When to pivot, and when to let things burn, with Bob Perkins

Summary:

Ray is joined by Bob Perkins.  A former senior marketing executive at household names like Pizza Hut, Calvin Klein, and Playboy, Bob has spent his entire career creating structures to market and sell things to people efficiently.

Topics Include:

• Getting to know the company you run

• Why it's dangerous to assume you understand your customers

• Lessons for small businesses and startups

• Why how you spend your time is as important as how you spend your money

• Differentiating between urgent, important, and unimportant tasks

• Honing in on your priorities

• The “let it burn” mindset required of upper management

• And other topics...

Resources Mentioned:

• Four Disciplines of Execution: https://amzn.to/3rJx9lH

• 7 Habits of Highly Effective People: https://amzn.to/3hyOARp

• Lean Startup: https://amzn.to/3n5amxc

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Transcript:

RJG: Welcome to the show, Bob.

Bob Perkins: Thanks. Glad to be here.

RJG: Glad to have you. Um, so I'm, I'm really looking forward to, to some of the stories that I already know that you're going to, you're going to dish out. Um, but I wanna, I want to start with one that you've, you've shared with me.

Um, some, some number of years ago, that's always stuck with me and it's, it's the story of a, um, it's a great leadership story, and I don't remember the role that you were in, but it was, uh, a CEO that kind of stepped into a new new company, large company, and yeah. Didn't didn't really spend any, any time in the office, like jumped straight out into the field.

And when you've, when you've told this story, it's, it's always made me kind of rethink, uh, the, the role of a CEO or leadership in general. Do you mind like for the listeners you mind share in that story?

Bob Perkins: I'd love to, and I think there's a lesson that the lesson is it's very difficult to run a company. You don't intimately understand.

And sometimes when you're an entrepreneur and you're the founder, you think you really understand it, but lots of times when you get promoted or move to a new company, you don't. I was the chief marketing officer at Pizza Hut and the CEO of Steve Reinemund, who's probably the best CEO I've ever worked for in my life.

Steve's fabulous. Steve got promoted. Pizza hut was owned by Frito-Lay at the time Steve got promoted to run. Our Pizza Hut was owned by PepsiCo at the time PepsiCo owned Frito-Lay Steve got promoted to run Frito-Lay and he asked me to join him. And I didn't want to go to Dallas long story. Steve gets the Frito-Lay.

He's now the CEO of a multi-billion dollar company. And for the first six months does nothing, but get up every Monday morning. Fly someplace spend a week going on route trucks with people because the core advantage Frito-Lay had was a dedicated group of rod guys who went men and women, obviously who went to every grocery store, put the product on the shelf, fluffed it up on the shelf and looked at it on the shelf.

So Steve did that for six months and didn't come to board meetings. Didn't just says, you guys run the company as if you didn't have a CEO, I'll be. When he got to BC, when he was done with that, he had three things. First of all, every route salesperson on the planet loves Steve Ryan. Cause Steve baby, Steve hadn't been with them, but they all knew somebody.

Steve had spoken. Uh, 24 weeks on the road. Everybody knew somebody that had written with Steve Ryan, and then Steve got in the cab and talked about their kids and talked about their dog and talked about how that the history of fruit really was. If you did really well on a route, then they gave you a failing route and why nobody liked that.

I mean, so all the people loved them and these are the people that make the business successful. These are the people that go on. Grocery stores primarily every day to make sure that you got as many facings of Frito-Lay bikes, as you can get. Secondly, Steve had a real understanding of the customer. He, he was there and, you know, around and all these grocery stores while people were why the route salesperson was fluffing up doing what they did, which took an hour or two.

And what was it? he was talking to customers. Hey man, why don't you just buy printer? What, why did you buy, why didn't you buy my product? Or why did you buy this product? What do you think about this grocery store? What do you think about prices? So Steve, all of a sudden had a great sense of what the customer was thinking.

And thirdly, when Steve got back into the office and somebody said, I have a great idea, and Steve said, it will never work. Nobody's said. What, what the hell does he know? He's a new guy. They all said Y and S Steve's very rational. He gave him a rational answer. They had a rational discussion and it moved the business forward.

So I think knowing your business and your customer intimately is something that's under appreciated in the modern world that we all think smart people can parachute in and fix things immediately. I think Steve's living proof and by the way, he was then promoted to run PepsiCo. And what do you do at PepsiCo?

I went out and rode with the route salesman at Pepsi-Cola because they are different than the rod salespeople at Frito-Lay and he understood the business and I give Steve a huge amount of credit for that. And it was, I look back at when I became chief marketing officer at pizza hut. Steve. And I talked about my doing that then.

Well, the old C M had laughed and we have all these problems and we need you there immediately. Huge mistake I should have spent. I should have spent a couple of months in the field for all those reasons. So that's in the Steve Reinemund story.

RJG: I love that story. The there's, I mean, there's a whole lot that stands out to me on that.

One of them, the question, I don't think I've ever asked you this. How did you, how did he get away with it? With a board like the, was there, was there a pushback on this or did they, was it okay, go for six months and then come back,

Bob Perkins: Steve, Steve had run Pizza Hut for eight years and had made his numbers every year.

So he was sort of the fair hair, or if we're allowed to use that phrase. Secondly, I think that he said, that's the deal. He, he made that the deal let's figure this out. Now he was luckier than I was in my case. The CMO at Pizza Hut had left. They got, uh, Roger Enrico, who was the CFO CEO of Frito-Lay to stay around for a few extra months.

So it wasn't as big a deal. But I think it's a classic example of, um, make sure you ask for everything you need when you start a new job. And it's a lot more than money. Um, plus I think if, if, if I was the board and Steve's a lot more articulate than I am and said that the board said, Steve, why do you want to do this?

And Steve just gave the minute I just gave you, but a little better, because he's better as a board member. You'd say, God, you are really smart, Steve. I mean, No. The big advantage of a big company is it's not going to fall apart overnight. It's not a four person operation where if somebody dies or leaves, the world comes to an end, they all have a moment.

But my point is, is that I think it's easy to underestimate the importance of intimately knowing your customer and intimately knowing your clients and how the system works. And. It's easy to overlook that for exactly the reason you just said, oh my God, the world is coming to an end. I don't have time to learn the basics.

Well, if you don't learn the basics, how can you fix the problem?

RJG: Well, and there's also, it seems like there's a, a degree of humility and saying, yeah, I can be, I can be a really smart person. I still need to do some foundational work. I still need to do some, like I have answers. I don't, I can't possibly know everything.

And there's a. I mean, I can speak from experience as a, you know, when you, when you're dropped into a first CEO role, you want to have all the answers. You want to have an action, you know, a bias for action. And, you know, I can, I can answer all these questions and it takes some humility and certainly a lot of courage to say, we're going to pause and I'm going to go for six months.

I'm going to go learn things that I don't know today. Um, and then put those in perspective and execute in a much better way than I would otherwise.

Bob Perkins: Well, you know, McKinsey did a study years ago and I haven't looked at it for years, so I'm maybe not accurately recalling it, but they compared CEOs that were promoted from within and CEOs that were came in from the outside.

And what they said is the average CEO from the outside didn't really do much for the first three months. In terms of making changes and the guy promoted the person promoted from within started to make changes much faster, which raises the question of what was the person doing for the first three months.

And what they were trying to do for their first three months is do all this stuff. Steve did, but it was very difficult because they still went to a bunch of meetings and tried to talk to their staff and tried to do all this stuff. So it's easy to confuse the importance. Sitting in the chair with the importance of knowing what you're talking about.

And I would argue that if it's, it's how you use that three months as efficiently as possible, not you have three months to do it because the math is you're veering outside. Are you going to take the three?

RJG: So what advice, I mean, you kind of hit on this with the luxury of a big business. And in that case, there's a little bit of redundancy with the CEO role. But if you're a, if you're a founder, if you're running a, a seven person business and you're trying to scale, and you don't necessarily have the luxury of, of six months or a lot of redundancy, how can somebody in a, in a small business or startup learn from that lesson and incorporate some of that.

Bob Perkins: Um, one of the most important things to do, and it's very tough to do, but I try to do this in the business ceremony now is I try to spend a day every other week talking to customers and talking to the tech people. Because even though I think I know the business pretty well, and I think I know the customers pretty well.

It's in a very turbulent world, so it doesn't have to be an all or nothing. It can be a, I'm want to do a little bit. Um, but it's just like you go to somebody whose schedule is fully packed. They don't have any time to learn. They don't have any time to reflect. They don't have any time to pick up nuances that are going to be important to them.

Most people don't set aside time to say, I'm going to learn more about my customer base. And I'm going to learn more about how my business works and that you can do in this. It has to be regular. It has to be planned. It has to be thought through, but it doesn't have to be all consuming. I mean, I remember once I was talking to somebody about marketing and they wanted to.

$300 million. And I wanted to spend 290 million because I wanted to do something else with the 10 million. And they said, we can't give up those last, you know, $10 million worth of gross rating points. And I said, I guarantee you that you will never notice them. The difference between two 90 and 300 is not noticeable.

And people would say, boy, I can't give up a little bit of time here that I'm just too busy. My argument would be, you'll never know. Because it's it's yeah, there's some small shipmates, uh, slipped through the cracks, but you're going to learn so much more over here. You get a much better ROI on your time.

And most of us don't think of that about spending time like money. And the truth is, is that time is the only thing is senior executive hat. So they should spend that in a very cautious way. Think about, am I getting the maximum bang for my buck here? And you know, Stephen Covey, I'm a big, big fan of the seven habits of highly effective people has this great two by two matrix that important, not important urgent.

Not urgent. And of course the most important quadrant is the not urgent but important because if it's urgent and important, of course you'd do it in theory, if it's urgent and not important, you're smart enough to say no. Although a lot of people don't, they try to fix it anyway. And if it's not urgent and not important, you fit everybody, but it's getting to the not urgent but important box.

That talking to customers and your tech people in my case is so essential. That's the box that defines success. And I think there's no better example of that than the period we're in right now. It's really easy to get totally distracted by all the chaos of the immediate thing and not step back and say, Hey.

Six months ago, we should have all been paying a lot more attention to this. You know, I, uh, I was reading the Washington post this morning online. They send it to me for free, cause I own a Kindle and they had this great cartoon of a guy watching television and he calls to his wife, Hey honey, come over here and out of the TV.

The countdown to the New York, New Year's Eve ball in times square. And he says, look, I know you had season two of the COVID pandemic. You know, we got six or seven more. We've got some time left here. So you got to get into that urgent, not urgent but important box. And this is just an example of that.

RJG: I want to ask you about that because I've, I'm also a big fan of, of the 7 Habits of Highly Effective People.

And I actually recently just re-read it. And, um, one of the things that's always stumped me. So when I start using the matrix, like whether it's the Eisenhower matrix or the, or the, or the cubby thing is I start categorizing. Everything is important. Like it's, so there's a there's because there's, it's still subjective, right?

Like when you're in and it's really difficult to quantify. And so my. The important box ends up getting too full. And I look at it and once I realized it's too full, I'm like, okay, I'm clearly screwing this up. I'm not doing it. Right. So when you're, when you're looking at, you know, as an executive and, you know, the, the important versus the urgent, do you have any, any tips on differentiating between the two of those?

Bob Perkins: Well, remember things can be important and urgent or not, or. The distinction you're talking about is important versus not important. So you know that great buzz phrase of consultants speak key drivers. What are the key drivers for success? Why is this, um, what's going to happen? And the question I always ask myself is what's going to happen if I just ignore this.

Oh, Fred will really get upset and this will go wrong. But you know, there are a lot of, if you really asked that question, a lot of things that seem to be important. It's, it's not that big a deal. I, I was in a meeting the other day and somebody said, we're going to do this. Do you agree with that, Bob? And I said no.

And they said, well, then maybe we shouldn't do it. And I said, look, there are two kinds of decisions, decisions that are wrong, but they don't make it. Doesn't make any difference if they're wrong. And decisions that are, if the wrong, it makes you a huge dip. This is one of the former. It doesn't make any, this, this is, I think this is the wrong decision, but we'll never know six months from no one will remember this decision.

If we make it right known, remember it. If we make it wrong, don't worry. It's like, you know, what color should we paint the tile and the living room... you know,who cares? But. So you have to really be aggressive about figuring out what's really important. And you know, that is one of the areas where a board or a fresh set of eyes or a consultant is so important because in my experience and I'm including me, I'm I'm as bad as everybody else.

I'm running this little co I'm, the chief operating officer of this startup plenty. And everything seems important to me. And then my part, two partners, they have their own important list in between the three of us. We have our gigantic important list. So while we put some processes in place to allocate resources and at least we've done it.

Okay. We have eight engineers, they work 40 hours a week. They work four weeks a month as 1200 engineering hours a month. How are we going to spend those 1200 hours? That is a dis a discussion we have every other week. So when somebody comes in and says, we've got to fix this, and it's really important, and it's going to take 600 hours, you can say, well, what, what are we going to push off the engineer's plate to get 600 now?

Because we don't have the money to go out and hire more engineers. So. But occasionally I wish we had an outside voice. We don't, we don't really have a very strong board because it's us, which is a mistake, but that's the way the world works, but we need, we would benefit. I think everybody benefits from having a, a little more dispassionate, gee, Bob, I know that's your pet project and I know you really love it, but it ain't worth the money.

It's not worth the time or it's not that important. And that's really true of things that are not important than urgent, because I, I tell this story all the time. I don't know if I've ever told you this story. When I was, was in politics, somebody was telling me we have to do this. We have to do that. And I say, look, when you're the CEO, the job is not for somebody for the, to sit the phone rings and you pick it up and I go, hi, this is the fire department.

Hi, there's a house burning at 32nd and main send out the fire trucks. Your job is not to send out the fire trucks. Your job is to look at the resources, to look at the assets, to look at the mission. And most of the time say, let it burn that, you know, Peter Drucker famously said, the essence of strategy is denial.

Let it burn. And of course, when you say, let it burn, the person that owns the house has a heart attack, and this is outrageous and the company is going to die, but that's what management install about selecting priorities. And when you say everything's okay, important, that means you have no priorities.

That means you don't understand the key drivers of your business, or that means. You need somebody to hold your hand, metaphorically speaking, and say, it's all right. To let a few houses for.

RJG: Well, there's always where they say like, I'm, uh, actually, it's also also, I think it's Franklin Covey stuff. I don't know if you know, four disciplines of execution and it's, uh, it's uh, Sean Covey and he.

Uh, they in, in there, they have the wildly important goal because they say the whirlwind is going to happen. Like that's your day job, and I'm doing a workshop for business on this right now. So it's, it's fresh on my mind, but you, you, you have to hone in on what is the one or two wildly important goals that we're going to focus on.

And then what's the structure we're going to put together to make sure to hold people accountable to that on a weekly basis and keep moving the ball forward. Um, because. I think they say in the, in, in the book that there's all, there are always more good ideas than there is time to execute like you're.

And as, uh, your, your job as an executive is to recognize even the biggest companies on the planet. Don't have enough resources to pursue every good idea. Um, and so,

Bob Perkins: or you have to have a strategy, like 3m has a strategy, but no focus. It's, it's it, it's all about focus. Focus is really important, but people don't talk about where focus comes from very much.

In other words, they think of focus is the way you think of a camera. You look through the aperture and you twist the dial and then things look like. They look in the real world. So you focused in focus, comes from understanding what the key drivers of success are. Focus is not saying, oh, I understand this.

I can see this clearly. It's what you just said earlier. Right? Hey, that's a good idea, but it's not going to help us get to this key goal. So focus is really the ability to discriminate between things that drive you and things that don't drive don't drive the business forward. And if you don't understand the business and you don't have a pretty clear sense of what's going to drive success, it's very tough to focus because, and this is a trap that a lot of small business does fall in.

When do you pivot? And when do you stay the course? And if you pivot too early, then you never really exhaust an idea. And if you pivot too late, then you run yourself down a rabbit hole and you run out of money. So that is a balancing act that most people don't think about conscious. In other words, they say, okay, we we've set this goal.

We're working on it. It's not working, but this thing looks more attractive. Let's go over here. That discussion doesn't get enough airtime in my experience because it's a big it's, you know, okay, we're going to do this now. We're going to do that. Then we're going to do this. And pretty soon you're not accumulating the learning to help you move the business forward because.

You know, a startup is really a learning machine, you know, the, uh, who wrote the book, the lean startup.

RJG: Yeah. Uh, Eric, uh, Eric.

Bob Perkins: Yeah, I think so. Something like that. Well, you know, he says a startup is a learning machine, so why do we need to learn? What's the most important thing to learn? What's the cheapest way to learn it.

Very interesting. Um, observation, very important observation. But if you, if you bounce around too much, you don't ever learn, you learn 10 different things, but you don't learn 10 things stacked up on each other. There's the goal is that every learning gives you another learning, which gives you. It's like building a chain.

You want the links all to fit together. You don't want to have 10 links scattered across the floor. That's not a chain. That's. That's a tough thing to wash.

RJG: So if you were, I mean, you're, I know you're, you're in a startup, but you've, you've mentored many startups if you're early stage and you want to develop the discipline to learn effectively pivot appropriately, like the things that we're talking about, focus, um, how do you w what would you recommend to a, to a CEO or founder early on to set the foundation to make sure that that happens?

Bob Perkins: I think you have to have a process in place at bright pool. We have a vision committee that meets every other week to talk about how we allocate exactly this what's the most important thing. What are we learning? What are we every other other week, we have a engineering meeting talking about the engineers and what they need to know, and then every other.

Then every other week, we have a meeting with the sales team. Here's what's coming down. The product pipeline is, this is this. We thought you said you could sell this where we ride. So we sort of have three ways that allocate resources and the meetings happen. Everybody come, you have to come to them. I mean, the beauty of zoom is it's easier to have a meeting,

although, I mean, so. But you can't, you know, a lot of entrepreneurs will say, well, we're too busy or we're too small. Well, if the meeting only takes 10 minutes, it only takes 10 minutes. But once you get into the habit of thinking like that, then it's easy to start to make the right decision. Cause it's like baseball.

You don't have to bat a thousand. You have to bad 500. You're going to do really, really well. Right.

RJG: And who so in, um, say a small business or a, or even a midsize company. The, I, when you say that, I imagine that falls to the CEO, but the, I guess a two part question, it doesn't fall to the CEO. And if you weren't the CEO and you're in an organization that doesn't do this well, are you basically screwed?

Are there things that you can, you can do to implement these types of systems and.

Bob Perkins: I think that in my experience, if you're not, if you're the, it's your job, if you're the CEO, for sure. But if you're not the CEO and you're high and up off in the organization to talk to the CEO, then all you have to do is show the chaos that's going on. I think most CEOs, everybody has a knowledge set.

Nobody's knowledge set is perfect. A lot of CEOs don't have that gene, or that's not in their knowledge set, but if once explained to them, they'll adopt it immediately. Now I have a funny story. I was hired once upon a time to help reorganize us senator's offices. So I did six. And then they called me six months later, come back.

I told them all, essentially the same thing, you know, more or less. So they said, come back six months later and see how it works. See how they're doing. Three of them were running four times more efficiently than I ever thought possible. They were well, uh, Bob, you said we should do this, but that didn't work.

We do this, but I mean, they were flawless. Three of them. We're backed. They were screwed up is when I had gotten there six months earlier. So you get a bad CEO. You're not going to have a good outcome.

RJG: Right.

Bob Perkins: You know, and I went to talk to a us Senator. I thought we agreed that you would. When you walk from your office to the Senate, floor vote, you would only take one staffer with you and having an agenda.

Now we tried that, but it was no fun and people felt left out and I missed the excitement. Well, you know, you don't want to be organized. You don't want to be organized