Bonus: The Magic of Value Creation with Curt Carlson

Bonus material! Join host Daniel Serfaty for a bite-sized discussion with innovator Curt Carlson on the magic of value creation using the NABC methodology.

To listen to the rest of the interview with Curt Carlson, check out Episode 1 of MINDWORKS Season 4.

Transcript

Daniel Serfaty: I've seen the power of having a few what you called early adopters of this method in my company, because it's enough to have a handful of folks promoting the message and showing success. That's the key part. That saying, "When I did that, I won that proposal. When I did that, I was able to install the technology in those customers." I think this is extremely powerful. I'm a big believer in that. 

It also, frankly, as far as I'm concerned, teaches also a form of empathy on the part of the inventors, by exercising basically the need of others. How does the other, whether it's a business to business proposition, or business to consumer proposition, how they think, how they see the world, what they need? Really, it's a great exercise in useful empathy, in this case. 

Curt Carlson: Absolutely. Perfectly said. Our approach basically was to lead with the best, involve everyone else. Those early adopters, like with your teams that I've seen, I can say anything I want. But want influences them is their peers. That's what influences them. If they see their peers saying, "This is a good thing to do at being more successful," that's how you win people over. That's what influences them. 

When we did the second round with your team ... We went through, for the audience, two teams of Daniel's. One we call practitioners, those were people who were just working on their projects to run the fundamentals. What we try and do is, the whole process is to learn these ideas while doing their actual projects. It's not make-work. It's not Dominoes, or some silly thing. We asked that the teams come in, small teams, three or four people. They're seriously committed to some problem. What we're going to do is help them learn these ideas, but also improve the value proposition for the project. The way we like to say it is we're going to help them do work they should be doing but probably won't do if they're sitting at their desk. Because we're going to get them to address the big issues that are easy to postpone. So we did that. We had some great successes, I think. I'm not the customer for this, Dan, you were, so I shouldn't answer that.

But I would tell you, the second thing we did was we had a group of mentors that Daniel picked, who would take another step, so they can actually be able to facilitate this. 

Daniel Serfaty: Yes. 

Curt Carlson: What impressed me, because we'd never run that program before, was how effective your people were at coaching your people. Again, as opposed to most of it coming from me, most of it was coming from them. I thought there was a magic from that. 

You asked me earlier, "When are you surprised at things?" I was surprised. I thought, "Whoa, this is working a lot better than I ever thought it could." Because we've tapped into the colleagues. 

Daniel Serfaty: Yes. 

Curt Carlson: They have a different kind of credential with the other folks. 

Daniel Serfaty: I think it's a secret, Curt. It's one thing for a person with your pedigree, with your experience to teach. People say, "Well, it's easy for Curt to say that. He's been so successful in doing that." But it's a totally different message when the person that is sitting in the desk next to you tells you the same thing in their own word. And that's transformative. I think that that's how a mindset gets propagated, also. 

Curt Carlson: You just said something else that I think is really important about that feedback. These are people who understand each other. They understand the values that you created in the company. They're actually using your language to communicate similar ideas, but in a way that makes perfect sense to people. There's a knowledge gap that gets filled by having your own people do this. I think that made a bigger impact than I expected by a lot. 

Daniel Serfaty: Let's open the aperture a little bit now, on larger issues of innovation, and the future of innovation.

But first, one of your beloved students asked me to ask you the following questions. 

Curt Carlson: Oh, good. 

Daniel Serfaty: Here we go. She says, "It is difficult to force inspirational innovative ideas on the fly. Ideas have lives of their own. You just have to wait for them to come out and make themselves known, often when you least expect it." 

Curt Carlson: Yes. 

Daniel Serfaty: "Is there a practice or an activity that you can recommend that would increase the opportunity for innovative ideas to happen?" 

Curt Carlson: Well, yes. First off, I think those are fundamental truths. Some things just can't be done because they can't be done. Sometimes you don't know that, so it's the unknown unknowns that prevents you from doing things. Then of course, there's all kinds of issues. There are teams that can break up. You can have economic downturns. You can be bought by somebody else. There are a lot of things that can happen to you that get in the way.

But nevertheless, given all that, the real question there I think, correct me, was given all these factors, and given the fact that innovation is a complex activity where you're dealing with things that aren't all known when you start, are there things you can do that improve your odds? 

Daniel Serfaty: Yes. 

Curt Carlson: You can tell my attitude is the answer to that is profoundly yes. That when you think about the fundamental principles of learning and improving, so that's active learning, systems thinking, behavioral science. If you think about those things, and you think about the fact that you need to bring together different forms of knowledge that no one alone knows, and you realize you need to create an environment where they can collaborate freely, and without rank, or debate, or crazy human stuff that gets in the way. What I think is amazing is if you do those things, how much the probability of success goes up. 

Again, going from a company that was failing for 20 years with the same people. I had no money to hire new people, or fire people, or whatever. Just by helping them work in this way, we did amazing things. That's what it comes down to. 

It's not perfect. It'll always be messy. But one of the rules, which this will sound a little extreme to your audience, is one of the principles of a manager is you should make the results you want inevitable. Are you doing everything you can to make the results you want inevitable? That sounds extreme. But it's a mindset of, given these factors, the difficulty, the challenges of the world, the challenges of people, the challenges of learning fast, all these things. Every barrier we can take down increases our probability of success. Can we actually imagine a situation where the results we want almost become inevitable? It's a mindset. It sounds extreme to your audience. But that's what I was after as a CEO of a big company. 

Daniel Serfaty: Yes. No, I think it may sound extreme to some of our audience. But to anybody with managerial or leadership experience, I think has understood exactly what you meant there. I think that's a great piece of advice. The notion of inevitability as a practice. 

Let me ask you something else that is very omnipresent in the tech industry in particular, to comment. We are zooming out a little bit now from [inaudible 00:07:30]. In the technology industry, the innovator is often an inventor, an engineer, a scientist, who is taking their innovation to market. 

Curt Carlson: Yes. 

Daniel Serfaty: Not necessarily within SRI. But we've seen that often in both the big successes, but also the many, many lesser successes or even, most of the time, failures.

Curt Carlson: Yes. 

Daniel Serfaty: Is it always a good idea that the person with the idea is the one actually taking the innovation to market? Can you share an example where that worked well? Or maybe, another one that didn't. 

Curt Carlson: That's a tricky thing because having all the skills of being both a value creator, innovator, and entrepreneur, that's a very rare mix of people. Typically, we thought of teams as consisting of three kinds of people. There was often a technical genius, who knew all kinds of stuff that nobody else knew. There'd often be a person who was a super smart person, but more of a business development person. Someone who wanted to go talk to people, set up meetings with customers, and trying to figure out what's really going on in the ecosystem. The third person was an operations person. Someone to just keep things running, and make it work. That's the magic triad of people. 

Now obviously, you can plus or minus these three categories. But basically, that's what we had. When we did high definition television, we had those three things, and it's one of the reasons why we were successful. Our operations guy at the end was the person who allowed us to win because he knew how to organize people, and build things in a way that was just ... Nobody else on the team could've even come close to him. Without him, it wasn't going to happen. That was the magic triad we started. If we just ended up bringing a technical person, we knew that was going to be a limited thing. If we only had a business development person, the idea's not there, so that's not going to work. Somebody needs to keep the lights on, and take care of the books, and stuff.

That was our magic triad. We had other rules. And people violate these things. Go back to your original question. Can a technologist, can a Musk or a Jobs do this? Well, they really don't do all three of these. They partition this out. Musk doesn't do operations. He would never do operations. Jobs didn't do operations. Jobs didn't really do technology, either. He was the promoter and entrepreneur who'd get people to work together to solve these impossible problems. That was our formulation.

When we went out Siri, one of our people left, he was the brain guy who made the technical breakthrough, or a lot of it. He went with a company. But we hired a CEO who was an entrepreneurial person who never would have invented the technology. That was always our mix. 

Another rule was, when we formed a team, we wanted people to share the vision. Have unique complimentary skills. That's the key phrase, "unique, complimentary skills," and shared rewards. If you're asking people to work in the way we're talking about, which is really hard and demanding for the previous part of our conversation, they have to buy into the vision or it doesn't make sense. If they're not uniquely valuable in their role, unique, complimentary skills, then they're not going to be happy. You can't have two people who do the same thing in a small team. They're going to fight with each other about who gets what. And we did that. 

Then, this is the shared rewards. They have to feel like it's worth it to put in years of hard work. It's not just financial. They're going to be appreciated and rewarded emotionally, as well as financially, for what they do. That was another one of our rules that I see get violated all over the place. That people look at this team and you'll say, "There's no hope for this team, they're fighting with each other already because they don't compliment each other." 

Daniel Serfaty: I think you will find many people, I can imagine people in our audience, nodding as you say that because we all have experience where either one of those three elements was absent. Then you became a two-legged stool, which is not a very stable structure. 

Curt Carlson: No. 

Daniel Serfaty: Or, as you said, they had unique skills, but they were not complimentary in the sense that they didn't really work in synergy, and as a team. Many companies collapse because of that. Either because, as you say, they didn't have shared rewards, or they just didn't work well as a team. It's interesting. Many people probably have examples in their own immediate corporate neighborhood when they've witnessed rare successes, and probably many, many more failures when you don't have those conditions fulfilled. 

Curt Carlson: As another tip for the audience, we had a little playbook that we gave everybody that talked about all these things. It's not a very big playbook, it's maybe a dozen pages long. But it had these rules of thumb. They got violated all the time, that wasn't the point. Just that everybody knew that here's a brilliant technical person, who is probably not going to be that successful if we can't team them up with somebody who believes in them and the vision. The operations person was often taken care of by corporate, because we would run that part of it. But if it was a big thing, like high definition television, that was a unique role to make it happen. For example, with Siri, we won a $100 million DARPA program, so we had an operations person obviously who was a key to that success as well. 

I want to talk about a really hard thing. When you think about a really hard problem, your folks work on really hard problems. One of the things we were trying to get all the teams to do is tell us ... First off, you see all the discussion about the need, so let's leave that alone for a second.  We really nailed a problem, where we understand the need, and where the gap in performance is significant. And the economic impact, or some attribute that we're after, is significant enough, it's worthwhile that we want to go after it. 

The next question we try and get people to think about is what's the one thing, not the 12 things, what's the one thing if we addressed it would make all the difference? Can we prove ... Again, not build it necessarily. Can we prove that we can do it? We sometimes call that the key insight into the solution. 

What we learned at SRI, I didn't know this obviously working for RCA or GE. You can tell, I'm not enthusiastic about anything I learned there, other than we had brilliant people that were great friends. But with the [inaudible 00:14:02] questions, if you can get people to really identify the need and prove to us it's an important thing that we need to solve for the enterprise and for the team, and we can identify that key barrier, or limitation, or whatever word you want to do it. It may be two things, but it's not a dozen things. 

I mentioned with Siri it was this question of disambiguating search. That was the one thing. For Steve Jobs with the iPhone, it was two things. It was first, a small computer to get rid of the buttons. The second the step to get rid of the stylus so it would be convenient to use. Sometimes you have to peel the onion, where there's we got to solve this one problem. Okay, that's better, but it's not perfect. Now we have to peel it again, listen to that. Instead of jumping to the end, which we've discussed can be a real problem. When you jump from the cup all the way to the bottom, without addressing these issues in between, then you can end up with a disaster on your hand. Because at some point it catches up with you, and you go, "Oh, I have no solution for the stylus."

Daniel Serfaty: Yes. Because you have to also into account, that once you peel that first layer, if you can find a hierarchy. Okay, this is my top one, or maybe as you say, you give us permission to even consider two. Then there is learning that is occurring while you're dealing with that first one that will affect all the other layers. We should not minimize the amount of learning that happens when you solve a problem.

Curt Carlson: Exactly right. 

Daniel Serfaty: Because it certainly propagates. 

Curt Carlson: People like Musk and Jobs were uniquely good at identifying this key insight, and then addressing it. Then all of a sudden, they open up this whole new universe of problems. Again, it's about learning and optimizing your odds, which is what we've been talking about. 

Daniel Serfaty: You dabble in a lot of different domains. My question is are there certain domains in life that are more resistant to innovation? Or more, how would I say, not even open to innovation? I don't know, politics, real estate, banking, as compared to other ones that everybody talks about all the time. Which is high-tech, and maybe medicine. Are there some domains that are still almost a blank slate almost, that are innovative to say, "I want to disrupt that domain?" If they exist, why are they resistant to innovation? 

Curt Carlson: The answer, as you know, is yes. There's some areas. When you look at a problem, actually just what we were talking about, what's the main barrier that's preventing a solution? It can be political. It doesn't have to be technical. The reason we haven't transformed education is not because we don't know how. It's because there are political barriers, and we can't influence them. Making educational innovations is very difficult. Although people are doing it now, and they're going to using AI, and Zoom, and other ways that's going to break that down. But it's a huge barrier. 

When you see politics involved, or regulations, or things like that, that can be difficult. Obviously in healthcare, there's a regulatory hurdle. We develop drugs at SRI as well. A drug is a 15-year process. With failures all the way, and ultimately a huge amount of money. To do that, we had to be a very patient organization. We could, so we could do drugs because we weren't in a hurry. We built a pipeline, and one would come out every once in a while. 

The basic rule is bits are easy. I'm joking here. Electrons are harder. And atoms are terrible. Anything you have to build that scales with more atoms is going to be less desirable to a venture capitalist. Because what they want to do is they want to scale basically at almost no cost, which IT often allows you to do that. 

Another thing, which I think a lot of people underestimate the importance of it, is that IT, for example, often gives you a direct interface with your end users. So you can get feedback in realtime for your end users. If you're building ... Let's say even if you're a great company like Proctor and Gamble. They're moving away from this, of course. But the way you typically interacted with their customers is by putting products on the shelf, and seeing which ones they picked up. That innovation cycle is years.

Daniel Serfaty: Yes. 

Curt Carlson: Whereas if you can, with Amazon, interact with your customers in realtime, that is a huge advantage in every way you can imagine. Traditionally, when you're doing things with venture capitalists or others, you look for where are the areas where there's the potential for major transformations where the barriers are the minimum. 

I want to share with you one of the secrets of SRI. All right, are you sitting down? 

Daniel Serfaty: Audience, pay attention. 

Curt Carlson: Okay. This is going to sound funny, of course. We called it Colliding Exponentials. If you're thinking about doing major things, which we did and all big companies are supposed to do this, like Siri, or high definition television, or intuitive surgical, or almost anything we did. When you first had the idea, you can't do it. The technology's not good enough to do it. 

What we would do is we'd be always looking ahead and asking, "What are the underlying technologies, particularly the ones that are growing exponentially?" At some point, the combination of them is going to open up a new white space. When those exponentials converge, five, or seven, or 10 years from now, they're going to open a new white space where there basically is no competition, and where you can do something brand new. That's one of the ways, and one of the mental models we used at SRI, and why we were able to find some of these opportunities. 

I think it was crazy that we beat IBM with Siri by seven years. That is crazy. I don't think that goes on at IBM. I don't think they think that way, and I don't think they have a similar kind of incubation or value creation process. It requires to keep on looking at those things. Certainly, the Siri team did that endlessly. It's like, "When is this going to be ready? When are we going to be able to put the pieces together? When is the interface of the APIs, and the interfaces with our end users going to be in place so we can have a business model?" That was going on ... Well, it still had to be resolved before we thought we could actually do it, so we were waiting for these things. 

Daniel Serfaty: You were asking those questions while the technical team was doing the development of the solution at the same time. 

Curt Carlson: Exactly. You said it better than I did. Endlessly, that's exactly right. Exactly right. You ask earlier about, "How do you mitigate the risk of things?" Well part of it is, if you can identify a situation like that before even an IBM does ... Think of it. It really is crazy. How could we, with almost no resources, beat them in an area where they already had Watson? How could you imagine that? Well, it says a lot about the way we work, but it also says a lot about the way they work.