NIELSON

Let's find out.

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GEOFF NIELSON

John, 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?

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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, problem solving hard problems for customers, solving hard problems for operators, solving hard problems for business models.

00;01;07;11 - 00;01;39;13

JOHN ROSSMAN

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.

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GEOFF NIELSON

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 roots? And are they the same hard problems from, you know, 2 or 5 years ago? Or like what are the hard problems that people are?

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JOHN ROSSMAN

Yeah, I think the hard problems are durable. Some of the tools that we have, 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, our relative peers in our, in our industry space, I think scale, which is different than growth scaling, it is always kind of the hardest thing to do in scaling means being able to do more on an improving, improving unit cost or efficiency basis, right?

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JOHN ROSSMAN

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.

00;03;07;09 - 00;03;45;02

JOHN ROSSMAN

And we wrote big about leadership because this game of creating transformation is primarily a game that people lose that, I don't believe that you have to. And the skill is had begun to become even more and more important in the future. And and that's why we so big that leadership specifically for senior executives to help them understand what do we personally need to do differently in order to tip the scale in our favor of winning at these major transformations?

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GEOFF NIELSON

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, of the way we structure ourselves. And, you know, is it the what we do about it is kind of the hardest part.

00;04;04;12 - 00;04;21;04

GEOFF NIELSON

But I wanted to get a sense, you know, what what 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?

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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, I is the mega force. Well, I believe disruptive technology is are a mega force, but not the only one. The other two, the other one is kind of the, the, the aging of our workforce, which is a combination of both kind of the, the aging of our workforce and the declining birth rates, which is going to create an even harder burden for companies to retrain and attract skilled talent.

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JOHN ROSSMAN

The 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.

00;05;25;26 - 00;05;52;11

JOHN ROSSMAN

And what those mega forces are going to do is it's going to put incredible pressure 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.

00;05;52;11 - 00;06;32;03

JOHN ROSSMAN

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 100 x change relative to the 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 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.

00;06;32;05 - 00;07;03;21

JOHN ROSSMAN

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 realized 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.

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GEOFF NIELSON

So you 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 the winning path. You mentioned some of the winners maybe or sorry, rather some of the losers may be previous winners from the last wave of innovation.

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GEOFF NIELSON

Why do you say that? And you know what? What's kind of at stake here, I guess.

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JOHN ROSSMAN

Yeah, yeah. Well, the reason I say that 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, on everything, right. Like incredible gross margins, 90% market share of search.

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JOHN ROSSMAN

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 in 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 run.

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JOHN ROSSMAN

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 in there, and they're trying to respond to it.

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GEOFF NIELSON

So when we when we think about that response, what 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.

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GEOFF NIELSON

But like digital transformations, these large scale transformations fail at like just a really alarming rate. So so why is that? And maybe at, at at just kind of the cursory level, what, what do we need to do to avoid some of those traps?

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JOHN ROSSMAN

All right. So I'm going to unpack this a little bit if that's if this is 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.

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JOHN ROSSMAN

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 replatforming initiative like an M&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.

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JOHN ROSSMAN

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.

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JOHN ROSSMAN

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 versus 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.

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JOHN ROSSMAN

But on the other hand, you have to do them right. It's the only way to meaningfully move forward and 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.

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JOHN ROSSMAN

They, they they suffer death of a thousand cuts. Right? And so some of the reasons they fail, just some of the reasons they fail is we don't really understand the problem that we're solving. We don't really understand what our hypothesis is for the future state. We don't communicate in a strategic manner around them that helps people and helps the journey.

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JOHN ROSSMAN

We under power 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.

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JOHN ROSSMAN

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 in everything. Right? So, my coauthor, Kevin McCaffrey 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.

00;13;30;22 - 00;14;01;22

JOHN ROSSMAN

And so, you know, those companies, those leaders are Jeff Bezos, John Ledger of T mobile, Elon Musk of many companies, and, Satya Nadella 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.

00;14;01;24 - 00;14;33;26

JOHN ROSSMAN

And while those may be sound obvious, 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 chart. 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.

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GEOFF NIELSON

Right. And I want to 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 two here, actually. And I'm trying to not like shill the book too hard on this, but I, I am a fan, and I think, just just go headlong into into shill mode.

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GEOFF NIELSON

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 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 to many business and leadership books these days are at best like a Harvard Business Review article masquerading as a book.

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GEOFF NIELSON

Right? Like they it's either a sentence or a best's 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.

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GEOFF NIELSON

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's stuff here that, 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.

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GEOFF NIELSON

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.

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GEOFF NIELSON

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.

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GEOFF NIELSON

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?

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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 and titles like I worked that super, super hard and what we wanted to do, we wrote this specifically for you. So Kevin ran new business incubation at T-Mobile.

00;17;15;21 - 00;18;06;14

JOHN ROSSMAN

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'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 need 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

00;18;06;14 - 00;18;33;02

JOHN ROSSMAN

none of it's to, to actually, you know, dish out business value. And so 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 you do. But also putting constraints in place, right? Time constraints, people constraints, length constraints, all those types of things.

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JOHN ROSSMAN

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, improve 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 labs fault, right?

00;18;57;10 - 00;19;31;20

JOHN ROSSMAN

Like for the people within the lab, it's 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.

00;19;31;23 - 00;19;57;21

JOHN ROSSMAN

They this person has the 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 a lateral decision making capability because speed, speed to learning, speed to testing is the thing that we are trying to optimize for.

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JOHN ROSSMAN

It's not unit cost, it's not some other policy. It's speed and just grok 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.

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JOHN ROSSMAN

If I can get that across as one of a few key points. Okay, now we're making progress. We can accomplish the principal in a variety of ways, but you have to truly recognize the problem and have a principled approach to solving that problem.

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GEOFF NIELSON

So 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.

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GEOFF NIELSON

That was right that that was like exactly it.

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JOHN ROSSMAN

In fact. In fact, we say like having a a small dedicated team is the critical and manageable factor of being successful. Not the only thing, but but critical. It's just, you know, again, to draw attention to the point, I, I hope I poke fun at most labs because they aren't set up for success in this way.

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GEOFF NIELSON

Right. And 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 for leadership, right. That you have to you have to be able to make clear decisions. Okay. Can you unpack a little bit about what that means.

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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, 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 is my my favorite chapter title, which is kill pivot continue or confusion.

00;22;10;10 - 00;22;46;22

JOHN ROSSMAN

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 medium 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.

00;22;46;24 - 00;23;18;04

JOHN ROSSMAN

And the job to be done is to make the best clear eyed going forward decision 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.

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JOHN ROSSMAN

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 recount in the book, gives some funny stories and again suggest here's the principles to follow.

00;23;39;29 - 00;23;44;08

JOHN ROSSMAN

Here's some activities that help put those principles into play.

00;23;44;10 - 00;24;14;09

GEOFF NIELSON

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 not admit something is dead.

00;24;14;09 - 00;24;37;02

GEOFF NIELSON

And 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.

00;24;37;04 - 00;25;03;24

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?

00;25;03;24 - 00;25;26;17

JOHN ROSSMAN

A big bet vector is a well understood definition of the problem we are solving and our hypotheses 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 meaning.

00;25;26;22 - 00;25;49;20

JOHN ROSSMAN

Secondly is you you need to write up as clear eyed critique as possible as far as like 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.

00;25;49;20 - 00;26;10;19

JOHN ROSSMAN

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 it 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.

00;26;10;19 - 00;26;41;14

JOHN ROSSMAN

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 if for some reason it hasn't gone right, so people are on the defense and participé hints are on the offense of essentially auditing.

00;26;41;18 - 00;27;10;17

JOHN ROSSMAN

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, well, 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.

00;27;10;17 - 00;27;30;29

JOHN ROSSMAN

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.

00;27;31;02 - 00;27;48;22

GEOFF NIELSON

Now that's great John. And it's such, it's such a microcosm of, of kind of the approach you bring throughout the playbook here to these things that it's, it's so well rounded. It's not it's not silver bullets. It's really kind of checklists of of activities.

00;27;48;22 - 00;28;14;03

JOHN ROSSMAN

And as you said, like none of these things are are new or revolutionary in mind. But 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.

00;28;14;06 - 00;28;34;05

GEOFF NIELSON

So I wanted to speak for a second about not new and I mean this lovingly, but. Well, when we talk about the 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 it's memos.

00;28;34;07 - 00;28;41;05

GEOFF NIELSON

I've never gone down that road myself, but I've. You know, I'd love to just hear briefly, like, in defense of memos.

00;28;41;07 - 00;29;00;29

JOHN ROSSMAN

Well, what a great title. It's so, so the one appendix in the book is called Why Memos. Writing is kind of the the lightweight research about all of 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 there is that is so important.

00;29;00;29 - 00;29;30;02

JOHN ROSSMAN

So yes, Amazon is a company that has really absorbed and created their own version of how to work in memos. You know, that 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.

00;29;30;02 - 00;30;01;06

JOHN ROSSMAN

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 it when a situation is difficult, complex PowerPoint is a horrible medium. In order to help your audience do their job right.

00;30;01;10 - 00;30;20;01

JOHN ROSSMAN

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 communicate it to others who need to understand it, whatever degree that they need to understand it.

00;30;20;04 - 00;30;41;24

JOHN ROSSMAN

It's portable. You can work asynchronously. There's just all sorts of benefits to it versus, you know, the medium does, which is PowerPoint. That works for simplistic, well understood problems and situations, but it does not work for complex situations.

00;30;41;26 - 00;30;52;08

GEOFF NIELSON

Right. So 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.

00;30;52;08 - 00;31;12;11

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.

00;31;12;11 - 00;31;27;14

JOHN ROSSMAN

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 vector, right? Like what's your problem and what's your hypothesis for the future state?

00;31;27;16 - 00;31;51;05

GEOFF NIELSON

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, 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, of marketing, but it's also it's also a notion that little Jocko.

00;31;51;05 - 00;31;52;19

JOHN ROSSMAN

Willink right there. Right.

00;31;52;23 - 00;32;17;27

GEOFF NIELSON

So, knife, knife. You know, 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.

00;32;17;27 - 00;32;32;12

GEOFF NIELSON

And so can we unpack that a little bit, like what do you unlock when you get that? 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?

00;32;32;15 - 00;33;10;15

JOHN ROSSMAN

Yeah. So rarely I'll say never, but rarely is a initiative of substance solely stovepipe within an organization. Right. So in 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.

00;33;10;15 - 00;33;35;06

JOHN ROSSMAN

But that's not enough. Like, again, you actually have to equip them with the tools to, 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 world, it's a it's a fictitious press release, but you use it internally.

00;33;35;08 - 00;33;56;17

JOHN ROSSMAN

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?

00;33;56;17 - 00;34;18;29

JOHN ROSSMAN

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 what? Everything. Right? So we're cutting across org structures and job titles, and we work for missions versus for a job title or for siloed objectives.

00;34;19;05 - 00;34;54;25

JOHN ROSSMAN

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've been ordered by the general to get this done. Well, then you can have better. Hey, you know, we'll call it negotiations. You can better discussions and drive quickly what needs to be done versus all the escalation up and down and organization in order to get like one thing done across an organization.

00;34;54;25 - 00;35;18;10

JOHN ROSSMAN

So that's an example of the kind of extreme ownership that I think is if you can equip it, it's it's 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 in a chemical equation, if you put in a catalyst, it requires less energy to get to the transformations you get the output.

00;35;18;13 - 00;35;28;11

JOHN ROSSMAN

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.

00;35;28;14 - 00;35;46;19

GEOFF NIELSON

So I'm I'm, I could not agree more. Like 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?

00;35;46;19 - 00;36;08;00

GEOFF NIELSON

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 in your world you're saying like, okay, well, let's get the math.

00;36;08;07 - 00;36;30;01

GEOFF NIELSON

Whoever's doing this, you know, big that 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 or maybe not, which is do we just need to change the operating models of organizations in general? And say, like the organization of the future is going to in some way abandon these silos?

00;36;30;05 - 00;36;34;24

GEOFF NIELSON

Is that realistic? Is that totally fanciful? And where does that fit in your mind?

00;36;34;24 - 00;37;00;06

JOHN ROSSMAN

Relatively well, I don't think it's completely fanciful. And I think that there, there might be kind of a, a dual mode, operating model and organization that fits in. And, 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.

00;37;00;06 - 00;37;20;29

JOHN ROSSMAN

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 unlike 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?

00;37;21;01 - 00;37;44;16

JOHN ROSSMAN

Because you will lose steam like 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.

00;37;44;16 - 00;38;10;26

JOHN ROSSMAN

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's work backwards on this. But I think that they're the organization of the future in some cases. Could be something that parts of the Amazon model, which is, you know, you've heard of service oriented architectures, right?

00;38;10;29 - 00;38;41;25

JOHN ROSSMAN

Sorry, 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 on two pizza teams, right? So it's small teams that own Independ and capabilities that integrate and can be used across the organization in a self-service manner.

00;38;41;29 - 00;39;32;08

JOHN ROSSMAN

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. You you do. I mean, I do believe that the the you know, if a business is primarily like, you know, 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.

00;39;32;11 - 00;39;42;05

JOHN ROSSMAN

But you know, I'm open for other ideas on this and everything. Right. Like there's not you know, my version or no version of this discussion.

00;39;42;07 - 00;40;25;01

GEOFF NIELSON

Not it's fair and and I mean you had me it 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. Sure. And I wanted to talk about it in general because you had, you had a very damning sentence, that, 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, you know, the nature of of legacy technology.

00;40;25;03 - 00;41;05;20

GEOFF NIELSON

And, you know, your proposed solution was, you know, kind of IT systems be damned workaround is find some way to ignore the legacy stuff, get a just kind of good enough parallel, you know, alternate parallel universe that you can work in and make it work until you're ready to scale. And you know, John, I come from a world where I've done a lot, a lot of work with CIOs and 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,

00;41;05;20 - 00;41;31;28

GEOFF NIELSON

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?

00;41;32;00 - 00;42;07;17

JOHN ROSSMAN

Yeah. Yeah. So so a, you know, thanks for in flaming 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.

00;42;07;19 - 00;42;31;01

JOHN ROSSMAN

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.

00;42;31;01 - 00;42;54;14

JOHN ROSSMAN

And what typically is going to happen is it 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 agenda items that we just walk through.

00;42;54;16 - 00;43;14;01

JOHN ROSSMAN

Well, in the short term, that's a great that's a great lens and a great decision. But over a 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 a CIO is how do we actually do it all? And that takes that takes resource commitment from the enterprise.

00;43;14;01 - 00;43;47;00

JOHN ROSSMAN

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 transfer transactions today.

00;43;47;03 - 00;44;07;26

JOHN ROSSMAN

And that takes that takes a, 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 of that.

00;44;08;01 - 00;44;37;21

JOHN ROSSMAN

But in either case, it it's an enterprise commitment relative to that agenda. And that the thing that I think we both are antithetical to in 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 the business, but then you starve it from resources.

00;44;37;21 - 00;45;06;01

JOHN ROSSMAN

You ask people to do five jobs at once. You won't, make quick decisions relative to 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 and I think that's the situation I find most companies in, is that they're, you know, they kind of for, for PR purposes internally and externally.

00;45;06;01 - 00;45;10;08

JOHN ROSSMAN

They say one thing, but they actually act completely differently.

00;45;10;11 - 00;45;43;12

GEOFF NIELSON

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, of year round 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, the beyond the basics and getting, you know, the senior leadership team bought into the fact that you need to be doing that.

00;45;43;14 - 00;46;08;06

GEOFF NIELSON

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 pause 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.

00;46;08;08 - 00;46;33;04

GEOFF NIELSON

What I found, and I'm curious on your perspective as well as 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, you know, CIO, CTO saying, I've got the secret to tech.

00;46;33;04 - 00;46;49;25

GEOFF NIELSON

It's no, this is 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 do you buy that? Would you change anything about that?

00;46;50;00 - 00;47;27;17

JOHN ROSSMAN

I do, I, 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.

00;47;27;17 - 00;47;54;01

JOHN ROSSMAN

But I, 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 IT organization.

00;47;54;06 - 00;48;20;08

JOHN ROSSMAN

Again, you can solve with it 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.

00;48;20;08 - 00;48;44;06

JOHN ROSSMAN

That was a that was a good alignment of kind of this this team that was set up to go across the business. And just by operating M.O. 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.

00;48;44;14 - 00;49;25;20

JOHN ROSSMAN

I would look for in general or 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, you know, in a lot of companies today, you know, the technology function is still the IT function. And, and they're both equipped with 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.

00;49;25;23 - 00;49;38;25

JOHN ROSSMAN

They're not equipped to rethink the business and to make calculated risks on in, in terms of like what the business of the future is. They're just not set up for that.

00;49;38;28 - 00;49;59;29

GEOFF NIELSON

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, ten, 15 years where they're not and they end up, you know, you know, I hate to say, babysitting a lot of this core technology.

00;50;00;01 - 00;50;30;14

GEOFF NIELSON

And then groups like Enterprise Strategy get the approval and the budget for these like sexier technology ventures. And and what sort of triggered me in a really powerful way, you know, for better or for worse, is when you you did you use the phrase alternate universe like the alternate reality, right. And there's but 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.

00;50;30;14 - 00;50;47;08

GEOFF NIELSON

But it's like, we don't care about that. We just have to have that 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 that house.

00;50;47;08 - 00;51;18;08

JOHN ROSSMAN

But 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 PNL owner or a large divisional owner asking them to also reinvent their business? I don't think that tends to work either. Oh, one of the great Canadian business authors, Roger Martin, has written extensively, kind of about this challenge of the incentive systems.

00;51;18;10 - 00;51;42;25

JOHN ROSSMAN

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.

00;51;42;26 - 00;51;55;19

JOHN ROSSMAN

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.

00;51;55;21 - 00;52;10;00

GEOFF NIELSON

Yeah. It's 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 if you're be able to summarize everything you've got the, you know in your model and kind of one pithy sentence.

00;52;10;00 - 00;53;01;14

JOHN ROSSMAN

But the simple thing is is work backwards work backwards from like, what's the mission we're trying to accomplish? What 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, 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 organizations challenges that we've been we've been talking about here.

00;53;01;16 - 00;53;04;07

GEOFF NIELSON

Yeah. Now I makes it makes complete sense.

00;53;04;10 - 00;53;33;08

JOHN ROSSMAN

It does make complete sense. But yet we know that the vast majority of people will just proceed in 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.

00;53;33;08 - 00;53;52;02

JOHN ROSSMAN

The bets are actually a recognition that we don't know the future. We can't play for it completely. So we have to excel at the things that should be tested early, test them out before we proceed with big commitments. Right. That's the big bet playbook for sure.

00;53;52;02 - 00;54;16;18

GEOFF NIELSON

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.

00;54;16;18 - 00;54;34;11

GEOFF NIELSON

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?

00;54;34;13 - 00;54;58;09

JOHN ROSSMAN

It I mean, I get it. 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.

00;54;58;09 - 00;55;24;03

JOHN ROSSMAN

All right. Let's 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. And 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?

00;55;24;03 - 00;55;36;13

JOHN ROSSMAN

Like it is specific, the mission of these transformations requires a different set of leadership skills in order to be successful at it. Period.

00;55;36;16 - 00;55;56;12

GEOFF NIELSON

Very, very, very well said. John, before before we, you know, kind of leave off here. I did want to ask you, you know, 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 B.S. or are you think are way over?

00;55;56;12 - 00;55;57;00

GEOFF NIELSON

I.

00;55;57;02 - 00;56;27;07

JOHN ROSSMAN

I'm I'm not convinced yet that a genetic AI is either anything or anything new like AI. 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 a genetic I.

00;56;27;09 - 00;56;50;01

GEOFF NIELSON

I, 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 I would love to see it succeed. I would love to see, you know, organizations either internally or with their customers, you know, 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.

00;56;50;01 - 00;56;53;02

GEOFF NIELSON

But I agree, I feel like it's not it's not quite there.

00;56;53;09 - 00;57;14;03

JOHN ROSSMAN

But Jeff, Jeff, do you remember what the last piece of advice I give him? 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 a genetic AI, but be a skeptic. Meaning like prove it before you buy into the hype.

00;57;14;03 - 00;57;36;09

JOHN ROSSMAN

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.

00;57;36;12 - 00;57;45;14

GEOFF NIELSON

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.

00;57;45;17 - 00;57;50;11

JOHN ROSSMAN

Well, Jeff, I appreciate your preparation and easy conversation to have. So I appreciate.