Transcript of Episode 58 – Jake Bornstein on Leadership & Clarity

The following is a rough transcript which has not been revised by The Jim Rutt Show or by Jake Bornstein. Please check with us before using any quotations from this transcript. Thank you.

Jim: Today’s guest is Jake Bornstein, a senior executive coach and the head of global expansion at Talentism, an executive coaching firm.

Jake: Great to be here, Jim. Thanks for having me.

Jim: Yeah. Great to have you. I saw your presence on the internet, and I said this is the kind of guy I’d like to talk to. And Jake has had a rather interesting career trajectory. His first job, at least the first I could find, was at Bridgewater Associates, perhaps the world’s leading motherfucker hedge fund. Ray Dalio, who’s got to be goddamn near the root of all evil. In fact, a very good friend of mine worked there for a while, and went out fleeing into the night, fairly heavily traumatized by the whole experience.

Jim: Then he went on to Slow Money, the other extreme, one of the best and most well thought out do-gooder organizations, that helps match investors and local agriculture people to help up-regulate the local agriculture scene. I actually have a little nexus with them, my wife and I helped start a clone of Slow Money here in Virginia. We call it a clone with changes, the group of us took the ideas, kept some of them, changed other ones. In fact, we had the head Slow Money guy, what the hell was his name? I forget.

Jake: Woody Tash.

Jim: Yeah. Woody Tash came out to one of our organizing meetings and we got to meet him and chat with him. He was an interesting fellow. So yeah, going from Bridgewater Associates to Slow Money, got to have been the biggest career jump of something I’ve ever seen. Then after that he got into personal and business coaching, and has been doing that at his own company with Talentism since, as far as I can tell. As those of you who listen to my show know, I have a fairly extensive business background, and my passion in business was the people side of business: recruiting, development, and retention, and culture. And in fact, one of our earlier episodes, episode 22, featured Sara Kindsfater-Yerkes, an organizational design consultant and someone who’s worked for me in the past in the recruiting and development side of people. So people know this is an area of passion for me, so this should be a fun conversation.

Jim: So Jake, your take on your little epic journey here of career arc, from Bridgewater to Talentism?

Jake: Yeah, absolutely, Jim. And in many ways my career arc reflects a principle that I’ll be talking about more in terms of living your life as an experiment, continually refining your clarity for what is ultimately going to be meaningful to you, and where you can best deploy your talents. So going back to Bridgewater, the one thing that you said that I don’t know that I’m on the same page with is Ray Dalio as the root of all evil. I think he has his flaws as do all of us, but I actually got a ton of value out of my time there. And the challenge that ended up having me decide to leave, was actually something that they encourage, which is thinking about economic fundamentals, and being relentlessly curious about how does all of this actually work? When you drop the academic jargon, when you drop the theory, how does any of this actually work?

Jake: And there was a white paper that was put out a couple of years into my tenure there, where it was talking about how the economic machine works. And there was this underlying assumption that it all started off with that productivity can be expected to grow sort of ad infinitum, for around 0.5 to 1.5% globally. And I read it, and it just sort of blew my mind. Because on one hand, if you’re trying to trade on a three to six month time horizon mostly on debt and business cycles, then fine, it works as a simplifying assumption. But it begged the question, why would you think that? It’s a pretty strong claim to make, divorced from the underlying drivers of what actually creates productivity, what actually creates value. And that question led me down this whole rabbit hole of heterodox economic thinkers, and environmental thinkers. E.F. Schumacher was huge in my perspective at that time.

Jake: And I decided one day to basically just up and leave, which is sort of unusual. Bridgewater usually ends up kicking people out. And in that case, I decided that my path needed to go after this question of what actually creates value. That I was no longer satisfied to sort of solve the puzzles around these little wiggles in the market, but what actually drives value in the world, and how can I be a part of creating that? What is my highest use towards that end?

Jake: And so I ended up going on a journey around the world with my extremely patient wife, to check out all of the people who claimed that they were doing this, that they were taking another shot at the fundamentals of how to organize economic activity. So, ended up in a variety of different eco-villages. I volunteered on a farm for a bit, studied permaculture, studied different forestry management techniques, got involved with transition towns, which is based out Totnes, England, with Rob Hopkins. Did all of these different things, some de-growth activism, and all of it was based around this idea of, some of the things I think you’ve talked about on your show before. That when you have essentially neolithic cognition dealing with exponential growth and exponential technology, that you’re inevitably headed for a wall.

Jake: So, that idea led me to the concept that, okay, given my background, given that particular view of the system, what can I do? And the answer to me that seemed clearest was okay, I need to help formulate a new narrative around money because that’s how we allocate resources in our society. And in particular, shifting capital from the current game, which is optimizing for sort of a false efficiency that mostly revolves around making public externalities, and shift it into an alternative economic system that takes those into account, that sees benefit to community, benefit to environment, benefit to all the stakeholders as part of the ultimate return on capital. So, got in touch with Woody Tash, because he seemed to be one of the leading lights talking about that, and that was what led me to Slow Money.

Jim: Great. That’s quite an interesting idea. And it’s had a lot of effect both directly, they did a lot of projects there, but also various emulations like ours, it really has been I think, a fountainhead of rethinking about how you relate capital to building real value, and what real value means beyond just short term money on money return.

Jake: Yeah, no, I think that’s absolutely right. And the place where that breaks down, to be honest, is that you have to actually be able to outcompete the existing system. And none of the responses that I saw from the hippie eco-villages, to impact investing, trying to kind of sidecar the system, none of them actually demonstrated the ability to outcompete, that the underlying system that we have, the existing game, was still allocating resources and still commanding power in such a way that they win. And that ultimately prevented scaling on all these sort of underlying alternative attempts.

Jim: I’ve identified the same thing. I think as you know, I’m involved with an organization, actually there’s no organization, that’s the beauty of it. A movement called Game B. And we call the status quo, the system as it is, Game A. And one of our deep tenets, which actually does tend to drive away the hippie dippies, is that we talk about the fact that Game B must become good enough at things like coherence, and sovereignty, and working in a high impactful way, to actually be able to outcompete Game A, at least in some niches. And to therefore parasitize Game A and pull resources out of Game A, that we can reinvest in building Game B. I’m with you a hundred percent, that what comes next will not come from wishful thinking. It has to come from good thinking combined with excellent execution.

Jake: Yeah. And that question of how do you actually design for the things you’re naming, autonomy, sovereignty, ability to collectively deploy resources effectively? That’s the question. That’s the thing that I’m now obsessed with, that has led me on the rest of my career journey, is what is actually the key leverage point or key leverage points that will enable that to happen? I think at this point, the notion that the existing Game A is in some sense self terminating, that it’s no longer meeting the needs of the majority of people who play it, et cetera, et cetera, that’s becoming shockingly widespread. Since when I was dealing with the de-growth folks back in… I guess it was like 2012, 2013, it was absolutely fringe. And now you’re seeing that as part of, increasingly the mainstream left dialogue, which has been sort of wild to see.

Jim: Yeah, it’s quite interesting how we started the Game B movement in January of 2013, and we were just a bunch of fringe kooks at that point, and now we’re growing exponentially. The time is right. And my prediction is that one of the non-equilibrium effects of this COVID-19 epidemic, is going to be the ears to hear are going to increase by at least a factor of 10 for the next nine to 12 months. This is the kind of wake up call where people for once, are heaved out of the glossy hammock of Western high gloss civilization, and thrown on their ass and have to think for themselves a little bit. And I suspect one of the side effects is going to be opening their minds to realize this isn’t the only game in town.

Jake: I certainly hope so. And that to me is often the blind spot in this kind of thinking. It’s the way that most revolutions fail, is a lot of focus on, okay, if the existing system breaks or if we can speed along that break, then people will realize that we’ve got the answers. And the way that it tends to play out is oftentimes, it’s actually not that hard to tear down a system. And it is remarkably hard to organize people towards building something better. The things that tend to fill those sense-making gaps, I’ve listened to you before talking about the different detractors. You end up with, particularly in these days, likely, technologically enabled fascism, things like that.

Jake: So to me, the question is, okay, if this is one of those moments, and there’s likely to be more, where we’re pressing in the clutch and we’re out of gear, and we have an opportunity to choose a new gear that we’re going to go into. What is the underlying frame? What is the underlying algorithm that actually tilts a meaningful portion of the population into productive means of collaborating with each other going forward, and moves us towards the more beautiful attractor?

Jim: Yep. And my own view, I’d love to hear your view on this, is I think most people are not too interested in abstract talk and theory, and that the way to really get people to move is to actually show. And so what I’ve been pushing in the Game B world through the concept of Game B ventures and proto B’s, which would be smallish initially, communities that organize independently using their own charters, which may differ between them. If we can actually show people a better way of life, and show that we actually can outcompete Game A at least in certain sectors, then the number of people who are amenable to moving their flag, goes up exponentially. The number of people who could make a life changing decision based on pure intellect are relatively small. So I am constantly trying to nudge our community, which frankly is overpopulated with thinkers and talkers, towards action, and that strikes me as indispensable.

Jim: Also, this comes from my complex systems thinking, is that frankly, the more you know about complex systems, the more you know that you can’t predict the unfolding of a complex system very far. And so one’s got to actually go out there and do experiments, be empirical, learn, do probes on the environment, and then react. But, while being cognizant of the fact that you’re embedded in a very high dimensional complex system, and that almost all of your responses are going to have yes, an anticipated effect, but also some unanticipated effects. So it’s this kind of mix of epistemic modesty, but also a bias toward action, and thinking in high dimensional spaces, that strikes me as how we move from theory to practice.

Jake: We are a hundred percent aligned on that, at least at the theory level, which is always the trouble. That combination that you’re saying, epistemic humility and a bias towards action, that’s the heart of my focus. And part of why I’m excited about coaching and why I’m excited about bringing these ideas into business, is because I genuinely believe that there are some psycho-technologies and some underlying frame shifts, particularly for people operating at the leadership level, that will demonstrate this.

Jake: And they don’t even have to be bought into any notion of Game B, they don’t have to be bought into any theoretical framework, they don’t need to be bought into even any particular set of ideals. There’s an underlying shift in the same way that it became advantageous, as you’ve gotten to capitalism, the simple shift of, oh, the future is likely to be better than the past, therefore you should use your accumulated capital to invest in things that will return on that improving future. That mindset shifted the world without even needing all of that much ideological buy-in. And so there’s a fundamental idea that I’d love to get to with you, the notion of potential and confusion and clarity, that I believe can be sort of the germ of that. Particularly when handed over to leaders who at this point, given the way power laws work, actually control the vast majority of how resources are allocated.

Jim: Yeah, I’d love to talk about that. But before we get to that, let’s dive in a little bit into what it is you actually do at Talentism. I pulled down off the website, something that I suppose you guys would call your mission statement, though when I hear the word mission statement I want to go, blah. Which is, “We constantly explore and challenge the thinking that stands in the way of unleashing human potential, including our own. We consume scientific, economic, and behavioral data to test our approach and solutions. We take our latest thinking and offer it for free to anyone who is interested, while embedding our proprietary insights into solutions that help our clients gain competitive advantage and achieve their hardest goals.” That’s pretty cool.

Jim: So let’s start out with that as a framing, and you can go from that, and then put it in the context of why do Game A people seek out your services? What is it that they need? What is it that you’re delivering, in the Game A context?

Jake: Yeah, absolutely, Jim. I love the question. And by the way, I do share the sort of inherent vomit reflex when I hear mission statements most of the time. And in some ways that’s actually a reasonable place to start, that there’s this sort of inherent incoherence in the way that most of us organize towards shared goals. And that’s why mission statements by and large, are such nonsense, because they in no way actually reflect with clarity the reality of the leader who formulated them, or the people that they’re trying to work with.

Jake: So why the Game A players use us? Why is this something, what do we actually do? It’s because it wins. That’s pretty simple, that’s really what this boils down to. And the reason why I think our approach wins relative to what you’re seeing mostly being done in the market, is it’s a fundamental shift from accomplishing goals through the work of others, by commanding and controlling what they’re doing, to unleashing their potential, which ultimately is about the collective speed of learning. And the sort of Taylorism scientific approach to management that was used in the past, made sense in a relatively low change environment. When you mostly just needed people to interface with an assembly line and do repeated things all day, it made sense to say, “You go sit over here and connect this piece to this other piece,” and that was a reasonable way to win in business.

Jake: And that’s still the fundamental architecture behind the way most people think about management. In the current environment, with the amount of connectivity, the amount of frame relativism, exponential tech, environmental limits, power laws, all of those things creating this extraordinary speed of change, you can’t win by doing the same thing over and over and over again. And in fact, if you are doing the same thing over and over again, you’re probably going to get eaten by software. So the way that you’re going to win as a human, trying to organize with other humans, is increasing the overall speed of learning of everyone involved, towards a shared set of goals.

Jim: That makes perfect sense. In the core academic discipline I come from, which is evolutionary computation, where we let software write itself by competing in Darwinian fashion, it’s really amazing stuff, we have the concept of exploration and exploitation. And that neither is the meta strategy, you got to have the appropriate mix of both. Your organization needs to be exploring whatever the appropriate amount is for its co-evolutionary context. But then once it finds a vein of gold, it’s got to mine that pretty efficiently. So you have kind of two different tensions going on, and developing the culture around the company. Particularly in a world like ours, where the co-evolutionary context is quite extreme, at least in many industries, you got to be light on your feet and be constantly looking for what’s next.

Jim: But at the same time, you can’t give away the ability to be the low cost producer, or the more efficient player, or whatever the dimension of competition happens to be in that niche once you find it.

Jake: That’s exactly right, I think you nailed it, Jim. And the one variable that I would add, particularly in the context that we’re talking about, because we’re talking about humans rather than software, is human cognition. That’s sort of the linchpin of all of this, why is this so hard? At some level, what you’re saying is, cutting through all of the complexity, is relatively simple. Use your excess resources to explore, check your assumptions, and when you find something that works, double down on it hard. That shouldn’t be that hard a play to run. And yet, nearly every organization and every leader on the planet is failing at it, with very few exceptions.

Jim: Yeah, absolutely. I remember I did part of my career in one of the, I think the 250th biggest company on earth. It had a bunch of operating divisions, very successful company, great culture in certain ways, but the way I described it when I finally reached the C-level ranks, and could actually say such things in public, was, “Hey, you guys are on the top of hills, you’ve entrenched yourself there, and guess what? Many of your hills are shrinking.” We were essentially a print and CD-ROM publisher in 1992. Literally 90% of our revenue came from print and CD-ROM’s in 1992, and we were the fourth biggest in our industry.

Jim: But fortunately we were able to get the attention of the powers that be, and convince them of this co-evolutionary fitness landscape idea. And we started doing things differently and we actually started out competing our peers. And by 2000 we were number one in our category. Not bad, right? We did some smart things along the way, like sold our newspapers at the top, moved our biggest, most lucrative business from being mostly print-bound to mostly online, et cetera. But the natural inclination of successful business people is to entrench where they are, “Let’s squeeze 1% out of our costs this year. And if we do, we’ll get a gigantic bonus.” And it really takes a whole bunch of leadership incentives, compensation plans, and above all else, culture, to overcome that natural tendency, or at least the common tendency for people to entrench in place and defend their position.

Jake: So, what you just laid out is the kernel of what we do at Talentism. What you just described is what I would call the path of clarity, and that’s what it’s going to take for businesses to actually win in such a fast changing environment. And that question that you’re asking of, why is it, given that’s a winning strategy, do most people not follow it? That is the driving question that we are after, and that we work with people through in our different service offerings. And there’s another story I love along the lines of what you’re talking about, where Blockbuster actually had a streaming service in the works before Netflix, and it got shit canned by a group of VP’s who were scared that it was going to cannibalize in store sales.

Jim: The classic innovator’s dilemma, right? Most business books suck and are not worth the dead trees that were sacrificed for them, but the Innovator’s Dilemma, what’s his name? Christensen, that talks about exactly that, in a kind of a complex systems fashion, that people that control the revenue also unfortunately control the investment, which is an error. And so it’s exceedingly hard to compete with-

Jim: … which is an error. So it’s exceedingly hard to compete with a successful franchise from inside.

Jake: Yes. So what actually drives that and can the behavior that drives that and the way to switch out of it actually be reduced to a simplistic enough sort of psycho technology or mental algorithm that busy executives can deploy it? That’s the real question for me.

Jim: That would be gold if you have that. So why don’t you tell us about, give a little bit of the cognitive science of what’s going on, then pivot from there into your practice and your deliverables?

Jake: Yeah. So at a high level, the core idea here is confusion that most of us, most of the time are confused without realizing it. And because confusion shows up as a neurological response, when reality, what we’re experiencing, doesn’t match our existing mental models. There’s a gap between what we were expecting and what we are experiencing. And this is deeply hardwired into our biology. We evolved as this sort of middle of the food chain animal on the savannas of Africa, where we needed to be watching out for predators and at the same time looking to exploit food sources.

Jake: And the reality is that our ancestors all survived because they recognized that seeing a log and misidentifying it as a crocodile was going to lead to you surviving more than seeing crocodiles and thinking that their logs. We’re going to see things that don’t match, that don’t match our mental model, that get our attention out of the reality.

Jake: And most of the time, what we are wired to do is to go into threat, to identify the new thing that doesn’t match as some sort of threat to us. And there’s a whole trigger of biological responses that this creates. It kicks off obviously, our limbic system, the amygdala. It triggers a whole sort of cascade of hormonal responses. For nerding out on that stuff, I highly recommend looking at some of Sapolsky’s work, specifically Behave and Why Zebras Don’t Get Ulcers. But the net result is that our cognitive architecture is designed to respond to the unexpected by solving simple problems. Runaway, kill it, run from it, or freeze and hope it goes away. Fight, flight, freeze. That is the basic toolkit that we have been given to deal with things that we did not expect.

Jake: And that works in a world where most of your threats are simple. When your threats are a tiger that you need to run away from, shutting down the part of you that’s going to go, “Well, is it actually a tiger? And does this tiger want to eat me? And maybe this is a different kind of tiger that doesn’t want to eat me.” You’re dead. Automatically, you’re dead. Just run. Just run away from the tiger.

Jake: So we have a whole set of cognitive architecture devoted to taking offline our ability to step back and do complex thinking. What Daniel Kahneman calls our type two thinking. That ability to step back and break down a problem and go through first principles and put hard thinking into it, that turns off most of the time when facing something new. And the problem with that is that in our current environment, our problems, most of the time, aren’t simple, they are actually complex. And complex problems don’t respond well to taking our higher level cognition offline.

Jake: So the net result of that is people get faced with things that don’t match their mental model. They get confused. That confusion rapidly converts into a biological threat response. And then the way that you’ve resolved that, particularly in a complex system where you don’t get the catharsis of having actually run away from the tiger, is you retreat into certainty. You basically double down on your existing mental model. And so, when you’re talking about say board dynamics or company dynamics, something happens that doesn’t make sense. Sales don’t go the way you want, go into the Blockbuster example. You see sort of this streaming thing on the horizon, whatever it is. And you go to protective narratives, you go to certainty, you go to, “Yeah, I know how all this works. And I just need to defend myself, screw those guys who are trying to take away my in-store sales, screw that guy who wants my job, screw that guy who wants the credit.”

Jake: Whatever it is, we retreat to these narratives that help us make sense of our ongoing threat by retreating to things that we already know that we believe will protect us. And that path from confusion to threat to certainty is the reason why most leaders and most businesses fail to learn and fail to unleash potential.

Jim: I like it. I like it a lot. In fact, it ties into one of my own theories of leadership. I’d love to get your thoughts on this distinction. One of my key super powers, I think, and I think my success at least is anecdotal evidence that it was true. I was pretty successful in my business career, is that I concluded that leadership was a mix of underlying innate, almost probably genetic stuff, some talent in certain domains, like communications and interpersonal skills, and some skills that could be honed and developed over time. But let’s get back to the innate part. It’s interesting, I eventually developed a system where I said, we have innate leadership at the L1, L2, and L3 level. L1s can lead a squad. L2s can lead a company, a company in the military sense, a hundred people, and L3 can lead anything, essentially.

Jim: And that the emotional underlying context of the sort were talking about that… By the way, I know Sapolsky a little bit, very interesting character. And certainly somebody who’s thinking about response in extreme situations is very, very valuable. But anyway, for instance, I know about myself, I have somewhat unusual wiring in that I’m a fight, not flight guy. As I tell people if I get into a business war with them, I’d say, “You know, you can kill me, but you can’t stop me, motherfucker. I will not run.” And that’s relatively unusual in business. Most business people are fucking pussies. You put up a little fight and they fold.

Jim: And I also never fall into the fear reaction. It’s just like, “Why would I be fearful about something as trivial as business?” At the end of the day, it’s just a game as my wife and I used to always say, particularly in our startup days when I did a number of startups, “Hey, we end up in a basement apartment back in Somerville, Massachusetts, who the fuck cares. We’re young, we’re talented, we can do it again and again and again. And we don’t really give a shit about the status through things or any of that kind of bad distractors.”

Jim: However, once I got into big corporation world, it was very, very different. And one of my favorite stories, I won’t name names, but one guy that was in the C level suite with me, making a low seven figure income. Jesus Christ, low seven figure W2 and spending 10% more than that. How the hell could you even do it? But he managed. And so what does that mean? He’s holding onto his desk in desperate desperation. There’s nobody on earth that would pay him what we were paying him at most 30% or 40% of what he’s making. And yet he somehow ratcheted up this insane lifestyle. And so that means that he is utterly in fear of losing this ridiculously idiotic consumptive lifestyle, should any perturbation happen that causes him to lose this job.

Jim: And of course, ironically, it led him to make some bad decisions which caused him to be fired. But to your point, the short term reaction was fear. So at least in part, when I’m looking for high level Ls, L2s and L3s, I’m looking, at least in part, for people who have the genetic right stuff. You can teach the other stuff or they could have achieved it on other jobs, but I’m not convinced that high level leadership can be built. That at least it requires a substrate of right cognitive type.

Jake: Yeah. Listen, I think the nature and nurture debate to me, by and large is sort of a distraction. At the end of the day, we have certain potentiality built into our genetics and those in turn will be influenced by how they’re deployed. And then that in turn will be matched against the context that we’re in. So one distinction that I would add there, and I think that it’s inherent in your story is, that inherent response that you have of going to fight, it sounds like didn’t work that well in the big structured corporate environment, where going to war wasn’t an effective response in that culture. Is that right?

Jim: Actually, I was such a goddamn good war fighter, it worked fucking great for me. I’ll give you a hilarious [crosstalk 00:31:02] . And the biggest part is because I did not give a fuck. I would raise the ante as high as I could because I didn’t care. I was also being paid a ridiculous amount of money and I was living on 15% of it. And so my bank account was getting really fat, really quickly. I didn’t give a fuck. I’m not interested that shit.

Jim: Anyway, I ran the tech division and in particular I had a high tech division that reported directly to me. It was about 800 people, a thousand people, something like that. One day, the new HR fucking asshole, who we stupidly hired from some other big company put out this dick tot that drug testing would become mandatory. And my high tech division was located in the DC area. One of our big competitive advantages is we were trying to out compete the big beltway bandits, the big defense IT contractors, intelligence agency IT contractors, et cetera.

Jim: And for statutory reasons, they were required to have drug tests. They were also required due to administrative law to pay talent based on resume rather than quality, which we arbitrage the fuck out of that. We’re able to sell the labor of a C++ programmer with seven years experience for this price. And so they just hired people based on their resumes and paid them all the same irrespective of their quality. And we highly arbitraged. We’d pay the good ones, 25, 30% more. Guess what? We got all the good ones. They got all the stiffs.

Jim: But anyway, we also arbed on the drug testing. While we didn’t quite make it explicit in our ads, we came pretty close, but we also definitely got the word out on the grapevine, we don’t do drug testing. In fact, everything else being equal. If I found out you did acid once or twice a year, that would be a plus. You’d have a heightened consciousness about the world. You want to smoke a little reefer when you get home, I don’t give two fucks. But anyway, this new HR executive sends his dick tot that, thou shalt. And I first called him up and said, “Hey X, this doesn’t work for me. Here’s why. Here’s my recruiting strategy. You can look at our results. We’re kicking everybody’s ass. Without a doubt, we have the most forward-leaning effective organization in the whole 50,000 person corporation. Don’t want to do it.” And then of course, he goes, “I am the head of HR. You will do it.” And I go, “No I won’t.”

Jim: And then I sat down with my ghost writer who was also my chief strategist, nothing better to have a chief strategist who’s also an impeccable wordsmith. And we wrote a two page letter to the CEO laying out our argument, very forcefully and very, not quite confrontationally because I had a great relationship with the CEO, but I didn’t say it, but it was more or less, him or me motherfucker. And again, do I really give a fuck if they fire me? No. So I’m willing to go all in. Here they are. Sent the letter to the CEO and just sort of biding my time, have no idea what will happen. Don’t really care. It’s the right thing to do.

Jim: The next day, I get a call from the CEO and he goes, “Jim, you’re fucking right. This is ridiculous. No, you should not have to adhere to this policy. It also violates, by the way, our corporate doctrine of radical decentralization.” And so the next day he sent a rather stern email to the head of HR saying, “Independent business units may opt out of your policy.” End of story.

Jake: Yeah. And the headline… My main takeaway from this story is that your business was operating with cultural clarity and that’s the antidote to confusion. You were clear that you were running an arbitrage in this particular way, that you were going to index to talent, no matter what, that part of your culture was one where you weren’t going to overly index to policy stability or to the personal lives that your employees were leading, whatever it is, and that you were going to be compensating primarily on output and that you didn’t really care about much else. And so that cultural clarity allowed you to attract people like that. And for your CEO to quickly help make sense of situations where someone like this HR director does something contrary to that, which is not what you end up seeing at most companies.

Jim: Yeah. I will say that, this is the other thing I find so important in companies that I build, and we happen to have a very powerful culture of radical decentralization at this big multinational, where the default was if you run an independent business unit, you have remarkable leverage, do what you want. In fact, some of our independent business units actually opted out of our corporate healthcare plan and put out the bid and independently got their own healthcare plan. That’s pretty damn radical for a major corporation.

Jim: So, in some sense, I knew my battlefield. Bottom line was everything in this almost medieval decentralized kingdom and I had to bottom line, God damn it. And plus I had gigantic five stars for strategic change, both within my unit and across the company. And I could appeal to the cultural norm of radical decentralization. So, being a war fighter, you don’t fight stupid wars, but you fight wars you have a reasonable chance to win. And if that cultural basis hadn’t been there, radical decentralization, even me, Mr. war fighter would have opted out of the fight because it struck me that that cultural norm gave me a reasonable chance of victory.

Jake: Yeah. And that piece of the cultural norm gives you a reasonable chance of victory is I think pretty key. I’m curious and feel free to skip the question or edit out if it’s overly personal, but does that war fighter impulse, has it ever gotten you into trouble?

Jim: Oh yeah. I will say that I got my ass kicked a couple of times when I was a teenager, but in business, no. I would say that, did I win every battle? No. But being a smart war fighter, I generally had a fallback position. Did I ever get fired? No. Did I have bosses that probably thought about it? Yes. But I would say net, net, my war fighter strategies are hugely net positive on a portfolio basis.

Jake: Nice. Well, I’m glad to hear it. And my guess or at least my sense making around that would be that part of that success is that you’ve been good about choosing your battlefields because I have seen cases where people who have that fight reflex and end up going to places where that fight reflex is outside of the existing culture, and then they confuse the shit out of everyone. Everyone gets confused by them. They get confused and that usually goes badly.

Jake: So partially, the way that I read your story is that your ability to choose places where that worked and effectively choose your battlefield that you’d be operating on, and have clarity about the goals that you were actually fighting for, I would imagine that those were the ingredients of your success without knowing more about your story.

Jim: Yeah. I would say that’s mostly the case. And then the other is that when the battles were outside, where it was actually a lot more fun, is that most people are just afraid of a fucking fight. Particularly a fight that they know will be a fight to the death. And they flinch. And so I think that was the other part. I guess you could call that macro battlefield analysis. You assess the other side and you realize that their leadership will definitely blink. If you raise the lids on the ICBM, they will definitely sue for peace. So when the time comes and you have them at their weakest, you raise the lids on the ICBM and threaten nuclear annihilation, most people don’t then raise their lids.

Jim: I guess that’s probably good for the world, but I think that’s another reason, particularly externally why my war fighter strategy worked pretty well. But again, you have to do it where you have the strategic position. And my biggest strategic battle, I literally had a war room where we created eight scenarios on the whiteboard from rollover and submit to thermo nuclear war and six different options in between. We eventually chose option six, which was to make them think we were going to nuclear war, but actually be ready to settle. And we called that strategy, Huff and Puff and then Settle, which worked perfectly.

Jake: I’m glad to hear it.

Jim: But anyway, enough about my tales, let’s get back to your confusion and clarity and all that. How do you help people get through that and increase their capability to do the right thing in a rapidly changing world?

Jake: Yeah. So if one branch and the branch that most people go down instinctively is confusion, the threat to certainty, the alternative that you have is going first to awareness. So rather than being just aware that, “Oh, okay, right. I’m probably confused right now.” And that’s actually an enormous step for most people because once you’re in that threat, once you’re in that space of going into that fight, flight, freeze reaction, it’s difficult to pull back. And that’s where, especially having external sense makers whether it’s other executives or a manager or a coach or whoever it is, to help you recognize that you’re confused at the moment is sort of the first step.

Jake: Once you recognize you’re confused, then you can actually get curious about it. You can go, “Okay, what is my underlying mental model? What isn’t matching here? What is that gap to expectation that’s driving this reactivity in me?” And from there, you can reorient to your intentional goal. Because what gets lost on the way to that path to certainty is the aperture focuses down to how to protect oneself rather than how do you actually win? How do you win against your bigger goals? And this is where you see executive teams endlessly bickering, or retreading the same fights, or backstabbing each other, or whatever it is, even if it’s value destructive for everyone in the firm.

Jake: The way out of that is you recognize that confusion, understand it, drop the assumptions, reorient to the intentional goal, and then you can start moving towards clarity. Then you can start moving towards the clarity of, “Okay, I know what actually matters here. I’ve now simplified down to something that I can do action taking on. Not because I’ve retrenched my existing mental model, but because I’ve expanded it. I’ve taken this new information and I’ve adjusted appropriately to make sense of it.” And then it’s just about experimental action taking. Because clarity, I think, as you said at the beginning, it’s not a fixed place. It’s a constant dynamic loop between, “Okay, confusion awareness. I’m doing my sense-making. Now I’m taking action from a place of clarity. Okay. What did I learn from that? Update my hypothesis. And now I’ve expanded my mental model again. And I’m back to the next step of the strategy.”

Jake: So being able to rapidly run that loop where you’re catching your own confusion and the confusion of others, reorienting them to what actually matters and expanding the mental model through experimental action, that’s more or less how you win.

Jim: In the game B world, we have adopted a model from a fighter pilot named John Boyd called the OODA loop, observe orient, decide, act, and then repeat. It sounds very, very similar.

Jake: Yeah. And the challenge with the OODA loop, from what I’ve seen with people trying to deploy it is they can get lost in the orient stage, in particular.

Jim: Exactly. That’s the hard one. People don’t understand it.

Jake: And it’s hard enough to do as an individual. When you’re doing it as a collective, the complexity of that scales exponentially. And that’s where you have to start thinking about, “Okay, this isn’t just about me. How am I going to actually orient large groups of people, the majority of whom are going to be confused most of the time towards working productively towards a singular goal?”

Jim: Okay. So what’s your trick? How do you do that?

Jake: So one way that, and there’s listen, I think it’s an ongoing learning process. And I want to start with at least some amount of skepticism about what I’m doing, because I think there’s always room to be learning and expanding the model. But there’s a couple of key areas where, especially in an organizational context, you have to create clarity for your people.

Jake: And so those are goals. Like what are we actually going for? Leadership, which is, hey, what’s the point on the horizon we’re heading towards and why in the world should you trust me to get us there? Management, like, how does this work? Who’s responsible for what? What are the processes, et cetera, et cetera. And then finally culture, which pretty much just boils down to, what are the behaviors that people expect to be rewarded and punished around here?

Jake: If you give people clarity across those areas, then it becomes very easy to run that orientation process because someone gets confused, you get confused, whatever it is, you don’t get the outcome you want. Someone misses a key result, misses their OKR or whatever it is. And rather than it turning into this sort of blame festival…

Jake: And rather than it turning into this sort of blame festival, or we have to throw up our hands or redo it or fire someone, whatever it is, you actually have a framework for saying, “Okay, let’s step back. How was this supposed to work? What are we trying to achieve? Does this get us towards that point on the horizon? And is there something that needs to change given how this went down?” The challenge with most orientation is that there’s very poor diagnosis. We tend to be very bad at actually pinpointing where the problem was and the inability to pinpoint the problem usually boils down to a lack of clarity on one of those four elements, if not more.

Jake: So let’s go back to your example of the HR director. So your HR director comes through with this drug test policy. For whatever reason, thought it was a good idea, et cetera, et cetera. Missed all of these key elements of the enterprise clarity for the company that you are working for. That your goal was bottom line. That’s all that really matters. The management structure is decentralized. So doing broad-based edicts is not going to work. The culture is one in which you’re going to be indexing to results rather than people’s personal lives. So doing behavior that’s controlling towards other people is not going to work. So you look at all of that, that person was confused about all of these key elements around how your company was actually working. And the net result was that they created something that A, pissed you off and B, ended up getting the CEO, having to step in. And luckily in that particular case, your CEO actually had the clarity about those areas sufficient to say, “Hey, that’s not how things work around here.” Which prevented that from cascading throughout the org.

Jake: Because what you see more often than not is that the CEO doesn’t have clarity. They’ll just come in and say something like, “Ah, just let Jim have his way this time.” Or something like that, or, “You too play nice or whatever it is. And now you’ve sown the seeds of future confusion in the org.

Jake: Because now the HR director goes to their people and says, “Oh, we got to work around this Jim fucker. And we’ll do drug testing for everyone else, but not Jim’s little ward, but we’ll be trying to work to undermine them in the future because they don’t respect us and whatever, whatever, whatever.” And that hardens over time until you end up with these companies that are basically divided into warring fiefdoms, where there really doesn’t need to be a war.

Jim: Very good point. Because that’s exactly right. Our CEO because we’re in a radically decentralized organization, didn’t have too many actual duties other than to cut off heads when people failed to perform and to make sure that the culture was relatively clearly communicated to people. And when I think back on it, interestingly, this HR guy was brand new. He’d come in from a much more traditionally organized big company. What I heard through the grapevine, he was utterly scandalized by the fact that we didn’t already have a corporate drug testing policy and just thought, “How could anybody.” And somehow had not been properly acculturated in these almost religious tenants of the company.

Jake: There you go, existing mental model for how companies work, for what matters comes in and sees it’s not there and is like, “These people must be nuts. So I’m going to take it upon myself to fix this. To create something that is in line with my existing mental model, rather than trying to actually understand how this place works.”

Jim: How do you get a senior management team to get that if they aren’t already there. Again, in this company, we had the fact that the company had had a 20 year tradition of radical decentralization, which was almost religious in its intensity. Most companies aren’t that way.

Jake: Yeah. I mean, I think the answer is painstakingly for the most part. It’s a grind. You got to run that loop consistently, right? Where you’re helping people make sense of how often things aren’t matching their expectations, which if you’re talking about a management team that doesn’t have that clarity around those four elements, doesn’t have enterprise clarity. It’s going to be all over the place. And I’m sure you’ve sat through many of these executive meetings that are just sort of interminable. You have one person say, “Well I think it should be this way.”

Jake: And then someone else says, “Well, no, I think it should be this other way.” And then it just goes around the table and suddenly it’s six hours and a million dollars later and what did you just do? Nothing. Because no one actually was able to get to the heart of the confusion at hand.

Jake: The first thing that I’m always trying to look for, whether I’m in a coaching role or trying to encourage my clients to do is dial in, what is the root of the confusion? You have to actually, you have to get out of the process of trying to be an advocate or trying to argue for some position, because that’s sort of that certainty path. And instead start thinking like an investigator. “Okay. Why does this suck? Why are we all confused? Why does this feel so bad? Why are we missing our goals? Okay. It’s because X, Y, Z. It’s because, okay. It sounds like tech things our CTO is indexed to creating beautiful products, no matter what. And our sales team just wants him to respond to their feature requests because they need to sell and they don’t care about the beauty of the product.”

Jake: Okay. So there’s a fundamental mismatch there around what you’re trying to create and how you win in the marketplace. If you have a good CEO, they’ll crystallize that as the confusion point. And then from there be able to clarify, “Okay, the way we win in the market is whatever it is, X, Y, Z.” And then see is there a way that they’re going to be able to hit that it might be such that, “Okay, CTO guy, I hear you care about the beauty, but we’re going to have to iterate fast to get there. And we’re going to be learning from the market to inform that because our strategy is to whatever, move fast and deliver to customers no matter what. So we’re going to go with the sales guys approach. But it’s going to be feeding back into your product.”

Jake: Or maybe it’s going to the sales guy and saying, “Hey, listen, we have long lead times and I want my techs. And we’re going to win because we’re going to be creating something new in this market. And I want my CTO focused on these longterm high standard build projects. So go figure out how to sell what you have and stop arguing about it.” You have to be able to step back and rather than diving into the content of the conversation, frame the existing confusion point. And then be able to go to clarity about how you’re operating and what your actual north star is, then you can start moving forward.

Jim: Yeah. The north star is really critical. Again, in my own units, I had a similar thing. I called it Pike’s Peak. I’d say, that’s imagine we’re 200 miles out on the Plains of Eastern Colorado. And there’s, Pike’s Peak you just see the little tip of it, way out there on the horizon, we have no idea what river valleys, what hostile Indian tribes, what deserts we have to cross to get there, but we’re heading for Pike’s Peak, God damn it. Let’s go.”

Jake: Yeah. And that’s exactly right. And that the thing that’s a challenge in practice is what I just described to you. It requires a fairly high level of mastery to actually be able to do that on the fly when you have lots of stuff flying at you and you’re often confused yourself. So I usually try to break this down to some real basic first principles, which is one, just assume that the people around you, including yourself are confused. Just hold that as an assumption. They’re probably not trying to fuck you. They’re probably not evil people. They’re not bad, stupid or lazy, which is typically the narratives we go to. They are confused. They don’t know how to make sense of what is happening around them. And you’re seeing reactions because of that, that don’t make sense.

Jake: Then just start with you. Go from, “Okay. I need to make my own narrative too. What am I missing here?” That basic shift from, “I need to push my perspective.” To, “What am I missing here?” Saves so much heartache, it’s unbelievable. Like I’ve seen literally billions of dollars of company value saved because two cofounders who were at each other’s necks stepped back for a second to ask, “What am I missing here?” And saw that they were basically on the same page. It’s really common.

Jake: And then finally just getting into a spirit of investigation. Like, “Let’s go actually figure out what’s going on here. If I’m assuming that things aren’t working, not because you’re a bad person or because you’re a stupid person or because you’re lazy, but because there’s some confusion here and it probably starts with me. Then let’s go figure out where that is and see if we can get to clarity together.”

Jim: Yep. That makes sense. Maybe talk a little bit about, let’s say there’s an executive, senior executive team of five people. Usually, it’s five people that really hold the culture together or not. How do you actually engage them in this process?

Jake: Yeah. And that’s a great question. I think that’s a bigger question about how do you institute any kind of cultural change. Because what we’re fundamentally talking about at that level is culture change. It’s saying, “You will be rewarded for admitting that you were confused and exploring it.” Because that’s the underlying fear that most people have. They get into these situations and there’s often an implicit cultural assumption that this is a zero sum game. If you win the argument in the room, then you’re going to get more resources, more status, whatever it is, and the loser will have to go away. So you never want to share that you’re uncertain. You never want to take responsibility, you never want to look for the limits of your own mental model because that’s the first step on the pathway to defeat. That’s the sort of underlying cultural assumption that you see a lot of companies.

Jake: So if you’re a CEO, and most often, I think this change has to come from the CEO, you have to be crystal clear, both in what you’re communicating and more difficult, how you’re behaving to reinforce this new culture. So, “Hey guys, we need to learn fast. Learning fast is how we’re going to win. And we can’t learn fast unless we actually are clear on where things are breaking. So from now on the behaviors that are going to get rewarded, escalating problems, calling for sync when you’re confused rather than continuing the battle, taking responsibility for your own confusion and the outcomes that are being missed. Those behaviors are going to get rewarded. And the behaviors that aren’t going to get rewarded is diving into content without actually setting up a frame, deviating from the big picture and going for personal goals at the expense of company goals.” Whatever it is, you can go through that list and then you have to actually stick to it. And it takes time like this is the grindy part of it.

Jake: And I think if we started talking about how difficult it is to actually do change just through theory. You have to actually be there calling balls and strikes in the meeting and say, “Hey, that thing, that was awesome. I’m so glad you brought up that confusion point. Okay, great.” And versus, “Hey, are you actually tracking the goal here? Let’s step back. Remember rules of the game is this: We take responsibility, we escalate problems, we start with our own confusion and get investigative about what’s going on. You’re not doing that right now. And if you keep not doing that, you’re probably not going to be an executive here for very long.”

Jim: Yep. That would certainly help. That would certainly help. It’s interesting in my own companies, I had something that was kind of a conflation of your three points, now that I think about, which I always called our basic cultural premise is intellectual honesty in all things. You always escalate bad news. You never shoot the messenger. You’ll give credit to whoever it is. I would always say, “If the receptionist comes up with the a hundred million dollar product, she gets the credit for it,” et cetera. In some sense, intellectual honesty above all else is kind of infused in all three of your components.

Jake: Yeah. And I wanted just to at the, at risk of complicating the picture while I think that that’s critical for actually moving towards a learning organization, you can actually run a successful organization that doesn’t have those qualities, as long as you’re actually providing clarity for people about how things work. And being clear about when it deviates from that.

Jake: So one example that I love is Spirit Airlines. Everyone makes jokes about how they suck so much and how the experience is terrible and how you’d never fly them again. And they’re one of the most successful airlines ever. And the CEO Baldanza was just relentlessly clear with people that he didn’t give a shit about anyone. He didn’t give a shit about employees. He didn’t give a shit about customers. All you had to do all the time was make shit cheaper and figure out how to squeeze money out of people. That was it. That’s all he cared about. And who delivered that won and who didn’t lost. And under that leadership Spirit actually became remarkably successful and actually pushed the needle on a number of things that you’re seeing today, driving down airfares across the board, et cetera.

Jake: Now, I like using that example because it’s not the warm fuzzy one. The warm fuzzy one is Herb Keller at Southwest who had clarity on the other side. Like, “We do everything with love. It’s all about the customer experience. We treat each other well. These are the rules of the game.” Two very different companies operating under very different cultural rule sets both successful because they led with that clarity. People were basically able to make sense of what was going on around them. We’re a social species. We always want to know how we’re supposed to work with the group. And that clarity enabled two diametrically opposed businesses in the same industry to succeed.

Jake: And the interesting sort of kudo on the spirit airlines example is that Baldanza actually ended up handing off the reins to this other guy for narrow in 2016, because they were so successful that they were like, “Actually we need to stop treating the customers like shit on things like on time and things that actually people care about.”

Jake: And was Baldanza’s like, you know what, I’m the wrong guy for this because I truly don’t give a shit. So I’m going to hand the reins over to someone who does.”

Jim: I love that. I love that story.

Jake: And to me, that is an example of leadership clarity. You set clear guidelines, you set clear cultural rules, you set a clear North star and how you’re going to win such that people understand it. You’re ruthless in how you’re driving it through the org. But then you actually have the humility or the self skepticism to recognize when you’ve lost the thread, when the macro game demands something else. And in that case, sometimes the best thing to do is step down and find someone who’s actually better suited to that role.

Jim: I love that. I love that story. I don’t know. I never even heard of Spirit Airlines tell you the truth. I do know Southwest very well. I’ve actually was friends with Roland King’s son, who Roland King was one of the two cofounders. And it’s a company I have admired greatly, but I didn’t realize there was essentially an anti Southwest out there in the same marketplace off the have to look into that a little bit because it sounds like an interesting story. And it certainly does highlight the quality of clarity above all else. Whether it’s dark clarity or light clarity, both can be effective, I suppose.

Jake: Totally. I mean, there’s more and more examples of that. You have, you have Nike, backstabbing competitive culture, starting from what Phil Knight is like. And it worked because people understood that’s the game we’re playing here.

Jim: Yeah. Child slave labor, what the fuck? Whatever it takes right.

Jake: And I use these examples, right? Because the clarity enables the winning. Now, if you want to actually win with the different values that go into game B values or something, cause you know, these aren’t the kinds of companies I would want to work for the, what gets lost when people try to put these things into practice is that clarity about who we are, what we stand for and how it works. And a willingness to actually drive that down through the org and everything that gets done.

Jim: Okay. Jake, this has been very interesting and I think speaks very clearly to how to do a better job as an executive team in the game A world. But what can you repurpose or extend from your experiences and your insights, which are impressively deep into the game B world or into other, shall we call it better future, what comes next world? Doesn’t just to have to be game be there’s lots of other people doing good work in this area. But let’s use game B as an example. Our four pillars of game B are that the things that emerge in game B will be self-organizing, network centric, decentralized and meta stable. The first three are probably sort of obvious meta stable means that they can last a long time, but probably not by staying the same. They have to constantly flex and change and adapt to their co-evolutionary landscape to last for a long time. But they should be built with that in mind to be able to do just that.

Jim: A rather different contexts than let’s say the company I talked about where we happen to have a CEO who, when he needed to, could throw lightening bolts and would to defend the culture. As opposed to true self-organizing bottoms up ways of organizing. What of your toolkit do you think applies to game B and where might it need to be extended? Feel free to go long on this answer by the way.

Jake: Yeah, absolutely. So I think it’s a great question. And part of the reason, why orient to the sort of the hierarchy structure is just that’s what’s most common out in the world right now. But the reality is that hierarchical structure is just one particular clustering of responsibilities. Where I think a lot of people get lost when playing the decentralization game is that they say, “Oh, well, okay. If these responsibilities lived in the CEO or lived in a manager or whatever it is, we’ll just get rid of all of that. And we’ll just all go do a thing together.” And in most cases that just devolves pretty quickly, particularly if there’s any shock to the system.

Jake: So the first thing I would say is recognizing that the responsibilities related to creating clarity, those exist, no matter what structure you’re in, you still need clarity across those four areas. You still need goal clarity. You still need management clarity, you still need vision clarity. You still need culture clarity. The responsibilities involved in management, meaning helping people productively make sense of when things aren’t working so that they can keep growing and learn how to best deploy their talents. That is a responsibility that still needs to exist. It might just not be bundled with say higher fire authority or particular reporting lines or whatever it is. So what you need to make sure that you have is if you’re trying to create a decentralized organization, that you’re not falling into the naive trap of, “Because I don’t like these roles, I’m going to just get rid of them and the functions that were embedded within them.” You actually have to still solve for those underlying functions. And there’s lots of different ways you can do it right now.

Jake: I will say, please feel free to weigh in on your own research here, from the cooperatives and decentralized entities and things that I’ve seen be successful. A lot of them did start with a founder who kind of set that meta container for people to play in. So I think about the Morning Star company the famous tomato company out California, that’s highly decentralized. I think about Mondragon. A lot of these sort of cooperative entities started with a founder who laid a lot of this stuff out clearly. “Things will work in this decentralized way. And that means that you will have this autonomy in this way and you can go do this and you can’t do this. And if you want to try to create a hierarchical fiefdom, that’s not going to fly here.” They were still providing clarity around the basic rules of the game that others could play with. And then they stepped out with a way, They didn’t maintain sort of the operational veto power that’s embedded in the CEO role at traditional companies.

Jake: So that’s sort of my first one. Is one, you got to recognize that these responsibilities for creating clarity still exist when you’re trying to coordinate large groups of people, whether you want to do it in a way that’s unbundling those responsibilities or not. Does that make sense?

Jim: Absolutely. And again, especially with our game B perspective, that we have to be disciplined about how we do this. Because our goal, our north star is a particularly say for a game B venture, we have to be able to out compete game A alternatives. So that means we can’t be lax and sloppy and hippies in a mud hut. Though, we have to figure out how to do this without a command and control hierarchy. So we have a very difficult problem to solve, and I would say having looked at some of the alternatives like Holacracy, et cetera, I’m not convinced anybody actually has a template yet that I would feel comfortable rolling out at scale.

Jim: And in fact templates interesting because another one of our key game B concepts, we call X in a Box, where X can be anything. And the idea is maybe instead of the founder being the one who lays out the deep doctrine, the Moses who brings down the 10 commandments, some previous ventures that more or less found the right way to do it, documented how they did it and created a template, we call X in a Box. Then any group can take that X and think of it as like Kraft macaroni and cheese, pretty crappy by itself. But if you doctor it up and change it to your local conditions, “Oh, I like green chili and my Mac and cheese. And then let’s pour some heavy cream in there. God damn it.” You can make it pretty good.

Jim: So that’s the concept of an X in the Box. It’s not to be thought of as a rigid template, but as a starting place for each team to then take and add their own local ingredients and things for themselves and then go with it. And then, Oh, by the way, it’s their duty, if successful to report back to the X in the Box that this fork, or we added heavy cream and green chile worked really well for us. So here’s our version of X and a Box, which we hope somebody else will take and-

Jim: So here’s our version of X in a Box, which we hope somebody else will take and further develop. So that’s at least our theoretical, not yet tried, way to attempt to address, at least in part, your assertion that one, somebody’s got to do this; and two, maybe it has to be a traditional strong founder, even if maybe that strong founder steps away. I’d argue maybe there had to be such a strong founder somewhere up the evolutionary chain. But through the use of X in the Box, soft templates that can be modified and grow and learn, these values can be propagated out wider and wider without necessarily ever having to have a strong founder after the first one.

Jake: Yeah. And listen, I love the X in a Box concept. That was one of the big projects I was working on actually in my slow money days, was sort of the Chapter in a Box, how you’re going to create something that’s going to be work for your local condition. So that notion of templatizing, I think, but providing autonomy with some amount of local modification, makes sense to me as a model. The thing you said about “do we still need founders to set the container”? I would sort of love to believe that that’s possible. I’m not convinced that it is. That’s mostly where I come out on it just because of how hard it is to actually get groups of people to agree on anything, particularly people who are interested in decentralization, right?

Jake: One of the big common failure points I saw in sort of a lot of these eco-village models and things like that is that when you get a group of people together who are basically united by a distaste for authority and an inability to get along with the main social vectors, you put them all together in a place far away from everyone else, and surprise, half the time they tear themselves apart, right? Or more than half because you’re not actually, no one’s actually holding the container of the higher values and you end up just getting people reverting to the underlying mental model that had them want to divorce from the Game A in the first place.

Jake: So that would be my big watch out for something like that, that if that’s going to work, A, I do think at minimum, you’re going to need some group of people, if it’s a committee or whatever it is, who are highly aligned, who have done the work to get that alignment with one another. And then you can play with different mechanisms. I’m in no way an expert on this, but some of the things that I have my eye on are automatically executable contracts in the crypto space, the whole sort of dow stack approach where you’re embedding a lot of these protocols into code, taking the person out of it. I kind of hope some of those things work. I haven’t yet, like you, I haven’t yet seen anything that I believe is ready for prime time. But I’d love to be proven wrong.

Jim: Yeah. I had Rich Bartlett on recently, and he has a whole bunch of interesting ideas. You can check them out on Medium, though his toolkit basically takes you up to 10 or 20 people. And it’s quite compelling as a way for a group to self-organize and start building its values and building its processes. But he’s the first to admit he has no clue if it scales beyond that. And due to a lot of the kinds of things that I’m interested in and I presume you are as well, we have to figure out how to scale that to hundreds, thousands, tens of thousands of people working in some form of a cloud of decentralized activity that is nonetheless coherent and can out compete Game A on its own turf.

Jake: Yeah. And no, I totally agree. And to me, and obviously I’m biased given my day-to-day work, but I do believe that a key missing ingredient is this notion of confusion and using, leveraging confusion to create ongoing clarity of learning for people. That’s the thing that I most often see missing, is there’s sort of this notion that well, if you get a bunch of people together who basically agree on stuff and hold the same values, et cetera, that it’s all going to work out. And the reality is that it can work out for a bit, but inevitably there will be confusion. People will not be able to make sense of what is happening with one another. And in that case, they will revert to their worst selves or at least to a non-optimal version of themselves. So you see a lot of these kinds of enterprises, a lot of these projects starting with the underlying assumption that, “Hey, we’ve got this sovereignty, we’ve got these psycho technologies, we’re all going to be able to just be self-regulating and great together.”

Jake: And it doesn’t account for the fact that that’s just not what our cognition is wired for. We need ongoing sense-making from those around us to get our heads out of our own asses. That’s just the underlying reality of how our brains are structured. So when I think about what is it going to take, the seed algorithm to me is, okay, what is the underlying mechanism? And if it’s not a manager, who is it going to be? That is going to be helping others make sense of their confusion on ongoing basis. So that those micro learning loops are happening really, really fast. Those OODA loops you talk about, people are orienting well consistently. They’re not getting sucked into that knee jerk response loop. The certainty loop that ultimately hardens into something that kills the org.

Jim: Let me throw an idea at you. I just had it. Being a software and product guy, I tend to sometimes immediately leap to a solution, almost always wrong, but at least it’s a basis for a conversation. Suppose a group of people who are trying to self- organize into a venture as part of their network centric platform had a button that they could push called: I am confused. And at any time, there would be high social reward for pressing and explaining why they are confused.

Jim: They could then specify who they wanted to have as their de-confusers. And that would then become a working group to work on this confusion and to help the member of the team who is confused, reach clarity, or for the wider group to realize that this is a high-level confusion that’s beyond their abilities solve. And then they would collectively escalate it to a wider group to solve until some level reduce the confusion to clarity, and that process would be reduced to a one page description of what was the initial confusion, what is the new clarity? And then that would be published to everybody and go into a knowledge repository for future confusions to use as starting raw material.

Jake: I love it. Yeah, absolutely. I think what you just described is kind of the social software that ends up getting, that I end up helping install for a lot of my clients, right? It’s getting people, getting people to raise their hand, say “I’m confused”, reward it, make sure that they get the appropriate sense-making from someone who can actually help them and then make sure that those learnings are reiterated back into the wider org. That’s it.

Jim: Do you have software?

Jake: Not yet. So I think what you’re describing, turning that algorithmic process from human software into actual software. I think there’s a lot of promise there. So definitely a project worth pursuing. And in the meantime, to not let the perfect be the enemy of the good, recognizing that that’s a, at least a sort of a PsychoTechnology that you can install right now.

Jim: So you could essentially do it on paper. I’m confused, I’m going to send an email out to a group of people to help me become unconfused, something like that.

Jake: Totally. Yeah. It sounds great.

Jim: Yeah. Interesting. Interesting. Now I’m going to also go back to something I mentioned earlier. I suspect this will be controversial with some of the Game B folks, but I raise this from time to time, this idea that there are sort of natural leaders, which I call L1, L2, L3, obviously it’s a gross reification, it’s clearly a continuum of whatever it is that constitutes this underlying ability to be a leader. One of the areas that particularly Jordan Hall and I have been talking about a lot in the background is: How does a natural L1 through L3 leader develop into a true Game B leader? Right?

Jim: And what is Game B leadership? We’re not even sure. I’ve confessed several times on this podcast and as guests on other podcasts that I doubt I’ll ever be a true Game B leader. I’m too much of a Game A motherfucker, right. Those two groups weight too heavily in my brain. I can move towards Game B ship. I can coach people in how to build Game B entities that aren’t insane when it comes to out competing Game A. But I doubt I’ll ever be a true Game B leader. And I wonder if you could speculate a little bit about what Game B leadership might even be.

Jake: Yeah. It’s a wonderful question. I’ve got kind of a double barreled answer for you. So I’m going to give you two parts here. The first is that I would be very cautious about sort of single factor, one size fits all leadership structures. What I have seen time and time again, is that there are different leaders that you need for different contexts. That there are contexts where you want a very strong leader who’s going to go around and yell and push people to do stuff. They’re organizations that need a much more sensitive touch. Someone who’s going to be more of a facilitator and bring people together and bring the best out of them. Consistently this idea that there’s only one way to be an effective leader, irrespective of context, I’ve seen sink a lot of ships.

Jake: So I would just throw that out there as a caveat. Now to simultaneously undermine what I was saying a little bit, I do think there are some sort of meta qualities, particularly when thinking about Game B leadership that are going to be critical. And to me, it comes down to, are you capable of holding enough perspectives and updating your own perspective with enough epistemic humility that you can then help others make sense and mass towards a shared goal.

Jake: So there’s a lot wrapped up in that, right? Because we’re talking about some difficult polarities to navigate. You need to be able to on one hand, be highly self skeptical of what you’re doing; and at the same time, be willing to not to cut off the analysis and go to action. You need to be able to hold a lot of perspectives; and at the same time, be able to identify that a lot of those perspectives are basically bullshit. And being able to hold those polarities effectively, I think is going to be required for anyone who wants to organize large groups of people towards complex goals in a minimally controlled structure.

Jim: I like that. Openness, but not too open. The tension between openness and the need to get to a decision.

Jake: Yeah. I see it as managing a polarity rather than a happy medium. A lot of people fall down into the happy medium trap. It’s more like you’re willing to be radically open and radically skeptical of the assumptions that you’ve made and simultaneously willing to act very fast towards an end, right? Being able to hold both of those as necessary and not water down either one. That’s, that I think is pretty, is hard and possible. I’ve seen people who can do it. And whether as you said that’s a genetic thing or, or whether it’s something that can be taught. I don’t know. I do know that I’ve seen people be able to get more and more clarity about what kind of a leader they are and if they are capable of doing that, and if they even want to do that, and at least that clarity has the not lie to themselves. And that’s a big step in the right direction.

Jim: Yeah. I would say interesting. Your description of that is not too far from my Game A motherfucker leader style. I think I was both radically open and radically decisive, certainly much more so than your average Game A motherfucker. So maybe I’m not that far from a Game B leader, though. I do think I still have too much Game A motherfucker to be a good model for it.

Jake: That’s the confusion point, right? Would be that assumption that the trappings of Game A motherfucker-y automatically would disqualify a model of Game B leadership, right? That’s their sort of reactive move to certainty that whatever type of leadership comes next, can’t look like the leadership we’ve had before. Versus, Hey, there might be some qualities that are just good for organizing groups of people that have been applied out in different structures, and so let’s take the best of those and add to them the higher reaches of human development and cognition and the structures around them that will enable that and see what that looks like.

Jim: Yeah. I think that’s always good advice. Don’t be afraid of the past, right? The past had some errors in it, but it also had some brilliance. We have to remember Game A took us from a world where 95% were starving peasants. 50% of kids died by the time they were five and led us to a world where life expectancy, including the whole world, is now over 70 and the number of kids that die before they’re five is one or 2%. So Game A not all wrong by any means. And that we should not be afraid to look back and find what actually works.

Jake: Yeah. It’s the most extraordinary cooperation system ever invented thus far.

Jim: Yep. And if it weren’t for the fact that it’s on a self-terminating, can’t put on the brakes because of its underlying relentless short-term money on money return, there’s a lot to be said for it. Well, there’s also some other, not so nice things to be said for it. Like the amount of alienation that it creates in people and the number of manufactured psychologically astute needs that it manufacturers in people to keep them on the hedonic treadmill. But there are a lot of good things to be said for it. And we shouldn’t be reactive against every possible lesson that we may have learned in Game A.

Jake: Total sync.

Jim: That was really good. Jake. Let’s go to our final topic, which is one of the things we talk about in Game B a lot is that none of us are really prepared for this Game A world. And we’re carrying a fair amount of what we call a Game A malware, trainings from the time where we were young sitting in the sausage factory public school systems, abusive bosses we’ve had along the way. And the idea is that there are a series of psycho technologies, things that could go at the lighter end from mindfulness meditation to nootropic drugs, to psychedelics, to mind machine implants, to a whole series of other possible practices. Breath work, whatever fuck that is, but some people talk about. Do you have any insight into psycho technologies in ones that might be relevant or that you’ve seen used successfully in helping upgrade the capability of people to manage, particularly self-manage in groups?

Jake: Yeah. So this is … So A, yes. Absolutely. I’m a bit of a PsychoTechnology, I don’t know what you would call it, aficionado, whatever it is. I like to try stuff and see how it goes. That’s just kind of built into my own mental model. But I would start rather than just sort of listing things that I’ve seen work or not work. I would rather start with an orientation, which is going back to the body of our conversation is what are you trying to do? What is the actual goal? Right? There’s a lot of times I see people go to psycho technologies mostly because they just don’t feel good. Right. They just have that impulse of, I don’t like the way I feel, therefore I will try something, right. Which is not all that different than the impulse that gets people to go binge watch TV or do heavy drugs or whatever it is, all these different addictive patterns.

Jake: So like any technology, I would want to start with going back to that bigger clarity of what actually matters. What are my intentional goals here? What am I going for? And if we’re talking about Game B, I believe the goal is how do I expand my frame of reference enough that I can catch my patterns early? That I can do that switch from confusion into awareness rather than confusion into threat because it’s really hard to catch in the moment. And to me, that ability to catch it and to be able to be expansive enough that you can hold that polarity of perspective checking and action taking, that is the goal that I think is worthy of using psycho technologies. Because a lot of this stuff is powerful and I think can kind of lead people off track if they’re not using it towards a meaningful end.

Jake: So with that said, right, I do think meditation is fantastic. I think a guy named Jeffrey Martin has done some really interesting research on people who have transitioned into what he calls fundamental wellbeing, which maps onto a lot of descriptions of enlightenment and sort of demystifying that and looking at the different ways that you can actually create that relatively easily. But I think meditation is a great one. There’s lots of different meditations out there. Anything that’s going to create a bit of a buffer zone between stimulus and response is really powerful. So, if meditation does that, great. Some people use nootropics for that. Though I think again, if you’re just speeding up your underlying processing power without actually distancing stimulus and response, then you probably aren’t doing yourself much good.

Jake: Relational practices, I think are great. I spent a while out in Boulder learning, circling and something, something they call circling, which is basically an interpersonal meditation where you’re tracking yourself in relationship to another. Again, being able to practice that sort of gap between stimulus and response in a relational context, which is where a lot of meditators with solo practices fall down.

Jake: I think that can be really potent polarity mapping. There’s a woman named Beena Sharma who does amazing work with polarity mapping. So getting, starting to get used to that idea of, okay, I can actually hold and pursue two seemingly diametrically opposed things in an integrated way. Being able to develop that skill, I believe, is enormously important to Game B leadership.

Jake: So, yeah, those are some that come to top of mind. The big one for me, more than anything, is just learning to treat life as a practice. If there is any single PsychoTechnology that I have gotten more out of than any other, it is a fundamental shift in orientation from life as a series of tasks to life as a series of experiments. So if I’m going out to the grocery store, what am I noticing? How am I behaving? How am I treating the people around me? How much am I aware of? If I’m getting into conflict with my wife or my family or a coworker, how am I showing up in that? There’s a way in which many people who use the psycho technologies, I think tend to think of them as these discrete things that live in a particular practice space, rather than recognizing that all that really matters is how you’re living and whether you’re able to consistently create that stimulus response distance in a way that enables you to get from confusion to clarity.

Jim: I like that. Well said. I think it was a good review. And I also very much like that you called out the fact that a lot of people, unfortunately, use these things as analgesics, essentially, right? When they’re in pain, they go for a hit of it, which is understandable. If it works, great, but rather than using it more constructively to build their capability. I think you did a nice job of reviewing the landscape. And particularly, I liked the perspective of really these things are a means to an end, which is allowing us to process the world and turn confusion to clarity. Whereas I sometimes would say the main skill of a business person is just to reduce ambiguity, right? Because when we run into ambiguity all the time, and if you’re afraid of it and you lock up, you’re not going to make any progress. You just have to live in the ambiguity for a while and then gradually chip away at until clarity emerges.

Jake: Absolutely, Jim. No, we’re on the same page and it’s been a wonderful conversation. So thank you so much for having me on.

Jim: Yeah. It really has been. I look forward to continue to remaining in touch in the future. It’s been, I thought, very good conversation.

Jake: I’m so glad. Yeah. I’ve been a fan of yours for a while, so it’s really a delight to get to jump on here with you.

Production Services and audio editing by Jared Janes Consulting. Music by Tom Muller at