Best Selling Author and World's Top Strategy Expert Rita McGrath On How To See Around Corners Through Inflection Points (#264)

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Rita McGrath is a bestselling author, a sought after advisor and speaker, and a longtime professor at Columbia Business School. Rita is one of the world's top experts on strategy and innovation, and is consistently ranked among the top 10 management thinkers in the world, including the number one award for strategy by Thinkers50.

Rita's recent book on strategic inflection points is Seeing Around Corners: [00:02:00] How To Spot Inflection Points In Business Before They Happen. Rita is the author of four other books, including the bestselling, The End of Competitive Advantage. 

Welcome to the Deep Wealth Podcast, and you heard it in the official introduction. We have a thought leader. She's going to rock your world and not only a thought leader, a fellow podcaster, bestselling author, you name it, she's been there, she's done that. When you check out her webpage and check the show notes, we have a link.

It couldn't be any easier. Some of the top brands in the world. She is there, but I'm gonna put a plug in it. Rita, welcome to the Deep Wealth. Podcast. An absolute pleasure to have you with us. And I'm curious, Rita, there's always a story behind the story. What's your story? What got you to where you are today?

Rita McGrath: Oh, curiosity. I think my children would say nosiness. I graduated college actually with a political science degree and thought I. Would go into government and politics and sort of policy making and did spend about eight years doing that after I got my master's. And then what I realized was that in the public service, your [00:03:00] career goes, straight up into the right for the first 10 years and then it flatlines after that.

And it always had an interest in academia. And at that time you may recall, this is right about when you were running your business, MBAs were just taking off and there just weren't enough. College professors with PhDs to teach them. So I thought well, it sounds like a, interesting opportunity.

So I landed at the Wharton School where I went to work at Ian McMillan's Entrepreneurship Center. And so while I was in the public service, I'd done this large scale change at the time. At the time we called it computerization today, we would call it digital transformation or some other more modern word, but computers were kind of seen as these alien things, right?

That were popping up on desktops. what I got really interested in was this problem of large scale organizational change and transformation. And so I went to my, advisor who he became my Advisor and I said, oh, I'd love to study the science of implementation, like how things get done. And he looked at me and he said, I can't think of anything more boring than the science of implementation.

So we were kinda at an impasse. And then [00:04:00] fortune smiled upon us in the form of gentleman by the name of Ira Rimmerman. Who was with Citibank at the time, and they were interested in sponsoring a research project, a three-year research project, which would look at detailed case studies of all of their corporate ventures, the successful ones, the failed ones, what made the big difference.

And that led to a framework for how they could think about corporate venturing. And it also led to my fascination with innovation, entrepreneurship, doing new things, which, the mechanisms are very similar to what it takes to do implementing major transformational change.

Jeffrey Feldberg: Wow. So quite the story. Very humble beginnings, and you're really at the forefront with technology and what later we now call, thanks to you inflection points and in your book Seeing Around Corners, which we'll talk about it in a moment, but I have to ask you, Rita, what was it like back in the day as all of this thought leadership was emerging and companies were making these catastrophic decisions knowingly or unknowingly and you're right in the think of things and you're seeing this [00:05:00] as it rolls out. What did it feel like? What were you thinking?

Rita McGrath: Well, Back then there was not what I would describe as a well understood theory of corporate venturing or corporate entrepreneurship. People back then looked at sort products that would come out of the. R&D lab or something that the engineers would come up with and they'd sort of dress it up and then it would go into the market.

But there was no idea that it was an actual process. And as you've alluded to, I got really interested in these stories of these massive flops, like 1992 Euro Disney launches. With a theme park that could hold 60,000 people to find that only 25,000 turned up. Or FedEx, you know, it was zap mailing documents one way or the other.

Only to find that fax machines made them unnecessary. Or TV cable week, which was this thing that time tried to produce. Anyway, these big corporate flops and you know, I got really interested in how could this be? I mean, these are smart companies, smart people. If you looked at the business plans, they were all like, six inches deep with tons of market research and blah, blah, blah, blah, blah.

And what my [00:06:00] colleague and I realized was that the main challenge was that these companies were embarking into uncertain spaces with the same tools and the same mindset that they were using to do things. They already understood really well. So the same big dense plans, the same net present value calculations, the same, you name it, they were doing it.

And so we took a big step backward and we said how would we plan if you knew you didn't have the answers? What would you do to create discipline around this startup if you knew you didn't have the answer. And we took a lot of inspiration from people like you, serial entrepreneurs who'd started multiple businesses and were very, very good at keeping costs low, doing a lot of exploration, doing a lot of learning before making a big commitment to anything.

And right around there I got fascinated with the concept of real options, which are small investments organizations make in the present that buy them the right to make future choices.

In a big contrast to the way most companies at the time were doing things with an options mindset. You can try a lot of stuff, recognizing most of it won't work.

Whereas what [00:07:00] corporations were doing was they were saying, okay, every time we decide to do something new, we're gonna make a big bet as though it was gonna go all the way through to completion. And a lot of times you learn that what you thought was gonna work doesn't work and the sensible thing to do is to stop.

But the way that companies were planning sort of got them on this treadmill of not being willing to alter course not being willing to stop. And so that would've been back in the nineties. And of course, fast forward to today, we've now got a pretty well developed set of ideas about how you become a disruptor, how you can create new things.

And I'm not saying it's easy, but at least we're starting to see a real methodology emerge.

Jeffrey Feldberg: Rita, as you're going through that, I'm putting myself in the shoes. It could be someone who's a startup. It could be someone who perhaps is leading the charge to the corporate world, or it could be a titan of business who is paranoid, you know, all kinds of topics and books on that, and some great thought leadership with that as well.

Who's looking over the shoulder saying, okay, What can't I see? Who can't I see that's going to come out of nowhere and really [00:08:00] harm my business or put me outta business? And you so eloquently talk about that in your book, seeing Around Corners. And for our listeners in the show notes, it'll be a point and click as well as to read's other books and we'll talk about that.

But in Seeing Around Corners: How To Spot Inflection Points In Business Before They Happen, regardless of where someone is in the business journey. What would you tell that listener? well, Why are inflection points important and why should they make the effort to understand them?

Rita McGrath: Absolutely. So I define an inflection point following Andy Grove as some shift in environment or technology that creates a 10 change. What's.

Lived with that for a long time and I didn't know what to do with it. I was like okay, so an inflection point creates a major change. As you said, if somebody was looking over my shoulder, what would I advise them?

But then I realized that these things feel when they burst upon the scene as though they came out of nowhere, but. If you go back and look, they've actually been building up for a really long time, and I like to talk about the famous Ernest Hemingway line when one character asks another how did you go bankrupt?

And the answer was two [00:09:00] ways gradually. And then suddenly, and that's the case with inflection points that they verbal along. I mean, if you think about it, we have had the Jetsons. Since 1962, and we're still mulling over, I just saw the other day, there's a regulatory authority for this car that can also fly, and it's just been cleared for its initial tests.

I mean, it's taken since 1962. So how many years is that before the thing that we could conceive of actually becomes a reality? So I think what I would advise people is make the time. Take that time regularly, take a big step back and look at what are the assumptions underlying your current business operations that some shift might change.

And of course, right now the buzz is all about ChatGPT, right? And it's actually pretty good and there are a lot of things it can do. So it's gonna change the cost effort parameter for content creation, for journalism, for getting your message out. For the difficulty of sustaining your message, maybe for podcasting, and if I was in any of those [00:10:00] fields or relied on any of those fields, I'd wanna be paying a lot of attention to what are the shifts that get made now?

Jeffrey Feldberg: Rita, offline, you and I were talking and I'll bring the listeners in on that conversation. This kind of thought leadership, this thinking is so paramount. It's so important that in our 90 day Deep Wealth Mastery, step one big picture, this is exactly what we talk about. And offline you're asking Jeffrey, you know what?

What's your story? How'd you get to where you got to? And it was exactly an inflection point that really changedd for, in my case, for ebt, it forever changed the trajectory. But inflection points, they're funny things and you do a really eloquent job in the book. I mean, you talk about Microsoft, you talk about Netflix, Blockbuster, some of the more bigger ones, the companies that we know.

And here about the same inflection point, as we like to say in Deep Wealth, Mastery Left Unchecked, your competition of the market will put you out of business. Or if you can figure it out and you give a formula and a methodology of how to do that. If you can leverage that, you can put [00:11:00] yourself outta the business to go into a bigger business.

So for the listener who's saying, okay, now you got my attention. Yeah, I'd love to get into a bigger, more profitable business. I wanna be the one calling the shots. I wanna put myself outta business. Where would one start big picture wise?

Rita McGrath: Well, I think you start with where are the areas where there's simultaneously really big problems shared by a lot of players and a lot of uncertainty and no current solution that's really viable. So I call these stepping stone options, and what they are is they're that sort of first Foothold in a really burgeoning new area.

And so what a lot of people do that don't do this well is they say, ah, big attractive area, autonomous vehicles, And we're gonna spend millions on it. We're gonna create these big teams and we're gonna have all this stuff, we're gonna be Google, we're gonna out race, BMW or BOS or whoever.

And that to me is exactly the wrong way to go about getting on one of these growth curves because, What you'll do is you'll spend a lot of money, but [00:12:00] because it's so uncertain, you know, if you have a range of uncertainties, you're making a big bet that you're gonna hit one particular point in that range.

Whereas if you find a stepping stone option, and let's see if this corresponds with your experience, you're looking for a small market that has a big problem that current solutions just can't address, and they're willing to pay. 

And so what you wanna do is start there. That becomes your stepping stone.

So I'll give you an example in the autonomous vehicle sector, right? People have literally spent a hundred billion just chasing down whatever this might be. And yet there are stepping stones in that market. So if you think of the military, they have a problem supplying frontline troops. And the traditional solution is you have two troops in each truck, driving, and it's not a very good use of their time.

It's putting people in harm's way, but the robots aren't smart enough to take over the whole job yet. But the robots are smart enough to play Follow the Leader. So I think it's Northrop Grumman or Lockheed or one of those that came up with this system where you have two human beings in the first vehicle and then up to six vehicles, Daisy chaining along [00:13:00] behind.

Now that's not what we think of when we think of the Jetsons and level four but you're getting paid handsomely cuz it's military, so you know they'll pay for it. And you're demonstrating the use case and now you're learning right? You're creating, learning in a context in which you can be ahead of the curve because you're learning faster than others are, and you're doing it profitably.

So that's the kind of opportunity I recommend people start with.

Jeffrey Feldberg: And so when you look at that, and I love how you talk about stepping stones, we use uh, similar but different terminology. Look at it as an experiment. It's not a bet the farm decision, if it fails, which it probably will in the early days, you're not going out of business. It's a learning lesson and you go back at it and you keep on figuring out.

But I know in the book I loved how you talk about your really, you picture these two lines where they can intersect signal strength and degrees of freedom. And for most businesses, and whether you're an entrepreneur or in the C-Suite, by the time that signal strength is really at as loud as, okay, now we're gonna enter the market, you've missed it it's too late. So can you [00:14:00] talk about from that stepping stone to really that balance between the choices that we have, that signal strength, and how we should be thinking about that?

Rita McGrath: Right. Well, So the more data that you have, the more established the situation is. So remember I was mentioning that you want to find opportunities in really high uncertainty situations, and that sounds kind of counterintuitive. And most traditional managers say to me, Ooh, that sounds really risky. I don't wanna do that.

But if you think about it, by the time something's become well understood, You are now in diminishing returns. Like every additional dollar that you put into that is not gonna deliver, super big payback. Because, we know this from financial theory and we know this from entrepreneurship theory, that, you know, people that make a lot of money go where there's enough volatility that your typical investor.

He gets freaked out and won't do it. And so that's where the really big returns are. So when I'm talking about degrees of freedom, what I mean is if you can make your decisions when uncertainty is still reasonably well established, you can sort of get facts on the ground before everybody else is figured out what's going on.

And that [00:15:00] to me is the strategic opportunity. It's how do you. Take that, I call it a time zero event. The inflection has happened, ChatGPT is here, whatever it is that you're worried about right now, but then work backward, what would have to be true before that could happen? And that's where the strategic insights begin to get created.

Because now what you're doing is you're watching as these signals get stronger, you're able to see them moving forward. And that I think is the opportunity.

Jeffrey Feldberg: Let me ask you this, and you can say I'm completely on base or off base, because I can imagine some listeners who perhaps aren't part of the corporate world are saying, you know what, Rita, jeffrey, I don't have a billion dollar company. I don't have an army of people who are looking at all these things.

And my response to that is that's perfect because that's gonna be your competitive advantage. We all have access to the signal strength in your words, to see what's happening or not happening. We can all figure out what's really a painful problem that people aren't solving. And here's the question for you.

If we can be [00:16:00] agile and we can be quick to respond and we're doing really these stepping stones, these small experiments, we don't need to be a Fortune 10, Fortune 500, you pick it. We can be the ones that are really leading the way in this area that we can become and leverage well up there as a titan of business, as a Fortune 10 or a hundred or 500.

Pick your number if we do it well. What would you say to that?

Rita McGrath: I would totally agree. So one of the things to remember as a startup, as an entrepreneur you actually can benefit from asymmetric competition. And what I mean by that is the people that you're competing against may have a lot to defend. And so their instinct is not gonna be to probe the disruptive new area that could threaten their.

Established core business, their instinct is gonna be to try to put up moats and prevent and defend. And what small companies can do in a much more agile way than big established ones is really get close to their customers. I think when entrepreneurs are at their best, they totally understand the customers jobs to be done.

They know what the pay. Pain points are, they know all the people that have to be lined up to [00:17:00] get a particular solution to work. And in a big company, you're often dealing with that customer experience being split all over the place. You know, It's divided into functions and departments and regions and geographies and so getting that sort of holistic view of what the customer's pain points are is often extremely difficult for a big firm.

Jeffrey Feldberg: Speaking of pain points as we record this episode, I am really relieved and happy to say the pandemic is behind us. We're now entering what some are calling the golden era of ai. Rita, as you're out there, whether it be startups in the work that you're doing in your consultancy@ritamcgrath.com and for our listeners, we'll have that in the show notes, or whether it's with some of the corporations that we all know the names and their really the behemoths out there doing their things.

What are you seeing big picture wise? Are there some new trends that, I mean, there's always new trends, but what are you seeing that's emerging that you think would be of interest for our listeners?

Rita McGrath: I do think artificial intelligence as a class software solutions has a [00:18:00] huge amount of shift. So, what a lot of people have talked about is Netscape. That Netscape moment, like that was the very first browser.

That introduced the masses to this thing called the internet. And you know, it went through the classic hype cycle, right? Everybody was like, oh, not the internet. And everybody had to have web pages and you know, and it was all, go throughout the nineties. And then things kind of come back to earth again.

So we're in the bubbly phase right now of, of. AI startups. And what'll happen as people are experimenting, and again, we're high uncertainty, right? So nobody's completely sure what like the killer app is gonna be or where this thing is gonna start being, it's being felt. But out of all that experimentation are gonna come.

Some survivors now, most won't. Most won't make it. But there'll be a few, like demonstrated use cases. So if I had to place some bets, I'd be definitely looking at healthcare. The ability to mine huge amounts of structured data gives us the potential to do, for example, synthetic clinical trials.

Where, like right now, I mean the, standard for clinical trials is you give an affected population, half of them get [00:19:00] a placebo and half of them get the real thing well with. Big data and ai, you can now synthesize what an untreated population would look like and compare that to the treated population.

And the advantage of that is if you're developing drugs for very ill people, this could be their last chance. And so putting half of them on a placebo is like, Kind of almost inhuman. And so things like that could really be huge major advances. So I think healthcare, certainly the communications business is gonna be completely upended as is the news business.

I think unfortunately you're gonna see a lot more junk out there. I think what you're gonna have now is AI systems that are deleting the junk from other AI systems so that the human beings actually get something that. It's vaguely sensible and you almost see this arms race emerging where in order to combat the pernicious effects of some ai, there's another AI that gets developed to do stuff.

And of course it's imperfect yet, you know, it still has hallucinations. You can't count on it. If you talk to somebody who's an expert, And say, have you tried to use, ChatGPT T or one of these to do something that you do? All the experts will tell you, [00:20:00] oh, it's terrible. The results are awful.

Like if you talk to a writer, you say, did it write something fabulous for you? And the result is usually, no, it wasn't very good. But if you talk to an amateur and say, oh, did it write you a good poem? Or did it do you a good newsletter? They're all like, oh yes, it was fabulous. So you've got this interesting thing where now amateurs are kind of making.

Incorrect value judgements about the quality of what these systems are spitting out.

Jeffrey Feldberg: Mm-hmm. We'll have to see where that goes. And you know, while you're talking about that, so whether it's the AI of today or the internet and the first browser of yesteryear that was on the scene, let me ask you a question that there's always gonna be something new that's up and coming. What would you say?

And I'm really leaning now on the art side of life, the art side of business. The mindset, how we approach things, how we view things. And specifically as I'm talking with you about this, I'm going back to your book and seeing around corners, and you did such an eloquent job in talking about Microsoft. And how they were doing really well on putting themselves [00:21:00] out of business.

That's the trajectory they were heading on with this old kind of mindset and how really the mindset, these are my words now, you can agree or disagree how the change in leadership and the change in mindset that came along with that. That's what Asher in Really, that was the saving grace for Microsoft to begin the climb back up and out there to become relevant again for profits to start getting back out there and becoming a daily part of our lives.

So, how would you say, or how does mindset play a role in all of this?

Rita McGrath: That's huge. It's absolutely huge. So if you're thinking about the kind of mindset that you need to be successful in rapidly changing environments Microsoft would. Lean on the work of Carol Weck who talks about developing a growth mindset rather than a fixed mindset. And the distinction between the two is that a fixed mindset sort of views your ability to do something or having accomplished something as relatively static and unchanging.

So, I'm not good at math, for example. Whereas a growth mindset would be well, you know, [00:22:00] I'm constantly on a learning journey. My goal is to improve and the fact that I'm not good at something means that I've got a lot of opportunity to learn and so I'm going after it with a learn mindset. So sat Nadella would say things like, we needed to go from know-it-alls to learn it alls.

And we needed to really embed that in our philosophy. The other thing that I think he did, which was. Les talked about, but equally important was he said, we're all one Microsoft here. I mean, it used to be literally the divisions would compete for attention. The senior leaders would, smart talk their way into being smartest guys in the room.

It was just incredibly competitive as a company to a point that got dysfunctional. I mean, I think it served them really well in their early days, and then I think it just got very dysfunctional. So, I think that was another element of the cultural change. Kathleen Hogan, who's the HR person who partnered with Satya, a lot of that change was actually a p and l leader.

And he turned to her to really say, we really need to rewire the culture of this company. How do we think about doing that? Another thing that he did that's very relevant to seeing around corners is he got them focused on leading [00:23:00] indicators. So the company had very famously been focused on things like profits quarterly performance, ship dates, stuff like that, that are all lagging indicators.

They're great data, but it's about stuff you can't change. And what Nadella said was, no, I really want us working on leading indicators and in the cloud leading indicators is usage tracks usage like a hawk. But before I get usage, I have to have the customers really liking what we're doing. And so he established as one of his number one leading indicators customer love.

I mean, can you imagine this from historical? Microsoft, like, blows my mind. So he actually invited me out to speak at one of his very first big management meetings out in Bellevue, Washington. So I get off the plane, get to the ballroom where this event is being held, open the door and on the back wall tall as me letters, it says the word empathy. And I was like, oh shoot. I must be at the wrong conference. This can't be at Microsoft event. And at that event, they had an empathy walk. They talked about the importance of empathizing with your customer. They talked about the criticality of [00:24:00] understanding customer's pain points, and I think just getting the company focused forward was hugely important.

So another tip I would recommend for your listeners is think about what leading indicators you pay attention to. What are the, things that foretell the possibilities of other things.

Jeffrey Feldberg: It's interesting. And so I can just imagine you're walking in and your expectations are completely doing a 180. And so if we put a pause on that for just a moment because it's such an important point that you're sharing with us, and it really goes to the courage from a leadership side of things to say, I'm not gonna do the way things were done before. That's the old way of doing things. This is the new way, but this is corporate America that we're talking about. I mean, it's Microsoft, but we're bringing in really this, what some people would call the soft side, the soft skills, empathy, love, how our customers are rating us.

So what was that like for you, Rita? Right Then at that point in time, you're now leading the charge, you know, in, in your talk, and you're at that conference. I mean, what's going on? What's going through your mind?

Rita McGrath: I think what was fascinating was that was very early [00:25:00] in Nadella Let's Change. It was before his book came out, the book Hit Reset, which he wrote, I think he wrote it for his employees to kind of really try to reinforce his message. And of course it was very widely read by other people too, but I'd say half the room was kind of in this model of. We're not really sure if he really means it right? and the other half of the room, which I think had been a bit disenfranchised in the old Microsoft culture, the other half was like, yes, let's do it. Let's do the empathy walk. Let's be a better company for our customers.

And, interestingly, while I was there, they had a whole presentation on their not-for-profit efforts. And I forget the exact name of the program, but it's this program where employees get time off to work. On great causes. Now, the other interesting thing that happened at that conference, and this is to show you, Nadella is not, he's not all, fairy dust and pixies.

I mean, this guy is super serious. So he had a CFO O up there giving a talk about how every single business line leader was gonna have to give up. I think it was like 7.9% of their revenue. So he could put that into a central innovation fund. You can imagine how popular [00:26:00] that was. So he was like, you were turning this ship, but it's gonna take resources to do that.

And then I wanna explain to you what sacrifices you are gonna have to make. And if that's not a journey you wanna go on, I get it. But that's the journey we are on. And so it was this combination of, let's really think about the human side of things, coupled with really tough business decision making.

Jeffrey Feldberg: A little bit of tough love thrown in there. Hey, here's the vision. We're gonna take a softer approach, but a little bit of tough love. Here's what I need from you, and either you're with us or perhaps you're not wanting to 

think about that and and ponder 

Rita McGrath: as a leader yourself, right? If you've got a bunch of people on the bus who don't wanna be there and aren't willing to row along with the same thing, I mean, they're better off going somewhere where they'll be happier.

Jeffrey Feldberg: And so the more that we talk about this and we go down this rabbit holes of this wonderful thing called inflection points of what they do, what they're not, what they are, the more we go here, it's really leadership and vision. And a lot of this doesn't show up in the hard skill side, you know, on a complicated formula in some kind of spreadsheet.

It's really part [00:27:00] imagination, part courage, part empathy. We're putting together as a leader to steer the organization in that direction. That's a tough one for a lot of people that are probably hearing this. Wait a minute. That's not how I learned business. That's not what it's all about. How would you speak to that person?

What would you say?

Rita McGrath: Oh well, our classic concept of leadership. Right is metaphorically some person waving a sword on a horse saying Follow me. Right? And there are times when that's necessary. I'm sure you know of Ben Horowitz's, the very successful entrepreneur, and he talks about wartime versus peacetime CEOs, you know, and that there are just times when that behavior is necessary.

But if you're trying to engage the whole organization in creative problem solving that behavior is really destructive. So what I really also think we get wrong about leadership is if you talk to 10 people off the street about what are the qualities of good leader, but what do you get back?

You get back, oh, good. Leaders are clear-minded and decisive and able to communicate well. And they give you a vision and they have clarity about where they wanna drive the company. And at the same time, they're vulnerable, they're authentic, they're, listening to [00:28:00] people. They're great people.

People. And it's like, who are these schizophrenic people running companies? Right? And so the way I like to think about it, it builds on the work of my colleague at Columbia Hitendra, Wawa, and what he talks about is he said, in your inner core, in the so essence of who you are, you want a lot of stability there, right?

So, what are your passions? What's your purpose? What's your wisdom? What do you uniquely bring to the world? do you love? What are you emotionally engaged with? Those things you wanna build on and work on, and be very kind of grounded in what those are offering you. At the same time, in the outer manifestation of how you lead in a particular moment.

You've gotta be very situationally. Adept and I think one of the things we get wrong about leadership is we give people these long laundry lists of behaviors that represent great leaders. And so we're often busy trying to remember, okay, be authentic, look people in the eye stand up straight.

Have presence, whatever your thing is. And I think that's actually not very helpful because what you'll find is two people with very different [00:29:00] behaviors can be quite effective even in a similar leadership situation.

Jeffrey Feldberg: Rita, let me ask you this, and I may be way oversimplifying things at. You can set me on the right path here in seeing around corners. You talk about leadership during, we'll call it peace, time, and wartime, and I don't wanna put words in your mouth. My takeaway was if one had to choose where to be, it was more on the wartime than the peace time, because in the wartime, you're improvising, you're resilient.

You're always looking for, okay, what could get in our way? What do we need to know about? What are we gonna have to defend against as opposed to peace time. Maybe it's a laissez-faire and what's gonna be in life is great, and hey, let's just keep on doing what we're doing. Am I on base with that? Off base?

What would you say to that?

Rita McGrath: I think that depends on, first of all, your appetite for uncertainty and risk.  If you're the kind of person who gets bored with everything being. Same day after day, then you don't want a peace time situation. Here's the great irony to me, which is. Because peacetime leaders are so often just kind of letting things roll.

What is this incredible pattern where [00:30:00] incredibly successful companies just ride that, right? They don't continuously challenge themselves. They don't continuously sort of almost put themselves into a wartime footing. And what ends up happening is this great success that they've enjoyed for years and years eventually leads.

To them becoming irrelevant because they haven't been making the effort. And we saw that with Xerox. We saw that with Nokia. We're possibly seeing it with some of the big tech giants today, right? Where you know, you're printing money for years and years. You're hiring all these people who've never seen the struggle, they've never experienced wartime.

And so the first little setback and everybody freaks out. And of course now we're seeing layoffs. We're seeing, recognition that maybe we got a little fat and happy during peace time, and whoa, there are battles to be fought out there and we're not fit for purpose. And what is fascinating to me and I know you'll share this as someone who went through the whole.com bomb, I mean, there's so many people talking about this as though it's never happened before. You know, Like this is a truly unique experience. We've never gone through, you know, a setback in vc. We've never gone through large scale layoffs in [00:31:00] tech. We've, I mean, of course we have, we've been through this before. These things happen in cycles, and so one of my predictions, and this might be helpful to your innovators, your innovative listeners, is what a lot of the big companies are doing is, they're not saying it, but they're essentially cutting back on innovation.

So they're calling it things like rationalization. We're going back to the core Zuckerberg's talking about the year of efficiency. What does all that mean? It means we're dropping all that weird, funky, experimental, high risk and high profit stuff, and we're retreating back into what we know. And so here's the opportunity.

If you have the sort of. Intestinal fortitude to be willing to take some risks now without syncing the company. Again, so appreciate your comment about experimentation, but you could be positioned because what's gonna happen is two, three years from now, those self synced companies that fired all those people and got rid of their innovation functions are suddenly gonna look around and go.

Oh my God, we've got nothing new going on Now we need to get it. And for a lot of your listeners that might be looking to Exit an entrepreneurial company, that's where the purchasing opportunities are gonna be because all of a sudden these big [00:32:00] companies are gonna realize they haven't been doing the job they needed to do to build up their, pipeline of innovations all along.

And they're gonna be desperate looking for something on the market to buy.

Jeffrey Feldberg: So. Let me ask you this. For the listener who is eavesdropping on and saying, okay, yeah, I like what I'm hearing. You know what? I have a window here where I can innovate. I can have some thought leadership. I can really put myself out there and I know through your podcast or through your Thought Sparks, or you have a wonderful newsletter and blog, and they can come to the site, and again, it's in our show notes as a point and click.

They can get all that. But for you and the person, and whether you're giving a keynote or a talk or even a virtual talk at a company event, or they're working with you and you're now really being brought on board to help lead the charge. What's your secret sauce? What's your process? I sign up today. Okay, Rita, here's our company, here's what we're doing.

Help us along the way. And Rita, rightfully, you're probably gonna say well, Jeffrey, it depends. Every company's different. And you know, no two are alike. And it all depends on where they're at and what they're doing. And I get all [00:33:00] that. Broadly speaking though, what's some of that magic formula that you have to really bring that clarity to companies that we come out with, the strategies that ultimately win.

Rita McGrath: I think the through line is that I really help people to think about and challenge their own. Assumptions weekly or strongly held. So whether I'm talking about, competitive advantage is no longer lasting as long as it once did in many parts of the economy, whether I'm talking about, you know, we haven't trained people on how to be innovators, which is kind of a crime to me.

I mean, it's a skill. You can learn it and there's no reason it should be some kind of big mystery or whether it's assumptions about the core business. So I'll give an example. I was doing some work with a Swiss private Wealth Manager, the private Wealth bank. And it was one of the situations where I did interviews with the people before doing this big presentation and they were all kind of whispering to me like, our CEO doesn't get it.

Our CEO just doesn't get it. Can you figure out some way you can see it? So I went to talk to the ceo. And as part of this preparation, and I said, so tell me what you think about innovation. He says, ah, there [00:34:00] hasn't been real innovation in private banking in centuries. You give me money today.

When you come back in 20 or 30 years, they should be more of it. How simple could that be? Now, this of course, was in an era where if you were Swiss company and you were in private Wealth management, basically your business model was you leaned out the window and grabbed the. Frank's flowing by, I remember asking one of their investment banker, one of their banking leaders I said, so how do you get new clients because they were interested in being more entrepreneurial, blah, blah, blah.

He said, oh, we inherit them. I said, excuse me. He said, yeah, when the guy before us dies or retires, we get their book of business. So anyway, so for my presentation for that one, now that I understood the significance of the problem what I did is I just pulled together a kind of a picture of all the different.

Startups, the trends, the things that were new that were happening, and used that as part of the opening of the keynote. And literally by the time I was done, the CEO had gone a little pale. He was like, ah I think maybe we have some things we need to look into.

Meanwhile, his team is like [00:35:00] behind him where you can't see this is. So I think it's the ability to really challenge what the prevailing assumptions are. The other thing that I think I bring to the table particularly is, you know, I've been studying this a long time and a lot of people who never have had to look at it, never have been trained in it. How do they even know where to start?

And so I can kinda shortcut that whole process of putting this system into place.

Jeffrey Feldberg: It makes so much sense. I mean from the KPIs of, okay, what are the leading indicators, not the lagging indicators, which we probably add if we even have KPIs, a lot of us don't. And no judgment there to having been there and you've been on this journey, you've been around the block a number of times with some world class companies or some startups, everything else in between.

And for the listeners, let me put this out there. There's no judgment with this. Are you meeting perhaps with a fitness trainer because you wanna learn the ropes at the gym or how to become fit? How are you gonna have your company become fit? Are you gonna be doing that on your own? Or can you save some cycle time, save some effort, save some money, and you have a world [00:36:00] class thought leader like Rita who can come on board and get you there a whole lot quicker.

To me, it makes a whole lot of sense, but you know, everyone is on his or her own journey. Speaking of the journey, Rita, we've spoken about a lot of things today, and a listener can go in any number of directions with that, if I can put you on the spot, and you may say Jeffrey, it's like having to pick of which is my favorite children.

But if there's one thing, one strategy, one action before leaving this episode, before going into the next meeting, or email or call that a listener could at least do or start thinking about doing. What would you suggest that be? Of all the things that are out there, what could be one thing to really get this moving forward in the right direction?

Rita McGrath: As a leader, the most powerful asset that you have is your own agenda. And by that I mean where you're spending your time and attention. So what I would recommend is take the last, 10 times you got together with people who are important to talk about important stuff, and just look [00:37:00] at the agenda for that meeting.

And. Think about where does innovation, growth, new business development, the future, you know, where do those things pop up? Because I'm telling you, if it's not item number one, two, or three for you, it's not gonna be anybody's first priority anywhere else in the company. And that requires sacrifice, right?

So if innovation or the future or inflection points are gonna be important, that means something else gets shoved out of that top space. But if you, as the leader, don't make that a top priority, It's not gonna happen anywhere else. So I would if I couldn't advise them on any other thing, I'd say get a look at your agenda and get in control of it.

And, every meeting, every time you get together, when you randomly meet people in the elevator, you're gonna be asking about innovation. When you're giving out the hero awards at the annual, you know, dinner it's gonna be people who had something to do with innovation, and so if you don't keep it top of mind.

Jeffrey Feldberg: Some terrific advice. And speaking of advice, and before we go into wrap up mode, What was really intriguing in the book, again, seeing around corners for listeners, get [00:38:00] the book, click on the link. Or if you're not the reading type, you can listen to it on the audio book. I mean, it's all there in every format that you can imagine.

At the very end. Rita, I was delighted when essentially you said yes, we've been talking about business and strategies for optimization, but it doesn't have to be just for business. You can apply inflection points into your own life and you give a whole prescribed formula. I mean, right there, if nothing else, that's the price of admission for reading the book and following what's going on because you can agree, disagree. At Deep Wealth, our philosophy is business is very much personal. Whoever said business isn't personal, has never been in business before. Because if we get it right on the inside, and as you point out, if we have the right people around us on the personal side and things are just really clicking along.

Things will be that much better on the business side. And so for listener who's saying, what do you mean I can use all these corporate strategies On the personal side, Rita, from a very high level, how could you speak to that listener of how it's possible and what they actually could do?

Rita McGrath: Sure. So as you think about your career [00:39:00] unfolding or your life, there are gonna be these moments which have a very road not taken flavor. To them, right? So you're gonna make a consequential decision that takes you in one direction or another, and those really are your personal inflection beliefs.

And I would observe most people. Don't benefit enough from the ones that feel negative at the time. You lose a job you have a falling out with a friend, you, an opportunity doesn't materialize that you were really hoping for something negative or at least at first happens. And what we know from the research is events like that cause your brain to wake up, right? They cause you to instigate your imagination. They cause you to consider possibilities you wouldn't have considered otherwise They cause. And how many people do you know who had an event like that? Who said, you know, in retrospect that was the best thing that ever happened to me.

Jeffrey Feldberg: Sure. 

Rita McGrath: And I'm not saying you want disappointment. I'm not saying that's desirable, but what I am saying is inevitably it'll happen. And what you can do by leaning into it a little bit is say, okay what have I learned? What assumptions were wrong? What is what? The world now, because your brain is now open [00:40:00] to things not.

Going the way that you'd hoped. And back to wartime versus peacetime CEOs, if everything in your life just went the way you expected and hoped it to, you know, you kind of get to the end of it and it's like, what have I done? What have I accomplished? And I think that notion of having enough not overwhelming and deadly, but enough challenge that you're staying on your edge.

You're staying fresh.

Jeffrey Feldberg: I think what's nice about that, if I can use the word harmony in the sense that, okay, I am applying these principles in my personal life. Obviously very personal, but I'm also applying the same principles, a little bit of a different twist on the business side. And you can really put the two in a way that propels both the business and the personal life forward.

I mean, after all, as we say at Deep, Wealth. We're not in business of being in business, we're not having a liquidity event to have a liquidity event. It's about optimizing our life for happiness, helping people, making a difference, changing society for the better. So let me ask you this, Rita. You've been generous with your insights and your wisdom, and I would love to go on.

We need to start wrapping up though, and so I have a thought experiment. It's a really fun one. Let me set this up for you. Think of the movie Back to the [00:41:00] Future, and in the movie you have that magical DeLorean car that can take you to any point in time. So the fun part, Rita, is tomorrow morning you look outside your window.

Not only is the DeLorean car there, but the door is open. It's waiting for you to hop on in which you do, and you're now going back to any point in your life. Maybe it's Rita as a young child, a teenager, whatever point in time that would be. What are you telling your younger self in terms of life lessons or life wisdom or, Hey Rita, do this, but don't do that.

What would that sound like?

Rita McGrath: Oh, I think it would probably be back to my first year in the PhD program because I gave up a job I loved, had a baby. Moved to the suburbs. So I gave up the city. Yeah, I gave up all my friends, I gave up everything. And then I walked into this world having been a manager for eight years, thinking maybe I knew something about management.

And I'm sitting in the article reading a journal article rather, by a guy named John Child. And the article was called something like In Defense of Managerial Choice, and I'm reading this, or The Importance of Managerial Choice, basically saying what managers decide matters.

[00:42:00] And I'm like sitting there thinking to myself like if I didn't think that, why would I even be here? This is the most insane premise I've ever heard, and I think I would wanna tell that young person that I had entered into a holy monastery where there was kind of like the Latin speaking monks of old, , there's like a ritual that you have to be initiated into.

And that first year was really hard. You know, You talk about inflection points and going up an S-curve, it was so, so difficult. But I think I would've liked to give myself a little pep talk. It would've probably saved myself and my husband a lot of misery because I would come home and I'd be like, I am not sure this was the right decision.

I don't understand a word of what they're talking about. This makes no sense to me. And just to give you the sort of final on, that little story, it turns out in management academia, there was this school of thought which was called population ecology. And basically the school of thought was that organizations are like bugs.

And that there, there's an environment that has a carrying capacity and when there's a new bit of resource that opens up all these entrepreneurs and companies will enter, and then the resource rapidly gets consumed, and then there's a dry off event, and then population can be explained. Success and failure can be [00:43:00] explained by population dynamics.

And John Child was basically saying no, actually what managers do matters. It's not all just explained by the external environment. So is an actual real live debate in academia. But I had no idea what the backstory was.

Jeffrey Feldberg: I love that. And for that pep talk, for your younger self, if you had to verbalize that in a word or a sentence what do you think that would be for your younger self?

Rita McGrath: It would probably be, stay the course, you'll figure this out.

Jeffrey Feldberg: Some terrific advice. Isn't that the case with inflection points? Stay the course, you'll figure it out. And when you do, it's really good things ahead. No matter what the struggle is or what you're thinking you can or can't do. Some terrific advice. And Rita, let me ask you this for our listeners, and again, we're gonna have all this in the show notes from your books to the podcast, to your thought leadership, to your consultancy.

But if someone has a question. Or hey, watch you come in and give a keynote. Or Hey, how do we become a client if they just wanna reach out and get in touch with you, where's the best place online that they can do this?

Rita McGrath: RitaMcgrath.com. My very imagin, typically named website. there's There's a contact us button [00:44:00] there and we watch that a lot and help somebody will get back to you. You can also find me on the Columbia Business School website. That's another place where my email's there, it's all public, so you can definitely reach out there.

Jeffrey Feldberg: Terrific. And again, for listeners, it'll be point and click. It'll be in the show notes. Well, Rita, it's official. This is a wrap. Thank you for your insights and your wisdom, your story from the trenches. We're the better for it. And as we love to say here at Deep Wealth, may you continue to thrive and prosper, Rita, while you remain healthy and safe.

Thank you so much.

Rita McGrath: Thank you. This was a pleasure. 

Sharon S.: The Deep Wealth Experience was definitely a game-changer for me. 

Lyn M.: This course is one of the best investments you will ever make because you will get an ROI of a hundred times that. Anybody who doesn't go through it will lose millions. 

Kam H.: If you don't have time for this program, you'll never have time for a successful liquidity 

Sharon S.: It was the best value of any business course I've ever taken. The money was very well spent.

Lyn M.: Compared to when we first began, today I feel better prepared, but in some respects, may be [00:45:00] less prepared, not because of the course, but because the course brought to light so many things that I thought we were on top of that we need to fix. 

Kam H.: I 100% believe there's never a great time for a business owner to allocate extra hours into his or her week or day. So it's an investment that will yield results today. I thought I will reap the benefit of this program in three to five years down the road. But as soon as I stepped forward into the program, my mind changed immediately. 

Sharon S.: There was so much value in the experience that the time I invested paid back so much for the energy that was expended. 

Lyn M.: The Deep Wealth Experience compared to other programs is the top. What we learned is very practical. Sometimes you learn stuff that it's great to learn, but you never use it. The stuff we learned from Deep Wealth Experience, I believe it's going to benefit us a boatload.

Kam H.: I've done an executive MBA. I've worked for billion-dollar companies before. I've worked for smaller [00:46:00] companies before I started my business. I've been running my business successfully now for getting close to a decade. We're on a growth trajectory. Reflecting back on the Deep Wealth, I knew less than 10% what I know now, maybe close to 1% even. 

Sharon S.: Hands down the best program in which I've ever participated. And we've done a lot of different things over the years. We've been in other mastermind groups, gone to many seminars, workshops, conferences, retreats, read books. This was so different. I haven't had an experience that's anything close to this in all the years that we've been at this.

It's five-star, A-plus.

Kam H.: I would highly recommend it to any super busy business owner out there.

Deep Wealth is an accurate name for it. This program leads to deeper wealth and happier wealth, not just deeper wealth. I don't think there's a dollar value that could be associated with such an experience and knowledge that could be applied today and forever. 

Jeffrey Feldberg: Are you leaving millions on the [00:47:00] table? 

Please visit www.deepwealth.com/success to learn more.

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