Is Strategy Complex with JP Castlin

Speaker A: JP Castling, what one thing do you wish you'd have known ten years ago?

Speaker B: Um, that the world is complex and not ordered primarily. That would have helped me a lot.

Speaker A: Which is a great introduction to what we'll be talking about later on. This definition of the world being ordered, um, or this understanding that the world is ordered. It's kind of deep rooted, isn't it? There are lots of people in lots of places and we're kind of taught this at school, that uh, everything has a structure and we decide these things and if A and B happens, then C is the next thing to happen. Yeah, we're told this, so it must be true, right?

Speaker B: Yeah, I mean, yes, that's precisely it. So in the Western philosophical tradition you can go back probably to the ancient Greeks at least, but for the sake of the argument, let's say that we go back at least to the late 1700s. So you had ideas, um, well, coming out of Newton originally, which was the 1600s, but then into um, classical neoclassical economic theory. And like these ideas spread, um, far beyond their kind of immediate purview. And the issue again was like, don't get me wrong, it, those ideas have helped humanity a very great deal. Right. Um, and we took massive leaps forward as a civilization as a result. Having said that, there are limitations to, limitations to these theories which we've seen with, you know, Einstein and so on and so forth, but we're still taught that fundamentally this is how the world works, this is how markets work, this is how marketing works, uh, if you will. And for every question there's one correct answer. And if we do this one thing, regardless of the context, then we're gonna get this result over here. Um, and you know, the effectiveness rule is 60, 40, regardless of where you are or sometimes now with effectiveness in context, it's, you know, 60 or 70, 30 if you happen to be, ah, a brand working in quote, unquote, finance, whatever it might be. Right. Those kinds of rules. And unfortunately, as I think most people realize in practice, in reality, that that's not really how the world works. Um, sometimes it is, but oftentimes it's not. So that's the big thing.

Speaker A: So from our perspective as humans, we love this certainty that, uh, rules and order can give us, don't we? It helps us through our day because we cling to the certainty that, well, you know, economic theory says that, you know, we behave in this way and um, these rules of marketing tell us to behave like this. And it's comforting in some ways what you talk about if you kind of explore it to its further limits, which we will do after the introduction in a minute, but in many ways can be terrifying.

Speaker B: Yes.

Speaker A: When you think about it initially, it can be terrifying.

Speaker B: Yeah, no, it's a very good point because it's kind of a, uh, paradox, uh, if you will, because it's easy to understand why that is. Right. So if you go back to our savannahs, living on, sorry, ancestors, uh, living on the savannas of Africa, it's easy to understand why they would not like uncertainty. Right. So. Because if there's something moving about in the shadows of the tall grass ahead, and we don't know what that is, we don't know whether we would live to see the next day. Right. And so we try to reduce that uncertainty. And originally we had things like religion, um, so we would seek to appease the gods by means of ritual sacrifice or penance or prayer, and thereby lower the uncertainty about whether our kids will live or whether we would live or whether the harvest would be bountiful or whether we would travel a few miles up once we traveled six feet down, and so on. Um, and that idea is comforting of kind of. It's a feeling of safety, as Christopher Hitchens once said, the false security of consensus. But in reality, it can lead to, uh, well, risk aversion, for one. But it can also lead to behaviors that are actually quite dangerous, long, uh, term, which I'm sure we'll get back to during, uh, our conversation.

Speaker A: And we are, I think I said this in the last episode. Humans are just chimps in shoes, aren't we? So we are just, um. We're simple beings that, um, maybe simple emotional beings anyway. So that cling to certainty is a place that we feel comfortable. So. Yeah, yeah. So understanding that that maybe isn't true, uh, has inspired your work in the last decade, but also, I'm assuming, changed how you approach life generally.

Speaker B: Yes, I mean, I, uh, think a lot of these things become painfully obvious once you have kids. Um, I've written about this in Marketing Week, but a very simple example is you can't really plan how many diapers you need to purchase. Um, that's more of an agile thing. Right. But similarly, we have. In complexity, we talk about boundary conditions. And so boundaries, when you're raising kids are things like, when do you go to bed? Now, that's a rigid. We go to bed at 7 or whatever. It can be negotiated sometimes and it'll change over time. So you might actually go to bed later once the kid is older. Right. But It's a similar thing of working with principles, heuristics and boundaries, as opposed to, well, on Wednesday we plan to go to bed at 7:05 or whatever it might be. Um, the problem with the world is that it keeps changing and that's where plans tend to go to fail, because any change will bring about novel information that you could not, by definition, have known when you were planning. So you need to continuously, either you continuously update your plan, which means you're going to spend a lot of time planning as opposed to actually doing things, or you can learn how to manage that in practice. Um, and so that has been quite helpful.

Speaker A: And listening to you talk about this reminds me of why Mike Tyson is probably still the most quoted man in strategy. Um, he's famous. Everyone has a plan until they get punched in the mouth. Now, we'll not fall out about the, uh, difference between a plan and a strategy in the context of Mike's core anyway. But that's broadly what you're saying, isn't it? When you get punched in the face, you've got to make a new plan really quick, otherwise he's going to keep punching you in the face. And, um, yeah, who knew Mike Tyson would be the, uh, world's leading strategy thinker?

Speaker B: Yeah, yeah, the San Tzu Dinojour. Um, but, yeah, brilliant.

Speaker A: Well, look, let's get to a quick introduction and we'll be back in 60 seconds with JP Castling. Hey up and welcome to the Strategy Sessions. My name is Andy Jarvis. I am the host of the show and the Chief Strategy Officer at, uh, Eximo Marketing. Thank you for joining us today, where my guest is JP Castling. You've just heard from him. JP might be one of my favorite people in strategy. Rarely met anyone who thinks in quite the same way about the discipline of strategy. He never accepts the first level explanation of anything, digs deeper, uh, references it and comes at it from an entirely new viewpoint. What you'll take away from this is how to be a better strategist and how to avoid some of the pitfalls that a lot of strategy can take you into. He has some interesting ideas, he has some challenging ideas, and that's some ideas that might make you think, oh, I've never really thought of it that way. That's why he's on. So enough of me. Let's just get back to jp, have a listen, share it with your friends, rate the episode, leave a comment if you want. J.P. castling, welcome back to the Strategy Sessions. You were last here. Episode four, Season two. Just Give everyone. Because we've picked up some new listeners since then. Let's just give everyone a quick introduction to. You are, um, because you write in Marketing Week, but you're not a marketer. You are in strategy, but are you a strategist? Here we go. So give us an introduction to yourself.

Speaker B: Right, so it's the, the mom question about so what do you really do for a living? Right. Um, the simple explanation or the simple summary of it all is that M. I'm a consider myself a strategist or strategic management consultant. My story is, um, began life as a lawyer working emergency acquisitions and corporate finance, went to onto corporate governance, which is strategy disguised as board work really. Um, and then from that into strategic management consulting and then um, being the CEO of a consultancy, building one, which basically meant I had to do, or we had to do everything. So I've done everything from you know, programmatic supply chain analysis, content marketing, creative stuff, uh, to broader strategic stuff to planning to media planning, whatever. But then over time, you know, you tend to get narrower and narrower, narrower. And then it became um, global marketing strategy and global business strategy. Um, and these days what I tend to do is I tend to work with brands, um, executives, C suites and so on, on so called adaptive strategy and how we make decisions under uh, high uncertainty, which of course is quite relevant these days. Um, and on top of that I write quite a lot. So I'm writing two books, finishing one now, um, starting another. And then I write for Marketing Week, I have a newsletter and then I do what you do, which I travel around the world and I talk to people, um, or sometimes talk at people, but you know, I use keynote basically. So that's it and the long and the short of it.

Speaker A: So a very busy man. So adaptive strategy, uh, because that is built out of, stop me if I get this wrong, out of complexity theory.

Speaker B: Yeah.

Speaker A: Um, so we need to at this stage get a bit of a handle and some definitions on. So adaptive strategy. People are like, well, I think I might know what adaptive means and I think I know what strategy means, but what do they mean together?

Speaker B: Yeah.

Speaker A: And then we'll drill down into complexity theory as well.

Speaker B: So when I was working as a, um, uh, strategists, um, doing more strategic planning stuff, what I would find was that the client would really like the process of planning or strategizing because usually it involved going to a nice retreat, playing golf, sauna, a, um, couple of glasses of wine, maybe a glass of whiskey and a cigar and you kind of end up with some Kind of plan which, you know, involves a target, which is usually whatever revenue we had last year, plus 5%, something like that. Right? What. What, uh, Ritson calls the SOMA database, which is straight out of my ass. Uh, but basically that's it. And people enjoyed the process. And then, um, you'd leave them there, right? And then you'd call back six months later, whatever might be, and go, hey, guys. Okay, so what happened? How did work? And that kind of thing? And they. They'd either go, oh, uh, right. I, um, think the document is. Brenda, is the document still in that cupboard? Right. Either it was that or, well, we intended to do it, but something changed. Now, if you're a consultant, it's actually not a bad thing to happen because what it does is it enables you to kind of double dip back into your client pool to use a Seinfeld reference. All right?

Speaker A: Don't tell you. Giving all my secrets away. Jp, don't do it. So, sorry. Carry it.

Speaker B: And, um, yeah, and so you can do that, and you kind of tell your clients, listen, guys, clearly something has changed. We need to come up with a new strategy. And because they like the process, they're happy to do that again. Right, But. And that's fine. And that's. You know, a lot of companies do that, but what I kind of realized was that I could either do that or I could try to figure out why this was right? Why is it that things don't go according to plan? Why is it the plans don't really not executed as intended? And I started digging into this. Um, and what I realized was that there are fundamental assumptions in conventional strategy that actually are quite easy to disprove. Um, and once I'd done that, I kind of deconstructed strategy. I go, okay, so what can I do instead? And I, for some reason or other, can't remember really how it happened. But I. I started reading about complexity science, which I think it might be, because around that time it became more kind of popular media because it started winning a lot of Nobel Prizes. So I started reading that, and then I basically had, like, this epiphany moment. Went, oh, right. So actually, the reason why this is happening is because the world is complex. It's not order. We cannot plan for every detail. Actually, there are a lot of moving parts. And when you think about it, it's not a massive kind of threshold or barrier that you have to cross. Because as people, we know that, right? We know that when we're going to Grandma, sometimes something will happen to the car or maybe your kid gets sick or you know, like shit happens. Um, and so I started building this uh, other framework and then the first time I really took it to practice I was doing global strategy for a large fintech company. Um, and we did this thing which later became the ABCD framework, which is in the book. Although obviously it's a continuous process and it was not just down to the strategy, but a bunch of things happen in the global economy wherever else. Broadly speaking, the company made $5 billion off of that strategy. Uh, and I basically went, right, so maybe there's something to this, but actually this seems to be what working. And then um, I came across a guy called Steven McCrone who is now my co author for the book, uh, who is also one of the like the leading figures in adaptive strategy. And what we realized was that none of our clients had to change their strategies during COVID for example. Right. So we think of sometimes when you talk about adaptive strategy, people mistake it for agile or a, ah, series of pivots. That's what BCG likes to tell people that it is. It's not, there's nothing like that, um, but actually it's the ability to adapt over time. It's not, planning is tied to a specific moment in time. Do this and do this and this and this is going to happen in a five year period or ten year, whatever. Adaptive strategy does not have that kind of end state, um, or Garden of Eden, uh, state which Steve likes to point out. You know, that paradisical kind of moment in time where magically all of our problems have been solved that doesn't exist.

Speaker A: The angels appear with harps. Yeah, yeah.

Speaker B: Um, and so I just realized, okay, that this is actually working. And again, it's not weird that it's working because it's based off a proper, actual cutting edge science as opposed to a lot of the conventional stuff which is based on like I alluded to in the intro, based on ideas that are at least 300 years old. Um, and again that's not to say that these ideas are necessarily all wrong, it's just that they're quite limited in scope and there's a bit more to it than that. And we know why these days, so why not take advantage of that knowledge?

Speaker A: So if you're listening to the podcast as a marketer and you've not heard anyone mention brand or anything like that yet, and you're thinking, okay, but some of the things JP's just mentioned there are probably really, really relevant or resonating to you. If You've been through a strategy process, you'll know you make a series of decisions, typically, that say, well, it will do this, we'll do this, we'll do that, and then at the end of that we will achieve something, we will achieve this target, the, uh, 5% or whatever. And if you've been through this, if you've got a few more candles on your birthday cake, you've been through it a few times, think about how many times you've actually got to the end of that and landed exactly where you said you were going to land. Yeah, now, I been doing this a number of years now. I've probably been doing strategy, consultancy strategy for close to 15 years, my own consultancy for close to nine. I'm not sure I've ever, in that time worked with a client or run a business or anything, where we've landed exactly at the point we said we were going to do. It's not say we've missed it, sometimes we've gone past it and overachieved it, sometimes we've underachieved and missed. But I've never landed exactly where we said we were going to do. And that's what really appealed. When I started reading JP's ranks, it was like, if actually things worked as we said, as we think they were going to work as we're taught they're going to work. If we do these series of steps as we said we were going to do, surely we should land at the point we said we'd land on, or pretty damn close, but no one ever does. And if you have ever landed exactly at the point you said you were going to land on, get in touch, you're the next guest on the show. I want to know how you did it. But genuinely, just a quick one. Have you ever landed at the point you said you were going to land at? I don't think I ever have, no.

Speaker B: I don't think I have. In terms of, like, very precise goals. Sometimes when you do things like, um, global media purchasing, for example, that you have kind of. You have a lot of historical evidence for, roughly speaking, what might happen and you have a good, uh, econometric modeler or, uh, econometrician, then you can get roughly right. But you're dealing with essentially macro patterns. And so one of the things that you learn in complexity is that, uh, there's something called emergence. Right? Things emerge and they arise. Emergence basically means in a technical aspect, that you have various layers of information without kind of any, um. They don't describe or predict One another. Um, and so you might take a very basic example. So if you look at an employee, for example, an individual employee will tell you nothing about the behavior of the company that he or she works in. Similarly, that company will tell you nothing about the behavior of the economy. Um, the classical example for marketing that I use is the Earnburg Bass science versus the traditionalist, where the Ernberg Bass patterns are macro patterns. So you talk about negative banal distribution. In other words, it looks like a banana. If you look at your customer base, your buyer behavior, you're going to have a few people who buy you a lot, a lot of people who buy you little, and most people will not buy you at all. So that shape looks like a banana. That's a macro pattern. That pattern tells you nothing about what any specific individual customer is doing at any one point in time. Right. And the issue sometimes, I feel, with the marketing debate that's been raging ever since how Brands Grow came out and what was 2010 is that the Earn Big Bass crowd are talking about macro patterns up top, and the other people are talking about, you know, the mental positioning three things in your brain. They're talking about micro patterns beneath, and they can still be both be correct, but because they're talking about various layers of information, they're talking past one another. So they're kind of doomed to continue this debate, you know, until the ends of time. Um, so things like that are quite valuable to understand. Um, because if you are looking for a goal which is a macro goal, and you think you can describe it on a micro level, you're kind of doomed from the outset. You might hit that goal, but you're more likely to do so despite your plan than because of it. Right. Um, and also, by the way, uh, there's a book by. Is it Kenneth Stanley, I think it's called, called the Objective Paradox, uh, where he basically established that the very act of defining a specific goal pretty much guarantees you're not going to be able to reach it. So what you instead should do is you define the direction in which you go, and then kind of the goal will emerge as you move in that direction, basically.

Speaker A: So to come back to the very opening conversation we had about what you wanted to know 10 years ago and the way we explored that through people clinging to certainty. And we're almost. I don't want to say we're hardwired for that, but we've had a lot of years of development of looking for that certainty. So sometimes just to reduce the mental lord, because we know If A and B are going to happen, we can just carry on and do the other things. Yeah, so what you're talking about, when people may be listening, going, yeah, that makes sense. We can't predict everything that's going to happen, so maybe we should stop trying to. We need to be more, you know, adaptive in how we approach this and all those sorts of things. But then you've got an organization to, you know, you to convince of this. You've got a whole bunch of people in the room who also have years of experience of not doing it the way that, uh, you talk about and doing it the other way the golf way and all those sorts of things. And they like it as well. And um, it gives them some certainty and certainty helps you speak with certainty to the higher ups and all those sorts of things. And it feels to me when I, when I hear what you talk about and write about that, uh, the sense is there, but it breaks the model for so many people that, uh, actually, is it hard to land with them? You know, do you spend 30% of your consulting time trying to convince the people in the room that you're right as opposed to doing the thing that you need to be doing?

Speaker B: It's an interesting question. I've had gigs where, um, I've had to be a bit of a hair dryer early on. It has earned me the nickname Snape a couple times. Um, but ideally what you want is you want for people to kind of discover that for themselves. The challenge is twofold. Uh, from my experience, the first one is that the human brain reasons off of or acts, interprets reality based off something called cognitive blending. What that means is that whenever we encounter new information, we map that information against the patterns that we have based on our experience. But crucially, we don't go for a best fit pattern match. We go for the quickest pattern match. What that tends to mean is that whenever people suggest something new, we kind of match that against our most recent experience of change. And we go, ooh, that didn't work last time. So we're reluctant to do it. Um, this is why, um, when people talk about digital transformation, for example, one, uh, of the telltale signs that they haven't got that much experience actually doing it is because they say, well, the first thing we're going to do is we're going to announce that we're doing a transformation project and go, well, okay, that pretty much guarantees it's not going to work because people go, ooh, I don't like transformation projects. Um, the Second issue is that we know from research that a lot of managers prefer, to your point, predictable performance rather than peak performance. Actually, what's been proven and quite. I mean, I was going to say in psychological research, but research in psychology, but that these days can mean anything because they have a replicability issue.

Speaker A: Does this mean you saw it on Instagram? Is that what you mean?

Speaker B: But this is actually quite a robust finding. And what we find is that what people have found is that people would actually prefer a predictable negative outcome than an unpredictable positive outcome. Which sounds weird, but it kind of proves to your point how little we really like uncertainty. Um, we'd rather know what's coming even if it's bad.

Speaker A: Is this the example? I think Rory Sutherland's talked about this. You stand people on the Tube in London, they would rather have the sign that tells them the next tube is 10 minutes away than stand on a station platform, um, with no sign. But the tube arrive in two minutes.

Speaker B: Yeah.

Speaker A: They would rather understand that the train is 10 minutes away, even though the train arriving in two minutes is actually better for them. But we want the information that tells us it's worse for us rather than it just being better.

Speaker B: Yeah, exactly. Another example of that is, um, they ran tests where people would get mild shocks in their hands. And what you could see that anxiety levels were at the peak when it was 50. 50. So when they knew that they were going to get shocked, it was actually less, kind of less painful in a way than when they didn't know whether it was going to happen or not.

Speaker A: Uh, somehow I knew you'd give an example related to electric shocks as opposed to standing waiting for a cheap.

Speaker B: Um. But, yeah, but then, of course, I was going to say there's a third thing, of course, in practice, of course, as well, which is incentive, um, displacement. So, um, one of the. For me, who've done quite a lot of global, uh, strategy, one of the telltale signs for me is, and I think this applies to most approaches to kind of strategy, but it's when people go, right, so we kind of agreed on what to do. And then we did as we agreed. And you go, no, you didn't. Because what happened was that you did your strategy, you got everyone on board and whatever else, and then the very next day you had to be on a call with Jurgen, who was the head of sales in Berlin. He just went, yeah, I'm not doing that because it's into my bonus. And then just like. And then what you do. Because there are always incentives for, you know, that kind of do, um, not synchronize within an organization. Part of the adaptive strategy, actually getting synchronizing things. Um, but uh, yeah, there's always more to strategy to strategic management than just going, here's what we're going to do. And we're all going to do as we agreed. Because that's people do as they're told. And you go, no they don't.

Speaker A: So as you're running this through organizations, then the strategy work and the work of the consultant exists often in the boardroom and the away days and the C suites and all that sort of stuff. But the reality of strategy coming to life tends to be as it filters uh, down the organization. So you talk about synchronization and things like that, but how as a strategist can you impact that as it cascades through? And uh, especially at a global level, when there's so many layers of people, teams, local nuance, all that sort of stuff, how do you manage to get that to filter down so that you do get those, you know, great, you know, $5 billion results?

Speaker B: So what you're looking for, the quality that you're looking for and apologize to listeners, because this is going to be a technical term, uh, but I'll explain it in as simple terms as I can. So what you're looking for is a fractal like quality. So fractality basically means self similarity. So the kind of easy example is if you look at a Florida of broccoli, right, and you look at like, each part of that broccoli will look like a slightly larger part of that broccoli, which actually looks like the part, the broccoli itself. So each part will kind of, it looks the same across scales basically. And this is a pattern that we see in all kinds of things, from the uh, blood vessels in your heart to um, galaxies in the universe to all kinds of things, right? So this is called fractality, self similarity. It's a mathematical concept. So you cannot have a strategy which is fractal, strictly speaking, but you have a strategy which is fractal like. And what that means is that your strategy should look the same, um, across the entire organization. Now that does not mean that the decision that you make off of that strategy is necessarily the same because you have various. You know, the decision that a CEO makes will not be the same decision that a guy on the floor, a girl on the floor does or makes, right? But it should still inform that decision so that you move in the right direction at the right tempo, um, and the Way in which to do that is to ensure that the strategy is legible and understandable and simple. That you establish. Rather than having a definition of success, we talk about a shared understanding of success. What that means is that people, when you talk about your strategic aspiration, what you want to achieve as an organization, people need to understand what that means. Right? It cannot be something so esoteric and poetic that people go oh, that's a nice, nice bit of prose. I have no idea what it means. Right? Our ah, customers haven't got a fucking clue. Obviously, uh, because if you're not able to translate it internally, guess what, you won't be able to translate it externally either. But it's a thing of keeping things simple and ensuring that the structure of the strategy is the same throughout the organization. If you can achieve that then you're going to get synchronization kind of um, as a side effect, uh, to that. There's a bit more to that, but in kind of simple terms that's what you're looking for.

Speaker A: Marketers operate kind of below their global business strategy. And you know, and we have a, probably one year increments of marketing strategy and things like that. Which actually that fractality explanation, uh, probably makes sense then because if you are trying to reflect the business strategy that is being filtered down to you, then you probably need to be that small piece of broccoli that looks like the whole. Fantastic. What do you see when you drop into my, into the marketing world? Because I feel that you have um, a passion for marketing but also um, a frustration with the marketing world perhaps. So what are the good things you see marketers do in that sort of strategy, place for marketing strategy and what are the things that have you whacking your head into the desk going why are we still doing that?

Speaker B: I've said this before, I think that marketing is the single most important business function. Right. That is because in an ideal world anyway, marketers are quite creative people who kind of can think about how to sell stuff and market stuff and solve business problems and overcome obstacles and maybe provide, as a cliche goes, the customer's view, um, you know, in the C speed or on the board or whatever. Um, and, and they do that stuff. Good markets do that very well. What I wish that marketers didn't do um, was to one or two things. The first thing is that I wish that they would stop taking uh, credit for stuff that isn't there, um, the result of their work. Right. And the reason why I don't like that is I'VE used this example before, many a times before I've written about it. But, um, Airbnb's turnaround is a good example of this. So Airbnb, was it four or five years ago, something like that, they had this turnaround where magically, suddenly, they managed to go into the black rather than being in the red all the time. And a lot of people, famous columnists, heads of agencies, whatever else they said, oh, this is all down to the fact that they've now started doing brand building advertising. You know, even though brand building takes years and years and years, magically, this is because they got this new brand platform. And Marcus kind of rejoiced and went, yes, this is it. And I spoke to the CFO about that, and she basically went, yeah, that's all horseshit and just means we cannot really trust market, because what really happened? And again, this is all out there if you want look it up. But what really happened was that, um, as the world kind of turned after Covid, a couple of things happened. The first thing, of course, was the countries opened up. But not only countries, but city centers, which kind of during the pandemic, were off limits. So that played into Airbnb's hands. Not only that, but the dollar was unusually strong, which basically meant that Americans could fly on the cheap. That played into Airbnb's hand. And then there were a couple other things. But perhaps the biggest thing in this was that once that started happening, what Carbnb did quite cleverly was that they took that cash that people, uh, paid them, and they reinvested it in certain kind of financial instruments. These instruments were tied to the American interest rate. And as some of you may recall, from that moment in time, the American interest rate just went straight through the roof. So if you actually look at Airbnb's figures at that time, um, they made a profit of. They were something like 117 million in the black. Great 124 million of straight profit came out of those financial instruments. What does that mean for the rest of the organization? Well, they were in the red. Seven million. Right. And so, um, again, I'm not saying that marketing didn't play a part. Of course it did. I'm not saying that the brand platform didn't play a part in it. Of course it did. But there were a lot of other things happening. And when marketing takes credit for stuff that it doesn't do or shouldn't take credit for, the rest of the organization basically goes, yes, you're trying to steal my ideas and my Work now. Right. And because marketing has an issue these days anyway of being reduced into, well, effectively comms. That's marketing promotion. Right. I just don't think that's a great way forward. I, uh, think they would be better off actually kind of trying to build bridges with the other departments as opposed to burning them, uh, which is what those things tend to do, from my experience.

Speaker A: Yeah, I think I would probably agree that there's a lack of depth to some marketing thinking. Not everyone. Some people are great.

Speaker B: Ah.

Speaker A: In depth, into detail. But I probably call it in a badly made up world, the Instagramization of thinking when it comes to this, where people just look at what they see and then just take it at face value and go, all right, well, Airbnb invested in brand. They've made some money, therefore it must have been brand that did it, or company has done this. And therefore it must be marketing that happened without ever digging in or interrogating it. And then somebody writes about it and nobody ever dives into it any further. And all of a sudden you're into this place where these things are now true because it's been written about a couple of times or someone's posted about it on Instagram. My favorite irritation is the, um, uh, uh, attention spans are now the same as a goldfish, or worse than a goldfish, when, if you spend more than about 30 seconds looking into that particular stat, which came from Microsoft. No, uh, it didn't come from Microsoft. No one can ever prove where it came from. And if you talk to actual scientists in attention span and stuff like that, they're like, this isn't how you measure attention span. I don't know. I don't even know what you're talking about. When you, when you give me that quote, it's just entirely made up. But when you go to as many conferences as we do, I think I hear that stat once a conference from somebody everywhere.

Speaker B: Yeah. I mean, to his credit, there's depth to the thinking. Yeah, I mean, Ferris Jacob has been making that point for. I mean, I think he made it. We did a talk together and I think it was 2018 in Mumbai. And like he was making that precise point then and people just aren't listening. Um, another one of those is, um, you know, all these, these days, uh, attention is all the rage in marketing. People talk about attention this, that and the other. Right. So what do we know from science about attention? Well, what we know from science about attention is if you're looking at something. In other words, if your eyes are Physically scanning something, you take in 3 to 5% of what's in front of you. That's it, Right. If you're Asian, it's slightly higher based on how they write and the kind of signs they use and so on. So you typically around maybe up to 10%. Anything above that, you're typically autistic. That's part of what autism is, is this inability to kind of separate signal from noise. And so you become overwhelmed. So if we take in 3 to 5% of what's in front of us and we go, oh, it's all about attention and where eyes are focusing on this, uh, thing over here, really what you should be going for is just like, no, you need to establish your distinctive brand assets so that if you take in 3 to 5%, you know, you still recognize the brand. But that part is not never really mentioned. It's just about, no, no, no. We need high attention advertising and this, that and the others. It's like, yeah, but you're still. There's a lot of waste, you know, scientifically speaking anyway. Um, but I also think to your previous point about social, um, media marketing and, um, what might call this kind of fundamental attribution error, maybe at scale, is that it also ties it back to this conversation that we had earlier about complex systems versus order systems, because this assumes that there was ordered. In other words, Airbnb did this thing A, which led to this thing B, and it was only this thing A that led to that thing B. It wasn't actually a lot of things. And, um, that's problematic. And this is an issue that we see, um, in the management side of strategic management, even in marketing. So these days, of course, you have a bunch of specialists. So you have your social media marketer, you have your. Maybe even it's a TikTok marketer and an Instagram marketer. And, you know, you split down all these various pieces and there are a bunch of assumptions around that. First one being that so long as we can optimize these parts for a better whole, so we can just hire someone who's better at that thing or replace them with an AI and the overall output will be better. That's not actually how it works. But the other thing, which is rarely spoken about, is the fact that these people, A, they're easier to hire and place, but also, of course, easier to replace, but they all speak slightly different languages. And as, uh, a result, as an organization, you get people who cannot speak to one another because they all speak different languages. So you all have each Kind of person has their own, oh, it's this attribution thing or click through rate or this, that and the other. And then they keep talking to one another and there's not that cohesive, strategic, here's the direction which may move and you just get a bunch of people who cannot speak to one another. Right. And that's also one of the reasons why you lose that kind of synchronization across your marketing department because you have a bunch of specialists, but no one is actually able to speak to anyone else.

Speaker A: And when you've got the better marketers and the better, uh, CMOs, marketing directors, they do manage to pull that together. And I look at curries in the UK at the minute who are doing a stellar job on, um, they're getting all the plaudits and all the flowers are coming their way for, uh, mostly social TikTok. They're doing really, really well by not overly trying to control it as a brand platform, but leaning into being really native on TikTok. And their TV ads have gone up a level by some changes they made and they're flying and that's what they're getting all the praise for. But if you ever hear Dan Rubel talk about it, if you read him on LinkedIn, he's always really clear and you know, as well as sort of praising the people behind it, probably every third or fourth post talks about the business impact this is having and the change it's having to sales figures and growth. And if you look at what they've done on their share price, tremendous over. But he's doing that by pulling everyone together, the sort of conductor of the orchestra and everyone is pulled towards that same goal and that some great stuff happens when you manage to get that together. I imagine it's not easy, you know, trying to pull a team that size to get everyone pulling in the same direction. But when you see it work and you see it in action, it just looks so simple. You know, you're like, why wouldn't everybody do this? But it's back to that. Simple can be difficult, huh? Can't it?

Speaker B: Yeah. And it also, it requires that kind of, um, broad view, um, um, which is not necessarily something that people will take these days because, I mean there are a lot of silo issues and whatever else. But I think, you know, a few years ago, uh, I wrote a piece called, uh, the Gravity of E Commerce together with James Hankins about, um, digital dtc, but E commerce in general. And what we found was that there was a negative correlation between online uh, penetration and profitability. So in other words, the more stuff you sold online, the less profit you made. And the reason was effectively because um, the traditional retail model, in other words, when you had a store was a many to one model, so your customer would come to you and thereby incur the cost of transportation and so on and so forth, right? And while they're in the store you can also rent out a piece of that store to cost a coffee or whatever and you can make. There are a bunch of ways in which you monetize that. When you shift to a digital DTC model, which is cheaper early on because you don't need that massive distribution and store and so on, what happens is you switch that model to one to many models. So instead of your customers coming to you, you have to go to them and that, that's a massive cost. And then of course instead of the truck going to the one store, it has to go to individual customers, but also on returns, that's also a cost. And what we found was that companies like Next, for example, like to your point, they already know this stuff because they understand the business of it. Hence they have an omni retail model whereby they encourage people to actually return goods to their stores and, and if they're in the stores they're more likely to buy something else. And again you can rent it out, cost a coffee. Like there are ways in which to monetize this, but if you have that fragmented bunch of specialists, you have the acquisition specialist who just goes, no, no, no, it's all about selling stuff online. And then you have someone who's optimizing this bit and this bit and this bit, not realizing that their work actually has detrimental um, impact on the overall overall value. Um, another example of this is um, there's quite ah, a famous Swedish furniture store which is called the Nordic Gallery. And basically it's really, really expensive furniture, right? Designer furniture, um, the most expensive stuff you can find on the market basically. Um, and they've gone from a kind of a fiscal, you have to come to us model to it now. Well it's a hybrid model but they're really high on uh, on digital. And that meant they've hired people who come out of digital from traditional brands. And now magically or tragically, it's all about discounts and acquisition and oh, subscribe to a newsletter, you're going to get 10% off. Like their profitability has just fallen through the floor. As a result the revenue hasn't improved that much. But profitability just really uh, really bad and again, it's because I think that they don't understand that, which is ironic. Maybe, uh, it's a generational thing, but they've kind of lost that understanding of the whole. And this is the thing about complexity. It's all about the whole, not the parts. And order systems is all about the parts.

Speaker A: Tell us about your new book, because by the time this episode comes out, the book may well be finished, about to hit shelves or finished. And, you know, there we are.

Speaker B: I mean, it's funny because I think the last time we were on, I was talking about writing the book then. And, uh, what turns out is when you're writing, especially riding with someone, and you happen to have two kids along the way,

Speaker A: uh, bad timing, J.P. bad timing.

Speaker B: You tend to push deadlines. I wonder why that is. Um, no, but. So the book, uh, is called what to do when youn Don't Know what to Do. Uh, and it's about adaptive strategy. But what it does is it creates this argument where we talk about essentially the past, present and future. So we talk about the past. In other words, how. How was it that we came to think in the way that we currently think? Well, the central ideas that we see in economy, uh, uh, economics, rather, and strategic management strategy, where does it all come from? What are the flaws and stuff like that? And what we discover along the way is that there are a lot of assumptions that have been made. Uh, there are a lot of things that have been put in there, uh, essentially just to make the mathematics work. So the idea of a rational man being one such example is just like, okay, so we cannot make utility theory work unless we make these assumptions. And you get this idea of all else being equal, if everything else is equal, and we just do this thing. Yeah, but in reality, that's never really the case. Um, but then. Okay, so that's the first part. Now the second part goes into. Okay, how does this manifest in reality? So we go through some of the conventional strategic ideas, uh, from planning to emergence strategy. That's Mintzberg. Um, to this idea of strategy being a way in which to solve problems, which is actually quite problematic when you dig into it. Um, we criticize rule melts. Uh, we talked about where to play, how to win, all kinds of things. And we kind of prove that these frameworks oftentimes make similar assumptions and these assumptions fall down in reality because insert reasons here and then. So we kind of deconstruct strategy in the second half of the book. Second part of the book. And then in the last Bit just

Speaker A: before you move on to the last bit, I love. Um, so casually during the second half of the book, you've taken a potshot at two of the great thinkers in the strategy.

Speaker B: Oh, no, no, no.

Speaker A: World of way more than that. Yeah, pretty much basically every. Everybody in strategies had it. Yeah. Okay.

Speaker B: Yeah. I mean, do you want the. Do you want the sort of headline grabbing, the quick thing?

Speaker A: So, I mean, listen, let's get the clip. This is going on. So.

Speaker B: Yeah. So with Michael Porter, actually, we go back to scientific management and Taylor. Scientific management is the idea that we can time everything and optimize everything. Uh, Taylor himself was basically making shit up as he went. And there's historical evidence to demonstrate that that's the case. Uh, we then have things like mbo, which is, uh, Peter Drucker, who's hailed as the great kind of strategic management thinker. I tend to disagree based on what I've actually read, uh, about him and the stuff. And the main reasons are twofold. Uh, first that he kind of rose to fame criticizing Taylor. And then he realized that when he was trying to sell mbo, which was his approach, managers didn't like that. They liked to Taylor stuff. And then he just changed. He did a full 180 when. Oh, actually, no, no, no, he wasn't wrong all these, uh, these years. He was just like the greatest thinker in strategic management. Like the greatest thinker since Newton. Right. And you go, well, hang on a second. Are you just saying that because you want to sell your stuff or not? And then so you end up with mbo, and MBO turned out to then be scientific management. This guy, really, if you look at it, um, we go into people like Porter. What Porter did was Porter did a lot of good things. But also his assumption that markets are based on competition, that's not rooted in reality. We kind of think, well, it sounds good enough, fair enough. Right. But effectively it came out of his own background as being very good at sports. American football and golf more than anything. Or baseball, I think, as well. Um, he's just annoyingly good at everything. Porter, but that's a different thing.

Speaker A: Um,

Speaker B: and you see that when you go to things like, uh, where to Play, how to win, which is Roger Martin's work. And I vaguely know Roger, Um, and I like him. So he worked closely with Porter. In fact, they both work in the same company. I think he studied under Porter at Harvard. And you see the kind of histrionics between Porter and where to play, how to win and where to play, how to win. And I'm not saying this is his intention, but this is what tends to happen when we use that in practice, is it becomes a cascading strategy. So up top, we define where we play and how to win. If that's off by a fraction of a millimeter, that will cascade like rings across the water, across the organization. The fault at the very bottom will be massive. And then he uses things like supporting management systems that kind of lock those falls in place. What they do in practice, what tends to happen in practice, that it basically means that any signs of success will be accelerated throughout the organization. Any signs of some failure will kind of be suppressed or ignored. Right. This leads to a strategic drift over time. So that's problematic. And then you get questions like, well, how can we define the best place to play and where to win ourselves? Is that not relative to something else, what other people are doing and not saying? And again, to his credit, and I want to make this clear because I'm sure this will pop up on socials. Uh, I don't think that's Roger's intention because he actually understands a lot more about complexity than most people do. I'm just saying that that's oftentimes how it's taken to be in practice. But then we have, on the other side of the scale, we have people like Henry Mintzberg's emergence strategy, which is all adaptive and whatever else. Well, even then, you have to assume that there must be something before the emergence strategy, because emerging strategy is defined as, um, a pattern and action taken over time. That's the definition of emergent strategy, not the kind of stuff that we actually do in practice. But the only way to separate that signal from noise or identify that pattern must be against something else. So there must exist something else before then, if you're going to do the. And so you get that kind of stuff. And you can find similar issues with all kinds of strategic management thinkers. That's what this part is. Um, but it's not just to be clear, it's not just about the frameworks. It's also a lot to do with how companies act in reality. What are the patterns that we see in organizations and how they behave? Um, and we kind of explain why that is and why it's sometimes problematic and why people face the problems that they face. Then the third bit is, once we've done that quite lengthy deconstruction, we go, okay, so what if we instead rebuild off of complexity science, cognitive neuroscience, and actual proper science, and we don't throw all the other stuff out, but we try to learn from it and go, okay, so actually what works and doesn't work? And the question then is not how can complexity, uh, work within or under what we already know, it's how does that stuff actually work once we realize the world is complex and off of that we build then adaptive strategy and app strategic frameworks like the ABCD framework, which is mine, which is, which is the one I mentioned before. Um, and the big benefit for the reader is that this is all research to the nth degree. Because if I'm calling people out or we're calling people out, I need to kind of a. I need to be nuanced at my critique, but also I need to kind of, of have a good reason for criticizing them. I need to have some kind of evidence that of course invites the same kind of critique when it comes to my own contribution. So that's another reason why it's taken so long to write. Everything is researched like hell. Like, you won't see that necessarily on the page, but trust me, every word is research like hell.

Speaker A: I believe it.

Speaker B: So, yeah, anyway, that's the book.

Speaker A: Excellent. So look, um, if the book is out when we, uh, launch, maybe. But what we'll do is we'll put a link to your newsletter because I'm sure there will be links in your newsletter, um, when you, when you launch the book. So, yeah, I'm looking forward to it coming out and the debate which will spiral after it. Well, look, JP Castling, I think we've come to the end of the road today. Well, thank you very much for your time.

Speaker B: Oh, thank you for having me. That was probably the, the least coherent podcast.

Speaker A: Uh, yeah, um, golf. No, it doesn't matter. So you're the links to JP's newsletter, which you absolutely should sign up for, are, uh, in the show notes and LinkedIn still the best place to contact?

Speaker B: Yeah, either that or via, uh, I was getting on my website, but yeah, LinkedIn is easiest.

Speaker A: Yeah, perfect. All that's in the show notes and do catch up and follow JP, especially on LinkedIn in. It's a great fun thing to see. So brilliant. Jp, thanks for your time.

Speaker B: Thank you very much for having me. It's always been a pleasure.