Navigating Leadership Challenges: General McChrystal on Trust, Teams, and Transformation

00:00:05: General McChrystal,

00:00:06: you asked me to call you Stan, so I'll go ahead with Stan.

00:00:10: I just wanted to say what an honor to have you on our podcast, Aspire to Inspire.

00:00:15: I'll proceed with the first question, which is that in your career, which has

00:00:18: spanned over three decades in the military and now in leadership consulting,

00:00:22: could you share a bit about your journey and what led you to transition

00:00:26: from military service to founding the McChrystal Group?

00:00:30: Dan, thanks very much for having me

00:00:32: and congratulations on the direction of these podcasts.

00:00:36: I think they're going

00:00:36: to be very valuable to people and I look forward to the conversation.

00:00:40: To go to your question, I spent 34 years as an army officer,

00:00:45: but I've now spent 14 years in business.

00:00:47: I founded a business right after we left service.

00:00:51: So I've been a business leader for 14 years.

00:00:55: The way I think of myself now is I think of myself as a leader

00:01:00: who was in the military, not as a soldier who now is trying to act

00:01:04: like a business person, because I think it's important to

00:01:10: identify to

00:01:11: ourselves who we are and what we're trying to do

00:01:14: because I think that helps define how your leadership style

00:01:18: is going to be. I think it has for me and there's been quite a transition.

00:01:23: To briefly describe my military career,

00:01:25: I went into West Point, our military academy at age 17.

00:01:29: It was the first thing I did.

00:01:31: I came out at 21 and became a young army officer.

00:01:36: I had normal developmental experiences

00:01:40: as a platoon leader and a company commander and a battalion commander

00:01:44: and so on where I was taught leadership and management

00:01:48: as well as the skills of soldiering.

00:01:51: And I found that my own leadership

00:01:53: style evolved during that period.

00:01:57: Now, I don't think it evolved completely differently from every other soldier,

00:02:01: but I think it was still unique based on my experiences.

00:02:05: Early in my career, I was very focused on being technically

00:02:09: and tactically competent.

00:02:11: I think most of us are when we start work.

00:02:14: Then I learned

00:02:15: that I really got the job done by getting other people

00:02:19: to be technically and tactically competent in the organization of function

00:02:23: and I became a micromanager.

00:02:25: I was able — up through the time I was a company commander,

00:02:29: I literally could control every chess piece in my organization

00:02:33: through force of will. Many of us have that experience.

00:02:38: Then I hit a point in my career where that didn't work anymore

00:02:41: because the span of control was too great.

00:02:44: And I was lucky enough to work with people at that point who helped me

00:02:48: make a transition to where I became much more decentralized.

00:02:51: I became much more based upon influencing people

00:02:56: and trusting people.

00:02:59: When I got into the civilian world,

00:03:03: I thought it was going to be completely different

00:03:06: because I thought

00:03:07: that they don't wear uniforms, they don't have the same values.

00:03:10: In fact, I thought people were godless, greedy, business types.

00:03:15: What I found is they aren't that way at all.

00:03:18: They're remarkably the same.

00:03:21: The military and the civilian world, except the way we look

00:03:24: and the words we use, are very similar.

00:03:28: But the mistake I made when I came out and started McChrystal Group was

00:03:32: I thought that some of what I'd learned in the military was not appropriate.

00:03:37: Really high standards, demanding

00:03:40: standards for people in an organization, very clearly defined.

00:03:46: We didn't implement those in my company when we started

00:03:50: because I thought civilians wouldn't like that. We had to go back.

00:03:54: As the company evolved, we found, no, no, we needed to do that.

00:03:59: And it's harder to do it later, but we did that.

00:04:01: But then the other part we found was

00:04:05: communicating with people, really the core of

00:04:08: what we're talking about here is very similar.

00:04:12: Soldiers need to know what they're doing.

00:04:14: They need to know why they're doing it.

00:04:17: They need to know what to do when the plan that you gave them

00:04:20: doesn't work because it never works.

00:04:23: It always works in the briefing and it never works on the battlefield.

00:04:27: And so what you learn is you have to be able to explain to them,

00:04:31: "This is the way I want it to go,

00:04:33: but when this goes badly,

00:04:36: this is what I want you to accomplish and you're going to have to do it

00:04:39: because I won't be standing next to you to answer your question at that point."

00:04:43: That's the same in the civilian world.

00:04:46: It unlocks the motivation and the innovation

00:04:51: and all of the initiative, all the things we want from bright young people.

00:04:56: But we as leaders — it took me a while to realize the same

00:05:00: basics applied in the civilian world that they did in the military.

00:05:07: That's amazing.

00:05:08: Would you be actually able to find a memorable experience

00:05:12: from your military career which actually shaped that

00:05:16: principle that you were just talking about?

00:05:19: Yes, it's interesting.

00:05:21: It was fairly late in my career.

00:05:22: I had a number of times, but this was the most impactful.

00:05:26: I had taken command of our counter-terrorist forces,

00:05:29: which are the most elite counter-terrorist forces that the United States has.

00:05:33: They're an extraordinary organization called Joint Special Operations Command.

00:05:38: If you think of the killing of Osama bin Laden

00:05:42: or Abu Musab al-Zarqawi, the rescue of Captain Phillips off

00:05:46: Somalia, that's all JSOC.

00:05:50: So I take command of that organization and what I find is we are extraordinarily

00:05:55: proficient at what we do, the actual

00:06:00: nuts and bolts of raids and hostage rescue.

00:06:03: The people are well-trained.

00:06:05: The small teams are cohesive.

00:06:07: We are remarkably

00:06:10: motivated as individuals, professional, elite.

00:06:15: But the reality is, we have two problems.

00:06:18: We are so elite that we don't want to work with anybody else.

00:06:22: We're arrogant.

00:06:23: And inside our organization, which is really a community

00:06:26: of organizations, SEALs and Delta Force and Rangers,

00:06:30: inside that ecosystem that I commanded, people didn't want to work together.

00:06:34: They didn't even want to talk to each other. Then the wider community

00:06:39: that we had to work with, our Department of State,

00:06:42: our Central Intelligence Agency, our Federal Bureau of Investigation,

00:06:46: nobody wanted to work with anybody outside of JSOC either.

00:06:50: And so you have all this capability,

00:06:53: but it's less than the sum of its parts because it won't work as a whole.

00:06:58: And there's no bad people involved.

00:07:01: As I used to tell people, there's no evil people or stupid people.

00:07:06: It's well-motivated.

00:07:09: But what we've done is we are holding ourselves back. In fact,

00:07:13: in the war in Iraq,

00:07:14: that became a potentially fatal mistake and we had to change that.

00:07:18: So the most impactful experience of my career,

00:07:22: I commanded that for five years, it was wrestling with that organization

00:07:28: and the wider community to try to get us into better alignment.

00:07:32: We made a lot of success doing that.

00:07:35: I learned some hard lessons of what doesn't work,

00:07:38: but I also learned that if you stay at it can work.

00:07:42: And the outcome of that is so positive that it's worth the effort.

00:07:49: That's amazing.

00:07:49: I actually remember

00:07:51: there was a chapter in your book, the Team of Teams, where you

00:07:53: were describing bringing the best from other teams, merging them

00:07:57: across different teams so that they could learn from each other

00:08:00: and get to know each other, that on the other side, there was not an enemy.

00:08:03: There was someone we should be working with.

00:08:06: It's easy to say.

00:08:08: You can put it on a whiteboard and it's remarkably difficult to do

00:08:12: because it takes the will of senior leaders, but it takes more than that.

00:08:17: It takes the buy-in of people across the organization

00:08:21: because it's really a group effort to culturally change.

00:08:25: That's the core of it.

00:08:27: II think it's also human to a side.

00:08:28: We trust people we know.

00:08:32: On the other end, you've got people

00:08:33: you don't know, so it's hard to build that trust easily.

00:08:37: It's a fantastic experience and a great solution as well, by the way.

00:08:41: You mentioned communications.

00:08:44: At Staffbase, we aim to help organizations achieve

00:08:47: their business goals and objectives through the power of communications.

00:08:50: Communication is very important to us.

00:08:52: It's a core of our business.

00:08:55: Would you be able to share your experience

00:08:58: with us with respect to communications, how important it was for you

00:09:03: and how you would apply those learnings to the concept of modern management?

00:09:07: Absolutely, and I think you are focused on the most important thing.

00:09:11: But I view communications very broadly, and I'll describe it.

00:09:17: When I was a captain,

00:09:19: I left one military unit, and I joined the US Army Rangers.

00:09:23: The Rangers are an elite light infantry unit.

00:09:27: The difference between the Rangers, I expected

00:09:30: everybody would be taller and stronger and smarter

00:09:32: because they were an elite force than in other forces.

00:09:35: And that wasn't the case.

00:09:37: The quality of people was the same.

00:09:39: The difference was the culture of the organization.

00:09:42: There was an expectation on the part of every Ranger

00:09:47: that they would be better than they would otherwise be in another organization.

00:09:52: And there was an expectation on the part of the organization

00:09:55: that they would hold each other to account.

00:09:59: What happened is you communicate

00:10:01: through many, many subtle ways how you wear your uniforms,

00:10:06: between how you address people, between how you stand

00:10:10: when a junior person talks to a senior person,

00:10:13: the level of discipline, the level of respect, the level of commitment.

00:10:17: Those are all things that we wouldn't say are direct communication,

00:10:21: but they are indirect communication because if they see me wear my uniform

00:10:27: correctly and stand proudly and with discipline, I'm sending a message

00:10:31: to every Ranger that sees me, and actually everybody outside the Rangers,

00:10:36: what the standard is.

00:10:38: And so the most powerful communication, in my experience, is example.

00:10:44: Leaders have to lead.

00:10:46: Leaders have to embody

00:10:49: the standards and the values that we espouse

00:10:52: because if a leader says one thing

00:10:56: and then people know them to live another, we call it a say-do gap,

00:11:00: a gap between what you say and what you do.

00:11:04: As soon as you have that gap, you get cynicism

00:11:07: because people down in the organization —

00:11:11: so that's the first kind of communication.

00:11:13: Some organizations do it brilliantly,

00:11:16: and some do it very poorly, and they don't even understand that they do.

00:11:21: They don't understand that they are creating this level of dissatisfaction

00:11:26: among junior people because they think they're being part of a lie.

00:11:30: It's just not true. The next part of communication is that

00:11:31: It's just not true. The next part of communication is that

00:11:35: we used to say the rule of threes in the Army,

00:11:38: and that means until you tell the troops something three times, it doesn't count.

00:11:45: You have to tell the same troops three times.

00:11:47: I don't think it's true.

00:11:49: I think it's the rule of 300.

00:11:51: You have to say it 300 times.

00:11:55: When I

00:11:55: was commanding the Ranger Regiment after a number of years working my way up,

00:11:59: my sergeant major and I, the regimental sergeant

00:12:02: major and I were very close friends, and we developed what we call the Big Four.

00:12:06: Those were the four priorities of the organization

00:12:09: that we wanted people to focus on. When we went and talked to Rangers

00:12:14: around the regiment, almost all we ever talked about was the Big Four.

00:12:19: Now, there were many other things

00:12:22: that they had to think about and do, and we wanted leaders to do,

00:12:25: but we didn't want people to hear us talking about those other things.

00:12:29: We would talk to leaders and say address these problems.

00:12:33: When they saw us, we wanted them to immediately

00:12:35: go, "Oh-oh, we're going to hear the Big Four again."

00:12:38: Pretty soon they started saying it back to you,

00:12:42: and it became the core

00:12:45: of the regiment. They became

00:12:49: just almost like they were brought down on high on tablets

00:12:54: and put in front of people and say the Big Four have always been

00:12:57: and always will be.

00:12:59: That's exactly what we

00:13:01: wanted because we knew that would form

00:13:04: something that really guided where the direction went.

00:13:07: That kind of communication has got to be intentional.

00:13:10: It's got to be forceful and constant.

00:13:14: And then the other part of communication is it has to be two-way,

00:13:17: and it has to be perceived to be two-way.

00:13:21: One of the things I learned as a leader was: If you go down as a senior leader

00:13:26: and you ask a young soldier or young

00:13:29: employee, “How's it going?”

00:13:32: when they start to answer, you immediately turn your head

00:13:34: and start looking at something else.

00:13:36: They know that that was just a gesture.

00:13:38: You didn't really want the answer.

00:13:42: If you ask them their opinion, you have to look at them,

00:13:46: you have to write it down if they give you a substantive

00:13:48: recommendation, and you have to follow up on it.

00:13:51: If you think about it, most senior leaders can have somebody with them

00:13:55: that writes it down and helps you follow up because nothing's more powerful

00:13:58: than going back to a junior person and say "You asked this question

00:14:02: or made this recommendation, and we either can or can't do it

00:14:06: but we didn't ignore what you said."

00:14:09: I think that the communications part, that's what senior leaders do.

00:14:14: The reality is we think that senior leaders

00:14:18: set strategy and make decisions.

00:14:21: What I found is you've got good staffs

00:14:23: to develop the strategy for your approval,

00:14:26: and most decisions should be made far below you.

00:14:30: What senior leaders do is communicate,

00:14:34: and they ensure that communication is occurring.

00:14:38: I 100% agree.

00:14:40: Stan, would you be able to draw any parallel between

00:14:42: or maybe even actually differences

00:14:44: between your experience from the military to your business experience?

00:14:48: What I believe our audience might be asking is whether

00:14:52: in military, your audience listens because they have to perhaps.

00:14:57: In business, we're dealing with a lot of millennials,

00:15:01: and we're dealing

00:15:02: with a slightly different generation now perhaps that might not necessarily

00:15:05: feel like they have to listen. They want to be inspired.

00:15:08: They want to be driven.

00:15:09: Is there any difference between the two communications that you've experienced?

00:15:12: It's a great question, Dan.

00:15:15: There's much less difference than you would think.

00:15:17: People think that soldiers say yes, sir, no, sir,

00:15:21: yes, sergeant, no, sergeant, and have to do what you order them.

00:15:24: On a parade ground, that is true

00:15:26: because on a parade ground, they are scared of the sergeant.

00:15:30: On the battlefield, they're scared of the enemy.

00:15:35: You have to convince

00:15:36: soldiers to do what you want them to do, not order them.

00:15:40: In fact, in the years of combat that I had,

00:15:43: I don't remember ever giving anybody an order.

00:15:47: I remember asking them to do things. Now, they may say, "Well, okay,

00:15:51: if the general asked me to do something,

00:15:52: that is, in fact, an order."

00:15:54: You could say that but

00:15:56: you really want to get them

00:15:59: to accept that the order I'm giving them is rational, it's

00:16:02: the best thing I could come up with, that I've listened to other inputs.

00:16:08: And If they think it just doesn't make sense, they can come back and go,

00:16:11: "This doesn't make sense." You're really convincing them.

00:16:15: In the civilian world, you do sometimes, particularly with young people today,

00:16:20: because I'll be honest, they are more sensitive

00:16:24: than we were and so

00:16:28: you’ve got to couch things.

00:16:31: You've got to express things sometimes a little differently.

00:16:35: You've got to be a little less forceful.

00:16:40: What we do in my organization now is

00:16:43: I don't give many orders, but I'm very transparent.

00:16:48: I will show them the financial status of the company in detail.

00:16:52: And I'll say, "Okay, I think we need to do this.

00:16:56: The numbers tell me we need to do this.

00:17:00: If you think I'm wrong, somebody read the numbers differently."

00:17:05: That works pretty well.

00:17:07: And you do — as I say,

00:17:08: I think we're a little too sensitive right now, to be honest.

00:17:12: It might be.

00:17:15: But I think it's still very, very similar.

00:17:19: In fact, I'm going to touch on another book

00:17:24: that you wrote, Leaders: Myth and Reality.

00:17:27: In that book, you've challenged conventional thinking about leadership.

00:17:31: You've examined a number of historical personas.

00:17:35: What would be the three actionable steps that C-level

00:17:39: leaders can take today to improve their leadership

00:17:42: and risk management practices in these challenging times?

00:17:47: If I could actually get that right,

00:17:49: I'd be a zillionaire because I could sell that answer.

00:17:52: But I'll tell you what I think, Dan.

00:17:55: When I studied leadership to write that book,

00:17:59: because I didn't write it because I figured leadership out.

00:18:02: I wrote it because what I had been taught about leadership was not

00:18:06: what my experience told me actually worked.

00:18:11: And it was a little different.

00:18:12: What we are taught about leadership is the great woman or man theory.

00:18:16: That is if you find the right leader, you put him on a pedestal, you pay him

00:18:19: enough money.

00:18:20: Your corporation is going to be wildly successful

00:18:23: or you're going to win the war or your country is going to be effective politically.

00:18:27: And we hold on to that.

00:18:30: And so we're in this constant search for genius and perfection.

00:18:35: What I found is leaders do matter.

00:18:37: They are hugely important, but they matter differently

00:18:42: in almost every situation.

00:18:45: When you say, what are the attributes of a great leader?

00:18:49: I can list some things that I value

00:18:51: like integrity and courage and resolve.

00:18:55: But the reality is it's so contextual.

00:18:59: The right leader,

00:19:01: for the moment and for the people that they're working

00:19:04: with, the followers that they have, is so different. What we find,

00:19:09: if you study this in corporate leadership,

00:19:11: when they take a successful CEO out of one company,

00:19:15: and they go move them in another, their success rate is lower

00:19:19: than when you promote somebody from inside the company.

00:19:23: You say, "Now, wait a minute, I'm getting a person.

00:19:25: They're already a proven great leader." No, they're a proven great leader there.

00:19:30: And they’re also at a different phase of their life.

00:19:35: It's an intersection, leadership

00:19:38: is this intersection between leader follower in the context of the moment,

00:19:42: that's almost like a chemical reaction. Those things come together.

00:19:47: If you're lucky enough, and if people are focused,

00:19:50: and it gets right, you get this great outcome.

00:19:54: If you don't, if any one of those is enough

00:19:57: different, you don't, which is one of the reasons why

00:20:01: I have a problem with when nowadays, when we want to look at success

00:20:06: of a corporation, and we want to say it is that CEO, so therefore,

00:20:10: we should give them $500 million because it's all them,

00:20:14: they may have been a factor.

00:20:17: But the reality is

00:20:19: I'm not convinced in most cases, that it's not a much broader

00:20:23: set of contributing factors to include the team around them.

00:20:29: I think

00:20:29: companies and organizations should look first at their culture,

00:20:34: and all of those factors, and then they should try to find

00:20:38: and develop the right leaders to fit in for that particular

00:20:43: set of circumstances.

00:20:46: I love that.

00:20:47: I have to say this is what I found extremely valuable in the book,

00:20:51: where you describe certain historical personalities and leaders

00:20:57: from different perspectives, from the perspective they're known for,

00:21:01: where they've been successful, but also show the other sides

00:21:03: of the leaders that we might not be talking about, which are not have been

00:21:06: always as positive as you would like them to be.

00:21:10: It leads me to a thought,

00:21:12: whether you would agree that a lot of the leadership has to do with what the person

00:21:19: might stand for, what we believe they are, that inspires people to do something

00:21:24: like that. They might not be always 100% exact to that.

00:21:28: In fact, in the Sapiens book by Yuval Harari,

00:21:32: he talked about

00:21:34: humanity differentiating itself because of the stories that we can tell each other.

00:21:38: Sometimes we perhaps

00:21:39: imagine a little bit about certain people, and we follow that example.

00:21:43: That makes us perhaps better performers or better leaders as well.

00:21:47: Would you believe that maybe the

00:21:49: aura around the leader that might not always be

00:21:52: 100% accurate, perhaps also inspires others to lead

00:21:55: in a certain way, and maybe that alone is valuable?

00:21:59: I think it is.

00:22:02: I think of in the United States, George Washington is the penultimate leader

00:22:06: because we really can't find a lot of things bad about him.

00:22:11: There are things about him

00:22:13: that don't match with current standards.

00:22:16: But in most cases, if we go to Abraham Lincoln,

00:22:19: he was not always honest in his political dealings.

00:22:23: If we go to Franklin Roosevelt, same way, or we go to John F.

00:22:26: Kennedy, he was a philanderer.

00:22:29: Almost every leader that we want to raise up as a standard

00:22:33: has some aspect of their character

00:22:36: that can be found wanting.

00:22:40: I think it was Frederick Douglass who said,

00:22:43: and he was talking about the Scottish poet, Robert Browning, he goes,

00:22:46: we have got to be able to separate the good in a person from the bad,

00:22:51: and accept the good.

00:22:53: If we just discard that person, we'll throw out so much good.

00:22:56: I think that what we have to do is, and there are societies struggling

00:22:59: with this right now.

00:23:02: We are struggling with this idea

00:23:04: that there's a duality in everyone

00:23:09: and the negative part of us

00:23:13: does matter, but shouldn't always define.

00:23:16: We should be able to focus on those good things. Now, to go back to

00:23:20: the beginning, here's a problem, because when I look at a leader,

00:23:25: and even if they are very successful financially, or politically,

00:23:30: or militarily, if they are too flawed in their character,

00:23:34: if they do things that cross a line with me, I have a difficult time with that.

00:23:40: I can't respect them, I can't follow them.

00:23:47: I'm making a personal judgment that — I think that's important, to be honest.

00:23:52: I think character is just dramatically important.

00:23:56: But we can't expect everybody to be perfect all the time,

00:24:00: or have been perfect all the time.

00:24:02: Yes. I think you even described

00:24:05: that situation with your relationship towards General Lee.

00:24:09: I think you mentioned you had a picture in your study,

00:24:12: and at some point, you learned more about his historic role and decided

00:24:17: that it's not the kind of a leader you would like to aspire to be as well.

00:24:21: Is that correct?

00:24:23: Robert E. Lee,

00:24:23: I live right now about 75 feet from his childhood home.

00:24:28: I went to Washington Lee High School.

00:24:31: I went to the same college he did, West Point.

00:24:34: I took the same oath he did, was slightly modified later.

00:24:38: I lived in Lee Barracks at West Point.

00:24:42: For the US military, Robert E. Lee

00:24:44: was considered the penultimate

00:24:48: idealistic ideal leader.

00:24:50: He was courageous, he was effective, he was personally disciplined

00:24:54: and all these things.

00:24:56: We just ignored the fact

00:24:58: that he also ran an insurrection against the United States.

00:25:02: And in fact, as a general,

00:25:04: he killed more American soldiers than any other general in history.

00:25:09: Any foreign general never killed as many

00:25:12: United States soldiers as Robert E. Lee did.

00:25:14: That's a huge tension.

00:25:21: It took me until about 2017, before

00:25:25: I took down a painting that my wife had given me of Robert E. Lee.

00:25:30: I don't think he's evil now.

00:25:33: I don't.

00:25:34: I think he was just wrong.

00:25:36: He hit a point in his life where he got to make

00:25:40: an incredibly important decision, and he got it wrong.

00:25:45: I think there are a lot of people in life who've gone back,

00:25:48: we look at other movements in other countries where either a dictator

00:25:51: or somebody and people decide to follow that person or become a part of that.

00:25:55: And in the sweep of history, it looks wrong,

00:26:00: but in the moment, it's probably more understandable

00:26:04: than it might be when we look from a distance.

00:26:08: That's right.

00:26:09: In fact, we could talk about leaders for a very long time.

00:26:13: I'm going to shift a little bit from leaders to leadership.

00:26:17: In your book, Team of Teams, you emphasize the importance

00:26:20: of agile, decentralized decision making, which I think,

00:26:23: as you mentioned earlier, is not as easy to be done.

00:26:27: Easily said, perhaps difficult to do.

00:26:30: How can leaders in corporate settings implement this approach effectively?

00:26:35: Would you have an example where you have seen it done well?

00:26:38: Yes, I would say first, when we talk about

00:26:41: agile, decentralized leadership, the two are pretty close

00:26:44: because you need to decentralize to get fast enough.

00:26:49: The problem is, if you decentralize leadership across

00:26:51: your organization, usually it's not coordinated enough

00:26:56: so you're not all contributing to the same outcome,

00:27:00: and it is often not informed by the real situation.

00:27:04: In the military, we call it a common operating picture.

00:27:08: In the book, Team of Teams, we refer to it as shared consciousness.

00:27:12: You go back to the blind men and the elephant, the story of the five

00:27:15: blind men, and one sees the tail, one sees the trunk.

00:27:19: They aren't incorrect in their description.

00:27:22: They are describing what they have touched.

00:27:26: But none of them are correct about the elephant.

00:27:29: Yet the problem is almost always the elephant.

00:27:34: The challenge of this is not telling people at the lowest level

00:27:38: to make decisions because you can do that and then go off to the golf course.

00:27:43: The problem is they will all act on their narrow

00:27:46: perspective with their narrow capabilities. The art is having

00:27:50: everybody have this shared consciousness, this common understanding

00:27:55: and operating towards a common goal

00:27:58: with a unified strategy.

00:28:01: Here's this tension point.

00:28:03: Traditionally, armies, which wanted to have mass,

00:28:06: they wanted to get their bulk of their forces

00:28:09: to attack the enemy at a point of weakness altogether at the same moment,

00:28:13: had to get people lined up shoulder to shoulder,

00:28:15: had to have huge discipline because otherwise you couldn't

00:28:19: get everybody at the right spot at the right time.

00:28:25: Of course, you give up tremendous amount of agility,

00:28:27: you give up tremendous amount of initiative to achieve that.

00:28:30: For years, that was the tradeoff.

00:28:33: In fact, to a great degree, it still is the tradeoff.

00:28:38: What we are trying to do now is to leverage technology,

00:28:42: to leverage training of junior leaders,

00:28:46: so that you can connect people using this miracle of modern information technology

00:28:51: to give them this constant awareness, have ability to constantly shape

00:28:57: what they are doing and adjust it to what's happening maybe hundreds of miles

00:29:01: from where they are, and to make the relevantly correct decision.

00:29:07: During the

00:29:08: Apollo program, where the United States put the man on the moon in 1969,

00:29:14: the guy they put in charge

00:29:16: was a systems engineer.

00:29:19: And what he did was he created — there were 80 universities.

00:29:22: There were hundreds of thousands of people involved, all spread out geographically.

00:29:27: He connected with a big radio link because every time you changed

00:29:31: one part of this program, it affected every other part of the program.

00:29:37: And there was no Internet.

00:29:38: So they communicated constantly, so that if I added a pound of weight here,

00:29:42: somebody else knew that's an issue. I got to do that.

00:29:44: It's that discipline.

00:29:47: This gets back to

00:29:49: decentralized agility requires extraordinary discipline.

00:29:54: People say, "Now, wait a minute, those two are in opposition." They are not.

00:29:58: You are disciplined to stay focused on the strategy, disciplined to follow

00:30:03: the need to communicate to

00:30:05: where they are.

00:30:07: And this is where I think people sometimes get confused.

00:30:11: There was an idea that came out a decade ago, holacracy.

00:30:14: It basically says that everybody in the organization do what they think is best.

00:30:20: To my mind, that's just chaos.

00:30:23: I agree.

00:30:24: How do you find the right balance between the two?

00:30:27: You certainly want to give your people space

00:30:30: where they can be creative and innovative and

00:30:34: add to this agility.

00:30:35: At the same time, you don't want to create this chaos where

00:30:37: everyone now decides that actually my day job is no longer what I want to do here.

00:30:42: I want to go and do something entirely different.

00:30:44: How do we find the balance so we can still inspire people to be

00:30:48: fully vested into it, have their heart in it, in the same time

00:30:52: they contribute to the common goal?

00:30:55: It is a constant

00:30:58: effort because the

00:30:59: conditions change every single day.

00:31:03: It's like a sailing ship.

00:31:05: You can't leave the sails and

00:31:08: the rudder the same way.

00:31:10: It's got to be constantly adjusted to sea state

00:31:12: and all the different things with the wind and whatnot.

00:31:15: You are sailing an organization now and it takes constant attention

00:31:20: and everybody's got to be adjusting things as they go.

00:31:24: HMS Victory, Admiral Nelson's flagship,

00:31:27: had 850 soldiers or sailors.

00:31:30: They had to constantly be doing their job.

00:31:33: All coordinated, but doing their job

00:31:36: individually to get that thing right.

00:31:39: If you think of your organization that way,

00:31:42: you can't have an annual planning process in January, put out a plan,

00:31:46: and then expect everybody to follow that because the conditions change.

00:31:51: I think in the modern environment, you need to have a much

00:31:54: more organic system, much more frequent adjustments

00:31:58: to what you're doing, constant communication.

00:32:03: I also like to term it in terms of variables and constants.

00:32:07: Certain things need to be constant.

00:32:10: The training of your people needs to be. You have to have a level of competence.

00:32:14: You have to have a level of values

00:32:16: and culture that you have to be able to count on.

00:32:20: What people are committed to, what they won't do

00:32:23: in terms of legal or moral and whatnot.

00:32:26: You have a number of constants that are a foundation.

00:32:29: Then the things above that are variables

00:32:32: that must constantly be adjusted.

00:32:35: But if you can't count on that bedrock foundation,

00:32:38: then you've got a real problem.

00:32:41: I remember in your book, Team of Teams, you were mentioning

00:32:44: Admiral Nelson and after his death,

00:32:48: The Battle of Trafalgar.

00:32:50: You mentioned that the entire

00:32:53: British fleet was consisting of captains

00:32:55: who were the Admiral Nelson in the way they approached the battle.

00:32:59: How do we achieve this in the modern management?

00:33:01: How do we get to a point where, as you're describing it, the approach,

00:33:07: the methodology is so clear

00:33:09: that, not just the top leader, but every leader

00:33:13: across the organization is so clear on the way to go?

00:33:16: Would you have any good recommendations for leaders out there?

00:33:21: Yeah. A few facts first.

00:33:26: The French and Spanish fleet

00:33:28: that Admiral Nelson defeated at The Battle of Trafalgar,

00:33:31: the captains of those ships were competent,

00:33:34: but they were typically upper class or lower nobility leaders.

00:33:39: British captains had grown up at sea.

00:33:42: Many of them had gone to sea at age 12 and had worked their way

00:33:46: up as midshipmen through.

00:33:47: They were masters of their craft in terms of technically and tactically competent.

00:33:53: They were also middle class people.

00:33:56: And that's important

00:33:58: because the way it worked was if you captured an enemy ship,

00:34:02: the crew of the ship that captured it got the prize money

00:34:06: with the largest part going to the captain and then down.

00:34:10: That was the captain's retirement account.

00:34:14: They were incentivized to capture ships.

00:34:17: They were trained through this.

00:34:18: They'd grown up in it.

00:34:19: Now, after The Battle of Trafalgar,

00:34:24: the number of seamen in

00:34:27: Admiral Nelson's fleet that were whipped, flogged

00:34:30: for petty offenses stayed high.

00:34:34: You say, "Now, wait a minute,

00:34:35: they just had this great victory, a very loyal thing." The point

00:34:39: I make is the level of discipline that was accepted by the crews,

00:34:43: they just accepted this way of life, was a constant.

00:34:47: There was an absolute understanding that this is the way

00:34:51: this ship's going to operate and you will not violate that.

00:34:54: At the captain level, he viewed them as the entrepreneurs of battle.

00:34:58: What he sought to do was create a situation where those entrepreneurs,

00:35:03: with the understanding that they had competent crews that they could count on,

00:35:08: they could then go outside the norm and they could exercise initiative.

00:35:14: And it gave

00:35:17: an ability for the British Navy to thrive in the

00:35:23: wild melee that The Battle of Trafalgar

00:35:25: and some of the others turned into.

00:35:28: That's amazing.

00:35:30: We talk a lot about accountability and responsibility down

00:35:33: to throughout the entire organization.

00:35:37: Would you have any recommendations how to think about those?

00:35:40: You did mention discipline.

00:35:43: That a lot comes to it as well.

00:35:46: Would you have any experience from your military career where you had to

00:35:50: maybe impact or influence the way that accountability

00:35:53: and responsibility all the way down to individual truth has been perceived?

00:35:57: It's something that we talk about and we confuse ourselves about a lot.

00:36:02: What I mean is we typically say accountability

00:36:05: and we want to hold people accountable for the outcome.

00:36:09: If they don't make enough money or they don't have success in this

00:36:12: particular project, they are accountable and therefore that's going to affect them.

00:36:17: We need to be careful with that

00:36:19: because the reason we have to be careful

00:36:22: is no one will ever take risks

00:36:25: if they are accountable entirely for outcomes

00:36:29: because they will be incentivized to do

00:36:32: what's safe and get a limited outcome

00:36:36: because the chances of a failure, the cost is pretty high.

00:36:41: You've got to explain to people, "Okay, what are you looking for?"

00:36:45: If you are looking for people

00:36:48: to put the right kind of effort, accept an appropriate amount of risk

00:36:53: with the right due diligence and go at it, meaning that if they fail,

00:36:57: but they have done things that were responsible and effective,

00:37:02: you're going to underwrite that, then you'll get people

00:37:05: to make those kinds of decisions and take those risks.

00:37:08: If you don't, then they will typically be very, very conservative.

00:37:12: They'll wait for you to tell them exactly what they do and whatnot.

00:37:16: I deal with a tremendous number of business

00:37:18: leaders who complain that they want their subordinates

00:37:22: to take more responsibility and make more decisions.

00:37:27: But if you look back at the organization, how is failure greeted?

00:37:32: Meaning when a person does that and fails, what happens?

00:37:37: They may not be fired, but if they aren't promoted

00:37:40: or if they're shunned or criticized,

00:37:43: nobody else is going to want to take that chance.

00:37:46: And so we build a culture of risk aversion.

00:37:50: We don't do it intentionally.

00:37:54: We do it.

00:37:55: And the bigger the organization, the more this tends to come,

00:37:59: because in a small startup, everybody's freewheeling.

00:38:03: You don't have as much to lose because, you got to do big bets to survive

00:38:08: and everyone knows that.

00:38:09: When you get a big organization, it's different

00:38:12: and you start to be very careful and

00:38:15: process starts to come in.

00:38:18: We call it analysis paralysis,

00:38:21: it comes around and people are very safe because they follow the formula,

00:38:26: the process.

00:38:28: If it fails, they go, "Look, I followed the process.

00:38:32: Don't hold me accountable."

00:38:34: We've got to be more flexible than that to do that.

00:38:39: Stan, how can I go around this?

00:38:41: There are a few concepts that come to mind.

00:38:44: I believe it's Amy Edmondson's, The Fearless Organization,

00:38:47: which all of us want to build an organization where everyone feels

00:38:51: empowered to make a decision, perhaps make a mistake, be innovative.

00:38:55: If they fail, they move on.

00:38:57: But then also, we don't want to be in a place where people start taking risks,

00:39:00: which are inappropriate or not sizable towards the size of their role,

00:39:05: and then they impact many other teams around them.

00:39:08: Have you been able to work out in your leadership and organizations,

00:39:13: how do we fine-tune the amount of risk we are willing to take all the way down

00:39:17: to individual and any framework principles that you would teach them to do?

00:39:23: We do, but I will start at the beginning to go back.

00:39:25: This is very organic.

00:39:28: You can't do this and then

00:39:30: set it out and lock it in concrete and expect it to do.

00:39:32: It's constantly adjusted, but here's what we've learned to do,

00:39:36: one is to look at what decisions people are responsible for.

00:39:41: We typically start at the CEO level and they say, "What decisions

00:39:45: do you make?" The CEO will typically say, "I approved the budget.

00:39:49: I developed the strategy.

00:39:50: I make key hires." Then they'll often add, "And I do anything else

00:39:55: that's very important."

00:39:57: And when they do that, I erase that from the board.

00:40:00: I say, "No."

00:40:02: There are certain things that only you can and should do,

00:40:05: and they should be literally about three.

00:40:09: Then there's a responsibility

00:40:11: you have for — those are decisions you make that

00:40:14: you withhold for yourself.

00:40:17: Every other decision in the organization is made below you.

00:40:21: Then we go to the next level and we do the same thing.

00:40:23: Then the next level.

00:40:25: The idea is that any decision that's not lifted up there

00:40:29: high is automatically

00:40:32: allowed to be made at a lower level.

00:40:35: And people sometimes look at that and they look

00:40:37: and they go, "Wow, nobody made that.

00:40:40: I can actually make that."

00:40:41: You go, "And we expect you to." That's the mechanical part of that.

00:40:46: Then the next part is the discussion

00:40:48: of risk in the situation because

00:40:52: in the military, you learned that people couldn't

00:40:55: and wouldn't take battlefield risks if they didn't understand

00:40:57: what was happening wider in the battle because it may not make sense.

00:41:03: And so giving them that common operating picture.

00:41:06: That's why I think in organizations now, the key is

00:41:09: don't let people get tunnel vision in their part of it.

00:41:13: There's the famous story of the insurance company, and I think it's true.

00:41:18: They sold a number of policies, thousands of policies,

00:41:22: and they lost money on every policy.

00:41:25: And so the CEO went to the guy

00:41:28: in charge of selling them and goes, "Whoa,

00:41:31: did you know this?" And the guy goes, "Yeah." And he goes, "Why'd you do it?"

00:41:36: He goes, "You pay me to sell policies."

00:41:41: Okay? And so this is where it's a constant communication

00:41:48: between different levels and not just at the very top

00:41:51: of the organization, it's got to be across and diagonally.

00:41:56: That information that creates a shared consciousness has got to breathe through

00:42:00: it because otherwise all of your decisions are made in a vacuum.

00:42:05: You just don't know enough.

00:42:09: The problem nowadays is

00:42:11: you can have so many meetings to try to align stuff, to kill yourself.

00:42:15: You've got to develop newer ways to collaborate quickly

00:42:19: on very specific things and keep moving.

00:42:22: That's amazing.

00:42:23: I think we go back to our communications piece

00:42:25: we were talking about earlier about clarity, explaining the wide,

00:42:29: the bigger picture so that people can tie their individual roles into that.

00:42:33: Is that correct?

00:42:35: Yes, exactly right.

00:42:38: The other thing I'd come back to is there's a leadership part of this

00:42:43: that in really good

00:42:44: organizations is different from what you can write on a piece of paper.

00:42:49: There's a connection between senior leaders and junior people

00:42:53: that involves loyalty, involves respect.

00:43:00: A lot of times in the military, a senior leader

00:43:03: would tell me to do something.

00:43:05: I would want to accomplish it because they asked me to do it.

00:43:10: It wasn't because I want

00:43:11: to get promoted or something, but because I felt tremendous loyalty to them.

00:43:16: I didn't want to let them down.

00:43:19: And that's really true at all levels in an organization.

00:43:23: That's a responsibility of leaders to create that dynamic.

00:43:27: It means you have to be loyal down to them.

00:43:29: I am going to take care of you, but when I need you to do something,

00:43:33: I'm going to ask you not to ask a lot of questions,

00:43:36: I'm going to ask you to do it.

00:43:38: And that’s an almost magical connection that you can create.

00:43:44: It's not limited to the military.

00:43:46: It could be created anywhere, bonds between people and up and down,

00:43:50: but it takes effort and it takes values.

00:43:53: I would not do that for a senior leader I didn't respect.

00:43:57: Yes, a hundred percent.

00:44:00: In fact, when I asked you about recommendations

00:44:03: you would give to modern leaders, you did mention technology as well.

00:44:06: I'm going to ask you about technology now.

00:44:09: You have released an article on artificial intelligence.

00:44:12: You emphasize the importance of early adoption, despite the risk

00:44:16: of embracing new technologies, particularly

00:44:20: related to artificial intelligence.

00:44:21: Can you elaborate on how business leaders can balance the need for innovation

00:44:26: with the potential pitfalls of early AI implementation?

00:44:30: Yes. It's a great one that everybody's wrestling with

00:44:34: and we've seen it in some other things because there's often a slow payoff

00:44:39: on when we first brought computers in

00:44:42: or the military struggle with tanks or things like that.

00:44:46: You don't get an immediate payoff often from technology,

00:44:50: but you get a payoff that you don't know you got.

00:44:55: That is when

00:44:57: personal computers first became available, the US Army

00:45:00: didn't have any and wasn't going to buy any.

00:45:02: They're too cheap. I went and bought my own and put it in my armored vehicle.

00:45:07: I was a company commander and it cost me a ton of money.

00:45:09: It cost me like $5,000 for this

00:45:12: RadioShack computer didn't even have a hard drive,

00:45:17: but it worked and it did

00:45:19: basic things for us.

00:45:22: The real payoff was I learned about technology.

00:45:26: I learned what the options were.

00:45:28: Instead of having to suddenly make a quantum leap

00:45:31: where I'm not using technology at all, and then jumping up to something big,

00:45:37: my personal growth was more like this,

00:45:39: and I think organizations need to do the same. I think with AI now,

00:45:43: what organizations need to do is spend a little bit of money, put some talent

00:45:47: and bring AI in and experiment it.

00:45:51: We use it for very narrow things that aren't highly risky for

00:45:57: dealing with customers or something,

00:46:00: but start to build the muscle.

00:46:03: And if you don't start to build the muscle, then you won't be able to move forward.

00:46:07: Also, our younger employees, they're using it in their personal lives.

00:46:13: If you aren't giving them

00:46:15: the opportunity to work with things there,

00:46:18: then they are going to get frustrated

00:46:21: like I did and I went and bought my own computer.

00:46:23: They can't go buy their own AI, but,

00:46:26: I think you need to give them the ability

00:46:29: and it's amazing what they'll come up with.

00:46:34: It costs some resources to do this,

00:46:37: but allowing the organization to breathe

00:46:40: and exercise that I think is essential.

00:46:43: I think it's an excellent point of view.

00:46:46: You did mention

00:46:48: the hype around artificial intelligence right now, and number of

00:46:52: perhaps businesses being built on the basis of

00:46:54: we also do AI,

00:46:58: and it's important to think about how the AI is going to be used

00:47:01: and the use cases around it, how applicable it is to day to day life,

00:47:04: which we have not yet entirely figured out.

00:47:07: I know from my own personal experience, when I go away

00:47:10: and I've got my cameras inside of the house

00:47:12: and it tells me that there is a person in the house

00:47:14: and it shows me, I don't know, my barbecue outside,

00:47:18: where it was a little bit of wind and it moved or a bulb.

00:47:22: I know we still have some way to go to actually identify objects and logic,

00:47:26: but I think it's the applicability to day to day.

00:47:28: As you say, exactly to deploy AI to specific process where we can get

00:47:32: value and slowly build up the muscle makes total sense.

00:47:36: I think just like I'm having the same experience as you are,

00:47:40: if we extrapolate some of that forward, pretty soon

00:47:44: AI is going to recommend which employee candidate we should hire.

00:47:49: The problem is

00:47:50: we won't be able to understand exactly how AI did it.

00:47:53: They will have used so many data sources, so many out,

00:47:57: and we're going to have to make really impactful decisions,

00:48:02: looking at a box or a feed and going, "Wow, do I trust that?

00:48:06: Is that right?" Already military systems are firing

00:48:11: weapons based upon AI because the speed they have to.

00:48:16: Pretty soon you're going to have a case where very big

00:48:19: political or economic decisions are about to be made.

00:48:23: The one I would use is suppose the leader of country A

00:48:28: has AI tell them that country B is about to invade you.

00:48:33: Are you going to preempt

00:48:36: based upon AI or are you going to wait?

00:48:39: Of course, if you wait, there's a huge cost to that.

00:48:43: I think leaders, particularly, are going to find themselves

00:48:47: challenged to develop how they think about it and how they respond.

00:48:52: In fact,

00:48:53: I believe in your book, Risk, you were describing a situation during

00:48:57: the Cold War, where satellite imagery was alluding to rockets

00:49:02: being fired from the United States and fortunately someone had

00:49:07: the presence there to decide

00:49:09: not to respond because it was a wrong imagery that

00:49:13: probably nowadays if AI was involved might have ended up entirely differently.

00:49:19: That's a great story.

00:49:20: A Russian lieutenant colonel made the personal decision not to respond.

00:49:24: Now, if we go back to December 7th, 1941

00:49:28: radar operators, and radar was brand

00:49:30: new saw an approach of aircraft coming to Pearl Harbor

00:49:35: on the morning of December 7th, they saw the Japanese attack coming

00:49:39: but they didn't have enough faith that what they were seeing

00:49:43: and they thought it was American planes being ferried

00:49:46: and so they didn't yet have enough faith

00:49:49: to take action with huge consequences.

00:49:55: There's always a story where it worked out great and where it didn't.

00:49:58: And so it didn't.

00:50:00: How do you make the decision?

00:50:01: Exactly.

00:50:03: I hear you. I'll ask one last question.

00:50:06: For those of us who love reading your books, I know one of those people.

00:50:11: I heard that there's another one potentially coming up.

00:50:14: I don't know if you can share with us anything about it and perhaps,

00:50:17: if you can, also what inspired you to write that book?

00:50:22: Dan, thanks so much.

00:50:24: One of the themes of my books is I don't write what I'm an expert in.

00:50:27: I write what I realize I don't know enough about.

00:50:30: Leadership: Myth and Reality was that.

00:50:32: I didn't write Risk because I'm a risk expert.

00:50:34: I wrote it because every organization, me

00:50:37: included, have never gotten risk right.

00:50:41: So my question was: Why do we always screw it up?

00:50:43: We've got all this study.

00:50:46: The next book is called On Character.

00:50:49: Particularly in the United States, we've had a real

00:50:54: tough time

00:50:55: deciding what character we want in ourselves, what character

00:51:00: we want in our leaders, and what we want our national character to be.

00:51:05: We throw the word around and we say that person has good

00:51:07: character, bad character, no character.

00:51:11: But we haven't agreed upon what character actually is

00:51:15: and what would right look like.

00:51:18: And so I wrote a very personal book.

00:51:20: It's a series of reflections on a whole range of subjects

00:51:25: that examine the question: What do I believe in

00:51:30: and why do I believe that? And I offer that to readers.

00:51:35: And I don't say that I want you to agree with me.

00:51:37: What I'm saying is this is the span of issues

00:51:41: that I have pondered now that I've gotten to this point in life.

00:51:45: And I would suggest that all of us ought to have a view on each of these.

00:51:50: We ought to think,

00:51:51: "What do we actually think about that?"

00:51:54: I don't think I could have written this book even 10 years ago.

00:51:58: I've turned 70 this summer.

00:52:01: I've got a lot of light behind me, not so much in front of me.

00:52:05: And I think that I've come around

00:52:08: to believe that the single most important thing

00:52:11: in individuals and in organizations is character.

00:52:17: That's what I'm thinking writing about.

00:52:20: Stan, thank you so much.

00:52:21: I look forward to the book.

00:52:22: Would we have any date for when you think it's going to come?

00:52:25: It's going to be released May 13th.

00:52:27: May 13th, next year.

00:52:28: I look forward to this. Thank you so much for your time.

00:52:31: Thank you so much for this amazing interview.

00:52:33: A lot of learnings in here for me and for our audience

00:52:36: and we look forward to the next books.

00:52:39: And perhaps, we'll come across you very soon again.

00:52:43: I look forward to it, Dan

00:52:44: and thank you so much.

00:52:46: Thank you.