Let's Talk Business Strategy: An Interview with Ray Arell

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Presented by Tom Perry & Ray Arell

You won’t want to miss this interactive session, where Tom Perry from Hyperdrive will interview Ray Arell, founder of nuAgility, as part of our spring Business Strategy series.

They’ll deep dive into those burning questions you’ve been wondering about but didn’t have an expert to answer them! While this is an unscripted event, they’ll touch on several aspects of Business Strategy, such as:

How to set an effective business strategy
Communicating your business strategy up and down the organization
Measuring the success of your business strategy
Aligning your business strategy with your teams’ work

Transcription:

Speaker 2
(0:11) Well, welcome everybody, I’m pleased to this is sort of a sort of a reunion for me to get back together with Ray because the first time that I met Ray was a conference that I was putting on for the very first time. (0:26) It was called the Agile Management Conference, was doing it in Seattle, and I needed a keynote speaker desperately. (0:31) So I called my friends and I was like, who’d be really, really good?
(0:35) And they said, well, there’s this guy, Ray, and he’s this leader over at Intel who’s leading the charge on the agile transformation there, and he might be really good. (0:46) And so I called Ray up and I did a little looking and I found out that Ray had, well, he was really big into modeling.(0:55) And I was like, oh, my God, this is this is a guy who’s like my soulmate here.
(0:58) He had his own giant Dalek in his office. (1:03) He had this amazingly detailed Starship Enterprise. (1:08) And I talked to Ray and learned that he really did have a wonderful way of conveying his understanding of how businesses approach agility.
(1:21) And so I had him for the conference and he was fabulous. (1:23) He knocked it out of the park. (1:25) He just made the conference for me.
(1:29) And so it was with that that I got to know Ray and his path after that went towards things like, well, he was doing independent consulting with his company, New Agility. (1:42) He also was a leader for the Agile Alliance, where he was the chief of innovation. (1:50) You get the best titles, Ray.
(1:52) I got to figure out how you get some of those titles. (1:54) Chief of innovation, director of emerging systems and transformation. (2:00) Man, you’re good at titles.
(2:03) So with that, I’d like to introduce Ray Arell. (2:09) And Ray, what did I miss? (2:11) I probably, there’s a whole lot in there that probably could be improved on.

Speaker 1
(2:17) I think you hit most of the high points. (2:19) Just one thing to note with Intel, I was there for three decades. (2:24) So I’ve had a variety of different careers inside of the company.
(2:28) Started off as an engineer for about half of it. (2:33) And then the second half, you wake up one day and they say, hey, you should go into leadership and management, which I think that was probably not the wisest move, but I did it anyway. (2:42) And so I went into leadership and was doing anything from a variety of different projects, including microprocessors and platform design and other work.
(2:56) And then eventually when I, towards the latter part of my Intel career, I was running the Agile transformation that was going across 162 sites worldwide. (3:06) We had a community of practice of about 52,000 people that were practicing Agile in some way, shape or form. (3:13) So I’ve converted from a waterfall dude to, you know, over to the Agile side.
(3:19) And I’ve been that for some time.

Speaker 2
(3:22) Very cool. (3:23) Thank you, Ray. (3:24) So I’m here with a few questions about strategy.
(3:29) That’s largely our theme today. (3:31) And as we’re going through this, Ray’s probably going to fire a few back at me. (3:36) And you know what?
(3:36) You guys may have some questions of your own, so please don’t hesitate to put those into the chat. (3:43) And if we can, we’ll incorporate those here. (3:47) I’m very casual and laid back.
(3:49) So if this stuff comes up, I’m happy to incorporate it. (3:53) And so please contribute wherever you feel the need. (3:57) We can, we can kind of treat this rather informally.
(4:00) And with that, I guess maybe I’ll start with a confession, which is my impression of strategy is that it is something that takes place when the executives go off to a mountaintop somewhere, some sort of James Bond lair, and they all drink very, very expensive drinks. (4:22) And, and they, they, they do this thing called strategy and it happens on this mountaintop and they’re all sipping Ambrosia and they, they, they work their way through it. (4:33) And then it comes down from the mountaintop and, and is handed to us in the masses.
(4:38) And, and, and that’s, that’s the way I see it. (4:42) Frankly, take place a lot of the time. (4:44) What’s been your impression, Ray, of strategy?
(4:48) And is there a way we can democratize this, that we can bring it down off the mountaintop, that we can maybe have a little bit less Ambrosia sipping and a little bit more conversation? (5:00) You know, I, what, what are your thoughts?

Speaker 1
(5:02) Well, when you, when you pictured that, I pictured Mel Brooks coming off the mountain as Moses, you know, I’ve got these 15, break 10, these 10 commandments. (5:12) So I think it depends on the company. (5:16) You know, I was fortunate enough.
(5:17) If you look at the way that Intel and I’ll, again, I’m, if I use the word Intel too much, it just, that’s not, I cut most of my life through there. (5:27) The other thing is just a real disclaimer. (5:29) The views expressed are those of myself and not of my former employer.
(5:32) I am a retiree and an alumni and a shareholder. (5:36) So the stuff I’m sharing is public information that I’m, that I’m sharing that I’m giving out. (5:42) So if there’s an Intel lawyer on here, which sometimes follows me around, Hey, good to see you again.
(5:48) But we were lucky enough that we practiced what was known as a strategic long range planning session. (5:54) And, and even from my early days as a, as an engineer to when I got into leadership, first line management, or as I send it up into directorship and, and others, we were at least good enough to understand that since we were a technology based company, that we needed the insights of the people doing the work in order to go establish what that strategy is, is it, is it, is it business viable? (6:22) And I remember that word being thrown, thrown around a lot.
(6:26) And so from at least my case in the three decades, I was there. (6:30) I participated, participated every year in a strategic long range planning session in some shape or form, either providing data or, or basically taking some, maybe even some prototyping or other early work in order to be able to establish it. (6:46) I think the on high issue, I think is, and this is true with a lot of companies and even, even in the case of companies like Intel, I think the, the issue of strategy is, is that we’re setting some vision out that’s multiple years in size and, and, and, and complexity.
(7:06) And, and, and it’s basically a bet. (7:09) We’re going to start betting resources and people and start to go do big things. (7:16) You know, in the case of Intel, it would be like build a fab, billions of dollars would be going in investing by putting a new facility someplace or to invest in a marketplace, some, some direction.
(7:28) I think the biggest issue is, is that the feedback cycles coming back from as things are being put down, how is that adapting in real time? (7:39) What’s the time to information in the organization in order for us to be able to react to maybe a, it was a wrong move. (7:47) It was a wrong bet.
(7:48) And I think a lot of companies today suffer on that component. (7:52) Definitely. (7:53) A lot of agile organizations still suffer from that because a lot of them don’t talk to the customers as often as they should.
(7:59) And then definitely the tactical side of the business and the strategic side of the business has some weak links in between the two of them, if that makes sense.

Speaker 2
(8:09) Yeah. (8:10) And when we’re talking about this strategy, is this, and I, again, recognizing that this, this is Intel back in the day or organizations the mechanisms that we’re using at this level to try and get feedback and things like that. (8:30) Are we talking about classic agile mechanisms or are we talking about maybe, maybe even pre agile or, or, you know, I mean, what are, what kinds of tools are we talking about?
(8:42) What were you using at the time? (8:44) Was it, you know, SWOT diagrams? (8:46) What did you, how did you try and get feedback and, and, and, and do this thing?

Speaker 1
(8:52) Well, I was fortunate enough to grow up in a company that the father of, of OKRs lived and breathed. (9:00) So if you think of Intel, which we used to call them EMBOs, management by objective, but basically it’s OKRs, that was the mechanism that Andy put in place for the organization to stay in sync. (9:15) And so if you think of from the highest level of a strategic goal that was set, you could literally trace that through the organization down to, you know, at the time when I joined, I was employee number 32,000 or something like that.
(9:33) You literally could track my, my management by objective, my, my OKRs basically linked up to my managers and that linked up to the director and that linked up to the division and that linked up eventually up into Andy’s office. (9:53) And so you could trace a straight line through, and I remember at times you know, since I started my career in, in, in, in California, Andy used to wander the hallways or he would sit down with you and have lunch with a group of people just kind of off, you know, off the cuff. (10:12) You think he would be over there with the execs, but no, he, he really liked to integrate with the people.
(10:17) And he would ask the question, he says, well, what’s, what is your OKR? (10:21) What was, what is your key results for this quarter? (10:24) And, you know, you would, you would say them and he would go, oh, and that’s connected to this, and that’s going to do this in the business strategy.
(10:32) Very well understood a mechanism for us to be able to communicate. (10:38) There was also another component to it, which I’m not sure if the modern people who are teaching it today understood, is you were never expected to complete all of your key results. (10:49) Right.
(10:50) They were, they were never supposed to be at a hundred percent. (10:52) We, we were in order to take risk, we had to assume that we’re going to try very hard things. (11:00) And therefore we may not get, we might get to the 90% mark or 50% mark.

Speaker 2
(11:05) So that goes back to your sort of placing bets.

Speaker 1
(11:08) Yeah.

Speaker 2
(11:08) Or here, if we’re talking, if our strategy is a bet, if it’s a gamble, if it’s putting money on a wager, and then our goal setting cannot be things that we automatically just expect to achieve.

Speaker 1
(11:23) And I think, oh, please, is that a question? (11:30) Which thing? (11:32) Somebody’s just now, they need to go on mute.
(11:37) But I think that the, the one key thing that, you know, as you talked about on high, I think earlier, one of, one of the things that was very interesting about at least the dynamics of the founders of the company was Andy Grove taught my welcome to Intel class, and he talked about the culture of the organization and how it worked and operated. (12:01) And you know, Gordon Moore taught the, the, the Inbo class, you know? (12:07) And so it was, it was the culture of the company to teach.
(12:11) Leaders needed to teach, leaders needed to stay connected. (12:14) Now, over the years, that of course, shifted as, you know, Paul Delaney and others took up the reins and the founders left. (12:24) Some of those systems, you know, and then, and then the size of the organization had gotten incredibly large over, over a very quick period of time.
(12:34) It was hard to actually maintain some of that culture just because of the sheer size of the organization.

Speaker 2
(12:42) Right. (12:42) That would be hard. (12:43) That would be hard.
(12:44) So another thing that’s occurred to me when I look at strategy is can you really separate the process you use for your strategy, whatever that might be, whatever tools you’re using, whatever methods you’re using from the goal setting or from the, the, the way in which you cascade goals down through the organization. (13:06) Can we think of those things as independent things or are they tied together?

Speaker 1
(13:11) So you’re talking about like, if we go off and create a SWOT analysis or create any of the tools that we use for this, I think the most important component in all of that is the conversation.(13:23) Yeah. (13:23) So, so as we, it’s interesting that you could take three teams and say, go do a SWOT analysis on X, Y and, and you’re going to potentially get three different perspectives and it’s important for those conversations to take place.
(13:40) One, the building of the model, I think opens up the knowledge of course, of what are the known knowns that we have and the known unknowns and what are the risk factors associated to it? (13:52) But if you take it all the dimensions and I’ll use it as an example. (13:57) Does everyone here like wifi on their laptops?
(14:02) Yeah. (14:02) You’re welcome. (14:03) This is Centrino technology when it was being introduced.
(14:08) If you think from a strategy perspective, it wasn’t just go put wifi on the motherboard, there was a much larger issue that existed, which is nobody knew what wifi was, what was its benefits? (14:22) Did I, do I think that I need it? (14:25) You know, those types of things, if you think of market building and ecosystem growth.
(14:29) So it became the strategies as, as each of those models were being built out. (14:35) It was the aha moments of going, Oh, you know what? (14:38) There is no infrastructure out there.
(14:40) How could, how could we suddenly start to influence the marketplace if we don’t have wifi hotspots established at coffee shops? (14:50) So then partnerships then had to be created in order to go establish, you shifting around, how, how do we make it so that people took the Centrino brand and related that directly to, Oh, that has connectivity on it. (15:07) And that’s going to be my laptop that will get me any place in anywhere.
(15:11) Um, and again, I think what, what happened when we created any of those models, um, it just, it just started to peel back the layers of what we needed to go do and the strategy and how long it was going to take. (15:27) Yeah, that kept etching out, but, but we at least had more knowledge of what we didn’t know and what we needed to go explore.

Speaker 2
(15:38) So I guess one of the fundamental things that were, one of the things that distinguishes the agile approach to strategy, as opposed to maybe more conventional approaches is that it’s that collaborative nature. (15:53) It’s that, that bringing folks together and talking about stuff.(15:56) Um, because I certainly have seen plenty of examples of organizations where yes, strategy was discussed up top.
(16:05) And then each leader took it back to their independent silo and cascaded it straight down that silo and never talked with any of the other silos when they did that, and so you ended up with a strategy that basically was individually interpreted silo by silo by silo and led to not a whole lot, to be honest with you. (16:28) That seems to be kind of the conventional approach. (16:32) And so I love one of the things that’s been both attractive and terrifying about the agile approach is that we need to find ways to, to have those conversations, like you were saying, with those three different teams that might be in different areas.
(16:47) How do we bring them together to solve? (16:50) Well, I mean, the challenge you were describing was audacious. (16:54) I mean, you know, that was, that was big.
(16:57) Um, so lots of unknowns, lots of uncertainty, um, which, um, um, really is super cool.

Speaker 1
(17:05) Well, I think the other thing is just everyone being in sync with what the problem statement is. (17:10) What are we trying to solve? (17:12) What’s that going to eventually do for our customers?
(17:15) Um, I’ll use another example, um, USB, um, before USB was there and I’m looking at some of the, some of the devices you have in the background there, there’s probably a parallel port on there. (17:28) There’s probably a serial port on that old, that old thing. (17:31) And we used to have this thing called plug fest.
(17:34) Where, where we literally brought in all of the OEM customers and we were plugging in all the peripherals to make sure that they worked and, and it was like this sucks, you know, it’s like, why, why are we putting in so much work to this? (17:49) And when the USB standard was starting to be created, we, we knew the opportunity. (17:53) We can have one plug to rule them all.
(17:57) And, and I was, I was at an airport in, um, in, um, Japan, uh, several years back and I noticed something and it, it kind of hit me that I never thought that this was a usage model that we ever thought of that the power plugs were all USB, that we never really consciously when USB one was being introduced, we were just handling the plug fest issue. (18:21) You know, can we have one plug to, to plug into everything? (18:24) But then I’m looking at this, this project that I used to be on and it’s now become the universal way that you get power to your device, which I never really considered that before.
(18:34) So the growth of, of, of a, of a long, uh, if you look at an S curve, you (18:40) know, if you think about, you know, our strategy is, is to continuously, you (18:44) know, hopefully beyond the rise of that S, but eventually we’re going to get (18:48) into that sort of plateau and then we’re going to start coming down that, that (18:51) back end and maybe it will end on a long tail, hopefully it won’t shark fin on (18:56) us and then collapse, but just noticing as, as some of these standards, um, we’re (19:02) rolling out that we would see the next bump, you know, the next, the next (19:08) increase of, of, of market penetration, which was pretty amazing to see. (19:15) Um, I mean, Intel and summer guards and like some big companies were a little bit like Seinfeld and Kramer.
(19:21) Um, you know, Kramer would fall over backwards and fall into money. (19:24) Um, you know, if you think about when we got the IBM PC, it was a little bit like that, literally Paul, when he was talking about, you know, the early days of the, of the company before I was even there. (19:37) They were astonished at the fact that they ended up with the IBM contract.
(19:42) They didn’t have enough capacity to, to, to do that contract back then. (19:46) And they’ve, they’ve all talked about that, but then again, those inflections, those problem statements turned into strategic plans that, that in fact, eventually delivered. (19:58) Um, one other thing to note, um, I think this is kind of interesting (20:02) because we’re seeing this with companies with big projects, like, you know, if (20:05) we look at, uh, chat GDP or, or some of the other things where now the models (20:09) are big, big software that they’re running into the same problems that we(20:15) had with semiconductor manufacturing, which is, it takes us five years to go (20:20) build a fab 10 years in certain cases. (20:22) Now we’re seeing like models to go build, say the next version of AI.
(20:27) It’s billions of dollars of investments. (20:30) And, and it’s, it’s years next model may be out in, you know, three, five years, depending on, you know, the, the work that’s involved with it.(20:39) So some of the strategic planning that’s there also has to go look at these kinds of market trends and say, okay, well, you know, how do we, how do we.
(20:49) Fund the next thing. (20:51) You know, how do we start to get enough dollars coming in from some of our legacy stuff in order to go bridge us through the period of time. (21:01) So some of it is also looking at that aspect of how can we bring things back to Genesis, how can we make, just do a slight tweak to it in order for it to continue to help fund their work that we’re trying to do.

Speaker 2
(21:15) Yeah. (21:15) Yeah. (21:16) And I guess, uh, sort of a related challenge here is as you’re trying to do that, not only are you trying to get the, the, the funding to do all of that.
(21:26) Um, but, um, getting everyone into alignment on that stuff has got to be a challenge, you know, the executive team by themselves, let alone, you know, the, the, the rest of the organization. (21:38) Um, uh, what was your preferred tool for doing that? (21:42) Was it the cattle prod?
(21:44) What, what seemed to work, uh, to, to, to get people on the same page like that? (21:50) Was there anything or was it magic?

Speaker 1
(21:53) I don’t think it’s magic. (21:54) And I think this is true for any of the organizations I’ve worked with. (21:57) It’s about communication and it’s about trust.
(22:00) Um, and those are two core components that you have to be able to go through and, and, and flex it a lot. (22:07) When people get quiet, they’re like my children. (22:09) It’s like, I want to go see in the other room what’s going on.
(22:12) Um, I found as, as a leader that, um, you know, and I can tell you that I was probably about 40 to 50% away from home because we’re, we’re, we were a global company, but that factor that I learned, you know, from my lean training was, you know, go to the Gemba, go, go to where the stuff is being built. (22:36) And I was addicted to that, to be honest with you. (22:39) I was like getting on planes because I want to go and see, okay, what’s happening in Russia.
(22:42) What’s happening over in Germany. (22:44) What’s happening over in Israel and hopping planes back and forth. (22:50) And I was surprised at what we would see when we were there.
(22:55) So communication, zoom, zoom is great. (22:58) We didn’t have zoom back then for it.(23:00) So someone sends me a note on an email that still doesn’t give enough contrast.
(23:05) Go there and actually talk to the people who are building the product. (23:09) You start to hear things that, you know, one makes you incredibly proud of your teams and then other parts saying, Ooh, that sounds tricky, you know, and how can you as a leader in particularly not bias yourself or put in front of yourself, just the information that makes you feel good that you’re on the right path. (23:32) So you got to really get out there, you know, including go stop by a customer and get yelled at.
(23:42) You know, one of my first roles as a director, I actually did something that at the time, because Intel was in a mode of, we know what the customers want. (23:53) We know, we know, you know, this is before the big agile transformation took place. (23:58) And I found that, you know, no, we didn’t.
(24:01) And there was a lot of customers that the reason why they were with us is because, well, in certain cases, we were the only ones who could produce enough product for them. (24:10) And if given a second opportunity of someone who could also equally produce those chips, then guess what? (24:18) They would go.
(24:20) So, you know, I think leaders need to get into the field. (24:24) I think you’ve got to also put your employees out into the field, too.

Speaker 2
(24:27) Has that changed with, I mean, well, it must have changed with Zoom and, you know, all the online tools that we’re using these days, or do you think it’s still critical for us to be hopping on that plane?

Speaker 1
(24:40) I think at least once it’s critical, but, you know, I’m right now in my office is is like a mini studio. (24:48) I’ve got production lights. (24:50) I’ve got things around me.
(24:51) I have an environment that’s created around me. (24:55) You don’t see all of my body language. (24:58) You know, you get a little bit of it, you know, if I start to animate a little bit, but you don’t see, you know, the rest.
(25:06) This is also always on, meaning that I can tell when somebody is engaged or not engaged, you know, depending on what they’re doing and how they’re acting. (25:17) But you find that is I’m on, you know, I’ve got to be present there versus you see (25:24) somebody sitting down having a cup of coffee someplace, you know, if you’re in Germany (25:28) and sit down and have coffee and talk about their family a little bit, you know, I mean, (25:34) at least as a kind of leader perspective, I always thought, you know, bring your whole (25:37) self to work, you know, don’t leave it at the door, you know.

Speaker 2
(25:45) So you and I both have been in the agile business for a little while and it’s been a while.(25:51) Yeah.

Speaker 1
(25:51) You know, we’ve seen I had hair back then.

Speaker 2
(25:54) Yeah. (25:55) Yeah. (25:55) Both of us.
(25:56) And and so we’ve seen some of the innovations come along on the strategy front. (26:04) There have been a few. (26:06) And and I’m wondering, is there anything that you’re intrigued by anything?
(26:11) And this is our opportunity really to geek out a little bit. (26:14) You know, I like I saw Wardley Mapping and I thought that was so cool. (26:18) I thought that was so awesome.
(26:20) And what what are the things that you find intriguing these days going on and sort of, you know, the that domain, what what interests you now?

Speaker 1
(26:29) Well, Wardley Mapping, yes. (26:31) But you got to mob it. (26:33) You got to get you got to get enough people in the room to make that really just drive a conversation that just more data is just oozing out every place where you go, oh, we need to go dig down that for a little bit.
(26:46) I think lean value trees, because it does structure itself in the way of being able to say from an ambitious goal or your objective to be able to take that down to what we what we think. (26:58) And this is the important thing, what we think the strategy is. (27:02) And then from that, then placing those strategic bets in order to prove get a proof of value back as soon as you can, meaning you set up experimentation in order to to kind of drive it through the system and you fluctuate your bets based upon what gets returned.
(27:23) I think a lot of companies go down diminishing returns a lot. (27:27) I mean, if you think about just by shifting the language to bet that that changes the mindset a little bit on the way that you approach. (27:38) I think there’s a whole bunch of other different models that are are linking together with, OK, more of a solutions thinking type of perspective where it’s like, well, time to information, but not just time from my interface to the customers, but time through the entire organization.
(27:59) How can we not treat it where we’re just throwing things over the wall, which a lot of companies are and really start to live up to the agile principle of the business working together with development daily?

Speaker 2
(28:12) You know, very cool, very cool. (28:17) The and so given all of that, do we as Agilis, do we focus on these new methods? (28:26) You know, the the the Wardley mappings.
(28:30) What did you call? (28:31) I haven’t heard of the other one, the lean value trees, lean value trees. (28:36) Should we be looking there or is there value in using some of the older tools, the balance scorecards, the the blue ocean strategy, the Porter’s five forces, that kind of stuff?

Speaker 1
(28:49) Again, I think all of those models will give us a perspective dimension on maybe the problem statement that we’re doing. (28:58) You know, if I think of balance scorecards or or the fact of just doing strategy mapping (29:03) over, OK, well, if I’m, you know, take take, for example, if you are doing the strategy of (29:10) adopting agile across your entire business, well, well, what if I look at it at each of these (29:16) dimensions and then, you know, specifically looking at where is that going to eventually (29:21) filter out to the value to the organization and be able to map that effectively with a (29:27) strategy map, I think works really well, because a lot of times and I still see this today (29:34) where, well, agile is what those people over there do. (29:38) That’s that’s not what I do up here in my job as a leader.
(29:44) And what they don’t get, I think, is just that simple reality of if I build a learning organization and and how do I how do I hate to use the word exploit, but how do I exploit all this information that I’m getting? (30:00) Don’t leave it on the table. (30:02) Don’t leave the money on the table because the next business idea might be coming from there, even if we can’t find it now.

Speaker 2
(30:10) You kind of need a couple of different lenses or a couple of different perspectives to interpret all of that and and come up with something that’s going to be reasonably holistic. (30:23) Doing using just one method may not be enough, may leave you blind to some things.

Speaker 1
(30:29) Absolutely. (30:30) And I think this is where we mix it up a little bit, where it’s like, OK, maybe this time I might go do a wordly map in my in my strategic long range plan. (30:38) Maybe I’ll have people do a different model.

Speaker 3
(30:40) Right.

Speaker 1
(30:40) Maybe maybe I’ll mix those models in order to see what’s there. (30:45) And as any experiment, we would expect to see different dimensions or we’re going to get smarter from it.(30:55) You know, that’s that’s I think the main goal.
(30:57) And I think out learning your competition is is really kind of job one for the executives.(31:05) How do we know more than our competitors in a particular space? (31:09) And that’s including on what investments not to make, you know, and as you know, right now, everyone’s hiring AI.
(31:18) Yeah. (31:18) I mean, it’s like everyone’s going to have to go get them. (31:23) It was no different than when we talked about the Internet of Things.
(31:26) Everyone Internet of Things. (31:30) And investments were shifting. (31:32) And, you know, I’m sitting back and going, a pencil doesn’t need Wi-Fi.
(31:36) Right. (31:37) Right. (31:38) You know, and there’s going to be a point where the bubble pops.
(31:42) And then what’s even that what’s the strategy? (31:46) I can tell you one of the projects that I worked on was probably one of the most difficult one that I had to go do. (31:51) And this is during our agile adoption work is what is our strategy for obsolescence?
(31:59) How do we as an organization not fund something for 20 years and how do we then from a marketplace perspective, we’ve got all these ideas that we want to go do, but we never have enough time or people or resources to go do it. (32:18) But maybe some of those things that are on the diminishing, you know, long end of the tail. (32:24) How do we free them in order to then move them and shift them towards shift them left and to go work on these other ideas?

Speaker 3
(32:34) I completely agree.

Speaker 1
(32:35) And I and I could tell you one of the things I discovered during that is that is our hoarding mentality that was created because of the way that we do our budgets. (32:45) Yeah. (32:46) You know, and I and so this kind of is the next dimension.
(32:49) I think everyone has to go rethink if you’re going to really, truly get agility in your organization is go read Beyond Budgeting. (32:56) Go read some of the books that are talking about new models and how to go do finance within your organizations, because I literally worked for a general manager one time who says plus or minus five percent on spending. (33:10) If you’re out of bounds of either one of those, you’re you’re in my mind, not a good manager, a good leader of your organization, because you should be hitting your targets.
(33:21) And I remember having a conversation with one of our vendors who was providing a million dollar oscilloscopes to us. (33:29) And they’re going, hey, we’re going to give you a 20 percent discount because you’re a good customer. (33:32) And I’m going, nope, can’t take it.
(33:36) Can’t take it. (33:37) Because I would that would ruin the plus or minus five percent thing.(33:42) And and I literally told him, could you give us more probes?
(33:46) Could you give us, you know, buffer this? (33:49) And I remember we had boxes of probes sitting on the ground that we never used.

Speaker 2
(33:53) Oh, my God. (33:54) That’s great. (33:55) That’s great.

Speaker 1
(33:56) It’s crazy stuff. (33:57) But that type of behavior. (34:00) And and I’ll give you one other example.
(34:02) I actually had a another leader who had a really great project, but he needed five more engineers to go work on it. (34:12) And I looked at my PLR, my plan of record, and I looked at his and I said, you know what? (34:19) I think there’s higher value down that road for what you’re working on.
(34:24) Here are the five engineers. (34:26) I got into next year’s annual plan. (34:29) I lost my five people.
(34:31) Right. (34:32) Right. (34:32) And so the behaviors then just reinforce, let me hoard.

Speaker 2
(34:37) Right. (34:37) Right. (34:38) Absolutely.

Speaker 1
(34:39) So you got to break down those things, I think, in most of these processes where I am just the caretaker of this. (34:48) I don’t own it. (34:50) Right.
(34:50) And I think that’s what you got to get people shifted out of the you know, I can’t give you this because if I do, I’m going to get punished somehow.

Speaker 2
(34:58) And maybe that’s some of the underlying mechanism that makes a lot of strategy very difficult, because ultimately it is going to change who I control or what I control, those sorts of things. (35:11) Yeah. (35:12) And that’s ultimately threatening to the folks who are involved.

Speaker 1
(35:18) Well, let’s take the failure model. (35:20) So how do your companies today deal with failure?(35:24) And I remember getting exposed to one business because I just I’m an addict for talking to people about how they approach things.
(35:33) And I adopted a pattern that they did because I thought it was just cool. (35:37) And it was the wall of failure. (35:39) And it was this big wall that I walked into their office and they had all these stories and narratives put up about how failure happened.
(35:47) And they considered that’s how they mined and taught their new people to come in to the organization. (35:55) That’s how they taught them about the culture of the company of being open to failure. (36:00) Yeah, because there were stories on this wall from executives.
(36:03) There were stories on this wall from engineers and others. (36:07) And and it was all about sort of bringing together that knowledge. (36:10) And some of the stories that were on this wall were, you know, they were amazing.
(36:14) They were an amazing contrast that you can say that this company is not going to beat me up because I failed.

Speaker 2
(36:21) So you’re creating that sense of safety around failure that enables us or buffers us, I guess, to a certain degree, culturally, to allow us to start having maybe more fruitful. (36:34) Strategic conversations.

Speaker 1
(36:37) Absolutely. (36:38) And I think that’s the I mean, how many strategic long range plans does the the opening of these these meetings that you have in your executives today start to say, what did we fail at last year?

Speaker 3
(36:51) Right.

Speaker 1
(36:52) What did what did we learn? (36:54) And I think, you know, I take the word failure out and just say, what did we learn last year? (37:00) And then the next part of that, and this is the other thing, is if I’m releasing things in two week cadences.
(37:08) Isn’t it a bit crazy to have a one year planning cycle before I can come back to the bank?(37:14) Yeah.

Speaker 2
(37:14) Yeah. (37:15) Yeah, absolutely. (37:17) Absolutely.
(37:18) So and all of that seems to, you know, dovetail well with fostering a culture of that continuous learning, you know, and an evolving strategy. (37:31) So maybe that’s the other question here. (37:36) When we think about strategy, I’m very accustomed to strategy as an annual conversation and as a multi-year conversation, you know, the big conversation.
(37:50) But of course, in my Agile world, I live in a world of two week sprints, you know, of much shorter time frames. (38:00) Does strategy need to be something that we talk about more frequently?

Speaker 1
(38:06) I think the answer is yes. (38:09) And specifically, if you take like lean startup techniques or other things where you have tripwires that you build into your planning, which is if we trip that wire for whatever reason, that’s a trigger for a conversation. (38:24) And so that could happen as an asynchronous cycle, you know, putting on my my CPU head.
(38:33) I think we have a very healthy synchronous cycle in most companies. (38:37) I think we have a very unhealthy asynchronous cycle. (38:42) And if I think about interrupts when they occur, people’s reaction to an interrupt is like, oh, there’s an interrupt.
(38:50) Versus, hey, that’s something we we should pay attention to and have that conversation about what is the potential remedy or. (38:59) Let’s monitor it closer, you know, it’s sort of let’s let’s we now have a tag that’s been put on that because that interrupt occurred and maybe we won’t change the investment yet. (39:12) But you’re now on my monitor list.
(39:15) And when I think about metrics that management looks at daily, that’s the new thing that gets inserted into your metrics package that goes, oh, I need to closely monitor that thing. (39:29) We used to have tiger teams to go handle big problems. (39:34) Anyone else here have tiger teams?
(39:36) I’m not sure what we called it then because there was no tigers. (39:43) But but but they were very effective and fast at resolving issues. (39:48) And I’ve always wondered why senior management felt that they didn’t need to follow similar patterns all the time.
(39:54) Having tiger teams all the time.

Speaker 2
(40:01) So the. (40:04) And in fact, you know, I’ve heard of a lot of tiger teams, but I don’t think I’ve actually ever used one. (40:11) I don’t think I mean, I’ve had teams that might have been considered.
(40:17) I don’t think so.

Speaker 1
(40:19) Have you ever had a guy at meeting?

Speaker 2
(40:21) No. (40:22) What’s that?

Speaker 1
(40:23) Get your act together. (40:25) You know, we used to have those.

Speaker 2
(40:34) And so it was that was that your project is out of control, your project is in trouble or.

Speaker 1
(40:40) Yeah. (40:40) And you get to form a guy.

Speaker 2
(40:42) Nice.

Speaker 1
(40:43) And typically one of the senior leaders, senior executives would be running the meeting, which is which again, that’s that’s connecting to, you know, going to the GEMBA and being it’s a Kaizen event in most regards.

Speaker 2
(40:59) Yeah. (40:59) Yeah. (40:59) That’s actually really cool.
(41:01) I love that. (41:02) Yeah. (41:02) So when you talk about these teams, of course, I’m used to, you know, your typical agile, empowered, self-organizing team in some ways that that that seems to conflict a bit with this notion of having an organizational strategy and placing these bets because a lot of the agile, self-organizing teams, boy, they tend to be pretty inwardly focused.
(41:29) They have their own agenda. (41:30) They have their own product. (41:31) They have their own thing.
(41:33) How do we how do we bring them on board or how do we keep them in tune with all of this? (41:38) Because to be honest with you, I’ve I’ve struggled with that. (41:41) That’s I’ve I’ve had a hard time sometimes getting teams on board.

Speaker 1
(41:46) Well, I think there’s kind of two factors. (41:49) Number one, the reason why we create an organizational structure is to drive focus around something. (41:57) So when we organize a group of people together, we want to have those people working on that particular item.
(42:04) The question is, and I was I was at a fast event. (42:08) It’s one that I forget the gentleman who’s inventing fast, but it’s it’s a new way of getting a group of people and using using open space technology, things together for it. (42:21) And it looked really cool.
(42:22) Yeah, that’s that’s right. (42:23) And and the first thing that I was thinking about was, is how do you not get distracted by other people’s noise? (42:33) And and so, you know, we were one of the first organizations in Intel to put in team rooms.
(42:39) And the reason for it was, is we didn’t want to hear everyone else’s noises so that there can be focus. (42:46) I think, though, that that then has to be and I think this is how the business update meetings shipped. (42:52) I think business update meetings should be a little bit less of my executive standing up there, a little bit more of of demos of what the other cool stuff that the group did.
(43:03) You know, it needs to be like a county fair where you’re going from booth to booth to booth going. (43:08) It’s the greatest it’s the greatest pan ever. (43:12) No, I didn’t even know I needed this pan.
(43:14) But this is great. (43:15) I think there needs to be more of that energy that we see in in in the in the way that we go deliver stuff. (43:24) And and I don’t know if this is your experience, but this has been mine.
(43:27) And that’s the fully going up the stack of people to eventually getting to where if I had to go talk about agile. (43:37) Are they speaking the language? (43:40) Are they are they getting that part?
(43:43) And I think some of our frameworks, unfortunately, are just kind of flipping the phase gate cycles and it looks phase gate from the top and it looks agile at the bottom.

Speaker 3
(43:52) Yeah.

Speaker 1
(43:53) Question is, is how can we how can we truly get a structure through an organization?(43:59) And again, I’ll put my problem that I had, which was we’re a hundred and twenty thousand person company. (44:07) How do you focus that much information?
(44:10) How do you how do you compile that up to where it makes sense? (44:15) Or, you know, and even though the methods worked, I think there was a lot of there was a lot of inefficiency in the process. (44:27) I mean, literally taking weeks to get information up to the top.

Speaker 2
(44:32) Yeah, that’s that’s when you get to that scale, it really starts to look daunting. (44:37) Yeah.

Speaker 1
(44:38) And when the you know, I used to I used to be in a position where I would get Michael Dell would call Paul Otellini and Paul Otellini would skip five levels and come down to me and say, Ray, what is going on with this? (44:55) And and so that there are some ad hoc processes that people know who to go talk to within it. (45:02) But so and I think this is your question about who who who’s the role of the knowledge broker within the organization and how can we make that easier to go transcend and go look at if you’ve got a small company, that’s not as hard.

Speaker 3
(45:18) Right.

Speaker 1
(45:19) Right. (45:19) But how do you how do you do that in a way that makes it relevant to what I’m working on?

Speaker 2
(45:26) Yeah. (45:26) You know, that makes sense. (45:29) That makes sense.
(45:30) And I just I just got off the phone with a client today that was having a very similar problem, which is they had a limited number of folks, the knowledge brokers, the folks who could be trusted to answer the question. (45:44) And yet they had this layer of product owners and others who were supposed to be the ones to communicate that information, but they didn’t have the same level of knowledge as the broker. (45:55) So how do we get all of this aligned?
(45:58) How do we keep these people in these in these roles in a way where they can communicate this information, where this broker can get this information out in an effective fashion? (46:10) And it was it was not an easy, easy question to answer.

Speaker 1
(46:15) Yeah. (46:15) Or just even identifying who those people are, it becomes, you know, several phone calls before you know it. (46:22) I mean, the agile teams that we had that used to work for me back at Intel, we had call lists.
(46:28) We had we knew that if there’s something in that particular unit, that’s that product owner there. (46:33) They are the decision maker for that. (46:36) So therefore, they should be knowledgeable if they were to if you were to ask them a question about where something was at or where things are, they could answer that question.
(46:46) And that was put into the roles and responsibilities of that role. (46:50) Now, keep in mind, when it got bigger, when we’re delivering like 26 components that needed to come together on the platform, then we actually needed a small product owner office so that if I called the product owner office, there was somebody within that group of people who could answer that question.(47:09) So we had very direct places we can go to and we didn’t have to go learn it off the street or even worst case, the scenario where, you know.
(47:19) Michael Dell calls Paul O’Dellini and he calls me, we need we need that stuff to go away.

Speaker 2
(47:25) Yeah, yeah. (47:25) Yeah. (47:27) So I’ve noticed there are a couple of questions here about some of the things we’ve covered.
(47:35) The one person wanted to know a little bit more about the the impact of budgeting on strategy and on change. (47:45) And I think this was where you were talking about beyond budgeting, you know, which I love. (47:52) And one of the things that I just love about that is that it’s it’s all about taking what is one of the more constraining processes that budgeting and finance operations within the organization and turning it into something that becomes more of a ghost in the machine, more of a less, less of a constraint and more of an enabler in the organization where the bank is open all the time.
(48:17) We can get what we need and we can find the information we need to operate without having to be told what to do next.

Speaker 1
(48:25) Well, I think that, again, when you’re talking about agile and agile organizations, I think that finance needs to be included in there. (48:34) Number one, I can really tell you that. (48:38) And I remember having this conversation with, you know, one of my finance people a long time ago and excuse, you know, I won’t cuss the same way as this, but I had a finance person telling me, no, you can’t go fund this particular project.
(48:54) And I asked the question, do we have the money sitting there to go do this if we choose to reprioritize? (49:01) Yes, but you can’t because blah, blah, blah, blah, blah. (49:03) And I remember telling the person that you’re my fracking bank.
(49:07) Tell me whether or not we have the dollars. (49:09) And if you do, then we are going to go shift those dollars around. (49:14) And I just found it was an adversarial conversation versus they seem to be at the other side of the table, you know.
(49:21) And I wanted I actually pointed to our legal group as saying, this is how I need you guys to model yourselves, because our legal group would always if you go to them and say, I have a question on this and they would always say, thank you for coming and talking to us about this.

Speaker 2
(49:36) Yeah. (49:37) And I do think that one of the things for the longest time, finance was really one of the only controls, the only metrics and organization.

Speaker 3
(49:46) Yeah.

Speaker 2
(49:47) It was the only tool. (49:47) Everything you know, everything was a nail. (49:49) You had a hammer.
(49:50) That was it.

Speaker 3
(49:51) Yes.

Speaker 2
(49:51) And the thing that’s interesting now is that in this richer world that I think we’re (49:56) evolving into with, we have many more tools at our disposal in terms of customer (50:02) feedback, in terms of customer relationships and things like that, that give us a much (50:08) richer set of information to work with so that we’re not exclusively reliant on finance (50:14) to control the organization for us to make those key decisions.

Speaker 1
(50:19) Right.

Speaker 2
(50:19) Yeah.

Speaker 1
(50:20) Well, I think it’s important to understand what what is my balance sheet? (50:24) What would you think it’s critical in order to make investments that you know what you can do? (50:31) And again, back to lean value trees, if you go look at part of the way methodology is, is if those points of value aren’t coming back, I there’s processes in place where you say, look, I’m going to cut this budget by 30 percent.
(50:44) I’m not going to cut it to the bone in the very beginning, but I’m going to cut back because it doesn’t look like it’s it’s going to bear fruit. (50:52) And then that frees those resources and people and dollars and everything else to start to go over and fund something else or fund a new experiment and and talk about it at the, you know, at least at the every month mark or every quarterly mark, you should be having these meaningful discussions about where those are bearing. (51:14) Don’t make them too tight, you know, because one data point doesn’t make a trend.
(51:20) So you got to really go look at and say, well, what other data points am I going to collect around the problem space in order to be able to to work? (51:29) Did I answer the finance question? (51:32) I kind of meandered.

Speaker 2
(51:36) Well, I for one, let’s see, Pamela has a comment here. (51:42) I think that orgs where finance rules the roost, it’s because earlier leadership failures or finance was the backstop. (51:48) Once finance is controlled and the ideas of discovery, value and opportunity disappear.
(51:55) Interesting.

Speaker 1
(51:56) Yeah, I mean, somebody a long time ago told me that you’re going to have like three different types of CEOs in your life. (52:03) You can have the founder who’s the innovator, the one who’s not caring about the finances. (52:08) They’re off just going out and doing cool things.
(52:12) The next person that takes up the reins is typically the and no offense to anyone if they are in the finance circle, the bean counter, the one who’s going to drive optimization within the organization and start to bring down costs and get things in alignment. (52:28) And then the last one is your lawyer who’s going to be selling parts of you off because of your IP is now worth more than actually you producing it yourself. (52:37) And I think what we see in these trends is, is that, you know, and this this happened at Intel, the the the Paul Onellini came from the finance circle.
(52:47) And so we started to behave like a finance company.

Speaker 3
(52:51) Yeah.

Speaker 1
(52:51) So I think it I think the CEO of the organization needs to really be able to I think they need to rotate a bit. (52:59) You know, if they if they’re if they’re birthed internally, you got to work them around the organization so that they can have more than just the one kind of view to it.

Speaker 2
(53:11) Well, I love this conversation. (53:14) I want to check in with folks. (53:15) This has been fantastic.
(53:16) Are there any.

Speaker 1
(53:18) Everyone raise your hand if you liked it. (53:22) I see no hands.

Speaker 2
(53:24) All right. (53:24) There we go. (53:25) There we go.
(53:30) Excellent. (53:31) All right. (53:32) That’s fabulous.
(53:35) So thank you again, Ray. (53:37) You, as always, are just delightful to talk with. (53:41) And I and folks, Ray Orell, one of my my favorite agile people.
(53:50) So if you’re if you’re looking for someone to help you on an engagement, I couldn’t recommend anyone better.

Speaker 1
(53:56) Thank you. (53:57) I really appreciate that. (53:58) So you can go over to new agility dot com in you agility dot com.
(54:03) That’s the that’s the that’s my my my company. (54:08) Also, I do a podcast. (54:11) It’s called the Agile Coaching Network.
(54:13) It comes out monthly. (54:14) You can see those if you follow me on LinkedIn. (54:16) That’s typically where I market that through.
(54:18) But it’s a it’s a group of agilists who get together as well as a few hundred of our closest friends. (54:24) We get together monthly and do a recording session. (54:26) You can also attend those recording sessions if you want to.
(54:29) We talk about these types of subjects. (54:31) So welcome to join me in that.

Speaker 2
(54:34) Awesome. (54:34) Thank you again. (54:35) And Sherriane, I’ll hand it back to you at this point.
(54:39) I think it’s all right. (54:48) Thank you!

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