PBD and the Biz Doc Interview the authors of one of their favorite books, W, Chan Kim and Renee Mauborgne, Blue Ocean Strategy Authors. In this heated interview, they discuss Capitalism, ESG, and Politics.
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Okay so today's podcast is a special Podcast let me tell you why the authors Of the book Blue Ocean strategy that are On with us right now Renee maborn and Chan Kim they wrote this book called Blue Ocean strategy Tom you give me this Book I want to say 15 years ago 14 years Ago when we were at vistage and you said Pat you got to read this book blue ocean I read the book after reading the book Blue Ocean strategy that sold I won't Say nearly 5 million copies if not Already above that in the in the Business World whether you go to any of The ivy league Business Schools at Harvard it doesn't matter what USC no Matter where you talk pen everybody References Blue Ocean strategy it's Always at the list with uh blue ocean With competitive strategy by Michael Porter and it's known as a top 10 best Business books of all time by a lot of Experts and for me I would like to get Credit for being recognized as the Number one salesperson of this book Without ever having made opinion for This book because I love this book I I Can't tell you how many times We have held strategy sessions worldwide In different places and asked our Executives to read this book write a Paper on it and then let's sit down and Go through it and uh and then the the Folks that are here with us let me
Properly introduce them as well so you Kind of have an idea so uh Chan Kim and Renee uh maborn uh Renee is the insea Distinguished fellow and a professor of Strategy at NCH she's also the co a Director of NCAA Blue Ocean strategy Institute in Fountain Blue France uh and Now they have a new book coming out her And Chan called Beyond disruption Innovate and Achieve growth without Displacing Industries companies or jobs We're going to find out how you do that And then she and uh uh her uh co-author Together Mr Chan Kim he is the Distinguished professor of strategy and International Management Emeritus at Code and the co-directive NC at Blue Ocean strategy as well and prior to that He was a professor at the University of Michigan business school in America and Both of them in The Thinker 50 which is Like the Forbes 400 of thinkers for Business management okay the fortune 400 Or you know the Inc 5000 or any of those Lists that we know about by thinkers 50 They're both recognized as one and two So we couldn't find anybody above them And so with that being said Renee and Chan thank you so much for making the Time to talk about your new book beyond Disruption Thank you So having said that for for folks that Don't uh know maybe this is their first
Time uh um learning about Blue Ocean Strategy if if you wouldn't mind taking A moment let's set the tone with that And then the evolution of Blue Ocean Strategy to uh the blue shift to Beyond Disruption let's take two three minutes On on the first two books and then I Like to spend the rest of the time on The new book if you don't mind Yeah Chan why don't you start Stop So you know Patrick Um when we started our research Journey We saw that the whole field of strategy Focused only on competing It was all about analyzing existing Industries and figuring out the best way To position in order to outpace the Competition within those Industries And you know competing is still a viable Approach to strategy But we asked the question why should Strategy only obey about how to compete Because when you compete one person wins And one person loses and why should we Only play this zero-sum game and as we Saw in many Industries it was Increasingly a race to the bottom where Everyone was competing so much against One another and imitating one another They had effectively commoditized their Industries and what they saw was Shrinking profits growth and margins so He said why can't strategy also be about
How to create these new market spaces Because history is very clear I mean First an industry gets created And then some companies jump in and Imitate and only then does competition Start so he said why are we there for Only focused on analyzing and competing Once in existing industry and once an Industry exists why is a field of Strategy ignoring the whole first half Of how those Industries get created to Begin with and so we set out to Understand what does it take to break Out of these red oceans of bloody Competition With Supply exceeding demand and open up What we call these new markets or these Blue oceans of New Market space where You have no competition and you're Effectively unbenchmarkable from buyers Point of view because what you do stands Out so significantly versus others Within it and so that was the central Starting point of our research Journey To the blue ocean how can we not compete But create these new markets And Chan it looks like you're definitely In a blue ocean right now without any Sharks around you you know they're in The red ocean uh you know biting each Other's market share so uh from your Standpoint uh Chan if you don't mind the Blue Ocean strategy how did you guys how How can you explain the concept of the
Increased decrease create eliminate to The average person that's watching this Cost [Music] Naturally about theory of the brand new Innovation Create the value in Innovative manner as A language called value creation you can Be incremental we're talking about game Changing value creation we're talking Manual Innovation to Simply put This new market space where no Competition is in by pursuing Differentiation and no constant together Not about one or the other for example Principle of competition is about Pursuing either differentiation or low Cost Differentiation low cost By breaking the trade off you create Explosion uncontested Market space so That's in the definition of uploads and It's about Time for for you when you and I first Talked about it and we're sitting there Talking about how we can turn our Insurance company which you know we grew From 66 agents and then we had a chance To sit down and read Blue Ocean strategy And how to differentiate ourselves from The marketplace we grew that from 66 Agents to now 43 000 agents and we Recently sold it and you know Silver Lake IMG all of that stuff and we have a
Few hundred offices Nationwide National Business and 49 stead states do you Remember the conversation we had about How we can turn our insurance company Into blue ocean based on the create Eliminate increase or raise and decrease Yeah absolutely Pat had this Vision to Serve the American middle class on a Diverse Um audience and that diverse audience Was increasingly coming from people that Were in Next Generation Next Generation Use technology so we eliminated uh Paperwork and processing through the use Of technology and life insurance we Added access us you know normally the Access to a career in life insurance was More difficult and challenging you added Access to come get quick training and People that had a high school diploma Could access a career in life insurance And so you added that and then you also Reduce complexity for insurance agents By not expecting them to have 40 Insurance carrier companies in their bag They had three or four to offer good Choice for the consumer and not overly Complicate what you were offering to the Consumer and so it hit like three Accesses very well and I think the proof Was in the uh the incredible growth rate And the difference it made yeah I like What she just said and you know about The fact that on how uh uh on the
Competitive side because we went the Average insurance agent as a at the time Was a 56 year old white male and that's According to limra and then we saw what Was happening with women wanting to go Into entrepreneurship so we Target Because the average insurance agent it Was only 7 19 percent of the agents were Women so we targeted women and and we Saw the fact with the election taking Place and how Barack Obama in 2004 he Came up as a senator and you know how Ron Paul raised six million dollars on MySpace in 24 hours I'm like wait what On on MySpace and in 2008 how much Everybody was talking about the Hispanic Vote So our target audience became uh women Hispanic Millennials you know and at the Same time using social media which was Not welcomed by the financial industry And we eliminated Securities we didn't Require people to get their series six 63 I'm a series 7 guy 66 26 all these Licenses but we said we don't need to do That we're just gonna you know create This element eliminate this part Increase this decrease this and the Market responded to it and you know by The time we'll have our event a couple Months from now MGM will be 54 percent Uh Hispanic 51 percent women and you Know the companies Excel into what it is Today but now for you to say from going
From there to now going into uh blue Ocean the blue shift what was the Premise of blue shift before we go into Beyond disruption so Chan if you don't Mind taking a lead on this one what was The whole idea behind uh the the blue Shift Came out Now says here already in Revolution Now we need to jump into the blue ocean Yes we can create exploration from the Ground zero but how can a ship make a Ship from Europe hey Salman is very Difficult with your mindset is where did The competition So how can you change your mindset from Computing to creating So now When you actually try to change it from from red to the blue it's not Simply strategic matter this orientation Involved you can change your mindset By changing strategy of course to begin With By changing track of strategy from Competing to grading but that's easy Part occlusions strategy will cover But if people refuse to change You cannot make a ship So who want to be in your side of it you Call me the interaction with the Strategy that's more thought than we Never ever comment before Strategy you never thought about people
Dimension about confidence of people Believe in things Of a process they have a big faith into This to make an execution stall to issue Of execution and behavior aspect came Into the victim so we interviewed many Companies to see how they feel how they Succeed in a delusion based on their Actual experience at this time since Frozen is so popular we have a lot of Samples who has failed with the Succeeding so we discuss with them how They imagine not only strategic change But also behavioral change and how People come along to be successful to Make a ship from relatively that's how Lead to blows anxiety and relationship There is a second page how pollution Shift became about Would you mind because one of the things That made your book so exciting when You're going through it is the stories You write Yellow Tail you know how they Were targeting you know wine drinkers And then all of a sudden they went from Drink targeting wine drinkers to beer Drinkers six dollars boom they went from Selling I don't know how many cases per Year now all of a sudden they're selling God knows I don't know why I remember The 48 million is a number maybe it's a Wrong number but I remember a lot of Cases they were selling per year and Then they took off also the circus
Soleil story about how you know the Ringley Brothers or whoever was prior to Them and they were competing circus only Comes in and they disrupted who would You say since this is your world and This is who you look at who would you Say did it right during covid and who Would you say made mistakes during covet Specific to Blue Ocean and the blue Shift And either one of you can take this one Yeah Chen do you want to take that I Mean It's all because you first book came out Already in 2005. And what we saw of course then the Financial crisis hit and then we rode Our Um uh 10-year anniversary issue of Blue Ocean strategy in 215 and we analyzed All those Industries across and all the Companies and we looked at it that were In the original database And what you find is that while all of Them get bounced when the financial Crisis or even covet hits everyone gets Up and goes up and down a bit But what we found is that they tend to Be far more resilient because when times Are tough like it was in covet or in 2008 what happens is people hold their Purses very tight because they have less Discretionary income they're concerned About the future and so when they
Dispense of their income at that point They're making a very a thoughtful Decision But the ones that are offering as Cham Is articulating value innovation Creating these blue oceans with Differentiation and low cost because of What they eliminate and reduce and raise And create what we saw is those on Average not in particular tend to be the Ones that ride these macro economic Waves much better and we've seen that Through covid so I would not in Particular maybe Chan will think of one Pull out one in particular but I would Say that they really that by pursuing That and thinking value innovation you Ride the waves of macro adversity it Doesn't mean you don't get bounced a bit But you do do it much better and come Out stronger and rise to the top much Better during those difficult times and And by the way that's why I think we Also see now increasingly more and more The attention to Blue Ocean has been Strong persistently but now as Everyone's looking at the recession Around us increasingly over the whole The potential recession whichever way You want to see it people are coming to Us about bluish and more and more Because why Amanda shrinking how do we Grow And so that's that's what I would say at
A macro level Chan do you want to add on That yeah sure something I can add on People make a Question about the coffee So but when you look at Kabir when you Look at the bottom fundamental economics You know it's a matter of inflation a Lot of slow growth matter of recession All these kind of things pop up what is Bottom line though in terms of value What people want after community They want higher value of course because The demand is they are really Don't understand a lot of money you want To prepare for rainy days So they're all okay last of course they Are facility In the end of the day in the mental Economics Is bad Innovation again as Renee pointed Out so I said they don't have high value Lower cost So occlusion was here now So today there are lots of more Demand On pollution because in principle what They looking for Is much higher value at the lower cost Then who is going to offer that in the Marketplace That's the game name of the game Everybody is going to go for so our Prediction The old 2023 for coming years Blue ocean is another Battle Cry
And they have no other way That they can I'll Stand in a Marketplace Tom so if you take a look because you Just mentioned your database and you Mentioned the 2015 anniversary issue Where you you dove in a little bit Can you comment on what industries and And I don't mean just like an example of Uber over taxis that's a dramatic but if You look at say the Fortune 500 is there An industry that you see more of your Fingerprints in terms of Blue Ocean Strategy being applied than others Tan you want to take it No I think uh No sincerity it's not about entire Company Small small Social the company If I give a good example they have a Really turned around something Was uh in a way the consumer comes from Humbling around Nobody heard of something in 1990s look At the town they Dash into the scene And me Main engine is very innovation And by adopting blue ocean if you're Talking about drastic Canal overall Obviously as a chief executive office of Samsung is Mr Yoon They invited us to really push something Something to explosion they could put
The one example in a company who adopted Muslim principles and practiced it That's really one company to get in Obviously there are small small part of The apples and all these companies Certainly a lot of motion so Fortune 500 We don't we cannot know exactly how many Uh actually doing it but I'm sure a lot Of them doing some are product level Some are division level similar to where They sell the products Now these are the type of things you can Say In overall Renee you have something to Wear it you know I think the other thing Tom and by the way Tom thank you so much For giving that book to Patrick Um really thank you Um and Patrick um let me say that if we Only got some share from your business For Blue Ocean application I think we'd Be fine alone We'd be sailing in the blue ocean Ourselves so you know we missed that Opportunity there but let me just go Back and say also Tom you know the thing That really took us by surprise um Initially when we came out with a book Is how broad the concept's been applied So in Blue Ocean shift unlike Blue Ocean Strategy You know and I wish we had known each Other closer earlier because you could Have been one of the examples in the
Book we should have a case on your Company these are all companies across Industries from government to Non-profits to Um old Corporation startups that have Applied so when you ask about which Sector in particular we haven't seen it Defined by sectors we'd had rabbis come To us and say you know our synagogue we Don't have young people coming anymore How can we apply blue ocean to rethink What we stand for so we've seen it Really the energy and the appetite for It coming across all sectors we even see Families asking us how do we create a Blue ocean family we're stressed out We're tired we're competing spending too Much money everyone's sad in the family We look good on the outside but on the Inside we're miserable how can we create A blue ocean so that might be my answer Let me let me tell you have no idea How many Avenues blue ocean so I'm Talking to pastors and I was you know Christian Church was a you know I'm in Newport Beach and they asked me to speak At this event with Les Brown and I Didn't know it was pastors but all of a Sudden I'm like okay it's an event for Pastors and they're having this Organization great And I said look forget about what Denomination you believe in I said just Look at what the LDS church is doing how
They're using Blue Ocean strategy and How they're marketing themselves right What they're targeting what audience They're going this blue ocean applies to Everything too in the book your next Five moves I talk about how everybody Has to find a blue ocean it also applies To branding on social media how you Separate your message from others media How Tick Tock Instagram Twitter in every Possible way one has to be thinking About blue ocean uh again I I it's such A day-to-day word I use referencing your Book if I run into somebody that hasn't Read Blue Ocean strategy I'm confused on How you haven't read this book yet Because it's that much of a Revolutionary book so I'm going to keep Selling for as long as I'm around I'm Gonna do my part to sell but let's Continue with a couple different things You know um Into Beyond disruption you know the Concept of non-disruptive creation which Is something you guys talk about a lot And which involves you know creating new Markets without destroying existing ones And is argued to be equally important And potentially more advantageous and You give an example of non-disruptive Creation is exemplified by Innovations Such as microfinance life coaching Viagra crowdfunding smartphone Accessories which expanded the economic
Pie without displacing existing Businesses now we're all capitalists and As capitalists you know the one thing About capitalism is There is a competition there is market Share there is you know Your smaller company you get into the Marketplace and barrier to entry you Know the bigger guys have 42 percent of Markets you're 31 and now you're going To come in and you're going to take Three percent of it they're not happy About it now it's seven percent now it's 11 they went from 31 to 20 they're now Upset their board is complaining what do We need to do not their then there Becomes competition right then there's a Battle there's a fight in the board Meetings they're talking about your Company and what do we need to do to Address this you know so how do you Compete without competing in a Capitalistic Society Patrick so first of All it is very much a capitalist idea of Course and so let me back up one is we Are never you know even in Blue Ocean What we're never saying is don't compete And only create right in reality Businesses both you have to compete and Create you create this blue ocean you Can other people try to jump in you have To compete so you need to do both the Premise of being non-disruption is hey Everyone is focusing on the field of
Innovation is disrupt this disrupt that Take on this existing industry as though When you take on an existing industry The industry is going to say oh yes Welcome come on in please take the Baloney off of my bread I'm gonna sit Back and relax but of course that's not True they're going to sit and punch you Right smack right back And what we're saying is well wait a Minute that is certainly one opportunity And believe me if you have an industry That's asleep at the wheel that is no Longer effective it has a lot of Negative externalities and I know Patrick you've spoken a lot about you Know some of that that you see in the News media industry it's not as Effective as it could be then maybe Disruption is absolutely the path right So we're not saying it's not what we're Saying is why are we shielding ourselves From thinking about these opportunities Where I can create these billion dollar New markets and not have to go against The big guys and create them outside of Existing Industries and that for us is The opportunity why should I compete or Disrupt you and take on you when I can Just sidestep over to the right and I Can up open up potentially this new Market that everyone has been ignoring Where I actually have no competition at All and there is no one I need to
Disrupt and displace And the premise of the book is why Aren't we having a conversation on that Why is that overlooked because that is Really where you know economics and by The way Increasingly what we would say is social Good can be manifested because I'm not Displacing people And if you think that's not important You just be one of these recent Tech Executives that are being left getting Losing their job every single day Nowadays and when you're at the other End of that that hurts so that's that's Our premise there Patrick is that Possible Can I add something on top of Honey of course listen a man in a blue Ocean who's not in a red ocean always Has the mic so yes please Okay so what what I wanted to have is That for example just give one specific Example Ocean liner Atlantic Ocean across from New York to London all this that's huge business at The time and you know Winston Churchill Even said that that is where all the Ideas and Troopers moving around And during the war so it was really Awesome all of a sudden except Invented flying over the sky So now ocean Minds in trouble
So Get the trouble disrupted entire Original Miner originalizes struggling So therefore they are disrupted So people are losing jobs they're Shrinking their business Now of course there are two options to It what is fight back getting past the Airline business Or taking any other chat Travelers which Actually one company tried to do but They realized soon He has a huge pushback market share a Barrel is because of Regulation they Just Always be kind like uh obviously it's Nice to hear You know they take on Reliant Collide Always be a huge pack of resources never Easy to disrupt because Italian so what Happened Is that this company says hey Why do we need to eat this up bad Personal right and we have these ships Creation breathing without disruption Meaning okay make their competition Irrelevant by having vacation yet scene All you see Borderline in transportation means from New York to London for example because Why should we in that business anyway The business is disrupted and ruined now We want to use the same clip between Modification to get the huge business
Almost nobody know what it does Vacationing at Sea so close to tourism Again Meeting without deception what happened Now the new jobs came in You know and then so many people excited Obviously when you see the cruise during Industry today 200 U.S You create the jobs without disrupting Anyone new excitement new pleasure new Progress well you go to cruise Beautiful thing to do that is a good Example of creation without disruption Approach Same explosion why you compete upfront Why you are the fight with the sharks Just let's go and create Similar principle why do you deserve Go to create without disruption then Disrupting creation So that you have your own Market Then you look at the plugin Zone Approach blue ocean relationship Beyond disruption as common denominator Thinking about partisan thinking that's One number two most importantly Under the capitalism we are not in the Illusion to be socialistic Jewish what Happened Today whether you like it or not Realities you should make the money on The way And help also stakeholders you cannot be Selfish making money only against
People's happiness but this mood is Coming up and you hear about anyone Talking stakeholder capitalism all the Same now even though put the question on Milton Friedman who is believing in show The maximization of holy God so he asked Question Friedman one of these Economists of the 20th century and say Well If you maximize a share of your owners Society will take care what's up this is An outscope of the company But that's not true That we have a lot of issues for metal Externalities which is Cost for society happen like emotions And inefficiencies unhappy people losing The jobs as well is no longer choice we Need to accommodate somehow economic Growth at the same time you should be Seen a good cities around the world to Be acceptable especially perhaps you Know In this MJ generation I was very Sensitive That all these big people just make Money against people's happiness they Just object that How can you simultaneously like we did Inclusion Simultaneous Same thing simultaneous but economic Growth And Cooper Society
This is the main Question why notice of the creation is Not really Well but also That's way to go to the new capitalism To thinking differently rather than you Know only cultural Society do I have Your permission Can I push back can I push back yes okay I want to push back and and I'm curious To know what you say about this so you Know as an operator when you're in it And uh the last three or some weird Things happened as an operator being in It so one you know uh making money Against people's happiness right and We're all capitalist and uh all of a Sudden the last three years when the Market started forcing everybody to work From home You know we started being bullied by Employees who were coming and saying if You don't double my salary and allow me To work from home I'm gonna go somewhere Else so they started doing that to us The employers and I would say listen guy It's not a good idea for you to do this Because in three years you can have a Resume with four different jobs and Nobody wants to have somebody for the Most part that has four different jobs In three years because you get around And that says you don't stay with one Company no but these guys are offering
Me 120 and you're only paying me 65 and They're offering me 120 plus working From home I'm taking it great so that Was the war then they took it year went By they got fired They went from that company to another Company that I paid in 145. they went to Another company that I paid in 155 and Then the market realized you're only Worth 65. and then they couldn't get a Job for six or 12 months and now they're Bitching complaining about the fact that They can't land their job they're upset But now the employer who is now still There and they're now sitting there Saying look look what happened to the Market I can't afford to pay that now The employees coming back with the Following line look I made a mistake I Always love you guys and you know you Guys were the best and you know I made a Mistake leaving you know I had to leave It was almost like the perfect thing God Sent because I had to leave to realize How amazing you guys are and I miss you And even my wife talked about it and we Were crying together anyways now we hear The sob story okay as an operator if I Told you this happened to me 10 times It's a small number but here's the part That I I wonder how you guys uh can do This you've been successful in the past So I know you can do it I'm wondering How you're able to make that shift with
The mindset is when the when the selfish Gene Is linked to an incentive which is what Makes capitalism work You get incentivized to building a Company and doing it better than the Other guy did it and for that you get Compensated maybe you go into the public Market you sell private etc etc you get Equity you sell million dollar exits Seven million dollar Exit 42 million Dollar exit billion dollar exit and People get paid and in the selfish Gene Where employees are sitting there saying Look if I get a better offer I'm leaving How do you prevent both The Operators The founders this you know the guys that Started a company as well as the Employers to set aside the selfish Gene To not just do what's best for them and Do what's best for the marketplace Because right now you know the whole Thing that's going on with AI musk and Wozniak are saying slow down pump the Brakes on AI and the other side is Saying you can't stop pump the brakes on AI because they're going to continue Doing it so how do we prevent that how Do we manage those the motives of Selfish genes 10 let me go So one thing you know Patrick just step Back one thing is about your employees You're discussing and I appreciate your
Challenge there and I appreciate you Just talk to them very directly and said Listen this is what I can do it doesn't Make economic sense for me to do Differently and if you need to leave You're going to leave and I'm gonna hold To my principal and I know how to run a Business and that's what I see and so Maybe some left maybe some are coming Back that's a separate issue but beyond Disruption what we're talking about Their non-disruptive creation it's not Asking for any sacrifice of your Economics the power of it is is that in Your very pursuit of economic good Beyond existing industry boundaries You're able to achieve economic and Social good at the same time because I'm Not displacing others in the marketplace And so it's not a trade-off of one or The other you know historically we think About Um you know doing social good or Corporate social responsibility it's a Cost function for an organization Naturally when times get tough that Money gets shrunk you have to because You're in survival mode then so that's Natural and so it's a trade-off one for The other what inspired us about when we Saw this non-disruptive opportunity Is the ability to achieve both at one Time now And then Chan maybe take it from there
Because you know your question for me is A little bit on the employee side you Know I commend you for what you did There Um having that honest conversation I Think the real key there is you know a Concept that we discuss as well is Called Fair process Being direct with your employees about What you can and cannot do and why in Holding for it so I guess that might be My perspective there and the individual Is going to do what they're going to do Depending on You know their bias and their Opportunistic action Um Chan I don't know you want to add to That yeah I want to add some point 10 Made a very very compelling statement I like this energy passion accuracy we Are obviously capitalistic but always You understand principle about Innovation Start with low cost High value Is one lower cost at the same time how You tip the cost to begin with then You're not in the game of Non-disabrication anymore You cost too high how you align the low Cost you need discipline in your Employees not a negative way but Positive passion for those demanding Individuals who has less contribution
Investing more money well you need to Make decision otherwise you're ruining Entire company evaluation you get the Low cost low cost is very disciplined Approach it's not about cruelty it's About the alignment of everything So as an operator you see these Seven Nation employees Impossible employees that has been all The time Basic principles of discipline existed Without which company cannot survive so Let's get the message right Always in the uh Beyond disruption of a Creek without a disrupting creation it's All about starting in the low cost That's why in the end you're talking However Principles of value Invasion therefore Patrick's example of the selfish people People self-serving individual not Participating in companies and then Maybe their remorseful later on it's up To you to say Okay you you get one more chance Or you saying No thank you Well welcome that idea but you can ask Them to say hey okay guys you did so bad Things now you come back asking me to Forgive you And you put in your life and everything You've also great So I will see whether you really must go Or not
So now I want to go value innovation and Create You know I want to go for the mental Disrupting creation creating without Disruption basic principle of departure Is no cost because I need to get the Valuation right if you give me three Powerful idea how is more for the course Wow that's great I'm here Only hire you A chance if there's no idea come back Hey I'm sorry you cannot get it But this amount of discipline to get you Know some people make mistake okay we Can punish him right away but maybe not Necessary but give him a challenge who Knows and say hey Pat my boss he's a Great idea of voting because well you Never know right maybe chance to forgive It but this is a different different Matter of the principle it's not about Helping Society It's a matter of discipline you Embrace Now what we're talking helping Society Is about other things being equal You pursue because at the same time you Don't have to hurt Society because you Don't want to demolish the community In your mind as leader always may be Thoughtful about it Rather than saying hey When are demolish Community I can Maximize the program well that's the Simplistic mindset say well what if I
Make more money doing this Is there any way that I can Be good to community and it makes lots Of money well that's the way to go Because it's supposed to be you're proud Of your business right because you know You can make maximum you make maximize Profit but you know you make somebody Cry unfairly you don't want to do that Because it's always Between the two is important organic Principles so we found this principle of Creating without disruption Tom yeah I see where that all comes from How do we incent you know the in in a Room of typical entrepreneurs or even an Entrepreneur left left to his own Devices his or her own devices how do You incent that thinking I see what You've discovered and I see how you you Brought it to life in the book beyond Disruption but how do you incentivize That because it's this is not this is Not typical it's not normal it's not a That's not the thought even the um the Great example you use with the the Cruise lines that was self-preservation We have enormous ships that take a long Time to build and are very expensive and We're being bypassed by other modes of Transportation hey wait a minute what if We did vacations at Seas we could still Use our boats they weren't thinking About keeping jobs they were thinking
About preserving themselves how do you Incentivize entrepreneurs to think about This when the typical the typical Reaction is not bloodthirsty it's just Normal comp it's just normal competition Or in the case that ocean liners that Was self-preservation that had a good Outcome Yeah So Tom you know um when we when we first Introduced the ideas of Blue Ocean Strategy which actually was a series of Harvard articles before that Everyone pushed back on competing and They said the exact same thing why Should anyone create we can compete so We had that similar pushback and what We're saying incentivize in a Corporation you give them a challenge You say hey I'm the leader I want to Give you two different teams I want your Team to start thinking about some Non-disruptive opportunities because Most companies do both levers right so Tesla Elon Musk Tesla for him Elon is Disruptive to the Auto industry his Whole passion for a space tourism and Mars non-disruptive completely Non-disruptive Industries right so you Say Okay I want to have a team on you Guys and I want you to start thinking About non-disruptive opportunities Related and outside of our existing Industry I want you to come back to me
On them I don't want you to sit back Look about how to take on and so we Discussed in our book the two different Paths give me some try to find some Existing but unexplored problems that We've always taken for granted in Insurance for example and we're outside In financial services that we can unlock Show me I want you to start thinking About this come back to me in two weeks Start to do some brainstorming I want to See it maybe I'll have a competition the Best winner I'll give you I don't know a Night at a beautiful restaurant for your Family whatever it is something small Another team I want you to start Thinking about some disruptive Opportunities tell me what those are but I think it just begins with a Conversation giving it a challenge to Your teams don't think it's going to be Intuitive if I am if I am an Entrepreneur and I can think about Because it's very Macho to think or very Brave to think I can just take on all These existing Industries actually it's Not so easy you know as we discussed and Actually when you do you have to Understand as well most of these Disruptive companies what do they find One of the disadvantages is they get a Lot of pushback often from society Negative backlash from external Stakeholders Uber smile Direct in teeth
Airbnb all of them the legal Implications they've gone through with Whether it's governments pushing back Social interest groups industry Associations trying to cramp down legal What they find is their legal costs Explode the management time explodes Dedicated to those instead of their Business and the aggravation mounts so You know we have that chapter and Beyond Disruption of the four advantages as Well to non-disruptive your employees Get behind it more easily often if You're an established company because I'm not displacing myself Um and we articulate them so Tom if if I'm an entrepreneur I'm going to start Thinking okay I've always thought disruption sounds Good every VC sees it let's be honest It's pretty hard too I want to spend at least two weeks start Thinking some non-disruptive let me look At what are the paths and just start Putting my mind there if we don't have It in our mental space we're never going To see it the minute we put in our Mental space we often see what before we Were blind to even though it's right Before our eyes So yeah Carnival was had their back Against the wall true and many companies Create when their back is against the Wall but our question and the purpose of
Our book is not waiting for you to be in The valley of death and have your back Against the wall it's for you to think Before the valley of death of how I can Create these growth opportunities and Let's start thinking so I'm gonna as an Entrepreneur I'm gonna think both I'm Not going to limit myself to half the Opportunity Horizon I'm going to open Myself to both and put some time and Start thinking and and let me say one Last thing about that is once it enters Your mind and you start thinking about Something you thought didn't make sense You start going around you're thinking Wow you know You start perceiving what you didn't Perceive before because you like look at Square Reader Credit card industry always focused on Medium and large companies payment System ncrb companies And you know the accepted reality is ah A babysitter ice cream truck they can't Accept credit cards micro business Farmers Market can't accept a credit Card that's just you know that's just The hard things a hard draw of the luck When you're a little guy those benefits Come when you're bigger Jim mcelvey and and Jack Dorsey said why Why should we accept that accepted Problem Can we not create that opportunity why
Not why can't we change what that is why Can't we leverage a cell phone that's All of r d of us as Samsung and Apple Why can't we leverage that make a little Reader why can't we do that in a very Low cost way and don't use the dock Where we have to pay royalties but use The Jack and then if I create it with a Jack I pay no one royalties I have no Legal implication And I hit Apple's customers and Amazon And Androids right away why can't I do That so You know those are the opportunities That we're saying as an entrepreneur And as an established company you think And start asking yourself so Systematically give a challenge to your Employees yeah that's how you start um Go ahead Chan sorry okay no no no Let me add some point Um by the way I'm so excited by your Question Now we are having good time With passion with a statement now your Question should we wait until until your Back is on the end and say no so here is The uh how we incentivize the Entrepreneurs So far theory of innovation if I Twitter Practice in theory Is all about disruption Disruption is Battle Cry it's updates It's up there or you will be disrupted
That's one lens they looked at Innovation even to the level if you Don't desert anything I'm not going to Finance you so entrepreneur Actually has trained they are actually Disciplined to say I'm the come up with A deceptive idea otherwise I'm not going To be fund it Silicon Valley boardroom Everywhere going That's orientation of thinking and we Said hey When you look at an empirical data That's part of the two the other part Never talked about Painting without disruption So it's an entrepreneur Should have considered some questions Don't don't worry about continuously Just give a small thing Let's say look at the Sesame Street Their question was preschool children Cannot be educated We just took for granted they don't know Alphabets They cannot have arriving numbers how Can you learn there's no way to learn it You pause the question Why not why couldn't young people learn By having fun young people you know Low attention span But they are so stimulated by the Pictures and entertainment so they Create okay why don't you use sheets and Muppets
Can make a difference and big birds Talking to you why don't you paint Imagination these young people can learn That start with small question Like for example even you know micro Finance industry They took Progressive Slower people Cannot get the loan we have no mortgage Knowing god But why not Poor people can get it a question For entrepreneur is so exciting and also You say for example for the future Why every year we see the Wind and Fire Going on all over we took for granted Annually all while in California these Bad and this Mountain Utah you know we Take for granted they should rebirth Upon us But now ai is developed don't Instagram So entrepreneurs say he What if I reduce the buyer by twenty Percent how much I'm talking about Trillion 35 12 it's not raining why Didn't you use something else that never Had before Can you for example imagine You can put the AI on the Drone And you can talk yourself anything Rather than people go there searching For the fire Can that reduce By 10 of saving unit 1st of us you know
How much money talking about just print Imagination now we are giving two lenses Okay assumption we are not saying no Search for it A very difficult emotion how about Another theory called non-disaptive Creation Creation with disruption look At this example what happened If you ask this question what could Happen even traffic he took for granted All traffic is always there How about the ideas avoid the traffic by 10 have ai drone AI loaded drone Preventing it like we have GPI GPS People You think you can make money certainly When you're in there nobody is there No you are in the swimming in the blue Ocean Making lots of money at the same time People like it because you're not Kicking around anyone So oh okay interesting how you Incentivize the entrepreneur as in the Series of question Not necessarily being It can be prevented it can rectification Whichever way As a thousand questions to paint the Imagination by having alternative way of Thinking about it it was so obsessed Within Theory so the power of theory is Giving another pair of analysis look at It so our our mission is to show the
Pattern tips Northern Horizon of the way you think About Innovation growth then all of a Sudden yeah I can see it when you talk with our People Even sooner they're not excited Okay so bro when I graduate I want to Create without this option the hero Tools here are the steps do you have Tools in process to go with it Yeah here it is maybe it's not perfect But you can start with this crazy Theory Case practice get his steps three-step Process why don't you try Like the other guy did wow we didn't Know that so now we heard it from Inception school that's only the game in The park But there's another possibility called Not disruptive creation was thinking Raise a series of questions Um Am I motivating you you as an Entrepreneur was thinking or you say hey Forget it I am going to be married with A dysfunction only doing it he hope if You stimulate you certainly Enterprise Will be stimulated Um if you next time come and you have Path to create business to the Entrepreneur and you want to go and then Disrupting creation this time Let's do it properly you give us equity
And we can talk about this because next Time I mean think about it how much we can Make out of selling one more very smart So this time if you want to do that you Want to incentivize entrepreneur now we Are getting developed You don't have to worry about royalties Of the books Well if you do a 20th anniversary Version it would be a privilege to see Pat and his vision for the insurance Industry to be uh one of the case Studies in in that book if you do a 20th Anniversary so thank you for that Chan Let me ask a question does this not kind Of open the door to think about Economic Development commission which is public Money to think about those things Differently uh Amazon remember it was Like 90 days of just horrible press and Argument when Amazon was going to build Its headquarter in New York get tax Benefits public money and yet the public Was screaming aren't these the guys that Are destroying retail and Retail is so Prevalent in New York a lot of small Business people were there and Eventually you know the the public side Won there is there not an opportunity For economic development commissions to Say okay if you're bringing businesses That have never been here before to the Area or you're trying to create a new
Center like maybe media in Fort Lauderdale or if you have a Non-disruptive opportunity so that we're Not going to have a net job loss which Has a cost to government because of Welfare programs is there not an Opportunity for maybe Economic Development commissions to think about Non-disruptive opportunities and maybe Give them preferences Tom I think that's a great question Um and I would say absolutely you hit on Two points one is that negative backlash We're talking about that disruption can Occur which happened for Amazon in New York I remember at the time So there was a lot about that and that's Something that often occurs but the Second thing is yes for economic Development especially you can think About the future right now when we're Seeing every single day what we're Saying about Ai and these new Technologies you know to what extent we Don't know no one knows but the large Numbers of 100 million potential jobs Being lost 200 300 million jobs and yes Prior technological revolutions have Always created jobs the real question is Though what is the speed that which jobs Are going to be released versus the Speed at which they're going to be Created and if they're released far Faster than they are created you have
Social instability in a country in a Community in a town and so yes I would Think that that would be a very welcome Message Um and that's a feedback kind of we've Heard and I would think then from an Entrepreneurial point of view as well It's one where you're likely to Potentially be able to get some Public Funding in support of ideas to say we Want to come to your community we want To do this and that is a string length Of it it is non-displacement so yes we Think it is from the government level Especially all going on in the world Right now with technology And the displacement that might occur Or seems to be on track to occur Um so we'd be totally I think you're Hitting the nail on the head it's a That's really a brilliant insight there Um but we are very glad in spoken with Them now Certainly this is a bright idea you can See the power 19 thinking about How we you know otherwise people really Want against them to be In terms of power and statue not only Supplying Kobe materials but also need To do something So question of course is the economic Development side there could be huge Move with a new way of doing it in
Excite entrepreneurial community Why it is so important for them Employment It's their big task I'm sure they want To find a way as part Pointed out in capitalistic way To create the job it's not about hey you Know we only pay 2 billion for you I Give you one thousand dollar check every Every month to take care of your world Map That's obviously naive and you know you Have to miss it do you keep a Distributing money from your child you Know they say hey Money tastes good I don't want to work So now many companies tell young people No I'd rather not to why because anyway I get the monthly excitement [Music] And you're creating right ladies see Them Who want to rely on the money you know Many companies who will be like that as A part one we are still in living Capitalistic Society We cannot do that now question Now common To be popular tend to handle the money That's first instances and say Hey you Know I can create a job I mean there's one Country I don't want to mention They hire all the people just sweeping
The street everything even necessary ten Thousand jobs fifty thousands are Created We pay the tax People the socialistic distribution That's a democrates a lot of people when Poor people love it anyway why not but The question we need to reverse the Trend how can we do it In capitalistic way you are helping Society that's economic development in Your Talking Thomas very good Opportunity well new way of thinking and Mobilizing people and And incentivize entrepreneur thinking Different People who do the money in good way in Other words you make money in good way Don't make your mind bad away That's it okay you know I think God is Great You know it's it's interesting you're Saying that capitalistic and contribute To society Um To me I think Again look this is your world where your Your everyday this is a topic you're Studying so I I love pushback because it Gets me thinking as well and allows me To find my blind spots but to me the the The ultimate uh uh contribution Capitalists make to society is creating A job that allows an individual to not
Lean on the government to take care of Them which means taxes for me goes lower God willing the the politicians are not Irresponsible with money and they're not Spending it constantly which obviously We all know politicians are very Responsible with money they don't ever Overspend money they're very good at Always wanting to lower taxes for us Hence I'm being extremely sarcastic here Um but but but but but the other part That's kind of confusing lately here's What happened China you guys will Appreciate this Renee when we were going Through the process of uh uh talking to Investment bankers and selling the Company We had this one meeting in Fort Worth And not for forget it This was a family office that had I Think 21 billion dollars of money that They were responsible for and so they Wanted to buy a company and the constant Criticism they kept getting was The fact that uh uh a percentage of Their advisors were not Black Or Hispanic and they were 99 white and this Is a topic that's coming up a lot lately I'm sure people are calling you guys About it and you guys are helping them Out you know so so so I said so where Are you going with this says look we Have a thousand resume we looked at this Is our problem only three B people
Applied that were Black Or Hispanic to Want to become investment bankers in Fort Worth okay where they're at what do We do about it and so they they kind of Express indirectly their frustration and And for a moment it was almost like we Were not in the room did you feel that Was like they were like talking to each Other and then all of a sudden they Buttoned up and they fixed their ties But for like do you know what I'm saying I felt invisible for a moment I'm like Do you want me to step outside or you Have your staff meeting and we'll come Back and then and then the part where They went uh Chan is you know uh for us Are one of our chief reputation officer Morale at the time she's now the President she CR she got a report from Newsweek that was reported on Newsweek On our Dei score and we had a very high Dei score and you know they were Interested about our di score so it's Okay we can get that for you so they Looked at the DI score and their Conversation was we value this asset to Buy it because it allows us in a Marketplace to see him a company that Has a high Dei score hypothetically Right okay and then we're on a flight Back and I'm sitting there saying I Don't know if that should be the reason For a company to make an investment just To please the government with a certain
Score that they have so recently one of The candidates that's creating a lot of Uh Ruckus and he's being talked about Everywhere he's like the Andrew Yang uh Of the right Vivek ramaswani I don't Know if you guys are following him or Not so Vivek I actually you know first Time we had him on the podcast and I'm Listening to him like okay this guy's Got an interesting angle he's taken he's At three percent right now this morning I saw the reports he's ahead he's right Behind Nikki Haley and he's a percent Ahead of uh uh who's a lady from uh uh Arizona father was a uh Um Carrie like McCain is it McCain I'm Sorry she's not Arizona where's she Based out of is she Arizona or no McCain Is where's McCain from Uh is she the one that's from the Project the uh Lincoln project McCain She's from Do you know that or no anyway so she's Two percent vivec is at three percent I'm sitting there watching this and Renee all he talks about is how Catastrophic ESG is okay and how it's Causing companies to make decisions that Just doesn't make sense recently Bud Light made a bogus of a decision the VP Of marketing and she says I'm a Businesswoman I said if you're a Businesswoman you know 85 percent of Your customers are men who drink Bud
Light why would you want to Target a Certain audience and then story comes Out that she was trying to help increase The ESG score because Anheuser-Busch has Won the lowest ESG score but that's a Dumb move to make because you just hurt Your business you lost six billion Dollars in valuation and then the CEO Had to come out who's a former CIA Harvard Business School Military Marine Zach luck you know we're going to go Back to our horse commercials because That's who our audience is and we're Going to Target our military folks you Know those who love America so do you Think some do you think the direction We're going right now with these you Know ESG Dei never been in so many Investment banker meetings but everybody Wants to know what our ESG how Responsible we're being with the society And the economy and Di all this stuff And uh it makes capitalism capitalists a Little bit confusing because who are we Pleasing now and why are you concerned As well with the direction ESG and Di is Going I know it's a little bit of a technical Question I don't know which one of you Guys wants to take it but I'd love to Hear your thoughts yeah Chan go ahead No Patrick obviously it's a really uh Sensitive issue and you're right I think
There are a lot of people and Vivek Ramaswamy is one of them really uh Pushing back obviously he was a very Successful entrepreneur before that and What he's saying is reality is you know We need to build excellent companies and We need to build it based on economics And if we're geared too much towards That and you know he took on some Different examples like in the energy Industry by you asking me to do ESG You're effectively asking me to kill my Business Um and and kill that and so he's really Pushing back on does this really make Sense to an economy Um you know I'm gonna Dodge that partly As you can understand as well Um and maybe Chan will Dive Right In Um but that is why and I just go back to Non-disruptive it allows us in that Sense to recognize as Chan articulated Much earlier that that pressure is Really coming down from different forces Um for whether it's D ESG or on Dei it's A reality now there is a big wave of People I think increasingly saying whoa Whoa whoa have we taken this too far This is not making sense Um we need to think about Merit first we Need to think about other things Um and I and I'm happy to share with you Um you know an idea we have for Non-disruptive creation and education
That could help that I think Um But on the other hand you know when You're pursuing now disruptive Creation In that sense it gives you an angle in The economic pursuit to also show you're Not doing social harm and it's not Perfectly aligned in the ESG language And the Dei language but it can show a Different metric of what you're doing Um in that space and that's also why we Believe it's important but Chad maybe You want to touch that hot button issue Um Foreign [Music] Agents and they become a big government So to speak So we cannot deny it Obviously become powerful Of course they make a laws So they say a government A business you don't listen to me I'll Punish you this way then you become more Unconfident that happens now why not Ends First of all they become so powerful And some very things we need to be Business but okay now there are billions Leading US Government we should leave Them they need our help maybe the good Intention You don't know what the real motivation Is brown struggle when you see any good
Intelligence think about it This is where many subsequences of our Tonight our bill what mechanism Government has They want to create jobs that's obvious People are crying for jobs So it's a disruption okay Greek but God We don't have destruction they know it And who will like disruption reception Anyway So they say hey but what are the Mechanisms oh we need to impose them This mechanisms holder yes What else they can do and also the other Side of it you guys hope this was a Responsibility you know you pay the Value we should allocate that well with All good invention But eternity mechanism they have Oh it should be gender issue hey you Need to have some woman some Hispanic What else they can do So we need help for government so to Speak we need to give them alternative Way Purely without going that direction it Does not come to suggestion they always Go that way we know government very well Right Now Machiavellian approaches sometimes Government does So now we need to educate government as Activity talked about hey why should you Destroy the jobs you don't have to look
At entrepreneur this is where you can Make more money by doing So hey You know think about it rather than Talking those Horsing allocated soil housing making Money that's better way of doing it It's like for example We talk about Tom's idea hey New York City guys coming entrepreneurs are Coming everybody coming in We need to create job here right yeah we Welcome those it's not the price but you Know it's great a lot of social Instability But now we want to tell you Non-disaptive opportunities That child grows is very important Entrepreneur here are the examples here The question when you go back your home You ask a thousand questions similar Like what Don't be obsessed with one idea think of An alternative task to Innovation and Growth this is why Ronnie and Chan talked about him he Started creature so can you think about It no I'm not going to score for you I'm Not going to pause you you cannot be the Idea what will you do Make our fund available for those good Idea to work my job Trading job without disruption even if You double incentive to do the money now
If we sell idea to the government I mean no one loves it because teachers Don't have anything full to do them Control mechanism because there's better Cry everybody say German And purpose [Music] Well of course they should but now that I'm deceiving because ridiculous Bureaucracy we're creating approach so Now we suggest to say hey don't do it Let's do it this way reading is like Manner this way you can create economic Growth and Broad but at the same time so Think about non-disable opportunities Here's what book says here's what is the Way to do it any other you know thinking About this way To incentivize but if you have an Interceptive opportunity you'll find you Well then I call in this vaccine Busy people needing the leading the way Now if government is leading Penis people are sitting on you know Back of the car that could be very risky Enterprises in it now we need to change Your order and how can business incent By themselves surviving A new thinking process where That should happen then disruptive Creation is way put the beans upright The government is playing Sponsor all or the incentive incentive Law push the resources behind make the
Push Now we need those many ideas I'm not Saying that this application is this Solution I will never say that anywhere Anyway these are only had for your Information this is only sure we we came Together we've never did it together Perhaps you said I want to see China Okay we are also equally curious to see The part that is such a you know plan For pollution it has been very moved Across for a long time didn't see your Face even though we saw in a photo but I Respond to see real real figure which is It today I want to stop right here Rene You know I was just gonna go back to Something Patrick you said very early in The conversation when we were talking About you know the applicability of blue Ocean far and wide you know even you're Talking about you know your local church Um or a local church And I think that you know maybe this Pressure is coming down and there's also A wave pushing against it saying we're It's going too far But in the interim it's the reality Companies are up against and it's a very Real reality and some of the biggest Um people that control a lot of the Equity in capital Are making their investment decisions of Where to invest Pension funds in this in
Those companies so the pressure is Coming from all different directions And it might mean from a company point Of view in a very practical sense Um to start thinking about how do I blue Ocean Source employees differently Do I need a different approach in terms Of where I'm looking for my employees so That I can achieve the Excellence I need And be able to meet this new Differentiated quota And are there different sources that I Have to go to to be able to make that Happen so for example for the diversity Equity inclusion So for some companies that that might be The challenge for them then Um given the reality that it's coming Down on everyone I think very very hard And from different forces Because to deny it and simply bucket yes We can do that you can make that Movement if that's what you feel but That might take longer than the pressure The immediate pressure coming down and The question is I want to push for Change like this gentleman Vivek Ramaswamy is doing and a number of other People of course but at the same time I Need to deal with current reality and You know a blue ocean approach as well To the employment HR policies of a company and how we do That sourcing could be a solution to you
There too yeah you know trust me we God Knows how many meetings we've had about This to try to find a way on how to Create our own blue ocean I I'll turn it Over to you but I want to say something Before I turn it over to you you know uh I lived in Iran 10 years And then we escaped Iran to come to U.S And when we escaped was because we were Forced to do things we didn't want to do Okay and the people who don't like to be Forced they leave The people who cave in and they're like Well I'll just kind of conform to be Enforced they stayed It's not in our DNA to conform and to be Forced to do what we don't want to do And we lived in Germany for two years Refugee camp then we came to the states Here and then after the Army I choose to Go into the financial services And I realize most people who start a Business is because that have fallen out With the boss at the prior company Because they made a decision that they Didn't want to pursue the the part with This is you can go to Subway and if you Don't like it write a negative real Yelp Review the manager may contact you to Find a way to make it a positive review You can go to DMV and write a negative Review no one cares there is no Accountability you can write as many go Find me a DMV in America with five star
With more more than 100 reviews I will Give them ten thousand dollar donations I'll send them lobsters for everybody For a day enjoy yourself for treating People well government employees don't Are not typically good and I've been a Government employee before being in the Military so I know what it is to be a Government employee so yeah the only Thing I'll say to that is my concern is I don't want to uh abide by the force And I know the whole thing about what Either 301 signatories 51 uh million Dollars of asset under management The Net Zero asset initiative whatever they Call it so everybody's worried about not Getting access to that money but I I Just don't think that's the right way of Um Dealing with entrepreneurs and Capitalists but again that's my thoughts I'll transition to whatever question Tom Has yeah and I think when you You have to some people think capitalism Is a dirty word it's really freedom and Liberty in a business construct governed By appropriate regulations and laws and You have things that come down like Sarbanes-oxley that added a lot of cost To going public but it was there to Fight financial fraud and make sure the Playing level was fair legal and Equitable and so those things are good Even though I've been through a sarbox
IPO and it was not fun it was more Expensive but I understood logically why All those elements and controls were Present then you go to something where You have this unintended consequence in Slippery Slope like carbon credits Carbon credits which there is a lot of Fraud in carbon credits where it's just A bunch of money spinning around where You're faking By oh I bought carbon credits over here Over there did that really take carbon Out did that really uh plant so many Hundreds of heck takers of um of trees In the Amazon that have been previously Stripped for farming you know did Something really happen there and the Answer the answer is no so you have the Unintended consequence and the slippery Slope of all the things you're supposed To be doing end up being virtue Signaling let and nothing happens like When we were on the plane coming from Fort Worth I really felt that all that Private Equity Firm wanted to do was Under the pressure of Dei they looked at Us as an opportunity to make an Acquisition that was basically Profitable but also first virtue Signaling so they could check a box and It's like wait a minute you know PHP When he had the vision to start it he Recruited from an open market and gave Open opportunity and guess what happened
You end up 51 percent female what a Surprise 50 of the babies born or female So when you do it in a fair normal and Just way in an open market as Pat did You end up with a Workforce that exactly Reflected the the population and in all Of its one wonderful diversity so I Think there's don't you think there's a Lot of virtue signaling that happens Here that is an unintended consequence When you try to put a force point in There you're going to get virtue Signaling and even fraud as opposed to Allowing things to happen you know Organically with incentive Mm-hmm You know Tom what you're signaling to me And I appreciate so much your passion Imagine your what you're saying is um I Want to push back on what I see Because I want to disrupt what I see Happening right now Because for me it doesn't make sense It's not how we built our business it's Not how great companies are built and What we said is what happens when you Push back on disruption and you decide To disrupt the existing order They're gonna not just say like welcome They're going to push back So what if instead you start thinking About what would be a non-disruptive way To go about Articulating this Vision we have of how
You build greatness And making that non-destructive market So big I mean Square Reader today is one Of the biggest markets right one of the Biggest sexiest players out there versus Existing credit card payment systems And they didn't take it on and so I'm I'm being philosophic in that But maybe just the counter punch as well It could be one way obviously and I see Where you're coming from But maybe the other thing is to start Thinking ourselves okay look we don't Like this we know a lot of other Business people that don't like this we Don't feel it's fair We feel it's virtual signaling we don't Feel we build great companies in the end We don't feel we'll hire as many people And help as many people as we can Because your service and your product Obviously helps so many people right Your education helps people your Insurance products help people so maybe We need a non-destructive approach to Get around that to grow and I add something to talk about Renee said It could be please yes so very important To this thing I now realize it Keep on using virtue as kind of good Thing to do Based on this type of thing we never Talked about the virtue Virtue is never really important
Purchase very subjective topic you can Be virtuousome as a person How can you have been installed or Writing about virtue I'm impaired to say It's philosophical topic when we are Talking about Social good good for society you never Think about blood sugar so that's Distinguish between when we are talking Such a good versus virtue what do you Mean by social work What are you talking This is for good It's not necessarily doing Making people happier That's not we are doing we are doing Business manner Then you don't have to destroy you don't Have to it shouldn't be so don't ask Question destruction is necessary well Is that really necessary Then all of a sudden you start to see New ideas or don't have to The model Creator ideas opening So happen to help Society At the same time you make lots of money You swim in Blue Ocean No competition They also have the Bingo is For making money you go to place where Nobody's in and you go non-destructive Way There's no resistance so it happens to Be good
For Business to begin with second also do Not destroy good for society in that Qualified manner we are talking about Equal to society No that's not we are talking time I just Want to make the distinction semantics So yeah I would say two things I would Say two things I would say one uh I understand why Renee this is not a Topic to talk about because you know who Your customer is and I respect it Because you're I don't know if this Makes sense you're doing exactly what I Would do because you know who your Customer is some of your customers that Reach out to you for Blue Ocean are the Ones that are part of the esgdi Community and why would you give a Message that would lose some of those Customers I get it I respect it so I Totally understand why Renee you Wouldn't touch that because maybe five Of the biggest companies you guys can Solve for they wouldn't want to do that Part yeah I would say the other part With this is the following thing is on The social good side You know what my argument is on the Social good side this is my argument for The social good side I understand if you want me to use a Portion of my money To for the social good of the country if
I'm not paying any taxes But if I'm paying taxes and I'm giving You the money it's your job to take that Money and do something social good Because that's the government's job if That's what you're doing you're taxing Me for you to do good don't add Additional restrictions for me to do Good my job is to create a company my Job is to create a job a company that Creates jobs innovates makes things Smoother better for everybody else That's not something that and then you Want to tax me as well and then you also Want to tell me what to do with the Money that I'm not being taxed on to Force me to not your next thing you know Is you want me you want to tell me who For me to marry and how for my private Life how many kids to have I'm not for That I'm a guy that's uh subscribes to Andy Grove's book of only the paranoid Survive and as an entrepreneur and Immigrant and a capitalist I'm gonna Stay paranoid and uh that's not gonna Change but I respect your possession Where you're going with this let's Finish it up here with the final Thoughts on where we are today I notice You in in the books Sure please So I think uh first of all Basic principles of non-disaptive Creation as economic growth that's basis
Of anxiety if you don't make a bad Innovation for the buyer You should forget about your idea However that is for anything for anybody That's basic thought we start with the Promise of value innovation for buyer For the customer that's basic principle Of business What does that mean is that when you Enhance utility at the lower cost That's only qualifier to enter that's Why I start with the closings ready Now extension of that That's not only thinking about being Simplification We'll also talk about social implication So what we do you keep on approaching Bad Innovation if you don't qualify for Example the examples you have a given Like in all these and personal that's Against the value innovation it's just Well the cost you know the value in my Mind in your mind there but it's very Upsetting you're a business person you Want to put some higher value at low Cost utilitarian matter but they're Saying hey forget about it think about This Just don't pursue that then obviously You're upset basic principles of Capitalism businesses and colliding That's obviously we should never talk About issue regarding Innovation Principle for anything for example think
About parent Innovation why people love Illusion because precisely that's very Helpful for buyer help of the society Advanced agenda of business Look at the extension on that very Innovation principles being point of View this application You should never leave the fundamental Basis believe Believe that there is a principle you Need to keep it on top of it In addition to that now think about it I Can have double demo that will bring Remains Not only have value for this I Can add the value to the government I Can add the value to you know uh Society What we are saying is impossible to Submit simultaneous so the value in Every aspect we thought English value Innovation on the business side only When we found none of this up to crazy You can have opportunity to keep much More value to the government meaning Creating new job as a trump pointed out And we can have these therefore not this Up to creation is pushing the frontier Point them to thinking And raise the game really to mind that Direction of business it's business idea And he says hey isn't it nice I have my Neighbor in the process I made lots of Money that's great but don't forget Making money of course right then you're Out of business when some government
Regulation comes in harming your Business Education [Music] ESC group for example you mentioned I Have so I hesitated by that for saying Well he may have doing this because they Have an original way of approaching Possibly he's dating is the only way Doing it Stop make me upset what but for Example Pat you go there hey I readable Yes alternative way of doing it you Don't have to mean the business okay So this one I was so upset with you but Look at the alternative way to do can You think about it worry you send the Idea to them they say gee gee my friend You really can do that do you have a Tools for that yes we have three steps We have the tools I will set the company Up to make every implementation for you Why don't you click index quantitative Index to help you out Rather than me Make you bureaucratic you know Destroying the business which I hate to Do then I can help you I think you're in Business you know Is that The most dangerous thing People have a good intention but Implement the wrong things It doesn't mean yes it toxic but if you
Pause the question extend your Horizon And thinking process And think about option that everybody Can win and say yeah that Bingo hour After that so what we are seeing is Opening New Paths to say hey This But however Fundamental requirements value Innovation for the market If you don't have Market you forget it What is business is there so that's Extension of those I just uh uh remain I Want to clarify that to make a shield Because obviously new questions are very Provocative they make us thinking to Push that I think you you have you have Your fascinating interview initially we Can go all the edges to really come Issues alive Yeah you know we we we Consult for a lot of small business Owners And we we have an event that's coming up In a couple months uh we'll have 3 000 People there you know people coming from 60 plus countries in the world and their Founders c-suite Executives Etc et Cetera will have different kind of Speakers they'll Tom Brady being one of Them my you know Mike Tyson be another One the author of the most recent book Unreasonable Hospitality which I like uh They'll be there and
Because we talk to them every day so I'm An opera we're operators and we're Consulting we're feeling the concerns And the fears on what they're bringing Up to us right like I don't know what it Is to be 11 years old today but I have An 11 year old son so he brings up to me What it is to be 11 years old in school Today and I'm like oh my God I didn't go Through that when I was 11. and I'm Trying to understand his frustration his Pain how different it was than ours it's A very weird climate today for Capitalists especially the smaller guys That are trying to compete with the Bigger guys and you have to figure out a Way to maneuver uh I just don't know if I want to Add a you know Harvard Business Review Did an article talking about nowadays When you're hiring people every 18 Months you have to learn 10 new skill Sets like this new thing with chat gbt You gotta learn how to use it people are Hiring that I don't want to add a new Skill set of mine of ass kissing to do Well in business because I don't think That's ever been a required uh skill set For capitalism I want to just make a Better company A Better Business and if The people show up great if I don't do a Good job I'll go out of business you Know it's totally fine with me as well Capitalism allows people the freedom to
Buy freedom to sell freedom to try but Also the freedom to fail and sometimes We have to fail so it Renee question you Guys in your book talk about the 10 most Profitable disruptive companies And we have apple Amazon alphabet Microsoft Facebook Netflix Tesla Airbnb Uber Alibaba these are some of the ones That were you know uh uh profitable Disruptive companies what what would you Call you know some of the most Successful profitable non-disruptive Companies Um I think our book lists some but I Think I just mentioned square there's Um so we number one we don't have Company as unit of analysis it's Strategic move that you have at the unit Of analysis Um so I guess we mentioned Square we Mentioned GoPro we mentioned you know Um you know Viagra we mentioned Um Chan do you what do we mention in our Book Yeah Grameen Bank Um project finance a new company that Was just created by NCAA just got Billion dollar uh debt funding for Students So this is a whole new area Um uh Pat um space force by the way U.S Space division uh the new division that Is really non-disruptive uh in military Branch so had we known the question in
Advance we could maybe have written that List but yes [Music] But let me add on the race point for Example look at pollution Theory 2000 Actually implies hit the 1997 you know 2005 is only combinational articles we Started Our article first Artic is 1997 we wrote As long as 1987 parking lotion at that Time Similar questions asked We saw a lot of big company meaning in Competition What is collusion company so we have Subtlet no look at T look at this big Company look at this one Come on Yellow Tail Small you know what is power Theory sir When things happen you know the book Called the structure of scientific Revolution from a screen philosophical Wrote about where the Theory comes from And if they put myself there's a new City comes from Peregrine When it stood 10 to 20 years moving to The Core And then so many blue ocean pops up 2017 like a citizen man and all this They said wow lotion is coming to quote From periphery We are serious to say hey we see that You know look at the spring how do you
Know the spring is coming well green is Turning into leaves from Winter have a Signal of green and I say hey Is coming He said where is the spring right it's Coming It's not yet here So where the science of Revolution comes Future very quickly become cold now Today same thing same question to us Okay look at all these big companies Like we did with the chi and this Company all those companies at the time Who competes who wins But now we are telling yes please come In here this interesting examples giving A prediction of Utah Then he say and look for it I am sure 10 Years later Patrick University B names Point even Though we have many names like you know These uh even you know the for example Walking to the Moon you know already They saw the ticket out and I don't Think they have a you did anymore it's a You know the oh IPL yes IPL yeah Meet some friends and someone to take it Out he didn't have any seats for going To the Moon anymore So so this uh he's shooting So when I'm talking about is that this Will be dominant coming into 10 years You will see many of those are coming Apparently
At least naturally occur evolutionary Like what Thomas King is talking Maybe hopefully Person like a pattern we believe in this Idea look at it he's spreading more you Will say oh that's interesting Perspective Micropologie before very calm and we we Can talk about big companies at Target Cheap you made the money out of it the President is always a benefit There are thousands of thousands have Come actually he tend to also focus on Big companies right yes it is important But there are a lot I mean entire world Of population majority in the medium Enterprise We need to resurrect that make them move Not only the companies inclusion has Done on many of the dollars you know Not fancy names but majority Entrepreneurs and Below what power is The butter entrepreneur Let's say a little bit More than entrepreneur really important Entrepreneurs they come by another Company he peeled from the bottom up That's the power of the theory I think Predict that lend yourself to Creation In build denomination of entrepreneur as Some point now and move onwards and we Start to have imagination of it I'm sure How long it take to walk in the top Um it shouldn't be that that long you
Know shouldn't be that long but how long Well it's all about we can approach and Telling now and population to dominate It took some time you know but 2017 only So many people Consulting lotion investment when you Google it Yes even closer lotion passed In Japan there's a blue ocean public Passes well any training The way of thinking about entire thing So now hopefully 10 years later when we Interview again that well you know ah we Talked about them a lot of big companies Now hopefully way of thinking comes into That Seeming passion yeah does that make Sense to you Yeah Patrick and Tom if I say one thing You know Um my takeaway you know having heard Your questions which we really Appreciate and we love hearing your what The struggle of the entrepreneur is Is twofold Um on the one hand you're seeing these External pressures that you don't Appreciate and you think are Counterproductive whether it's ESG or Um you know diversity equity and Inclusion and you're you want to push Back on it you don't philosopher quickly Agree on it so I appreciate inspect that We appreciate that everyone has their
Point of view and their perspective But on the other hand as an entrepreneur I still got to do business Right so that is going to be coming down To me and I'm going to have maybe Initiatives if I don't believe in that That I'm going to get together with People and create a blue ocean to Counter that right or blue ocean to win Elections right so that movement can Change but at the same time I gotta I Gotta I'm a business person I gotta make Business happen I got to create the next Opportunities and I want to do it in a Way that at high value as you said in Lower cost Now I've stopped thinking only about Completing now channel Renee said let's Think blue oceans powerful thank you so Much for what you said and that you're Built partly on that theory we respect That But now what we're saying is by the way At the same time there's another path as Well and it's beyond disruption and to Chan's Point Um over time as people start thinking That let's see what opportunities can Create so we're not denying that reality But as business people to your 3000 Still life goes on I gotta get in that Ring every single day and I gotta Deliver and I gotta earn the money that I want to earn to make my living so I'll
Have initiatives to push back on the Things I don't like but I'm going to be Creating the businesses the future and The growth for tomorrow And I want to thank blue ocean and by The way there's another alternative out There and if there's an alternative for Growth and profit where I don't have to Take on everyone else and get all that Pushback why as an entrepreneur wouldn't I think that way why wouldn't I want to At least have a conversation and a Mental thought process on it because Maybe behind that is the next Square Reader for us so why am I not going to Do it so I guess that it would be They're two different dimensions we're Talking about here And what we're saying is Let's open up that possibility for People as well to think about that for The future so Um It's Patrick I had the one point uh is So fascinating Um Chelsea that 40 10 years later Or government people Who was the working on the store so to Speak say hey That was kind of occupation we don't Want to have the score by post that's Against the wheel of business people Well we have another very smart way What if we make an impact
Those people who thought that is the Only way in doing it to import their Will Have the option to change it In different beings like manner What if that book impacts their mind Open new evidence of thinking And no longer doing what they're doing I mean this is so elegant to say the Venture how you perceive these people You know they are but I think Tom you Gave an idea to say Economic Development Might be Avenue we just smear into every Possibility to show don't think it's Only one way there are various other Ways Yeah hopefully tennis later and you'll Be so happy Hey you know we educate them well History shows is one thing always History says business end up educating Government look at the 100 years we Sleep when government is dominating in Business [Music] Our capitalism this being is always Teaching the lesson he learned the Lesson and reverse look at our history Of entire thing shows the natural Equilibrium of economy should be based On basic principles of business Now hopefully this time being sounded Like Ronnie and Chan and Sean opened the Door to all these people hey does we
Need him doing it hey don't force us to Do things we don't like to go it's an Option for you to do he's the more Audacious to say and entrepreneur says We love you And I think is making tons of money by Doing this at the same time we are seen As good guys you know hey I like it I Want to respect from my neighbor I am making lots of money that's our Kind of Mission to help them out Entrepreneurs grow up And permanent offices and educate to Think about options you never know so This is our trying To open up to their mind We're going to say something Nope okay uh yeah Renee that was great And and and Chan I love what you said That business historically is always Taught the government what to do uh uh Unfortunately sometimes it was too late By the time they taught the government What to do and a lot of people paid a Price for it and uh it became uh tragic For many uh I think in in this kind of a Situation Renee you are right the Capitalist has to figure out a way to Make money while this mess is taking Place and he will she will Capitalists are creative they're they're Independent they're they'll they'll do The fight but I want to make sure I'm Hiring people that are best for the job
Not being forced to do it to get a score And some people are not willing to Compromise those values and principles And if you have to compromise it to win I don't know it's kind of confusing that That's that's on the individual To do that whether they're okay with That or not it is a decision they have To make I remember one time I read a Book I don't know what the book was and It said the moment you can fire clients You know that's when you're winning Because you're choosing who your clients Are and everybody has had to have one Client before that's annoying that's Demanding that's disrespectful that's You know constantly creating so many Headaches and one day you're just like Listen I understand you're giving us 3.8 Million dollars per year we got to move On we sure there's I I trust that Somebody else is going to want your Business but we're going to move on Here's a point of today's conversation It one thing about our audience Uh Renee and Chan they know we like Debates and they know we like asking Questions we feel that's when we all get Smarter and if there's one thing that Happened on today's podcast we Definitely all became smarter uh Everybody that's tuning in there's a Reason why you guys are the thinkers That you are in the business World
Respected by people from Academia uh by People in business by Founders by C-suites by people from across the world Who follow what you guys do and I'm not Talking America I'm talking all around The world your book has been translated In many different languages my Recommendation to the audience that's Listening to this is to order both books Together uh to order Blue Ocean strategy If you've never read it if you have read It of course Beyond disruption is the Book to order that's a must but my Recommendation is to order both we're Going to put the links below obviously Beyond disruption will be the first link Above for people to order but we'll also Put the Blue Ocean strategy below it for You to order because In every possible way it's going to help You in every possible way Blue Ocean strategy and what you guys Write about can get the individual Thinking on how to do things differently Than everybody else in the marketplace Renee uh Chan I will give you guys the Final thoughts anything you guys have Before we wrap up Renee I'll go to you First and then inshallah finish up with You any final thoughts before we wrap up One Patrick his first gratitude thank You you said just on your last comment You don't want to be told what to do and You want to do the entrepreneurship and
That's fine just March but I think you Know the the issue is That maybe what that means is Temporarily you're not going to be able To if you have a company that you want To sell Get the price you want necessarily if They're looking at another metric so What I mean is that Pursue your business and pursue and Stand for your principles but sometimes When we stand for our principles Which I really deeply respect as well Um there's a cost for that and I agree And trust me I'm in America because I I Wasn't willing to compromise my Principles in Iran and as a Christian Family and we are very comfortable with Paying that price uh and and and you Know 10 times out of 10 times so I agree With you uh uh Chan anything from your End yes find a thought Patrick Before I say anything else I love your Passion Tell us the young man Will stand out the principles say it And amen to that it's just so being Inspired by The Academy have been long Time is so inspiring also questions are Very intelligent So we are back to work on it today About this you know what is virtue or Not and those but I think mostly upon a Suggestion of people and disruption
Person's 22nd very thoughtful As we talked about Beyond this option nothing worth in Same Spirit Of the pollution Serenity that was good Ideas for thinking about it because Value innovation for business Daniel Invasion for business and Society Or principle of it is not about any Going equitable distribution nothing to Do with that but it's about the business Way of doing it to create wind into Everything it has an option so we are Pushing Frontier a little more further By keeping the basic principles of our Innovation into that towards that By having two side-by-side goal is Powerful idea now obviously we now learn How to send it together this is Something about that and I think this is Powerful a discussion by the way is very Provocative And very intellectually inspiring this Makes a lot of thinking 35 Misunderstanding because if audience Lend you to be on disruption they may Say Hey you know you're saying group of Society are you asking to be with Yourself Are you supporting scorecard are you Doing this You actually discovered so many Misunderstanding possibilities although They end up having misunderstanding
So we are very grateful For your or your discussion intellectual Debate so thank you very much for for Asking such a questions And inviting us to give us an Opportunity to clarify what we meant to Be on the subject gratitude is also on This end uh tremendously for you guys to Be here uh I believe this is going out Today the the book is being published Which will have all that ready and going Out and again the link will be below if You haven't yet picked up those two Books highly recommend to do so as well As follow the content we'll put the Links as well on Instagram Twitter to See on all the other updates that blue Ocean offers as well I think you guys Got online courses and many other things Renee Chan once again thank you so much For coming and spending some time with Us here on pbd podcast I'm very Timmy Take care everybody bye bye bye thank You thank you And Tom
