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Ep32: Lessons Learned Scaling from Zero to a 650m Sale in 10 Years

This week Paul Docherty, former Founder and CEO shares the journey of leading the business from 0m in 2006 to a sale with Lumo Energy to Snowy Hydro for $600m in 2014.

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If you’re doing well in a super competitive market but feel you’re ready to make a major step change in your business, you’ll love the story of Direct Connect.  This week Paul Docherty, former Founder and CEO shares the journey of leading the business from 0m in 2006 to a sale with Lumo Energy to Snowy Hydro for $600m in 2014 and is now successfully incubating numerous startups and scaleups through BRC Capital.

 

A BIT MORE* ABOUT OUR GUEST, PAUL DOCHERTY:

Paul is Founder and Executive Chair of the BRC Group, one of Australia’s leading Incubator and Accelerator’s. Prior to Founding the BRC Group, Paul was the Founder and CEO of Direct Connect, a business that was sold with Lumo Energy for $600m to Snowy Hydro in 2014.

Paul holds Chairmanships across MedTech, Health, Technology and BRC’s Food businesses, and is both the Regional Chair of YPO in Australia and New Zealand, and the Chairman of the Melbourne Rebels.

WATCH SOME OF THE HIGHLIGHTS FROM THIS WEEK'S EPISODE ON YOUTUBE:

 

04:22 – An Overview of the Direct Connect Business

08:06 – How Much Churn in the Industry??

11:02 – The Parties Involved in the Sale of the Business

12:32 – The Critical Moment We Pounced on an Opportunity

20:33 – Having to “Right-Size” the Business

23:15 – If I Had My Time Over – Make Hard People Decisions Faster

26:26 – Key Advice and Advisors That Made an Impact

29:02 – Upgrade Your Neighbourhood

33:38 – The BRC Capital Model

38:05 – Lessons Learned from Direct Connect Carried Forward

43:04 – Paul’s Three Above All Else’s

44:48 – How to Follow Paul’s Work

Podcast Transcript

[00:00:32] Sean: G’day everyone and welcome to the ScaleUps Podcast where we help first-time Founders learn the secrets of scaling so they can fulfill the potential of their business, make big decisions with greater confidence and maximise the value and impact they can create in the world. I am your host, Sean Steele, and my guest today is a Warren Berger – author, speaker, a speaker on innovation, and also Questionologists. Warren, I'm wondering whether in your high school days, the career counsellor sat down and said; Alright, Warren, you can be a Lawyer or a Doctor or a Questionologist. Was that the conversation?

[00:01:05] Warren: No, it didn't quite go like that. Actually what's interesting is, after high school I went to a college as a journalist. I went to journalism school. And you would think that journalism school would have a focus on questioning and they didn't.

[00:01:25] Sean: They didn't?

[00:01:25] Warren: The didn’t care enough. Like they don't really teach you how to ask questions in journalism school, which is really strange because you then get out and do your job, and every day you're asking questions all day long. So, that was kind of the first tip off to me that this is an underserved market or an underserved subject, and it's not getting the attention it warrants. And then, you know, as I did work as a journalist for many years and always sort of self-taught in terms of working on my questions and figuring out how to craft a good question and how to do follow-up questions and that kind of thing. And then I think what really brought me in this new direction, which is talking about questioning as being really important in the business world. That sort of kicked in about seven or eight years ago. I was doing a lot of writing about Founders, about innovators, about business leaders, entrepreneurs, and I noticed that questioning was really important in what they did. And so that became kind of a, for me a new way of thinking about questioning. Like it's not just for journalists. It’s for lots of creative people and business people. And so that became kind of the focus of my first book on questioning, A More Beautiful Question. And really a lot of that book is about the connection between questioning and innovation and leadership. 

[00:03:05] Sean: Yeah, beautiful. And I really want to dig into both of those concepts today. One of the things that just jumped out at me whilst you were talking was it was almost the fact that journalism courses were being taught without really understanding the science of questioning is almost like a MBAs that still get done today and there's not a single subject on Sales. And I think, wow, these people are going to be running companies, but actually no one's going to clue about selling, which is a pretty reasonable part of their engine on the revenue side. And so, you're the author of five books now. The Book of Beautiful Questions that you did in 2018. Obviously, A More Beautiful Question, which you mentioned, you've co-authored many more books, you've written a lot of articles, wrote a lot of magazines and newspapers, New York Time, and Wyatt, and Fast Company, you are the founding editor of One, which is a quarterly magazine on advertising and design. In short, this specialisation you've got around questioning and innovation and creativity. What excites me about this is it felt like it was something that only I seemed to learn when I was listening to Tony Robbins, which was him saying, I think it was probably early 20s and hearing him say “Successful people ask better questions, and as a result, they get better answers.” And all the lights went on for me when I heard that or read that for the first time in my own development, both as a leader, as I grew through the ranks and became more senior and eventually CEO in my mid-30s. But also in my personal development, I realised particularly in my professional life, that as the roles became more senior and I had more responsibility for shaping and encouraging and harnessing and directing more people's time, that the quality of my questions would dictate not only the quality of answers, but actually all the work that we're doing in the organisation or at least 20 to 30% of it that's not sort of, day-to-day BAU is a result of the questions that have been asked and the answers that have come from that and all of a sudden, it that turns into work. And when you think about that as a leader, I think it's incredibly empowering and frightening all at the same time. You're like; Well, what's the quality of my questions that could be impacting 150, or for me it was 150 plus who were spending 20 or 30% of their time, probably executing on activities and strategies that are a result of my poorly formed questions. That's a really significant load as a leader. And I think sometimes we don't really give that much credence. So, I almost imagine people go into your keynotes and conferences where they have these ‘aha’ moments. When I was reading through your materials and your book, where they have these moments where they were like “Oh, my God. I've spent the last 20 or 30 years asking the wrong questions.” And you can obviously change it on a dime, but at the same time could be leaving you feeling pretty guilty about what you've done. So, you know, today….

[00:05:45] Warren: That's a pretty common phenomenon of business people kind of focused on the wrong question because it's not necessarily that it was always the wrong question. It may have been the right question at one time, but because of change in the business and change in the market place, it may now not be the right question. And so that's one of the interesting things about questioning is your questions always have to evolve and they always have to change. So, it's not like you can find the one great question that will be your question. forever. It doesn't really work that way. The questions that get you started, won't be the same ones that will get you to the next level and the level after that. 

[00:06:34] Sean: Yeah, actually, it's really interesting that you say that. In the last couple of weeks we interviewed Sydney Finkelstein, the author of SuperBosses, and professor from Dartmouth and one of the comments was, one of the biggest mistakes people make as a leader is overvaluing their own experience because of course, the experience that you go to hear was based on the problems that you faced in the past. But that doesn't mean that it's actually relevant for the problems that you're facing now or in the future. So, this is really nice parallel. You know, today I'm really keen to unpack some of your thinking around, both the kind of questioning and the relationship between that and the innovation. And I want to make sure that we are practical in the way that we approach it. The key focuses, to have people leave of course, with some practical steps they can take to improve the quality of their questions. If they're asking as the Founder of a business, maybe of the team of their business or of themselves personally. And so, the thoughts around, given we have a lot of people in our audience with that sort of maybe 2 mil to 20 mil revenue size business. How they think about building innovation, you know, innovation sometimes when you're in a small business, sounds like some big lofty word that IBM and Apple and big companies do, but it's not really for us, when we're small, but how they go about building more innovative thinking into the work of their teams and I guess the psychology and the practices of their teams. So, Warren, you sort of alluded to your background and some of the elements that were formed, how were you undertaking this when you were doing your thinking, how were you getting your, I guess the sourcing of information, how are you sort of approaching your research to get these ideas and see them test it out in real life?

[00:08:12] Warren: Yeah. Well, what I was mainly doing is and because I was a journalist, I was used to interviewing people. And so what I basically decided I would do is try to figure out who were the hundred or best questioners I could find. And then interview them and talk about how they ask questions and what their approach is. And from that, I then developed some frameworks and some tools, I think maybe the most simple and yet maybe the most useful framework that I developed in the course of this was, involve the use of “Why”, “What If” and “How” questions and the idea that you could ask those three types of questions in a circular manner or in a sequence. And if you did that, it could be a really powerful innovation tool.

[00:09:24] Sean: Can you give us an example of that? 

[00:09:25] Warren: Where that framework came from was simply from stories, from talking about, one innovation story after another, whether it was the creation of the windshield wiper in cars or whether it was the start-up of Netflix or Airbnb. I was always going back to the origins of these companies. And what I was finding is that the origin was often a “why” question, you know, the thing that kicked off the entrepreneurial venture was often a “why” question so that people would be looking at a situation or a problem or something that was lacking in an industry or in the world. And basically, asking why does this situation exist? Or why is it we have to, when we want to do this basic task that everyone has to do every day, why do we have to go through this elaborate process? So, why is it so difficult? So, the “why” questions would always be at the genesis of it, but the “why” questions don't really get you to the solution or anything, really. The “why” questions are really that is helping you understand. They're just helping you understand the nature of the problem, the existence of the problem. And so, what I like to say is, you know, just asking why, will make you a philosopher, but it won't make you an innovator. So, you have to do something with that “Why” question. So, you've discovered, okay, why hasn't someone come up with a better way to do X? That's not going to make you a successful innovator. That is just the first step. And then you have to sort of own that question or take ownership of that question and go to work on it and probably bring other people in on it to work on that question with you. And then you have to evolve to the next level of questioning, which is usually something like, “What if” because at some point you have to get from understanding the problem to starting to figure out. What you going to do about it. And that's when you start to speculate and you start to formulate your thesis for your company or your product. And that's kind of, what if we could combine this with that, what if we could find a better way to do this thing that they were doing? We're going to do a little differently. What if we use the internet and an interesting new way that wasn't done before, so I found that these people were cycling from “Why” to “What it” is formulating their idea. And then ultimately, they're working on “How” questions, which are very practical. You know, how are we going to get this thing to market? How are we going to scale? How are we going to budget? How are we going to hire the people we need to hire? So, there are all these practical “How” questions that come into it as the innovation is coming into reality as it's being made real. So, it's an interesting cycle. And then the cycle just repeats itself over and over again, because once the company has launched and the product has launched, usually there'll be something that will change right away. You know, a competitor will, will suddenly rise up that wasn't there before, or a flaw will be discovered in the product or the company is something you hadn't anticipated. And so now you're at you're going right through the innovation cycle again, why are we having this problem? Okay. What if we tried to do this? Okay, how are we going to make that happen? And so, I see it as an endless cycle of “Why, What ifs and Hows” and that's the endless cycle of innovation that companies are having to go through as they not only get out there, but then continue to improve, continue to expand, react to change, adapt, do all that stuff. And so, you know what my whole task or my whole challenge is helping people just to think in those terms to think about how questions can be used in this way. And how it can be this almost propulsive force. If you're asking the right questions at the right time, it can push you forward, or help you move forward, even if you don't really know. I mean, even in the midst of uncertainty, if you're asking the right questions, you can be moving in a forward direction and starting to get toward those answers and that's one of the big benefits of questioning. It's actually the opposite of what people tend to think. People tend to think questioning slows you down and that if you're asking questions, you are not doing things or you're not moving forward, but it's the exact opposite is true. If you're asking the right questions, you can proceed forward even in the face of uncertainty, even though you might not know exactly what to do tomorrow, but you are asking the right questions, then that'll help push you forward step by step. 

[00:14:48] Sean: And this is tremendous. I love the framework, by the way, that makes a lot of sense to me. And when you try that on as a leader, you can think about how you've actually taken forward your business, and it seems very natural to understand the problem, to imagine what could be done to solve it, and then to figure out what the action plan is to go from there. And I imagine…

[00:15:09] Warren: I want to say it's that that's based on, even though I didn't realize it at the time I was first coming up with it. It's actually based on a very, almost ancient principles of how human beings solve problems. So if you look at all, you know, some of the frameworks that are hundreds of years old about creativity and problem solving, they're often about people having to first understand the problem, and then they use their imagination to imagine something different. And then they get to work on building. So, they understand, they imagine and they build. And what I did was just line up three different types of questions with that. So understanding is “Why”, imagining is “What if” and building is “How”, and it has to do with human nature and the way we as human beings go about solving problems. 

[00:16:06] Sean: I almost feel like, one of the, you've got almost a sort of potential interlude sort of loop in your cycle where you could be going from How back to, What if, which is almost that sort of risk planning, downside protection, risk and aggression, or what if this goes wrong? What if that happens? What's the one thing that could turn us upside down and …because I, by nature and I know that I always work really well in partnership with others who recognised that I'm a builder of things and therefore I like in the way that you just explained your framework, quickly identify the problem, imagine what the vision is and build a plan to get there. And what I don't do naturally, and other people can do much better than that than me is often see, but where's the data, what evidence that we're using. Have we tested it? How can we do it more cheaply? What's the downside risk? How do we protect ourselves? How do we ring fence that like all of that sort of, it's kind of, I guess, a mix it's like almost a validation of the, How or using What if questions...

[00:17:03] Warren: Well, you know, it's interesting Sean, is that what I find is. who are doers, people who really gets stuff done and like your audience, you know, entrepreneurs and builders and leaders, they are naturally inclined to go to “How” as quickly as they can. And because that's all about getting stuff done, you know, you see a problem and you immediately, you're trying to figure out, okay, how do we deal with this problem? What's the quickest way to solve it. And so, one of the points I try to emphasise is that there's real value in almost forcing yourself to ask those other types of questions too, you know, the “Why”, why are we having this problem? Or why are we doing, you know… so often, business leaders are trying to solve a problem, they're trying to figure out how to do ramp up our sales, or how do we take this process that we were doing in seven steps and take it down to five steps? How do we do that? Okay. And that's a good question to be asking, except sometimes you need to be asking why are we doing that process at all? You know, because maybe that process made sense two years ago and doesn't make sense now. So, the one thing I say to business leaders who are real problem solvers by nature, be careful about always rushing to have and trying to do quick solutions on everything without using those kinds of other questions, which seem more philosophical, they don't seem as practical. They don't seem as action oriented, but they're really important because they will sometimes point out to you something that you need to know before you go ahead and try to do the, “How” before you try to solve a problem or fix something, you kind of need to be grounded in that thinking about why are we doing it this way, and what if we tried something different, that kind of thing.

[00:19:13] Sean: And I think that links really nicely to the… you know, I guess I say in a lot of organisations, there's almost the reward system and the recognition system is often built around “How”, you know, so people want to be seen. And also, if you think, you know, if you're not the leader, but the people in the organisation, they want to be seen by the leader or they leaders as people who get stuff done. So, they often operate from “How”, because they're like, I know if I get this done, like it's going to look good, we’re going to achieve more and so on. But to your point, if you're not stepping back and thinking about why is this happening in the first place and why are we even doing this, and is there a reason, is there a better way, is it still even relevant then what you end up doing is you end up adding, it's almost like you're dragging a chain, you're dragging, adding anchors on the back of this chain. So, you're actually slowing the entire business down because you can't just keep taking on more and more and more new things and new strategies without actually taking a step back and realising, well, maybe we're going to have to drop some things, maybe some of those things aren't relevant, maybe the thing we're planning on doing isn't relevant either. But I agree with you, if you're a natural builder and a natural, you shift a How very quickly. It's very easy to fall into the trap of feeling like you are wasting time. If you're going back to “How” everyone's like, oh, come on, let's just build the plan. Like we know how to do this. It's like; yeah, but we actually need to take that big step back to avoid that cost of all the baggage that we might be bringing on board with us.

[00:20:33] Warren: Yeah. And it's especially true, you know, I think, for your listeners who are at a certain stage in the development of their companies, it's important to realise that you move more and more people tend to move more and more towards practical questions or not questioning at all as their companies mature. And because when an entrepreneur is starting out, that's when they're in full questioning mode. And I often say like, there's an interesting parallel between business development and the development of children. So, when an entrepreneur is starting up, it's like a very young child. So, it's full of wonder, it's full of questions. The company wants to do things differently. It's rewriting the rules. It's making it up as it goes. It's in this incredible questioning creative mind frame, and then as things get established, you start to rely more on answers than questions. You know, you sort of say; we've figured this out already. We've developed a five-step system for doing this. We've learned from the marketplace. We've got all these answers. We've even put it into a nice little book, maybe, you know, rule book, you know, and then as you get to big companies that are a hundred years old, then it's really codified. I mean, everything is in a manual. You know, everything is like written down. So, what happens is you get very, very answers based and it's very similar to children as they mature, same thing happens. They start asking less questions, they get more full of their own answers. And so, there's an interesting thing that happens, and the real sweet spot for innovation is to have a nice balance between the answers, the knowledge you've already developed, the expertise you have, and this wide open learning and thinking and curiosity, that's going to keep bringing new stuff in. It's going to keep bringing new ideas in and that's what you got to do. So, it's almost like as you develop as a leader, you have to be really careful about losing your questioning habit or your willingness to ask questions and be open-minded and be curious. And you have to be careful about what sometimes people call it the ‘trap of expertise’. As you develop expertise, that's a wonderful thing, except if it becomes a trap and if it leads you to think; Well, I kind of have figured this business out. I figured this company out and now I just have to repeat over and over. 

[00:23:23] Sean: Yeah. And that's actually the reason I started this podcast in the first place Warren, and it was, I deal with all sorts of business owners on a regular basis and many of the questions or the challenges that I might face a similar, however, I wouldn't ever fall into the trap of thinking that I'm the guy, who's got all the answers on everything that could be further from the truth. And so the whole point of this podcast was to bring experts in all the areas, that bring different perspectives on similar problems to help stimulate creativity and ideas, rather than saying; Hey, I'm like the guru here, just come and asked me and I've got it all figured out, which is never the case. What would be some examples of poorly formed questions versus maybe better formed questions. Like have you got any examples where you think; okay, this is sometimes I hear leaders asking a question that looks like this, but with a small tweak, it could have been much more powerful question that could have looked like this. Have you got an example that you could think of?

[00:24:12] Warren: Yeah, well, one of my favourite question types is the ‘How might we’ question. And that's an example of how you can take almost any questions. And with a little tweak, you can sort of open it up a little bit and make it a little more inviting and more likely to induce creativity. And so the idea behind ‘How might we’ is simply that this actually started with the Procter and Gamble company years ago, but now it's been picked up by Google and lots of the Silicon Valley companies practice ‘How might we’, um, it's just the idea that, when you're trying to figure out how to solve a problem or what you're going to do next, or what direction you're going to move in. If you word the question as sort of like, what should we do, or what are we going to do. That ends up putting a certain pressure on you. It sort of creates the idea that… 

[00:25:21] Sean: There's only one. 

[00:25:22] Warren: One possible answer and we better find it or we're going to be in real trouble. And the reality is that there probably isn't one answer in a lot of cases. What you need to do is look at a lot of possibilities and you need to really open up your thinking so you can see the full range of possibilities and then maybe pick the best one, figure out the best one. So, what “How might we” does it just taking a problem you have and saying; you know, how might we find a way to do X, Y, or Z? Doing that simply has to do with the wording is the use of that word might for example, it suggests that there's a lot of ways you can come at this challenge or this problem. And if you share that with people within your team or your organisation, it tends to open up the imagination a little bit. It tends to get ideas flowing a little better and it tends to lead to more creative thinking about that problem or about that challenge. So, that's a really simple tool that you can use if you're not using it already. It's just to begin when you're working on challenges or problems, begin a lot of your questions with the phrase “How might we”

[00:26:36] Sean: Yeah.

[00:26:36] Warren: This can also be done on a personal level. If you're working on one, a problem, that's just your own challenging, not working on it with other people. It's your own problem. You can just say, how might I. And one of the things I recommend to people is even when they're doing like new year's resolutions, you know, don't do it as a resolution, as a statement that I will lose a 10 pounds or I will drink more water this year, or I must to drink more water. Instead, do it as a, “How might I” question, how might I drink more water this year? And what that will do is, it will do what questions do better than statements, which is, just kind of open up your thinking relates to your natural problem solving. 

[00:27:26] Sean: Well, I imagine…

[00:27:26] Warren: There is something very powerful about questions as opposed to. And this is why I tell companies, you know, a lot of them companies think I'm crazy when I say this, but I really believe it that they should just get rid of their mission statements and use a mission question instead. And the reason is that a question is more inviting, it's more kind of inspirational and it kind of triggers your thinking a little bit. A question is like a puzzle, right? So, your mind almost instinctively and automatically goes to work on it and tries to figure it out. A statement is more like a thing that gets put on people, and they either like it or they don't. A lot of times they ignore it. But a question, if you say; Hey, our mission question as a company is, how might we make this a better world through robotics or something? You know, if you put that question out there for people, they will see it as a mission or a challenge and they will respond to it. So that's one of the things I think you can use questions in all kinds of powerful ways. Not only for yourself, you can use them for your organisation as a rallying cry and it's going to be more powerful and more engaging than a statement. 

[00:28:47] Sean: Yeah, I love that I think. I was trying that on while you were talking about it. And I was thinking, the risk of saying, what should we, or what could we do. And somebody coming up with an answer is to the extent that that answer, that doesn't work out, which is quite often, you know, we attempt things and they don't work out. It almost leads to a feeling of failure, doesn't it? It's like; well, we did some thinking. We made a decision, that's the path, and now it's failed and everyone's feeling bad about it. As opposed to, a more open creative sort of framework, we've still got the same outcome, but how might we get there? I can imagine it inspires a lot of freedom, almost a sort of freedom to fail that maybe we can continue to fail constantly. But at some point, if you've created that freedom, people are going to feel less attached. You know, I always find that if you’ve made a decision and then you everyone's like; okay, we're going to throw everything at this, no one wants and someone hasn't really had a chance actually to sort of input and they might have a much better idea but they don't want to say anything because they're really scared of kind of, they can see all this momentum going towards the thing that everyone's decided, and you actually really shut down that feedback.

[00:29:51] Warren: Yeah. That's one of the things, I mean, it's just when you put things out there to your people as if it's already been decided, and as if everything is set in stone, you really are shutting down their creativity. And you know, to me, again, going back to mission statements, I mean, if you think about it, the whole idea of a mission statement is almost crazy because if you're on a mission you're supposed to be on it, you know, you're not supposed to have already done it. If you've already done it, then you might as well close your business and go home. So, the idea that a mission statement is done almost in the past tense, like as a statement. To me, it doesn't make sense. What you want to do is you want to suggest to people we're on a journey here and we may be doing very well. We maybe will be off to a great start, but it's a journey and everybody needs to help us figure out how to get further down the road on this journey. And that's what the mission question is. You know, you have to articulate, what is it we're trying to do? Where are we trying to go? And then you put that into a question form, and now people have something to pursue, something to aspire to. 

[00:31:08] Sean: And what I notice about that, Warren, is that, if I try that on, I imagine going to a website as a customer, and I'm seeing somebody mission statement, “We're in a mission to do X”, versus, “How can we together solve X kind of problem or make this kind of contribution?” I, all of a sudden it seems like it's going to be a far more open frame to invite collaboration from and with customers and stakeholders and partners, because it's like, no, no, we're actually trying to solve this together and we need your input. And I feel like in the next 10-20 years, we're already seeing the emergence of dowels and all sorts of new formats of ways of people collecting together to solve problems together in a more unique way. And I think that's only going to proliferate even further than it is today. And that's a really interesting way, because all of those, they're in there trying to solve a question together as opposed to somebody got the answer right now. 

[00:31:59] Warren: Yeah, well, I mean, questioning is a great collaboration tool. And I did a project with Pepsi about a year or two ago. And it was, they were trying to figure out how to get their sales people to better understand what the customers really need, you know, because they felt like their salespeople were going in and just trying to sell. They were just trying to sell the customers on whatever the latest thing that Pepsi had, that they were trying to push. And so what Pepsi wanted to do is open up their thinking in terms of, it's not about me selling to these customers, it's about how do we build this collaboration where we, it feels more like a partnership and that's going to end up creating a better relationship over time. And so, one of the things I did there was talk about, if you want to do that kind of collaboration and you want to build that kind of relationship, one of the best ways to do it is through questioning, right? So, you can go to your customer or your client and instead of doing a lot of persuasion or a lot of trying to giving them advice or that kind of thing, you're kind of putting things out there as how might we, there's a challenge in the marketplace right now that you guys are having, how might we working together address that challenge. And when you do that, you change the dynamic between the salesperson and the customer, and all of a sudden, they're more like partners and collaborators together trying to solve a problem. And I think questioning can be key in how you develop that relationship. With questioning, you can show that you're working together, you're trying to understand each other, you're hearing each other, and it's just a much better way of communicating with customers than trying to sell them on something or trying to convince them of something. 

[00:34:08] Sean: Yep. That makes complete sense to me, Warren, when I was reading your, and I'm sure you talk about ways people can sort of follow your work or get access to resources. I had been looking at your beautiful question index which has got 217 questions. And there's some questions that I thought were really interesting in there. I was putting on my Founder/CEO hat and thinking. You know, some of the questions you asked was what critical information do I have and do I not have, which, to my earlier point, it's very quick, when you jump to how. I thought these were really good questions for people who naturally jumped to how. So, if you’re listening to this today, and you also, I'm going to jump straight to the solution, straight to the action plan. And maybe it doesn't take a step back. Here's some questions that I heard that you had written down that I thought might be of use. What critical information do I have, and do I not have? Am I thinking like a soldier or a scout? What's the counter-intuitive option? What's the implication of this decision, 10 minutes, 10 months or 10 years from now? And had one that really made me laugh, but I think it's actually really valuable is, what would happen if I got kicked out and the board brought in a new CEO, what would they do? And particularly in those circumstances, when you're a bit scared, you know, it's a pretty tough decision perhaps, maybe you got to let some people go, you've got to right size, the business, you know, things like that. You know that actually, if somebody else brought somebody else in, they just make the call, or they'd be sort of paid to have the courage.

[00:35:32] Warren: That particular question came from Intel, the Intel Corporation. And what had happened was Intel was at a key kind of inflection point in the company's career where they had to decide if they were going to shift away from the old way they were doing things in terms of how they were developing chips or whatever it was, but there was an important decision they had to make about whether to stick with the old tried and true, proven way of doing this or shift into a new way, a new approach. And the Founders asked themselves that question, like if we left the company and a new leader came in tomorrow, a very smart person, what do we think that leader would do about this decision? Which way would they go? Would they go in the new direction or would they go in the old direction? And they realised absolutely a new leader would go in the new direction. There was no question about it. And what it made clear to them was that they were holding onto the… they were giving too much emphasis to the old way, because that was their way, that was the thing they were invested in for so long. And so, they had a real connection to it. You know, they had it like almost an emotional connection to that approach to doing business, but once they were able to step back and look at it unemotionally and look at it from an outsider point of view, they could see which way really made more sense. And that's one of the great things in general that questioning can do, particularly as you're making decisions, is you can use questioning to try to shift your perspective so that you're not seeing things the way you usually see them. You can almost force yourself to say; okay, what if an outsider we're looking at this, or what if I'm my competitor were looking at this, what would he say? Or what if a five-year-old child looking at this, whatever. You can try all these scenarios out. And what that will do is, it won't necessarily give you the answer, but it will give you different perspectives. It will give you different points of view. And that's what you're always trying to use questioning to help you do with decisions. You're trying to get as much information and as many points of view as you can so that when you do have to choose one, you've got a lot more to work with and you don't have as many blind spots. 

[00:38:13] Sean: Yeah, and I think that's such a big driver. At the moment, you think about the drive towards diversity and inclusiveness, and the whole benefit of that, obviously there's lots of benefits, but one of the key benefits is it should improve decision-making because you're going to bring in different perspectives that actually in the absence of those perspectives to your point, people will hang on to what they've done in the past. The experience they've had in the past and all of the, we can't not end up inside the box is the way I always sort of try to think about it's like; well, when you're inside the box, you can't see outside the box. You don't know whether it's square or rectangle or a circle or whatever. It's only people who are outside the box. You can look at it with fresh eyes and go, have you noticed that thing about, is this a trap door on that side and this side is a bit spiky, and you often can't see those things. So, I really like this practice. So how do you think about this as a practice? Because it's not just a Founder sitting around doing some strategic thinking about the future of the business. If you've got a business of say 10 to 30 people, how do you build this kind of thinking into the organisation? What are the practical things that you do to try to build this culture of questioning and creativity?

[00:39:19] Warren: Yeah, I think, this is the big question, it's something that when I talk to companies, it's the issue that we're trying to work on. And we're trying to think about. And I've worked with a number of companies on it, you know, like Starbucks and other companies and it's about a couple of things. The first thing you have to do is you have to, if you want to have more innovative thinking and you want to have more questioning and you want to have more open-mindedness in your organisation, maybe the first thing you have to do is model that behaviour yourself as the leader, and make a very strong statement that you believe in this because people need to be given permission to question, to think differently, to be curious, to wonder about things and then wonder aloud and share that wonder, and that question with other people, instead of being afraid and holding onto it. And a lot of people will wonder; “Jee, I wonder about this, that something we're doing here that, you know, maybe it doesn't quite make sense to me. And I'm wondering if we turned it upside down, wouldn't that be interesting?” But they won't ever share that because they're afraid, you know, they figure, well, that's a crazy possibility and people might laugh at me or, or worse, they might think I'm being insubordinate or something. Who knows? So, what happens is a lot of people have that kind of curiosity, they have questions, interesting questions that are floating around in their brain based on what they're seeing in the marketplace or in their job. You know, they're on the front lines, lots of times of your company the people working for you. So, they're seeing a lot of stuff and they're seeing how things work. You know, they're seeing how the machinery works. They're seeing where it gets bogged down, but they may have questions. about that, but not be willing to share them. So, the first thing you really have to do is get the message out there as best you can that, this is a culture of inquiry. We believe in questioning. We've seen that it's directly tied to innovation and we think it's the way we're going to grow. And it's the way we're going to adapt. And so, you have to sort of invite people to ask more questions. You do it through giving talks to your company, you do it through putting something on the wall that says, you know, “Ask more questions…”, you know, whatever it is, whatever you need to do to get that message out there, you've got to do. And then if you can incentivise it anyway, that's great. People get rewarded for answers, but they don't often get rewarded for questions. And it's kind of an unconventional idea, but I think that teachers in school should re reward students for great questions. They only reward them for the answers on the test. And I think, leaders of businesses should reward people who ask questions that are powerful. And a powerful question is any question that causes you to think about things a little differently. If the question suddenly, makes you say, “Jee, you know, I hadn't thought of that. That's an interesting way of looking at this problem we're having, or it's an interesting way of looking at the opportunity that lies ahead of us.” Just by asking a question about it in an interesting way, someone may change the thinking. And you have to reward that because even though that may not lead to tangible gains right now, the way an answer might someone comes up with a brilliant answer that can lead to tangible gains right now, someone asks a beautiful, great question, it may not lead to tangible gains, but it puts you on the path toward those gains, it changes your thinking, it starts to shift the company in a different direction. So, I think those kinds of questions should be rewarded in some way, they should be incentivised. And that's another thing you can do to develop a culture of inquiry. And then you can do things like, bring more questions into your meetings, have exercises where people are instead of brainstorming and ideas, they're brainstorming questions. A lot of this stuff is on my website and my book, so there's stuff out there. This stuff is all easy to learn, easy to pick up, but it's the idea that you have to incorporate questioning into your company in a way that it becomes like second nature to people to ask more questions. And as people ask, you know, as it becomes second nature, everyone will get better at asking questions. The more questions you ask the better you get at it. The more ways you start to look at problems a little differently and question them, and it just starts to become a natural thing. And pretty soon your organisation is sort of filled with beautiful questioners. Now the downside of that is, you know, you've got to figure out sometimes what to do with those questions and that's not always easy, you know, as people start asking more questions, you may have to develop systems to make sure people feel as if their questions are being heard. So, you may have to develop, you may have to put someone there in charge of hearing the questions and filtering them and making sure the question goes to the right place. You know, you may have to develop systems around questioning if you want it to flourish within your company.

[00:45:23] Sean: That's a great summary. And you know, when I just go back to your first point around modelling, in the absence of, and people read on authenticity very quickly. And so, you know, if a leader says; Hey everybody, it's going to be really important to do questions, I want everyone's feedback and so on and so on, but what we're not trying to create is a culture where people send questions up to the top and the top just makes all the decisions and sends them all back down because you end up with these huge bottle, you know, to your point around the system station of what you typically end up with is a really upside down pyramid where everyone's almost asking quite it's like, oh, my job is just to ask a question and it's everybody else's job to answer them or think about the solutions. And one of the things that I think is, first of all, people need, they need that safety, as you said, they need to know, they need to have seen examples and they will hear them from other peers. I noticed that so-and-so, you know, raise this really challenging question in that meeting. What happened after that? How did the leader respond? Like it's those informal stories that'll come back and tell them whether they should feel safe or not in actually challenging. And one of the things that I noticed…

[00:46:24] Warren: You don't have to necessarily act on every question that comes up, but you would want to make the question or feel that that question was heard. So, it could be as simple as a leader saying, “you know, somebody raised this interesting question, I'm going to share it with the company. We don't necessarily have an answer for that question, but it's an interesting question and it's something I'm going to be thinking about and I invite everyone else to think about it as well.” Just by doing that, you have celebrated that question and reinforced with the person who asked it that it has value. Now they'll ask more questions like that. On the other hand, if you just ignore it, if you ask people for questions and then nothing happens, people will get very jaded about it. And they'll say, well, I asked questions, nothing happened. Therefore, I'm not going to do it anymore.

[00:47:21] Sean: Yeah. That's like having an employee engagement survey and people giving a whole bunch of feedback and then nothing actually changing. It's like, well, you're only going to get that feedback once, if you don't turn that into an action learning cycle, nothing's going to happen. You're not going to get feedback again. One of the things I noticed, Warren, you said it up front around this parallel where you've got an early stage business, it's full of questioning. And then as it gets a bit more mature and things are starting to work, often the questions start to die, and we just get more into how, and one of the things that I think particularly that gets lost in those organisations is the leader or leaders connectivity with customer. And what tends to happen is as they get more insulated and certain of their strategy and their activities, what they don't notice anymore is that things are changing in the world of the customers, how they're being perceived by their customers, what pains their customers are going through, what other problems they're having that are related to the current problem that they're solving or they miss all these important tangential information, sometimes they're trends and so on. And so, one of the things I think that's often super valuable is ensuring that leaders have a KPI around actually a quality of engagement with customers, which is just to understand what's going on in their world and what's and what their perspective is of themselves and other competitors and what's happening in their market and what their problems are with no expectation of sort of outcome, other than to understand. And I think that can be done at any level of the organisation, particularly those people that are customer facing. So, you've got lots of people looking at; well, how can we do a better job in solving this problem from an internal perspective, but you've got to have that input regularly from what's actually changing outside you. And the bigger the organisation gets and team seems to be the easier it is for that to get lost. So, I'd encourage people to think about whether that feedback and those questions of your customers are actually feeding all the back to decision making.

[00:49:01] Warren: Yeah, and one thing that I find that people try to use surveys to achieve this. And so customers out there are getting swamped with surveys, and I feel like survey questions are great. I'm totally pro survey, but I really think that, the most effective kind of questioning is human to human, or it can just be based on observation. So those two things it's like actually asking another human being a question or observing them, and then asking questions in your own mind, you know, I'm observing someone go through the process of doing this of getting their coffee. You know, I'm a coffee company and I'm observing someone get their morning coffee. And what are the questions going through my mind as that happens, I'm noticing the person does this or that, or why are they doing that, or is that a good thing or could that be done better or is there… so, that kind of internal questioning in your own head is really important as is the external questioning where you would actually ask a customer, why you doing that? Or how do you like that process? And a lot of that stuff you can't get out of surveys because people just don’t engaged quite as well with a survey as they do with another human being. And sometimes the survey doesn't ask the right questions. Sometimes the question can only be asked if you're there watching and observing. And then all of a sudden you say, aha, I see something interesting here. And that creates the question. So, I encourage people to make sure they are just out there in the field, and as leaders be out there within your own country, just get out there and, and either ask questions or if you're not asking questions, be watching, be observing, and then be wondering in your head about what you're seeing asking those questions.

[00:51:16] Sean: A hundred percent. Before we wrap up a, Warren, just two comments on that. For those people, who've heard that and thought, you know what, actually, I am kind of missing something in there. That's a perfect segue and plug for Nihal Advani who was a guest that we had on, he runs a company called QualSite who does exactly what you just described. They have real-time video of people using their products. So, they work a lot with FMCG companies and so on. So, they're getting real time feedback and they use an AI in the back end to get good quality qualitative research in real time about what's actually happening in that whole interaction. And I've found, I ended up developing a, for anyone who's interested, I developed a service called Growth Insights. And I do exactly what you just said. So, if people have got customers that they'd actually like to have somebody independently interview. That's exactly what that service is. It's qualitative research, it's high-quality qualitative research that we can gain, gain the insights that should be feeding into the strategy of the business. If anyone wants to chat about that, you can go to Seansteele.com and just have a look at the Growth Insights tab. But Warren, we are out of time, but I just wanted to say a huge thank you to you for your time today. How can people get in touch with you or follow along with what you're doing? Where would you direct them to for sort of further information?

[00:52:26] Warren: Yeah. Basically everything I have is in one place it's on this site called amorebeautifulquestion.com. So that was the name of my first book. A More Beautiful Question. And it's just those words put together and that's the name of the site, Amorebeautifulquestion.com. And so, what you'll find there is, there's information on my books, which every author has, but, you know I just decided to go much further and really create a whole world of questioning there. So, what you'll find is a lot of articles, a lot of research on questioning, but fun stuff too, you know, you can take your own quiz to find out your own inquiry quotient, IQ - inquiry quotient. You can find my list of songs that have questions for a title. You know, this is all, anything question related is there, but there's just a ton of research and information and data about the power of questioning and the connection to innovation. You'll see all those innovation stories on there, and what was the question that started the innovation, that kind of thing. And it's just a good place to just sort of bounce around and immerse yourself in the world of questioning. 

[00:53:41] Sean: Beautiful. Well, thank you so much, Warren Berger. Folks, I'm sure you've enjoyed the show today and got a lot of value from that. I don't think you possibly could have you really been thinking about how can you potentially shift the dial or if you've just got that internal feeling like maybe you're kind of missing something because you're not asking great quality questions. It's been a great episode for you. Make sure you're going to Warren’s site and check all of that out. If you're enjoying what you heard today and you think somebody else might get value of it, please share it with somebody else. Share the episode with just one person, give us a writing on Apple Podcasts, helps it to get into the hands of more people and our team absolutely love that. Or you can find us on any of the socials @ScaleUpPodcast, Facebook, Instagram, LinkedIn, and the usuals. So in closing today, folks, just remember the only thing that can guarantee that you can't scale up or that you won't scale up is actually giving up. So, make sure that one of your questions is not, “Is it time to get off this bus?” You got to stay on that bus and you've got to keep adapting and stay flexible in your behaviour until you get there. Thank you so much, Warren Berger, really appreciate that. Folks, you've been listening to the ScaleUps Podcast. I'm Sean Steele. Look forward to speaking with you again next week. Thanks again, Warren. 

[00:54:41] Warren: Thank you.

About Sean Steele

Sean has led several education businesses through various growth stages including 0-3m, 1-6m, 3-50m and 80m-120m. He's evaluated over 200 M&A deals and integrated or started 7 brands within larger structures since 2012. Sean's experience in building the foundations of organisations to enable scale uniquely positions him to host the ScaleUps podcast.


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