Roger L. Martin: Business Reinvention

In this podcast episode, the hosts discuss business reinvention with expert Roger L. Martin.

They explore his forthcoming book on achieving human scale in large companies and the trends shaping the business world.

Martin proposes the concept of "intimate monumentality" for large companies to combat strategies that make employees feel insignificant. The importance of designing human-centric companies, maintaining transparency and intimacy with employees, and the balance between sustainability and innovation for long-term growth are discussed.

The attributes of effective leaders - passion, focus, candor, discipline, and humility - are explored, along with the role of communication in leadership. A.G. Lafley, former CEO of Procter and Gamble, is mentioned for his leadership style that emphasizes focusing on the consumer and simplicity.

More About Today's Guest

• Roger Martin's Website
• Roger on LinkedIn
• Roger's Amazon Author Page

Connect With Your Hosts:
Agostino Renna

• LinkedIn

Stef Tschida

• LinkedIn
• Website

Transcript

Agostino Renna

Welcome to Worthy Words, a podcast for people who recognize that being a great communicator is a requirement for being a great leader.

Stef Tschida

Communication and other so-called soft skills are finally being recognized as the absolute behavioral must haves that allow you to engage, empower and inspire anyone you have the privilege of affecting. Ready to level up your leadership by becoming a better communicator? We're glad you're here. 

Welcome to Worthy Words. We're your hosts, Agostino Renna, a senior executive at an international publicly listed company who understands the critical importance of culture and communication.

Agostino Renna

And she’s Stef Tschida, a communications expert who has advised executives across industries on how to communicate proactively and intentionally and with impact. So let's go ahead and dive into the topic of our first episode, which is one of my personal favorites. And I've actually been fascinated by this phenomenon throughout my career, which is the reinvention of businesses over time. 

And there's no one better to help us think through this than Roger Martin,  at one point was named actually the number one management thinker in the world, Roger’s written 12 books on corporate strategy, business design, and a whole lot more. He's got a forthcoming book called The Intimate Monumentality: Strategy at a Human Scale. Just let that title sink in for a second, because it's quite profound and it looks at how companies basically can preserve close relationships with employees despite their size. So basically, in my own words, how to make sure that scale doesn't come at the expense of intimacy and belonging, and that intimacy and belonging doesn't come at the expense of scale. 

Stef Tschida

Roger, welcome to the show. We're so glad to have you here.

Roger Martin

Thank you. I'm glad to be on your first show. That's fantastic. 

Stef Tschida 

Well, we can't wait to chat with you today about how business can best reinvent itself, particularly in how it interacts with those who matter most to its success. Before we get to all that though, we know work happens by humans who have lives outside of what they do. And that's why we kick off each podcast conversation with a quick get to know us. It's designed to help us and our listeners know our guests and our co-hosts as people beyond our work. 

So to that end, Roger, inquiring minds want to know: “What is your favorite movie and why?”

Roger Martin

I will give you two, what's my favorite serious movie and what's my favorite frivolous movie? 

So my favorite serious movie is an old Spencer Tracy, relatively obscure movie, called a Bad Day at Black Rock. And I love it because Spencer Tracy's character has to put up with all sorts of indignities and does it end up prevailing by not being triggered kind of to get upset and mad and saves the day because of that, so and I love Spencer Tracy.

My favorite frivolous movie is Galaxy Quest, which is a Star Trek spoof movie starring Tim Allen and Sigourney Weaver. And it just makes me crack up every time.

Stef Tschida

Oh, those are gonna be hard to beat. Agostino, how about you? 

Agostino Renna

Oh, look, mine is easy. It's the Godfather and you're gonna ask why, but I think it's a combination of my Sicilian heritage together with the fact that I think the movie is just jam packed with plenty of really provocative leadership lessons. Here's a fun fact actually, you know, one of Rogers iconic books is called Playing To Win? And I think the Godfather is a really twisted manifestation of that “playing to win” philosophy. So it's one of for sure one of my favorite movies. What about you, Stef?

Stef Tschida

Yeah, mine is kind of a classic Christmas movie, Love Actually. I just love how it demonstrates how interconnected we all are and I think there's some communication lessons from that as well. 

Agostino Renna

Excellent.

Roger Martin

I love that. I would probably have watched that 20 times every Christmas, right?

Stef Tschida

It’s such a good one. Agostino, what's your favorite food?

Agostino Renna

Oh, equally easy. This is my mom's lasagna. Now, Stef, to be clear, this isn't your mom's lasagna. This isn't Roger’s lasagna. This is my mom's lasagna and my mom is to lasagna what Michelangelo was to art. So that was an easy one for me to answer. So Roger, what about your favorite food?

Roger Martin

Probably Japanese. I never had it growing up because I grew up in the countryside in the middle of farming country and we didn't have many fresh fish there. So when I discovered sashimi and sushi, I just love it and so I have it whenever I can.

Agostino Renna

Excellent and Stef? 

Stef Tschida

You know, I'm gonna reveal my Midwest roots and say steak, just nothing like a good ol steak. 

Well, now that we better understand the humans having this conversation, which I found very enjoyable, let's dive into the topic at hand, which is business reinvention. Companies are trying to normalize and stabilize after COVID, but conditions remain tumultuous. As we all know, businesses are having to transform almost constantly. I read one time that nearly 60% of leaders are saying their businesses need to reinvent every three years to survive. And all of that requires leaders to carefully consider how they interact with those who matter to their success. Agostino, as a global senior executive, I wonder what you would say are some of the mega trends and forces that you've been observing playing out in the world? And how are they informing the way you lead?

Agostino Renna

Yeah, look, it's a great question, I would say that there's probably four things that I see that are forces being applied to businesses, regardless of what kind of business it is or where you're at in the world, etc.:

• The first is just volatility of all sorts is the way I'd characterize it. So macroeconomic volatility, inflation on the rise, different types of tensions, whether its geopolitical, socio- economic, etc., people worried about the planet and our ability to continue to exist or maintain our existence as humans over time. So generally speaking, just a lot of volatility. And I think that represents both opportunity and challenge from a business context perspective. 
• The second I would say, is just what I characterize as the Internet of Things, and with an open parenthesis about artificial intelligence. And to me, it's the coming together of the physical and the digital worlds enabled by obviously huge sort of advances in computational power, unprecedented quantities of data, which in my view, I think, will represent one of the most spectacular productivity platforms since the industrial revolution, would be the second. 
• Third, look sustainability has gone mainstream, it's to me clear that businesses understand that they can't just operate to turn a profit, but they also have to be responsible citizens of the planet. And whether that's environmental sustainability, or social sustainability, but I think it's gone mainstream as population continues to increase on the planet. And consumption per capita continues to increase with people, you know, wanting to do more things. So, I think it becomes incumbent on the businesses in the world to sort of play their part as it relates to sustainability. 
• And then the last one I would point to is just the reinvention of work and the workplace and the blurring of the lines between personal and professional spaces, as we sort of rethink what a career means, what it means to work and just this connection between person and company and company and person, in light of this new context. And I think some of that was exacerbated by the pandemic, but I think a lot of that is indigenous to the fact that this next generation, future leaders will want different things out of the workplace and out of the work that they do. 

So, Roger, maybe I'd come to you now. Inherent in all of these trends is the connection between company and people. You talk about a concept in architecture, whereby sort of buildings are monumentally large but are also designed to still feel intimate to the visitors and not make the people inside them feel small or insignificant. And you talk about how big companies need to do the same meaning to achieve human scale by finding a way to still feel intimate with their employees. Can you talk a little bit about the ways that you believe companies can do stuff like this? 

Roger Martin

The observation is that companies really have gotten a gigantic, right? And the biggest company in the world by far was General Motors at $10 billion of revenues. I mean, and that's just sort of kind of a medium sized company today. So companies have gotten gigantic. On average, the median company of the S&P 500 has grown 11 times in real revenue. For example, we have all these companies that are bigger, you know, bigger than the population of many, many cities. So is that a bad thing? No. In many industries that have lots of small players that are just a prelude to them. Somebody rolling it up and becoming gigantic in it. So I'm not saying you shouldn't get big, I'm saying you need to get big, but the way companies have dealt with being big, as I think with a real sort of intense coordination and control mentality, right, which is to say, “Boy, we're so big, now we've got to really control this and really coordinated or it'll sort of kind of blow up and get out of control.” And the way that companies have handled that is to standardize things. So they standardize ways to deal with customers, they create all this standardization, they compartmentalize. I mean, how many companies, and people in companies, do you know, Agostino, that complain: “Well, we're silo-zed, I'm in sales, and I can never get anybody to really understand what's going on in marketing or operations.” And they complain about that, well that's, they're complaining about something that's a very conscious policy, which is to say, well, we're going to split this company up into compartments, and that we will be able to manage them more easily. And last is to create a hierarchy to subordinate, right? So say you report to you, who reports to you, who reports to you just think of those all as coordinations and control their devices to enable you to, take this whole big thing and control it. And the problem with that is that people tend to feel ever smaller, they feel like a little cog in a wheel. 

And what you can do is delimited, by the compartment you're in and the level you're at, and there's a standard way of responding. So people just feel small. And I took this notion from the world of architecture, whereas buildings got bigger skyscrapers, right? There weren't skyscrapers for a very, very long. Chicago created them first and so now we have all these monumental buildings. And some of them when you walk into them, they make you feel tiny, they make you feel insignificant, and you kind of want to walk back out of it. But there's been a movement in architecture of intimate monumentality that says, “Yes, we have to build monumental buildings. But how can you design it in ways that makes it feel for more intimate?” The spaces kind of cause you to feel they're more intimate and for everybody on this who maybe has been to Grand Central Station in New York, it is monumental. They call it grand for a reason. It's a huge train station, but it was designed to make people not feel tiny. There are all sorts of different levels and little cozy spaces and little things about the design of kind of individual items, meeting places and the like that make people feel: ‘Hey, I'm in a wonderfully grand building that makes me feel comfortable,’ not ‘I'm in a grand building that makes me feel like a tiny ant running around.’ So I think the modern company has to think more about how to standardize, how to subordinate, how to compartmentalize in a way that's more human centric. And that's what I'm writing about.

Agostino Renna

I do have another question for you. I think you said somewhere that companies that achieved human scale in the way that you just described it are also more effective externally, because they're easier for the outside world to connect with. Say a little bit more about that. 

Roger Martin

Yeah, so what I think is if you're obsessed about coordination, and control, and then you compartmentalize into functions, and you have clear subordination, and very standardized processes, everything sort of flows up so that if you're an outside entity, it isn't easy for you to find a really effective place to filter into that, except near the top. You're going to have to escalate to somewhere high up, where the high up people can somehow kind of respond in an integrated way to your question. So let's say your customer’s saying “Your product is not working in my production system,” you're probably going to have to have the head of sales and the head of manufacturing for that company and the head of marketing, maybe, and maybe the head of strategy, get together to be able to solve your problem. You can't just go to your sales rep and feel like the sales rep can help take care of that for you. So rather than having many apertures into which you can get into the company in a useful way, there are a few and those people at the top are the busiest, and so unless you're a gigantic customer, the very biggest customer, if they don't respond to you, they will go bankrupt, you're gonna get told, “Go, you know, take a number and wait in line.” And so I think many customers feel like I am being served by a monolith, I can only ask my salesperson so much, because if I, you know, kind of ask them, it's gonna make life miserable for them, because they don't have the power to do anything, And, and so they're gonna think of me as a bad customer, etc, etc. Rather than saying I could go talk to this person or this person, they all have a chance to help me. 

Stef Tschida

Yeah, I really think it's fascinating to think about how this could apply to smaller companies. So my team works with a lot of growth companies that are on a journey to professionalize their operations. They sort of understand this idea of, right, that like what got them here won't get them there. But it involves a lot of culture change and involves a lot of implementing processes and systems and they’ve never had, having a lot more accountability and measurement than they've had. So I would love to hear if both of you talk about, you know, how could companies that are still growing, who aren't huge behemoths, keep all of this in mind and design their organizations from the ground up now so they don't have to go back and retrofit this later? 

Roger Martin

I think you're getting at the key Stef, which is to recognize that, okay, if we have to standardize, can we standardize in a more human friendly way? If we have to compartmentalize, can we compartmentalize in a more human friendly way? If we subordinate, can we do it in a more human friendly way? And I think asking those questions will cause you to do different things. One, I think it'll cause you to not over standardize and say, “Okay, now that we're a big company, we're going to have to create standardized jobs. So all the customer reps are exactly the same. And we're going to standardize on what they actually do.” Rather, you can say, “Well, what things are important to standardize? Let's standardize a customer service approach, so that we will have a checklist that says that these are the 10 things that we always have to pay attention to and serving the customer, right?” And you pay attention to them in your own way. You need that customer feeling that they were listened to, rather than sort of standardizing and saying the methodology for having somebody being listened to is XYZ. You say that this is an outcome we want and you figure out how to make that happen, standardizing, if you will, on desired outputs, rather than standardizing on inputs. How many times are things standardized? Did you fill in this form? Did you do that? Those are inputs. And that makes a person feel more like they're just a cog, as opposed to, you've asked them to produce an output of a certain quality and standard, but to figure out how to do it themselves. That would be a way to standardize, but in a way that is more human centric than standardizing in a way that isn't. And I would argue that if you standardize in ways that aren't human centric, they'll end up strangling you and you won't get the outcomes you want.

Agostino Renna

That's really good points. Stef, I think for me, on the same question, I would take a more philosophical response in that, I think regardless of whether you're big or small, whether you're growing or in a turnaround situation, whether you're differentiated or commoditized, my experience has taught me that there's sort of five basic principles that I think should be anchor points for all companies, whether they're in scale up mode, whether what have you:

• I think the first is just making sure you keep customers at the center. And as companies get bigger, it becomes more and more difficult to sort of maintain that focal point, aka the customer. And I think that doesn't necessarily mean that the customer is always right, because sometimes they're wrong. It doesn't necessarily mean that the customer is the boss. Because sometimes if the customer was the boss, they’d put you out of business. But the point of this one is that the customer informs and guides kind of your direction. And I think if you can stay anchored in customer centricity, that's always a good thing, regardless of big, small or where you are on your business journey. 
• The second is what I call lean, simple, and fast. And the enemy of large companies is complexity and bureaucracy. And I've seen it you know, throughout my career, I've worked with and for some really, really large companies. And the words lean, simple, and fast are generally not words you would use to describe large companies. And so I think to the extent that you can sort of make that a philosophical principle and a guiding principle for a business, it's a good thing. 
• This notion, I would say, of learning and adaptation. I think that when I started my career, you won and lost based on your ability to master and deliver what I called static content. And I think in today's environment, it's more about learning and adaptation, I think someone coined the term be a “learn it all” versus a “know it all.” And I think that culturally is also important, in my view.
• The one that I think cuts across everything, Roger said, is just this ability to engage, empower and inspire everyone across the enterprise. You know, if you think about the job that I have, and the company I work for, we employ 360,000 people globally, across a variety of different countries. And to be able to tap into the discretionary efforts of those people through engagement, empowerment, inspiration, is an incredible force. 
• And then, you know, the last thing is none of that matters if a company can't deliver results, and whatever those results are, whether it's for the environment, whether it's for the investment community, if you're a not for profit, to the mission that you represent, etc. 

So my view of this is that, regardless of whether you're big or small, and where you are in your journey, if you focus on customers, you try to stay lean, simple and fast, despite the fact that you might be getting bigger over time, if you create a learning organization, you're able to engage, empower, inspire everyone that works for the company, and you focus on delivering results and cutting out the noise – I think that's generally a good formula.

Stef Tschida

Yeah, you know, when we think about the leadership implications of all this, obviously, we all know leaders need to give people a vision for the future that they want to be part of. One thing I've noticed is that growing and evolving companies sometimes struggled to be transparent with their people about the natural tension and challenges that come when they're passing through new stages in their lifecycle. Roger, how do you recommend companies approach something like that in the spirit of maintaining intimacy with their people?

Roger Martin

Well, I think a bunch of it has to do with transparency, you know, people experiencing something for the first time. So let's say they've always worked in this small company that's growing and they're experiencing large size for the first time. I think they get scared that they might be losing something that they didn't have before. It's starting to feel different than before. And I think a good leader is one who sort of explains, “Hey, this is what's changing in the business. And in some sense, I need your help, and telling me how to make the kind of decisions manage the tensions that were that that we're managing, and, you know, I'm here for you, right?” If the message is, “I'm busy. I'm leading this growing business and no, shut up and get back to work,” then the person is going to feel more scared and more worried and when people are scared and worried, one, they end up doing unhelpful things often, and they are for sure less productive. I think a great leader reaches out their hand and leads people through change, rather than let's them sit there. And they listen to the worries and concerns and help people feel more comfortable about them.

Agostino Renna

Yeah, Roger I had another one, which is  you mentioned that scale and sustainability are the trickiest of combinations. Right? And that actually, in my own experience, and for the companies that I've had the privilege of working for, I've seen a lot of companies basically struggle to maintain kind of their initial disruptive spirit when they get to a certain size. So how do you think about striking that balance between sustainability and longevity and the need to continually innovate, disrupt, etc. etc.?

Roger Martin

Yeah, I mean, I guess I, I think that you're not going to be sustainable if you're asking human beings to function in a way that they're uncomfortable with, right, or an organization will be more sustainable and be able to grow sustainably, etc, to the extent that the people in it feel that it's a human environment. But what you want is an environment that doesn't burn people out. The major consulting firms are figuring that out in the modern world, having you know, you're traveling all the time, you're away from your family, kind of all the time that used to work, right? In the modern world, it doesn't anymore, they just say, “Life's too short, I'm going to do something else.” So I just think, you know, this is where there are some things philosophically, where I'm pretty simple. One is the golden rule. If you do to your employees something that you wouldn't want to have done to you, you won't be sustainable. This is where I love Issy Sharp, Four Seasons founder. That was his, he said, “Hmm, the only way we can have our staff treat our guests the way we'd like them to treat our guests, is to treat our staff the way we want them to treat our guests. So if we pamper them, are fair to them, pay them well, give them great benefits, have them eat good food in a good cafeteria,  have nice uniforms, etc., chances are they'll do that with our guests. Those sorts of ways of thinking about what makes a human organization work sustainably I think are important. 

Stef Tschida

Agostino, I'd love to ask you about this too, around this idea of, kind of the leadership implications here. You've worked with and for many executives around the world in your career. What are some of the attributes that you've found the best leaders do when it comes to making the greatest impact?

Agostino Renna

The other day, I actually, on a white sheet of paper I wrote the names of all the bosses I've had in my career. And I've had like 19 of them. But you actually learn from all of them. The good ones teach you how you should lead and the horrible ones teach you what you should never do. But I always say that the ones that were particularly effective had a couple of things in common:

• The first thing they had in common was they were all maniacally in love with the work that they were doing. They were just really, really passionate about whatever the mission it was that they were on. And you can't fake that. And you know, so I think coming to the work that you're doing from a place of passion is a superpower that I've seen permeate some of the best leaders. 
• The second thing I've observed is their ability to drive focus, particularly in this environment, where the opportunity to be distracted is exponentially greater than it was when I started my career – social media and emails and texts and all kinds of stuff. So the ability for them to separate signal from noise and particularly when you run a large organization, you know, 80% of the effort deployed on a couple of really, really big high return things. So focus I would say is a big one. 
• If we come into the comms space, candor, the ability to say what you mean and mean what you say and communicate, you know, precisely, surgically, etc. 
• The other one I always point to is just the discipline. So the best leaders I've had the opportunity to work with, for, and learn from, were viciously disciplined about what I call their say-do ratio. They would say something they would do something, and big or small, what they said is what they did. So that notion of discipline. 
• And then the last thing I would say, Stef, is just, I call it this interesting blend of humility and paranoia. And I think the humility part is the characteristic that keeps you grounded, and allows you to remember that you’re not always, if ever, the smartest person in the room. And the paranoia part allows you to stay curious. And so this blend of humility and paranoia I've observed in some of the most effective leaders. 

Roger, I'll come over to you again. This podcast is really, one of the elements is about the critical role that communication plays in the ability for leaders to lead well, and you've talked with leaders, you've interacted with many, many, many companies over the course of your career. What do you see leaders do really well when it comes to communicating and where maybe sometimes do they fail, particularly in the new environment of social platforms, etc, etc. But what's your view on this superpower that is communicating in the spirit of being a leader?

Roger Martin 

Well, I think great leaders understand that people's minds are extremely busy. They've got a whole lot of stuff flowing through them and their ability or desire to kind of focus on any incoming message is relatively low, right? And, not because they have a bad attitude or something, it's just, there's a lot going on.

So I really think it's a leadership gift or it's a skill that they create to have messages be simple, easy to go on to, easy to remember. And I'll give it as an example, AG Lafley, who as you know, I worked with very closely during his entire time as CEO of Procter and Gamble. And he came up with these very deep and meaningful kind of concepts that were expressed in an extremely simple way.

He just said, “We've got to remember that the consumer is boss.” Very simple. Consumer is boss, three words. But he repeated them enough times that everybody would be asking themselves in meetings, are we treating the consumer as boss? So, 

that to me is perfection. A really simple yet powerful message that takes into account that people have a full brain and you can't give a message that is two pages long that they're supposed to memorize and remember because they're not going to do it.

Agostino Renna 

No, it's spot on. I think it's, there's elegant simplicity in exactly what you just described. Stef, let me come to you with a question. So for leaders who do recognize the importance of being, sort of the Communicator in Chief for whatever it is that they're leading: their function, their department, area of responsibility, what advice would you give them on why, what and how to communicate in the current business context? Right? There's a litany of ways that you can communicate in today's environment. What advice would you give leaders that are looking to get better at communicating?

Stef Tschida

Yeah, I’d build on some of Roger's comments just around kind of the simplicity and the direct approach. One of the biggest things I think we forget is to put our audience first and to really take a minute to walk in their shoes, understand what's in it for them in what we're communicating and frame everything we do from that standpoint. It's not human nature, you know? If we communicated this way at home, we'd get our way a whole lot more!

It's just not what we do. But if you can take that beat in that moment to really change how you're communicating, to come from the standpoint of the person you're trying to reach, that's everything. One of my favorite quotes is, “The biggest misconception about communication is that it happened.” Right? We send an email, we put a check in the box, we go on our merry way and, just to Roger's point about how much noise everyone's dealing with, that's not how you actually get through. The way you get through is by speaking to somebody's direct concerns, their mindset and it has to be about them all the time.

Roger Martin

I agree 100%. And it's interesting, I don't know, a week ago, maybe it was two weeks ago, I was interviewed as part of a Medium day. They ask questions about, “Well, what do you think is sort of the secret to your success and having established a really big, big followership in a relatively short period of time?”

And I said what you said, Stef, basically that if you want to write on a platform like Medium and you want to write because you have things that you want to say, good luck. If instead you think of an audience and think, “What would they be really interested in? What would help them out the most? Chances are you're gonna succeed, especially if you listen to their questions because you know, they comment back on it and intuit from those comments, what has been more useful to them versus not, and then sort of tailor what you say to making sure that you're being useful to an audience, you'll be successful. But I think lots of communicators have things that they want to communicate and they're just never going to be as successful as people who think about the audience and think about how can they do something useful for the audience.

So if you're a corporate communicator to internal employees, how can I help my employees do the better job that virtually all good employees want to do instead of how can I tell them what I want them to think?

Agostino Renna

I think it's terrific and look, we'll get us wrapped up. We've covered a lot of ground in this call. So, first of all, Roger, a word of thanks to you, it's been terrific. For those of you that are out there, if you want to hear more from Roger, feel free to visit his website. www.rogerlmartin.com and you can get a sense for his books, what he does in an advisory capacity, some of his speaking engagements. You can also feel free to connect with Stef and myself on LinkedIn. We'd love to continue this conversation with you there and please, I would say stay tuned for our second podcast in this limited series.

We're going to continue to focus on leading well in the new world of work with our next guest who shall remain a mystery for now. But I'll say that will be just as enlightening as Roger, so watch this space.

Stef Tschida

Thanks so much to everyone for listening. Thank you so much, Roger, for being our guest today. Please be sure to subscribe to this podcast wherever you listen so you don't miss a single one as we release them. Until next time, lead and communicate well!