Gail Davis: Today's guest on GDA Podcast is Mike Maddock. Mike is an entrepreneur, inventor, writer and key note speaker. I recently was in his audience and I knew, immediately, I wanted to get him on the podcast. He is the CEO [00:01:00] and founding partner of Maddock Douglas, which is internationally recognized innovation consulting firm. He has helped more than 25% of the fortune 100 design, brand and launch new products, services, experience and business models. All while empowering an agile culture that continually innovates. He's written several books and has a new one on the way and I'm sure we'll get into that. For now, I'd like to [00:01:30] welcome, Mike.

Kyle Davis: Hey, Mike.

Mike Maddock: Hey, Kyle. How you doing?

Kyle Davis: I'm doing well and [inaudible 00:01:36] here as well, too. I think for about those who like listening to us and maybe are not too familiar with who you are and your background and kind of how you got started in the innovation game, if you will. What is your background and how did you come to where you're at?

Mike Maddock: Sure, thank you again, Kyle. I am an [00:02:00] entrepreneur, which is to say that I start small fires and run away from them. I've been starting small fires since I was a teenager. Just out of college, I went to Iowa State University originally and then spent time at Northwestern, but just out of school I started a branding and marketing firm outside of Chicago. About ten years into that company's history we started doing new product development. I just drank the [00:02:30] Kool-Aid and we went about trying to become the first, instead of agency of record, agency of innovation. We bought a few companies and that's really where things got started for us. Since then, we spent an awful lot of time helping leaders in companies that are being disrupted, get ahead of the future.

Kyle Davis: Are you helping those who are trying to be disruptive or, did I hear this right, you're helping those who are being disruptive get caught up and then go forward?

Mike Maddock: Yeah, that's a good question. [00:03:00] Our typical client has a C in their title and they're believers. They believe that what they sell or the service they provide really matters. They kind of have this mantra; not on my watch. They see that their customers or consumers aren't as interested in what they used to sell and they're keenly interested in trying to figure out how they might serve those [00:03:30] people in the future.

What we do, is an awful lot of research; qualitative and quantitative, trying to understand their superhero power and the need to their current or future customers. We do an awful lot of prototyping and testing and just help them launch what's next.

Kyle Davis: What kind of products or services are you helping to develop? Is it everything from hardware solutions to software solutions? [00:04:00] To everything between? Is it changing culture implementation? What is it that you're assisting with as the agency of innovation?

Mike Maddock: The answer is yes. We've done cereal products, we've done new fast few products, we've done new software products, we've worked for insurance companies, we've worked for banks. Many years ago, we were working on projects that had the secret title; teller-less banking. We were involved [00:04:30] in coming up with these machines where you could actually get money and do transactions and what if there wasn't a teller?

We spend an awful lot of time now in industries that are being rapidly disrupted. Think financial services, insurance. Think healthcare, think higher education, think retail where anyone that feels like they're about to be "Uber-ed" it's probably a little too late. We work with those [00:05:00] leaders who have realized it early enough to do something about it.

Kyle Davis: A lot of the issues that you just mentioned; whether it be financial services or insurance and the like that you're saying are kind of being rapidly disrupted at the moment. I worked for a Vin tech startup that was trying to play in that space in finance, what we kind of came up against was this thinking that these little startups aren't going to do anything and then all of the sudden we're taking a bigger piece of the pie. [00:05:30] What is it that you think is probably preventing these larger companies, more established companies, from seeing what's happening? What are the right steps that you see that they're taking to become more agile?

Mike Maddock: That's a great question. I thought a lot about that so I'll take a swag at it. When a CEO of a large, established company tells me they can't be innovative [00:06:00] my answer, typically, is, "Congratulations." because you built a company that is designed to do the same thing you did yesterday a little bit better. A little bit faster, a little bit cheaper, a little bit more efficiently than how you delivered it the day before. So, you shouldn't be surprised when you yell, "We need to be innovative." Or introduce something that's disruptive to that company that you're ecosystem wants to kill it, because it's designed to do [00:06:30] that. That's number one.

You've engineered an organization that has been created to mitigate risk, not take it. That's the first observation. Number two; I think it's really important to define what you mean by innovation. That's a big, scary word and when people get scared they freeze up. The way that we think about innovation here is, I'll talk like a consultant for a second, if you think of a Venn diagram, [00:07:00] which are three overlapping circles. It's the intersection of an insight, which is a need in the market that you should pay attention to. Then, followed by an idea, which can be a product or a service or a business model or an experience. You need to be agnostic. Then, and only then, the experience that a lot of people say is, "Oh, you listen to me and I'll pay you this much for it."

That was a lot of words but once everyone has a common definition of innovation, you can start talking about; [00:07:30] what are we talking about? Revolutionary, evolutionary, fast fail, because they're all a little bit different. Which, leads to having a portfolio strategy for how you think about innovation. When I talk to you, Kyle, about investing, we should invest. What do you mean? Are we talking about bonds or emergent growth funds, et cetera. There are different types of investing just like there's different types of innovation.

Having a common language, having a frameworks like a portfolio [00:08:00] framework and then having an open dialogue about the best strategies to invest in each one of those is how it all starts. I'll stop for a second. I've literally have written books about this and I don't want to lose everyone.

Kyle Davis: It was an intentionally big question on my end. I liked what you had to say with there's two types of companies; those that mitigate risk and I'm forgetting what the term was that you used for those who maybe accept [00:08:30] risk or accept disruptive technology and how they set up these organizations. At the end of the day, you have to grow your organization and if you're resistant to change, change is going to pass you by.

Mike Maddock: That's right. The question from if you're an established organization that the challenge for you as a leader, is how to operate that machine so it's creating enough [00:09:00] value and cash that you can invest in other types of futures. You said Vin tech, they started a venture fund about four years ago and we actually turned our own model on venturing. Of course, the people in venturing said you guys are out of your mind but we raised some money and from some entrepreneurial friends, we invested in 13 companies. [00:09:30] All 13 companies are still around, one of them sold to LinkedIn, we're about to have another transaction.

We're generating about a 20% rate of return on the investment but what's interesting is that we're doing it differently. When you go back to that definition of innovation, insight first idea second, the way we're investing is we're starting with really large established companies and we're getting the leadership to agree on [00:10:00] two or three challenges that they have identified that they need to be solved but they don't know how to solve them.

Once we have those challenges and they're quantifiably significant challenges, not to get in the weeds but these are real, specific things they need to solve. We go looking for startups that have solved those problems, we invest our own capital into those startups and then we introduce them into the large company who can use their solution, [00:10:30] partner and prototype with this startup or invest or even buy the startup if they want to.

That's a way for a large, established company to invest in disruption in a way that doesn't screw everybody up. It doesn't scare everyone because it's solving a specific problem. It's medicine that that patient is willing to take.

Kyle Davis: I want to put a pretty little bow on this but I like the fact that you talk about having [00:11:00] a portfolio mindset, not investing all of your eggs into one basket so to speak. Being agnostic in your approach, which then allows you to invest in various futures, when I say this more eloquently than you how you said it, people kind of don't understand what is being said, could you simplify it and shine a light on why you have to be agnostic with the ideas and kind of spread the love, so to speak?

Mike Maddock: [00:11:30] Yeah, sure. One of my favorite sayings is, "You can't read the label when you're sitting inside the jar." Which, is to say the more you've been working on the challenge, you become an expert. The greater your level of expertise. You know what business you're in, you know what product or service you make, you know what the laws say, you know what's illegal, you know what you've tried in the past, you know what you can afford, you know why Harry got fired, you know, you know, you know.

[00:12:00] That keeps you from seeing possibility when it's right in front of you. Taking a step back and forcing yourself to be as objective as possible, allows you to consider new business models, new platforms, new products and new services. Really, most everything we do here is trying to infuse objectivity at the right time and the right place so that experts can keep from [00:12:30] getting in their own way.

Just so that I don't sound like a snarky consultant, everybody has this challenge. I have a handful of business and it's really hard for me and my partners to get out of our own way because we become so good at what we do and then all of the sudden the world doesn't want from you anymore. You have to have these disciplines and practices to step back and be objective about what the future actually wants to buy from [00:13:00] you.

Since the future's coming faster and faster and faster, having that capability gives you an unfair competitive advantage. Then if you want, I'll make it even simpler and talk about idea monkeys and ring leaders, which is my favorite topic but you decide.

Kyle Davis: Let's talk about idea monkeys and ring leaders.

Mike Maddock: Okay. I wrote a book called, "Free the Idea Monkey," to focus on what matters most. It's really about these two mindsets and I call them idea monkeys and ring leaders. The ring leaders [00:13:30] are the operators. The ring leaders are the ones that know how to get you to where you want to go. They build the systems, the practices, the metrics, they're operators. They are all about mitigating risk, they are all about profit.

Then there are the idea monkeys. The idea monkeys are the divergent visionaries. They're the ones who are trying to solve problems you haven't even had yet. It's kind of like Roy Disney and Walt Disney. Roy is trying to make the happiest place on earth, and Roy, his brother, is trying to keep [00:14:00] them from going bankrupt everyday.

What happens is, as companies become more mature, like GEO, which is created by Edison, this amazing inventor, they bring in the operators. They bring in the ring leaders to make sure that they're profitable and they're making really prudent decisions and that muscle gets stronger and stronger and stronger.

The greatest companies are the companies that know how to balance the mindsets [00:14:30] and practices of divergent leaders and convergent leaders, of idea monkeys and ring leaders. Wherever you see great partnership, you see this tension but what happens in mature industries is that their ring leaders take over and under pressure, what they tend to do is operate better, which is to say that they double down on the formula that got them here. They do what they did yesterday cheaper, better, faster than the day [00:15:00] before and ironically, that actually accelerates their demise.

If you're product or service is no longer relevant, by doing what you did yesterday faster or better, you're actually losing money faster and better. This divergent, convergent tension is balanced in great organizations.

Kyle Davis: I like how you talk about how even if you continue to do what has gotten you to where you're at but if you [00:15:30] do it more cheaply and more proficiently, you kind of have the mindset that you are innovating in the way or that you're becoming a more efficient organization. But to you're point, you're more rapidly approaching a cliff face without even knowing it.

Mike Maddock: That's right, that's right. There's a great quote, I think it was Mark Twain, it's, "It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so." Operators [00:16:00] are so sure that they're right because that formula worked yesterday and that's what gets them into trouble because it's suddenly no longer relevant and they won't let go for a better grip.

Now, I got to tell you as an entrepreneur I have the exact opposite problem, which is to say that entrepreneurs tend to have a new idea every week. It's like, "I know we were working on that last week but now we're doing this. What about this and what about this." They run out of friends, run out of runway, run out of money [00:16:30] inside of 18 months to three years depending which study you look at.

That's why the balance is so important because the strength of a startup, an entrepreneur is coming up with a new idea that the world wants but then the operator is the one that knows how to scale it efficiently. Again, that's where the magic happens in that balance.

Kyle Davis: Yeah, I find it incredibly important for people to really have an understanding of how to land on both sides of defense. [00:17:00] At the end of the day, you need to specialize in one thing probably over another than work together with a counterpart. I think if you have somebody at the helm of it that can play on both sides of the fence, it's very beneficial. I sometimes think of myself that way but maybe it's because I'm like an ego maniac and I want people to believe that.

Mike Maddock: You might be, I'll call it a pivot thinker. If you look at the data, pivot thinker, that means that they can play both sides of the [00:17:30] fence, are less than 10% of humanity. I will say, that when you start a business you have to do everything. You have to play chief marketing officer and CFO, chief financial officer. As you grow and as you become more aware, what I have found is most extremely successful people just really love doing one of those more than the other and they spend their time then focusing on either being [00:18:00] a visionary, a "what's next?" person or being an "Okay, what's tomorrow?" Person, an operator.

Then, they find the yin for their yang. Just getting a little bit deeper into it, when we work with executive teams that want to be innovative, one of the things we do is we'll test to make sure it's a balanced team. It usually isn't. You've heard the fish stinks from the head down or a shadow of a leader.

Usually what happens is, the [00:18:30] leadership team is a reflection of the CEO, which tends to be out of balance. You want to get imbalance with your team.

Gail Davis: I was going to ask you if there was a key to creating an innovative culture.

Mike Maddock: Okay, we're talking about it a little bit. It's a balance leadership team, it's a process that is both divergent [00:19:00] and convergent, which is to say that there's an equal number of people and processes that keep you focused on what matters most and allow you to see what's around the corner. I think those are real keys to an innovative culture.

The cliché things like; being okay with experimenting, having leaders that say, "We tried something and it didn't work and here's what we learned from it." [00:19:30] Having a portfolio strategy where you have defined what innovation means and you're placing your bets with prudence. You're not just swinging for the fences.

Gail Davis: Are there certain places that companies tend to get stuck?

Mike Maddock: Yeah, that's a good question. We've done a lot of research on this. The first place that companies tend to get stuck is right in the beginning. [00:20:00] I believe that you have to have a case for change established with your company, which is to say that at the highest level of an organization everyone needs to believe that this is important.

The way that we do it is that we take a cross section of leadership, we ask them what their most inspired by and what they're most afraid of. We actually then go do research with them and we have the leadership present to each other what we'll call a case [00:20:30] for change, which are the economic, the financial, the economic, the macro, the micro, the cultural issues that could either make them famous or get them into trouble.

There's this whole [inaudible 00:20:45] that people support what they create. What you want is a leadership team that is both inspired and scared at the same time. Once you have that across the top of an organization, when the [00:21:00] rubber hits the road they won't give up, they'll stick with it. That's a case for change.

The next thing to do is to be insight focused. People fall in love with ideas, the difference between innovation and invention is inventors are people that come up with an idea and then go looking for someone that will buy it from them or wants it. Innovators start with a significant need.

A company that is really great at understanding what the future wants from them [00:21:30] is an insight driven company and they win. They beat idea driven companies. Those are the first two that are really important, it gets you out of a trick bag of bad ideas, rush the market, risk eversion, et cetera. Those are the first two, there are about eight others but I don't want to take up too much of your time.

Gail Davis: Is innovation a team [00:22:00] sport?

Mike Maddock: Yeah, it is. I once is in a leadership group with a bunch of people and we were learning about coaching. We had an executive coach come in and he said, "I'll tell you what a coach does. A coach asks you what position you're going to play and then makes you the best at that position. If you suck at that position, that coach is going to move you into a different position."

Innovation is a team sport but your people have to understand the roles and they [00:22:30] have to be playing the right position. I touched on that with the idea monkey, ring leader analogy so I won't hit it again. It is absolutely a team sport where the right people are playing the right position.

Kyle Davis: I want to circle back to something that I was just thinking about. When you talk with these companies and you got to them, you start making this case for change, I'm wondering if you could provide maybe one of your more generic case studies of [00:23:00] a company that you worked with and how you found them a solution and what the steps were through that process? If that's possible or maybe I'm asking too much.

Mike Maddock: I have to think for a second because as I'm sure you know, we have to watch it. Years and years ago we were working with SC Johnson and I'm going into the way back machine. [00:23:30] If you think about SC Johnson, they have brands like Glade and Off. They're a chemical company but they have consumer brands that are both candles and air freshener and insect control.

They were looking for something new in insect control. We did a bunch of qualitative work where we went and [00:24:00] talked to a number of consumers and internally talked to a number of their leaders and we formed insight statements. Insight statements sound like this; "I, statement of fact, because, reason to believe but." I, because, but, I, because, but. That's a three part statement.

Once you have dozens and dozens of them, you can actually test them and force rank them. The winning insight [00:24:30] actually had to do with decorative insect control. It sounded something like, "I want to control insects on my deck because it makes my part goers happier but insect control is so ugly."

At the time, there was citronella candles that you'd light up and they don't really work unless a mosquito flies right into the smoke of the citronella candle. There was things like coils that you could [00:25:00] light on the ground but if a child or a party goer steps on them you'll get third degree burns on your feet, but they work.

There was this whole opportunity against a macro trend of outdoor entertainment. Think about outdoor fire pits, outdoor kitchens. People were using their backyard space as their new living room that was growing. Put against this macro trend, this insight really had legs and what came out of that were these lanterns that [00:25:30] you put a candle in, light the candle and the you'd put this little chip of cardboard that was infused with insect repellent. It would heat up this piece of cardboard and that scent would get into the air and guess what? Mosquitoes hated it and it was beautiful. Decorative insect control.

Even better, now you have a razor blade model, you're ina new aisle in the supermarket, it plays on two of your [00:26:00] best brands and capabilities; candles and insect control and that's a winner. That's how it works. It's all taking a step back and saying, "Okay, what is an insight? What's a need in the market that fits right in our wheelhouse?" Once we had that insight there are hundreds of different ways we could solve it, that was just the winning way.

Kyle Davis: When we were talking with you and you're team about setting this up, this podcast recording. We had this great back and forth [00:26:30] and somebody sent over this question and I think it ties perfectly into the case study that you just provided but I think it also has this great general applicability. I'm curious as to how a brand or generally speaking, how their purpose and how their promise really impacts not just innovation but the innovative culture that they have and kind of everything throughout the organization?

Mike Maddock: That's a good question. Again, back to the Venn diagram; [00:27:00] insight in the market, then idea, then experience. That is the same Venn diagram I would use to talk about how great brands keep promises. Innovation at its core is really about keeping promises. Listening to what your constituents want from you and saying, "Okay, I've listened and delivering it." If you're a purpose driven company, that's just a criteria. You're listening [00:27:30] to keep that promise of purpose and then delivering a new product or service or business model that says, "Hey, I listened."

Every once in a while on stage, I'll tell people that advertising and marketing is the tax you pay for a bad idea. Keep in mind that my background is in branding and marketing and the reason that we got into innovation is because I got really tired of selling creativity. We work harder, we're more creative. [00:28:00] Advertising and marketing is the tax you pay for a bad idea.

Why not start with a relevant service, product or business model? Something the world really wants from you. You'll spend way less money because the people that care about you will tell each other. Gone are the days when you can push something that isn't relevant. Say hello to a time when as soon as you solve a real problem that matters [00:28:30] to a lot of people, the world will let their friends know almost immediately.

Kyle Davis: I think you kind of hit the nail on the head but it's having this promise to keep innovating and providing this outstanding service or whatever it may be, is the thing that really helps keep focus brands, I guess you could say, on the leading edge of the sword.

Mike Maddock: If you look at the biggest disrupters you can think of, what they really did is [00:29:00] they found a pressing opportunity in the world that the incumbent failed to respond to. Another way to say it is embrace the hate to innovate, which is to say if you would just pay attention to what people really hate about, it's a clue for needs that are going unmet in the world. I think it's funny that there's still waiting rooms in doctor's offices like it's okay to make people wait. It just drives me nuts.

Kyle Davis: It's kind of like to [00:29:30] your point. I literally had this conversation the other day when I was at the dog park talking to a Dallas chamber of commerce guy. We were talking about disruptive industries and how every time I go to a tech conference it's somebody telling me they're the "Uber" of this. It's almost always the "Uber" of something.

When I was working in San Francisco, I was worked in the same building as Uber headquarters and I remember one day, I guess however the ten remaining taxi cab drivers [00:30:00] in San Francisco decided to make the rounds and drive their taxis around the Uber building and honk their horns for an hour and a half, two hours. That's time one; they could have used to pick up fares but in that time they probably could have each on one phone, all signed up to become Uber drivers and started driving the next day. For something that was way better experience than riding in a taxi.

Mike Maddock: It's funny, because just building on that [00:30:30] point, I've been picked up by Uber drivers that have Uber and Lyft decals in their windshield. Which, is to say now that Uber might be "Uber-ed." Because they have customers, their own drivers, and if they're not treating them right and listening to them, those people have other options as well.

At the heart of innovation it's not ideas, that's a fallacy, it's insights. [00:31:00] We spend too much time and energy falling in love with ideas that only matter to a handful of people, when if you spend more time thinking about; let's do some real work about needs that are worthy of our attention and then we'll get the most creative people in our world, not just our company, and we'll get them together and we'll solve them in really unique ways that we can deliver and own. That is how innovation happens.

Kyle Davis: I like that you mention that because I remember [00:31:30] when I was in San Francisco and even here in Dallas, but I remember in San Francisco there was another company that was competing and it was called Side Car. Side Car, I think, is out of business now. I remember this driver had all three of them going and I was like, "This is ridiculous." But okay, good for you, I guess.

Gail Davis: Mike, do you want to give any hints about your fourth book that you're working on?

Mike Maddock: Yeah, thank you, Gail. Gail, as you know, [00:32:00] I have the unbelievable honor of spending most of my time now with either entrepreneurs, it's kind of like David and Goliath; by day I'm afraid of Goliath who's afraid of David. By night, I'm hanging out with David who really, really wants to be good friends with Goliath.

Because of that, I've had the blessing of being in rooms with disruptors and I've noticed, there was a guy across the street from my house [00:32:30] when I was a kid. He just seemed really lucky. He had the big house, the big car, the big boat, the big plane and I thought, "Man, that guy's lucky." What struck me as I got older was that he seemed to be lucky again and again and again. There was something about the way that he was behaving that he could just turn the world on it's edge to his benefit.

I got curious about disrupters. Not great leaders, but great disrupters. I picked out a couple dozen of my [00:33:00] friends and associates that have consistently been able to blow things up. Blow companies up, blows paradigms up. I just met with them and the book is called, "Plan D" which is about disrupters. It's how disrupters stay three steps ahead in what you can learn from them. I just had taken apart a dozen or so of the lessons that surprised me about these people.

Gail Davis: That will be released next fall, is that [00:33:30] correct?

Mike Maddock: Yeah, it will be by next fall for sure. I'm actually trying to get it out earlier in the year but I've got businesses to run. I've been working on it for a while. It depends how much screaming comes in on line two I guess.

Kyle Davis: One final question on the new book that's coming out; I know you said you had, I think, 12, but what's one thing at least that's surprised you that almost all of these disruptive people have in common?

Mike Maddock: One of them is that they're strategically selfish. [00:34:00] Think about that person that you know that golfs like four or five times a week or that seems to be totally, how do you have time od that? I was talking to Dennis McDonough, who is President Obama's Chief of Staff. I asked him, "How did you not go crazy?" Because next to the president the White House Chief of Staff, particularly lately, is a real difficult job.

[00:34:30] I asked him, "How did you keep yourself from going absolutely nuts?" And he said, "I ran." I go, "What do you mean you ran?" He says, "I ran to work and home every day." Which was interesting but what struck me was that he felt bad about it. Dennis has a pretty big family, he comes from a very large family. He said, "I probably should have been with my family because I work so much but I really needed the time to blow off steam and to process everything that just happened or was [00:35:00] about to happen."

When I look at disrupters, they have wittingly or unwittingly have this selfish practice that lets them step away, process and it gives them an unbelievable advantage. That's one thing that I discovered.

Kyle Davis: Yeah, I'm kind of speechless but at the same point of time it's like, of course they do. Of course they have this little thing that they do so they can get out of their mind and into [00:35:30] their body or something like that.

Mike Maddock: You talk to enough people and you start to notice patterns and it just hit me because before that hit me I'm like, "Dude, how can you get to golf five times a week?" I was telling myself these stories and as soon as I noticed that, it completely changed the way I think about, "You know what, I got to get away from this for a while. I owe it to myself, my family and actually, the people at work that are depending on em."

Kyle Davis: I think that's a great place [00:36:00] for us to wrap up. With that being said, I just want to say thanks to Mike Maddock and be sure to go get the new book that's coming out sometime next year. At the latest next fall, maybe earlier before that.

Gail Davis: In the mean time there's three other books you can read and we'll post all of those on the link.

Kyle Davis: On the website, yes. Thanks again, Mike.

Mike Maddock: Gail and Kyle, my pleasure.

Gail Davis: Thank you.