Leading Transformation with Kyle Nel

Welcome to Brainfluence Podcast with Roger Dooley. Author, speaker, and educator on neural marketing and the psychology of persuasion. Every week we talk with thought leaders that will help you improve your influence with factual evidence and concrete research. Introducing your host, Roger Dooley.

Roger Dooley:     Welcome to The Brainfluence Podcast, I am Roger Dooley. Our guest this week is Kyle Nel. He’s the CEO and Co-Founder of Uncommon Partners, a consulting and training firm focused on business transformation. He’s formerly the founder and executive director of Lowe’s Innovation Labs. Some of the projects included the Lowe’s Holoroom, augmented and virtual reality design experience, the OSHbot autonomous retail service robot, and 3D scanning and printing services.

Recently, Lowe’s was ranked at number one in innovation among the Fortune 500. Kyle also launched the disruptive technology startup accelerator and incubator in Bangalore, India. Kyle is the co-author, along with Thomas Ramsoy and Nathan Furr of the new book, Leading Transformation: How to Take Charge of Your Company’s Future. Welcome to the show, Kyle.

Kyle Nel:             Thanks for having me.

Roger Dooley:     So Kyle, you’ve got a neuroscientist and a strategy professor from Paris as your co-authors. How did the three of you connect?

Kyle Nel:             Yeah, just normal kind of walk into a bar kind of a meet-greet, right? No, it comes from my background and kind of bringing these great people together to solve these big gnarly, seemingly intractable problems. So, Thomas is an old good friend who was going to be my PhD advisor when I was looking to get my PhD in applied neuroscience years ago, and ultimately just convinced him to quit his tenured teaching position and start a neuroscience company, which is doing quite well, which I’m sure we’ll talk about.

Then Nathan, he had interviewed me for something else and very quickly saw that he was thinking very broadly about the future of management theory and that the existing management theory was really focused on managing incremental change and his focuses on disruption, how do you manage disruption? So, the three of us come together both to apply quantitative measures to things that feel like you really wouldn’t be able to understand what’s going on under the hood, and then also applying constructs to that. I’m the practical use guy who’s actually put it into use inside of a big large unexpected company like Lowe’s.

Roger Dooley:     When you talk about managing disruption, actually you’re sort of talking about not just managing things when you’re being disrupted by others, but hopefully doing some self-disrupting, right?

Kyle Nel:             Oh, 100%. It starts with the self, right? Everyone thinks that transformation, the book is called Leading Transformation, and everyone thinks that transformation is something that happens out there in the ether. It doesn’t. It starts with individuals making the transformation, and I know that you and your listeners, they believe this. I’m preaching to the choir here, but it is fundamentally a behavior issue. It’s not a strategy issue.

Roger Dooley:     Yeah. Kyle, years ago, when I was still in the corporate world, I was in charge of strategy and planning for a Fortune 1,000 company. We were a manufacturer of metal products, steel wire for every application you can imagine, and the company had focused its innovation on production efficiency, product quality and new products that looked an awful lot like the old ones. That’s led to a few innovations like the strongest wire ever created and conducted spring wire that was part copper, part steel, but most of the products were commodities with global competition.

The board brought in a visionary CEO who wanted to use the company’s strength in metallurgy and surface science to enter new markets, not make the current products a little bit better, but actually stretch into new things and new markets. The existing management team thought that the ideas that he was bringing in were pretty much crazy I think would probably be it, or just wrong that they were so ridiculous as to simply not to be workable. They nodded and agreed with the CEO in public and then either did nothing or actively resisted.

So, eventually, the CEO did clean house, but by that point it was too late. A lot of resource had been squandered. So, in the context of your book, it seems like in that example, the CEO was fighting what you call incrementalism. Why don’t you explain what incrementalism is and why it’s a bad thing?

Kyle Nel:             I think you just laid it out perfectly. Incrementalism is not anybody doing anything wrong. This isn’t fraud. This isn’t embezzlement. This is just the old model applied in this today context just doesn’t work, where you’re trying to manage your business. It doesn’t work as well if you’re trying to grow. Even if you’re trying to just maintain market share, it’s really hard because we live in this exponential world where everything is changing at a rate that is almost impossible to predict.

Then you have also this confluence. There’s the market problem, but then you have the leaders that are typically leaders of these larger organizations got there because they were really, really good at the old model. So, they’re almost naturally selected to just be super alpha beings of that one particular thing, and then they get to the top and shareholders and others will say, “I want you to disrupt your market,” and they’re like, “Ah, I don’t know really what that means.”

So, usually the behavior that comes from that is that feels like you’re trying to disrupt me and so I’m going to fight you either overtly but usually it’s like what you laid out before, a very passive aggressive sitting style, fighting it, and then it’s too late by the time the right action is taken. The action is hardly ever just to fire everybody. The real action I see is to address the behavioral and the structural problems first, rather than going straight to building stuff and then trying to find a way to cram it in, which is usually the way that organizations operate.

The whole crux of this book and the whole way we were able to get all this done whilst at Lowe’s and now at many, many other organizations since I left Lowe’s, is by applying this as the primary driver of change, not the secondary or tertiary.

Roger Dooley:     I think incrementalism affects customers too, because you can’t always rely on them. The famous quote supposedly from Henry Ford that if you ask people what they want, they would have said a faster horse. I think that really applies there to, if you’re trying to sort of get outside your space and you asked your customers, “What do you really want,” they too are going to have difficulty envisioning anything really new and different, right?

Kyle Nel:             As a reformed or reforming marketing researcher, that whole world is built around really weird concept which is a, like you said, people know what they want, which they don’t always, and then really even scarier is that we ask people questions about why they did stuff. We will come up with all smart rational people, we think, and so we’ll give you an answer but it doesn’t necessarily mean that’s really how we got there.

So, all of that becomes this world that almost becomes this codependence between management and aksing questions of customers and then you get to this forced incrementalism and then all of a sudden, someone on the outside typically will come up with something that’s truly new and disruptive and then boom, you’re kind of toast. The whole thing about this structure is how do you break free of that. It’s not to stop asking people questions, it’s only to be done, but that shouldn’t be your only way of gathering insight into what to do or how to do it.

Roger Dooley:     Right. I know in that case, my original example, the customers if you ask them what they want and well, can you make it a little bit cheaper?

Kyle Nel:             Sure.

Roger Dooley:     Our costs are really constrained here and there’s not much we can do, or wow, if it could just run a little faster in our machines. Sometimes you have to slow them down, if you just improve it. They too can’t really envision, well, what if there was a solution that is not quite what they were making?

Kyle Nel:             Oh, yeah.

Roger Dooley:     Early in the book, Kyle, you describe a presentation that you gave at Lowe’s that got off to a difficult start. It sounds like a speaker’s nightmare. Being a speaker myself, I’ve never had that happen. So, why don’t you explain that? That was a really hilarious story.

Kyle Nel:             Yeah. No, it’s an experience that I’ve had lots in my career. I find that other people have this sort of experience too. You plan and plan and plan to convince important people to do something and the form that that takes in an organization is typically a PowerPoint based presentation, right? Or MBA programs, you should beat your executive team over the head with rational thought, facts and figures, and the logic of it is that the best facts will win. That’s not really ever true.

Most decisions don’t happen based on facts, even though we like to think they are. How many surveys are done to create confirmatory stuff that then you can use on something you’ve already decided you’re going to do, right? I had walked into another one of these where I was giving a presentation that seemed like kind of layup and they said, “Kyle, awesome presentation, but essentially I’m not doing any of the stuff you said in the recommendations.”

Roger Dooley:     You actually had at one point somebody was booing you, right?

Kyle Nel:             Yeah. That didn’t happen at Lowe’s. That was at another place.

Roger Dooley:     Okay.

Kyle Nel:             Yeah, that didn’t happen at Lowe’s.

Roger Dooley:     Lowe’s are more polite. They would just think you were full of crap rather than actively booing you.

Kyle Nel:             Exactly. They wouldn’t actively boo. Like in most companies, they would politely ignore you. I had been booed a number of times because I say things that make people really uncomfortable. Then later on it becomes very plain and clear. At that time, I was talking about the importance of virtual and augmented reality before Oculus Rift even came out on Kickstarter.

For retailers who had built their entire world and construction folks who had built their entire world on a model of the past and of the current, frankly, the idea that something would disintermediate you is very, very scary and also becomes laughable, like how could you even think that’s a possibility. That’s where the booing and the laughter comes from.

But very quickly, those detractors either get outed because they’re not producing or they quickly kind of change their tune and pretend that they were your biggest supporters all along. I have had that experience happen a number of times as being the person presenting kind of what’s coming or what is here.

Roger Dooley:     I think in the home industry in general, it’s very conservative group and oftentimes, they’re right because the home buyers themselves are often quite resistant to new things. I was involved in home automation in sort of the first attempted wave of home automation which is back in the mid to late ’80s or early ’90s and there was this tremendous push for technology on the product side of things.

It had big cable makers and people like GE and others who were developing this great smart house technology and showing it off at the home builders’ show and what not, but the builders were extremely skeptical and ultimately it turned out that they were right. People did not want to pay for this technology because it was not cheap and just the pace of change on the home construction side is really slow.

We’ve been talking about various types of factory built housing for years. I mean, not just straight manufactured housing that goes down the road on the trailer, but some of the stuff they’re doing in Europe and that’s yet to penetrate here in the U.S. too. I guess I can understand why a group like that might be a little resistant to change. They just haven’t seen much change happening.

Kyle Nel:             Yeah. I would say, yeah, you’re exactly right. But the change is happening in lots of different ways, when you think about the success, how quickly Ring the video doorbell company, they kind of came almost out of obscurity famously on Shark Tank and didn’t get a deal to their buyout on Amazon. If you look at what started as a lot of people snickered and laughed at Alexa when it came out and Google Home and all of these things, and now they’re just so part of our life. We can’t even think about living without it. You can only imagine what’s going to happen in the next few years is those things integrate into other things.

The tendency of folks that create infrastructure is to create more infrastructure. People don’t want infrastructure. They want solutions and they might have an infrastructure capability but it just shows how people are willing to buy these Alexa speaker microphone things and put them in their house, but they weren’t willing to just reroute their entire electrical grid inside their home. There’s different waves of it.

Roger Dooley:     Well, yeah. It’s a lot lower risk now. I think that’s really what’s driving universal WiFi was not really an option. I mean, there were wireless devices but they tend to be clunky and they run out of battery quickly and so on. So, it was not a really robust solution, but today you’ve got the combination of this pervasive WiFi, so you’ve always got … You don’t need a special wiring or bus, it can all go over the air and low cost electronics.

Instead of saying, “Okay, we’re going to have to put 20K worth of wiring into your house,” now you can buy a device for 100 bucks and see if it works. If you like it, great. If you don’t, well hey, you know, you haven’t bet the farm on it. It’s really working now. I think that this time around we’ve got people like Google and Amazon and other big names who are fully behind this. It’s going to work now. I’m quite sure. There will probably be a little bit of standardization fallout and some devices will prevail more than others, but I think it’s really here to stay. Talk about some of the projects you were involved in at Lowe’s.

Kyle Nel:             Yeah. The whole series and continuum of stuff and we built, from what I know, the first and the largest, at the time, augmented and virtual reality showrooms and stores. We built autonomous robots that are used at other retailers across the world, quite frankly, with a partner called Fellow Robots. We helped to develop a 3D printer that’s in the International Space Station right now with our friends at Made In Space.

The first thing commercially manufactured off the planet is actually a Lowe’s tool, which is pretty crazy. We helped develop exosuits that employees wear inside the store, and a number of other things as well. All of these things I don’t think anyone would have ever expected would come from a place like Lowe’s.

Roger Dooley:     So, in that kind of environment, how do you deal with the conflict between current results, the constant nemesis of this quota’s numbers, this year’s numbers, next year’s numbers, and work on projects that clearly are going to have direct payback for, I don’t know, how many years. What’s the time horizon on some of these things?

Kyle Nel:             It’s shorter than most people think, but the trouble with large companies, especially large successful profitable companies like a Lowe’s is that anything, no matter how successful it is, is just nothing compared to the big scheme of the mature business. So, it’s finding ways to be able to make sure that nascent businesses doesn’t get crashed or nascent ideas doesn’t get crashed because of mature metrics. It’s an unfair and unreasonable. It doesn’t even make sense to compare them.

Everyone knows all these stories, some are more apocryphal than others, like Kodak and others, that we’re using essentially mature metrics to compare something in its nascent form. Being very aware of that, like how do we break that apart. So it’s really, the first thing to do, this has nothing to do with metrics and it’s entirely tied towards getting back to the brain, how do people make decisions, how do people take in new information and do something with it?

The only way I found in my entire career and working with Thomas and others is through story. You can literally see someone’s brain light up the second you say, “Can I tell you a story?” Our brains are hardwired to love and receive stories, and so instead of having a strategy, we opted to create what we called strategic narratives. It’s a whole process and structure and rigor to this … Marketing research and trend data to professional published science fiction writers.

We wrote stories and they wrote stories of how the future would be, that mess and goop of social and technological and other trends happening, and what that would play out and look like in 10 years, with real characters conflict in a narrative work. In that first story, there was a couple or part of their day, there was a couple redesigning their kitchen and they were using what we would call augmented reality now.

This is way back in the early days before anyone was really talking about this stuff. What that allowed us to do is to get beyond the traditional metrics and think about what would this actually, how will this play out for our customers and our employees? Then is it something that we believe a, will happen, and then b, if it is, what would we do now from a make, build, and buy partnership structure in order to not just exist but take advantage of that? That’s what we did.

Roger Dooley:     How many writers did you start with or how many did you try using?

Kyle Nel:             Yeah. On the first take, we usually use a number of writers, somewhere between three and five, and the writers don’t talk to each other. They get the same inputs, but then the idea then is to see … You try to not lead the witness as much as you can and see what they come back with. When we started that, the first story was not meant to be an AR story or a VR story.

Frankly, I didn’t know anything about augmented or virtual reality at all, other than what I had read in a cursory way, and so it was interesting to see that the majority of the writers came back with that kind of a story, and then what we did was we narrowed down and kind of picked from the best of both worlds of the stories that we liked and then really gave it to the most compelling story, with the most compelling characters and all of that, and then really refine that and then turn that real short story into a comic book. Then I literally passed it out to senior executives at Lowe’s and we read comic books. I didn’t do PowerPoint anymore.

That goes back to behavioral economics and the behavioral science of breaking up how decisions are made. Every time I’ve done this process at other companies and other organizations, it all starts the same way. I take out the comic book and the executives giggle and laugh as they begin to read it, and then their faces dramatically change, and then they start to think, “Oh, if we’re not doing this or if we’re not a part of this, we’re in big trouble.”

Then also then becomes this happy spot where, oh well, very opportunistically, what if we really were to start to really go after this before it becomes a thing? We could be well positioned very, very quickly. So, all of that only happens through story. I’ve never seen that kind of change happen through rational facts and figures and a strategic presentation.

Roger Dooley:     Yeah. I should interject here that in the book itself, you’ve got a short, about 15 pages or so summary of the book presented as a graphic novel, black and white, I’m sure because of printing constraints but nevertheless, I did find it oddly engaging.

I can certainly see a reader whose eyes are sort of glazing over after reading dense footnote or text, not specifically referring to your book but just in general, finding a more comic book type approach to be kind of a relief and something that you can just sort of stay engaged with. Because it’s got the combination of story that, as you mentioned, we know engages our brains, and also it’s relatively easy to consume the story that way, versus just reading text.

Kyle Nel:             No question. We’ve done presented stories in a lot of different mediums, videos, straight text and other things, and Thomas can talk more about this, but we ran through all of this using high res EBGs and eye tracking and we found that people’s brains were most optimal across the board, even if people said that they hated comic books or hated science fiction or whatever, by reading a comic book because the movie or the video allows people to kind of check out a little bit. Like you said, reading text is a little too difficult to envision, but that graphic novel comic book is kind of the best of both worlds, and that seems to really help.

Roger Dooley:     Well, for all of our listeners who want to go out now and start creating their own comic books, how difficult is it to find somebody who can execute this in a reasonable skilled fashion?

Kyle Nel:             Difficult. It’s just like anything else. There are a lot of practitioners, to be able to do that inside of like a business context, it’s a skill. I would say finding really truly skilled science fiction writers or speculative fiction writers is important. Writing is a skill, right? You can check all the boxes and you just might not be a good writer in the sense that it’s compelling or engaging.

Then on the other side, to be able to sift through all of this stuff that you’re going to give them, and all of this information, that’s also another skill as well. So, to be able to find those writers has been difficult, but we’ve been lucky enough to work with a number of them and to kind of create a nice group of folks that we work with, and as we’re working with other companies now. But it’s something that anybody else can do, but I’d say handle with care, don’t work irritably and make sure that both are on track.

Roger Dooley:     Do you have any other suggestions for people who are looking for ways to come up with new ideas that sort of thinking outside the box, beyond hiring science fiction writers? Which I think is really creative and I can see why it would work, particularly if you can engage a few writers and not give them any … Not lead them, as you say, in any way, just sort of let their imagination do the rest. What about more conventional approaches, brainstorming, is there any other approach that you found to be successful?

Kyle Nel:             Yeah. Everything is a tool that has its proper place. So, brainstorming I’ve never found to be a place that creates disruptive new ideas. I’ve never seen that before. It’s really great for incremental improvement and there’s nothing wrong with that. It’s really important. But to go into a sticky note session expecting to come out with something totally blue sky I think is probably right.

Working with folks, I think the primary thing is bringing in folks that you would never ever work with. Those are the kinds of people that will create or help to co-create those newer bigger ideas. There’s a reason why our company is called Uncommon Partners is because it’s a fundamental principle of what we do while at Lowe’s and then now. So, working with folks you would never expect company X is working with who? If someone says that, with this complete look of incredulousness on their face, you know you’re on the right track.

Then also, like true partnerships to be able to say, “I don’t like that,” in a constructive but serious way. That feedback back and forth is very, very powerful, but most organizations are just not set up or comfortable with that level of conversation.

Roger Dooley:     So, failing to get a science fiction writer, if you could have Ray Kurzweil drop by for a chapter, that would probably be pretty cool.

Kyle Nel:             Yeah. I’ve hang out with Ray teaching at Singularity and yeah, that would be amazing. If you could get Ray to show up, that would be incredible.

Roger Dooley:     So, one last Lowe’s question, the graphic novel describes Lowe’s as a transformed company, and obviously the internal thinking has been transformed to look at these kind of out of box technologies, but I’ve got a Lowe’s and Home Depot both within about 10 minutes from my house, and in truth right now, they don’t feel much different. When is this going to kick in, do you think?

Kyle Nel:             Yeah. So, in the book we talk about little t transformation and big T transformation. So little t is within your sphere of influence. If you’re a single contributor, that’s your transformation, right? If you have a group of 5,000, that’s your sphere of influence. Along the way, what we did was we transformed very significant pieces.

Now, you can provide, I no longer work at Lowe’s, right? So, you can provide all these options, and once again, it provides optionality to the company and ultimately, going back to the people side of things, it’s up to them to figure out how it integrates or doesn’t integrate. The transformation, the big T transformation is a process that takes a long time and also has many, many dates attached to it.

I think within, what we did was Lowe’s was able to create and allow for a space where we were able to do these things and create a lot of optionality and to do things that I don’t think anybody would have expected Lowe’s to do. Lowe’s is also listed as the most innovative company in virtual and augmented reality, not amongst retailers but in the world, which makes no sense at all. That creates a lot of things you can do, but then it becomes another skill to implement it and to take it to the next step. I know that’s something that they’re working through it now.

Roger Dooley:     Yep. I know our listeners love free tools that can help them get a handle on their business, and one surprising thing you mentioned in the book is Google Trends. Why don’t you explain what that is and how people can use it?

Kyle Nel:             Yeah. I’m always surprised how a few people use Google Trends. It’s a free and awesome tool. Really you can go by geography and location and you can type in a search term, any term and it will show you the relative rank and how it changes over time. You can type in like gym membership, and you can see that it spikes just after Christmas and drops off pretty precipitously down two weeks into January.

You can do that in all kinds of different things and compare and contrast. You can see that Justin Bieber got beaten by bitcoin a little bit ago. So, those kinds of things are both fun, but also is a pretty significant insight tool that all business leaders should be using.

Roger Dooley:     So, what’s a practical example of that?

Kyle Nel:             Yeah. There’s quite a few. One is, you can take that data and then you can put it into other tools, which I’ve done before. But one was really to be able to check and balance as you’re having discussions and having those brainstorms and implications to be able to see if it’s right or not. You can compare is …

For instance, back to back in the day when we were looking at virtual reality, we checked very quickly to see what search terms … Were people searching for virtual reality, and then were people searching for virtual reality in conjunction with home improvement? You can search those terms together and see how it’s increasing.

Then you can use that as a measure to be able to use as a numerator, denominator for potential growth in other categories as well. So, just like any other forecasting and trendsetting thing, it’s an excellent, excellent way to be able to incorporate real data, real behavioral data into your model, which is hard to come by. Behavioral data is very difficult to come by.

Roger Dooley:     Right. I think you really made a key point there, Kyle, when you are looking at people’s search behavior, you aren’t asking them questions. This is what they’re actually doing. As you said, it’s tough to get beyond asking people stuff and observing their behavior and Google basically gives you a window on that.

I know that a while back, I was trying to convince my publisher at Brainfluence, Wiley, that we needed a Spanish edition. I, using Google search data, found that about half or more of the search terms for neuromarketing were Spanish language, so-

Kyle Nel:             There you go. Yeah.

Roger Dooley:     It’s not that that accelerated the process. We eventually did get the translation, but whether that helped or not, I don’t know. But it’s always good to have data to back up your points, rather than just arguing, “I know there’s demand for this.”

Kyle Nel:             Exactly. Yeah.

Roger Dooley:     It’s great there for you. Are there any other tools, either free or cheap, that you can suggest?

Kyle Nel:             Yeah. The other one that we talk about in the book and it’s something else that you can pull out too is experimental design. I am shocked at how few organizations use a hypothesis driven experimental design that’s taught in a much more basic form in third grade to a much more advanced way in graduate schools in social sciences across the board, to be able to analyze in a structured way, what are we testing, independent and dependent variables, and measures along the way.

That’s a critical part to our success. If you apply those things, it makes life a lot easier and gets stacked on much, much faster. That’s something that if you aren’t doing that, look up experimental design and there are a lot of frameworks that right away will give you a huge leg up.

Roger Dooley:     Very good. That might be a good place to wrap up. Let me remind our listeners that we are speaking today with Kyle Nel, CEO and Co-Founder of Uncommon Partners, and co-author of the new book Leading Transformation: How to Take Charge of Your Company’s Future. Kyle, how can people find you and your ideas online?

Kyle Nel:             Yeah. I’m on Twitter @Kyle_Nel, and then at uncommonpartners.com, and you can see a lot more in-depth stuff of what we’ve done and what we’re doing to transform companies.

Roger Dooley:     Great. We will link to those places and to any other resources we mentioned on the show notes page at rogerdooley.com/podcast, and we’ll have a text version of our conversation there too. Kyle, thanks for being on the show.

Kyle Nel:             Thank you so much. Really appreciate it.

Thank you for joining me for this episode of The Brainfluence Podcast. To continue the discussion and to find your own path to brainy success, please visit us at RogerDooley.com.