Kris Safarova  00:29

Welcome to the strategy skills podcast, where strategy partners teach you the tools and techniques to solve mankind’s greatest problems. You Kris, welcome to the strategy skills podcast. I’m your host, Kris Safarova, and our podcast sponsor today is strategytraining.com and we have two gifts for you today. The first gift is a book on how to be an effective reader, which I co authored with some of our amazing clients, and you can get it at firms consulting.com forward slash gift. It is F-I-R-M-S consulting.com forward slash gift, and it is called Nine leaders in action. It was a number one Amazon bestseller. I think you will really enjoy it. And the second gift is McKinsey and BCG winning resume re download. And that is a resume that get offers from both of those firms. And you can get it at firms consulting.com forward slash resume PDF. And today we have with us John Rossman, round two. John was an early Amazon executive and senior innovation advisor AT&T Mobile and Gates Foundation. He’s the co author of big bad leadership and a keynote speaker and advisor. John, welcome.

John Rossman  01:46

Kris. Great to see you again. Thanks for inviting me back.

Kris Safarova  01:50

So I wanted to start with a few short questions about your career and then move to discussing an important new book you just published. The first question I have for you is, what experience from your career has shaped your approach to leadership and innovation the most?

John Rossman  02:07

Well, you know, it’s a fair question, but you know, I’m the product of 1000 little experiences and and both successes and cuts along the way and everything. You know, obviously the time that I spent at Amazon made a significant imprint on me, and I’ve written about that and talked about that a ton, but honestly, it’s been the work since then in applying, delicately applying those lessons, strategies, you know, things to do in helping companies create and reclaim competitive advantage and to innovate. It’s all of those little dots connected together. But I think I’ve just been extremely fortunate to pick a career where, you know, rarely is my goal, or the work that I’m doing to maintain the current state or just optimize the current state. It’s always about creating the future. And that’s what you know, really, I’ve fallen in love with and really my mission, which is to help teams and leaders not just optimize for the current business, but to help create the businesses of the future, and, you know, reclaim their competitive advantage.

Kris Safarova  03:29

And just to press a little bit more, do you feel there was maybe some defining moment that put you on that path?

John Rossman  03:37

Well, yeah, I mean, one was so it was 2012 I had left Amazon in late 2005 I was a partner at a firm called Alvaroza Marcel. Really fun firm, great platform to be a partner on. And my client was the Gates Foundation. And I wrote this one white paper. It was called Future Ready self service, and I sent it to all my clients and contacts. And one of my clients at the Gates Foundation, Greg Shaw, called me into his office, and he had the piece, and he goes, this is really good. And then he told me, like, the 10 things I could have done better with the white paper. He’s a journalist by background and and he said, You know, I think Amazon is, you know, this is 2012 before Amazon really started to impact the world like it has. And he goes in Seattle, we kind of see this company, but outside of Seattle, we really don’t. And I think you do a nice job of kind of capturing and applying what they do, and I think you ought to write a book about it. And so that was really the spark that set me on this journey of writing and trying to to capture a story for others to use. It’s never about Amazon, it’s about you, and what you can take from a company like Amazon or others to apply. And so you know that that relationship and that that spark. You know, certainly made, made a fork in the road for me, and I’ve taken advantage of the opportunities

Kris Safarova  05:09

And along the way, if you are willing to share what is the hardest lesson you’ve learned as a leader and how has it influenced your decision making,

John Rossman  05:18

the thing I struggle with quite a bit. And the co author of big bet leadership, Kevin McCaffrey, has pointed this out to me, and as and as and as a master at this, which is how to keep the main thing, the main thing I easily like fall in love with opportunities and things you could go do and everything but being a bit pickier and a bit more disciplined about where to spend my time and prioritize my efforts has been something that I have to work at along the way and and that is one of the themes of big bet leadership, which is how to keep the main thing the main thing.

Kris Safarova  05:58

I think that is a very common challenge for leaders, especially now, with so much noise, so much coming at us, so many urgent requests.

John Rossman  06:06

Did you know that the word priority didn’t have a plural version of it until, like, 40 years ago, right? It it means the one thing, right? So it’s, it’s, by definition, a singular term. But you know, the management consultants, we turn it into a plural world, and I think it is a very hard but a championship habit of how, how to say no to a lot of really good things you could do, and to really persecute ideas before you commit to them, and then staying focused on it right? And that is directly into the theme of big bet leadership, definitely.

Kris Safarova  06:45

So given that you specifically focusing on keeping the maintain, the main thing for our listeners who are struggling with that same thing, because they are leaders, a lot is coming at them. They have so many priorities. It is. I’m sure everyone really enjoyed this thing that you now mentioned that it used to be a priority, and many of us it was before even our time. We never were part of that world. What have you learned? What advice can you give for people who are struggling with that same issue?

John Rossman  07:18

It’s really to scrutinize. Ideas really well up front before we commit to them, and on a small basis like you can do that as an individual and as a team, but really big bet leadership is about doing that as an organization before you start pursuing these programs and strategies, right? And so much more, in my experience, so much real experimentation can be done before you really commit resources and start building things and people don’t take advantage of that opportunity to really persecute an idea and debate it and and beat it up better. And then, if you have a portfolio of these ideas that you’re doing this with, then you can better pick the concept that you should really proceed with and lean into. But you know, what tends to happen is we fall in love with ideas. We have a general idea. We have this, you know, fuzziness of a concept that we’re going to do, and an organization commits to it, or they, they’re forced to kind of commit to it because of the budgeting process and the way resources get allocated. And then you’re, you’re starting this journey to nowhere, and that’s the start of how, why so many of these transformations or growth strategies or market repositioning or technology platform re platforms fail is because we start the commitment process before we really understand either the problem we are trying to solve. Our hypothesis about the future state is, or the things that must be true to make that future state happen. And when you don’t have those things, I call that the journey to nowhere, right? Like we’re just going to be figuring it out along the way. And that’s what makes these things such high risk, failure prone initiatives.

Kris Safarova  09:18

And we definitely need to discuss this more, because in the book, you mentioned that big bad, whenever companies go after big bad, the failure rate is over 70% so we’ll get to it. Another question I have for you before we move to speaking about your book, the work you’re currently doing is, what do you want your team members and colleagues to understand about you that they might not already know.

John Rossman  09:43

If you can make the journey fun, yeah, like, that’s half the battle and and I think that these, these hard business problems, there’s an art to being both a disciplined problem solver and a good op. Curator and to figure out, how do you how do you actually make it fun? Because think of it as like an athlete. An athlete doesn’t perform their best when they’re under stress and strain and their coaches yelling at them and there’s all this pressure. No, they perform best when when you’re in the moment, when you’re in the flow, when you’re relaxed and you’re just focused on the job to be done, and it’s the same thing as a team. And what happens in these in these organizations, is like, maybe something isn’t going right, like there’s a problem we have to solve great, but we can still find a way to make it an enjoyable experience so that we can perform at our best. And I think that’s one of the things that I’ve really learned across my career is how to be both a really good and disciplined operator, but like making it fun in the moment, so that people can perform the best.

Kris Safarova  10:52

This is such an important point, we need to talk more about it.

John Rossman  10:55

That might be my next book. Maybe I love this topic.

Kris Safarova  10:59

I think it is very important information, very important message for so many reasons, just for so many reasons, that is an important thing to focus on. Life goes so fast. We spend so much time working. We can perform much better. We can think much better. We can come up with much better ideas when we are happy and enjoying versus when we are stressed and priorities.

John Rossman  11:21

One of the concepts I try to employ is this concept of, like, little victories, right? Like, how do we how do we find and celebrate the little victory today while still respecting, like, Hey, we’re trying to solve this hard, important goal or business problem or objective that we’re doing and everything right? So you got to find the little victories along the way, and again, like the goal is to put teams and people at their performance best.

Kris Safarova  11:49

So, let’s talk about big bad leadership. Let’s start with how do you define a big bet and what distinguishes it from regular strategic initiatives?

John Rossman  11:58

Yeah, that’s a great starting question. So a big bet is any strategy, plan, objective that has both high ambition, but it also has multi sided risks. It has dependencies and it has unknown unknowns to it, right? These get called many things within a business. It can be called a market repositioning. It can be called an AI strategy. Can be called a technology platform program. It can, you know, be called a turnaround plan or an operating model strategy, right? But at its heart, it has high ambition, multi sided risk, and they are distinctly different from an incremental or well understood project or program, something that like, oh, as long as we execute well, we know we should get a certain range of results, and we know how to execute these but these transformations are always they should be high ambition, But they always have dependencies and risks, and so fundamentally, you have to figure out a way to proceed on them in a in a truly agile, experimental manner. And that’s really what the book is about, is how do you create clarity, maintain velocity, accelerate risk and value, and test these concepts out cheaply, quickly and effectively, before the organization gets committed to them.

Kris Safarova  13:26

Talk to us about how the needs and mission of the big bath are fundamentally different from that of the existing organization.

John Rossman  13:34

Yeah, so it’s fundamentally different than like your operating rhythm within a business, because in an operating business, and when you’re planning and budgeting and strategizing like incremental improvements, you have a good basis for understanding how to forecast it, how to understand it, and everybody has a pretty clear vision as to like, oh well, this is what we’re going to create. This is what we’re going to do. This is, this is the end point for it, right? Whereas a big bet is fundamentally different. Oftentimes you don’t truly understand what the problem is that we’re solving. You, you all never have a very good understanding of, like, what’s the future state? Like, how would we imagine this working in an unconstrained manner, like, what’s the future state? And therefore, when you don’t understand those things, you can’t create an effective path at testing those things out. And you know, I get asked into a lot of clients to like, hey, come do a QA review or pressure test of a transformation or of a situation. And fundamentally, I ask three questions. Two of those questions are this, which is, what’s the problem we are solving and what’s our hypothesis for the future state? And I’ll go individually interview a broad set of team members, a third of the team, of the executives in the team. On this on this transformation journey, they won’t even be able to answer those two questions. And the other two thirds, they’ll answer the question, but they won’t give me just slight variations of the same answer. They will give me markedly different answers to those two questions, and that’s fundamentally like if we can’t agree to the problem we are solving and the symptoms of that problem, and we can’t agree to, hey, what do we think the future state looks like? Then we’re not set up to succeed. So that gets to kind of the fundamental framework from the book, which is what we call a big bet vector. Right? A vector has two points to it, right? Our big bet vector has the problem that we are solving and our hypothesis for the future state. And if you can establish that big bet vector, then you can use it over the life cycle of the big bet to guess what, keep the main thing, the main thing right, like communication and and understanding the specific words that matter to keep alignment on something and to make sure that we are actually talking about is one of the many failure points for why these major transformations fail, which is kind of where you started this question, like, why do these things fail? Well, they fail because we don’t all have a common understanding as to the problem we’re solving or where we’re going.

Kris Safarova  16:23

So what can leaders do to improve their odds? To improve their well, so big, big bets transformations.

John Rossman  16:32

They don’t fail for one or two easy reasons. They fail for lots of reasons, and so fundamentally, like that is why we wrote this book. Big bet leadership is because it’s easy to make the case. Hey, we need to innovate, we need to transform, we need to evolve, we need to grow. That’s an easy door to push through. But what’s what’s different is, tell me what’s different about the job of a senior leader or the teams that support senior leaders, like, what do we need to do differently when we’re approaching these high ambition, high risk situations versus our normal operating business? And that is the gap in the market that we saw. So you know, the answer your question is, well, that’s the book that we wrote. Is that playbook, and we believe that we outlined a set of concrete steps. It’s not a methodology, it’s a framework, but a set of concrete steps and actions and approaches that help you succeed at these high ambition, high risk transformations. And there’s three essential habits that we think big. Bet legends have people that are systematically successful on these journeys, they are they create clarity, they maintain velocity, and they accelerate risk or habit. So those three habits are the habits that we put across a set of tactics and a framework, big vector in order to act, actually deliver against those three habits. So that’s the summary of what needs to be done.

Kris Safarova  18:05

Can you explain a little more why clarity, velocity and prioritizing risk and value are essential for big bets?

John Rossman  18:13

Yeah. So creating clarity to some degree we’ve already talked about this, which is if we do not understand the problem that we are solving or a hypothesis for the future state, we are ill prepared to make a commitment and really proceed on this. This thinking is built off of what I think is one of the best pure strategy books written, which is called good strategy, bad strategy. And Richard rumal talks about like you have to, you have to have a problem oriented approach to strategy. You have to create, understand the crux of the issue, and create a hypothesis for how you solve that, instead of tactics. Well, that’s essentially what our approach is, but we insert a couple of new things, which is really around defining the hypotheses of the things that must be true in order to get to this defined future state. And we leverage Amazon’s working backwards approach, a narrative, write it out and debate it, approach and that that is the best, fastest and cheapest way to actually do experimentation. So that’s how we create clarity, maintaining velocity. A lot of that is about the team alignment and the team that we have running the big bets and the the DRI, the directly responsibility, and the and the senior executive that’s responsible for this, as well as like the policies and the environment and the culture that we create in that team. But a lot of it comes down to guess what, maintaining focus, right? Maintaining keeping the main thing, the main thing, and so having a small focus team is one of the most controllable Facts. Factors that you can have, and then the accelerate risk and value is all about kind of this hypothesis, experiment driven approach for gaining clarity before we commit. And the biggest disasters on these transformations, like the GE predicts as an example, is where somebody has a good concept an organization, momentum builds up behind it, they commit big to it, but then they have to actually figure it out along the way, and there’s no way to deliver against that initial set of expectations. And it means so many things to different people and diffuse decision making and a lack of a good governance structure, and so fundamentally, accelerating risk and value is to defer out big commitments until we’ve actually tested these so it’s about high velocity testing of a concept before we commit to it.

Kris Safarova  20:59

We couldn’t talk about this book without talking about some Amazon principles you shared, and of course, based on your work and being from executive there. So I would love to get your elaboration on certain principles. So first one, I wanted to ask you about this. What does it mean for a company to stay in day one, and how does that compare to become in a day two company.

John Rossman  21:21

Yeah, so Amazon and Bezos framing on day one, which first appeared in the 1997 shareholder letter, by the way, and everything is really a battle cry. It’s a form of strategic communication which is critical, and we outline kind of this type of strategic repeat, repeat repeat. We call it the chief repeating officer in the book, way of summarizing, like what we are about, but specifically what a day one company a day one company is one that is not trying to optimize for today, but is trying to optimize for tomorrow, and is always going to be leaning forward and taking more calculated risks to build the businesses and solutions and customer value propositions that are forward, leaning and investing more in that than just trying to optimize for today’s business. And I think it’s important. It’s an important concept, because when companies tend to go from great to good, it’s because they have lacked this kind of next horizon innovation orientation, and they under invest in building out those future businesses. But by the time that you start to see the flattening, then it becomes really expensive and really risky to try to build those next horizon businesses. So the best approach is to have a portfolio of a small set of bets that you are doing early to test these concepts out and find the one that you should invest. So my co author for big bet leadership is Kevin McCaffrey. Kevin ran new business incubation AT T Mobile. He was my client for three years. We built a new business incubation portfolio and approach which was largely this, like, how do we build beyond the core for T Mobile and much of big bet leadership came from the practices, the things that worked in the things that that didn’t work in adopting many of these Amazon mindsets into a company that distinctly was not Amazon. Did not want to be Amazon, but needed kind of this. This day, one tactical approach applied to them

Kris Safarova  23:39

When you work with clients and helping them adapt this kind of mindset, where do they struggle?

John Rossman  23:44

Again, big question, one of the areas that they struggle with is truly digesting, what does innovation and experimentation mean most senior executives are operators. Right? They they see a problem, they make a plan, they make a commitment, they execute and they deliver. Whereas a transformation and an innovation is fundamentally the flip of that, which is you have to truly understand that most things start from a basis of failure and test their way to a success. And so that is one of the fundamental concepts and kind of just core belief systems that, honestly, many senior executives can never get over because it kind of feels like we’re not executing well or wasting time and money on this, and it comes across in all these small and subtle ways. And then what happens is the teams that are on this innovation program or on this transformation program, they sense that they know that. And so there’s. Smart, they pull back so they de risk the endeavor by lowering the ambition, and that takes it into a purely incremental approach to this. And so that’s the doom loop of kind of short termism, incrementalism that is not fundamentally transformative in nature. So that is one of the fundamental ways that senior executives struggle with, with this is, is they think you should be able to plan these journeys pretty well. One of the the stories and examples I share is, is really about, you know this, this concept of guided wandering, right? And And again, in business and in life like you can, you know, most people can, you know, see a situation. They can plan it, they can execute it, but, but big discoveries and big new businesses are not that way. It’s more guided wondering. It’s not random, but it’s, it’s difficult to predict exactly how it’s going to happen. And I tell the story of the Amazon marketplace. And you know that that business, that was actually the third attempt at a third party selling business at Amazon, there was lots of naysayers, not just external naysayers, but internal naysayers. But Bezos was kind of, you know, committed to the strategy, flexible on tactics and so like, Hey, we’re going to take another crack at this. And it took a lot of patience and a couple of other big bets. The two I’m thinking of our Amazon Prime and Amazon FBA that were no place on our roadmap when we launched the marketplace business in late 2002 but it was the combination of those three strategies and some patience that allowed the marketplace to be, you know, one of the world’s most disruptive and famous business models ever. Right? Over 60% of all Amazon units shipped and sold are marketplace units. It’s the business that gets Amazon in all sorts of regulatory problems because it’s so dominant. And I think that that is is a struggle for again, many companies is to truly understand that the nature of kind of guided wandering.

Kris Safarova  27:18

Talk to us about thinking and outcomes.

John Rossman  27:22

Yeah, so the first chapter of the book is about thinking and outcomes, and what it is. It’s about unconstrained thinking, and it focuses on just establishing this notion of a big bet vector. Tell me what the problem is, and most importantly, like describe in detail what the future would look like. What What would it? How would it operate? Why would a customer love it? What would be the key operating outputs of it? Don’t worry about how you’re going to get there. We will worry about it, but in due time. So it’s kind of this unconstrained thinking. And what is so hard for teams to do is to put aside those constraints and to really articulate, like, if we were starting from scratch, like, how would this product service operations work? Like, what is the input and the output that we would want to what’s the job that the user is actually trying to get done. And it forces us to dig deeper, have better empathy, better understanding of the entire customer journey and environment and and it leverages this Amazon writing narrative, working backwards approach in order to do it. So that’s the quick story of thinking and outcomes.

Kris Safarova  28:43

Anything else that you wanted me maybe to ask you, and I didn’t know, anything else you want to share about the work COVID in the book?

John Rossman  28:52

Well, two things, you know, first, it’s like, why did we write this book? And I kind of touched on this to begin with. But the book starts with kind of defining, you know, the subtitle the book is your transformation playbook for winning in the hyper digital era and the and the the preface of the book is like, what’s the hyper digital era? And the simple answer to that is that if you think that this past 25 years of digital disruption and digital transformation has been impactful, you haven’t you’re not ready for what the next 25 years offer, and the ability to actually be not just a great operating company, but a company that is systematic about how it reinvents itself that is going to become the core capability that separates the winners versus the losers of this coming hyper digital era. And we have to get good at that as as as operator. In our business, but we’re not today, right? And so why is that? And that’s why I think this book is important, not that we nailed it completely, but I think we actually give a really good set of tangible actions to be done that help senior leaders do a really important aspect of their job, which is the ability to actually transform and change and grow a business. So that’s why we wrote the book, and why we think it’s important. And then the second is, is really captured each chapter. I have a, you know, a quote that I think kind of captures the essence of the chapter. And Chapter Four is called, think big and bet small. And the quote, I think, captures, like, the fundamental challenge that as humans and as business leaders, we have, and it’s from Michelangelo, which is a, you know, he was a 15th century artist and Renaissance man. And he said, and he says this, the greater danger from most of us lies not in setting our aim too high and falling short, but in setting our aim too low and achieving our mark. And I think that captures the constraint based orientation that most businesses and most teams, and there’s a few companies out there, Amazon’s the one that I know best, but not the only one that has this notion of solving big, important problems and has the guts and the Guile in order to actually invent and create something new. And I think that is the path that more companies need to take up, and we need them to take up.

Kris Safarova  31:45

We started our discussion today talking about how you were working on making sure that you focus on the main thing. So I want to wrap up our discussion today with advice you got from Jeff Bezos that you mentioned in the book, don’t let simple things become the hard things, only let hard things be the hard things. Can you elaborate on that advice?

John Rossman  32:06

Yeah, so that was, that was a great moment. And, you know, Jeff was giving myself and Neil Roseman a lecture about how we had allowed the the simple things in the business to become the hard things in the business, but only good leaders, really only let hard things be truly hard things. And simple things tend to be the things that are within our control, but because of an organization, or because we’re trying to get along, or because of these artificial constraints, we actually let them become the hard things. The truly hard things are are either sometimes inventing technology or getting sales, getting partners, getting people to commit external to the organization. Like those are truly the hard things that have to be done. And it was his way of telling us, you know, your title might be director of merchant integration, but I want you to act like you run the whole business. And he was saying this, not to us, but to the entire organization. And when it came to the marketplace, he was saying like, Hey, John and Neil, like you guys should operate like you run the whole business. And so he gave us permission to do a better job at running that business. And big companies, it doesn’t have a big company, any company, they have an uncanny ability of letting the simple things become the hard things, and those are policies, decision making, speed how we apply resources, all of these constraints that really are fully within our control. And so, so I’ve used that line, that logic, that story, dozens of times with my clients to help them like we’re the ones that are making this hard, not that, not not the market, not not the competition, not our customers. We’re the ones that are making this hard. I think we can do better than this.

Kris Safarova  34:12

John, thank you so much. I always enjoy our discussions, and you have so much knowledge with them, and you’re so generous. You share in your advice and experiences. Where can our listeners learn more about you, buy your books, anything you want to share?

John Rossman  34:27

Yeah, so big bet leadership’s that Amazon, and you know, it’s a beautiful, hard cover book, nice Kindle, really great audio experience. It comes with a bunch of free tools. You can get those at big bet leadership.com whether you read the book or not, but it’s helpful to read the book, and you can find me on LinkedIn, John Rossman, super easy or johnrossman.com

Kris Safarova  34:48

Our guest today, again, has been John Rossman. Check out his book. It’s called Big bad leadership. And our podcast sponsor today is strategy training.com if you want to strengthen your strategy skills. Sales. You can get the overall approach used in well managed strategy studies. It’s a free download, and you can get it at firms, consulting.com forward slash overall approach. And it is F-I-R-M-S consulting.com forward slash overall approach. You can also get McKinsey and BCG winning resume, which is a resume that got offers from both of those firms, and you can get it at firmsconsulting.com forward slash resume PDF. Thank you so much for tuning in, and I’m looking forward to connect with you all next time. Thanks for listening to this episode of the strategy skills podcast. Stay up to date on all of our latest training by signing up for our email updates on firms consulting.com we look forward to helping you develop your strategy critical thinking, decision making and communication skills next time here on the Strategy Skills podcast.