Maxim 0:03

Most companies don't fail because they have no strategy. They simply fail because they can't turn strategy into execution. My guest today has spent more than 30 years confronting that problem from the inside. Kevin Ertell has held senior leadership roles at companies, including Nike, Georgie Letab, Borders, and Tower Records. And today he's the founder of Mistere Advisory. He's also the author of The Strategy Trap, where he distills decades of operating experience and conversations representing more than a thousand years of executive experience into a practical framework for getting strategy done. Kevin, welcome to Scaling with Clarity.

Kevin Ertell 0:51

Thanks for having me, Maxim.

Maxim 0:52

Good to be here. It is absolutely my pleasure to have you um on the podcast. Kevin, you've made a really provocative argument in your book that companies generally don't have a strategy problem, they have an execution problem. So from your experience, when you walk into a company where a CEO says, we have a good strategy, but we're just not executing well, what usually discover is actually wrong in this situation?

Kevin Ertell 1:27

Usually what I discover is it's not an executable strategy. You know, I mean, one of the one of the things I always talk about is that I think it's all execution. Writing a strategy is an early part of the execution process. And if you don't start with that mindset, then you're not starting with a strategy that you've aligned with people, that you've validated to know what that it's actually executable and you and you've gathered commitment from people to help you pull it together. And that's usually the problem. It's it was created by a small group of people, independent of anybody who's actually going to carry through and bring it to life, and it doesn't it doesn't uh survive contact with the rest of the team?

Maxim 2:08

Okay, help me double-click on this. Why is this the case? Shouldn't G Strategy Officer or the CEO, it kind of depends on the size of the company, shouldn't somebody be on point strategy? And what's your recommended approach? Is it top-down, but then seek bottom-up feedback? How would you go about like defining an executable strategy?

Kevin Ertell 2:32

Yeah, I mean, the first thing I talk about in the book is co-creation, and it's it's making sure that you don't just have this select group of senior leaders creating the strategy in a room all by themselves. Um, it's it's bringing in some people who are going to be part of the execution. Now, you can't bring everybody in. So there are other processes you do within co-creation. First of all, you start, like I say, with bringing some other voices in right out of the gate as you're developing it. But then having a structured validation process where you're actually taking that early framing of what the strategy is and you're you're putting it in front of people throughout the organization and you're getting structured feedback. Um, I talk in the book a lot of a lot of ways to do that in a structured way. You can't just like sort of send it out and say, What do you think? You know, you have to actually have a structured process where you're where you're soliciting feedback in a specific way, where you're you're actually trying to get different perspectives in a particular manner, which I talk about. Um, but that way you you get a really good look to understand is this thing gonna actually be executable? Have we seen it from lots of different perspectives so that we understand as we carry this through forward through the organization, it's gonna mean something to people in various ways in various places.

Maxim 3:50

So, how do you make sure that the company has the right strategy? Like what what what is the litmus test besides getting input from key stakeholders within the within the company? How do you how do you make sure that it's the right strategy?

Kevin Ertell 4:09

Well, you never can know it's the right strategy for sure, right? I mean, you have to start to implement it and to know, but what you can do is know whether you have something that has a fighting chance. And that's where it goes back to the execution and and and the various conditions. And so in the book, I talk about a system called the six C's. And let me just go through that a little bit because I think it'll set the basis here. Um I break it down into two phases you have setting the stage and you have showtime. And within each of those are three C's. So in the first stage, first phase, rather, setting the stage is co-creation, clarity, and capacity. So co-creation is what I just talked about. It's about getting alignment and validation and commitment ultimately. Clarity is about making sure that you're able to say it simply and it's meaningful and understandable to people within the organization. Capacity is critical. Do you have room for this? You know, because you can have a great idea, but if you drop it on top of the existing business when everybody's already full, good luck. It's not going to really land, right? So that's the first three C's in setting the stage. And then showtime is when you get a little closer into the implementation stage to some degree. And so that is uh communication, coordination, and coaching. So communication actually really needs to start early. I talk about being early, loud, and continuous. So that has to be a thread all the way through this. Coordination, you know, we talk about that a lot, but it's really some key areas around defining accountability, around having clear, pre-established checkpoints so that you can understand where there's problems early. And then coaching is a subset of leadership, but it's that active subset where you're actively out there and you're solving quick problems and you're making quick decisions and you're motivating the team and defining the culture. And to me, you have to set those conditions. If you take those, that system, it's not linear, you're gonna move back and forth between all of those. But if you set those conditions using that system, then your idea has a fighting chance to go live. Now, is it a guarantee that your idea and your strategy is gonna work? It is not, but it is a much closer guarantee that it's actually gonna see the light of day and that it's going to have a chance to work, you know, and so that's really what I kind of talk about.

Maxim 6:34

So once you have this conditions as as you as you call them, what what is the next step? So obviously setting out the foundation, building out the foundation, setting the conditions. What's the next step?

Kevin Ertell 6:53

Well, once you've sort of done the first phase and laid out, you know, clearly validated strategy, you've got clarity, you've got you know goals set up, you've created space for it, then the next step is to start to start get it out to the team. It's to communicate everything that you set up, right? It's it's to start to implement actual processes in terms of you know progress pro program management, project management. And that coaching piece is is so critical too, because you're gonna get it out there and you're gonna have to adjust it. And let me back up a little bit too. Even in the book in the clarity section, I talk about the need to delegate the how also. So I think it's really important when you're creating a strategy to be super clear about the why you're doing this and the what in terms of what is the ultimate success. But then you got to break it down and let people closest to the work figure out the how they're gonna deliver that, where they're where they actually are, you know, in front of the customer, maybe, or they're closer to the manufacturing, whatever your your business is. But then they when they really understand why we're doing this and what the expected successful outcome is, they can help put together the specifics about how they're gonna deliver it. Now it is you're getting expertise from the source, right? Instead of somebody multiple levels away trying to come up with the specifics. But you also make it much more meaningful to them. You know, now they're they're directly involved in it, they're helping, they're contributing to this process. Um, there's an old story about uh NASA, you know, in the US with the uh space exploration program in the 60s. Maybe you know the story, but it's a really meaningful one. You know, they there was this huge goal, huge strategy to be to be the first to put the man on the moon and bring them back safely. And there's this famous story where President Kennedy went to NASA and he was talking to various people and he ran into a janitor and he said, What do you do here? And the janitor said, Well, I'm helping to put a man on the moon. And, you know, with NASA, he very much was. They were very, very clear about the way they took these high-level objectives and cascaded these goals and objectives down to everybody in the organization. And so he had a very clear goal and mission that he was going to keep, you know, the areas where the engineers were clean and clutter-free and you know easy to work in so that they could focus all their time on the work they were doing. So he very much was directly involved in helping to put a man on the moon. And that's the kind of things that you have to do once you have a strategy is to break it down so everybody knows their piece and knows their role in it.

Maxim 9:27

Kevin, what have you seen in practice to work well on traffic disalignment, clarity on the how, the cascading of goals? I mean, um, with the help of Intel objectives and key results now have permeated across organizations outside of technology, and it's really good framework. Walk me through what your experience is in terms of what are you observing on the front lines in terms of how companies are tackling the how successfully.

Kevin Ertell 10:04

Yeah, and I think OKRs are a great way to do it. It's my favorite way to do it. Now, I will say that a lot of companies overcomplicate it, and that's a problem. The key is the whole idea behind OKRs is so simple. Like have a very clear objective. You got to start there, which a lot of teams don't start even there, you know. What are you actually trying to accomplish? The key result piece is so critical because that is how will you know you've accomplished it? What are the things you'll do? Now, one thing I a little twist I like to put on OKRs that I found is really effective is to state the key results in the past tense. For some reason, it really helps get people's heads around it easier if you say, you know, we did these things. So when you think of it that way, it just helps you sort of see the successful delivery of that objective. The key with OKRs, though, is to keep them simple as you can at the highest level and then cascade them, but you can't over-cascade them. What I see happen a lot of times with companies is they'll take these high-level objectives, and then every function makes their own OKRs underneath that. And honestly, I don't think that you necessarily should do it function by function. The way I've seen it most successfully is you should create initiatives that are going to drive those high-level OKRs, and those initiatives should have their own OKRs that connect them to the broad ones. But the initiatives should be led by a single leader, and multiple functions should contribute to those initiatives. But that single leader is accountable. You know, the single leader is accountable for the work. The functions continue to be accountable for the people on the teams and for you know delivering to that ultimate cross-functional initiative leader. That's where I've seen it work best. You know, when it when it's like that, when it gets broken down and devolved into individual functions, it becomes super siloed and it doesn't work. So you because it just work just doesn't happen by function. You know, occasionally it does, but for the most part, it does not.

Maxim 12:15

What conditions need to be in place to have the right environment? Because quite often, um I mean the cross-functional collaboration is super important, but quite often they still silos and teams treat each other as like, well, this is this is not part of my domain, this is not part of what I'm accountable for. Um it's not a priority for me. It's not that it's not to say that it's not the right thing, it's just how do you make sure that everyone sets their agenda aside and focuses, hey, we have to come together as a as a cross-functional team to deliver on this initiative.

Kevin Ertell 12:57

Yeah, I mean, that comes down to the way you measure things and the way you put priority around measurement. So another tool that I love to use is KPI trees. And so rather than every function having its own, you know, metrics that are that are hyper-designed for something that only that function can affect, which is what happens a lot. Instead, build a KPI tree based on how the business operates and how the strategy is meant to drive the business. So the way I like to do those is there should be a North Star metric. What is the most important measure that is going to tell you the company or the strategy is successful? And then break that down mathematically, not by function, break it down mathematically. What is the way that that breaks down? Take that a couple different levels, and now you have a hierarchy of metrics. When you have that hierarchy of metrics, you can understand how the business works or how the strategy is meant to work. Then you build your initiatives and you draw from those metrics to figure out what your key result targets are going to be. They're not functional that way. They are for the overall business. And that's really the key is to get the whole company understanding that you're contributing to this broader goal. I mean, you can compare this to sports, right? So if you had a sports team, you know, imagine if everyone on the sports team was going after their individual stats instead of trying to win the game. That's what happens in companies all the time. So define how you win the game, lay that out, then figure out what stats or measurements or what have you are going to be important in driving that ultimate measure. Now, it does take discipline within a company, you know, and it takes the leadership to recognize that we are focused together on this broad mission, not individual functions and how our individual function can be successful.

Maxim 14:51

How do you make sure that the system stays in alignment?

Kevin Ertell 14:56

I I mean that's what comes down to the coaching component of what I talked about. That takes leadership who are actively managing that and recognizing again, you can compare it to sports, you know, like a a coach is not out there managing individual stats. The coach is saying, How are we going to win the game? And that's what that's the mentality you have to have overall. Make the changes necessary, make the sacrifices in particular areas necessary to win the game. I'm not saying that's easy, by the way, and human nature absolutely gets in the way of that. Um, but that's where the leadership team in particular needs to hold hands and recognize they're a team, not a group of individuals. Um again, no different than a sports team. A sports team, when everyone's out for themselves, is not winning championships. And it's the same sort of scenario. You know, you gotta lock hands, recognize you're all gonna push and pull and give up, you know, individual glory sometimes for the benefit of the team. But that's what it takes if you want to have a successful strategy.

Maxim 15:59

So I have been part of very large transformation programs and initiatives, and uh what quite often I've observed in practice is that we would have like a steering committee where the sponsor the typical elements, and uh the conversation during the steering committee is very friendly, and then you leave the room, and then there's like a back channel conversation that happened right outside of the outside of the room. And the question that you ask yourself is like, why is that feedback not percolating? Like, why are we not having the candid those candid conversations in the steering committee? Because if you have a program manager or project manager, whoever is is is tasked to lead this initiative, they need to have that feedback. Without that feedback, it's really hard to uh drive change. So Todd's perspectives, yeah.

Kevin Ertell 16:59

I so you know, Google did this study several years ago called Project Aristotle, and they looked at all the teams within Google and they tried to understand what makes a team effective. And they found you know a lot of different things. They looked at all sorts of variables, but the thing they found was the number one indicator of a successful team was psychological safety. It was creating environments where people could say, I have a problem, or here's my point of view, like people could be vulnerable and not be punished for it. Um, so that again goes back to coaching, but I think you can also build that into the process a little bit. So, one technique I like to use in kind of the coordination C that I talk about is red flag sessions. I call them red flag sessions, and these are monthly sessions where it's not a status update. It's only what's going wrong. Where do we have a problem? How do we identify that problem as early as possible? The point is not to punish anybody for the problem. The point is identify it, and we're gonna reward you for identifying it, by the way, because we're also gonna be here to solve it. And the whole point is to say we recognize like nothing's going perfectly ever. You know, there's always gonna be problems. So let's recognize that's the case. Let's reward people for identifying the problem as early as they possibly can, and let's solve those problems early collectively together. But creating a forum for it where the expectation is that we're gonna talk about problems. Like we're not talking status here. I don't want to, if it's going well, don't bring it to that meeting. That's not the that's not the reason. I have found that that does sort of psychologically enable people to feel more comfortable saying there's a problem because we created the forum for it, you know. So um steering committees also, I think the other place they get wrong or go off track is when steering committees start weighing in with ideas and here's what we should do to fix it and what have you. When the steering committee should really be asking questions, it should always be focused. What is the big picture of the strategy? Where are we focused? What are the metrics we're going on? How are we delivering on those? Where are we having problems? It should always be questions, you know, helping the team stay on track, helping the team continue to think big picture. You know, that's what's the role a steering committee or any sort of governing board has to play, I think.

Maxim 19:24

Just like um just like um a good mentor and coach, your job is to just ask the just to ask the questions, not necessarily to direct uh how the work is done. Now, I wanted to double-click on this. A common mindset that you would see in teams in organization, perhaps is where the psychological safety is not present, is they wait too long before it can bring this. And and it's not because they're trying to um offer obfuscate the truth, they're simply trying to come up with a solution. So, how do you break that mindset and encourage teams and build a culture where issues are identified early so that they can collectively taught about and address?

Kevin Ertell 20:15

Yeah, and that's that's a little bit like I was talking about with the red flag sessions, where you're actually hey, hey, thank you for bringing the problem. You did the right thing bringing it early. You conversely, bringing a problem too late to solve it should be punished, honestly. My friend Mike Africa calls it green masking, where uh you know the status is green, green, green, green, green until a week before it all of a sudden it turns red. Um that's a problem, you know. Um, and there's a in the book, there's a quote from Steve Miller, who's a private equity guy who's on a lot of boards, and and he said, you know, bad news that comes late feels like a betrayal. And and that's what we have to help people understand. Like you're you're you're not helping by just keeping it quiet while you're trying to figure out a solution. That's not helping. The more you can tell us early, make it open, let everybody help you solve it, by the way. Like, you don't have to do this on your own. Yeah, that the better. So it's a that's a bit of a cultural thing, I think, but it's it's that's how you open up that psychological safety.

Maxim 21:14

No, I completely agree with you. One of my favorite saying um that they have just to be able to drive their analogy is that bad news is not like fine wine, it just doesn't get better with age.

Kevin Ertell 21:28

Exactly.

Maxim 21:30

Yeah, yeah, yeah, exactly. So help me understand now, um kind of like around a lot of the cities around the around the clarity and communication. How do you make sure that whatever's in the founder's head is what translated in the people's heads, in the team's head? So like a lot of founders would say, Well, I've explained the strategy, everybody understands it. Like, here's a document, here's When we had a town hall, here's like, but that's not enough. So, what's the difference between a leader believing the strategy is clear and an organization that actually has clarity around strategy?

Kevin Ertell 22:12

Yeah, I mean it's a huge problem. And the first thing is listening, you know, ask the question back. Here's the strategy. How do you understand it? Yeah, tell me, tell me the way you understand it. Yeah, I talked about validation earlier, too. And I I one of the structured validation methods I love to use, it's so valuable is something called the six thinking hats.

Maxim 22:33

Okay.

Kevin Ertell 22:33

And and that's a great exercise that allows people to dive into the strategy from multiple perspectives. So the way it works, there's there's six hats, but they represent five perspectives because one of the hats is a facilitator. So there's five perspectives. But you know, what happens a lot of time in companies is you might put a strategy up and say, what do you guys think? And then you'll get the optimistic person weighing in and the negative person weighing in, and some idea guy, and everybody's talking over each other at the same time, and you get nowhere. What the five thinking hats says is no, we're gonna discuss this in a structured manner. We're each going to take the same perspective and talk about that for a while. So in that case, there's five perspectives. You know, one of them is called the white hat. And you say, okay, we're all gonna put the white hat on. This is only about facts and data. What do we know or what do we need to know to understand this strategy better? Everyone talks about it from that perspective. Then you might say, hey, let's put on the yellow hat, which is the optimism hat. What do we see as the advantage of this thing? Where do we think this could really go? Now, you know, you have some people who are supernatural about that. They're of course going to be optimistic. And then you have the negative Nelly. It's a really hard discussion for that person, right? But they're forced to take a different perspective. It helps them think about it differently. But then you flip it and they're happy with the next one, the black hat, the risks and challenges. That person can kind of weigh in, but now the optimism person is uncomfortable. You go into the green hat, which is which is ideas and creativity, and then the last one is the red hat, which is just gut feel. But by taking that measured approach and going through it that way, you really are starting to dig into what does this strategy actually mean? Do I understand it? What are the people weighing different points of view? And if you're the one that created that strategy to begin with, you really need to pay attention to the results that come out of that. Are people getting it? You know, when they're optimistic about it, are they getting the right thing? Are they when they're negative, are they getting the right viewpoint? Also, by the way, now that I've heard this feedback from people, what am I missing? You know, chances are really good when you're the one that created the strategy that you are very optimistic and you have a blind spot to everything wrong with it, right? And that's human nature. So do these things so that you get that feedback and you take a more well-rounded uh view of it before you unleash it on the rest of the company, you know. Um, that's a great way to find out if it's accurate and if people will understand it.

Maxim 24:55

Kevin, love this exercise. Um from my experience, quite often, a lot of companies traditionally adopt uh a kind of like a singular lens, like what could go wrong with a strategy, like they focus too much on competition um or marketplace or whatever other factors or forces they have in mind, and not as often think about what could go right or what must go right. And so I want I want you to kind of layer your perspectives there, as well as who is best to facilitate a six six hats conversation.

Kevin Ertell 25:34

Yeah, I so what I love to do is bring that into the organization. You might start that initial discussion with a facilitator. Some I like I go in and I do this with companies, right? But I I'll do it maybe with the leadership team. But what I try to do is teach them how to do it so they can take it out deeper into their organization and do it themselves. You do you can learn how to do this, and that's what you really want to do. You don't want to just do your validation with the same group that created it and be done with it. You want to take it out to different people, and it's a very portable uh exercise. You can very easily take that to a variety of groups within the company, and you can do it very quickly. You know, teach a number of people how to do it, and in a couple days, you can go out to and get together a bunch of groups all over the company and have them do that exercise and bring the results back. It doesn't need to take long. It's gold, though. I mean, every time I do it, it's absolute gold because it does a few things. One, you know, you do find things that you didn't think about, so that's critical, right? Two, it's a team builder. I mean, people like you know, are forced to see each other's perspectives, and that's really valuable. They start to understand each other better, you know, just in general, not just in terms of the strategy, you know, and and then that ultimately leads to when the strategy is finalized, people commit to it more because there's this concept called procedural justice, psychological concept. And what it says is that people can go along and commit to something they disagree with, even if they felt like they truly were heard, you know. So they had a chance to weigh in, they were truly heard, it didn't go their way, but okay, I really weighed in, everybody heard my point of view. This is the way we decided to go, I'm gonna go. So by using the six thinking hats and spreading it a little bit deeper in the organization, you get all three of those benefits. So it's it's just gold. I mean, I absolutely love that exercise.

Maxim 27:21

Spot on. I want to go like in in the context of this exercise, I wanted to get your perspective. I mean, we talked about the importance of psychological safety, and I couldn't agree more. Um, when we've when I have done exercises like this, and and and this is perhaps where a little bit of the CEO founder mentality becomes a bit of a drawback, um, the loudest voice in the room is typically the CEO and the founder, and kind of let the team typically in some ways deforced it. Now, I understand the ground conditions have to be around psychological safety, but if the psychological safety is perhaps developing, how do you encourage candor in this conversation? So that feedback's percolate. Is it true? Like, hey, you're wearing this hat now, give us your feedback. You're just kind of going around the room and getting people to and leave the CEO or the founder to be the last person to apply or speak.

Kevin Ertell 28:24

Yeah. I mean, those are always good practices. The the leader should go last for sure. One of the advantages of that exercise, though, like when you put the risks and challenges hat on, the I mean, the expectation is you're going to talk about risks and challenges. So you're expected to poke holes in it at that point. You you have been given permission to do that. In fact, you're expected to do that, right? So that helps. The other thing you can do again, because that exercise is so portable, you can do it with the CEO founder in the room, but you can also do it in other rooms where that person's not there, you know. And if that's easier for people to sort of weigh in, great. Now, if you're the CEO founder and you find that you're getting more truth in the rooms you're not in than rooms you're in, you should look in the mirror, right? I mean, because that's a problem. You know, you you should be actively self-reflecting to say, how am I making sure I'm getting, you know, the truth out of people? And it's, you know, look, it's hard. Even if you're if you're the the leader, the absolute leader, and even if you're as open as possible, people are still like gonna be deferential to you as a leader, and it's still gonna be hard. So sometimes you do just need to get out of the room and let somebody else um facilitate something and and get some truths that you care about, even if you're not there.

Maxim 29:38

I couldn't agree more with you. Um, and that kind of brings me to one of your C's around capacity. Uh, if the leader is not there, the teams can openly speak about their capacity. Now, the opposite is also true. I have seen teams where they have been blamed for sandbagging things. So, how would you get truth around capacity?

Kevin Ertell 30:02

Well, yeah, you're right. I mean, there's two ways that can go. Yeah. Um, the one I find more common though is overloading the teams, you know. Um, so I think you have to start there and just recognize um what you're asking people to do with what they can do. And I like the phrase I hate more than anything is we're just gonna have to build the plane while we're flying it, you know. Like that is uh I know nobody who'll get on that plane, so let's not ask the team to get on it.

Maxim 30:33

Yeah.

Kevin Ertell 30:33

Um, so you have to start there. Now, now, team sandbagging, I think you can look at the results over time, though. And if you say, hey, they're always saying they don't have the time, but yet they always you know deliver with excess time, then you can measure that and you can start to look at it. Um, and that's probably the best way to deal with it. But I again I I find that to be the lesser of the problem because usually if teams are sandbagging, they're actually creating a buffer that they ended up needing, you know.

Maxim 30:58

Yeah, yeah, yeah. For sure. So rather than be this being an annual exercise where companies go through how do you drive the what it's the governance, the people, the process, the technology, how do you build out the right ecosystem so that you're continuously ingesting because the world does not stay static. These external factors are changing you. So, how do you adapt the strategy strategy continuously? I mean, obviously, if you're trying to build a product, it may take you a number of years, you and you would have the conviction you would allocate a capital. It this is not going to change, but but how do you refine and tweak the strategy?

Kevin Ertell 31:39

Yeah, I mean, I think it starts with how you structure to begin with. So, you know, you you ideally have a vision for the company or the product, you know, and what is the big picture North Star you're going to that is not a you know three-month vision or a six-month or one-year vision. It's a much bigger, like, hey, this is where we're headed. Then, you know, again, I think OKRs are great. And I I like the the I think the best way to do OKRs is annual and quarterly. So you say, okay, we got our big picture over the next year, on that big picture vision where we're headed. Here's our OKR structure. Our strategy is sort of driving us on this picture. Strategy, whether strategy is a one-year, five-year, whatever, you still should have like checks points and milestones within it. And OKRs are a great way to do that. But the quarterly ones are super important because that's where you start to adjust as you need to, you know. Um, you you want to keep your eye on the ball on the big picture, but adjust as you need to. I mean, you know, all the AI stuff is a perfect example of this, you know. People are like, what are we doing with AI? And you hear all this like, we just got to do something with AI. Well, you know, AI is a tool. What are you trying to do as an overall company? Then you can look at it and go, okay, well, a AI is this new development, maybe we could use. Will it take us on this path we said we're on faster? What can it do for us? And it will be better than what we're doing now. That's where you can start to use your annual or quarterly OKR to make that adjustment by going, yeah, well, we've got a new way now we could do something, or you know, get a market condition change. So for us to deliver on our broader overall mission and vision that we're headed for, we have to make some changes quarterly or annually to do that. It's just how you structure it, you know, so that you can do that.

Maxim 33:22

Have you speaking of AI? Have you seen organizations? Have you work with organizations that have adopted AI really well when it comes to this? So like you talked about KPI trees, talked about OKRs. Um, rather than relying on humans to make updates, you have sensing sentiment capabilities that are pulling information continuously to feed the KPI trees, to feed the OKRs, and obviously human in the loop trying to refine and validate. But like, have you seen a company that has adopted AI really well in shaping and executing on the strategy?

Kevin Ertell 34:04

I think I'm starting to see that more. You know, there's a there's a couple of companies I've worked with recently and that have given away their specifics, but uh I think they are they've gone from we got to do something with AI to AI is a way for us to deliver on our our vision and mission better. That's where I think the advantage is when it when it first came out, people were getting you know demands from their boards about what are you doing with AI, and they were just doing anything and everything with AI with no purpose. Yeah, yeah, yeah, yeah. Didn't have the purpose, or it was just like we're getting efficiencies. Well, that might be a good thing to do, but efficiency in service of what, you know. So as long as you sort of start to line it up with well, what are we trying to do overall? And can this deliver efficiencies that would able us to do that thing better? Great, you know, use it, absolutely, but just have a purpose for it that makes sense in context of your overall business.

Maxim 35:01

Now, in terms of the priorities and and the strategy, how many priorities can an organization realistically execute well at one time? Is there a point where strategic plan stops being a strategy and becomes a wish list? Because, like you talked about the more common scenarios, not necessarily sandbagging, it's like being overloaded, kind of like so. Give me your perspectives.

Kevin Ertell 35:22

Yeah, yeah. I mean, prior, I talk about priority prioritization in the book in the capacity section, right? Because it's directly related to that. Yeah. Um it depends on the organization. There's not a set number, but I think you have to stack rank your priorities. So you can't do high, medium, low. You have to stack rank it. So there's one number one, one number two, one number three, one number four. When you do it that way, you you get a couple of things. One, you get clarity for the team on what's more important, and when there's conflicts that arise, they know which way to lean. But two, you can figure out where to draw your line when you do that. So you can understand your overall capacity, what you have, what availability you have, um, and see how far down that list you can get because you've stack ranked it. You know, and you can change that line by you know adding more, maybe, although you should be careful about anytime you add, because anytime you add anything, you're adding complexity as well. So, how does that, you know, sort of change your dynamic? But stack ranking gives you the ability to make those decisions. Um, I see way, way, way too often companies do high, medium, low as a priorization. And I'm sure you see this too. And when you do that, you get a whole lot of highs, some mediums, and pretty much no lows. So it's not useful. That's useless. Uh, it it's a it saved maybe some leadership team cognitive effort up front, but it it did not help the team, and it definitely doesn't help execution.

Maxim 36:53

Well, I mean, uh it's a real life example at the moment, uh, client situation. They have um without specifying the amount, um in the EPMO organization, the businesses put in um demand or requests for um X numbers of millions of dollars of technology-related initiatives. When you value the capacity to execute, there's 40% capacity to be able to execute the demand. And so when you talk to the business and say, Well, let's stack rank them, let's prioritize. Nobody wants to give up theirs. So yeah, how do you get to this company-wide prioritization of what is mission crazy mission critical, business critical, customer facing, right? Because I I mean, again, like we would all like to have shiny new toys and and and and tools, but but how do you stack ranking?

Kevin Ertell 37:59

Yeah, so I had a team a while back, uh, when it was a Nike, we had we had 60 initiatives on the plate, right? And we're like, we gotta do something with this. And it was the team was finding it really, really difficult to prioritize. It was so hard for people to weigh this against that. How are we gonna do it? Everybody, everybody thinks something's important. So what we did is say, okay, look, someone's gonna take a shot at just numbering these one through 60, just a starting point, right? Um, and but after we do that, what we're gonna do is we're gonna get in the room and we're not gonna try to order the whole thing one through 60 as a group because that's gonna be impossible. So instead, let's do buckets, okay? So we're gonna do top 20, the next 20, the next 20. So had somebody, the same person who did the first numbering, we took we took his one through 20. And then we said, okay, top 20, do you agree with that or not agree with that? You know, someone said, No, I think such and such should be in there. Okay, it'll that bucket only holds 20. So if you want to put something else in, what comes out? That now just using that method though helped a lot because now it was something really tangible, and you you could be like, Okay, well, I'm I'm weighing this one thing against these other 20 things. So we got it to top 20, but then we said, okay, top 10. Yeah, let's let's do it again and break it down again. If you want to see, if you say it's in the top 10, what comes out? Yeah, um, that was an effective way for the group to get to prioritization. Once we got to the top 10, then it became much easier to just number one through 10. Um, but it it by by breaking it down into kind of thirds of buckets that way, we were able to um, you know, deal with the cognitive load of trying to trying to deal with a huge number, you know. So breaking it down that little way was really, really effective. And I I I highly recommend that as a way to go um to help you get there. But you'd gotta get there. You I just think it's absolutely critical to get to one, two, three, four, five, six, seven, you know, no ties.

Maxim 40:08

For sure. We've we've quite often used the Moscow framework, like the mast must, should, could, what. Yeah, um, just just to be able to force that prioritization on like what are truly the musts.

Kevin Ertell 40:22

Yep.

Maxim 40:22

Not like what are the shoulds, not what are the coulds, anything and everything is possible, but like we need to define what is what is mission critical.

Kevin Ertell 40:32

Yep, yeah, and I think that's great too. The but you have to put a limit on it again, which is because it's the limit is the key. Because if you say there are going to be 20 musts or only 10 musts, then then people have to force things in and out. Um, otherwise you end up with a huge list of musts, right? So that's where I always like to have a specific amount of things that could fit in that bucket.

Maxim 40:53

So in in our company, one of the common advice that we often provide is that uh execution is very much driven by clarity, and so clarity drives agility. And so, how do you get to that agility? How do you get to that speed and velocity? Like there's very few modes left in today's marketplace, and proprietary data velocity are two of those. So if you have the strategy, um, and and you and you talked about the the leadership team is accountable for defining the the why and the what, um, the the layer below um is accountable for the how. How do you define cardrails that allow the the company to execute with speed and velocity? Um but still have some form of like you know bumpers on the side.

Kevin Ertell 41:52

Yes, absolutely. I love that question. Um, and the way you do that is with three specific things values that are actually meaningful, so values that actually describe behaviors that are gonna help you execute better, guiding principles that help people decide, you know, because you there's a lot of decisions that happen within a company every day, and people have to make choices. So, what are the principles that you're gonna use to make choices, particularly between two good options? Like, you don't need a guiding principle for here's a really good option and here's a stupid option. You know, you need you need a guiding principle. So laying out clear guiding principles and then constraints, be super clear about your constraints. What are the boundaries that you have to work within? Um, and I find like taking a time to be really structured in how you put those things together um gives people the guidance they need to now, you know. I call them pre-approvals. If you have really clear, you know, meaningful values, you have really clear guiding principles that help you make decisions, and you really that help people in the organization make the same decision you would have made in that situation and clear constraints, then what you've created are pre-approvals, you know, like hey, if you followed all these, it's pre-approved. You don't have to come ask about it, just go do it. Um, but that's that's the way to think about it. And I and I find I've used that phrase with clients too when I tell them, like, what's the pre-approval? What what what are the thinking you would put through to make this decision? Two things happen. One, that puts them in the right mindset. They start going, okay, yeah, let me, how can I define that? Two, often they they have trouble defining that, right? Because they've been making decisions on the fly all the time. So um taking a little time to really think through how you make decisions in specific instances and why you would hold to that particular decision gives you more structure in your organization, but it definitely gives your team a lot more pre predictability so they can make decisions on their own.

Maxim 43:52

So, Kevin, one out of common scenario that we see across all the time. Um founders love to create urgency. Um, you have to this customer, this is the feedback, we gotta action it now. And and it becomes almost like an overload. So every customer request, every competitive move, batman can become like something that we react to. So, how do you balance this like being responsive to being strategic and focused?

Kevin Ertell 44:29

That's where creating the structure up front about what is our vision, what is our mission, what are our key objectives? Because then you have to create the environment where I talked to this customer of this idea, they had this idea. Okay, how does that fit into the structure? We laid out a structure, how does it fit? You know, um, we should be asking ourselves within every company all the time, how does this fit? And that goes back to the steering committees. What's the question you're asking? How are you making sure it fits? Um, I know there's always this like we gotta go faster, we gotta go faster, right? And I um in the book, I have a big section right up front that talks about you got to slow down to speed up. And you know, I interviewed 60 plus people for this book, people who have been executing great executors everywhere. That was by far the number one advice I got from people. And what does that mean? It doesn't mean go slow, but it does mean put some structures in place, it means prepare your organization for this. I this is kind of a stupid example, but like a couple of weeks ago, this became clear to me in real life when I played, I like to play tennis lately. I've been playing a lot of tennis, and and I got out to the court getting ready for a game, and I was got there a little bit late. So I didn't spend enough time warming up. I didn't spend much time at all because I wanted to get in and start playing the game. And two games in, I tweaked my back, got a back spasm, I was out and I was out for 10 days. I couldn't play or do anything for 10 days, and that was because I failed to prepare my muscles for what I was about to ask them to do. And it's such a direct correlation to what happens in a company. If you don't prepare your company for what you're asking them to do, you know, you risk throwing your company's back out, you know.

Maxim 46:10

But um kind of a stupid example, but I think it's like I love the analogy, though, is like you you you were slowing down intentionally in order to speed up because now you were out for 10 days.

Kevin Ertell 46:22

Right. I mean, I lost all that time. Or I think about like race car drivers, right? When you're in a race car, you slow down into the curve so that you can accelerate out of it. If you don't slow down into the curve, what happens? You know, you hit the wall.

Maxim 46:35

So which is kind of an interesting example because it kind of ties to the the to the guardrails. These um, I'm a Formula One fan, but uh I I don't watch NASCAR very much, but there's one move in NASCAR that that got outlawed, and I don't remember who the NASCAR driver was, but essentially it's kind of like the the the simulation games. If you run really fast, if you drive the car really fast and run it against the the the guardrails, yeah, you can you can make the turn faster, and so that person won the race that way by just brushing the car against uh the guardrail. But again, if you have guardrails, you can do that, yeah, yeah, right.

Kevin Ertell 47:14

Otherwise, you're going right off the track.

Maxim 47:16

Agreed, agreed. So on the founder side, what role should the founder personally play once the execution begins? At what point does being deeply involved helps with the execution? And at what point does the founder actually become a bottleneck? Kind of like, how do they know where they stand, like how much to let go?

Kevin Ertell 47:38

I mean, the founder has to ultimately say, stick to the this is our vision, this is what we're trying to do, this is our success measures, this is what we're trying to get, and should be constantly asking people, is that the best way? You've come up with something, is it the best way to deliver on what we said we cared about? That founder then has to hold themselves to that same standard. You know, when they have a new idea or something, you know, they should be very careful about how they introduce that idea and make sure they're always putting the context around it if they are. Hey, here's a new thing I heard from a customer. Um, it really lines up with our vision, what we said we're gonna do. Our success measures, it can deliver on that faster than what we're doing already. I looked at what we're already doing. Here's why I think it could be better than that. But then they should ask the team to validate, you know. But hey, I'm excited about this idea. So where do you see the holes in it? You know, where are the problems? What we could do better. But again, it has to be asking questions, helping the team along, you know, with the understanding. Because even if you have a great idea, if they don't understand that this is a great idea or they don't understand enough about it, then it's gonna feel like you're just whiplashing them around. So help them understand how it fits within the vision, help them understand how it's gonna deliver to the success measure quicker than um you know what you were previously doing.

Maxim 48:55

Okay. You you work with some blitchy companies, big companies, Nike. How would you adapt the way that you built and execute a strategy at a big corporation versus let's say a 20-person startup?

Kevin Ertell 49:14

Yeah. Yeah, it's interesting when I when I was doing the research for the book and talking to all these different people who are great at execution, they're all different sizes of companies, all different industries. I I've been at all different types of companies too. So, what I was looking for with the system, the six C's, was what would work anywhere. You know, because in the end, what I'm talking about with the six C's and the success of any execution, it's about people. It's not really about size of company. I mean, as soon as you get more than a few people, you have a lot of complexity. So, how and you have you know different perspectives and mindsets that you have to manage. So having a system you can rely on to continually work through to put to bring people along into it really works. I mean, if you have a five-person company, maybe that's overkill, right? But once you get to like 20 or something, it's gonna matter because that's a that's a lot of you know additional complexity, even with 20 people.

Maxim 50:08

So speaking of the six C's, and uh this may be a rhetorical question, but is there one C that's that's more important than others, or is it kind of that sequence like the Adkar model and change management where you have to have awareness before you you can pass desire, knowledge, ability, reinforce? So, like you have to start with the co-creation, you have to have the co-creation first before it can drive the clarity, before it can move to capacity, before move to communication, kind of like shine a little bit more light over the six C's.

Kevin Ertell 50:40

Everybody always wants me to love one baby, one baby more than the other, but um it's the six C's is a system, I call it a system versus a framework because you move around within it for sure, right? But co-creation is pretty critical, you know. Um so it it because it feeds into the other C's, really. So if you've gotten people involved and you've done the validation, like we talked about, six thinking hats or whatever method you want to use, it's going to help you on all the other fronts. It's gonna help you with clarity and figuring out the right words and a way to convey things, it's gonna help you understand where you have capacity issues, it's gonna feed into your communication, it will help you understand how you want to start to coordinate going forward, and it will also give you ammunition as you go to coach, you know, because you've understood people's perspectives better. So if I had to love one more than the other, it's probably that one.

Maxim 51:36

I understood. So and if a founder is listening to this and and they are convinced that execution is their biggest constraint, what are the two or three things that you would ask them to do right away?

Kevin Ertell 51:54

I so I would use a six thinking hat immediately. You know, I would take your strategy today with your team and go out and validate your existing strategy with your team using a structured method like that. Uh, you may be amazed at what comes out of that and and what kind of clarity you personally get as a founder on where your team's heads are at on things. And that will help you take it from there. The next thing I would do is make sure that your, you know, that all the things we just talked about, your OKRs, your guiding principles, your constraints are super clear so people can make decisions, that you're really clear on the why and the what, so that they can do the how. Those are the places I would start immediately.

Maxim 52:35

Great advice. Um, Kevin, I sometimes think that founders what they do is they confuse clarity with certainty. So you can be very clear about where you're going without necessarily knowing exactly how you're going to get there. That's why you have the team. Um, does good execution require certainty? Or does it require clarity about a direction and the rules for making the decisions along the way?

Kevin Ertell 53:03

Yeah, it's clarity around the direction. There's no certainty. None of us know the future. And honestly, if you have certainty, I don't think you have a very good strategy because it means you have no risk, right?

Speaker 2 53:13

Okay.

Kevin Ertell 53:14

So you're not going to get any gains on that. Um, I think though that if you are really clear about the why and you're really quick, clear about the what, and you really, you know, do the things we talk about, guiding principles, constraints, and delegate the how, you can work through uncertainty because you have put the you have put the conditions in place to make adjustments in the teamed away and to make adjustments quickly, um, without everything relying on you, the founder that way, um, which will make it faster, you know. Um, so that's really the key and the place to be.

Maxim 53:43

Couldn't be more, Kevin. This has been a fascinating conversation. Um, for our listeners, Kevin Ertell, founder of Mistere Advisory and the author of The Strategy Trap. Kevin, thank you so much for joining me on Scaling with Clarity.

Kevin Ertell 54:03

My pleasure.