Roger L. Martin is Professor Emeritus at the Rotman School of Management at University of Toronto, where he served as Dean from 1998 to 2013, and as Institute Director of the Martin Prosperity Institute from 2013 to 2019. In 2013, he was named Global Dean of the Year and in 2017, he was named the world’s #1 management thinker. He has published 12 previous books including, most recently, When More is Not Better and Playing to Win, which won the award for Best Book of 2013 by Thinkers50. Martin is a trusted strategy adviser to the CEOs of many global companies. A Canadian from Wallenstein, Ontario, he holds a BA from Harvard College and an MBA from Harvard Business School.
In this episode, Dustin talks with Roger Martin about his book, A New Way to Think: Your Guide to Superior Management Effectiveness.
You'll discover how many of the dominant models of management fail leaders time and again. Roger and I discuss why it is so hard to toss out the old ways of thinking. Roger shares why the dominant model of thinking about competition is flawed and a new, better way to think about this.
Roger says, “The dominant model where leaders must make data-based decisions is flat-out wrong.” He provides a much more sustainable way to think about the future and our roles as leaders. We talk about culture, retaining top talent and why most mergers and acquisitions fail. Roger provides an inspiring way to think as a business leader and I’m so excited to share this episode of The Burleson Box Podcast with you. Let’s dig in!
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Dustin Burleson:
Hey, it's Dustin Burleson. And you're listening to another episode of The Burleson Box. This month on the program we're talking with Roger Martin. Many of today's top business and management thinkers call Roger Martin quote this generation's Peter Drucker. He's the Professor Emeritus at the Rotman School of Management at the University of Toronto, where he served as the dean from 1998 to 2013, and as institute director of the Martin Prosperity Institute from 2013 to 2019. In 2013, Roger was named Global Dean of the Year. And in 2017, he was named the world's number one management thinker.
Dustin Burleson:
He's published 12 previous books, including most recently, When More is not Better and Playing to Win, which won an award for best book of 2013 by Thinkers50. Martin is a trusted strategy advisor to CEOs of many global companies, a Canadian from Wallenstein, Ontario. He holds a BA from Harvard College and an MBA from Harvard Business School.
Dustin Burleson:
I'm so excited for this episode. You're in for a treat. Roger is our first time repeat author on the program, talking about his book that just launched, A New Way to Think: Your Guide to Superior Management Effectiveness. Let's dig in on this month's episode of The Burleson Box. Roger Martin, welcome back to the program.
Roger Martin:
It's great to be back. Really nice to be back.
Dustin Burleson:
For listeners who are just getting caught up or just joining us somewhere in the mix of all of our episodes, Roger Martin's last episode on his last book, When More is not Better, is one of our most popular episodes. So please go check that out. And Roger's been busy. He has a new book, A New Way to Think: Your Guide to Superior Management Effectiveness. Roger, tell us a little bit and give the listeners a background why this book? Why now?
Roger Martin:
Sure. The reason for writing this book is I've just noticed over time, so as you know, I work with senior executives companies all around the world and what I've noticed is how entrenched given models get in their thinking. And I almost feel sad when they try one of these models. So let's just use this whole shareholder value. Here's how you make sure you get higher shareholder value, you pay lots of stock based compensation to your executives and then you'll get more shareholder value because it aligns the interests of management and shareholders. So that's a model. That's a theory that says, oh, if you do X stock based compensation, you'll get Y more shareholder value.
Roger Martin:
Now that's been around since the late '70s, it really got started in the late '70s and shareholder value increase has not improved one iota since then. And you'd think, "Well, maybe they'd say this model doesn't work. How about a different model?" But there are so many people who are involved in and believe in et cetera, the model that they say, "Well, no, maybe it's because we gave stock options and maybe restricted stock would be a lot better. Let's try doing restricted stock grants instead." And then that doesn't work. And they say, "Well, maybe we didn't structure this restricted stock grants correctly," and that doesn't work. And then they try the next thing and the next thing, but they don't abandon the model and ask themselves the question, "Hey, you know what? Maybe this whole alignment thing doesn't happen. In fact, giving them stock based compensation actually pits shareholders against managers who manipulate stock prices just to get it to go up and down so that they make money when we don't." That doesn't seem to be the natural occurrence.
Roger Martin:
And so that's why I've written the book. I'd love to encourage executives and boards of companies, owners of companies to when the model doesn't work the way they thought to consider the possibility that it's a dumb model and they should try something else.
Dustin Burleson:
Why do you think that is? I love it and you're spot on. Why do you think that is? Is it a nature of the size of an organization? Is it the leadership surrounding themselves with people that won't toss out these old ways of thinking? What's your take on that?
Roger Martin:
I actually think it has more to do with human nature. Business is my domain of study, but I wouldn't be surprised if you studied lots of other domains you'd see people sticking to models longer than they should. And I think that we do know from all sorts of behavioral research that people get into habits, habits are quite powerful. People like to be automatic, if you will. They'd rather not think about as many things as they can so that they can save their brain energy to think about things, what it really matters. And I think it's probably a bit of human nature and it's just you don't want to abandon something that you've believed is true.
Roger Martin:
Plus, all these models that I see in business that seem to stick, gain traction and stick, have some appealing logic to them. So the appealing logic of stock based compensation is if the shareholder does better, the executive does better. And everybody said, "Oh, what's not like about that? That's perfect." Then they don't ask the question, "Does this model, does the tool of stock based compensation actually do that?" But it just sounds so good, they stick with it.
Dustin Burleson:
We do that a lot in speaking of professions or areas of study that are slow to change healthcare is certainly one.
Roger Martin:
Absolutely. Absolutely. No, no, absolutely. And I often, for what it's worth use the ulcer example. For almost 100 years, the medical profession was convinced that ulcers were caused by excess acid in the stomach and prescribed bland diets and acids and peptic ulcer surgery when it got bad enough, like cutting strips out of the person's stomach. And it took these crazy Australians over a decade to convince the medical profession that it was a bacteria, H. pylori. And so it turns out that every peptic ulcer surgery ever done over about a 90 year period made the patient worse off. Their health outcome was worse than better, but it took that long because there was this theory. This appealing theory, the stomach is like a delicate bag, like a silk purse. And if it's got acid in it, it eats into that delicate lining. And that's what causes ulcers. A very, very appealing theory, just happens to be totally wrong, but it was sufficiently appealing that it took Barry Marshall, the Australian who came up with the alternative theory, he had to ingest H. pylori, grow an ulcer, cure it with antibiotics to get his paper published.
Dustin Burleson:
Oh, yeah.
Roger Martin:
So you're right. But I don't say that by way of saying healthcare is some special case of people being pigheaded about their models. I think it's a human thing. And the real key is I'm not saying, "Well, then you must deeply question every single model that you've ever used." No. I just say when they don't work the way you expected, think about two possibilities not one. Think, "I didn't do it right." Or, "Maybe it's a bad model," not just, "I must not have done it right."
Dustin Burleson:
It's such a great answer. And I want to highlight so no one misses, it took those researchers over a decade to get people to think in a new way.
Roger Martin:
Yeah.
Dustin Burleson:
So maybe as you read Roger's book, just keep in mind that you might not convince your team leaders or if you have shareholders or you're in a larger organization and have partners or even larger and have a board probably going to be a little bit challenging, right?
Roger Martin:
Yes. Yes. It will. And again, what I would say is the best way to do is to make the predictions based on your model explicit. So I would say in the shareholder values, "Okay," so let's just say for the sake of argument, you're the chairman of the board. You say, "Okay, we're going to give this CEO this much in stock based compensation, these many options and these many restricted stock and our prediction is rather than increasing shareholder value by the," I don't know, "7% compound per year that this CEO has done over the last five years. We would expect over the next five years that to be 12%." And just write it down, write it down. And then if after five years, it isn't 12% compound annual, you say, "Well, what's wrong with my model that caused it to be 5%, not 7% as the past or the 12% we predicted?" Because the reason that it's so important to write it down is that when you get out five years and it's 7.3% compound annual, you'll say, "Yeah, yeah, yeah, yeah. That's what we said, right? Yeah. We said 7.3, didn't we? Yeah."
Roger Martin:
So the human mind has an infinite capacity to ex-post rationalize. And the only guard against that is writing it down. I did this, what? Just for fun. I used to be the COO of a big management consulting firm based in Boston and one of the many things I ran was recruiting. And the recruiting folks were quite adamant about their ability to really discern among the candidates that we were hiring, who had the highest potential dah, dah, dah. And if you argued with them at all, they said, "Oh, no, no, no, no, we've done all the interviews and the assessments, and this is it."
Roger Martin:
And so I said, "Okay, okay, okay. Let's just do this. You guys rank the 25." We happened to hire 25 MBAs that year. "You rank the MBAs we've hired from one to 25 in terms of their likelihood of success. And what I'm going to do is take that list and put it in my drawer and not pull it out for three years. I'm not even going to look at it. Nobody's going to look at it. And in three years, we're going to all take that list out," and because every year in the compensation process, we implicitly ranked them. Whoever got the highest bonus, total compensation must have been performing the best, dah, dah, dah, to the 25. "We're just going to take the real data right after compensation system three years from now and see how we did, okay?" And they were like, "Yeah, yeah, yeah." And they were super confident.
Roger Martin:
And it was a random walk. It was a absolutely random walk. And I always remember number one had been fired about 18 months in for he wasn't ever going to be a good consultant. Great guy, nice as can be. And when we told him, he said, "I was wondering when you were going to do that, I'm just not good at this."
Dustin Burleson:
And he knew.
Roger Martin:
Yeah, yeah, yeah. No. He absolutely. As is mostly the case. So a lot of people know. They know. So we could have hired from the zoo a chimpanzee for a couple of hours and had him throw darts at a dart board and we would've done as well as this very quote, sophisticated recruiting process. But had, I swear to God, had I not had that list and I would've gone back to the recruiting people and said, "Well, how do you think we did in that class of three years ago?" They'd say, "Oh, pretty well. Pretty well. I think we had it pretty well." And they would've forgotten completely that they had whatever, Billy ranked number one of 25 and we'd fired him 18 months in. That would've been lost in the midst of time. So if you're going to use a model, write down your predictions as to what you think the model will do for you, and then check back and see. And that will help you decide whether you should try to use it again, use it more cleverly. Or if it's a candidate for ejection.
Dustin Burleson:
It's such a great tip. I hope everyone caught that or pauses and goes back because it works in reverse too. So I think of all the things we do in healthcare a handful of years ago, maybe it's been a decade ago, they came up with a new surgical procedure to help move teeth faster for patients.
Roger Martin:
Oh, okay. Okay.
Dustin Burleson:
So they started using a little micro osteo perforation. So we're basically drilling small holes in your bone of your jaw and we have some limited evidence that stimulates the boney repair, like distraction osteogenesis, where if we need to lengthen a bone, perhaps in a patient who has a genetic syndrome in certain situations that works. Well, we translated that into moving teeth. And no one wrote down, is this actually reducing treatment time? And it's fallen out of favor now because it turns out, the research shows, no it doesn't. Even though we were drilling holes in all these patients' bone and-
Roger Martin:
Oh. Ouch.
Dustin Burleson:
... at a significant expense, and these devices were sold by very slick sales representatives. And it turns out not only do they not move teeth any faster, but they actually increased the risk of root resorption and other complications of treatment. So-
Roger Martin:
Oh. Great example.
Dustin Burleson:
Yeah. If we had taken Roger's advised and said, "We are going to institute this new process and we think that's going to reduce the initial leveling and aligning by two months. Let's go back two years from now when all the cases are finished and let's see if we were right." And often, to Roger's point, we're not. And now what's interesting in reverse is that sometime we stop doing things that do work. So what we found in our clinics to be far more effective at getting patients out of treatment faster is educating them on the importance of not breaking their appliances, of complying with proper recall intervals. So showing up to their appointments, keeping their teeth clean, not breaking the braces. Far more effective at reducing treatment time.
Dustin Burleson:
But what we found in busy clinics is very easy for the clinical assistant or the doctor to forget to do a thorough debriefing with the parent on what we did today, why it's important not to eat certain foods, why these things we placed on your child's teeth might break. So we all get excited about something we think will work. We never write down if we got the results or not. And then we forget about the things that do work. So I love your example because I think you're right, it's human nature and it's everything.
Roger Martin:
Yeah. No, those are marvelous examples. Marvelous examples. And I mean, the tricky thing about life is it doesn't exactly obey the most simple rules. It's complicated. And what that requires is you watch life as it unfolds because you're going to get all sorts of new data. And what I hate is when, and I might say the medical field, it's a little bit this way. It declares something to be settled. This matter is settled. And then that sends the signal, you don't even have to measure anymore. Because we just know this the case. I just don't think anything's ever settled. We thought the laws of physics were settled for about 150 years. Oh, this really smart dude, Sir Isaac Newton. And he was. He was a smart dude. It's like these three things and this is how it works. And it took up goofy non-sock wearing patent clerk, Albert Einstein to say, "Well, maybe what we're sure is settled isn't quite, quite, quite as settled as we thought." But that's really hard. Because people want things to be settled. And I just don't think much in the complicated world we call life is settled.
Dustin Burleson:
That's exactly right. We want everything to be settled. Speaking of some tremendous myths, I think you've busted in the book on ways we thought were settled. Let's talk about competition.
Roger Martin:
Sure.
Dustin Burleson:
I mean, I love the book first of all. I mean, you've got to get through the entire thing and it will blow your mind. I mean, healthcare is certainly an area that's constantly being disrupted, but there's a dominant model of thinking about competition and it's flawed, you say. There's a better way to think about this. Can we talk about competition?
Roger Martin:
Sure. I think the dominant way of thinking about competition would be big companies compete with one another. So everybody would love to think that Pepsi competes with Coke. PepsiCo Limited and Coca Cola Limited compete. And based on that notion that those compete, then those are the generals at the top of those companies. And they have to control and organize and coordinate the troops and have all sorts of mechanisms for doing that. That's the way competition and then Pepsi and Coke compete.
Roger Martin:
I would argue that while in some sense they do, that's not who consumers think compete. When you're thinking about reaching into a cabinet in a sea store, the cold cabinet in a sea store and picking out a water, are you saying, "Ah, I've got to decide between PepsiCo's Aquafina product and Coca Cola Limited's Dasani product." Or, "I got to decide whether I really like Coke and I'm loyal to Coke, and I'll buy Powerade or I'm Pepsi and I'll buy Gatorade." No. That's the farthest thing from the consumer's mind. Aquafina competes with Dasani, Gatorade competes with Powerade, Tropicana competes with Minute Maid Diet Pepsi competes with Diet Coke. That is what I would call the rock face, the coal face of competition.
Roger Martin:
And so the job of those people up top is not to control and coordinate, the job of those people at the top is to make sure that they're helping, if they're Pepsi, Aquafina compete with Dasani. Gatorade to compete with Powerade. And if they don't have that as their primary job, if they spend time saying, "Well, Aquafina, we're doing badly in the Cola business this quarter, I think you better cut your advertising or cut your distribution." Or the like. Or, "And by the way, you need to come to a two week long corporate planning session where we decide how much money to give you." If you spend your time on control and coordination, you are doing a disservice to Aquafina or Dasani and you're making yourself less competitive. Competition happens at the coal face and your job, your only job is to help them compete. That would be a better model of thinking about it than it's all about control and coordination.
Dustin Burleson:
I really appreciate that. Because we see this again in our industry with rapid disruption by telehealth-
Roger Martin:
Ah.
Dustin Burleson:
... and tele dentistry. And we often do not understand even who the proper competition is. We think it's a large group down the street and meanwhile, patients are receiving care across state borders now in ways that were not available 10 years ago.
Roger Martin:
And thinking about, yeah. Thinking about competition as who customers think of as competition is a key part of this.
Dustin Burleson:
Yeah.
Roger Martin:
You can say, "Oh, no, no, no, no, no, no. That's a low cost cheapo way to do it. You shouldn't be thinking about that." I think the consumer's saying, "Yeah. But to me it's good." Then you have to ask yourself the question. So let's say you're the in-person clinic competing with telehealth, and let's say you're a corporation that has 27 clinics or something. You got to be asking yourself the question, how am I helping that clinic in whatever, Des Moines compete against telehealth that is again, across state borders? Am I making them more competitive? Or am I spending my time telling them to send their budgets and make sure they're on budget and coming to the planning meetings, come to the corporate reviews and telling them all these things that help me coordinate them, but do nothing to help them win at the coal face of a customer. Who's saying, "Gee, should I try this telehealth thing? Maybe it's more convenient. Seems a little less expensive." What are you doing at the top to help the Des Moines clinic?
Dustin Burleson:
Yeah. Man, it never helps when we tell consumers what's good for them.
Roger Martin:
You notice that doesn't work so well. Huh?
Dustin Burleson:
In dentistry in particular, there's a great new upstart that's very exciting, and in transparency, I'm a shareholder, but-
Roger Martin:
Ah, okay.
Dustin Burleson:
... they've treated over a million patients in a niche that dentists and orthodontists said, "Well, those patients, I mean that's low quality. They don't want that." Well, over a million people last year did in the United States. And it's a pretty good cohort. And it's not like 5,000 people tried it out, over a million people did. And we said, "Well, those are probably patients that would never visit our offices anyways. Those are Walmart shoppers that would never show up at a Nordstrom," for example. And turns out we were wrong with that. Study out of the University of Pennsylvania showed over 45, 46% of them actually did visit a dentist first and did not choose to do in office care because of cost and convenience. So that's where we're controlling in coordinating budgets and allocation of human resources and marketing and clinic hours. And we realized the patients don't even want to come into the clinic.
Roger Martin:
Yeah. Oh, that's a fascinating study. And I would predict that you're going to find that there are probably two segments. One is the cost segment where they just say, "I like what you do, but I can't afford it." But there is going to be another convenience segment. I mean, it is hard as heck to get me jazzed up about going, I live in Fort Lauderdale and Cleveland Clinics has got a fiscal day out in West End where my doc is. Boy during COVID, doing a Zoom call with my doctor, oh, man is that convenient.
Dustin Burleson:
Nice.
Roger Martin:
Oh, man is that convenient?
Dustin Burleson:
Yeah.
Roger Martin:
Because he tends to be on time. If you've got a 10:00 Zoom, it actually tends to happen at 10:00. If you have a... Now Cleveland Clinic tries to do a good job, but if you have a 10:00 appointment, if you get to see the doctor by 10:30 ish, you're doing well and it's a 40 minute drive out there, then you got to park and walk and whatever. So they may be saying it's so much higher quality to be there physically with your doctor. But I'm saying there's a huge convenience cost in my busy life. Holy smokes is there ever. So I wouldn't be surprised if there's a segment that is relatively let's say median or above income and is doing it for pure convenience.
Dustin Burleson:
Yeah. I agree, 100%. There's a section of the book on, and I had to stop and put the book down. I was like, I got myself fired up because I was like, "Okay, this is absolutely contrarian to what I've been taught."
Roger Martin:
Yes. Oh, I think I know where you're going.
Dustin Burleson:
It's the chapter where you say the dominant model that leaders must make data based decisions is flat out wrong. So my head just exploded. But you're right, so I want you to walk leaders through that because doctors and dentists, they're all taught, "We need to make database decisions." So why do you say that dominant model is flat out wrong?
Roger Martin:
Well, what you have to do is combine two things that you were taught separately. So I suspect you took a statistics course as part of your education.
Dustin Burleson:
Yep, absolutely.
Roger Martin:
Yeah. And then you took a bunch of courses that taught you applications of statistics. So if you're an MBA like me, you get taught a statistics course, and then you get taught marketing and you're taught how to do an analysis in marketing that essentially used what you learned in statistics, but they're separated out. So in the marketing course, it says, "Well, go out and do a bunch of consumer research, crunch the data and see what inferences you can draw. You got to make sure that sample a random sample of consumers. And you have to have the sample size big enough so that you figure out the 95th percent confidence interval. And then you make decisions based on that data. And if you make them based on gut feel, you're a corporate floozy."
Roger Martin:
But over in the statistics class, they taught you some interesting things. They said, "Well, if you're going to make inferences from a sample to the universe," so I want to know what kids between 10 and 16 care about in terms of their dentist experience then, well, you better get a random sample of 10 to 16 year olds. If you get a bunch of five year olds and a bunch of 30 year olds, that's not going to be representative of the universe you want to understand. And if it's all boys that you're surveying, you're not going to have a representative sample. So you cannot make any inferences whatsoever from a sample unless it's entirely representative. So far so good?
Dustin Burleson:
Yep. Yep.
Roger Martin:
Okay. So from what era does all the world's data, every last piece of data that we have in the world, what era does it come for from?
Dustin Burleson:
The past.
Roger Martin:
Yeah. Okay. So what is your assumption about your data if you're saying it's representative of the universe? 100% of that data is from the past, so the core assumption is that the future will be identical to the past, because if the future is different than the past, then you have an unrepresented sample and your statistics professor will be wagging his or her finger at you saying, "Don't do anything with it. If you do anything whatsoever with that, you will be making a flawed decision. So no, no, no, no, no. Don't go there." Meanwhile, your marketing professor or your finance professor or your operations professor is wagging finger saying, "You must do data analysis to decide what you do."
Roger Martin:
So the core assumption, the absolutely core assumption in this view of we must make database decisions is that the past is a perfect, and I mean, perfect predictor of the future. Nothing whatsoever will change in the future. And if that's true, then voila, we're okay. Sampling from the past is representative of the universe and you're okay. And in aspects of medicine, that is absolutely true. The heart works the way the heart works. It always has and always will. Blood is composed of what it's composed of in the past and the future. So that actually a bunch of those things, the future is identical to the past and you can draw inferences.
Roger Martin:
But if it comes to things like, "Well, how do people visit dentist offices?" What we've just been talking about five minutes ago was the future is becoming entirely different than the past. We've got cross border, we've got telehealth, the tele dentistry, et cetera. And so basically if you're going to make a decision that's based on data, you have to be able to say to yourself, "I am utterly confident that the future will be identical to the past. And therefore I can make this database decision." If you can't say that to yourself, and I'm afraid in most aspects of business, you can't, it's just hilarious. You'd be laughing at yourself saying, then you must not use data to make decisions. You must not.
Dustin Burleson:
We have this conversation with listeners who will meet at a live event or that will come out to Kansas City and show some really detailed plans on maybe an expansion or acquisition that they're pursuing. And they've got a lot of data. Most doctors love data. And so we always encourage them to pump the brakes. And I think of so many deals that almost got done or database decisions that changed overnight. I think of all the business deals on September 10th, 2001 that the next morning just fell apart. I mean, imagine if you were the contractor for airport security and you were about to sign a big contract the next morning on September 11th. So sometimes everything changes - to your point that the future does not always behave like the past. Almost never. There are some themes that come back over. But I mean, yeah, healthcare is certainly one of those. I mean, we could never imagine that a provider in Texas could diagnose an MRI of a patient in Minnesota and that is frequent today because of technology.
Roger Martin:
Yeah. The way humans interact with one another and the stuff they pay attention to, whatever, all of that just changes so dramatically. Yet we restrict ourselves to analyzing data. And if you analyze, see the obverse of this true too sadly. If you analyze the past in order to draw an inference from it, it will convince you to not try to make the future different than the past. Because it'll convince you, even though you don't realize it, that the future will be identical to the past. And then you will act in a fashion that will encourage it to be like the past. This is one reason why things change so little. Now, eventually somebody else who is not trapped by the data will say, "Couldn't we have people do distant MRIs and I'll diagnose them 1000 miles away?" And everybody will say, "Oh, come on. You can't really do that. Can you?" And then they say, "No, no, no, no, let's do it."
Roger Martin:
And this is essentially, if you want to create the future, you have to imagine a possibility, and then figure out how to make it happen. Meanwhile, if you go to business school, you're taught the way you should operate is to analyze data and make decisions on that basis. That's why business schools are teaching you not to be creative. How to avoid creativity at all costs. And in fact, feel badly about yourself if you actually ever get this creative inclination.
Dustin Burleson:
And to adapt. We have a friend who's a member here and a big influencer in our industry, who's co-founder of one of the largest, probably the largest patient financing company for orthotic and dental patients. And he says, because they have a trove of data. And I mean, everything from demographic to credit scores, to how much people finance and win. I mean, it's just amazing the amount of data they have. And he says, "But," so this is someone who has a ton of data says, "but using that to make decisions about tomorrow is like driving your car looking in the rear view mirror."
Roger Martin:
Really? Oh, good for him.
Dustin Burleson:
He's right.
Roger Martin:
That's smart. See, that's probably why he's so successful. Because I mean, he has this huge advantage, which is everybody else is doing that. And everybody was trained to do that. And you're never going to invent the future by being data analytical.
Dustin Burleson:
Yeah.
Roger Martin:
You will optimize the precedent and in some sense, that's what data analysis does. So I'm not the guy who invented this thinking, a pretty smart dude named Aristotle, 2,500 years ago invented this. He said, "You can split the world into two pieces. The part of the world where things cannot be other than they are." If I drop my smartphone, it will fall. And it fell 10 years ago, 100 years ago, whatever. It'll fall next year. It'll fall in Antarctica. It'll fall. It's in the part of the world where things cannot be other than they are, because there is a universal force called gravity and it does push things down. But if I ask the question, how many smartphones are there in, and I'm sitting in 1999, the answer is zero. Zero. Because the first one came out in 2000. If I ask the question, how many smartphones are there now in the planet? The answer is 4.4 billion. That's the part of the world where things can be other than they are.
Roger Martin:
And what Aristotle essentially said is in the part of the world where things cannot be other than they are, in some sense, the job of human beings is to analyze the data, to understand the causes of the effects we see so that we can optimize to that. So in health it's like you analyze all these people who smoke get cancer. And they always will get cancer, because lungs aren't going to change. And nicotine's and smoke's inhalation is not going to change the effect on lungs. So you can optimize by trying to talk people out of smoking, make it harder to smoke, et cetera. And then you let vaping happen of course. But before that we were pretty good. But he said in the part of the world where things can be other than they are, the job of human beings is to be the cause of the effect that they want to see. Which is quite a lovely thought, I think.
Roger Martin:
And so your clever dentistry financing guy wants to see something that doesn't exist now. And he says, "My job is to make that thing happen." And I'm presuming, if we were talking to him right now, he'd say, "Yeah, I want more people to be able to finance in a reasonable way their dentistry, because it'll be net positive for them. And right now they think they can't do it because they can't get financing for it and they can't afford it." So he wants to be the cause of a new effect and he will never be the cause of a new effect, even though never is a long time, if he makes his decision based on data, because the data will tell him, "This is the way it is," and he wants to make it a different way. The only way you can do that, Aristotle said, is to imagine possibilities and choose the one for which the most compelling argument can be made. And that is a fundamentally different model of being a manager than is taught universally at all business academic institutions on the face of the planet.
Dustin Burleson:
You're spot on. I love that. That's great. I read somewhere, someone tweeted, someone much smarter than I tweeted that you are our generation's Peter Drucker. And I could not agree more. It's lovely-
Roger Martin:
That's very nice. He's my hero. He's my hero. He's the most important managerial thinker of all time. So that is a very lovely thing to say.
Dustin Burleson:
Yeah. I just, I could not agree more. So thank you for that. That was fantastic. Can we shift gears and talk about culture? I think that's always-
Roger Martin:
Sure.
Dustin Burleson:
It's always a hot topic for our members. I think they-
Roger Martin:
Yes.
Dustin Burleson:
... want to address it. Particularly if they are acquiring. A lot of consolidation is happening in healthcare, as you know. And so trying to merge or acquire cultures is really challenging. So can we talk a little bit about maybe some myths about culture and the dominant way of thinking and maybe a new way of thinking?
Roger Martin:
Sure. Sure. So I think the dominant way of thinking about culture is that you can declare the culture you want and it will happen. And you see this often in the scenario you've just talked about, so we've taken you over and you get all the people together and say, "Well, your culture was this, our culture here is to be blah, blah, blah." Whatever the hell blah, blah, blah happens to be. And then you imagine it will change. Or, or, that's the most usual thing to happen. The second most usual technique is to say, "Well, we are going to change culture by flattening the organization, decentralizing or maybe centralizing. We're going to make a formal organizational change." So one is by declaring and the other is by formal organizational change and that's what we see happening. And that's, I would argue why we see cultures not changing.
Roger Martin:
How do cultures change? Cultures change only when there is a different nature of interpersonal interaction. Because culture derives out of how we interact with one another. Then there becomes a shared understanding. Culture is shared norms and understanding so that, you know you've got a strong culture if you could have 10 members of the organization watch, as if they were watching behind that one way mirror, and watching a meeting and they all say, "Oh, wow, the CEO really schooled that EVP." And if some of them say, "Oh, no, no, the CEO was really nice to him. You don't understand." Then you wouldn't have a strong culture because people can't interpret things or won't interpret things in a consistent way. If it's all consistent, "Oh, wow. You see that." Then you've got a culture.
Roger Martin:
So if you want culture to change, the only thing that'll change it is when people work with one another, person to person, they change the way they behave. And the only way that I've ever seen that change is when the people at the top change their behavior. So when they change the way they interact with other people, it slowly starts to change the way people understand how interactions happen. So when I first started working with A.G. Lafley after, I had worked with him before, but when he became a CEO, what we realized is that the strategy and planning process in P&G had become theater. The culture sure was something called get in and get out. So if you were a business unit president, like you were a president of Baby Care, the Pampers business, and you were coming up for your strategy review, you'd put together a huge long PowerPoint deck that you would want to come in to print, present to the CEO, COO, CFO, et cetera, the top six managers who would be on the receiving end.
Roger Martin:
And it would be buttoned down airtight. And you would have a whole lot of little slide loops in case a question came up, "Oh, funny, you should ask that." Flip out the six page deck to show how question answered. So it was just corporate theater, where there could be no actual discussion of anything. If the CEO raised a question, there was already a set answer to it. And so A.G was like, "This is such a waste of time. I hate this." And if you actually ask the business unit presidents, they hated it too, but that was the culture. Get in and get out. What you wanted to do is get in, make your presentation and get out with the least amount of changes possible to what you're planning to do. So no value was the ultimate goal. Which is something when you think about it.
Roger Martin:
So we just made this subtle change. We said, "Here's how that interaction is going to go. We're happy to get that PowerPoint deck, but you just need to send it to us a week in advance, not months and months in advance, a week in advance. We will issue to you, just a very short memo with the three subjects based on our reading of that, that we would like to discuss. And you are not allowed to bring into that meeting more than three new pages of anything."
Dustin Burleson:
Love it.
Roger Martin:
"So we don't want you to have 100 page PowerPoint deck answering those questions, because we want to have a discussion of these questions in the meeting. And by the way, we have absorbed your PowerPoint deck. We don't have to spend any amount of the time going over the PowerPoint deck. We just want to talk about these three things."
Roger Martin:
It freaked people out at first because they wanted to come in with another 100 page deck. They wanted to present, "Can't we just present our deck?" And it's like, "No, no, no, we've read it."
Dustin Burleson:
We've read it. Yeah.
Roger Martin:
"We just want to discuss this business. What could we do to make sure these things that is now a threat we can take care of?" And it took about two or three years to change the culture about how the CEO had dialogue with his business unit presidents. But then it became the new culture. The culture was that you did this in advance and you had a discussion. And after that discussion came a bunch of things that you could do to follow up and the like, and it changed completely from something that was corporate theater to something that the business unit presidents and the CEOs loved and would've missed completely if it had gone away.
Roger Martin:
So you have to think, if you want to change culture about how you interact in that interpersonal domain, and that is what will eventually change the culture.
Roger Martin:
And what was A.G trying to demonstrate to others? If you doing this up, and you're the head of, whatever beauty care, maybe you want to do that with the head of shampoo head conditioners and the head of antiperspirant deodorants and skincare, whatever. And sure enough, that starts to happen. Because that becomes a more natural way to interact with one another. And then you have this change of culture from formal command control to dialogue between intelligent people about how to shape the future.
Dustin Burleson:
Yeah. And for out listeners, to catch them up, we're talking about a small company called Procter & Gamble when Roger says, "Yeah, I did change this over at P&G." I think probably about a $380 billion company. So if you can deliver value and change the culture at a behemoth, a really cool company, I'm biased. My uncle did research and development for them many years ago.
Roger Martin:
Oh, really? Oh, boy.
Dustin Burleson:
Yeah.
Roger Martin:
Yeah. R&D there is great.
Dustin Burleson:
Oh, it's just such a... I mean, he loved his time there. Anyways.
Roger Martin:
Yeah. What I do say on that front is Kremlin watching does not just happen in Moscow. It happens everywhere and you cannot imagine how much impact a change in interpersonal behavior of a CEO has, because everybody watches it. Everybody watches it. So for example, another thing A.G, the CEO, took over and turned around P&G in the 2000 to 2009 period, he said to all the businesses around the world who wanted him to come and visit to open this plant or talk to the president of the country or whatever, said, "I'll come and visit under two conditions. One, you set up an in-home visit for me. So we find a consumer and I'll visit her," mainly women, "in her home to sit down and talk to her about how do you do wash? How do you do dishes? How do you clean your floors?" Blah, blah, blah. All of that. And store checks. "I need to go and walk several of the retailers. If you don't do that, I ain't coming."
Roger Martin:
So what cultural change does that bring about? It's super hard for the country manager of Turkey to say, "Well, the CEO of Procter & Gamble has time to do in-home visits with consumers and store checks. How is it that I do not have the time?" And the answer is-
Dustin Burleson:
Exactly.
Roger Martin:
... there is no answer. And so you start doing it. And then when the president of all of Turkey, P&G Turkey is doing in-homes and store checks, what does the category manager of beauty care do in Turkey? Do in-home visits and store checks. So you just have to, if you want cultural change, you have to lead it by changing your own behavior. Which again, I rip off Aristotle. I rip off Gandhi. Be the change you want to see. I mean, Gandhi was brilliant and right. That's how change happened. That's how culture change happens.
Dustin Burleson:
I'll never forget one of our head marketing copywriters who's done a lot of work for Excellence In Orthodontics and for our member programs helped develop a really popular skincare product. And it became wildly successful. The firm sold for over a billion dollars and the co-founder, he said, "When's the last time you were in a Walmart to see where this thing is on the shelf?" And he just said, "I don't shop at Walmart." He had flown into this meeting on his private jet. And the advisor wisely said, "You might want to get to Walmart every now and then and see what this is like." So his entire marketing team had never been to a Walmart or a Target and walked around.
Roger Martin:
Wow. Wow.
Dustin Burleson:
And that's something we tell all of our members, if you're a doctor, you're a plastic surgeon or an ophthalmologist or an orthodontist or a dentist listening to this, and you don't shop at your Target or you're Walmart or your Sam's Club or your Costco, promise you, your consumers do. And you might want to go walk around, see what that community is like before you start trying to sell to them. So I love your story that-
Roger Martin:
No kidding. That is great.
Dustin Burleson:
... the head of P&G said, "I'll come on two conditions." And they're probably thinking, "Okay, he's going to need a private jet and he's going to need the penthouse suite at the Four Seasons." And he's said, "No, I want to meet with some consumers and I want to see our products on the shelves." That's brilliant.
Roger Martin:
Yeah. And one of the things was legendary in his entire time there was a time that he insisted on going out to Western China. Rural China-
Dustin Burleson:
Wow. Wow.
Roger Martin:
... not Shanghai, Beijing, rural China to watch and talk to women, washing clothes in the stream.
Dustin Burleson:
Wow. Wow.
Roger Martin:
Because he wanted to say, "Hey, we think Chinese people live in Shanghai and Beijing." And of course there are 30 or 40 million people in each of those, but the 1.2 billion people, lots of them wash their clothes in a stream. What can we do for them? And everybody's like, "Holy smokes."
Dustin Burleson:
What a great leader. What a great leader.
Roger Martin:
Exactly. And that's culture. Did he order everybody else to go to streams? Did he change the organizational structure so he had stream watchers? No. He just behaved differently and people watched.
Dustin Burleson:
Yeah. I mean, we're getting close to the end of our time together. I want to talk if we can, a little bit about knowledge work.
Roger Martin:
Oh, sure.
Dustin Burleson:
Because I see it in healthcare, in that the dominant model often sets up this consistent and destructive hiring and firing cycle. Can we talk about knowledge work?
Roger Martin:
Sure. So the interesting thing about the modern organization, and it would certainly be in a professionally oriented world like dentistry, is that it's adopted the habits of a world that's gone away in a way that isn't very helpful. So it used to be that if you had a company, like let's just say Procter & Gamble, 100 years ago, they would've had all sorts of factories producing all their various products, Head & Shoulders and Pampers and Tide and et cetera, et cetera. And then a small structure of offices and office tower with some people in it managing that. Then all these companies have grown, and what's happened is that you have a much bigger part of the wage bill in Proctor's case, even though it's a classic product producing thing, 67% of the wage bill is in office towers.
Dustin Burleson:
Yep.
Roger Martin:
And you ask the question, "Well, what do those people in office towers do?" Because you're manufacturing products in all the plants and they've plants all over the world manufacturing all these products, but got these office hours. Well, they are decision factories. They manufacture decisions. What we are going to produce, what we're going to price it for, how we're going to advertise it. What's our R&D budget? All of those things. And if you look at it, that work is very different. So work in the factories, so if you just go to a diaper plant in Proctor, they have a bunch of workers who come in at the start of their shift and work in the same way their whole shift, end it, come back the next day, do the same thing exact. Those are what I call flat jobs where the job is the same every time you are the third worker of the 12 workers along the diaper line.
Roger Martin:
We've taken that world and said, "I guess the people working in those office hours must have flat jobs too." So we have something called a brand manager. And I guess they come in every day and manage the brand. But it turns out that if you look at those jobs, those jobs aren't flat, they're a series of projects. So that brand manager maybe intensely working on launching a new variant of it or that brand manager may for a couple of months, be worrying about how to get better retail distribution where shelf space is being shrunk. Or there's a new ad campaign. Or there's a new... It's a set of projects that are different. In fact, that brand manager can probably only say, "Yes, here's the part of my flat job every Monday morning, we have a one hour meeting about the category I'm working on." The other 39 hours are a series of things that come and go projects that take up all of my time, day and night, and then disappear forever, because we've fixed it. So we've taken that flat structure and applied it to a structure that's really project oriented.
Roger Martin:
And then what we do is add enough capacity so that when there are multiple projects going on at the same time in a person's area, you've got enough staffing. It's like planning your capacity for your power generator if you're in the, whatever south, it's the hottest day of the year when every air conditioner is going. And what you have then is massive amount of slack in that power generation in the cold months. Or the opposite if you happen to be in Minneapolis, it's maybe January 14th is the peak peak usage. We design organizations for that peak usage because we've organized flat jobs and you have to add another flat job when you hit peak usage.
Roger Martin:
If instead you said, "You know what? This is a project world. We should manage this on the basis of projects. We should have people available to work on projects, so rather than having a brand manager for every one of Proctor's $70 billion or 70 big brands," we say, "we should have a cadre of brand managers who are capable of doing these projects. And we assign them to these projects as projects are required." And you say, "Well, gee, that's a weird way to organize." I say, "Well, if you look at what happens at Accenture or Deloitte, both are 40 to $60 billion companies, that's actually how they're organized."
Dustin Burleson:
Yep.
Roger Martin:
Professional service firms are organized around projects. You just have a level that says, here's the kind of role you could take on a project and the kind of projects you have experienced in doing. And we will assign you that project. And you'll be ripping at it for six months, working day and night on it. And then it's gone. And then you're assigned to another project. I believe that if we organize the decision factories of the world by projects, rather than flat jobs, I believe we could have a 30% saving in all white collar employment in our companies. 30%.
Dustin Burleson:
Wow.
Roger Martin:
Because we've got that much slack built into it by having these flat jobs. Because when somebody's got a flat job, you're a brand manager and you don't actually have a lot of projects going on right now, do you go to your boss and say, "Can I go lay on a beach for a few days, because I got no projects.?"
Dustin Burleson:
Yeah.
Roger Martin:
No. You make up work to do.
Dustin Burleson:
Exactly.
Roger Martin:
So that you can look busy. And that's why there's this... You started out the question with this what I call binge and purge. So companies, when things are going well, they binge and hire all sorts of white collar people. And then when things are going badly, for one reason or another, they fire a bunch of them and you'd say, "Well, how could they possibly fire 10,000 white collar workers? And there must be so much stuff falling through the cracks after that." And typically it's not. And it's because you have all this incredible slack because you've got job structure, flat jobs that is not suited to the actual world, which is projects.
Dustin Burleson:
And not just the savings to the bottom line, but I'm assuming probably you saw lower turnover, higher engagement in those employees, particularly creative employees or knowledge work that have project based versus these flat jobs, correct?
Roger Martin:
Absolutely. Absolutely. And if you will, I think in the modern economy, there are lots and lots of talented people who are, what is the gig economy? What is a gig?
Dustin Burleson:
Yep.
Roger Martin:
It's a project. That's just another name for project. People are voting with their feet and saying, "Here's what I'm going to do. I'm going to organize myself around projects. And I do not need to be slotted into a company as a," whatever, "a medium level package designer."
Dustin Burleson:
Yep.
Roger Martin:
"I'm going to join the gig economy and hang up my shingle and get projects designing packages and get rid of all this useless bureaucratic overhead that's above me and have more fun." So I think if we don't rethink the decision factories and remember, you could say, "Well, Roger, I understand how in a big," I don't know, "big consulting firm or something, yes, you'd have more white collar than blue collar, but not in a Procter & Gamble where they have factories that are actually banging out stuff." No. Wage bill two thirds, knowledge workers.
Dustin Burleson:
Wow.
Roger Martin:
Every company is now dominated by knowledge workers. Then the reason is the knowledge workers just get paid way more. And for better or for worse, they get paid way more. So the amount of waste of human lives of people doing work that doesn't need to be done. And you know as well as I do, that if you're doing work that doesn't need to be done, it's not fulfilling.
Dustin Burleson:
No.
Roger Martin:
What is fulfilling to you when you're doing something that you know is important to be done, that's hard to do, that's challenging, that's what gives you fulfillment. And I think if we reorganized the knowledge factories with a different model project basis, rather than flat jobs, we'd see productivity rise, worker satisfaction rise and the economy grow faster. Because you don't grow an economy on the basis of useless, unproductive work.
Dustin Burleson:
That's what we've seen for a long time. And I could talk to you all day about why really we're productivity in the United States hasn't changed a whole lot in the last 40 or 50 years. I think it's a huge part of it. And I love, love, love that section of the book and the entire book. So thank you for writing it. If you're a member of this program, you're going to receive a physical copy of Roger Martin's new book, A New Way to Think: Your Guide to Superior Management Effectiveness. I know people are going to want to learn more about you, Roger if this is their first time hearing you. I'd just like to maybe let us know, let listeners know where they can find you, what you're doing next, because you write a ton and it's all great stuff. So where can they find you?
Roger Martin:
Well, I'd like to start by just saying a big thank you to Burleson Box. I mean, I think it's really lovely that you've interviewed me again for a book, it's really appreciated. But they can find out more about me from my website. Everything that I've written is organized, I think nicely there. It's Roger L Martin. My middle initial is L for Lloyd. So www.rogerlmartin.com. And I have been now, for the past year and a half also writing a weekly post, kind of column on Medium. So if you're into Medium, you can find it there. But if you don't pay 50 bucks a year to belong to Medium, I post all of them on that website so that you can see what I write every week.
Dustin Burleson:
We will include both of those in the show notes. Roger, thank you for being here. Thanks for writing the book. It's such a tremendous honor.
Roger Martin:
And thanks for having me. This is lots of fun as always.
Dustin Burleson:
You've been listening to another episode of The Burleson Box, where we bring you and your team leaders into the conversation with today's best authors and business leaders. If you enjoyed today's program, please share us with a friend or colleague, visit theburlesonbox.com where you can sign up to receive my monthly reading list, study guides for each of the books and authors we interview. Give us a call at 1-800-891-7520 and we can discuss how The Burleson Box membership, monthly coaching or our annual leadership conference can work for you and your team leaders. Be sure to listen each month for new resources to help you and your employees serve your patients with excellence. Until next time, remember the words of Umberto Eco who said, "The person who doesn't read, lives only one life. The reader lives 5,000. Reading is immortality backwards." Go make it a great month. I'll see you right here next time on The Burleson Box.