On this week's episode of Inside Outside Innovation, we sit down with Jonathan Brill, author of the new book Rogue Waves: Future-proof Your Business to Survive and Profit from Radical Change. Jonathan and I discussed the coming rogue waves of change and how to prepare your company for resilient growth, innovation, and decision making under uncertainty. Let's get started.

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Interview Transcript with Jonathan Brill, Author of Rogue Waves

Brian Ardinger: [00:00:30] Welcome to another episode of Inside Outside Innovation. I'm your host, Brian Ardinger. And as always, we have another amazing guest. Today we have Jonathan Brill. He is the author of the new book, Rogue Waves: Future-proof Your Business to Survive and Profit from Radical Change. Welcome to the show Jonathan.

Jonathan Brill: [00:00:58] Thanks. It's a pleasure to be here.

Brian Ardinger: [00:01:00] Well, I'm excited to have you on the show to quite frankly learn about what you've seen over your amazing career, when it comes to innovation. To give the audience some context. You are a senior leader and global futurist at Hewlett Packard. Creative director at Frog Design. You've probably helped create over 300 plus products in the innovation firms that you've worked in.

And you've been a contributor to Ted and Singularity University and Forbes and Harvard Business Review. And the list goes on and on. Now you've got a new book coming out. So, I really wanted to dive right into it. The title of the book is called Rogue Waves. So, let's start there. What is a rogue wave and why should companies start preparing for them?

Jonathan Brill: [00:01:38] So in the deep ocean, literally out of nowhere at the snap of a finger, 120-foot wave and pop up and sink you know, a 600-foot ship. We used to not think these things were real. We thought they were kind of sailors’ tales, but it turns out that as we're having better tracking and satellites and whatnot, that these things are happening every day in a major storm, that one of these things might pop up about every eight or 10 hours.

So, the issue isn't that rogue waves are rare it's that the world is large. And to use that metaphor and in many ways, the same types of mathematics apply. We're moving faster as a society. We're becoming more connected as a society. The reason, and so more freak occurrences will occur, and when they do, you'll see more contagion, you'll see more movement between those occurrences.

And so, when you think about business. When you think about something like COVID right, why did COVID happen? And SARS was a pandemic. It didn't scale in the same way. Mers was a pandemic. It didn't scale in the same way. Lots of reasons.

But I would argue that the biggest was we've put a population, the size of Los Angeles into the wilderness and outside of WuHan. So, we increased density, but we did that at the scale of literally the population of the United States and China, over the last 20 years or so. Connected them by 16 high-speed rails.

Since 2010, we've increased travel out of China by 10 times, making China the largest spender on tourism in the world. Literally coming from out of nowhere and that didn't just happen in China. It happened in India. It happened across Southeast Asia and it's happening in Africa.

And so, what was containable, 10 years ago, or 20 years ago, is suddenly not containable today. Not because of the disease, but because of all of the things that surrounded. All of those overlapping trends that surrounded. And when you think about a rogue wave, that's what it is. It's these independently manageable waves of change that overlap to become massive and unmanageable.

Brian Ardinger: [00:03:43] It's not the one particular thing that is necessarily the disruptor. It's the blending of emerging technologies and changing demographics, and the data economy, and all of this colliding at once that creates that seismic events so to speak.

Jonathan Brill: [00:03:57] Absolutely. And there are something like 10 major trends. And I picked these because they're the 10 sort of highly trackable trends by analysts and whatnot. And they tend to be highly quantifiable trends, that are overlapping over the next 10 years to virtually guarantee that the next decade will be more volatile than the last decade.

And so, what that means is that we'll have more risk. Risk is a measurement of volatility change over time. And most people sort of, a lot of traditional risk management looks at that and says, okay, well, how do we push back the future? How do we protect ourselves from it?

But the reality is when a rogue wave comes at you, you cannot protect yourself from it. What you can do is position yourself to try and ride it. Be more resilient. And if you're more resilient, take advantage while your competitors are trying to recover from being capsized.

That's a radically different way of looking at the future. Looking at the world, then business schools have been teaching us for the last 30 or 40 years. They kind of assume that even though new competitor might disrupt you, and a new technology might disrupt you, that the rules that the playing field, the game board will stay the same. And that's simply not true anymore.

Brian Ardinger: [00:05:13] Do you think companies are getting it so to speak? I mean, obviously COVID was a major factor, I think for most individuals and companies alike. Where I think we've been talking about change and disruption, you can see examples throughout the ages about this. But rarely did it hit everybody at the same time. So, are you seeing companies being able to fundamentally grasp that this type of change is here? And are they getting better or worse when it comes to navigating this type of change?

Jonathan Brill: [00:05:40] So within that question, there are so many other questions, right? At the board level, is there an awareness that we need to focus on resilience? Yes. The number or percentage of meeting topics on agendas, that are focused on resilience has gone through the roof. The number of topics that have focused on innovation and other things is also dropped through the roof.

And so, I don't know that at the investor level, at the board level, we yet understand that resilience and growth are intertwined issues. You can't focus on one without the other. It's a balance because if you don't have that resilience, if you don't know where to position yourself, it doesn't matter that you're better, you're faster. That you have a life jacket, right? Like you're still out at sea.

Brian Ardinger: [00:06:30] So tell me about this book. How did it come about? And what's in it for the readers?

Jonathan Brill: [00:06:35] I spent the last several years at HP as the Global Futurist. And a lot of our study was looking at long-term change. What could happen? What risks did we think were static risks? Like hundred-year pandemics that were actually dynamic risk. And so, if you are in that community of people who look at these things, pandemics were becoming more and more and more likely over time.

And yet most of us, most of our leaders, 8 of the 10 largest companies in the United States, failed to identify pandemics as a risk in their SEC Risk Filings. So, we were in denial as a, an economy about what was happening. A lot of my job at HP was also to figure out, okay, If the world is changing, what are the new opportunities?

Not just what are the risks and how do we become resilient, but how do we turn those into new opportunities? And one of the things our group focused on was how do we deal with disease diagnostics? Because we know that the population is getting older. We know that something like a pandemic can rapidly accelerate this type of work.

And I actually just published an HBR article about how to balance that kind of resilience and growth that we experienced at HP over the last year. I've recently left to write this book because it's, and it's really about what I learned as a practitioner. Right. I spent 20 years as a consultant working on contract R and D. All of a sudden was a practitioner and you had to figure out how to actually drive change in the 58,000 person organization. And it turned out that it's a different problem entirely.

And so, this book was really about how do you blend that world, that the knowledge of the consultant versus the reality of the practitioner. What are the simple steps that you can take? And there are really three and I call them the ABCs of Resilient Growth.

First, you need to increase your awareness as an organization that the world outside is changing. And you need to think about the range of ways it could impact you. It's really easy to look at the world and say, okay, you know, our technologies have to change, or our workforce has to change or whatever.

What we discovered over the last year is actually that all has to change at the same time. A lot of times, things overlap to become unmanageable rogue waves of change. So, you need to create awareness, not just of what the changes are, but what would happen if they overlap.

Brian Ardinger: [00:08:56] On that front, is it something where you can't manage it incrementally? It is something where you have to transformationaly change these things to actually be able to keep up, or are there opportunities to, to do a more incremental approach to, to this.

Jonathan Brill: [00:09:11] I think there are two answers to that. Yes, there are opportunities to do an incremental approach, and that's the only way that works. You can't change your culture overnight and you can't change all of your processes overnight. And by the way, if you do that, there's a better than even chance that you'll, that you'll sink yourself.

So, it's this balance. The first piece is building that awareness of there is stuff going on outside. The second is building the skills, the behavior change within the organization. Because even if you know that the wave's coming, if you don't know how to swim, it's not a good idea to pick up big wave surfing. So, you got to build the skills.

And then the third is the culture, right? You have to, I don't believe that you can really change corporate DNA. I think that's consultant speak. But I do believe that you can change the RNA. When you think about DNA, this is the deep code that causes life. That allows life to build itself.

But RNA is the code that controls the types of proteins that you use to regulate your body. That RNA can actually be changed relatively quickly. If you take a look at an octopus, for instance, or a Cephalopods, like a squid, a cuddle fish, they can change 60% of their RNA in a lifetime. And companies do it all the time.

You change your processes, you change your hard incentives, right? Bonuses, bonus structure, and whatnot. And you change your soft incentives right? Who do you encourage? Who gets ahead? Those, those kinds of things. So, you can change that stuff pretty much overnight, but the change is incremental, right? The company has to catch up to the reality that you're serious and that you can sustain the change over time.

And that's the real challenge. I see a lot of these sort of change efforts. I read, the other day in Harvard Business Review that 70% of change efforts fail. And so there, I think are two things there, right. One is, do they fail or do people just not keep at them long enough? Do the leaders not convince their population that they're serious?

And I think there are kind of like four phases in corporate change of any type, but certainly in becoming what I call a resilient growth organization, right. The first is you come, and you say the future is going to be different. The sky's falling, whatever your story is. And everybody looks at you like you're insane. But you get a few early adopters.

The second is that people start saying, well, actually you're not the legitimate person to make that argument. I am. Your arguments dumb, my argument's better. It turns out that's actually a win. And as a, as a manager, if you're asking people to be change agents, you need to recognize when that shift occurs. And that that's actually the big win.

What you see though, is that people take whatever the change message is, and they start covering the first page of their PowerPoint deck with it. To justify whatever it was they wanted to do, all right. It's a shift. It's an important shift. It's about being future compliant, as opposed to actually thinking about the future.

The third one is when they start actually asking for budget to do new things, and this is where I think a lot of change management breaks down, right? You can get through the first one. Sure. You send in your Avant guard; you send out your Scouts. And you send out your missionaries and they, they preach the future.

Couple of people believe it. The better politicians figure out how to do what they already wanted to do. But then a couple of people say, no, I want to find out if you're serious and I'm going to start asking for money. Not like a hundred thousand dollars, like a million dollars, $10 million. A meaningful amount of money and, and talking about large organization terms. Right.

And if you say no, think about what happens. Their ideal is almost destined to fail, right? It will be right. It's almost destined to fail. And so, if you're a rational manager, you say, well, I'm not going to invest in something that I know is going to fail. And if you don't support them, when they do fail for trying, you cut off the opportunity. You cut off the change.

And I think that's where a lot of change management breaks down, right? That you have the senior manager incentives on an annual basis, versus a senior manager incentives on a long-term basis and they get disconnected. And then the third piece is when your senior managers start looking at this as a process and saying, okay, we're going to embed this in the process. We're going to take whatever the change is. In this case, becoming a resiliently, a growth organization.

And we're going to have it be part of our annual decision-making process budget process. And we're going to set a minimum that we spend on this thing. And that's when I think you start to see the long tail of growth from this work. But it's often, you know, it's a three-year or five-year process. It doesn't happen in six months, and it doesn't happen because the board woke up on Tuesday and realized that they'd been cutting resilience for 20 years.

Brian Ardinger: [00:13:59] Absolutely. On that you've seen and worked with a lot of different companies and have seen this progression. Where are the biggest struggles or obstacles that companies are facing going through that? Are most of them dying at that stage one stage two stage three? Or is it a combination or, or what are the things that people should be preparing for as they go along this journey?

Jonathan Brill: [00:14:19] I think there are two answers to that question. The first is really at the board level, you know. Are you serious about this? If the board has a cocktail party and they say we should be more resilient than, you know, that verbals down, like that happens a lot. That happens a lot. That change isn't going to happen.

And the people who participate in that change, especially in performance driven organizations, tend to not keep their job. So you've got to figure out, okay, well, are people serious about this? And that's why phases one and two happened. That I was talking about earlier. That's why they happen. The second question is, if you are serious about this, you know, can you be serious about it from the bottom up?

Can you make that change from the bottom up? Or do you have to make it from the top down? I think it's probably generally a bi-directional process where you have to link the communications between the senior leadership and the edge of your organization. And that, that's a huge political challenge, especially like in organizations where you have high longevity of career. You know, where you have 20-year careers and whatnot. It gets really hard to do that.

You know, people in the middle, don't like, you know, the people in the center talking to the edge, you got to break through that. And I think that's one of the real places where the issue breaks down.

And I think the third, and this is really important to, and I think this is why I wrote the book, or one of the main reasons, is that if you have somebody, if you're headquartered in Indonesia and you have somebody who sees a rogue wave on the horizon in Mozambique, right.

That person in Mozambique, probably even if they can talk to the CEO, probably doesn't have the skills to the language, the context. They're just going to sound crazy. And we've all been in that conversation, right? We've all been in that conversation. And so the key thing is you also need to increase the executive judgment, executive communication skills far lower in your organization. If you want to have an innovative organization. You can't trust people to innovate if they don't understand the context. You know, and they don't understand how to take risks, as opposed to just manage.

Brian Ardinger: [00:16:32] And maybe that comes back to some of that, like you were talking, one of the first themes is, is awareness. And it's not just awareness at the board level or at the CEO level, it's awareness across the organization that these risks are happening and exist. And what can you do to both understand them, as well then do some behavior or cultural things around it to actually execute or, or take advantage of that.

On that awareness front. Are there things that you've seen that can help companies think outside their industry and see what's going on and explore in areas that they don't typically explore. Whether it's technology or human resources or whatever.

Jonathan Brill: [00:17:08] Right. So, in a pre COVID world. One of the things that I did was I'd bring teams who'd been in Europe and the US their entire careers. High potential leaders or whatever, and I'd bring them to China. And this is one of these things where if you're an American and you try and explain the Grand Canyon to a European, they just don't get it.

If you're an American and you haven't been to Beijing or Shenzhen or Shanghai, you just don't get it. That, you know, every two years, literally they're using the concrete that the U S poured in the United States in the 20th century. The scale is unimaginable. And once you get there, once you see that. Once you see your Grand Canyon, once you see your Beijing, your mind can't go back to the same place.

And so that would be my first thing is just kind of, how do you get that cross-cultural awareness of, of what's happening. The scale of change in the world. The second thing that I really suggest is figuring out how to create peer groups outside of your industry, but at your level. And ideally across the world. And that's some of what I do is building those peer groups, so that we can have those conversations.

Because otherwise you don't actually understand the challenge. You don't understand the scale of the opportunity. You don't see the rogue wave coming, right. If you were sitting around and you know, you were very specifically, you know, stockpiling face masks for the US government and you see, you know we can get these things cheaper in China. Like let's shut down our supply chains. Let's shut down our local manufacturing. Yeah. That all makes sense. Right? Because it's a price performance issue. Like all the incentives are there to do that.

Until you look at the bigger picture, risk is changing. Everyone's going to need all this stuff all at once. And we're going to need it when we need it on a sustained basis. And by the way, it's super cheap. Right. Like there's no, which is the entire problem, right? There's no margin in this. It's so cheap. There's no margin in, this.

It totally makes sense, as a middle manager that you'd say let's get rid of that thing. But as a senior manager, as a senior leader, you need to say, okay, that doesn't make any economic sense today, but in the long-term, we're going to have an inevitable need.

Brian Ardinger: [00:19:34] So how far out in the future do you think companies should be preparing or looking. To, or is, does it depend on the rogue wave that you're looking at?

Jonathan Brill: [00:19:42] How far out should you be preparing and looking are interesting. There, there are two different questions. What I really am interested in is that there's a range of possible futures. There isn't one, the closer you get to that future that, you know, the more the rank shrinks So the farther out you're looking at the broader the range should be obviously. But the goal isn't necessarily to look at 7 years out or 10 years out, or 3 years out, or 1 year out. It's to figure out, am I prepared for the types of threats and opportunities I'm likely to see?

And so I think about this as kind of like, what are the financial, operational, external, and strategic aspects of my corporation of my organization. And what types of waves would impact it? What types of challenges or opportunities might you see? And the same thing applies to customers, by the way. Could a static threat, a hundred year disease, suddenly become a dynamic threat, right?

We're starting to see these more often. Could a symmetric threat, it's going to impact everybody the same become an asymmetric threat? So you take a look at a Toyota. Their investment in semiconductors, after the Daiichi nuclear explosion in 2011. They looked at, you know, we had an asymmetric thing happened to the us, all those American manufacturers they didn't get hit by this nuclear meltdown. But we did. What would happen when the next thing happened.

And how could we move that from a situation where we get hit and no one else does, to we survive and then everyone else gets hit. So how do you shift between symmetric and asymmetric threat? And the result of that is in 2016, when there was an earthquake in Taiwan, China had a six-month supply of chips and they kept operating just fine. Everyone else got hit.

This past year, same thing happened. How do you move things from synchronous to asynchronous threats or the other way around? So how do you move them from things that hit everybody at the same time to things that hit people at different times, because you know, often all you really need is enough buffer.

All you need is enough time to respond. And then the other is to think about which issues are temporary and which ones are permanent. So, what's amazing to me about the U S response to COVID is this thing that really should have been a 10 year, five-year, ten-year issue historically. Appears at the moment, you know, to have been shifted from a permanent issue in the United States to a temporary issue.

Now we're going to need to manage our response permanently. Right. But the economic impact may be temporary. It's one of the greatest innovation moments, you know, I think when we look back 50 years from now, we changed the path of nature. It was one of the great innovation moments of the 21st century.

Brian Ardinger: [00:22:36] It's, I mean, truly fantastical times, we're living in, in a number of different ways. Are there particular trends or things that you're seeing or want the audience to pay attention to that they may not be as familiar with?

Jonathan Brill: [00:22:47] So we can talk about trends you might be unfamiliar with, but I think the question that you should really be asking is what happens when the trends that you're familiar with collide? I mean, a lot of the things that I talk about were in the news.

Can you take a look at the growing risk of a pandemic? I mean, and all of the things they talked about, high speed rail Maglev in China, the explosion of urbanization around the world, massive increases in Chinese Asian travel, the explosion of low-cost airlines around South Asia. Right? These were all front-page news. The issue is that people weren't putting them together.

For More Information

Brian Ardinger: [00:23:25] It's a fascinating book and I love folks who are listening to this to take a deeper dive. It really is a really good framework for how to start thinking about these things. And you dig into a lot of the tactics and examples around that as well. So I encouraged people to pick that up. But if people want to find out more about yourself or about the book, what's the best way to do that?

Jonathan Brill: [00:23:44] Jonathanbrill.com is my website and there's piles of useful tools, HBR articles, Forbes articles, advisory options, surfaces, and they're all focused on being useful to you.

Brian Ardinger: [00:23:58] Well Jonathan, I want to thank you again for being on Inside Outside Innovation and sharing your thoughts on this. I'd love to have you back. You know, as the world changes and we get more used to seeing innovations and digging in and being a part of it, I'm sure things will pop out new best practices and that will emerge. So, I appreciate you sharing what you know now, and hopefully we'll have you back on to talk about the future as the world evolves.

Jonathan Brill: [00:24:21] I'd be glad to anytime. Thank you very much for having me.

Brian Ardinger: That's it for another episode of Inside Outside Innovation. If you want to learn more about our team, our content, our services, check out InsideOutside.io or follow us on Twitter @theIOpodcast or @Ardinger. Until next time, go out and innovate.

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