First Friday Book Synopsis

{Before we get to the book, a famous quote from Abraham Lincoln:

“The dogmas of the quiet past, are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise — with the occasion. As our case is new, so we must think anew, and act anew. We must disenthrall ourselves, and then we shall save our country.” — Message to Congress, December 1, 1862}

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Not all the articles with David take on a dominant model that is not producing the outcomes desired and provide a superior alternative. But at one point during our collaborations, David noted that a goodly number of them did, and broached the idea of doing a whole book in that vein. This book is the fruit of that conversation.

As I’ll argue in the following pages, leading businesses needs to be seen less as a challenge of managing organizational complexity and more about making sure that value is maximized at the front lines. This calls for an approach that is less inspired by hierarchy and more by respect for the insights of the people in direct contact with customers…

Solving the problem required a new way to think. It required a different model. That became the heart of my work.

I’m proposing, rather, that my fourteen new or different models will provide a better likelihood of getting you an outcome you want than the model it replaces.                                                                                                                                

By design, the fourteen chapters in this book don’t build on one another in a way that absolutely requires them to be read in order. …In that sense, you can treat this as a management handbook.  

In strategy, what counts is what would have to be true—not what is true.  

Roger L. Martin, A New Way to Think: Your Guide to Superior Management Effectiveness

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At the First Friday Book Synopsis in Dallas, we have presented synopses of good, best-selling, useful business books for 24 ½ years.  There are a handful of authors who write such good books that they are “repeat” authors for our presentations.  Roger L. Martin is one of those authors.   And, not only do I think that Roger Martin’s books are useful; I enjoy reading his books.

I have presented my synopsis of his book The Design of Business, and The Opposable Mind, and last month his newest book A New Way to Think: Your Guide to Superior Management Effectiveness. 

So, to state the obvious, I am an appreciative fan of his work.  He helps a business thinker think through things!

This latest book is a book that deals with a theme that seems to be recurring:  the way we’ve been thinking may no longer be adequate to the task.  In early 2021, I presented my synopsis of Think Again: The Power of Knoning What You Don’t Know by Adam Grant.  (My blog post on this book, Think Again by Adam Grant: Here are My Six Lessons and Takeaways, is my most viewed blog post the last few months).  This new book by Roger Martin is a very good “next read” to the book Think Again.

I always begin my synopses with “What is the point?” of this book.  Here it is for this book: The models we use, by default, are not worth using if they are no longer viable; useful; effective. Working harder while using an outdated model will not solve today’s and tomorrow’s problems and challenges.  We need…a new way to think. 

And I ask Why is this book worth our time?  Here are my three reasons for this book:

#1 – This book captures a lifetime of thinking by a superior thinker/professor.

#2 – This books helps explain why (just) working harder does not always lead to more success.

#3 – This book is a tutorial on how to “think again” – a very big concept in today’s business environment.

I always include a number of Quotes and Excerpts from the book – the “best of” Randy’s highlighted Passages.  Here are quite a few of the best of the best from this book:

Executives, mainly CEOs, hire me to help them improve the performance of their companies.  …To help them, I need to diagnose why the results aren’t what they wish. It has become clear to me over the years that in nearly every case, the poor results weren’t down to their not working diligently enough in pursuit of their goals; it was because the model that guided their actions wasn’t up to the task.   

In other words, the seemingly sensible model was logically flawed: it was predicated on the availability of good market data, but existing market data is not likely to be relevant for genuinely breakthrough innovations.   

But be assured that in due course your new model, too, will be found wanting and will be replaced by a better model still.  

A poor product or service at the front line won’t be saved in the eyes of customers by being part of a particular corporation, even if that corporation has other related products that are successful.  

Corporations must bring together many resources and capabilities to create new products. Consequently, firms become complex organizations. 

If the judge of the value of any product or service is the customer who chooses to buy, not the provider, then it is the provider’s people at the front line, in front of the customer, who are best placed to determine what the customer values. It is up to the rest of the company to help the people in the front lines, where the revenues come in, to satisfy those customer needs. The lower level, in effect, is the customer of the level above it. And like a customer, it should expect to get more value from those services than it pays to get them.   

Managers in the layer above have got to start treating the people below them as customers—understanding their lives and needs, stepping into their shoes. …it is surprising how remote executives become as you go up the hierarchy. 

During his entire time as CEO, A.G. Lafley had a rule that whenever he visited another country, he needed the local P&G organization to set up an in-home visit with a local consumer and a store walk-through at a local retailer. 

Because most companies don’t build corporate strategy from the perspective of increasing the competitiveness at their front line, their corporate structures tend to swell rapidly in terms of both costs and decision-making.   

Modern capitalism can be broken down into two major eras. The first, managerial capitalism, began in 1932 and was defined by the then-radical notion that firms ought to have professional management. The second, shareholder value capitalism, began in 1976. Its governing premise is that the purpose of every corporation should be to maximize shareholder wealth.  Then in 1976 managerial capitalism received a stinging rebuke: Michael C. Jensen and William H. Meckling’s “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure,” published in the Journal of Financial Economics. The paper, which has gone on to become the most-cited academic business article of all time, argued that owners were getting short shrift from professional managers, who enhanced their own financial well-being rather than that of the shareholders.  …Their critique ushered in a new philosophy of capitalism, as CEOs quickly saw the need to swear allegiance to “maximizing shareholder value.”  No longer would the shareholder be abused—the shareholder would be king.  

If the shareholders were all you cared about, would focusing on increasing shareholder value necessarily be the best way to make sure they benefited? …To actually create shareholder value, put your customers before your shareholders. In other words—and nobody should be surprised by this—Peter Drucker had it right when he said that the primary purpose of a business is to acquire and keep customers.   

To keep customers loyal—and to attract new ones—you need to remain relevant and superior. Hence Instagram was doing exactly what it was supposed to do: changing proactively. That’s an edgy thought, to be sure, but a lot of evidence contradicts it. 

And this brings me to an important truth about customers: the familiar solution usually trumps the perfect one.  …My argument is that sustained performance is achieved not by always offering customers the perfect choice but, rather, by offering them the easy one.  

Research into the workings of the human brain suggests that the mind loves automaticity more than just about anything else—certainly more than engaging in conscious consideration.  Given a choice, it would like to do the same things again and again. …the easy, familiar thing to do is to buy Tide yet again. A driving reason to choose the leading product in the market, therefore, is simply that it is the easiest thing to do: in whatever distribution channel you shop, it will be the most prominent offering. 

Become popular early. 

P&G also made sure that no automatic washing machine was sold in America without a free box of Tide to get consumers’ habit started. 

For internet businesses, free is the core tactic for establishing habits. 

For customers, “improved” is much more comfortable and less scary than “new,” however awesome “new” sounds to brand managers and advertising agencies. 

Remember: the mind is lazy.   

First, in the early steps, they must avoid asking “What should we do?” and instead ask “What might we do?” Second, in the middle steps, managers must shift from asking “What do I believe?” to asking “What would I have to believe?” Finally, by focusing a team on pinpointing the critical conditions and tests, the possibilities-based approach forces managers to move away from asking “What is the right answer?” and concentrate instead on “What are the right questions?  

You can’t chart a course for the future or bring about change merely by analyzing history. The behavior of customers will never be transformed by a product whose design is based on an analysis of their past behavior. …Yet transforming customer habits and experiences is what great business innovations do. Steve Jobs, Steve Wozniak, and other computing pioneers created a brand-new device that revolutionized how people interacted and did business. …To be sure, innovators often incorporate scientific discoveries in their creations, but their real genius lies in their ability to imagine products or processes that simply never existed before.

When a new strategy calls for a change in behaviors and values, a powerful culture gets in the way of those changes because all employees will instinctively continue to be guided by their inner rule book in responding to decisions and situations…

Too often we mistakenly assume that our reasoning is clear to others because it is clear to us. We must take the time to be explicit about the choice we have made and the reasons and assumptions behind that choice, while allowing the opportunity for those downstream to ask questions.

Upstream theories, and the decisions based on those theories, constrain downstream experiences. …It’s time to revisit and revise our upstream theory. The business world may be utterly convinced that better execution is the path to greatness, but in truth, a better metaphor would be much more helpful.

“Creativity is the potential of an idea, and execution is the extent to which that potential is realized.”

And, in my synopses, I include key points and principles from the books.  Here are a number of the ones I included from this book.  (Words in italics are taken directly from the book)

• How A.G. Lafley learned…
• During his entire time as CEO, A.G. Lafley had a rule that whenever he visited another country, he needed the local P& G organization to set up an in-home visit with a local consumer and a store walk-through at a local retailer. …His visit to the bank of a river in rural western China to speak to the village women who washed their clothes there became legendary. 

• The Olay decision…
• At $15.99, purchase intent dropped dramatically. At $18.99, it went back up again—way up. So, $12.99 was really good, $15.99 not so good, $18.99 great.” — For the department store shopper, the product was a great value but still credibly expensive. For the mass shopper, the premium price signified that the product must be considerably better than anything else on the shelf.

• The Four Seasons
• If the average tenure at Four Seasons approached twenty years, the talent team could invest ten times the resources per person in hiring, training, and rewards than could competitors, whose employees tended to stay for a year or less. The result for Four Seasons would be far better trained and more experienced hotel employees, without higher talent costs overall. …Under Sharp, Four Seasons enjoyed happier, more loyal, more capable, and longer-serving workers—enabling it to deliver superior service and earn leading-price premiums.
• The goal for everyone at Four Seasons would be “to deal with others—partners, customers, coworkers, everyone—as we would want them to deal with us.” The Golden Rule… 

• Mary, the genius bank teller
• she had three customers; one wanted a social visit. One wanted a friend. And one wanted something of a financial advisor.She recognized their differences; and treated them differently! …and… the bank did not learn from her.
• I began to see a pattern in the way Mary dealt with her customers. With some, she was polite, efficient, and professional. With others, she would take a little longer, perhaps suggesting that they transfer some of the extra money in their checking account to a higher-yielding term deposit or explaining new services the bank had introduced. And with some customers she would ask about their children, their vacations, or their health but relatively little about banking and finances. 

• What is the primary purpose of a business?
• Peter Drucker had it right when he said that the primary purpose of a business is to acquire and keep customers.

• What this book is/does:
• This is the way we have always approached this kind of situation/problem/challenge
• That way may not work any longer…
• We should, instead, consider this; try this…

• The power of cumulative advantage:
• It’s about helping customers avoid having to make a choice. To do that, you have to create what I call cumulative advantage. …Each time you select and use a given product or service, its advantage cumulates over the products or services you didn’t use.

• Remember the wisdom of Daniel Kahneman (always!)
• Daniel Kahneman characterized subconscious, habit-driven decision-making as “thinking fast” and conscious decision-making as “thinking slow.”

• Strategy!
• There’s a secret about strategy that no one tells you: every organization has one, whether or not it is written down and whether or not it is the product of an official strategic-planning process.
• Step 1: Move from Issues to Choice
• Step 2: Generate Strategic Possibilities — On one aspect of this question, I am adamant: the team must produce more than one possibility. …Analyzing a single possibility is not conducive to producing optimal action—or, in fact, any action at all. …I also insist that the status quo or current trajectory be among the possibilities considered. By including it among the possibilities, a team makes it subject to investigation and potential doubt.
• At least one possibility makes most of the group uncomfortable
• What would have to be true if… — Once again, during this step, expressing opinions about whether or not conditions are true should be strictly prohibited. The point is simply to ferret out what would have to be true for every member of the group to feel cognitively and emotionally committed to each possibility under consideration.
• planning must not be confused with strategy.
• Rule 1: Keep the strategy statement simple — Focus your energy on the key choices that influence revenue decision makers—that is, customers.
• Rule 2: Recognize that strategy is not about perfection — At its very best, therefore, strategy shortens the odds of a company’s bets.
• Rule 3: Make the logic explicit
• AND – Execution and Strategy are joined at the hip – The problem is the model that holds that strategy formulation and execution are distinct and different. A more powerful model about execution is: it’s the same thing as strategy. You cannot talk about execution separately from strategy.

• Cultivate a very good use of metaphor…
• Aristotle himself observed, “Ordinary words convey only what we know already; it is from metaphor that we can best get hold of something fresh.” In fact, he believed that mastery of metaphor was the key to rhetorical success. — Research in cognitive science has demonstrated that the core engine of creative synthesis is “associative fluency”—the mental ability to connect two concepts that are not usually linked and to forge them into a new idea.
• The automobile, for instance, was initially described as “a horseless carriage,” the motorcycle as “a bicycle with a motor.”

• Culture:
• I think of it primarily as a book of rules residing in the minds of employees that guides how they interpret situations and decisions.
• Culture is what helps a manager understand “how things get done around here,” “what I should do in this situation,” and “who must I pay attention to.” …The strength of a company’s culture is determined by the similarity of the mental rule books of the employees.
• Culture emerges from the interaction between the environment (the formal mechanisms) and individual behaviors (the interpersonal mechanisms). Because of that, little can be done to change the culture of the organization directly by fiat, and CEOs who make the attempt usually lose their jobs.

• Knowledge Workers:
• In particular, most companies make two big mistakes in managing knowledge workers. The first is to think that they should structure this workforce as they do a manual workforce—with each employee doing the same tasks day in and day out. The second (which derives in part from the first) is to assume that knowledge is necessarily bundled with the workers and, unlike manual labor, can’t readily be codified and transferred to others.
• The Rise of the Decision Factory — But they do produce something, and it is perfectly reasonable to characterize their work as the production of decisions: decisions about what to sell, at what price, to whom, with what advertising strategy, through what logistics system, in what location, and with what staffing levels. …knowledge workers hammer away in decision factories. — Decision factories have arguably become corporate America’s largest cost. …the salaries of these decision factory workers far exceed those of workers in physical factories. 

• Be uncomfortable!
• In fact, if you are entirely comfortable with your strategic plan, there’s a strong chance it isn’t very good. …You need to be uncomfortable and apprehensive: true strategy is about placing bets and making hard choices.

• Motivation and management
• I can say with confidence that in my forty years working with people who really are in the very top category of talent, I haven’t met a single truly talented person who is solely or even highly motivated by compensation. ….feeling special is more important than compensation. …As I will show in this chapter, when it comes to managing high-end talent, the secret to success is making people feel like valued individuals, not as members of a group, no matter how elite.

And here are my seven lessons and takeaways:

#1 – Yesterday matters less than you think.  Yesterday’s customers need to be won back time and again. Yesterday’s successes may not work tomorrow. And yesterday’s strategies and models may be outdated, obsolete, and ineffective.

#2 – Be good at definition:  define current reality well. Define just what makes up the status quo.  Define what could be possible.

#3 – Get very good at thinking about what could be possible.  Aim for what could be possible.

#4 – Get as close to your customer as possible.  Stay as close to your customer as possible.

#5 – Let decisions be made by those as close the customer as possible.

#6 – Projects matter more than jobs for knowledge workers. Much more.

#7 – Treat individuals as…individuals.

Here’s a tip:  take some time to read the table of contents very carefully.  It will really help you see why the insights in this book are worth your time.

I present synopses of 24+ business books every year (at our First Friday Book Synopsis event, and a few others for clients who “special order” a synopsis).  One thing is more and more clear:  what worked yesterday, and yesteryear’s ways of thinking, are not up to the challenge of what we will face tomorrow and the day after tomorrow.  We really do need a new way to think!

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My synopsis of A New Way to Think, with the audio recording of my presentation, and my comprehensive, multi-page handout, is now available on this web site.  Click here for our newest additions.

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