Leading with Excellence: The Power of Continuous Honing in Tumultuous Times

0:00 The topics and opinions express in the following show are solely those of the hosts and their guests and not those of W FOURCY Radio. It's employees are affiliates. We make no recommendations or endorsements for radio show programs, services, or products mentioned on air or on our web. No liability explicit or implies shall be extended to W FOURCY Radio or its employees are affiliates. Any questions or comments should be directed to those show hosts. Thank you for choosing W FOURCY Radio. What's working on Purpose? Anyway? Each week we ponder the answer to this question. People ache for meaning and purpose at work, to contribute their talents passionately and know their lives really matter. They crave being part of an organization that inspires them and helps them grow into realizing their highest potential. Business can be such a force for good in the world, elevating humanity. In our program, we provide guidance and inspiration to help usher in this world we all want working on Purpose. Now, here's your host, doctor Elise Cortez.

1:04 Welcome back to the Working in Purpose program, which has been brought to you with passionate pride since February of twenty fifteen. Thanks for tuning in again this week. Great to have you. I'm your host, Doctor Release Cortes. If we've not met before and you don't know me, I'm a workforce advisor, organizational psychologist, management consultant, logo therapist, speaker and author. My team and I at gusto Now help companies to enliven and fortify their operations by building a dynamic, high performance culture, inspirational leadership, and nurturing managers activated by meaning and purpose. You can learn more about us about us now. We can work together at gustodashnow dot com or my personal site at last Coortes dot com. Getting into today's program we had with us today two dynamic men from Deloitte, Jeff Tuff and Steven Goldbach. Jeff Toff is a principal at Deloitte and holds various positions across the firm's sustainability, innovation and strategy practices. Those include leadership of the US Hydrogen Practice and all sectors excuse me, and all sectors related to energy. Jeff's work centers on helping clients transform their businesses to grow and compete in non traditional ways. Also with US is Stephen Goldbach. Goldbach who leads deloitte Sustainability business in the US, which serves the complex and novel challenges their clients face across issues such as climate adaptation and other challenges associated with creating a more sustainable future. Previously, he served as Deloitte's US Chief Strategy Officer for eight years. They have written three books together. Today we're talking about their latest, hon How Purposeful Leaders Defy Drift. Gentlemen, welcome back to Working on Purpose.

2:36 Thanks great to be here. Yeah, thanks for having us again. You guys are crazy and amazing at the same time, right, Can we just start with that? Can we level set that you're both crazy and amazing? Can we agree on that? Well, I thought you were going to call one of us crazy and one of us amazing and then just leave it, leave it out there that figure out which one is. With for us for you to choose. No, no, no, no, I'm giving you both both of these labels here. So you know, as I was thinking about this and I was reading your book, let's just lasses for people who haven't ready yet, It's just gorgeous. I was just thinking to myself, you know, I know you know what goes on at Deloitte. You guys are really really busy humans, and so here you are. You've unplanned and accidentally written a trilogy of books here. So let's just start with how how in the world, first do you do you find time to do that? What's the inspiration? I know a little something about this, but our listeners and viewers don't craziness explained, please.

3:27 Well, I'll say it has been an interesting journey, and I'm sure Steve has his own version of the journey as well. Over the course of the I guess it's eight, maybe even close to nine years now that Steve and I have been writing books together, and we've learned a lot about each other over time. And one of the things we've learned is that we're actually very different writers in terms of how we approach it, the times that we try to take it on, the joy or lack of joy that we get from it at certain points in time, and so we you know, we each have our own style. I will say for myself, finding the time i'm is hard, but when I find it, I can really concentrate a lot of effort and bang out a lot of content all at once, which I'm not saying is the same for Steve necessarily. But the good news here is that the stuff we write about is entirely consistent with what we experience in our work lives.

4:18 It's not like two different lives here that we're somehow trying to live. We're actually taking lessons that we take from our client work day in day out, and then trying to generalize them in a way that helps others that may be struggling with some of the same issues. Awesome, anything to add Steve. Look, it's just I think it takes. One of the things that's forced me to do is I love writing, and I love engaging with people about the ideas even more. That's the thing that I kind of enjoy about this process. And the writing process for me is about getting the best and most concise version of what we're seeing onto a piece of paper, and that makes our ideas crisper and easier to easier to understand when we work with clients.

5:06 So I think that that's sort of the synergistic aspect of it to our work, and so I don't find it a burden. It's one of those things where you just have to make the time to write and I find having a good outline makes the writing process a little easier. I'm not as natural a writer as Jeff. Jeff had the benefit of a upbringing and writing and I've kind of new to this over time. I forget which one of you had the idea first of just maybe doing an article, then the other one said, no, no, no, I've got bigger aspirations. Let's do a book. Which way did it go? That's a good memory telling the story. I do read your books, guys.

5:46 Yeah, So I had been writing for some time, As Steve said, I have a history in writing. I actually way back when I studied to be a creative writing that was my major in college. And I had always dabbled with trying to get thoughts out down on ear in a variety of different formats, from plays to poetry to fiction to what have you. But I did. I guess my serious business writing career really started about fifteen or twenty years ago, when I started writing articles for the likes of Harvard Business Review and other magazines, which were thankfully well received and became reasonably well circulated. And you know, Steve and I had worked together at the same firm for some time then we ran in the same circles, and it was it was after that firm actually joined up with Deloitte and we both came to Deloitte. We were at a session together and Steve said, hey, you know, I've read some of your stuff, and actually Steve had published some pieces as well. One I was just telling him two days ago that one has stuck in my head ever since it came out about the difference between hockey and football applied to business, which I'll leave that out to Linger. And he said, hey, you know, we should do some writing together at some point, and I made what I thought was a very gracious offer to come and be a guest blogger on the blog that I was writing for a huff Post at the time.

7:00 And Steve had bigger aspirations than that, didn't you, Steve. But it was, but my aspirations was not a book. So the aspiration was we could write something together in HBr or something like that. And then it was Jeff that said, well, actually, you know this book publisher Wiley's been chasing us for a follow up to The Ten Types of Innovation, and that was the origin story for Debtonate. And then it just flourished from there. Well, let's talk about that briefly. So, since you have now written the Accidental trilogy, you say unplanned, but I like the idea of calling it accidental. Let's just if we can sketch the ideas from meach you have deton first, and then Provoke, which we talked about in the last conversation we had together. And now, of course tone give us a little understanding of how maybe the ideas stitch together.

7:48 For those three maybe I'll give us a head start and Jeff can add so I think debtonate if we're giving the users sort of the behind the scenes story at NATE was we had an observation or several observations about the world that there was just a bunch of things that businesses did in the name of best practices that when you take a jaundiced eye a skeptics eye, to have made no sense and we needed to change those supposed best practices. And then Provoke is really about how you you know, how you shape the future to your advantage early by identifying trends that are a matter of when they'll come to fruition rather than a matter of if we tend to wait as managers far too long.

8:40 And then hone is really about how do you on a more ongoing basis manage the system to your advantage. If I'm going back and saying, like, what's the common threat and how would I explain it today? Not necessarily like when we say unplanned or accidental, I think that's because we didn't set out with this. I think part of this is a recognition that you don't usually know the future. You've got to manage companies more from a perspective of first principles, i e. Satisfying customer needs. You know, changing human behavior is the most basic some atomic particle in business, Really constantly looking to the future for what's coming next, and then trying to shape your surroundings towards that.

9:27 But then being vigilant is really where we get to, and hone being vigilant about not just believing that you're good once you said it. You have to be carefully managing your environment because it's constantly changing, whether it's competition or technology. And that's where we get to with Home. But I'm sure Jeff would add to that, as I see him chopping at the bit. I didn't know it was that obvious after eight years together, Steve. But I think that's a good summary. We can obviously go a lot deeper on each book, but I will say that we have taken pay age from our own quote unquote teachings or writings over time. And one of the themes that we come back to time and again in all all three books is, and this is an overstatement for effect, but things are always better if you pay really keen attention to the markets you serve and the quote unquote customers or users you serve. And I will say that we've found after each book that we did leave our readers wanting a little bit more, not necessarily of our writing, but of the kind of what comes next. So Detonate was about blowing up the playbooks, and after you've blown up the playbooks, and you know, we did suggest at that point some principles of how managers can work effectively or lead effectively in an age of uncertainty, but it wasn't really the okay, so what's next?

10:42 So provoke then was the logical follow up to that after you've blown up the playbooks, to say, how do you actually create the future in which you have advantage when you actually need to start rebuilding things, and hone again was a logical follow up to provoke because we create the future, but then how do you manage differently than you have in the past once you're once you start to approach that future. And so, even though it has been accidental, I am proud at how all three of the books hold together, and at this point actually do feel somewhat complete. Delightful. Now, speaking of delightful, I really love it since I do read a book every single week for this for this podcast, cover two cover, and I take the notes and everything else that's my research. I get delighted when authors do something a little bit different and compelling.

11:28 And so in your case, of course, you have helped us learn from four distinct artisans in your book about this idea of honing, and I think it's just delightful. So will you introduce us briefly to your four artisans that give us inspiration and direction in the book. Yeah? Why don't we do it in rough order of their appearance in the book? Steve, So, what do you lead us off with Flannery? Yeah, I'll take Flannery, you take On, I'll take Sam, you take our lady Peace. So this is a good example lease of where you know, we have to come up with creative ways to tell stories. We're we're in a business where we're not able to divulge any of the work we do with clients, and so part of it is we look for stories that would share the same benefit that are you know, wonderful to share with the world. And flannery story is has been sort of We made it the centerpiece of chapter one because it was a conversation with her that led us to the title of hon And it basically is, you know, she's a wonderful chef. She works in people's homes. She doesn't have a restaurant, and she comes over and she'll do special, special gigs and parties and things like that. And we had the benefit of knowing her for the last fifteen years and I noticed that she's just always I thought she was sharpening her knives before every gig. And I said, like, Flannery,

12:58 what do you what do you? What do you? Why do you do that every time? And She's like, I'm not sharpening them, Steve. She's got this, she's got this you know, crazy uh, you know way to talk. She's like, I'm not sharpening them I'm honing them. There's a big difference. Honing, you know, doesn't Honing doesn't take away any of the steel. Sharpening actually takes steel off the blade. You're actually thinning the blade, You're making it more brittle, and honing is realigning the steel that exists to make it cut the way it was originally intended to the last time it was sharpened. And she was saying, this is just keeping the knives sharp the way I want them to be, because a sharp knife is actually a safer knife inside the kitchen.

13:43 And but then the thing she said also was honing is a maintenance and a meditation, and so it was also not just about maintaining the knives. It was also about reminding her herself right before an event. But this is what I'm trying to do. It's like a way to focus ourselves. So we thought that was a great metaphor for keeping an organization sharp the last time they made you made made your changes to making sure it's doing what you're wanting it to do, but also reminding you to focus on the things that are super important your customers, your employees, what what's your elemental purpose in business?

14:23 And how do how do you do that. So that's the lessons we took away from from Flannery. And then the second artisan we profiled on A Vonda Wall is actually best known out in the world as probably one of the most, if not the most prolific and well known marine photographers. So he's he's become famous shooting shooting photos of sailboats and sail races and what have you. But he's got a really interesting life story about and it was born in born in South Africa, grew up around boats, But most of what he has learned over time and that he's been able to apply to his photography is came from him tinkering in first a machine shop and then on boats. He's a world class sailor himself. He's actually had a number of different He's had a number of different documentaries made about him that ultimately come back to him rebuilding some old boats from scratch. And what fascinated us about on A as we got into it was not just the way he constructed the pictures he makes, but what he did in his off time and the fact that he is ultimately the consummate tinkerer, and what we're trying to teach business executives is to be consummate tinkerers at aircraft.

15:39 Love it you guys. Okay, let's go ahead and get the last two and then we'll go and break. Sam Pollard So Sam is a film editor and a documentary filmmaker himself. He is famous as an editor for editing a number of Spike Lee's films in the nineteen nineties. He is a an Oscar nominated filmmaker. He's won a number of other awards. He's made a number of amazing documentaries as well, some together with Spike and some on his own. He is just what I found compelling about his evolution is he has to some extent softened his approach over the years, and now what he really just focuses on is making his subjects in his interviews feel super comfortable, feel super at ease, so that they are sharing his stories. He feels like his job is to get the story out into the world, and he wants to put as little between the documentary subject and the camera as possible, so he looks to make them super comfortable.

16:57 Whereas before, as an editor and an early director, he you know, was trying to almost too hard too in his words, to to sort of force a vision onto his team and to the subjects. And now he's become, you know, a little bit more relaxed over the years and realizes the way to bring a subject to life is just sort of let it paint itself. And so he's honed his own craft over the over the years and his his work is amazing. And then the fourth Artisans. Anyone that knows me would not be surprised that I somehow figured out a way to get a rock band in the book. But Our Lady Piece is a very well known Canadian rock band. We are both Canadian gentlemen of a certain age who grew up listening to Canadian indie rock, well, indie rock from everywhere, but Canadian indie rock in particular. Our Lady Piece was always one of the standout acts at that time, and.

17:52 We had the. We had the great benefit of speaking with two of the members of Our Lady Peace to the original members, rain Mata, who is the lead singer, and Duncan Coots, who has been a longtime bass player, and there was just a there was a fascinating metaphor for business all through Our Lady Piece's story. They've been around for over thirty years. At this point, they think of Rain and duncan think of themselves as the CEO and COO, respectively of the band. Rain has got a very successful side gig as a tech entrepreneur, and he's brought a lot of what he's learned about business over time into the music business and the way that they've grown the band. But actually it's been just all the disruptions to the music industry over time and the way that they as individuals and the band itself have had to shift and hone themselves to stay relevant over that course of that thirty years that we found to be a great way to learn some lessons from what would otherwise be a pretty strange couple of folks to profile in a business book.

18:52 Well again, I really appreciate that it made for a very interesting read, and I get delighted whenever we can take ideas and lessons from one very different area into another. So love it, guys, let's grab our first break. I'm your host, doctor e Release Cortes. We got an air with Jeff Tuff and Stephen Goldbach of Deloitte, who each have long spanning careers as principles and sustainability innovation and strategy. We've been talking a bit about their first there are three books in total. How they weave together the opportunity for us to learn from some of these artisans about how to hone. After the break, we're going to talk about our over reliant focus on transformation in the world of business. We'll be right back.

19:44 Doctor Elise Cortez is a management consultant specializing in meaning and purpose. An inspirational speaker and author, she helps companies visioneer for a greater purpose among stakeholders and develop purpose inspired leadership and meaning infused cultures that elevate fulfillment, performance, and commit within the workforce. To learn more or to invite Elise to speak to your organization, please visit her at elisecortes dot com. Let's talk about how to get your employees working on purpose. This is working on Purpose with doctor Elise Cortes. To reach our program today or to open a conversation with Elise, send an email to Elise A. L Se at eliscortes dot com. Now back to working on Purpose.

20:36 Thanksteresting with us, and welcome back to working on Purpose. I'm your host, doctor Elise Cortes. If you are just joining us. My guests are Jeff Tuff and Stephen Goldbach, the authors of hone, How Purposeful Leaders Defy Drift. So one of the benning delightful things that I get out of your books, all of your books actually, but this one in particular, was this notion of we have this tendency to over rely on transformation in business. And I think if anybody's listening to this, they might find that a little bit surprising. I know I did. Now I know, for what you guys do on a day day basis, it's not surprising. But lead us in help us understand why do we over rely on transformation? So, Steve, I think you got to go first. I'm I'm loving the way that you've further crafted your metaphor around working out, So why don't you set.

21:19 Up the whole notion of transmission using that? Alise, have you ever made a New Year's resolution to work out more frequently? Yes? I have? Oka So I mean that means you're a human being, because I figure that almost every human being has done that at least once in their lives. And you know you see that all the time. I go to the gym pretty regularly and January is just a you know what show. You can't get you can't get a machine, you can't get a squad rack, you can't get on a treadmill because it's littered with everybody trying to get back in shape. But then it's pretty quick, you know, into towards the end of January, where where the gym starts to you know, become pretty uh pretty empty again.

22:06 And I think that transformation is basically the same. It's really hard to change a lot of behaviors at once. You can't go from being you know, sedentary to all of a sudden training like an Olympic athlete overnight. But that's sort of what transformation asks of organizations. And that's just really hard. And because it's really hard, it fails frequently. Is it's expensive, and it just do it doesn't It doesn't work out in the way that it's intended to. Now Jeff and I are not anti transformation. We just would say like transformation should be used when it's really needed, and that's when there's a major competitive disruction, disruption, you know, something external, there's a really important new technology that you only have moments to uh implement that there is a really competitive disruption, a merger in your industry, then perhaps that's that's a good reason. But what tends to happen is that we rely on transformation because we've been sedentary, we haven't been reacting over time, and our so our view on hone is that we don't ever want that to be the reason for transformation. And so we're saying, you've got to be honing because there are going to be times where you might need to use transformation. And so we've got to be paying attention day over you know, day over day, month over month to what the world is evolving towards so that we can be making minimally

23:38 viable moves in order to address the change in surroundings. And then the only thing I'd add to that, Steve, is, you know, the big, the big danger in the transformation myth, the transformation myth being that it works and it's not expensive what have you, is that. It feeds upon itself. So if if you believe that it's okay to not make too much changes, because somewhere down the line, we're going to be able to transform and take care of all the you know, the stuff that's accumulated over time, and and and the bad behaviors and the drifting off course, which is obviously one of the central metaphors that. We use in the book. Then you are going to wait for that transformation, and you're going to when you actually go try to execute the transformation, you're going to find out that it's too late, which just leads to even more herculean efforts to try to get the metaphorical ship back on track.

24:28 And so we probably. Come across in the book as being more overtly against transformation than we actually are practically speaking when we're working with our clients, because we understand sometimes it's necessary, but that sort of overstatement is I think necessary to combat the conventional wisdom right now out in the out in the world. That it's all about transformation. Yeah, I mean, I don't think you can go a day without hearing the word transformation, and it's it's everywhere. So so a couple of things really quick. I want to situate for our listener and viewers who haven't read the book yet that I have, like I have, you say that the book is a call for action for leaders to build a capability and mindset to hone their organizations, minimizing but not eliminating, as you say, the need for transformation.

25:12 And so really, when you talk about honing, for listeners and viewers are like, how do I stitch all this together, the artisans and everything else. Just I want to give a quick definition, and if you want to add to it as well. But what you say in the book about what honing really is, it's the idea of making conscious micro changes consistently over time to keep the organization on track. Is there more to it than that that we would define honing? No, I think it sounds brilliant to us at these If it came out of the book, it must be right on. But I told you guys were brilliant already. We're good at using many words to describe something much more simple than are needed. But that one I think is actually pretty succinct. But you know, as I mentioned before, the central metaphor, one of the central metaphors we use in the book is the whole notion of drift, and it comes from i'd like to think both of our love for being out on boats in the ocean. It may have been born more with me than it was with Steve, but I'm trying to help him learn the joy as well. And the metaphor is, you know, if you've got a fixed point you're trying to head to, whether it's something you can see on the horizon, or it's a it's a it's a location you're trying to get to the plan that you've charted a course to.

26:22 You. Inevitably, if you're on the water, you're going to drift off that course because of the wind or the waves of the current or tide or what have you. But in boating and sailing, you have the mechanisms to recognize when you're off course and make slight adjustments to counteract the forces that are hitting you, and so most of the time you are able to stay on course. In business, that's not the case. There are things coming at you every single day. You have to respond to a competitive threat, you have to do something about a new regular regulation, you need to take advantage of some sort of technology. And there is no fixed point on the horizon that you know you're heading towards. And so you can be dealing with all these data today pressures and not actually realize that you've drifted off your path towards what Steve and I call your elemental purpose, what you're trying to achieve, and so what those micro adjustments are do that you talked about before, is not only help you stay on track, but they force you to always be looking for the ways in which you might have drifted. If you know that that's your central job to make those micro adjustments.

27:22 Mm hm, so so important. So since drift is part of your subtitle, I wanted to make sure that you hit that, So thank you. Now, another thing that I applaud about your book and really also align with is you have a strong focus on the idea of systems and that's how I was as educated was in the world of thinking about things and systems. And then specifically you're talking about management systems in the book, but you also situate that the CEO needs to be the chief system designer. Can you say a bit more about that? Well, why don't I? Why don't I start with what is a management system? Okay? And then because I don't think that's an obvious it's not a word that has a shared definition, and then Jeff can talk about why the CEO needs to play the role of chief system designer. So a management system is the collection of formal and informal processes, decision rights, infrastructure in an organization that motivates human behavior. So think about things like formal performance evaluation or formal organization design, or budgets or those are like example, those are examples of formal elements that motivate how people behave. So for example, you've got a performance evaluation, a set of key performance indicators.

28:48 Those are the things that your organization is telling you this is what success looks like. But there's also informal management systems. And informal management systems are things like the questions that a key leader asks in meetings. Oftentimes that leads to a response. There's a famous story about j Edgar Hoover who got a memo and then wrote in the margins of the memo watched the borders, and his underlings took that to mean we should be deploying, you know, troops to the borders to make to check the borders. And really what he meant was like, your margins in the in the memo are too large, and so people you know, the little questions that people ask that people ask our management systems in and by themselves, or just what people perceive gets people promoted. So those are management systems and collectively they shape and motivate all the behavior that all the behavior that takes place in an organization. Now, if you want to be honing, those are your tools for how to, you know, change ever so slightly what your people are doing so that your organization can do slightly different things over time. But those are the tools that you use. It's not inspirational posters on a wall talking about culture. It's actual changing what people succeed. And the reason we say, and I'll set Jeff up here

30:19 the CEO needs to do it is because they like they're the only one that can see the whole see the whole system. But Jeff, why don't you expand on that? Well? Yeah, and I feel like it may be helpful to just anchor this and one of the core beliefs and Steve and I have about strategy, one of the core methodologies. It actually seems to pop up in all of our books something called the strategy choice cascade. This is actually something that was developed by Roger Martin and a number of our. Colleagues at Monitored Group and a number of years ago. Is popularized in Roger's book with ag Lafley call playing to Win and I won't take you into all the detail of it, but it stipulates that, amongst other things, good strategy doesn't happen unless you've made choices. And there are five broad clusters of choices that are that are that are all interlinked, that make up a sound strategy.

31:09 You need to make choices around your goals and aspirations, around where you're going to play in the market, around how you're going to win in those markets via your business models, around the capabilities you need to run those business models, and then the management systems you need to have in place to support those capabilities. And there's all sorts of as I said before, inter relationship and laddering up and laddering down and what have you. And one of the observations that actually led to hone and I will say, this is an obsession of Steve's and he would call the management systems cluster of those choices to be the pinky toe of the choice cascade. It was. It's the thing that is always assumed to actually not matter that much that but that actually provides balance to the entire system. And so our observation is that most senior executives, most CEOs conceive of their job as being in those first few buckets. It's their job to lay out the goals now aspirations. It's their job to set out the bold vision around where to plan, how to win, and then it's everyone else's job to execute. But the challenge to that is if you believe like we do, that management systems ultimately are the things that will that will that will determine whether you either succeed or fail at executing your strategy. Those should be the things that get the vast majority of the tension of the people who actually control what happens in companies. So we're trying to flip this orthodoxy on its head a little bit that that CEOs are about setting the vision but not necessarily executing it, and we're saying, actually, yeah, you can set the vision, but you absolutely have to be involved in the execution because if you're not, then it's not going to happen. And that does not mean, by the way,

32:40 that the CEOs need to personally take responsibility for working on every single management system, but they do need to understand the breadth of them that are at the company's disposal, the ones that matter most because they are so related to the behaviors that will drive towards the objectives that the company has, and then they need to be able to empower those that control those management systems to work on them relentlessly, to execute in the way that they need to to achieve the strategy. And that's as I said, it sounds like, yeah, that sounds pretty logical, but it's it's not the way that many companies run. It's not the way that many senior executives think. Right, And this show is very much educational and inspirational that people listen to the show to become better leaders, to become better at running their companies. So that's tremendous contribution right there. And I don't know that I would have distinguished that even from having read your book. So I'll take it. Let's grab our last break. I'm your host, doctor a Leasee Cortez. We've went on air with Jeff Tuff and Stephen Goldbach from Deloitte, who each have long spending careers as principles and sustainability, innovation and strategy. We've been talking a bit about the importance of not hyper focusing on transformation, but the opportunity for honing. After the break, We're going to talk about overcoming the systemic imbalance and share the shareholder focus to start, We'll be right back.

34:10 Doctor Elise Cortes is a management consultant specializing in meaning and purpose. An inspirational speaker and author, she helps companies visioneer for greater purpose among stakeholders and develop purpose inspired leadership and meaning infused cultures that elevate fulfillment, performance, and commitment within the workforce. To learn more or to invite Elise to speak to your organization, please visit her at elisecortes dot com. Let's talk about how to get your employees working on purpose. This is working on Purpose with doctor Elise Cortes. To reach our program today or to open a conversation with Elise, send an email to Alise A Lise at elisecortes dot com. Now back to working on Purpose.

35:02 Thankteresting with us, and welcome back to working on Purpose. I'm your host, doctor Releie Cortes. If you're just joining us, My guests are Jeff Tuff and Stephen Goldbach, the authors of hone, How Purposeful Leaders Defy Drift. So as somebody who has spent a good portion of time as a conscious capitalist and certainly studying stakeholder capitalism or other things like that. I understand the need not to focus on just solely the shareholders in terms of an organizational operation. But when you add in the element with what the two of you about just really thinking about that, when you do that, that creates a systemic imbalance for the organization That is very very interesting. Can you share a bit more about that perspective. Well, I'd love to take this one and then and see if Jeff wants to add.

35:45 So. I think part of it is, let's recognize where most shareholder value comes from in a commercial for profit organization. So most of the value comes from being around a long time. The so called terminal value of a free cash flow valuation, right, it comes from that assumption that the company is going to be generating profits for a long time. If you do any kind of a valuation exercise, at the end of a five or seven year or ten year forecast, you make this assumption that we're going to freeze the business in in laminate for at that moment, and then we apply a multiple to that. That's a really important assumption. And it's and and and when you think about it, the only way that companies can survive forever is by also being relevant to other stakeholders. You won't have an organization that is relevant if you're not serving customers well, if you're not taking care of them, if you're cutting costs out of the product, out of your product that that that could be better put into continue to create customer loyalty, you will not be able to serve your customer as well. If you don't attract great employees, you will not be able to serve your customer as well. If you're not investing in technology, if you're not engaging with your local communities and being relevant.

37:17 That is just what is good for broader stakeholders. Usually makes a company more resilient and leads to more shareholder value over the long run. Usually the notion of being shareholder focused tends to come with things where we're maximizing profit in the short run, which usually comes with trading off long term competitive position. It's not always the case, but it is the case that you can maximize shareholder value by simply making sure that you're a durable entity over time. Yeah, and I think again, we try to be somewhat consistent through our books and this principle in somebody ties to some of what we talked about and provoked that the only way to manage in a world in which uncertainty is increasing, and we both fundamentally believe it is, whether that's due for technological reasons or other reasons, is by widening the aperture in terms of what you pay attention to. And by definition, if you only pay attention to a subset of your stakeholders i e. Your shareholders when you're trying to think about how to drive performance, then you are by definition narrowing the aperture. But there's nothing in what we're suggesting that in keeping consideration of all stakeholders in the decisions you make day and doubt, there's nothing in that that is fundamentally value destroying or intended to be value destroying. In fact, we believe that in the face of all this uncertainty, taking the long view, taking the wide aperture is going to lead to both

38:49 long term value but more short term value as well, especially as cycles accelerate. Beautifully said thank you. One of the other things that I found delightful about your book that I did not know at all was the history of how the Big Four came to be. I didn't know that. I know I have so many friends and people connected to the Big Four, but I didn't realize how they were born. Can you share that history? Well, you should do this one. You're more of a history. You're more of a history buff, I am. Yeah. Well, the Big Four generally have been the product of lots of mergers and acquisitions over the over the years. Deloitte was was born nearly one hundred and eighty years ago, and you know, just there was a challenge in the railroad industry and William Walsh Deloitte was our founder and then But the I think you might be referring to the idea that many of our businesses have been local accounting firms that have been built up over the years at least.

39:51 Is that that which, yes, I'm where I was riveting on. It was just an ocean after Starbin Oxley active two thousand and two when they you had to separate your account your accounting audits from your consulting. Well that that actually so the Big Four had existed before then, and they were there were they were the Big eight, the Big Seven in different different ways. What ended up happening around the Sarbanes Oxley was for in later and I won't get into the specifics is basically it said there needs to be a separation between the business of providing attestation services or audit services and the business of also providing consulting services to those companies. Many of the companies that were in the auditing business around that time all decided to jettison their consulting practices. For the most part, Deloitte did not. Deloitte chose not to do that, and instead we followed the regulation and we said there are certain things that we can do for our audit clients, and we will serve them as our audit clients, and then there are other clients that we will serve in a consulting capacity. Interestingly, the industry has come back and sort of rebuilt itself around a model that is more consistent with the model that the model that we've chosen, and the thing that we feel like

41:22 it's advantaged us over the years is that we are able to having a broad breadth of services bring lots of different capabilities to a set of clients that have complex and novel needs, and those needs don't neatly fit into boxes that are on our org charts. It's about the deployment of multiple of those capabilities, in particular to the world that Jeff and I now sit in, which is sustainability and infrastructure, where it's hard to imagine how you might do a project like Jeff does in the world in the world of energy without having you risk x spurts, without having financial advisory experts, without having regulatory expertise, without having tax expertise. And so we've been blessed by not having in some respects made the choice that others made back at the turn of the two thousands.

42:19 So for any listeners and viewers who also are kind of rivetted on this, I want to just situate what the names that I learned to associate here from your books. So I'm going to say them, and you tell me if I have these right. But so Deloitte remained, it stayed if all the regulation kept itself as a consultant consulting arm as well as the audience services. But Ey, you say, became cap Gemini and KPMG spun out its consulting business into an IPO which eventually went by the name of Bearing Point, which of course we all know these names in PwC sold it's consulting business to IBM, creating IBM business consulting services. Do I have this right? Yep? Okay, So I think that's interesting because we all know these names, but I didn't understand their their their forefathers, if you will.

43:06 Yeah, it was that was the that was the consequence of the Sarbanes Oxley or the some of it was part of that at that at that time, in and around the two thousands, as folks started to, you know, deal with the consequences of the change regulation. But now, of course everything and everything's getting mixed back together again, and different brands are parts of different companies. And I don't blame you at least for not being able to keep track, but it certainly is a dynamic space. Well it's it's just really helpful to understand since I'm in the consulting world too. I'm not in that space at all what you guys are doing. But this is this is important history to know, I think. So. Okay, so you already been talking a bit about the idea of the minimally viable thoughts toward honing. So the minimum viable thought toward honing for the future, I don't know if you want to say more about that. I think in the bit of time that we have together here, I would love for each of you maybe just to share a couple of key takeaways that you've learned from your years of working with these large companies to help them navigate complex problems. If there's any patterns or key insights that you've been noticing beyond what we've already talked about today. WOULD definitely love to hear from both of you on that before we have to close.

44:18 Sure, why why don't we trade off a little bit here? Steve, I'll do one, you do one, and then and then we'll go till we run out of steam, which may actually take several more shows. But the one one inside and I you know it was we got it early in exploring Detonate and it's carried through HUD to hone as well, is that you have to strike balance and you know the I think there's an over interpretation sometimes of what Steve and I write about to assume that we're when we talk about, for example, blowing up the playbooks, that it means blowing up the entire company, or when we talk about, you know, provoking the future in which you have advantage. It means turning away from the path that you're on right now, and that's that that has not been our tent from the beginning. It's really what we're trying to have people do is redeploy their capital in a way where they take more ambitious bets in shifting the way things have been done in the past.

45:11 And what we're finding, I think, especially as technology in particular and even more particularly AI these days, as it accelerates the pace of change and creates an ever more uncertain world. Again, another theme I'd come back to is that the balance, the shift in the balance, is changing, and we're finding that. And actually, one of the things we often say when we talk about the books is that, you know, it used to be, even at the beginning of writing Deadnate, it used to be that the status quo felt quite safe and change felt quite risky. And now actually we're finding that in many circumstances it's flipped where the safe thing to do is actually go try to change something, and the risky thing is to remain with the status quot. But it always is a matter of balance, and whether you get that balance right will depend a lot on the nature of this face in which you play what you're trying to achieve, et cetera.

46:02 But that that is definitely one key theme that I've taken away and I hope our readers have taken away as well. Yeah, and I'll build on that and share my own and we'll probably uh, this will probably take us to the end. I'm guessing the it's it's one A in one B so one as human beings have this capacity to fundamentally believe that the future, the future is going to be continued from the from the past, and in particular, an assumption that is terrible in business is that you know, you even see it happening. Now with AI, we're saying, will we get the return from our investments in AI?

46:43 And it kind of fails the smell test because if we don't invest in AI, the likelihood that your business is going to be competitive in the future is almost a probability of zero, right, if you choose not to invest in AI. And so when people people say, you know, I can't generate a return on AI, it's like you have to compare it to the alternative, right, and not not what you've got today that is done? Right, You either have a choice now I can invest or not invest in. The not investment path doesn't look very good. And so if you're investing to avoid a downside, that's as good of a return as investing to create an upside from today. But people have this innate capacity to just presume that we're safe in whatever we have today, which is so not the case. And that's why I think the thing that I've learned the most is the importance of always going back to first principles and whenever you're doing something like making an incremental management decision, it's not about just extending the past. It's about what's the investment choice of, like do I do it or do I not do it? And you have to then think about what the consequences of not doing it are. We're just not very we're just not very good at that more generally, more generally than we are.

48:05 Very helpful gentlemen. Yes, you're right, we have come to the close here. However, we do enough time for each of you to say, maybe fifteen seconds each, what would you like to leave our listeners and viewers with around the world. Move before you think you have to, or said differently, don't overthink it. Yeah, go check out our book hone The Book dot com. We'd love to hear what you think. Catch us both on LinkedIn. The nicest thing that an author can have is engagement with their ideas, so we love to engage and hit us up. Delightful. I'm so happy to know both of you. You're both inspiring, you both teach me a lot, and you're delightful to engage with. Thanks for coming back on Working on Purpose.

48:46 Thanks for having us. It was fun having us again. Absolutely, listeners and viewers you want to you're gonna learn more about these guys in their books. The best way to start is to find them both on LinkedIn and then also check out their book at hone the book dot com. So h O n E thebook dot com. Last week, if you missed the live show, you can always catch it via recorded podcast. See you next week for another nourishing and elevating conversation together. Let's lean in and learn how to make workplaces that work for everyone and find way to do business that betters the world. Let's work on Purpose. We hope you've enjoyed this week's program. Be sure to tune into Working on Purpose featuring your host doctor Elise Cortes each week on W four CY. Together, we'll create a world where business operates conscientiously. Leadership inspires and passion performance and employees are fulfilled in work that provides the meaning and purpose they crave. See you there, Let's work on purpose.