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Why you should provoke the future

Steve Goldbach, BCom’96, bestselling author of Provoke, on why caution is no longer the best strategy for business leaders. In other words: Do something!
Steve Goldbach
Why you should provoke the future

Steve Goldbach, BCom’96, has co-written two stellar business books that urge leaders out of complacency. In Detonate (2018), the principal and chief strategy officer at Deloitte in New York City showed how many corporate best practices no longer make sense and why they should be (as the book’s title suggests) blown up. His latest book has an equally powerful name—Provoke—and tackles the wait-and-see approach so common in organizations today. Goldbach and co-author Geoff Tuff argue that, rather than play it safe, companies should go on the offence by “provoking” actions in their marketplaces. Far from being risky, such provocations reduce uncertainty, provide real-world feedback and open up new possibilities for growth. “Action, in an uncertain world, is increasingly the best way to learn,” they write. “If you don’t act with purpose, your once-thriving business could suddenly become a ‘wind down’ firm, operating on borrowed time.” Here, in this exclusive article for Smith Magazine, Goldbach explains why now’s the time to provoke the future.

I learned the power of provocation at the most improbable of places—a charity poker tournament for my then two-year-old daughter’s pre-school. I’m no Annie Duke (whose business book Thinking in Bets is a great read), but I fancy myself as semi-knowing what I’m doing. Through a bit of luck and the benefit of this being a charity tournament with mostly inexperienced players, I ended up as one of the final two players left out of 50. And apparently my opponent was really good. He was the defending champion and was now in a position to nearly repeat. The final table went quickly, so I didn’t get a good read on how he played before we were the final pair.

Because I didn’t know his tendencies, I had to learn quick. I decided to raise every time I had the “dealer” position—irrespective of my cards. I also played aggressively after the flop (the three community cards that are dealt after the first round of betting) by following up my bets. It turned out my opponent played pretty conservatively, folding to my bets most of the time. I quickly ascertained that he was unlikely to bluff at me, so when he did bet, I assumed that he had a strong hand, and when he chose not to, he didn’t. I used this information to quickly devise a strategy to whittle his “stack” (his remaining chips) down to a low enough level where he had very little flexibility. Ultimately, I won the grand prize of a gift card to a local restaurant (but the real winners were the kids, of course☺).

I could have employed a more typical poker strategy, mixing up my play. But that would have taken me longer to gain an assessment of my opponent. Of course, had he played more aggressively, I would have been forced to alter my strategy, but I would have still benefited from that information, so long as I didn’t meaningfully weaken my position in the process.

What I learned that night was that you can gather important information—and do so quickly—by provoking a response. This is a very different way of learning than what is typically done by most executive teams. It is this idea that I (and my co-author, Geoff Tuff) wrote about in our new book, Provoke: How Leaders Shape the Future by Overcoming Fatal Human Flaws [Wiley]. As Geoff and I challenged each other in writing the book, we ultimately came to the point of view that provoking the future is a far superior way for teams to learn in a fast-moving, uncertain world compared to how organizations traditionally learn. Companies that fail to employ this approach, at scale, risk becoming quickly marginalized.

We have three core reasons for this logic (and welcome debate on our thinking):

  1. It’s forward-looking;
  2. It is a great way to align an executive team;
  3. It gives a voice to the tails of your organization.

Provoking is Forward-looking

Normally when an executive tasks a team to “study” an issue, they implicitly look to the past. Why are they looking to the past? Because the core method of “studying” is to gather a lot of data about the market, customer behaviour, etc. And data, by definition, is about the past, not the future. We can only hypothesize about the future. (As a side note: We should absolutely do that. I won’t go into it here, but a major tenet of having a Provoke mindset is to think about ways the future could be different using a technique called “scenario thinking”.) This gap between gathering data on the past and hypothesizing about the future tends to create a trap for executive teams. They want “proof” that a hypothesis will work, but they tend to only accept data as proof. Since data is from the past, it’s almost impossible to prove definitively that an idea about the future will work. Leaders, please don’t ask your teams to perform this impossible task. Instead, provoke your marketplace (or as my father used to say, don’t tell me, show me).

Rather than using retrospective data analysis, pick a behaviour you want to try and change in the marketplace (e.g., will customers sign up for this offer?) and design a real-world test that will give you insight into whether you can change the trajectory of the future. We called this a minimally viable move in our previous book, Detonate, expanding on the minimally viable product (MVP)concept from the world of design. This is commonly practised in the world of software with beta versions of software, or A|B tests. But there’s absolutely no reason that every business can’t use these techniques. Even asset-intense businesses can use simulation and other forms of prototyping to get the benefits of this thinking. For example, to test the viability of a physical store with no employees, Amazon didn’t conduct a BASES test or conduct a survey. It just opened a handful of stores to see if the non-employee stores worked in the real world. This kind of test gives you much more insight into how people will behave, if given a chance to change their behaviour.

Provoking creates better alignment

Imagine a management team that is debating a product launch of a cloth diapering service that would compete with disposables potentially on the basis of price or being more environmentally friendly. Because the team can’t agree on their potential target, they also haven’t agreed on a few key aspects of the service experience or target price. In their last meeting, they discussed and debated the same issues again—agreeing to try and go get some more data about the number of families in their target cities who fell into the “price-conscious” and “ESG-conscious” segments. All the while, their board has been pressuring them to stop burning expense dollars and get revenue in the door.

Getting more data seems like what most management teams would do. There’s an orthodoxy that if we just have better information, we’ll make better decisions. Unfortunately, there is no singular data point that will yield sufficient data to give us perfect confidence, and when we get in the habit of asking for some information, it tends to breed a desire for more. Maybe the ESG segment is smaller but they are willing to pay more? Maybe the price-conscious segment is large but harder to get to trial? We can be lulled into thinking that we would make the perfect decision if we just had a bit more information. But most likely, it will never be enough, so we are left in a vicious cycle looking for more and more information.

Provoking is a better learning method here. Don’t pretend that the next piece of data will solve the debate; instead, design a test that is more comprehensive and based on the real world. In this case, why don’t we just try and launch two competing versions of the cloth diapering service on a small beta basis in two different but representative cities? In one, we launch the version targeted at the price-conscious customer and the ESG in another. Or we could launch both offers in a single city and see which does better. We could even ask some questions of people who buy the service as to what drove them to purchase it. This would give us actual data on the totality of customer behaviour—and importantly, it would get us into the market faster. The benefit here is that when the management team can’t agree, they can just agree to do something in the real world that will lead to a solution. In this way, a real-world test is superior in that it has the potential to settle the debate and get the team to action faster. So replace your esoteric debates with real-world tests to create alignment.

Provoking gives a voice to the tails of the organization

When Geoff and I wrote Detonate, which was focused on blowing up proverbial best practices to start from first principles because following best practices is a route to mediocrity, one of the frequent questions we’d get was: “How can you drive change from the middle of the organization?” To be candid, our strong belief is that it’s pretty near impossible to drive broad change from the middle. If the C-Suite isn’t supportive, the change effort will eventually die. But here’s the but . . . the middle can stimulate change by running tests. In this way, all you provocateurs out there who feel as if you’re stuck with nobody to support you, the best way to get attention to “radical” ideas that challenge conventional wisdom is to figure out a way to run a small-scale test and then share the data with leadership. So instead of consistently feeling frustrated at “leadership’s reticence to change,” bring them a small and simple test that doesn’t cost much but might yield some interesting insight.

Hybrid work is a great example that shows that failure to run the test is a key barrier to getting something better. There were plenty of people who voiced their preference to work from home at least some of the time prior to the pandemic. All the technology to do so—Zoom and others—existed; they weren’t invented for the pandemic. The fact that we didn’t have hybrid work at any scale was a failure of creativity to run a test to see if it could be made to work. People insisted it couldn’t work—until they were forced to do it. Now it seems that the vast majority of office workers prefer to work from home at least some of the time. So, next time you’ve got a wacky idea, even if you’re not confident it will work, it’s always a good idea to run a small-scale test.

Taking a provoke the future approach and replacing data analysis with forward-looking tests is a lot easier if you make one simple change in your mindset. Whenever someone on your team suggests that doing something different is “risky”, you could suggest that it might indeed be true that there is some element of uncertainty to trying something new. But when it comes to what’s really risky in a business climate that people perceive is moving at a breakneck pace, doing the same thing that we’ve always done is what’s really risky, and trying something new is the prudent, safe thing to do.

“Stay curious”

A Q&A with author Steve Goldbach

Growing up in the Toronto suburb of Thornhill, Steve Goldbach, BCom’96, got a lot of “parental nudging” towards an engineering education. But eventually, he successfully navigated those concerns because he was drawn to Commerce and Smith. “There was something about the high standards and the energy of the school that really attracted me,” he says. Goldbach loved his time at Queen’s (he met his wife there, Michelle Dunstan, BCom’96, now chief responsibility officer at AllianceBernstein). As graduation neared, he considered careers in both consulting and investment banking. But an information session with Monitor convinced him to choose consulting. “I remember hearing about Queen’s grads that they had hired who had gone on to great things. It was this club of high achievers.”

Fast-forward 26 years and Goldbach is chief strategy officer at Deloitte (which bought Monitor in 2013) in New York City. His consulting career has given him a unique window into corporate strategy and business leadership. A few years ago, he and Geoff Tuff, principal at Deloitte, turned their observations and ideas into a book, called Detonate. They’ve followed it up with Provoke, a Wall Street Journal bestseller. Here, Goldbach explains some of the lessons to be found in both books.

Your first book, Detonate, has a pretty explosive title. What’s the premise?

Detonate is about the need for businesses to rethink longstanding orthodoxies, so-called best practices, and get out of the bad, ingrained habits that cause us to miss opportunities. Everybody loves to follow best practices. But if you do the math on best practices, they actually can’t be “best” in the long run—they’re average because everyone follows them. Only the first few get the benefit of actually being “best”. Instead, we suggest that companies need to go back to first-principles thinking to design how they run their organizations.

What’s an example of such a best practice?

One of my favourites is the idea that we can orient a forecast around revenue. We start with, How much is the market going to grow and what’s our share of that market? Then we ask one of the worst questions in business: How much can we afford to spend based on the revenue forecast we’re creating? Most businesses do this, yet it’s completely the opposite of the way the world works. The way the world works is, we spend money to create demand that creates revenue. Revenue doesn’t magically grow on trees and we decide how much we’re going to invest in ladders to pluck it. So a much better way to think about forecasting a business is to start with customer behaviour. “I’ve got a hypothesis about what behaviour I want to drive. Let me do a test and figure out how much it costs to change that behaviour.” And then, “What would be the revenue as a result?” But almost every organization sets their budget year-in and year-out with conversations that begin and end with a debate about if we can afford to spend enough based on committed profit targets. Profit is an outcome, so focus on the customer behaviour first.

In Provoke, you argue that leaders too often take a wait-and-see approach. Why are they reluctant to act?

Largely because they’re human beings, and human beings are risk-averse. There’s comfort in the status quo. We need to shift this orthodoxy. Think about it: In a world that’s changing really fast, it’s ridiculous to think that doing the same thing is not risky—it’s incredibly risky. But the problem is that it feels comfortable because it’s known. And the opposite is true for trying something different. It feels risky, but in a world that’s moving fast, it’s actually the safer move. We need to somehow make business leaders feel uncomfortable when they are not changing with their surroundings.

How does that abundance of caution play out?

An example is that leaders will see an emerging trend and instead of trying something new, they will ask for lots of data about it. It’s like what humans do with a mole that seems like it’s changed a bit. It makes us uncomfortable—but we tend to examine it more versus acting and going to see a dermatologist. Businesses do an analogous thing. They study, study, study and then need to do something massive—because the problem got really big. And that creates all sorts of unhelpful risk in the execution, including being right. It’s like running through a dark forest really fast. That’s a bad idea. You are going to run into a tree and it’s going to hurt. It’s better to prod along and feel for the trees. In business, we learn so much more by poking and prodding the marketplace versus what you can learn by studying data. Marketplace data is static and it’s from the past.

What do you hope business leaders take away from Provoke?

That it’s far superior to run a business by consistently tweaking and being curious versus long periods of stasis followed by massive transformation. Leaders should be “consistently somewhat dissatisfied.” How can we improve and make our customers happier? Don’t wait for a customer survey. Sadly, most customers don’t give feedback. They just stop being your customer.