Effective Leadership And Innovation In The Modern Era With Robert Siegel

There are two things in a company, be it a startup or an established business, needs to survive and thrive. They need the vision to innovate and great leadership. In this episode, Dr. Diane Hamilton gets into a conversation with Stanford University Lecturer and Venture Capitalist Robert Siegel about the changes that are happening in the business world today. Robert discusses the way disruptors are changing how the old guard of business operates and how leaders are evolving to keep pace with the changes. Hungry for more? Then tune in to Dr. Diane and her guest.

 

I’m so glad you joined us because we have Robert Siegel. You might know his work as a lecturer at Stanford Graduate School of Business and he has worked for some of the top companies, including GE and so many more. His most interesting work is his book that came out, The Brains and Brawn Company. It’s a must-read and I’m looking forward to talking to him about it.

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Effective Leadership And Innovation In The Modern Era With Robert Siegel

I am here with Robert Siegel, who is a lecturer at Stanford Graduate School of Business. His work includes teaching graduate classes and executive education classes at Stanford GSB and doing extensive research on companies like Google, Schwab, you name it, the list goes on. He has co-authored several articles for HBR and the California Management Review. He’s also a frequent contributor to Fortune, TechCrunch, VentureBeat and Forbes. He’s got a new book, The Brains and Brawn Company. I’m so excited to have you here. Welcome, Rob.

Thank you, Diane. It’s great to be here.

This is going to be fun I can tell. Before the show, we commiserated about puppies and other things.

The pandemic has changed everything.

We are having a great conversation about something. It’s a little different what you are writing about compared to a lot of the angles that people have taken on the show. I’m very excited about talking about your book but I want to get a little backstory on you because a lot of people want to know what led you to this level.

A random walk, to be honest with you. In my career, it was planned and designed. It was oftentimes a series of meetings or random phone calls that took me in a particular direction. I have been teaching at Stanford for many years. It started with collaborating with one of my mentors, Robert Burgelman, on strategy and innovation, and tech companies.

Over time, it grew into teaching a 2nd course and the 3rd course on Entrepreneurship and Financial Management and it kept growing. In 2021, I will be teaching six different academic courses at Stanford. At the same time, I’m also a slimy scum-sucking venture capitalist in Silicon Valley, investing in startups and entrepreneurs.

I like to teach the students. I try not to take myself that seriously. We are who we are. We are investors and we are not changing the world, and we are not making it a better place. Our goal is to invest in entrepreneurs and hopefully make money for the people who give us money. I also had a variety of operating roles.

I ran a division of GE. I worked at Intel and Sun. I was a several-time entrepreneur. I started a company that made the world’s first digital picture frames. That company got bought by Kodak. I worked for a company that made image sensors and image processors, and that company got bought by Sony. A long time ago, I wrote software for computers that your audience won’t even remember, Commodore 64s and 128s. Ultimately, PDs in cell phones, where the company we took public in the mid-‘90s called GeoWorks. I have been largely in Silicon Valley for a long time and had the blessing of being an investor, a toehold in academia, as well as being an operator. There’s a reason that I’m bald and that my beard is gray.

I can beat that. I was selling System/36s and 38s in the ‘80s.

That’s two people at a certain age.

It has been a while, though. In my last company, a lot of people worked for GE when Jack Welch was there and I have had a lot of people on the show. Steve Kerr has been on the show. I have had a lot of people from Stanford, Albert Bandura was on the show and I’ve got to go to his house on the Stanford campus and chat with him. He passed in 2021 but what a great guy. I love Stanford. You must pinch yourself every day.

[bctt tweet=”Sports teams execute well when everybody does their part, holds each other accountable, and contributes to the greater good.” username=””]

It’s a magical place. The students are amazing. When I’m in front of the room, it’s like teaching at the United Nations. The men and women come from all over the world and every continent. They want to do good and do well. The faculty where I get to co-teach are the smartest men and women on the planet. They are doing amazing things. What’s also cool is the ability to collaborate with people in other schools, whether the Medical School or the School of Education, the Engineering School. I’m grateful every minute of every day. Shame on me if I’m not projecting an attitude of gratitude for what I get to do. Lord knows I’m nobody. I’m some random person who seemed to have slipped in the butter. I get to hang out at Stanford. It’s not a bad gig.

You are being very humble. I’m curious. When you went to school, what was your background?

As I did my undergraduate work at the University of California, Berkeley, I stumbled into tech. One of my friends was working for this software company and I needed a job to make some beer money. I ended up working full-time for the software company while going to school. I enjoyed tech. I have been playing with computers since I was a little kid but I didn’t know what I wanted to be when I grew up. I entered Cal. I was seventeen years old and wanted to drink beer and meet girls like every other seventeen-year-old doofus. This was the mid-‘80s. It was a neat thing what was happening in Silicon Valley.

When I was lucky enough to get into Stanford to do my graduate work, I took a class that was co-taught by Andy Grove, the former CEO of Intel. Andy was one of the most amazing business leaders I had the privilege of knowing. When I graduated, I went to work for Intel. It was the predecessor of Intel Capital. We were corporate business development.

I like to say that we were Andy Grove’s group of weirdos. I was this 26-year-old snot-nosed kid who had disproportionate access to the leaders of Intel at the time when Intel was the Google and Facebook of the day. We are at the forefront, and to learn from them. I’ve got lucky throughout my career, where it’s one place led me to another.

I started my first company at the height of the internet bubble. Not a huge outcome but I learned a lot. I went to another startup and GE tried to buy the company and our board stupidly said no. By the way, that was the best sales job I had ever done other than talking my wife into marrying me. I helped the company raise the next round of funding after the board said no, then GE called and said, “Do you want a job?” I said, “No.”

They said, “Let us tell you about it.” They offered me a job running a multi-hundred-million-dollar a year division of the company. I had never run something large before. I went from being the heart of Silicon Valley to go to what was still at that time, largely an industrial company trying to find its way into digitization. I was there for a few years and learned a ton and got fat and was never home. My wife calls it the lost years.

When Jack was there, right?

No, Jeff was the CEO at the time. I was there from 2004 to 2007. I started to see the transformation as the company came out of the Welch era. A time of extreme cost out on optimizations, where Jeff was trying to get people to be more innovative and take more risks. It was a difficult thing for the organization to try to drive that cultural change, especially in an organization of 330,000 people that had been successful at doing one thing previously. It would be like asking me to dunk a basketball. I’m the short bald guy with glasses. I’m not LeBron, even though he and I have the same haircut. It was very hard to watch the company try to change how it did things.

For me, that was part of the learning experience and why it was such a great experience to get the competencies and skills. I learned of what it meant to operate an executed scale that was honed during the Welch era but also, tried to watch an organization try to shift and pivot at a time that it knew that it needed to and it wasn’t an easy transition.

Did they still have the culture of the bottom 15% or whatever they would get rid of, the Jack thinking, or did that go away?

It was there but it was much more of your top 20% were your high-performers, your 70% were highly valued and the bottom 10% were the needs improvement. It wasn’t that you had to fire these people if they were in the bottom 10% but you built a culture of operational excellence and delivering. To be honest with you, that’s not a bad thing.

 

Being in a culture of high-performing teammates can be a great thing. You look at sports teams. When they execute well, it’s because everybody does their part and holds each other accountable, and tries to contribute to the greater good. When it can be bad and I saw this when I was a GE, when people thought that the enemy was inside of the building and not outside.

I’m reminded of that old joke. The two campers are in the woods and a bear walks into the camp. One of the people starts putting on her shoes and she looks at her friend and says, “What are you doing? You cannot outrun a bear.” Her friend replies, “I don’t have to outrun the bear. I just have to outrun you.” Culturally, you saw that sometimes and that’s when it can become very toxic.

You have this great background. I’m curious about what you teach at Stanford. What courses? Is it always the same thing or do you switch it up?

I teach six different courses. I have maybe attention deficit disorder that I’m always looking for new things to teach. In 2021, two of the courses that I teach, Industrialist’s Dilemma and Systems Leadership, look at what happens as every product and service is increasingly blending both digital and physical. How do you develop products differently, how do you organize your company differently and what are the skillsets and competencies that people need to lead differently? I do a course on Product Management, which is how a lot of my career grew and evolved because I came from a product perspective and point of view. I co-teach a course on Financial Management for Entrepreneurs.

I’m doing a new course that I’m having fun with called Business and Government Powered Engagements in the 21st century with one of my colleagues, Anat Admati. That looks at in the 21st-century world where economic ideology is shaping so much in terms of geopolitical conflict, how do the business leaders we graduate think about. How they are going to have to navigate through these worlds of having to deal with governments, human rights, and different cultures, values and legal systems? How to adjudicate, not just ethics standpoint but from a governance standpoint?

Finally, I do the course on Strategic Management of Technology and Innovation. My hope is in five years to be teaching five new courses because it’s so much fun to learn new things and the world is changing. I don’t ever want to be that person who’s teaching the same things the same way that I was doing years ago.

You are teaching all the easy things, finance, tech, government, the hardest stuff out there but I love that you love to learn new things since that’s my focus on, curiosity. I love that you also teach skillsets and competencies. Do you touch on curiosity? I have had Barry Rhein on the show who teaches at Stanford. He teaches a Curiosity in Sales course there. I’m curious where that plays in what you teach.

I probably should start using the phrase and the word curiosity more. The Silicon Valley phrase, “It’s hackneyed and overused.” It’s this notion of the growth mindset. I like to compare Stanford graduate students to crustaceans, whether it’s a crab, a lobster or a shrimp, whatever it is. Crustaceans need to molt their shells to grow. You think about a crab at the bottom of the ocean as this vicious predator with these big claws but to grow, they have to molt their shells. They fill themselves up with water. It gets so much water that it breaks off its shells. The shells have to go because the shells constrain their growth. The shells also develop deficiencies. There are chips, they can get parasites in them. A crab or any crustacean can’t grow unless it molts its shell.

For a couple of weeks when they molt their shells, when their soft-shelled crabs, they go from being these vicious predators to soft paranoid cowards that hide. They are delicious. The crab grows its shell back. We, as humans, are the same thing. We have to molt our shells to grow. It’s a scary time when you do that. I’m in the process of shutting down several of my courses. The courses are in high demand and everything else. It’s scary. Sometimes I look and I’m like, “What am I thinking? Why shouldn’t I cruise and relax?”

The world is going to keep changing and it’s changing at an increasing pace. I know whatever I’m teaching the students, these young hotshots, these women, and men are the smartest in the world but in ten years, whatever they are good at now is going to be passé. The next generation of hotshots is going to be coming through. All of us, no matter what our ages are, need to constantly learn and try new things.

When I work with companies, I will often look at the executives and say, “Do you have TikTok on your phone?” Most people don’t. I’m like, “Why not? I get it. You don’t want maybe the Chinese government to have your data. Have you played with it? Do you understand why it’s so addictive? Do you understand why it’s so appealing?” If you don’t get that primary data, how can you grow and learn, and render your own opinion?

I love your analogy to the crab, by the way. As you are talking about all this, you mentioned the growth mindset as well. Carol Dweck’s work was a real big part of my work in curiosity. What you are talking about ties into everything I love. When I thought of the word curiosity, for me, it’s getting out of the status quo and not doing things because we always did it in the past. If Kodak bought out your company, you know companies like that and what happens to them. We’ve got to move forward.

[bctt tweet=”No matter what our age is, all of us need to learn and try new things constantly. ” username=””]

I want to talk about how companies can move forward in your book and why you wrote the book, The Brains and Brawn Company: How Leading Organizations Blend the Best of Digital and Physical. That’s interesting, physical and digital and how you compare certain things. Give me a little background on the book and who is this book for?

The first two of the courses that I mentioned, The Industrialist’s Dilemma and Systems Leadership, the book was as much a learning experience for me based upon what I was observing in my guests at Stanford. Aaron Levie, who’s the CEO of Box, approached me along with Max Wessel, who’s the Chief Learning Officer at SAP. This was many years ago.

They had this idea for this course, The Industrialist’s Dilemma. The notion was they thought, “As tech moves into other industries, not just software and everything else but as they move into mobility. As tech moves into healthcare and financial services, the way you develop products and interact with customers is very different.”

The thesis was, “Maybe the disruptors will have advantages that the incumbents don’t.” As we talked about it more, we believed some incumbents would make it, most won’t. They will die like dinosaurs and the disruptors will take over the world. The end. That was going to be the class. We were going to bring in disruptors and incumbents to compare and contrast the two. Were we wrong? We could not have been more wrong.

We bring in these amazing leaders. People like Anne Wojcicki, CEO of 23andMe, Emma Walmsley, the CEO of GSK, Bernard Tyson, the CEO of Kaiser Permanente. What we quickly realized was that incumbents were not doomed and disruptors were not ordained. This notion that digitalization was going to change everything, it’s necessary but not sufficient. We found that the great companies, the ones who were thriving were combining the best of digital and physical.

That was our big a-ha. The men and women running some of the incumbent organizations while some of them were going to go away. We realized that a lot of them were in front of the changes. They also had some unfair competitive advantages against the disruptors. Similarly, while the disruptors had the advantages of not being encumbered by the past as we talked about Kodak and GE, the flip side was that many of them were lacking the skillsets, competencies, and how to operate in the real physical world. To understand that if you are going to go into ag-tech, what do you need to know about farmers? What do you need to know about farming? If you are going to go into retail, logistics matter hugely.

We saw that the best companies were combining both. I co-teach the class, Systems Leadership, with Jeff Immelt, former CEO of GE. Jeff went through some very hard times as he transitioned out of GE. We started looking at leadership and how do leaders go through good times and bad. How do you deal with crises and in a world that’s blending digital and physical? What’s different about the leadership competencies that are required and we think will be needed over the next decade or two?

That’s what prompted the writing of the book. I have had over 80 amazing guests come into the class that we have been able to talk with the CEOs, study them, write cases on them. That became the foundation of The Brains and Brawn Company, which is this idea that the winning organizations will be the ones that combine both and those would be the ones that would have an impact globally.

By the way, the pandemic accelerated this. The forcing function as the pandemic started. I saw that I had to live it as an educator. I had to completely rethink how I delivered a craft that I had been trained to do on how to teach in front of a classroom I now had to do on television. I have a face for podcasts and suddenly, I was a television star. How I have to deliver a compelling interactive experience on Zoom and borrow some of the competencies? Even from television, on how to make it educational and entertaining and dynamic in a way that can hold student’s attention?

It’s tough. I have taught thousands of virtual courses. This was not a problem for me because this is my way of always doing things but I was surprised at how it was such an a-ha moment for so many people who hadn’t done it. They learned so much and it’s changed education. It’s how we are going to do it and how people prefer to get it. It’s going to be fascinating.

I love the people you brought into your courses because I have worked in ag and pharmaceuticals. Many things you were talking about I’m like, “That’s great that you looked at so many different kinds of companies.” A lot of people reading want to know who has done a great job at this. Amazon is going to come to mind. Are they the master or somebody else?

Amazon, the archetype of the ideal of Brains and Brawn Company that blends digital and physical. If I can start versus what the framework is, then we will talk about some companies that have done it well. The idea of The Brains and Brawn framework is I identified five digital and five physical attributes that I saw that got to what I thought-leading companies were doing a great job on.

 

On the digital side, the left hemisphere of our brain, using analytics. The right hemisphere of our brain, how we develop and use creativity. The amygdala, how you use empathy for your customers and employees. The prefrontal cortex is for how you manage risk. Finally, the inner ear for how you balance partnership and ownership. I know the inner ear is not part of the brain but it’s close like cavities and plaque.

On the physical side, the brawny side. The spine, how you handle logistics. Hands, the craft of making things and manufacturing. Muscles, how you operate at scale globally. Hand-eye coordination, how you shape and drive your ecosystem. Finally, stamina, how you survive over time. I developed the framework and the idea is that any individual, whether they are a C level executive, a vice president, director or even a manager, can look at her or his company, do the analysis and say, “How’s my company doing on these attributes on a 1 to 10 scale?” Give your company a score. The perfect score would be 100 but no company is going to get 100. No company is going to get a ten on all these attributes.

You can understand where’s your company excelling and maybe struggling a bit. You can then make changes on how to, where to invest, what skillsets and resources you need to apply. One of the compelling companies that we studied strangely enough on analytics was a company that we highlighted, Charles Schwab, the financial services company, which you would not think of as an analytics company. What I liked about them is, they have data science and data engineers but that’s the ticket to the dance. The far more interesting thing is, how do they use the data?

Every time they get a piece of data, they think for themselves first, “What would our customers want us to do with this information?” Let’s juxtapose that to Facebook. We all believe that Facebook makes decisions based upon what Facebook thinks is in Facebook’s interest. Schwab’s first question is, “What would our customers want us to do?” Case in point, if a client goes to the website or onto the app on their phone and clicks life events, divorce, Schwab might know at that point something is going on in a customer’s life before a spouse does.

They ask themselves this question, “Do you want to keep humans in the loop? What do we do with this?” When we looked at the right hemisphere, we looked at creativity, we looked at aligning technology, which makes the Invisalign, clear plastic aligners for teeth straightening. We look at how they combined great digitization about how they take pictures of our teeth but also manufacturing.

They are the world’s largest users of 3D printers, highly customized. They sent 500,000 plastic molds out every day but they also have a creative business model. They sell both to orthodontists and dentists. I talked about Kaiser Permanente and the amygdala. Bernard Tyson, when he was the CEO, he used to come and talk about trying to understand how do his doctors and nurses work every day. Does he understand what they are dealing with so that he can help design a better system?

We looked at Instacart for partnering. How does a company like Instacart figure out where do they need to own something and where do they need to partner with others? In the spine in logistics, we looked at three retailers, Home Depot, Best Buy, and Target, and how they combine digital and physical. How does the back end of logistics become very tied to the front end of the consumer experience?

Hand-eye coordination, we looked at Google with Android, and how they drive and shape their ecosystem with software that is open source that they don’t even control yet, they have almost 80% market segment share globally in smartphones. Finally, stamina, how do you survive over time? We studied Johnson & Johnson, the Credo, which guides their North Star about how they act and behave, and who they serve, and also some of the challenges they have had.

When we look at the opioid crisis, we look at the tower and all the other issues that they have had and why have J&J survived. You mentioned Kodak. Why did Kodak go away? My former employer, Intel, is struggling because they lost their way. What do we see in companies that get through the hard times? Every company is going to have hard times. That’s the nature of the framework on the book, some of the companies we studied and we look at both incumbents and disruptors.

Finally, with systems leadership, we ask ourselves, “What are the competencies of great leaders that we studied and what skillsets did we see?” Two of them that I highlight. One is Katrina Lake, the Chairman of Stitch Fix, and Julie Sweet, the CEO of Accenture. We see these great leaders. They do a great job of operating intersections. They know business models and technology, manage innovation as well as hit their numbers. They are great communicators. They know how to manage contacts. They have a product manager’s mindset. They understand what’s going on inside of the building, as well as outside of the building.

I found that the great leaders were self-aware of their strengths and development needs. One of the things that amazed me the most were the men and women whom we studied and who have had the privilege of getting to know. They were open on what they did right and wrong. There was no confusion or space for them to have hubris in front of the classroom. The students would eat them alive. In fact, they did not like it. If somebody was only on a marketing message, the students rolled their eyes in ways that only students can.

I love that you brought up the self-awareness piece. When Daniel Goleman was on the show, it was such a great experience because I’ve got to meet him from all the research I did for my dissertation. You bring up a lot of aspects of emotional intelligence, self-awareness and empathy. You gave us some good examples. I want to hear about Amazon but I’m curious about Apple. Is there a particular area that these companies all struggle in? A company like Apple, how did they do in this respect, and have you looked at them?

[bctt tweet=”Logistics is not sexy unless you’re Tim Cook.” username=””]

Apple is hard to study because they are so secretive.

My son-in-law works there. He can tell me but he has to kill me type of thing.

The one thing that we talked about Apple was in the context of the inner ear and partnering because Apple and Tesla are two of the few organizations that don’t partner well. They do almost everything themselves. One of the things that we say is, “If you are Steve Jobs or Elon Musk, you can get away with it.” These people are similar to the right of the mini. This is not what mere mortals like you and I can do. We are decent. We have done fine in our careers but we are not them. The question is, with Apple, they can do things that others can’t. I don’t know that we learn as much from studying them in this but then again, they do a great job of blending digital and physical.

We have Tim Cook now, though.

That’s another point. We make it unless you are Tim. Logistics is not sexy unless you are Tim Cook. Tim is going to go down in history as one of the greatest CEOs ever in terms of the machine that they built. They do well on analytics and creativity. On the emotional side, Tim does a great job, whether it’s marketing or genuine. He does a great job on that. Taking moderate risks.

The inner ear, balancing partnership and ownership, score a little bit weaker but they do great in all the other things, too. They do great on manufacturing, logistics, operating scale, driving an ecosystem and they have survived. You would see that they would score well on these things but you would also find some areas where they are not going to be as strong. The ability to do a deep dive on them that would be hard to do because it gets fun to learn what’s going on inside versus the marketing.

It’s interesting. When I go there, all their doors are darked out. In case they have drones come by, you can’t. It’s locked away.

They have been very successful. We certainly can’t fault them for their greatness. On the other hand, it’s hard to teach.

You brought up the scoring of how they would come out. What’s interesting when I did my research for the Curiosity Code Index, that was the reason I created it because I was not only wanting to know more about curiosity. Some assessments told you, whether you were curious or not but they give you a high or low level. If you are low, then what? I created that, found out what keeps you from being curious so that you can move forward. I’m curious because I have had so many people on the show, we have talked about this, whether it was Francesca Gino. She did a great piece in HBR on the case for curiosity from Harvard.

Even anybody who is an expert in curiosity and creativity, motivation, a lot of things you are talking about as far as you know, emotional intelligence. All these things, when you ask, “What comes first?” of all the experts, they all say curiosity comes first, whether we call it a growth mindset or getting out of status quo thinking or whatever you want to call it, it’s important to measure these things. Do you come up with any assessment for people that they can measure these ten things?

No, but that’s going to be my next book. What we focused on in the Brains and Brawn framework was how do you evaluate the company. In terms of the self, the best practices that we studied about how do we, as leaders, evolve and change, some of the tools that we gave, one of the things that we talk about is this notion of who are your trusted people outside of the company who will tell you the truth?

For example, we are all biased as humans. I would argue that in our vernacular, the word bias has been hijacked to talk only about racial and gender issues in the workplace. That’s an incomplete view of the issues around bias. An example of this is as a venture capitalist. My business partner was trained as a lawyer. I was trained as an operator.

 

We look at every investment opportunity differently. He will look at it through a legal lens. I will look at it through the CEO’s lens. Like, if I’m going to run this business, what does it take to get done? That’s bias right there. Who we are, how we were raised, our experiences shape us and who we are. That is neither bad nor good.

As a leader and especially as you get more senior in an organization, sometimes it’s very hard to get the truth because as Carl Ice, the former CEO of BNSF, used to say, “You are never wrong in your conference room.” Everyone is going to tell you that you are the smartest person there. The question is, “Can you get outside of the company and have people who will say, ‘This is how your company is perceived. This is how your products are perceived?’”

Do you have those trusted people that will help you understand the truth? Jeff Immelt, my co-teacher, likes to talk about truth equals facts plus context. Make sure that the leaders understand the context by which data is being understood and facts are being understood. A world where everything is connected and there’s so much that’s interactive, that becomes much harder to do.

I found that the great leaders, we talked about that self-awareness, are true seekers. They want to go out and try to understand what’s happening out there. They are not interested in being the smartest person in the room. They are interested in getting it right, not being right. Those are some of the attributes we saw in people.

You talked about the naturally curious thing. The hard part is as we get more senior in organizations, we have been rewarded and promoted for doing things a certain way. What happens when the world has to change? One of the questions that Katrina Lake used to ask her staff, which I love is, “If you were hiring for your job now, would you hire yourself?” If that doesn’t stop you in your tracks, nothing will.

You bring up something that Dr. Maja Zelihic and I wrote our book on perception. What you are talking about with bias and all these different ways that we perceive things, was what we were fascinated by because we were looking at perception. It combines so much of culture and experience that IQ, EQ and also, your curiosity to look outside yourself. Daniel Goleman brought that up on the show as far as emotional intelligence. You need a 360 of some sort.

You are bringing up some important things that I don’t know that a lot of people recognize that they need to deal with. I want to go back to Charles Schwab because you mentioned how great they were. You say they use cutting-edge analytics to better serve millions of investors without violating their original code of values. Conscious capitalism is in a lot of the courses I teach. Is that where you are going with that?

It’s hard for me to take the place of somebody’s parents and their upbringing of how people should ascribe the moral code. It would be the height of hubris for me to be telling people what’s right and wrong. When done poorly, telling people what’s good and what’s bad leads to increased divisions. As an instructor and a teacher, my purpose is to try to help the students how to think, not what to think. In a world where everything is interconnected, one of the things we want to encourage them is to see the system and to understand.

As a great example of this, I was teaching a class session in my Business and Governments class. One of my students is from Egypt, we were talking about doing business in Saudi Arabia. The student from Egypt talked about the relationship between Egypt and Saudi, and some of the opportunities and challenges of that relationship.

I made a point to the students. I said, “In the next 30, 40, 50 years, petroleum might be used last. We seem to be headed down a path of moving towards different types of energy sources but the neck is always going to be in Saudi.” Saudi is always going to play a big role in the Islamic world. In a world where everything is increasingly connected, people need to understand these types of seeing the systems. That’s one thing that you have to think about and understand the bigger picture of what’s going on.

It has to be more than making a buck. It has to be more than, “I’m only here for making money for my shareholders.” Don’t be confused. You have to make money for your shareholders but you also need to understand what’s happening with your employees. How is the next generation different than the existing generation? What’s happening in your communities? I don’t think leaders conduct those issues. That doesn’t need me. They need to be waving the banner on whatever issue comes to mind but they better have an opinion on it and be prepared to speak to it fast.

You touch on so many important companies. In addition to Schwab and you mentioned Kaiser and many others, I was curious if you looked at companies like DocuSign or any of the other big names that you hear, any of the unicorns out there that you think you have found particularly fascinating.

[bctt tweet=”Great leaders aren’t interested in being the smartest person in the room. They’re interested in getting it right, not being right.” username=””]

Not DocuSign specifically. Some of the disruptors that we looked at that we have the opportunity to study soon, we had Logan Green, the CEO of Lyft, come in and talk about how he was looking about ride-sharing and autonomous driving and how that shaped their business opportunities. What does it mean if they go into logistics and things like that?

We could look at, as I talked about, Instacart, which is a fascinating company in managing a four-sided market between shoppers, the consumers, the supermarkets as well as the large brands and the CPG companies, and how all of that fits together. Desktop Metal, we look at how additive manufacturing is completely changing how we make things. It’s not about putting a factory in the low-cost labor part of the world.

You cannot put your factory at your customer for making parts. That fundamentally changes how you think about jobs, where you can do these. Probably my favorite, the company that I studied as an up-and-comer is 23andMe run by Anne Wojcicki. You’ve got a company whereby taking DNA information, they are able now to develop pharmaceutical drugs in a way that is substantively less expensive and potentially way more effective than how we have developed pharmaceutical drugs for the last 100 years. It’s a combination of software and spits. What they can do and the number of people are being disrupted in the healthcare industry boggles the mind.

It works a lot better than the blood and whatever for Theranos.

That’s fraud and very different than what her team is doing. The ability to see the art of the possible, which to me, is hugely inspiring. When Anne comes to class, she’s a force of nature. The fun of this is the inspiration that we can give to our students, that they can see the positive impact that they can make through business and commercial opportunities. There’s so much lack of trust in institutions now. A lot of these people can and our forces for good and can be so in a very human way, as opposed to a self-serving way.

How is a VC do you recognize if Anne doing the good thing or Elizabeth doing the Theranos thing?

That’s hard. One of my venture funds, we still look for certain attributes in great entrepreneurs. We look for people who were making, we called them the energy creators. They can get us excited about what they were doing that helped recruit and customers. It wasn’t that they had to be dynamic but it was like they could get you excited about what they were doing. They were problem solvers. “It’s Tuesday. There’s a brick wall. Are we going through it? Are we going under it, around it or over it?” We call them the truth seekers. I talked about getting it right versus being right. Finally, great entrepreneurs are always a little bit impatient.

By that, I mean you want an entrepreneur who is a little bit broken and not a lot is broken. It’s like if you are a Star Wars fan, it’s that great scene where Han Solo is flying the Millennium Falcon into the asteroid field and C-3PO looks at him and says, “The probability of surviving is 3,722 to 1.” Han Solo looks back at the robot and says, “Never tell me the odds.” Great entrepreneurs have to leave. “Everyone else is going to fail but not me.” You need a little bit of that.

In terms of how do you make sure that they are not committing fraud, in this world with low-interest rates and so much capital sledding into the venture, you often don’t have time to do due diligence, and that’s hard. Sometimes you have to look for signals of other investors that you trust, whom you know are smart people.

A lot of smart people were backing that and that’s why it gets so scary. As you are talking about having a little bit of that, it reminds me of the TED Talk I saw a long time ago. You’ve got to be a little crazy. If you are seeing that guy, he pulls on the ringlets on each side of his face a little bit.

You want a little be a little crazy, not a lot crazy. If I think about our country, every country and culture does certain things well and poorly. America does two things better than any other culture on the planet. The first thing we do better than everyone is ice cubes. I have been told that all over the world, we put ice cubes in everything and we are the best. I’m not going to apologize for our greatness in ice cubes.

The second thing as a culture that we do well is optimism. It’s the sense of like, no matter how bad it is, there’s this sense that we can make it better. No matter how bad we have messed it up as individuals, we can make a right or as a community, if we’ve got something wrong, we can improve. Even as a country, when we get things wrong, we can do better. That’s part of the joy and the greatness.

 

You look at Silicon Valley. When we are at our best is, it might go wrong but, Diane, what if it goes right? It’s going to be awesome. There’s that almost childlike wonder of the art of the possible, which great leaders can inspire in their customers, employees, teammates, and the men and women who come to our classes. You know it when you see it. When an entrepreneur walks in, you know it when you see it. By the way, we are wrong most times, as investors.

We just need one, though.

What if we are right next time? It will be awesome.

I love your enthusiasm and this discussion. This has been such a great overview of what you write, what you teach and all that. I want to find out what’s the one thing you would hope your readers would take away from your book because there’s so much in here. I want to make sure you get to touch on the last point here.

I’m going to make it three things. First, the world is going to combine digital and physical. This notion is that it’s going to be only digital or only physical, that’s not how the world is going to work in the next few decades. We’ve got to think enough data to prove that the real winning companies are good at both. The second thing is that incumbents are not doomed and disruptors are not ordained, whether you are working for one or the other, the ability to learn from the best practices can help make your company better.

The third thing is this new type of leadership, what I call systems leadership, is important in the new world order for what it takes to be successful. You need to understand so much more about how things are interacting with each other because everything is connected. You need to see the flow in the system inside and outside of your company. It’s doable and it’s a choice that leaders can make. The question is, will you, as a leader, make that decision to help lead your organization to success going forward?

This was such a great conversation. You’ve got such a fascinating look at this because we talk about hybrids, whether people are going to go back to work or stay home, online. This is like the hybrid discussion in a different way. I thought this was going to be fascinating and it was even better than I expected. Thank you, Rob. This has been so much fun. I enjoyed having you on the show.

Thank you for having me. I look forward to continued conversations in the future.

You are welcome.

—

I would like to thank Rob for being my guest. We get so many great guests on the show. I enjoyed it. We had such high energy, and I love that when we get guests on the show that have so much in common with the research I have done. Rob has done that. If you have missed any past episodes, you can find them at DrDianeHamilton.com.

As far as books go, if you are interested in finding out about Cracking The Curiosity Code or The Power of Perception, the books that I have written or co-written are also available on the site. We also offer free chapters and a lot of other different free content on the site. I hope you take the time to check that out. Doing a lot with training, consultants and HR individuals, anybody who’s interested in changing corporate culture.

Reach out to me through the website. You can always contact me at, Diane@DrDianeHamilton.com as well. I would love to hear from you and get your feedback on anything you have read on the show or anything that you would like to know about training for any of your organizations with which you work. I hope you take some time to explore some of our past guests because they have so many great books they have written, many great TED Talks. We have so many interesting people on the show. Explore it. I hope you enjoyed this episode and I hope you join us for the next episode of Take The Lead Radio.

Important Links:

• Stanford Graduate School of Business
• Steve Kerr – Past Episode
• Albert Bandura – Past Episode
• Barry Rhein – Past Episode
• Daniel Goleman – Past Episode
• The Power of Perception
• The Brains and Brawn Company
• Curiosity Code Index
• Francesca Gino – Past Episode
• Cracking The Curiosity Code
• Diane@DrDianeHamilton.com
• Box
• SAP
• 23andMe
• GSK
• Stitch Fix
• Accenture
• HBR – Why Curiosity Matters Article

About Robert Siegel

Robert Siegel is a lecturer at Stanford Graduate School of Business. His work includes teaching graduate classes, teaching Executive Education classes at Stanford GSB, and doing extensive research on such companies as Google, Schwab, AB Inbev, Stripe, and 23andMe. He is also a General Partner at XSeed Capital, a Venture Partner at Piva, and sits on the boards of several startups. He has co-authored several articles for the Harvard Business Review and California Management Review, and is a frequent contributor to Fortune, TechCrunch, VentureBeat and Forbes.

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