Effective Ways to Maximize Output and Increase Profit

On this episode of the Process Breakdown Podcast Bob Sutton, professor of management science and engineering at Stanford, co-founder of Stanford Technology Ventures Program and the Hasso Plattner Institute of Design, speaks about the errors companies make, how to correct them, and how they can adjust their game plan for maximum output and profit. 

He also tells funny stories about certain companies that he finds interesting, about some of the books he’s written and his favorite story that inspired his first book.

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Show Notes:

0:07 – Introduction

1:06 – Dr. Weisz shares the best solution for documenting standard operating procedures, highlighting a 14-day free trial with SweetProcess.

1:50 – Host introduces Mr. Bob Sutton, the guest speaker, sheds light on him and his work, including his new project, The Friction Project, and some of his other books.

3:31 – Mr. Sutton starts to talk about how he got interested in his line of work, and on how to grow organizations.

5:13 – Mr. Sutton gives some examples of things that companies should make more difficult.

9:30 – Mr. Sutton talks about the road map for his new book, and the difficulties he’s undergoing.

12:11 – Mr. Sutton talks about the rise of “flash organizations” that just come up out of nowhere and crash.

13:46 – The speaker talks about Patrick Collison and how he’s into doing things really fast.

15:54 – Mr. Sutton talks about steps he thinks will be valuable for a company to apply, and arbitrary traditions that need to be eliminated.

19:26 – Mr. Sutton talks about when he worked at Facebook for a bit, and how their mentality of operation there confused him.

20:40 – Mr. Sutton shares his take on the annual performance review.

24:00 – The guest speaker talks about his favorite case study in the Friction project.

26:00 – Mr. Sutton speaks about the difficulty leaders face in times of uncertainty.

28:15 – He gives an example using the CEO of Airbnb as someone who’s handling this difficulty rather well.

30:16 – The speaker talks about companies he finds fascinating, and his particular interest in Walmart, and about companies that disrupt themselves.

32:55 – Mr. Sutton talks about co-founding the Institute of Design.

38:41 – The speaker talks about scaling to other markets, using IKEA as an example.

42:00 – Mr. Sutton makes reference to Apple’s and BMW’s strategy of seeing how far a company can push its innovations without losing too many customers.

43:40 – The guest speaker talks about one of his favorite stories from his book Weird Ideas That Work: How to Build a Creative Company.

45:28 – Mr. Sutton talks about one of the stories in his book, about the founder of the Lotus Cars, Mitch Kapor, and how his organization has gotten so good that even he wouldn’t be hired at it.

48:50 – Mr. Sutton tells his favorite story that was in his best-selling book.

51:49 – Outro

Guest Profile:

Bob Sutton is a professor of management science and engineering at Stanford

Bob Sutton is a professor of management science and engineering at Stanford, co-founder of Stanford Technology Ventures Program, and the Hasso Plattner Institute of Design. 

He is the author and co-author of multiple best-selling management books. 

He has also won multiple awards such as the Eugene L. Grant Award for Excellence in teaching and also the award for the best paper published in the Academy of Management Journal

Transcript of this Interview:

Speaker 1: Welcome to the Process Breakdown Podcast, where we talk about streamlining and scaling operations of your company, getting rid of bottlenecks, and giving your employees all the information they need to be successful at their jobs. Now, let’s get started with the show.

Dr. Jeremy Weisz: Dr. Jeremy Weisz here, host of the Process Breakdown Podcast, where we talk about streamlining and scaling operations of your company, getting rid of bottlenecks, and giving your staff everything they need to be successful at their job. Over the body of work, if you studied Bob Sutton, which you should if you haven’t. The body of work that he’s put out gives exactly that. The stuff, everything you need to be successful, maybe not everything, but a lot of things. Okay. Before I introduce Bob and give him the introduction, the episode is brought to you by SweetProcess.

Dr. Jeremy Weisz: And so, if you’ve had team members ask you the same questions over and over, and it’s the tenth time, well, there’s probably a better solution, or you haven’t done a good enough job systemizing. SweetProcess is actually a software which makes it drop dead easy to train and onboard new staff, and save time with existing staff. And Bob, when I was talking to Owen the founder, I knew universities use it, banks use it, hospitals, but I didn’t realize that first responder government agencies use it in life or death situation. So, you can use SweetProcess to document all the repetitive tasks that eat up your precious time.

Bob Sutton: [inaudible 00:01:33].

Dr. Jeremy Weisz: Focus on growing your team and empowering them. There’s a 14-day free trial, no credit card required. Go to sweetprocess.com, sweet like candy, S-W-E-E-T, process. I’m excited for today’s guest. Robert Sutton officially, goes by Bob, professor of management science and engineering at Stanford, where he co-founded the Stanford Technology Ventures Program, and the Institute of Design, the d.school. Right, Bob? The d.school. And, he studies leadership, organizational change, innovation, scaling-

Bob Sutton: The d.school. That’s what we call it, everybody calls it that.

Dr. Jeremy Weisz: I love it. And his current project is the Friction Project. And, he focuses on why companies make the right things too difficult, the wrong things too easy, and what to do about it. And, he’s published over 200 articles in academic and popular outlets, seven books that’ve gotten accolades from top 100 business books, to New York Times bestseller, to Wall Street Journal bestseller. You should check out Hard Facts Dangerous Half-Truth and Total Nonsense, The Knowing Doing Gap. He says his neglected book which everyone should go get because he released it after 9/11, so it didn’t get the attention it deserves, Weird Ideas That Work. I personally have loved The Good Boss, Bad Boss is my personal favorite out of them Bob, and The No Asshole Rule, and The No Asshole Survival Guide, if that was enough Scaling-up Excellence. So Bob, thank you for joining me.

Bob Sutton: Great to be here. Great to talk to you, Jeremy.

Dr. Jeremy Weisz: There’s so much going on in today’s world, and there’s a lot to discuss with you. But, I figured we’d start with the Friction Project. And, I mentioned why companies make the right things too difficult, the wrong things too easy, and what to do about it. So, what does that mean?

Bob Sutton: So, the way we got interested in this, and this is what my coauthor Huggy Rao, is in 2014, we published this book, Scaling-Up Excellence, and that was about two elements of scaling. One, is how to spread good things across networks, and organizations. And then, the second one, was how to grow organizations. So, that was the focus. But, what we started realizing, as I working with different organizations was, as they got bigger and complex, things got harder and harder to do, so we got interested in your sponsor, I don’t mean to plug your sponsor. But your sponsor, "Well, what can you do to make things better?"

Bob Sutton: And then, the other part we got interested in once we dug into this friction stuff, is that there’s actually a whole bunch of things that organizations should make harder, like unethical behavior, launching products before they’re ready that can hurt people, things like that. So, and we’ve been futzing around with this for four or five years doing case studies of Uber, writing pieces. And, the great thing about being a professor is I got all these smart students. So, we have our students doing case studies, and in some cases working with organizations to reduce friction. So, that’s the adventure we’re on.

Dr. Jeremy Weisz: So, can you give me an… Let’s talk about example for each. What’s a couple things that organizations should make harder? And then, maybe an example of one of the case studies.

Bob Sutton: Wow. I saw an example of something that organizations should make harder, is essentially throwing things into the marketplace before they’re ready. And so, there’s a term in our book we call a clusterfug, since I guess I’m allowed to swear we call it clusterfuck in other writings. So, what happens when executives get excited about a new product or something like that, especially software executives who don’t realize a hardware can be fixed quite so easily, is that they throw it into the marketplace. So, we call this a clusterfug. This is when people are impatient. They have an illusion, it’s going to be easy to do something when it’s hard, and they’re incompetent, which turns other people incompetent.

Bob Sutton: So, the definitive story in Silicon Valley is Google Glass where, essentially Sergey Brin then a co-founder, he saw Google Glass in the labs, and all the people on the R&D team said, "No, it’s not ready. No, it’s not ready." And, he threw it out into the marketplace. And, the rest is history. Glassholes, the worst product ever, and so on. And so, that’s the kind of thing that there needed to be a little bit more breaks. It wasn’t ready. So, that’s an example of things that are too… There needs to be a little bit more discipline. Although for Google, it didn’t cost too much money, it just hurt their reputation a bit, at least by their standards, by the standards of a real startup, they’d be dead, right?

Dr. Jeremy Weisz: Mm-hmm (affirmative).

Bob Sutton: And then, the other side is what ought to be easier. As a headline if you want to think about one of the things that really causes problems, and I bet that software that is your sponsor, I bet you they get into some of this stuff, are handoffs in organizations. So, when you look what goes wrong in organizations, so that’s where the problems are. So, one of the case studies we did and this is, I can say this publicly was with JetBlue. And, it was with one of my heroes, her name is Bonny Simi, a three time Olympian in the luge, still a pilot, she’s now head of JetBlue Ventures. And, she led an effort… So, what happened was when storms… Something like Kennedy Airport, they actually had terrible problems, especially in 2007, where the whole thing would shut down. They couldn’t put Humpty Dumpty back together again very well.

Bob Sutton: So, what she did was she brought together people from all over the company, everything from pilots, to luggage handlers, to reservation agents, and operations people too, and had them map, do a process map, which those of us who do efficiency stuff, we all do process maps. And, to look to see what was necessary to close, and then reopen Kennedy Airport. And, there were all these handoffs from one thing to another. And, what they worked on was fixing handoffs. And, at least for five or six years afterwards, they improved the system quite a bit. So, I guess, that’s where I would say impatience when you’re doing something that isn’t quite done is dangerous. But, when you want to make things that are hard to do, that ought to be easy, the first place I look is handoffs, or one of the first places.

Dr. Jeremy Weisz: Why do you like Bonny so much? What do you respect about her?

Bob Sutton: Bonny, she’s just one of my heroes. She just could get shit done. I mean, that’s what she does. I mean, so she was in a situation, she was not that senior a person, and JetBlue had spent three or four years trying to fix this problem. In kind of an unauthorized way, like a corporate rebel… And, she’s a pilot, she knew it was actually dangerous and bad for the company to fly into Kennedy in some ways. She led the effort to actually fix it. And now, she’s head of JetBlue Ventures, and it’s just remarkable what she does. And, she’s just one of those people that has always the courage to do the right thing. And a lot of people who are that successful are actually quite arrogant.

Bob Sutton: So, I first met Bonny when she was in a Stanford classroom of mine, because she keeps wanting to come back to Stanford to get degrees because she loves education. And so, I had her in a team with, it was her and two undergraduates. And usually, when you have somebody that accomplished, it’s terrible. She was just so giving, and so non-egotistical. She’s just a really constructive person. So, I just admire her.

Dr. Jeremy Weisz: Yeah. I love that. And then, do you have a roadmap for your next book, Bob? Is this going to be [inaudible 00:09:25].

Bob Sutton: Yeah. So, the people in your company is just like, they have a roadmap. It’s like, I just talked to my coauthor Huggy Rao about three times a week, and we just keep having more and more… I’ve got this document, it’s just right on my hard disk here, that says like, "Running notes friction." And, I’ve got a 90 slide deck too. But, it’s the way we describe it, is we’ve taken nine puzzles and shaken to pieces on the table, and we’re trying to figure out how to build one puzzle that makes sense. So yeah, I got a lot of information, it just doesn’t go together very well.

Bob Sutton: And then, maybe we should talk about this, with the advent of COVID, the question of fast and slow, oh man, all these things that I thought were impossible to do, all of a sudden are happening really quickly. And then, things that used to be easy, like going to a restaurant are difficult to do. So, Huggy and I were collecting cases, and our students are doing case studies, and we’re doing some research, and we’re trying to figure out what we’re learning from COVID. It’s hard to untangle it.

Dr. Jeremy Weisz: Well, I want to talk about what’s happened faster with COVID. Because I have a suggestion for the working title of the book from listening to you. I don’t know what the subtitle is, but frictionless is the title, or something. Frictionless, and then the subtitle-

Bob Sutton: Oh, no. Let’s do it.

Dr. Jeremy Weisz: … is something. But, what I thought you were going to say about Bonny is like, "If you’re an Olympian luge person, you need to create less friction." And so, she’s almost the prototype, a person not from a leader standpoint, but from her Olympic career standpoint. Literally, that’s what you have to do, if you’re going to be successful luge.

Bob Sutton: Yeah. And, she’s like that. But also, Bonny in terms of friction, she has a sense of when to stop, and when it’s dangerous. She’s a pilot and she’s still alive. And so, she’s pretty risk averse and she’ll slow down, she’ll cancel thing. So yeah, so she knows when it’s fine to innovate, and when it’s dangerous. So, that’s another thing I like about Bonny. And, that’s one of the things that Huggy and I are really into this notion that with organizations, of when you hit the gas, and when you hit the brakes- [crosstalk 00:11:43].

Dr. Jeremy Weisz: Yeah. Friction is good when you need to stop, right?

Bob Sutton: Yeah.

Dr. Jeremy Weisz: I mean friction is a good thing.

Bob Sutton: Let it smash here.

Dr. Jeremy Weisz: But, frictionless, luge to leadership. So Bob, talk about what goes faster, what going faster than expected with this Friction Project, and with COVID?

Bob Sutton: So, the thing that’s really striking, and a couple of my students are really getting into this, is one of the things that we’re seeing are… And, I have a colleague, Melissa Valentine, who studies these. Is the rise of what some people call flash organizations, or virtual pop up organizations, where just all of a sudden these organizations just pop up. They’re completely virtual, and they just jam. And, I’ll give you two quick examples. One is called the United States Digital Response, which was founded by a bunch of folks who actually were in the CTO office of the Obama administration. And, what they did, because… I’ll be descriptive, our federal government’s response was not being adequate. What they did was they organized… It’s essentially a matching, it’s almost like a dating service.

Bob Sutton: Your readers can look at U.S. Digital Response. Where governments asked for help, like New Jersey, the state New Jersey would ask for help, when we have unemployment benefits or something like that. And then, they called for volunteers. And now, there’s a couple thousand volunteers who are working for at least 115 municipalities, and they finished a bunch of projects that are basically IT projects. And, this is an organization that was just erected in a weekend, boom, it was jamming. So, how does that happen so fast? And, you know how slow government change occurs, and then you’ve got things happening incredibly quickly. So, that’s one.

Bob Sutton: And then, my favorite one, and for your readers who are interested in the word faster speed, and your listeners, they should look up a guy named Patrick Collision. Patrick Collision is CEO of a company called Stripe. But, that’s not the most interesting thing about him, the fact that he’s a billionaire and started a company is still not that interesting about him. He’s into do things really fast. He’s got a list of all these things that would happen really quickly, like building the Empire State Building in a year and a half or something like that. But, what he did was, he just got sick of the notion as an academic, that it takes so long for us to get our research funded. So just for example, National Institutes of Health, which would be supporting COVID research. Traditionally, if you were an academic, you would spend a year just figuring out what to make the proposal, and another year having the proposal reviewed, and then you probably won’t get funded. That’s the usual fate of an academic.

Bob Sutton: So, what he did is, he got some donations from various rich people like Reid Hoffman of LinkedIn fame, and he put out this call for proposals for COVID research, and he said they’d be reviewed and rejected or funded in 48 hours. And this was, I think, in late March or early April. They put up the call for proposals they got, I think it was 4000 proposals, and they just were really short. I actually tried to do one just to see how easy it was, it was like nothing. And then boom, I think they handed out $122 million to 40 projects. And, they’re on pause, so it’s like, boom, And, some of that was they want to do good, and some of that was Patrick Collision and other folks saying F you to how bad the process is, and how friction filled it is.

Bob Sutton: So, the question that maybe we should talk about is, "Okay. So, these are great stories, but what are we learning about when we go back to real life?" About how to reduce friction, because if we go back to a Google Glass story, there’s going to be more Google Glass stories, because that’s the cost of making things too easy to do. But, it sure would be nice to get rid of all those processes that are just in the way, and are just a waste of time. So, that’s the stuff we’re interested in.

Dr. Jeremy Weisz: What have you seen will be valuable for a company to apply? Once knowing that the Patrick Collision-

Bob Sutton: Well, first of all, this is every one of your listeners or audience knows this. What will happen in organizations is these arbitrary traditions build up like barnacles, and nobody ever scrapes them off. So, that’s something that Huggy and I, we call this addition sickness and the notion… And, sometimes we call this the George Carlin effect too, which is… And, the way we describe it is, so George Carlin, the famous late comedian, he had this notion that… Essentially, the way that he put it is that, "My shit is stuff. So, anything that I come up with is good. And your stuff is shit." So, what happens in a lot of organizations, is everybody adds all these little things because that’s their pet peeve, their little practice, that little extra. They call them robotic emails you get at Stanford all the time. I have to take 15 minutes after sign on, I have to approve something that… I don’t even read, but I have to do it so the student cannot get deported for example, or something like that.

Bob Sutton: And my contribution is completely useless, but some bureaucrat decided that I had to do it. So to me, that’s one of the things that I think we will learn, at least I hope we will learn, is to get rid of some of these arbitrary traditions. And not just to say, the George Carlin notion of, that it’s other people’s fault. But to look in the mirror, and realize that sometimes we’re the gunk person who has this precious little thing we think everybody has to do, but really for the greater good it isn’t worth it.

Dr. Jeremy Weisz: It could be skipped.

Bob Sutton: Yeah. If it could be skipped, it can only be used in exceptional circumstances. I mean, one of the things, I know you’ve talked about this on your show, is all these organizations who have realized that the annual performance review takes so much time, especially 360-degree evaluations, although in theory it’s great. That, "Gee, maybe we don’t have to spend so much time on this." And, we talked about this at least in some of our discussions, it was in Harvard Business Review too. We didn’t write it, somebody else did. So Deloitte, they figured out with their 360-degree evaluation system, they were spending two million hours a year. And those are hours they could build, they’re a consulting firm. Right? Two million hours a year, and then they streamlined it. So, that’s some of that addition sickness. That’s the stuff that hopefully COVID will bring us to do.

Bob Sutton: What’s going to make harder, we’ll find out what should be harder later. So, one of the things we’re really into, in fact we have a case on Uber, is this idea of debt, technical and organizational debt. Financial debt, obviously is part of the story too. But one of the things that organizations do, is that they do a bunch of things that enable them to move fast for a while, but then the chickens come home to roost. The problems start appearing and you end up with a whole bunch of things that are broken. And if you don’t fix them, you can’t scale to the next level, or even survive. So, the definitive one and probably in technology would be Mark Zuckerberg’s, move fast and break things.

Bob Sutton: I worked a little bit with Facebook in the early days up to about 400 people. And he really meant move fast and break things. And we talked about this in our book Scaling-Up Excellence, they would [inaudible 00:19:28]. But that was great until it wasn’t. And everybody moved so fast and didn’t think about users and legal issues so much. Now, it’s move fast and build good things. I don’t know what their… The last thing I heard it was that, move fast and build good things or stable in for something like that. But they’re modifying that, and maybe they should have modified that a couple of years earlier, honestly.

Dr. Jeremy Weisz: Bob, you said a few things. One is, obviously maybe people at this point just need to stop, look at, reassess everything, review something if is halting or broken, and maybe look at eliminating things that basically are antiquated or are outliers. And then two, that annual performance review thing, that’s just one example. I’m sure there’s a lot of specific things that people do that you’ve proven in your research that maybe should be done in a different way. What should people do is, obviously, you want to review people what was proven? What did they show was a better method for something like that?

Bob Sutton: Well, I’m enough of an academic, I’m worried about the words, proven. So, there’s two findings. One is, there’s all sorts of evidence that the annual performance review sucks, okay?

Dr. Jeremy Weisz: Yeah.

Bob Sutton: It’s biased, it spends all this time and everything. But there’s a second question which academics have not answered so well, so I would plead guilty to this, which is, "Well, what’s less bad?"

Dr. Jeremy Weisz: Right. What do you replace it with?

Bob Sutton: And one solution, and some of your listeners or audience may have heard this is Adobe, and then some other firms got rid of the annual performance review. And we did write a little case on this, and they switched to check-ins. So, the idea was, Donna Morris who was then head of HR, she’s now head of HR of Walmart, which is quite a big job, just only done that a couple of months. And what Donna figured out was, that essentially every year around performance evaluation times at Adobe, that actually satisfaction the company would go down, because it just sucked.

Bob Sutton: So, she came up with the system they did called check-ins, where you’re supposed to have regular conversations with your boss, but there’s no grand performance evaluation. Now, at least based on the data that they report that seems to have worked, because there’s not that weird conversation with your boss where nobody quite knows what to do. So, there are some things you can get rid of, but that’s why I always say, "It’s one thing to complain about what sucks, but coming up with something that’s even better in life, that’s a lot harder." Because it’s easy to say things suck, it’s harder to fix them.

Dr. Jeremy Weisz: Yeah. And it makes me think of when people implement and do a daily standup with their meetings, and a weekly standup, and it’s equivalent. Don’t just wait to the year, and do a daily standup. I mean, that’s what would be equivalent, right? Something like that.

Bob Sutton: Yeah. And some of that was, the standup is so interesting, because what you’re getting to there, that’s another way to get rid of friction and coordination problems. And we talked about this, and I think we’ll be writing about this more. Is when you get people on similar rhythms, similar cadence that really helps. Salesforce one of the great in terms of at least finances, one of the great success stories, that’s a lot of what the key to their success is. It actually saved the company when they were in trouble early on, they got their whole organization on the same rhythms. The daily standups, shipping a demo every month. The whole company, they still do this, they ship every four months, everybody pauses. And they have this thing called Dreamforce, where at least until this year, they took over San Francisco, and turned into a traffic nightmare. But the rhythms really helped glue the whole company together, because you know what you’re doing, when to do it, and you know also what everybody else is doing, so you can coordinate with them.

Dr. Jeremy Weisz: It like what you talked about with JetBlue. One of the key elements is they brought everyone together, so you’re getting these different perspectives of what needs to be done, right?

Bob Sutton: Yeah. Well, and what JetBlue was, that was a real specific case. But, the rhythms in the airline industry are different, really though. Airline industry is very difficult place to be right now. But yeah, but rhythms really do help.

Dr. Jeremy Weisz: So Bob, talk about what it was another favorite case study that’s come out of this work, the Friction Project.

Bob Sutton: Well, I talked about it a little bit, but it’s worth talking about, and especially now. The trouble that Uber and other industries are in, like the restaurant industry, and so on, you don’t know what’s going to happen. But Uber, was a really interesting case, because in the early days, they essentially have one giant software system they called the spaghetti mess. They had all these problems because the pieces didn’t fit together. So then, they went to this thing. They call it micro-services, where they decentralized the organization, and it’s Thuan Pham who was CTO until recently, who was the star of our case described, "We had essentially hundreds of speedboats going in hundreds of different directions."

Dr. Jeremy Weisz: Yeah.

Bob Sutton: Bless you.

Dr. Jeremy Weisz: Thanks.

Bob Sutton: And so, that’s one of those things you had decentralization, and you also had a culture under Travis, where it was, let builders build, toe stepping. It was almost like they rewarded people for not cooperating with each other. So, that was great. So, as Thuan Pham put it, "Our average speed was really high, our collective velocity was getting worse and worse." Because of all these coordination problems. Just for example, they were using 12 or 13 different programming languages. So, you couldn’t weave things together, you couldn’t move people from one team to another. And so, what that does, is it allows them to move fast, but then, and this is this issue of debt that we’re really interested in, technological and organizational debt. And, one of my general sayings is, "What got you here won’t get you there." Which we stole, of course from somebody else.

Bob Sutton: But this becomes this point, as I described with Facebook too, in terms of move fast and break things, where you have to stop, and you have to slow down. And, as Thuan Pham put it, "We had to take all our speedboats, and we had to bring them… We didn’t want to be a supertanker, but we wanted to be a fleet of larger boats that were all going in the same direction, of ships." So to me, that’s one of the things that we’re really interested in. And from an organizational standpoint, that centralization versus decentralization. So, when do you let everybody do what they want, and when do you trim down stuff?

Bob Sutton: I mean, right now with COVID is a good example. You’ve got all these different solutions in different municipalities. And some people complain about it, but it’s also instructive because there’s so much of experiments in the country about, when do I open? How do I open? But the difficulty comes is, when you start figuring out what works and what doesn’t. And then, I don’t know, either the lawyers, or just social norms start to say, "You’ve got to stop doing that because it doesn’t work, and you got to do this instead." That’s when you got to let go of my stuff, which has been proven to be shit, and to join what actually works. So, the notion of the rhythms between centralization and decentralization, that’s one of the things we’re really interested in, in terms of friction, which is that, when do you let them go, and then when you weave everything together.

Dr. Jeremy Weisz: Yeah. And there’s probably a gray area where it’s a tough call. Certain parts are obvious, looking back, but at the time, it’s probably not so obvious, right?

Bob Sutton: Yeah. Well, in fact that’s the whole… So, you bring up another thing, which is really something that every leader I know has a challenge, which is in general, when you’re leading people through uncertain times, when you don’t know what’s going on, and they don’t know what’s going on. I mean, COVID is a perfect example. That saying to people that, "Essentially, we don’t know what’s going on, you got to wait." That’s a really difficult thing to do for leaders. But, sometimes you’re finding out that they have to delimited it, but they also have to say to the people following them, "Sometimes we need more information. We don’t know what we’re doing yet when it comes to this."

Dr. Jeremy Weisz: Yeah. Not just picking a path and go, that’s the natural tendency of a leader to do, right?

Bob Sutton: Yeah. And so, the poster child that I’ve been talking about, let me make sure I get his name right. Who has, I think been doing the best job of this is, is the CEO of Airbnb. So, what’s his name? How can I forget his name? Anyhow- [crosstalk 00:28:17].

Dr. Jeremy Weisz: Yeah. I know who you’re talking about. It’s slipping my-

Bob Sutton: Anyhow, so what he’s been doing is, so they hit a massive layoff. Remember May 5th, they did this massive layoff, 25% of the company. And so, what he said, and he-

Dr. Jeremy Weisz: Brian Chesky.

Bob Sutton: Thank you. Brian Chesky. How can I forget that? They do this… And he takes responsibility for it. But he also says, "Here’s all the things we’re going to do for you." And they’re doing amazing things just for example, they’re taking a large proportion of their HR department, and then having it focused on helping find people that are laid off jobs, which is amazing. But in addition to that thing, one of these things he said in the memo is that, "There’s a whole bunch of uncertainty, and we don’t believe in being transparent, when we don’t have enough information to make a decision." And essentially, to take you into the sausage making, because I think that makes people even more stressed out.

Bob Sutton: And the thing that I liked about that memo that he wrote is… This amazing memo people can find online, if you go to May 5th, to the Airbnb folks. Is that he’s saying, "Here’s what we’re certain about things. Things like, if you’re laid off, you get your stock is vested and so on, and you get this much money, and you get to keep your laptop too." Which I thought was pretty cool. But, "Here’s the part that we’re not sure about, and we’re not going to announce stuff until we’re sure." And I really like that, conveying what’s certain, and where we have doubt, and we don’t want to confuse you and make you even more upset. I thought that was pretty-

Dr. Jeremy Weisz: Sharing the thought process.

Bob Sutton: Yes. But not too much.

Dr. Jeremy Weisz: Not too much. I’m curious what other companies you find fascinating with this? You mentioned Airbnb, Uber, Facebook, Stripe. What other companies do you find fascinating? Because it’s probably a useful research.

Bob Sutton: Well, it might not be very popular because they’re controversial, but I still am amazed by Walmart. Obviously, you can talk about the damage they’ve done and maybe they should pay more taxes, and things like-

Dr. Jeremy Weisz: Bob, that’s why I use is fascinating, because that could be construed whatever way someone wants, even though it’s controversial.

Bob Sutton: I mean, they’re the largest private employer in the United States. They really are, except possibly for Amazon, or at least as much. They’re the lifeline for holding people together in this process. They really are… Or they could have better benefits. They really are taking care of their employees, and really do care about their employees. So, the way that they’ve responded, to me is actually pretty interesting. I’d say it’s a non-tech company, but walmart.com doing quite well. And some people think Amazon is worse in terms of how it treats its employees, so that’s one other… I don’t know what the facts are there. The other company that also amazes me to switch gears is Netflix, and the reason they amaze me, for a lots of reasons.

Bob Sutton: But so, Clay Christensen said in the famous on the disruptive innovation stuff, the number of organizations that actually have successfully disrupted themselves is very small. And if you look at what they’ve done, they have disrupted themselves before the market did twice, not once. So, we all remember they used to ship DVDs, then it was streaming, and then now they’ve become, I think, the largest production company in the world. And they’re still doing those other two things. That is brutal pivots. And I don’t know how they’ve actually pulled them off. And in fact, some folks will remember that they tried to spin off the DVD operation too early, and the market reacted negatively.

Bob Sutton: One of the only organizations I’ve ever seen that may have disrupted themselves too early. I thought they were right, because I mean, DVDs and shrinking market, and a different business model. So anyway, that’s a company that really impressed me. They also do weird things that fascinate me, and I’m not trying to want to work there, but they’re very performance driven. You talk about performance, boy, they really mean it when it comes to performance.

Dr. Jeremy Weisz: Bob, I want to talk about a couple of your books. Good Boss, Bad Boss, Weird Ideas That Work. But I also want to go back to co-founding the Institute of Design, the d.school. Talk about the inception of that.

Bob Sutton: Okay. So, the way I would describe the founding story is, it’s Snow White and the Seven Dwarves, and I was one of the dwarfs. Let’s just be really clear, okay? So, there’s this guy named David Kelly, who has won every award I can think of and deserves it. He just won a $500,000 award for teaching innovations from the National Academy of Engineering. And just a remarkable person. So, David founded, and we started setting them in the ’90s, a company called IDEO, which went from a mechanical engineering shop to doing broader product design. And now, what they do is, that they help companies all over the world be innovative in almost no matter what they do.

Bob Sutton: So, he led the spread of design thinking that way, David is also a tenured Stanford professor. And he, this is sort of 2003, 2004, something like that, we used to go to IDEO. A group of us old professors, we’d go there maybe like six o’clock at night, and he’d gives us wine, we get drunk, and eat food, and he’d talk about bring IDEO inside of Stanford. And it’s really fun to drink with David. And somewhere on my hard disk, I’ve got, Kelly’s fantasy, or Kelly’s dream, or something like that. Then one day, he comes back with $35 million from this guy named Hasso Plattner, the founder of SAP. So, we actually had to do it.

Bob Sutton: And so, David did all sorts of things that I disagreed with, I may still disagree with. But one of the key things is in terms of a teaching operation, just for example, is that none of the classes we teach at the d.school can be required for any Stanford major, and David’s logic… And also, he doesn’t like paying people and teaching them very well, or sometimes nothing if it a… So, I’m a tenured track faculty, he would never give me more money to teach a d.school class. Because his perspective is that, he wants everybody who is at the d.school to be there because they want to be, not because they have to be.

Bob Sutton: And then, our projects are all actually doing something. So, some students will build projects or products. My students in my management classes, and this is where we learn stuff, they’ll actually mess around with organizations, and try to make them more efficient or more creative. Just one example because we wrote it up, is that a couple of our students work with the San Francisco Opera. And then, it came up with these little events in bars and stuff like that, to attract younger people to opera music. Because if you’ve never been to the opera, so I’m 66 years old, when I go to the opera, I can feel young. I look around, I’m one of the youngest people around, I go to the bathroom, I’m the only people who doesn’t have a walker, or is in a wheelchair.

Bob Sutton: And somebody from the San Francisco Opera joked that our business model is, "We wait for a billionaire to die and leave us a bunch of money." That’s like, we lose money every year, a billionaire dies, boom. We might have that business model at Stanford too, by the way. And so, they give the money when we’re alive, like Bill Gates, and so on. But seriously, that’s the thing that is fun to do with the d.school, is if you’re not trying to actually have people come up with changing stuff, then you’re not living the d.school spirit, and also consistent with that, in addition to rapid prototyping, and in trying things where you can’t do too much damage, and so on. That our other philosophy is to be very user centric, which has really taught me a lot. That we’re always into thinking about what is human experience, and designing to make human experience better rather than worse.

Dr. Jeremy Weisz: I mean, that is some of the fundamentals most important things in general, I think actually taking user feedback.

Bob Sutton: User feedback, and the other thing that we always say at the d. School, and this is part of the IDEO mantra, which David brought in, is that we don’t just believe what people say, we watch them. And then, we try to have the same experiences ourselves. And that’s one of the classic things, that’s how you learn, is you try something yourself. So, to go back to something that I just talked about, about 15 minutes ago, that’s one of the things I thought was really interesting. And I think the d.school taught me that, with the fast grants thing, the Patrick Collision set up. The best way to learn about it, in the past, I would have probably talked to somebody or maybe read about it. But I realized if I did it myself, I’d learn more, because then I’d know what the experiences is like. But yeah, I think that’s a match. And it sounds so obvious, but as you know it’s amazing how often people forget to do it.

Dr. Jeremy Weisz: And Bob, when you say that, the question that pops in my head is, to myself, how do you go wrong with user feedback? If people are going to paying you money, and you get their feedback on how to improve it, how do you go wrong with that? And then, the devil on the shoulder is like, well, Steve Jobs said, "Well, if I asked what they wanted, like they did ask for Henry Ford, I’d give them a faster horse." So, Steve Jobs-

Bob Sutton: [inaudible 00:38:00].

Dr. Jeremy Weisz: So, talk about the difference of user feedback.

Bob Sutton: Well, that’s interesting. So, there’s this argument that essentially, you can’t believe what people tell you, because they’ll do things that are socially desirable. And they’ll do things that fit their past experience when they’re uncomfortable. And to your point, I think that IBM did some survey in the ’80s at the worldwide market or at late ’70s for PCs, was like 2000 PCs or something like that. Because the customers had these mainframes and they thought they were great. So, that’s an argument that you come up with something that’s different, and then you look to see whether people, how they react to it and how they use it.

Bob Sutton: And so, there’s the old saying that my mother said every day when I went to school, "Don’t believe everything they tell you." Because you got to actually see how people respond in the situation. I’ll give you another example, since we’re very interested in scaling to other markets. So IKEA, you may know is very successful in China, and you can read something about them in Scaling-Up Excellence where we did not tell the whole story. And so, many people might know that that China has a, do it for me culture, that it’s not do it yourself culture. So, that’s why Home Depot for example failed there, classic do it yourself thing.

Bob Sutton: So, when IKEA opened in the Chinese market, they made a couple of interesting modifications, when they had many more better delivery and assembling services, because not that many people have cars and they don’t assemble their own stuff. Okay. So, that was in theory. This is my book, so I’m talking… This is about two years ago, I’m talking to 55 Chinese CEOs. So, they’re from China. In the supposedly startups almost none of them had fewer than 500 people working for them.

Dr. Jeremy Weisz: Wow.

Bob Sutton: And I think there was one woman too, the gender dynamics were another issue. So anyways, I started telling my IKEA story but they’re from China, so is this true? And then, this guy says to me in English, not through the translator, he said, "We don’t assemble anything except IKEA."

Bob Sutton: So, what happened is IKEA sort of… So, they were uncomfortable. And, if you ask people, "Would you assemble something in China?" "No." But, they go to the store, they have the experience, and then they do something simple and take it home. And to me, that’s one of those cases where sometimes you don’t learn until you put people in the position of actually doing. In that case, they’re actually like a Trojan horse for cultural change, the sort of a do it yourself culture. In this case, I knew that they had actually done it, because one of the guys after he said… I said, how many had assembled stuff, two thirds of them had assembled stuff, and one of them said, "Very bad for relationship with spouse." So, we all know, we go to McDonald’s and it’s like, "Oh, so you know they’ve done it, right?"

Dr. Jeremy Weisz: It brings out the worst in people. The manager… Yeah. Well, it’s interesting if you think, based off all of that IKEA would go and they would fail. I think-

Bob Sutton: But if you look, they were smart, which is that they both had more assembly, and they changed a number, some of the food they changed for cultural accommodations. But what happened was they gave people the opportunity to learn. So anyway, an interesting combination of, where we’re going to conform to the culture, but we’re going to push it, and see how far that they’re going to go. And Apple, is a great example, that all of us have iPhones and so on. They do things like, well, they got rid of my earphone jack. I’m still annoyed by them but I’m used to it. I was pissed when they got rid of the earphone jack, but as far as you-

Dr. Jeremy Weisz: [crosstalk 00:41:56] elimination thing, they go and eliminate. They eliminate the disk drive, then they eliminate the jack.

Bob Sutton: Yeah.

Dr. Jeremy Weisz: Exactly.

Bob Sutton: But then, there’s so many other good things they brought in. And then, when they seemed to eliminate the keyboard that didn’t work, when they went to the butterfly keyboard, now they’re back to the old keyboards. But still I think in some ways that notion that you’re always experimenting on the edge. And I remember there was this guy, Chris Bangle. And so, Chris Bangle was the head of design at BMW. And in fact, I got him to endorse Weird Ideas That Work, when he was head design of BMW, because I met him somewhere at a conference. And he had this great line, which this reminds me of, which is that, "When we come up with an update like 3 Series BMW, whatever. Our goal is to lose about 15% or 20% of our existing customers. Because if every one of our existing customers like what we’re doing," he said, "You end up with the Oldsmobile." Every year your customers die, essentially.

Bob Sutton: So, what you got to do, is you got to have that tension between comfort and discomfort, and make your existing folks uncomfortable enough, like my ear jack, I still bought the phone. But make them uncomfortable enough that you lose a few, but then you bring even more, and then you keep innovating in the culture too. So, it reminds you of that, that tension between making people uncomfortable, but not too uncomfortable.

Dr. Jeremy Weisz: Yeah. Well, thanks for telling that story, Bob, about the inception of the d.school. But on that note, Weird Ideas That Work, what’s one of your favorite stories from the book?

Bob Sutton: So, Weird Ideas That Work, the general premise of the book is, I started out with actually a pretty mundane and well established idea in the behavioral sciences, that the logic of doing innovative work and routine work are different. And you think about it, when doing innovation, you’re failing all the time. You actually will have a bunch of functional conflict over it. You’re looking at the same thing as everybody else and seeing things differently. It’s a different logic. And then, when you’re in routine work, well, you don’t have a lot of failure when you have a routine surgical procedure. You don’t want the physician to pretend that your kidneys are your heart, which is the kind of thing that an innovator would do. And you don’t want to have a lot of arguing about how your surgical procedures should go because that would be a bad sign. So, I did that, and then I took things a little bit further. So, just for example, one of the weird ideas I have is, reward success and failure, but punish inaction. Okay?

Dr. Jeremy Weisz: Mm-hmm (affirmative).

Bob Sutton: I don’t even know that I agree with that at all times. But if you think about the logic of innovation, that you do want to have people who are constantly experimenting and trying things. And the other part which I hope I put the [inaudible 00:44:58] but I honestly can’t remember, to quote my buddy Diego Rodriguez, who is head of innovation at Intuit, and was in IDEO for years. He likes to ask clients in the old IDEO place, "Where’s your place for failing?" There’s some places where it’s safe to fail, and there’s some places where it’s not safe to fail. And maybe, the best story in that book… By the way, there’s lots of stories. So, there’s a guy, a famous guy named Mitch Kapoor. Mitch Kapoor was founder of Lotus, was an accidental billionaire, still a venture capitalist, fascinating guy. So, Mitch Kapoor, and this is in the ’80s, he comes up with this… Lotus was essentially a spreadsheet.

Bob Sutton: And it’s like a bunch of his hippie friends started this organization. And he looks around, five years later, and he’s chairman of the board of a company that has 5000 employees. The CEO is from McKinsey, there’s all these people in suits, and he’s an old hippie. So, what he does is he works with his, actually, then head of organizational development and now wife, I don’t think this is irrelevant, Freada Klein. Now, Freada Kapoor, I believe. And what they did, was they took the resumes for the 40 people who started the company, including Mitch’s or they disguise this a little bit, and they put them into the HR system, and none of them even got a callback, including Mitch. And so, you think about that.

Dr. Jeremy Weisz: You can create the organization you won’t be hired at, right?

Bob Sutton: Yes. Isn’t that great? And there’s a bunch of stuff about how in the book the tone as I was taking Mitch and Freada perspective of, "This is outrageous. This why they weren’t innovative enough." But then, I started thinking well for the culture of innovation that might make sense, but to really cash in, maybe those were the wrong 40 people. And I actually don’t know the answer to that. But you can see the differing in logic between founders and people who do well in an organization that’s just, cranking out selling the Lotus software. So, to me-

Dr. Jeremy Weisz: What was your example of Facebook also? I mean, their first motto is break things, and now it has to change a little bit.

Bob Sutton: Yeah. And the other thing you look at Facebook, boy, Mark is there, but just about everybody else is gone, and we’ll see how much longer Sheryl Sandberg last. But everybody who helped found the company or almost everybody, they really replaced most of them. So, that’s another example that the people who were right early on, Mark is clearly changed, but they definitely were not right. One of my favorite people who I’ve worked with him, Chris Cox was employee number 30, he did news feed. He was actually head of HR for a while when Mark didn’t like traditional heads of HR. Even though he had no HR experience, he actually did a great job. And then, he was head of product, and eventually it got to the point where well… I don’t know why he left, but I suspect he wasn’t right for the company anymore, it wasn’t right for him.

Dr. Jeremy Weisz: So Bob, I have one last question. I know we’re pressed on time. Where should we point people towards first to find out more about you, and about the books, and about everything else you have going on?

Bob Sutton: Well, probably the best place, just go to my website bobsutton.net. So, that’s where my books and various things are there, and that’s probably the best place. Or they can just Google me because you can find stuff like that so easily, but bobsutton.net is probably the best place.

Dr. Jeremy Weisz: Bobsuttton.net. You can go on Amazon check out their books, Audible check out their books, all those places. I highly suggest it. So Bob, the last question is, out of all your body of work, I wanted to hear maybe from one of the other books we didn’t touch upon and a favorite story, it could be from, The No Asshole Rule, Good Boss, Bad Boss. What company or case story or research should we tell?

Bob Sutton: Well, that’s interesting. So, I guess, my favorite story, I haven’t thought about this story in years. So, The No Asshole Rule, which we haven’t talked about it, which is probably just as well. But, The No Asshole Rule, for better or worse has sold more than all my other books combined, maybe by a factor of three. It’s getting close to a million copies worldwide. And there was a prophetic moment, and I didn’t realize this, I was 21 years old, and I was with my then girlfriend now wife, Marina. We went to a restaurant called Little Joe’s, and Little Joe’s was this wonderful Italian restaurant with a long counter. And the chef he-

Dr. Jeremy Weisz: Where was it?

Bob Sutton: In San Francisco.

Dr. Jeremy Weisz: San Francisco.

Bob Sutton: On Broadway Street. And just really entertaining. And it’s mostly people sitting at the counter and bantering. And there was this one guy who kept insulting the chef. He was inappropriately hitting on women, and he was being an asshole. And so, this guy runs up to him, and he says… So, one of the other guests and he said, "You’re just so wonderful. You’re one of the most wonderful, fantastic people I ever met. I’ve got to get to know you more. Please give me your name." There’s big performance of the whole thing. And the guy who is the asshole gives him his name and everything. And then, he announces to the whole restaurant he said, "I’m writing a book on assholes, and you are perfect for chapter 13." And then, the whole place, just like this operatic, they cracked up.

Bob Sutton: And little did I know at that point, well, I don’t know, 27 years later I’d be writing a book on assholes, and I got this guy in my last chapter. So, whoever that stranger was, who got a story from the asshole, he was actually providing material for my work, and I didn’t even know it. Because it never occurred to me I would write a book on assholes. So, I thought that might be my favorites. I haven’t thought of that in a few years, even though it’s in the book.

Dr. Jeremy Weisz: Why that title?

Bob Sutton: Oh, why? Because I think it was commercially the best title. Honestly, if I call it, the no jerk rule, I think it would have sold 2000 copies. And the fact that it was controversial, honestly attracted attention to it. And if you fast forward, it’s a relatively clean and innocent title. I even noticed… So, I was quoted in an article in The New York Times about Michael Jordan, just a couple of weeks ago. Because there’s this series about him, and-

Dr. Jeremy Weisz: The Last Dance.

Bob Sutton: … him being an asshole. Because on the side road, did it help him get ahead in everything? And I noticed the New York Times, when I was in the bestseller list, they wouldn’t even give me the eight, it was the no seven-star rule, that they printed the word asshole two or three times in the story. So, even the New York Times is coming around. So, it’s either they’re reflecting reality, or it’s a degeneration of values, depending on what you believe.

Dr. Jeremy Weisz: So, first of all, Bob, I want to thank you. Everyone check out bobsutton.net, check out Amazon, Audible. And thank you so much, Bob.

Bob Sutton: It’s really fun to talk to you. Thanks so much, Jeremy.

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