Experience Strategy Podcast: Integrating Experience into Corporate Vision with George Barnett of the Strategy Toolkit

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In this episode of The Experience Strategy Podcast, we’re joined by George Barnett, strategy expert and author of The Strategy Toolkit, a newsletter that includes excerpts from his books on strategy, plus insights, analysis and strategy for the 21st century. We look at how business strategy has changed over the last 20 years and why customer experience is now so important for success. George shares stories from his work, showing how focusing on customer experience can help businesses grow and attract investors.

Tune in to the episode as we discuss: 

1. Why some common ways of measuring customer happiness might not work well

2. How to use CX to attract investors 

This episode is a must-listen for anyone interested in making customer experiences better and ways to have a bigger impact on their company’s decision. 

Voiceover: [00:00:00] Welcome to the experience strategy podcast, where we talk to customers and experts about how to create products and services that feel like time well spent. And now here are your hosts, experienced nerds, Dave [00:00:15] Norton and Aransas Savas

Aransas: Welcome to the experience strategy podcast. I’m Aransas Savas. 

Dave: and I'm Dave Norton. 

Aransas: And today we are joined by George Burnett.

George is a Silicon Valley based diplomat, engineer, [00:00:30] consultant, investor, and entrepreneur. He's worked with companies of all sizes around the world as part of Monitor Group and Clear Lake Group and is the author of a really wonderful, uh, sub stack that we're going to share with you and talk [00:00:45] more about today.

This, uh, self proclaimed strategy geek is going to join us experience nerds to talk about the intersection of experience strategy and corporate strategy. What's the difference between these two? [00:01:00] How do they play well together? Where do things break down? And what can you as experienced strategists do to be an effective and impactful part of corporate strategy?

We're also going to touch on how experienced [00:01:15] strategists can play a really valuable role in helping companies attract investors, thereby adding an intentional value to their company. So George, we're really excited to have you join us here today. Let's just start with a little [00:01:30] of your. Why? What makes you so passionate and excited and energized by corporate strategy for two decades now?

George: Hmm. 

Aransas: Well, 

George: thank you. And, and I'm really excited to be here around CIS and day. Thank you for having me. [00:01:45] Well, it was, um, in the middle of being at business school as a diplomat, right? There were all kinds of geopolitical issues going on that we were dealing with. And in the classroom, they're talking about strategy.

Right. Right. [00:02:00] From a completely different perspective and economic and financial perspective, you know, markets, et cetera. And I was like, you know, there are some common human elements to this. And I bet you, we can pull [00:02:15] insights, different places that can help you as a strategist from one place to another.

And I've been passionate about it ever since, because the first strategist that I met at the business school. They were very narrowly focused. And I have [00:02:30] an engineering and physics background in my original studies. And so I was bringing a lot of my analogies from technology. Fortunately, as we've seen, it's technology that's caused a lot of change over the past 20 years.

And so we actually need to be able to [00:02:45] draw upon those things in order to understand, you The, when, when technology affects people and then people change their strategies, what should we do with our organizations as a result? 

Aransas: What a great question here. And I see Dave already lighting [00:03:00] up because those sort of contextual questions about what's changing as things are changing are so much at the root of good experience strategy.

Dave: You know, I think it's been really interesting and fascinating to see how strategy [00:03:15] has evolved over the last 20 years. George, you probably have a really good perspective on this. When I first entered into the workforce, doing SWOT analysis was kind of the thing to do. Strengths, weaknesses, [00:03:30] opportunities, and threats.

And the name that was most associated with business strategy was Michael Porter and his five forces, right? And since then, we've seen such a [00:03:45] broadening of the definition of what strategy is, because it used to be very narrow, like you said. I wonder what are some of the big markers that you look at or how.

strategy has evolved, a [00:04:00] corporate strategy, business strategy over the last 20 years. 

George: Well, you touch on a very sensitive topic for me because the Monitor Group was started by Michael Porter, right? So in a sense, he was my boss at one point, right? I didn't [00:04:15] have the honor of actually working side by side with him, but it kind of is his students, right?

And I was a heretic because I kept saying, yeah, but right, you know, five, four scissors, oversimplifying a [00:04:30] circumstance, right? The, the BCG two by two, you know, you know, whether you invest in this or, or it's a dog or whatever their language was, the pejoratives, right? I was like, You don't want to make it that simple or McKinsey, you know, always come back with three [00:04:45] things because otherwise people can't think past three.

All right. I actually think the best strategists, whether they're, you know, CXOs or, or, you know, line managers, they're really, really naturally intelligent. [00:05:00] They can handle complexity and they actually want that complexity so that they can feed their own mental algorithm. and mental models to come up with good choices.

So this then brings me to the neuroscience [00:05:15] component, probably the biggest change in the past 20 years. If, if anyone listening to this has not read thinking fast, slow by Daniel Kahneman, it's awesome, right? The Princeton researcher who worked with [00:05:30] Amos Tversky to say, we are wired mentally. To think instinctively, but then also in a, in a second phase, when we have some information and we want to be intellectual, [00:05:45] and you have to be aware of those two modes of operation in order to understand behavior.

And then this whole world of behavioral economics and the Nobel prize and all that stuff followed to me that helped humanize [00:06:00] our understanding of dealing with changes, whether they're technological, et cetera. Interesting. 

Dave: I think that's really, really fascinating to think about thinking fast and thinking slow, trying to understand the relationship between the two.

For me, [00:06:15] one of the biggest changes that has occurred, Michael Porter was brilliant. He and Clayton Christensen, I was more of a Clayton Christensen kind of guy myself. You know, they kind of battled it out there for a little while, but I think one of the biggest changes, [00:06:30] and this kind of builds on what you're saying, Is that nowadays, whoever the strategist is, is also responsible for developing the framework for understanding what the challenge is.

So we used to [00:06:45] rely on the frameworks that were provided by the consultancies. But today, what we find is the strategists themselves who are like saying, okay, I'm going to bring in some elements of SWOT analysis. But I'm also going to do some other [00:07:00] things as well to help me to understand and develop a better, maybe a better dashboard or a better framework for understanding what it is that I'm trying to do.

Do you agree with that? Or what are your thoughts, George? 

George: Ah, well, let me [00:07:15] take a step back as to how I think about strategy and then how that then brings corporate strategy and experience strategy together. All right, because when you go through the whole onboarding [00:07:30] process at monitor, they help you to think that.

Strategy is about choice. Choice of what to do and choice of what not to do. Right? So it's conscious, it's aware, you actually put it on the whiteboard and [00:07:45] everybody agrees all the way up to the board. That in itself creates value because getting them to not to do their favorite thing. Pet projects is one of the hardest things, right?

Now, what kind of choice then becomes the [00:08:00] next question? It's like double clicking, right? It's, and the two big categories are where are we going to play? How are we going to win? And I'll, and I'll nod to Roger Martin, who was an early monitor thought leader. And he's continues to do his, his wonderful work.[00:08:15] 

And as a friend of mine, right? Almost like a map. of where to play. I'm going to go into these industries with these kinds of products and look at these types of customers. That's a huge set of things. And I'm not going to go in these other places. And that helps [00:08:30] to guide the investment. Well, then once you've decided to do that, then how are you going to win?

Because no matter where you go, you're going to meet some other type of competitor who's already figured out that there's attractive potential for profit there. How to [00:08:45] win, right? Is exactly where Understanding your experience strategy is important. How are you going to interact with your customers? What are the, the, the aspects of the customers that you're interested in?

What are the, [00:09:00] what's the talent basing resources and capabilities of the people that you're going to use or pay either as employees? Or they're external to your firm, but you are highly dependent on your partners, your ecosystem, your community, and then [00:09:15] the whole financial dimension of it. How are we going to fund this, right?

Whether it's with your internal corporate finance decisions or your ongoing financing, which will vary between whether you're public or private, right? So for me, your, what your [00:09:30] choices are, are very important. On how to win. And there are many examples. I'm sure you have highlighted in the past. These decision makers say experience and a [00:09:45] superior industry leading experience is key to winning in that place.

And therefore we've chosen to put experience At the heart of our strategy. 

Aransas: Yeah, I think that's [00:10:00] exactly right. And I love the way you've broken that down. I'm curious in the breadth of work that you've done, how often you have seen organizations decide. to put experience at the [00:10:15] forefront of the strategy.

George: This is one of my favorite stories. I, I can't for confidentiality reasons, name the organization, but everyone knows them, right? Um, one of the leading brands in financial services, [00:10:30] right? And they, from the beginning has had the experience of the customers who interact with them, but their life savings with this firm, right?

The Uh, employees who decide [00:10:45] to come and work there, tens of thousands around the world, right? And then the ecosystem of channels, channel partners, right? Who helped them interact with yet another set of, you know, end markets, [00:11:00] right? Those experiences is what differentiated them from all the other financial institutions that they're duking it out with on Wall Street, right?

Well, what happened was technology, right? Technology [00:11:15] changed everything in, of all those categories and how they, how that was actually being experienced by the different categories, but also how it was measured, how it was understood, and [00:11:30] how you could then Decide to affect change, right? Because you couldn't just do it the way you had done it in the 1980s or 1990s, right?

And so what came up in all the way up to the boardroom was that there was a, [00:11:45] um, a dissonance. It was not the same. It needed to be aligned. There were clear examples of it being better and worse in different aspects. And they wanted one. aligned [00:12:00] experience across everything. That was the challenge and it was amazing, right?

I mean, it was a lot of work. 

Aransas: And so in the end, now that you look back at it, what do you see in their approach as a [00:12:15] lesson? 

George: They, what they did was they went back to principles of experience, user experience design. They had us, um, what's the best way to describe research, the leading. [00:12:30] Examples across many industry verticals, and then get the underlying capabilities.

How were those different reference companies able to do what they did? How much did it cost? How [00:12:45] many people, what kind of people, what kind of systems, right? And we, and we brought out a whole series of principles and then how each different company actually went across, if like a series of dashboards, this one went through like this, this one did it like this, right?

And those ones were identified. By [00:13:00] the, by the board and the CEO, like these, this is who we want to be like at a, at a, uh, what we call it, um, it's not existential, but it's a, it's a, it's a feeling, right? We want it to be like this, right? It was very hard for them to actually express. [00:13:15] Express it in concrete, quantitative terminology.

It's all qualitative, right? Um, and then we actually said, okay, if you're going to, if you're going to move in this dimension to be more like that one, right, then this is what it's going to take to build the capabilities over this amount of time. And then you [00:13:30] translates into, uh, investments and plans and stuff.

And they took it all the heart, took it all the way back up and actually green green lit the project, right? It's a multi year project. They are actually making progress. 

Dave: Oh, that's awesome. That's exciting to hear. You know, Rances, that reminds me a lot [00:13:45] of what we've been talking about a lot on the podcast the last few shows, and that's point of view.

How do you develop a point of view around what the experience should be? And it just reminds me [00:14:00] again of the importance of doing the strong qualitative research, the qualitative thinking, and not just relying on The quantitative, which can be so seductive because it's got these [00:14:15] numbers and percentages.

They look like truth. They look like truth, but it's really hard to establish a point of view without the qualitative, without the senior leadership envisioning [00:14:30] what the organization is going to look like in the near future. 

Aransas: Yeah, the other thing I'm thinking about in this, though, from a higher order experience standpoint is we feel very strongly that everyone in the financial [00:14:45] industry should be playing in the transformational experience space.

They should be thinking about their job. As a transformational job to be done and most are not, most are thinking about it or debating between many and most, I'm going to go with most, uh, [00:15:00] are thinking about it as a transactional and functional job to be done. When they interview their customers, I'm sure every company hears the same thing that we hear every time we do research for financial companies, which is it's safety and privacy and safety and privacy.

And [00:15:15] yes, that is foundational and you do have to be good at safety and privacy and. Ultimately, like I'm going to go back to your phrase, industry leading experience, it differentiates. That means creating transformational [00:15:30] experiences that understand who your customer wants to become. Because every single person that puts money into a bank wants their money to do something for them.

And most [00:15:45] of the financial services leaders we're seeing. I don't understand that initially, because it's simply a very different way, I think, of thinking about. the role of experience in corporate strategy is and where they [00:16:00] interact. Now, I agree with you totally. 

George: I'm playing back many Silicon Valley investor demo days, aren't you?

Name, you name the VC fund that the institution and blah, blah, blah, right? And when they, and [00:16:15] many financially oriented startups, and then, and then they do their pitch, right. And I'm sitting there either as an angel investor or someone who could actually help them with their strategy. And the challenge that those startups, the FinTech world have is [00:16:30] it's so highly regulated that even though they want to do.

X, right? For them to be able to do it and give the experience that the technology and the, and the brilliance of their design could allow is [00:16:45] actually hampered. And the example that keeps coming up over and over again is seamlessly sending money into the system. between the United States and country X, right?

There's a reason why Western Union has a lock on it and it has to do with [00:17:00] government law. It has nothing to do with the lousy Western Union suffering. Sorry. 

Aransas: Preach. 

Dave: No, we totally agree. Yeah, no, it's a highly regulated environment. It's fascinating. You know, you think about all of the [00:17:15] different Industries that are dealing with transformation, healthcare, finance, education, lots and lots of regulations, governmental regulations that manage those categories.

[00:17:30] I don't know that we've ever explored that, what the relationship is between the two. 

Aransas: Yeah. I mean, I think the best experience strategies find the opportunity in those, and that again is so much of what we end up doing for our clients is we say, okay, great. [00:17:45] There's this limitation, let's use it as a forcing function to get creative and see what we can carve out of that.

Because most of the time we're not going to change the legislation, we're not going to be the ones to affect that. But we [00:18:00] can, I think, really use those forcing functions. Thanks. So, having worked with so many startups and, and even I think startups within larger companies, where [00:18:15] does this intersection between corporate strategy and experience strategy break down or where do experience strategies get in the way?

Yeah. That we could learn from. 

George: Well, I'd like to, to, to add [00:18:30] into the question, if I may, you know, the, the investor experience, if I could. Right. Right. Um, and, and, and that is, you know, the, the supplier of capital, the investor, right? I mean, [00:18:45] it's as, it's as simple as I've got to grow valuation. As quickly as, as humanly possible.

Now we can divide it between the private investment game and the public investment game. They're, [00:19:00] they're very different. There is some overlap in the middle, right? You know, having worked for a venture capital firm, having been an angel investor, having hung out with the gang here, they're all about turning.

That capital as [00:19:15] quickly as possible. The moment they close with limited partners on fund one, and then they've got their little team to try and start to deploy it, they're already out there marketing fun too. because and, and they're, and in order to [00:19:30] actually be credible and fun too, they've got to be able to demonstrate that they turned the capital on fund one.

So the pressure is never off. Now I'm not trying to say they have a hard life because they've got a, you know, they've got their preferential tax [00:19:45] regime that allows them to make a lot of money. Right. If They actually make good investment decisions, right? But for them to drive growth in their valuation, typically, all the metrics of valuation, all the models [00:20:00] will have something to do with either the top line, how fast did you grow the revenue?

Right. Some of them will be looking at other metrics that are specific. And let's just keep it in the software space, right? There's, there's particular things that, that, that if you're going to do the [00:20:15] SAS game or the cloud computing game or the AI game, you know, everyone agrees, these are the three metrics and you got to be, you know, in, in, in talk and then get Gartner to try and put you in the magic quadrant, blah, blah, blah.

Right. Okay. But it's always future [00:20:30] Looking, right? And, and it's like, all right, what story can I tell about the future that not only builds on a couple of data points that happen to have a positive trajectory, but [00:20:45] makes you think it's going to accelerate, right? I mean, I've got to convince you that it's going to accelerate.

All right. Well, you could choose to invest behind a set of business models, right, that will tell a very positive [00:21:00] story about the future. And you could choose to have as your, you know, underlying your narrative that it's experience based. Right. But some of them do not. Right. But to give an example of of two iconic brands that have come up over the past 20 [00:21:15] years is Airbnb and Uber.

Right. And they were like, you know, your experience of staying in Somewhere on a holiday is going to be different and we're going to bet the house on it. My [00:21:30] Combinator between you and I would be nothing without Airbnb, right. I mean that's, that's their big, their, their big success. All right. Similarly, Uber, I mean, I don't know if you were out here at that time, but Everybody was trying to figure a way across the [00:21:45] bridges and try and do it cheap.

They would line up physically on the bridge and hop into cars and do some version of Apple Pay to the driver to get over the bridge, right? Well, Uber is like, I can do that faster. So did [00:22:00] Lyft and about 15 other startups at the same time. But Uber figured out how to make the experience very easy. Right? I mean, it's just like, and then with it came, uh, you know, I'm kind of the, [00:22:15] I'm kind of like the top dog, right?

Because there was a, there was a cachet with using Uber, which wasn't there with Lyft. Lyft was more the party animals, right? Uber was like, I'm successful. All right. So this combination of I'm going to my software is so good. It [00:22:30] was super easy. And I'm kind of winning. Right? Those two things then made that company so successful.

So I think you could, as you're sitting there listening to the, you know, 100 demos that Y Combinator has in [00:22:45] this next batch, and you can say, Oh, I have an intuitive ability to choose those who are good at experience. And they know how to embed it in a business model because that creates a positive story about the future.

And then [00:23:00] I can actually run these valuations. So that's an example of something that could work. You could, on the flip side, right, say, I really have a intellectual or a historical reason to go into this [00:23:15] area, right? Right? Because I'm really smart at this kind of stuff, or I've got a team of people who are good at it.

But then you end up choosing a team or a circumstance, and they're just not good at this experience part. [00:23:30] You might look away from it, or you may decide that it's not important. And you could make a really bad decision. And, and I think the one that's it's the graveyard from my point of view is the, is the patient health records, you know, and you're going to make a run at Epic or whatever it [00:23:45] is that you're going to try and do in the healthcare system.

And this, there's been so many who have been trying to say, I can, I can, I can make this work better because I understand, you know, physician and hospital workflows and blah, blah, blah. Between you and [00:24:00] I, you know, I, if the experience is. Awful, right? For the people who actually have to do it. They're not going to do it.

Right. And I've watched them every time I go in there. Right. And, and, and so I would say [00:24:15] if you're going to play at that private investment space and you make a decision that experience is not important, you could just be throwing money away. Right. So, so it's almost like an early, early decision of which type of business models [00:24:30] should I be betting on and how important is experience in that.

And am I looking at a team that knows how to do it? 

Aransas: Yeah, that's right. And a team that understands what it means to truly [00:24:45] listen to that customer need and fulfill a customer need versus an idea of a customer need. Right. Yeah. No, 

Dave: I think you're right on. So I know this is a little bit of a red herring, but when you're talking about just, [00:25:00] Epic and the kind of the hold that it has on the industry.

Why was it that that ran through your mind? I, I was trying to follow what you were saying there, George. And it was fascinating to me because I keep wondering why Epic has such [00:25:15] a stranglehold as well. 

George: Well, it's more that the, when I, when I'm looking at contrasts, it's like, Oh, iconic, easy, right? If I'm going to try and get something on a Uber and then iconic, Oh my God, I wish I hadn't [00:25:30] opened up that application.

It's it's every time I look at my doctor's face or anybody that, when I, when I go into any kind of medical setting and they have to open up that software, it's like they're going through a root canal. I mean, oh my God, they hate it, 

Dave: but [00:25:45] that's what they have to do. Well, that's right. This. Very interesting.

George: But I, but I do. But it wasn't designed with them in mind. No, exactly. It's a, it's a 1980s design. It really is. It's horrific, right? And you know, for those of you out there who, who write code, there's [00:26:00] a lot of cobalt out there still, and it needs to get out of the system. We know that, right? Um, but it takes a long time to take out legacy systems and put in new systems.

It's so, yeah, it's so hard and it's so expensive. 

Aransas: Yeah, [00:26:15] well, and I think too, what you're seeing there is that it's a legacy stack that was built. To mirror an in person experience. It wasn't built to create a digital experience. [00:26:30] Right. And that's where I think so many of these fall apart. Is it's like, how do we recreate this?

But that's not the problem to solve. It's how do we create something new for this context? 

Dave: Fascinating. 

Aransas: So, you have so much [00:26:45] good writing on this stuff, George, um, and so I want to talk about your subset. But before we do that, I want us to talk for a second about NPS, because we've said a lot about it on this podcast, but I think it'd be good to hear your perspective as an investor [00:27:00] on what you see in NPS.

As experienced strategists, we find it pretty frustrating as an experience metric, pretty limiting in terms of understanding, but we do hear time and time again, oh, well, I'm It's a standard and we need it in order to attract investors. 

George: [00:27:15] Right. I think this is a great example of caveat emptor. Buyer beware.

Okay. You're going to put your money into something, right? If you're going to use a metric, you better know your metric, right? When I, when I went to New Relic, which is a, you know, a [00:27:30] fantastic SaaS software company that my first job in customer success was, Hey, have you got fix our NPS? Right. And I was like, Oh yeah.

I remember reading about that. That's Fred Reich held at Bain. He wrote about this a long time ago. I reread all the original [00:27:45] papers and I went, oops, none of the companies that he studied were software. Right. Somebody went off and said, Oh, I can translate this into every industry vertical, I can then make a lot of money.

Right. Because I can hype this puppy. Right. I'm [00:28:00] like, Oh, interesting. Then I looked at the competitors who had better NPS scores than New Relic at the time. And I'm like. Wait a minute. When I look at the process flow, they're gaming it, right? It's a marketing tool. Brought it back and I said, you know, [00:28:15] we can just as easily pump it up to 85, 90, 95, whatever you want.

You tell me the number, I can hit it, just like in accounting, right? But it's not actually predictive of churn. And my job is to, is to minimize churn, [00:28:30] right? All right. So it's like, what are the metrics that mattered? And after about six months, we realized it was use metrics, actual use metrics from the day you onboard, right?

It's the benefit metrics. And these benefits is like, did we, did [00:28:45] the customers actually start to have progress on productivity and making money? Right. Because if they don't make money, you don't make money. Right. And then there is these deep, deep customer success relationships, whether it's your technical engineers or anybody else.

Do [00:29:00] we know them well enough, we can predict behavior is going to happen. And, you know, I came back and I was like, if you don't have a slide, don't even try to automate this, right? This is [00:29:15] people stuff, right? And you need people talking to people, right? And then we can say, yeah, that 3 million ARR contract.

It's going to continue for a couple of years and you can actually put into your financials with [00:29:30] confidence, right? That's much better than, you know, running around with an NPS of 85. Sorry. Sorry. 

Aransas: Not 

George: sorry. I'm 

Aransas: going to just make a clip of this and [00:29:45] send this to every client who, you know, has To prove that there is another perspective.

Thank you for that. Before we wrap up, tell us a little about your Substack. We're huge on this platform. Uh, we love building community [00:30:00] there and connecting with other thought leaders there. So, um, a little update on yours. 

George: Thank you. It's called the Strategy Toolkit. It's the leading strategy Substack out there.

I, I have all the tools. Everybody is like geeky about, about [00:30:15] strategy. I research strategy in all different backgrounds. I, I write about it. I have some parts which are behind a paywall, some parts that are not. And then I also look for really interesting people. I interview them, not in the podcast, but I interview them and I, and I [00:30:30] share like today, it's like a leading practitioner and organizational design talking about how getting potential out of teams have changed.

And what strategies do you use? Fun stuff. It comes out a couple of times a month. 

Aransas: Awesome. [00:30:45] Awesome. So experience strategy podcast listeners, I know you're following Dave over on the experience strategist, follow George over at strategy toolkit. I think there's so much great crossover here, uh, and so much we're all [00:31:00] learning together.

It's a really exciting space to be in and to create community and to truly understand what's happening by taking a 360 view of this. So excited to keep watching that unfold for you, George. Audience, thank you [00:31:15] for listening. Thank you for your questions, your ideas. Keep them coming. We love to hear from you.

You know where to find us over at stonemantle.co. You can find every episode of the podcast. You can find our blog, a ton of writing [00:31:30] tools, resources, all available to you for free, as well as easy access to us and information on both our collaboratives program stonemantle.co. And our experience strategy certification, George, thank you for being here.

Such a joy to talk to you and I'm really [00:31:45] excited to be connected. Thank you so much. 

Voiceover: Thank you for listening to the experience strategy podcast. If you're having fun nerding out with us, please follow and share wherever you listen to your favorite podcasts, find more episodes and continue the conversation with us at [00:32:00] experiencestrategypodcast.com.