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(00:57): Hello and welcome to another episode of the Duct Tape Marketing Podcast. This is John Jantsch, and my guest today is Charles Conn. He's the author or co-author of the bestselling book, Bulletproof Problem Solving: The One Skill That Changes Everything. And he's got a new book coming called The Imperfectionists: Strategic Mindsets for Uncertain Times. He's also the co-founder of Monograph Capital, a life sciences venture firm in London in San Francisco, and was previously CEO of the Rhodes Trust in Oxford. He's the board chair of Patagonia and sits on the Nature Conservancy European Council. He was founding CEO at Ticketmaster City Search and was a partner at McKinsey and Company. So Charles, welcome to the show.

Charles Conn (01:43): It's really good to be here, John. Thanks for having me.

John Jantsch (01:45): You've been a busy man.

Charles Conn (01:47): I have been a busy man,

John Jantsch (01:49): . So I do wanna talk about your book, but I can't pass over talking for a moment, if you will, about Patagonia. And I'd love to just talk a little bit about the, I know how un uh, maybe you have to remind people, but a lot of people certainly are familiar with the story, but how unprecedented and maybe how important for the environment, the current kind of shift in, what would we call it? Ownership has been,

Charles Conn (02:16): I'm, I lost you for a second there. I hope it's not my internet here.

John Jantsch (02:22): So, so I had just teed up a question about the change in Patagonia, which I'm hopefully people have read. You might remind people of the scope of it, but just how unprecedented that changes and how important for the environment you think it's been or will be.

Charles Conn (02:37): Yeah, look, I mean, it was a number of years in coming and I think it's gonna have a huge impact. We already have many people, you know, calling us and sending emails about how they can do something like this too. And as you know, Yvonne and his family gave away the entire company to fight the environmental crisis. But I, I do think it's really worth saying that you don't have to, you know, in order to do good, you don't have to do something as bold as that. I like to think of the example of, for example, MasterCard. 9% of MasterCard shares are held by the MasterCard Foundation, which gives away, you know, billion dollars a year. So there's a lot of good that people can do without doing something as extreme as what Patagonia did. We think it's a wonderful example in some ways. Yvonne teed it up in 2018 when he changed the mission of the company from making the best gear, doing unnecessary, no unnecessary harm, and using capitalism to fight the environmental crisis, to we're in business to save the home planet. And what, you know, what he and the family did September 14th last year, I think was the kind of the culmination of setting us that kind of a challenge as the mission of the company.

John Jantsch (03:46): Yeah. Well the company has had a long history of, you know, of social as a men, you know, environmental steward is stewardship, but as you mentioned, that was sort of unprecedented . So in the subtitle of your book, you used the term uncertain times. So I'll just tee this up. Are we in particularly uncertain times?

Charles Conn (04:07): It feels like it. I mean, you know, when you look at all of human history, of course things change very little. And then if you really look at the last, you know, 75 or a hundred years, really within the lifetime of our parents, everything has changed. And then if you just look at the last two decades and you look at programmable biology, artificial, the impact of artificial intelligence, automation, robotics, things are changing actually much faster still, even in the last decade. Things are changing faster than the previous decade. And I think what it means is all the frameworks that we were taught, the ways of thinking we were taught, you really need to set them aside and say, what are the right mindsets for approaching the world that we live in now?

John Jantsch (04:52): Yeah. And of course you could certainly make a case for the last three or four years, you know, acceleration happened even faster. And really, as somebody who's written and writes about problem solving, I mean, wasn't that basically like it or not an incredible environment to test problem solving? Yes,

Charles Conn (05:09): . Yeah. I mean, I, it's funny. I think, you know, problem solving is now and you know, it's been my life's work. But in a world where, you know, the internet MO knows more than you could ever know, right? And there are more specialized people in every possible field and every type of influencer. What are the, what's the one or two things that humans can actually do better than anything else? And I think the answer to that is problem solving in small groups. And I, you know, I don't think there's anything more, you know, essentially human than that.

John Jantsch (05:51): There's a particular type of problem solving that I always find intriguing. There's examples of it the last couple decades particularly, and that's the, the business leader who is faced with solving a problem of their cash cow going away, right? The industry is changing in such a way that they are gonna have to like kill the, you know, let's use another metaphor, the golden goose. And some choose to ignore it because hey, you know, I'll be outta here in a while, , you know, and how do you address that? Put that problem that you don't, in some ways you could say you don't wanna solve.

Charles Conn (06:25): Yeah, well, you know, I mean, in many ways that's what the book is about. You know, that you have sh Peter's creative destruction, right? Which is the, which the Austrian economist said that's what capitalism is about. And of course, you know, it's the job of every company, including companies like Patagonia to either reinvent themselves or become part of the trash heap of, you know, past ideas that didn't work right. And what the book, the new book, which is about problem solving under high uncertainty is about can you make that transition? Can your company or organization, cuz half of our examples are nonprofits, can you recreate yourself or not? That's what it's about.

John Jantsch (07:05): So, so there's been a lot of, I mean a lot of people would agree with this idea that trying to be a perfectionist, you know, is a kind of a dead end that people have, I think given up on that idea. But have you taken it to another extreme that might be interpreted by using the word imperfections might be interpreted as like good enough?

Charles Conn (07:25): No, I mean, and, and of course, you know, the double meaning in imperfection is intended. Uh, you know, the, there is no, if you think about like linear programming or even chess where all the rules are actually known. And you know, that's one of the reasons why machines are so good at it. That isn't the world that we live in today. You know, when you and I were going through university strategy was about understanding industry structure and who the players are and thinking about the conduct of those players within the structure. Well, when the structure is blurry, you know, we have super competitors like an Apple or a Google or a Microsoft, and where things are changing so quickly that the person who disrupts your business is just as likely to come up from outside as inside, probably more. So that way of thinking about strategy as if it were a programmable game is completely wrong.

(08:19): You need to think about strategy as more of a dance. And that's where this idea of imperfection comes in. So what you need to do is be curious. You need to gather data, you need to see things from multiple perspectives, including the perspective of people outside your industry. You shouldn't be thinking about what your classic rival's gonna do. You should be thinking about some rival you've never even thought of. And so you should anchor outside your own way of thinking about yourself and even find sources or solutions in, for example, you know, com competitive games like Kaggle where you use that in order to provide a new way of thinking about your own business. Right? So that's imperfection

John Jantsch (09:01): It, it's interesting though because as I listen to you described that, you know, I think a lot of people would talk about strategy as a science, and you are talking about strategy as an art. Maybe , you know, check off who was both a scientist and an artist said, the only difference is artists embrace uncertainty, . And I think that's really where you're headed, isn't it? The uncertainty.

Charles Conn (09:20): And I wish, I wish I put that in the book. I mean, checkoff is one of my favorite authors, and I think that's right. What we're saying is that strategy is more like rugby than linear programming and more like an art than a science. And it's about an orientation you take toward the future rather than trying to discern each corner, you know, like in a Tron game, right? Yeah,

John Jantsch (09:42): Right. . So, so you, like all good authors have a framework, I guess the six mindsets we might call them. And some of them I think are pretty obvious. I won't have you unpack them all. I mean, pretty obvious where you're going with them. But the one I really do want to hear about is Dragonfly Eye, just because it's so interesting.

Charles Conn (10:01): . Yeah, so, so call it a framework if you like, but in some ways I'd like to think of it as an anti framework. Ah, okay.

John Jantsch (10:08): So you get, you, you're the author, you get to .

Charles Conn (10:12): Well we, you know, I mean, you know, I went to business school and went to work at McKinsey and we were taught, right? Right. You know, Michael Porter structure conduct performance in McKinsey. And what all I'm saying is here's a group of six things, you know, arrows you can put in your quiver. Yeah. Pull 'em out as you need 'em. Dragonfly eye is one we like a lot, and we use the analogy of a dragonfly, which has thousands of separate cells in their eyes and they collect information that's much richer than the human eye can capture. We don't know exactly how their dragonfly eye brains process information, but we do know that they can see far more spectrums of light and far more angles than we can. And we use that analogy to say, when you're thinking about strategy, don't just think about it from the perspective of yourself and your company, which is of course the very natural thing to do.

(11:05): Sure. Right. And you know, at a place like Patagonia, we've been going for 50 years. Of course you're rooted in your own history. What we're saying is step outside that, anchor outside that and say, force yourself to think about what does it look like from the perspective of one of your upstream suppliers or one of your downstream customers, or one of your existing rivals. Or perhaps think about it from the perspective of a potential rival. If you see the kind of strategic problems that you're facing from a variety of perspectives, you're much less likely to just drop into that rut that we're all used to thinking about. Like, maybe we need to cut price, maybe we need to add another product color. I mean, that's bullshit. That's, you know, that's the kind of old way of thinking. Maybe we need to blow ourselves up and think entirely differently. And of course, that's what businesses find so difficult to do.

John Jantsch (12:00): Well, and I mean, I'll give them a little bit of support. I mean be, because un unfortunately, sometimes what that requires is, and we're gonna go, we're gonna like get hit by our shareholders pretty hard for a while. I mean, we're gonna, you know, we're gonna have, you know, some real trouble explaining people why, you know, we see the future that they don't. So That's right. I mean, that's probably what holds people back, right.

Charles Conn (12:22): Is, and, you know, and of course my, my friend who was, you know, my, my colleague in business school, clay Christensen, you know, wrote books and books about this. Yeah, yeah. You know, you can either choose to be the disruptor of yourself or you can let other people have a go at disrupting you. And it is difficult. And you face pressures from your shareholders, from your employees, from your mother who says, what are, you know, what are you thinking? But if you don't do the job to rethink yourself. And it's funny, cuz I was with Yvonne Melinda online j just on Friday, and Melinda made this point. She said, you know, we've been doing this since 1970, right? And every few years we reinvent what it means to be Patagonia, not the core ethic of serving outdoor athletes and doing it in a way that doesn't damage the environment. But we rethink what it means to do those two things every few years. And if you don't have that flexibility to do that, you end up being toast. Right. And especially in retail, think how many retailers are still around, right? When you were a kid, there was Montgomery War and Sears, where are they today?

John Jantsch (13:34): Kmart. Kmart,

Charles Conn (13:35): .

John Jantsch (13:36): Yeah.

Charles Conn (13:37): Kmart two. Kmart two. Yeah. Yeah. And I think that, you know, this is the challenge for all of us as the world gets faster and as technologies make it easier for other people to attack our business even when they didn't grow up in our business. Right? That's the, that's what's different, different about today.

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(15:55): So in a lot of ways, I mean, I think people would think about this idea that you're explaining in maybe 10 year windows. Like where are we gonna have to be? And I mean, you're really talking about realtime, right?

Charles Conn (16:05): , I'm talking about realtime. I'm talking about, you know, your planning horizon should be less than a year. Yeah. You, and you should be scanning the horizon for both opportunities and threats all the time. Think about the folks in who work in banks right now. I mean, what's a bank gonna be in 10 years? Yeah. Who are the most interesting players in banking right now are not banks. Right? And look at players like Amazon. So in 2007, they had no position in consumer finance. Today they have a 24% share. Their payment system has a 24% share of transactions that are occurring in retail in the United States. That's just a few years. They didn't do it by acquiring a big consumer finance company or a bank. They did it by making small steps, investing in this little enterprise, hiring a team from this failed FinTech, you know, very small moves that were they, which they used to build up their capabilities and understand more, more concretely what was beginning to play out in consumer finance. They stepped themselves into a very strong position just as they had done in cloud computing and just as they're doing again now in consumer healthcare. Right?

John Jantsch (17:25): Yeah. And there probably were failed bets along the way that didn't work out, you know? But I think that's the point you're making, right? Is we have to be doing lots of events.

Charles Conn (17:32): Right? Many, the book starts with Amazon's stepping in to consumer finance. And the four examples I give that they did from 2007 to 2015 were all failures. Yeah. They all looked like failures, but they weren't failures. Each one of those was a learning step for Amazon. Each one of them helped build their assets and capabilities, helped build their team and the team skills and helped build the team's understanding of the game field that was slowly or quickly unfolding.

John Jantsch (18:04): So for this realtime strategic problem solving leader of the future, , are there attributes that they either need to develop, embrace, or have that you think are going to serve them?

Charles Conn (18:17): Yeah. And you know, I'm gonna give you the most obvious of all, and it's, and you'll say it's boring, but the very most important thing, because all of us humans are subject to incredible cognitive biases, his curiosity, right? And when you read, you know, Daniel Kahneman's book Thinking Fast and Slow, he tells us all the ways, you know, with our giant brains, we actually use that processing power just to convince ourselves that our initial thought about something is correct. Instead of using that awesome processing power to really think the starting point of real thinking is to be curious. Yeah. The second one we've discussed already, which is to see things from other perspectives before you jump in. The third thing you can do is conduct your own experiments rather than relying on other people's data. Right? And that's, you know, in the internet we've learned, let's do AB testing or a B C D testing before we hone in on something and then let's make small steps where we learn things, right?

John Jantsch (19:18): Yeah. I think validate, validating our existing point of view, sort of a survival mechanism, isn't it, ? It

Charles Conn (19:23): Is. And you know, and of course when you were, when things would jump out of the bush and eat you Yeah. You know, that that kind of instinct to grab onto the first thought, flee, made sense. And in the world we live in today, it doesn't make sense. It's counter, counter counterintuitive and unhelpful.

John Jantsch (19:41): So I don't think for, by the way, the, that your answer of curiosity was boring. I think it's, I think it's uh, I think it's a superpower quite frankly for, you know, a lot of the, the most innovative people out there and it's something that's hard for some people. So what do you think about the idea of, I mean there are a lot of, I I can just hear some companies saying, well, we're just a entrenched boring industry. We're just cranking along, you know, what's so, so curiosity has died, right? ? Yeah. So how do you go out and buy that? How do you acquire that? How do you, like, do you just bring people in that are not from your industry in any way, shape, or form to go? Why are you doing that?

Charles Conn (20:15): So first of all, I do think it's a great idea to bring people in from outside, but I think you can reinvent yourself from inside too. And one, you know, so first of all, there's internal processes you can do, you know, you can bring your team together more frequently. You can get rid of hierarchy in your company. You can push decisions down further into the organization. And when you do strategy sessions, you can make sure that the most senior people speak last, not first . Right? I love breaking teams into, I love breaking teams into two and having them contest each other. The other thing you can do is keep part of your external research budget to literally source ideas from outside. So let me give you an example. The Nature Conservancy, which is a nonprofit, wanted to build a system for detecting what kind of fish are caught at sea are protected and which ones are okay to keep.

(21:08): And it, they didn't have that capability inside. So they used Kegel to actually create a contest for artificial intelligence engine that would recognize Phish using onboard cameras. Mm. They didn't source that from internally, they sourced it from externally. And a group of boffins, they paid prizes $150,000 and that $150,000 created a whole new system for, for saving protected fish at sea so that those fish could be thrown back and tuna was the species they were looking at. So even a boring old organization can source some of its most leading ideas from outside and by using its, you know, frontline people much more effectively inside.

John Jantsch (21:52): Yeah, I th I I think there's probably no question that's where I think some of those crowdsourcing things have become Yeah. So useful is that there's no question there's people out there that have solved the problem. They didn't know you had, you know, , I mean, they were just something, they were tinkering with ,

Charles Conn (22:06): Right. And they weren't thinking about Phish when they were inventing this camera based shape recognition. Yeah. Right. And they loved it. They said, oh look, this is a fin . And so they u they used that, that computer vision in order to recognize the characteristics of different fish in a boat that was bouncing up and down and it worked.

John Jantsch (22:26): Yeah. So as you were answering that last question, I wrote down the word culture, because that's really what you're talking about in a lot of ways that's what has to change, right?

Charles Conn (22:35): Yeah. And in the companies we think of as nimble Yeah. You know, they're just as subject to the same human frailties that you and I are. Yeah. They build in a, they build in cultures that lead to constant questioning of what they're doing. So he may not be everyone's favorite person, but when Elon Rusk, Elon Musk is running things at SpaceX, he's constantly asking impossible questions and it creates a culture of asking impossible questions. Right? He says, we need a flight computer. Everyone says, great. And he says, we need a flight computer for $10,000. And everyone says that's impossible. And he says, make it happen.

John Jantsch (23:14): . Right?

Charles Conn (23:15): That kind of thinking that leads to, you know, what you have in that case, which is the cost per kilogram of launch is 93% less than it was at NASA before he started SpaceX. That's nuts. , you only do that by throwing out the window, the playbook, right? Yeah. Of nasa. And so we're gonna have a launch of this giant stainless steel rocket and what does he tell us? It's gonna be entertaining because he does, cuz he doesn't know if it's gonna work. And a number of the previous launches have failed. And of course if we don't put people or animals on those right, when you're still experimenting, that's experimentation and scale and that's pretty cool.

John Jantsch (23:53): Yeah. Yeah. Well, Charles, it was great having you stop by the Duct Tape Marketing podcast. You want to tell people where, invite people, where they might find out more about your work and your latest book, how to Become an Imperfection.

Charles Conn (24:06): Sure. I mean, you can find that@theimperfections.org or bulletproof problem solving.com. And look, it isn't, it isn't really about the book, it's really about this set of ideas. You know, in a time of, uh, fast moving change. We all need to be more mentally nimble and, you know, these are mindsets that'll help us be that

John Jantsch (24:27): Awesome. Well, again, thanks so much for taking a few moments to stop by the podcast and hopefully we'll run into you one of these days out there on the road.

Charles Conn (24:33): Don, it was a real pleasure. Thanks so much.

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