Bob Moesta: Developing the Five Skills of an Entrepreneur and Innovator

Building and improving products is hard. In his career developing over 3,500 products, Bob Moesta has identified five essential core skills for successful innovation and entrepreneurship.

1. Empathetic Perspective
2. Uncovering Demand
3. Causal Structures
4. Prototyping to Learn
5. Making Trade-offs

In this session, Bob explains why those skills matter and why doing a poor job at all five beats being excellent at one.

This talk will challenge you to assess your own situation and understand why this defines your approach to practicing and learning the five skills and offer some highly practical steps that will mean you build and improve products more easily.

Be prepared to learn:

• Why you’ve probably been developing the wrong skills.

• How to want to better yourself and continue to learn

• How to increase the skills of your team

• Skills to help run your business more successfully

Slides

Transcript

Bob Moesta
Alright, let’s get this party going. I have a new book coming out. This book is really about how I learned how to build, and a little bit about my background. I’m from Detroit, I’ve helped create the Jobs to be Done Theory with Clay Christensen that worked in over 3500 products. But what most people don’t know is that I’m dyslexic. I was that little kid who was breaking things by the time I was three, I was fixing things by the time I was five. And I’ve been building things since the time I was 10. I had three closed head brain injuries before I was seven, because I just had a little too much energy. I was told in high school that I should just be a baggage handler at the airport, that’s what I was supposed to do when I graduated. They didn’t think I could go to college. They didn’t think I could do anything more than physical labour.

And then I met my mentors. I met Dr. Deming when I was 18. I sat down next to him, I asked him 52 questions in about 22 minutes. And he just turned to me and said, “Boy, you’re a curious kid, how would you like to work for me?” And so, what I want to do is articulate to you the homage to my main mentors, Dr Deming, Dr Taguchi, Dr. William Moore, and Clay Christensen. To say, ‘How do they teach me how to build?’

At the same time, I’ve worked on so many different things, everything from food products, to software, to medical devices, technology, to homes, to insurance, to banking, just across all these different things. But when I took a step back, and I looked at all the people that I’ve worked with, and all the different aspects of not only what helped me become an innovator, but what skills those people had, I boiled it down to say: there’s these five skills that innovators and entrepreneurs have, that most people aren’t talking about or that the more you hone and refine them, the better and better you get.

So one thing I did is I have 35 years of notebooks. This is from October of 1990. And Dr. Tucci wrote in at the very beginning: write a book. And I’m like, “I can’t read and I can’t writem how can I write a book?” Well, I found a company called Scribe Media, that allows me to actually think through and frame my book, and be able to articulate it and talk to people who then write the book for me. And so if you read Demand Side Sales, they were able to capture my voice, but all of that comes from 10, two hour sessions that allowed us to kind of frame the book. And so part of this is to realise, at some point, even though you can’t read and write doesn’t mean you can’t pass on the knowledge that you’ve learned.

What I’m really trying to say is that, ultimately, I’m trying to pay homage to my four mentors who enabled me to work on so many different things. And to be honest, as I get older in my years, it’s about passing it forward and passing it on. Right? These are the four.

Dr. Deming is the father of the Toyota Production System, he went to Japan in early 1950 and basically helped restructure all of Japan’s infrastructure but also then became the father of quality management.

Genichi Taguchi was basically a protege of Dr. Demings. And he’s brought engineering and quality to engineering and how do we actually engineer better and more effectively.

Dr. Willie Moore was my first boss at Ford. She was basically the first African American woman to graduate with a PhD in particle physics from the University of Michigan. And she taught me so much about things like empathetic perspective and causal structures.

And then there’s the infamous Clayton Christensen. People always ask me, ‘how did I meet clay?’ And what I realised is most professors are very lonely, because at some point, they’re not allowed to collaborate with other professors. Because most of the time, they have to prove themselves. And it’s all about their ability to write. And so all I did was walk into clays office and ask him, “How can I help you?” He was so taken aback by it that that he literally invited me back and I just kept bringing in people to help him with his research and whatever he was doing. So being kind and giving is very important to being an innovator and entrepreneur.

So let’s walk through what I consider the five skills to be. They’re going to be kind of obvious, but the thing is, is that it’s this next step that really causes you to be better. What is empathetic perspective? The ability to see things from very different perspectives, and being able to see conflicts before they happen. And so what you start to realise is that a lot of people have this ability to see things through space and time and basically see it from the investors perspective, from the customer’s perspective. But once you can start to hold these different perspectives in your mind, you can actually do amazing things.

Another skill is that they have the ability to uncover demand. New entrepreneurs will always say “We’re going to create demand.” But really seasoned entrepreneurs talk about the notion of uncovering what’s already there. How do we go after nonconsumption? We’ll talk about that.

The other one is that they have this notion of causal structures, how do things work? They have mental models, and they’re constantly updating those models of how things work, right.

And then the other unique thing is that they don’t prototype to verify, they prototype to learn. And they actually run prototypes that they know are going to fail. But the fact is, is they know that they’re going to actually uncover or answer an unknown that they didn’t know how to answer before.

And the last thing is basically, identifying and managing trade offs. What happens is that they know how to figure out what are the most important things to do. And they have methods and tools for doing so. And what I feel is that really, really successful engineers, innovators, and entrepeneurs have these skills, and they cut across. Alright, let’s dive into each one of them for a minute.

So empathetic perspective, is this whole aspect of being able to see things through space and time in your mind. And what’s very interesting is that, for me as somebody who can’t read, I’m very visual. And so I actually see things and have been able to see things all through space and time, see things from the past. But the interesting part is this layer of causality: what causes what to happen? Most people see things as a snapshot in time. So yesterday, we talked about vision, right? And mission. And what you start to realise, is that you think about a vision of where you want to go, but you actually don’t think about the context wrapped around you when you’re in that future. And so part of this is really good innovators and entrepreneurs can play things out way better than most people. Right.

The other thing is they take really unique, different perspectives. So let me give you an example. So I am 21 years old, and one of my first projects was working with Ford on the rearview mirror on the Ford Taurus. And what happened was, the glass itself would actually fall out of the mirror and end up on the dashboard at the plant in the summer. And so part of it was because it would get so hot, the case would expand and when it would expand, it would loosen the glass and the glass would fall out. Well, it’s the heat, so what do we have to do? We have to actually add some additives to the plastic to basically make sure it doesn’t shrink or expand as much. Well, it turns out that was almost 25 cents to do so. And Ford wasn’t willing to pay for it. So they got me to basically try to go solve it from a very different perspective.

And the first thing that Willie said is she said, “You need to understand how it’s made from the very basic elements all the way through.” And so the first thing we did is we talked about the plastic molecules that it was made of. And what were the characteristics of them? And how does it really work? And what are the fundamental principles of that? And then ultimately, what form do they take? And how is it really made? And then ultimately, how is it shipped? And it turns out that when it’s shipped, it absorbs moisture. It’s what they call ‘hydrophilic’, which means it actually absorbs water. And so what happens is that as it’s being moulded, you start to realise that that water in it is very, very important. And then how is it moulded? And then ultimately, how is it assembled? And then what happens to it? And by actually seeing these different things, there’s two things we’ll talk about a little bit later when we get to causal structures. But there was a way in which to view the world that actually said, “I can’t control how it’s made, and I can’t control what environment it’s gonna be in. So how do I actually think about what I can do with the manufacturing plant where it’s moulded, that can actually make it more robust to the aspect of moisture and temperature?” And so most of the time we were always taught to do root cause analysis. But by going through this process of seeing things from different perspective and being able to see it at this molecular level and how it actually builds up.

To me, this is actually a very, very powerful framework. So a lot of times I’ll work with people in software. And we’ll talk about: what’s the flow of data? And what happens to the data? How is the data transformed through time and space? And so ultimately, this is not just about seeing things from people’s perspectives. But it’s about seeing things from the micro perspective, the macro perspective. And the interesting part is if you really look at how we learn this, the best place to learn this is actually in theatre, where we play roles of other people and try to both emotionally and socially understand how things work. And so to me, really good entrepreneurs and innovators have this ability to almost disconnect themselves to be able to see the world. Right.

The second one is really uncovering demand, right. And for those of you who know me, it’s about Jobs to be Done. But the reality is, is that the struggling moment is the seed for all innovation. And that demand is actually independent of supply. It’s not that supply and demand are connected, only maybe through price.

Nonconsumption, where people want to make progress, and they can’t, that’s ultimately where real growth comes from. That’s what Clay taught me. So there’s these two sides of the world: there’s the supply side of the world – this is the lie I was told which is build it, and they will come – and then there’s the demand side – which is basically people who pull things into their lives. And there’s this huge wall between the two. And ultimately, it’s about understanding how demand works. Just like we understand how supply works, but it’s about connecting the two, right? And so if you think about demand as a current product, current context, struggling moment basically causes somebody to get to a new desired outcome. That new desired outcome have candidates, and ultimately, people make trade offs. That’s the whole notion of jobs to be done.

And so part of this is to realise that one of the biggest problems that I find that people have when they’re not sure is they over-engineer their product, because they’re trying to satisfy way more people, or too many things. And they end up over-engineering the products to the point where people won’t pay for it. And so part of it is to be able to understand the demand side as well as you understand the supply side. And so really good innovators spend the time not only to understand technology, but to spend the time to have a deep understanding of what causes people to say, “Today’s the day I need to do something different.” It’s not random, and it’s caused. And so just because we call it random, then we wait and we think it’s been a game of probability. And that’s not how I was taught to be honest. The aspect is that there’s that struggling moment, and then there’s some new outcomes that people want, but ultimately trying to get across that river. There’s 1000 ways I can get across that river. What I was told from Dr. Taguchi was: how do we understand the technology agnostic requirements, that tells us what the customer wants without telling us what to build? So if you think about that as a river to cross: how many different ways can I cross it? There’s actually 1000 ways I can build them. I can build a boat, I can dig a tunnel, I can do a dock, I can teach them to swim, I can get a helicopter, but ultimately, it’s their circumstances and the outcome, determining their progress.

So the other thing is to realise that there are forces at play. So this is the whole notion of being able to understand that it’s not just about features and benefits. It’s not just about the problem, but it’s also about reducing friction in the right ways in the right places. And so ultimately, by understanding these things, and having the perspective of the customer but understanding where they struggle, that’s where innovation should be targeted. And so instead of trying to build something for everybody, or basically trying to make sure that one product can serve so many. Clay and I used to talk about the ed of one. How do we actually understand what causes one person to do it, and then another person do it. So we analyse and then we aggregate. And so part of this is being able to uncover the demand before we actually detailed and design the supply. Right?

Third one. The interesting part is everybody has these abilities already. And they use them all the time in their day to day life. It’s the next level down. When I worked with Dr. Deming, I was 19 years old. And he was very hard of hearing. And as a 19 year old, you don’t realise that he needed hearing aids. But the fact is, he screamed at me all the time. If you can’t describe what you’re doing as a process, you don’t know what you’re doing and he’s like screaming at me. So it’s a little bit of PTSD. Right. So the entire time, I have all these quotes from him burned in my brain from him kind of yelling at me, but it was really, he just couldn’t hear himself, he was yelling, because he couldn’t hear. Alright.

But this is actually a really important thing that I realised. It seems very fundamental, but most people don’t actually understand the details of how things work. And really good innovators and entrepreneurs have this ability to make sure that they dig deep. And they also can understand what they don’t know. One of the hidden secrets to me is that really good entrepreneurs know how to actually figure out how to identify the unknowns, and they actually developped the unknowns, they don’t actually try to prove what they know.

So the way to think about this is this aspect of: most people might talk about events or patterns and trends. And to me, that’s typical market research, right? They might get down to underlying structures. But ultimately, really good entrepreneurs and innovators have mental models of how things work. And to be honest, they have respect for anomalies that help them when things don’t work, they don’t throw the whole model out, they either modify the model, or they actually create a second model to actually complement what they do. Most really successful entrepreneurs don’t have one model, they have three or four different models to help them cope with different situations. This is the one that I learned from Dr. Taguchi, it is by far the most important gift I think I ever got. We think about systems thinking, but in this case Dr. Taguchi thinks about it a little bit differently, he talks about the system being the thing that I have control of as an engineer, or a designer, or as a builder, it’s the thing that I can build, right. And there are what he calls ‘control factors’. Factors are inputs and actions that come to that system that produce an output. But at the same time, most people stop there. And what you have to really understand is this aspect of those outputs go to a consumer or customer and they have to turn them into outcomes. And what we have to do is we have to actually do this all in the face of what he calls ‘noise factors’. And so part of this is being able to understand, for example, when I was working on the mirror, right, what I was able to do is change the injection pressure and change the whole time and change the barrel temperature and all the different parameters out in the machine. So I could actually change the actions of how I moulded it, I could actually change the inputs, I could actually add a dryer to the plastic, I could basically mix it in a different way, I can actually add new ingredients into it, there are certain things to do, but they all affect cost. And so, Taguchi would always talk about this balance between cost and quality. And what I had to do is I had to make sure that it actually worked in the face of noise factors.

Because what happens is, the problem was the lenses falling out, but before I got it, they actually made a change already. And what happened is they stopped falling out. But then in the winter, they all cracked. So they solved one problem and created another. Dr. Taguchi would talk about that as Whack-a-Mole. And so part of this is for you to figure out what’s the right causal structures for you to see the world. But I see everything through this lens. We’ll be in a meeting and I’ll talk about “What are the inputs to this meeting? What are the actions? What are the outputs? What are the outcomes we’re trying to get to?” And then build the agenda. And so you start to realise once you understand causal structures, you actually can figure out how to build, right? And so ultimately, it’s about understanding what are inputs, right? What are actions.

And so, one of the things I did is I sat with an accounting group. I didn’t know anything about accounting, I know the basics of it. But the reality is, is that they produce reports. ‘Let’s see what’s going on here.’ They produce reports. And then we make the most perfect report. The first thing we did is we asked them “Who’s the customer of those reports and what are they trying to do?” And what we started to realise is there was a whole bunch of other stuff that the managers would do with the the reports they got. And we realised how to make those outputs actually even better. And so we had to change the actions and change the inputs. But ultimately, we saved all the managers time by understanding the entire process and system.

So again, most people see it as a very surface level thing, but part of it is actually digging deeper into it to understand the dominoes, how it actually works, and what are the underlying blocks of it, things to do right. The other part of this thing which to me is really important – and Ryan Singer and I have been talking about, we’re building some software together – but when we design things, once we understand how things work from a left to right perspective, but we actually create from a right to left thinking. Which is, “How do we understand the job, the output, the outcomes people want? Who are the customers? What are those outputs? And then ultimately, what are the systems that helped me get to those outputs?” And so it’s this notion of understanding how things work, and then flipping it from one way to the other, that then help you understand how to design and build.

My belief is you already have a way in which you think the world works or your product works. But the understanding is, is that once you can understand it one way, you should then reverse it and think about it the other way, because things should basically work in both directions. Right? Inductive, deductive, right? I’ve had people tell me I’m smart. And I would say “I’m not really smart, I don’t have that great of memory. But I’m very, very curious. And I always want to know how things work.” And ultimately, this is the one fundamental skill that I had, when I was three years old. I remember taking apart an antique clock, I put it back together but I missed one part. But I was three, almost three and a half years old. And it was one of those things where I could remember how I took it apart. So I can remember how to put it back together. And ultimately, those actions are to me a really strong foundation.

The fourth one – this one is actually really interesting – is that I was taught very early on in my career, that A/B testing or One Factor at a Time testing is the most inefficient and ineffective way in which to prototype and to actually build something. Yet, to me in the software industry, that’s what they do. I was taught basically to design, build, evaluate, learn, and basically build extensive experiments and sets of data that helped me understand the underlying causal mechanisms of how something works.

This is from one of my notebooks back in the 90s, I was in Japan and it says, “Most of the time in the West, they test to prove hypotheses of something they already know. And so most prototyping is about proving what they know to other people. Here in Japan, what they do is they test because they admit they don’t know.” And what I find is the more and more you actually test because you don’t know and frame what you don’t know, that’s actually where innovators and entrepreneurs really excel.

One of the things that I helped Ford do really early in my career was, this was our product development cycle time, this was about 72 months from concept all the way to market introduction. And we’d made very few changes, we’d actually design the product, we’d actually put it together. And as we’d started to put it together, we’d have more and more interactions, we’d have more and more problems. And then ultimately, we just hit a point where say, “Hey, we got to stop changing it, let’s launch the product.” And then we fix it afterwards. And I call it red-line development.

But what happened is in Japan, it was a completely different model. The interesting part is their development cycle time was 36 months, half of ours. And if you actually look at their prototypes, they actually end up doing almost 10 times more prototyping of the system, because they’re actually trying to figure out where the product fails, and where to actually understand what they don’t know. And so they’re prototyping to learn. So when something goes wrong, they actually already have the knowledge to know how to dial it in. So when they launch, ultimately, the cost difference between the way we would develop cars at Ford and the way they developed cars at Toyota, it was almost a 5x cost difference. And so you start to realise that this whole notion of prototyping to learn was at the very core of how Toyota did things because they could actually have conversations about what they didn’t know. I go into teams all the time where they’ll tell me what they want to do. And I’ll say, “What are the unknowns around this?” And they can’t tell me. So ultimately, all I can see is them being on the red line. And so part of this is being able to not only uncover the unknowns, but then build prototypes to help you answer the unknowns, not to prove what you already know, right? And so there’s that aspect of exploring possibilities, and then deciding what to do. And so there’s two types of experiments we do. But ultimately, it’s about being able to understand how it works. So then we can make and manage the trade offs, I would say contrast creates meaning. So by having 10-15 different prototypes, I can figure out, not only what the best one is, but why the best one is the best one and why the worst one is the worst one.

So on the side, I have a little side hustle where I actually design experiments for different food companies who have been working in the food industry for almost 30 years. So last month, they did pickles, right? Just simple pickles. Right? But the whole aspect is, is that you think that this company has been making deals for almost 50 years, but they actually didn’t understand how everything worked together. And so we built a series of experiments where we did 16 different experiments on different brines in different times and different temperatures and different pressures, as they make the pickles. And ultimately, were able to figure out how to actually speed up the process by almost 30% and reduce the cost by 18% and increase overall like crazy, right? But the whole notion is they had to take a step back to say “We don’t know actually how all this stuff works.” Because they’re just tweaking one thing at a time.

The last one is making trade offs. A very interesting notion here is that most people think that we have to optimise something. But the reality is, is that being able to understand what are the trade offs we’re trying to make? And how do you actually figure it out? There’s a whole set of tools and methods to do it. And it’s that notion of how do we actually confine cost, time, scope and quality. You can’t do it all. And so part of this is, instead of trying to do it all and put 10 pounds of crap into a five pound bag. Right? It’s this notion of how do we actually understand what are the critical things we have to do? And what are the things we don’t have to do?

We have to make trade offs between feasibility, viability, desirability, and ultimately, you have to iterate around all of those things to figure out the best combination of all three of those things. So it’s about understanding the trade offs to make and being able to make them with the right data, as opposed to reflecting the technological side or reflecting just the customer side. Because if I make it really desirable, but I don’t make any money, it doesn’t work. If I make it highly profitable, but people don’t want it, it doesn’t work. And so the good entrepreneurs and innovators know how to actually see these three different views, and then ultimately, how to make the trade offs between them. Right? You know, Jason freed says it best, “You’re better off with a kick ass half than a half asshole, right?” It’s that aspect of knowing what to suck at.

The other really big one that I think most really successful entrepreneurs know how to do is they know how to see trade offs, they know how to actually identify the tension between the two, and then be able to understand where to actually land in terms of either optimising one or the other, but not putting it in the middle. Right? This is where data actually can get in your way.

So for example, I’ve worked with Digiorno very early when they were in the pizza business. And one of the things they had was this rising pizza crust. What we ended up doing is doing a whole bunch of different tests, but what they ended up doing is averaging the data. And they realised that half the people like thick and half the people like thin, so they ended up with medium, thick crust pizza, and nobody liked it. So part of it is knowing the difference between clustering and analysis and being able to actually see things and separate things. So making trade offs is one of those skills that when you learn how to do it, you actually can make decisions way faster, and you actually realise that it’s about actually making progress, as opposed to trying to find the right answer.

So the way to think about this is that there’s the supply side and the demand side, right? If you think about it, the empathetic perspective helps you understand who to help you uncover demand. Right? They get you the design requirements. And then ultimately, the empathetic perspective also helps you understand the causal structures or the systems that satisfy those design requirements. So you get the system requirements. And then ultimately, how do we actually prototype to learn and manage the trade offs between them to help us build great products?

I feel like people aren’t talking about these underlying five things, they have little pieces of them, but to me, it’s how they work together that’s so important? So let me give you an example. This is Ryan Singer, he wrote a book called Shape Up. And his boss at the time was Jason Freed. And Jason said, “Hey, Ryan, I want you to write a book about how we launch products at Basecamp.” And Ryan’s looking at Jason going, “Well, wait a second, you’ve written all these books, you’ve written five best selling books, and I have no idea how to write a book, no idea in the world.” So the first thing is he sits down to try to write and his mind just kind of overflows, and he can’t really figure it out. And he starts to lock himself up, right? And so when he didn’t know what to do, the first thing he did is to figure out how I actually uncover the demand for the books? So for him, it’s like, “You know what, I’m going to actually do a workshop to figure out what in the world people would want to know about how we work at Basecamp. Because I can tell you everything we do, but what really is the thing that’s actually causing people to say they need help.”

So he writes a tweet, he literally says, “I want you to apply to this, we’re gonna have 20 people come for a one day workshop.” And shape and ship is just a name he made up. So he gave himself three weeks to write material. And he basically said, “I’m going to get applicants, but I want people who are truly struggling.” So what he did is, he actually built a quick website. And then what he did is he actually built a questionnaire, the questionnaire is almost 20 Questions long. And it literally would take somebody half an hour to 40 minutes to fill it out, to get 100 people to fill it out. And he charges $1,000. Right? How does he want people to pay? Right? He still doesn’t know what he’s going to teach. But the aspect here is: what would cause somebody to pay $1,000 and be able to find time in their calendar to come to Chicago for one day to learn about how Basecamp does this. So then he sits down, he starts writing an outline of all the things he could talk about. And he’s got more than enough material to cover for one day. And then what happens is he conducts the class. But for him, the whole aspect was: it wasn’t about checking his knowledge, or what’s there. What he wanted to do is he wanted to find people who were in this situation.

So this was all about uncovering demand for him. So he went off and then interviewed everybody who came to the class. Why did they come? What was going on at the at the office? What caused them to say “Today’s the day?” What were they hoping to get out of it? What did they get out of it ?

And he basically found four main jobs. “Help me shift responsibility to the team so I can think. I need space and time because I end up having to spend so much time with the team that I’m hoping that when I get here, I can learn tools and techniques, so I can transfer better to the team, so I don’t have to actually interact so much with them.” Another one: “Help me make faster product progress in the product, it feels like it takes forever for us to actually do things because we’re working on so many things. I want to know how Basecamp does it so I can do it faster.” Number three: “Help me bring my team along.” The fact is, they’re out in front and half the time the team is so far behind. “Help me make sure that the team is actually following behind me.” And then the last one: “Help me put my ideas right into action so others can go act on it.”

And so by understanding those four jobs, he then basically sat down and said, “What knowledge do they need to have? Or what information can I provide them to help them make progress in those four different jobs?” So he lays out a set of systems, which turns out to be shaping, betting, and building. So each system he built was basically a chapter. And he talked about what progress they were supposed to make, what’s the function of each chapter, and how do they play together. And so then what he did is took each system, each chapter, by itself and sat down and wrote pictures and then wrote things around it.

And once he got a first draft of the entire thing put together, what he did, is he actually went off and found three people to go read it and start to apply it. So Chris Beck, Ilya Sterin, and Andy Weisbecker from Target all had an early draft of it, and they went off and started to apply it. And what happened is, he would interact with them on a daily basis or weekly basis to figure out: what are the things that were working, what wasn’t working, how to rephrase things, how to clarify things? Ultimately, getting to a point where he said, “Well, I want to do one more workshop.” And so he did a workshop, now it was two days, but ultimately, it was about: how do we actually teach people the notion of shape up?

So how did he do? Well, he launched it initially on July 9 2019. So in less than nine months, he basically was able to pull up and have a draft of the book. It wasn’t until almost the end of August, where he put it in a PDF. The way he built it was he actually made each chapter, a web page, so that then he could watch how people actually consumed it. And where they spent more time and less time, before he created the PDF. But, having never written a book before, he basically had almost 345,000 Unique Visitors and 10,000 downloads by the time he had the PDF, which is pretty amazing. I think it’s sold over almost 20,000 copies already in a year. You can still get the book for free, you can still download it for free. But this is why I think of Ryan as such a great innovator because even though he knows he doesn’t know what to do, and it’s outside his area of expertise, he’s able to use the five skills to help him figure things out to build something that helps him make progress.

So the book will be out in January. But the fact is, you already possess the skills, you use them every day, in some form. But what I want to talk about is that if you want to become a really good entrepreneur, innovator, you need to take them all to the next level, you need to have better tools and techniques and methods. You have to be able to actually practice it on a regular basis. And what I would say is that as you look through the skills, my belief that you can say, “Oh, I’m pretty good at that one. I’m pretty good at that one. But oh, God, I know I’m not good at that one. How do you actually go learn more about making trade offs or prototyping to learn or things like that?” And I would say: practice one skill at a time and go deeper and deeper. And to be honest, sometimes it’s better to apply the skills to everyday life, like planning a meal, going to the grocery store, going on a vacation, you need all these skills to do that. The more you can make these explicit and do better with it, the better innovator you will be.

So I’ve written two books around these things. One is Demand Side Sales, which really focuses on helping understand the demand side of the world. And Learning to Build is really about helping on the supply side of the world, and how the two worlds collide to actually build a great product.

I’m really trying to pass on what my mentors have given to me. So one of the things is: just having a team take a minute to look at their system, for example, from different perspectives. Let’s look at it from a customer perspective. Let’s let’s look at it from the data perspective. Let’s look at it from the cost perspective. And as you start to actually frame these different views, they start to actually connect dots. Most people only look at one, maybe two perspectives. But when you can look at it from 10 different perspectives, it allows you to actually see things and to identify what you don’t know. And really get clear on those things that could be potential problems.

Audience Member
I’ve got a question, Bob, if that’s okay. I’d be interested for you to tell me about your journey. You talked about all of these skills yourself, could you tell me about how you’ve applied these to some of your things a bit more as well.

Bob Moesta
Yeah. So for example, my children, they all wanted to go to college, right? But going to college is very hard for them to pick and understand. And they don’t actually know the experience. So what we did is we actually designed an experiment and we went to eight different schools, very different schools: large school, small school, public school, private school, close, far. And ultimately, as we went to each school, I asked them about: what are the three things they really love about that school, what are the three things they really hate about that school? And out of it, they were actually able to build their requirements of what they wanted in college. But without it, the fact is, is they would have just fallen in love with the first one that came along, that was close enough. And they were able to manage the trade offs between scholarships and pedigree and they all went to different schools, and they all had different experiences. But in the end, it was a better match to their ability, and they all got through in four years, which is, for me, a big deal.

Another way is when I bought a house, I literally took the market and separated the market into different categories of homes and then different conditions of homes. That allowed me to actually understand that I was in a category two house, I wanted to move to a category three house, but I wanted to get a bad category three house and improve it so I could improve its value. And so it’s that whole notion of being able to understand the Senate as a whole, and then actually how the market moved over time. And so, as my wife would say: I tend to overthink things. But at the same time, people always ask how do i get so many things done. It’s because I can see that way. And to be honest, I can also manage trade offs.

Audience Member
Thanks, Paul.

Kirk Baillie
Great question from Kevin, do you want to ask it direct?

Audience Member
Yeah, I’d just love to know more about practising these things in day to day life. I’d love to know you go about that? For uncovering demand, for instance?

Bob Moesta
Yep. Yeah, on a day to day basis. Think about, “Okay, I have a meeting. How do I actually uncover the demand? What’s the purpose of the meeting? What’s the output you have for meeting? But what are the outcomes that are going to happen because of this meeting?” And so what you start to realise is people end up getting into a rut of how they actually run meetings. But when you take a step back and say, “What’s the purpose? And how do I actually understand the outcomes I’m trying to get to? You actually can run meetings better, and there’s a lot of stuff you don’t need to actually do. And so you actually become way more efficient at it. And so, I do this for meetings.

In meetings, I’ll do things like empathetic perspectives, we’ll have a conversation. And what you start to realise is there are people who actually use the same words, but they have completely different meanings to them. And so I have that notion of game-on game-off. And I go “Game-off for a second, what do you mean by that? What do you mean by that?” And you start to realise, they’re actually not even communicating with each other. And so part of it is to actually, to be honest, try to use it in small everyday moments. To figure out those things is – I think – the best way.

In prototyping to learn, what I’ll do is I’ll always build three alternatives that are very, very different, because contrast creates the meaning. And so if I can actually create three different ways to do things, I can actually get the team to be way more consensed around what we want to do, because they can eliminate what we don’t want to do.

I try to pull it into everyday life almost every hour, all the time. With my kids I do it with. My wife is not so happy so I try not to do too much with her. But at the same time, when we want to go on vacation, I’m literally trying to make sure I understand what she wants. So I don’t want to tell her where I want to go, I want to say why we want to go first, and then we can figure out where to go. That makes sense. So it’s about small, everyday things.

Audience Member
First of all, great, great talk. Actually, I love the breakdown at the top of the five key areas. That’s one of the most succinct descriptions of the stuff I’ve heard. What I’ve found over the years is, trying to teach this to people, it feels like we’ve got people out there that are really good systems thinkers and sort of naturally adjust into really understanding and absorbing all these things. I mean, Clayton Christensen has actually been at BoS before and I think he talked about himself and talked about how his work is commonly misunderstood. I’m just wondering if you have any specific advice or ideas on how to take the people who are not the system thinkers?

Bob Moesta
So that’s why I didn’t call it systems thinking, I really thought hard about calling it causal structures, because system thinkers is one perspective on the thing. And it’s a very objective way in which to look at what’s going on. But there’s emotional things and social things. So to me, the way I get system thinkers to be better system thinkers, is I actually help them go to prototyping to learn to tell me “Well, what are the variables we can change around the system that we can control? And what are the noise factors?” Or I help them say, “Well, let’s look at it from from the consumer perspective back to the system.” And so all of these have interdependencies between them. And so I think the fact is, is if you’re really good at one of them, and not the other ones, you’re almost myopic. When you do prototyping to learn, it’s really dominated by the statisticians, and they have a very strong view of: everything has to be statistically significant, and how you act and you’re trying to prove hypotheses. But the reality is, that’s not the spirit of prototyping to learn. It’s about, “Actually, I’m gonna run combinations, I don’t know. And I want to be able to very efficiently produce information.” And so you start to realise if somebody thinks you’re good at systems, I’ll go “Yeah, okay, great. Let’s talk about these other skills, because the other skills will make that skill better.”

Audience Member
Gotcha. Yeah. Thank you. And one quick follow up there. The people who are not the systems thinkers, though, what kind of gets them to realise you can close the loop on this whole.

Bob Moesta
Right, right. So that’s the causality part. So my thing is, the moment that they can have different perspectives, and then you can start to have in place things through time. Ultimately, you can then collapse the time into systems, because it’s groups of time and space that actually create this system. So to me, it’s that notion of being able to understand demand, understand perspectives, and how do I prototype? Well, I gotta have causal structures to do that. And so ultimately, most people who have a really good empathetic perspective typically, they start with almost like a photographic memory, they see things in pictures, as opposed to movies. And so once you move them to a movie, then they can move into causal structures.

Audience Member
Thank you. That was awesome, man. Thank you. Thanks.

Audience Member
Thanks, Bob. That was a great, great discussion. I was curious, when do you know when to stop experimenting? And when do you know that the unknowns you’ve got left on the table just aren’t worth investigating anymore?

Bob Moesta
Yeah. So I think that that’s where managing trade offs comes in, right? So that other skill of managing the trade, because you only have so much time and money and effort. And so part of it is that whole notion of, I look at prototype learning as a bet. And what can I really learn out of it? Dr Taguchi always used to talk about the fact that, engineers aren’t scientists. Scientists’ job is to find phenomenon and describe phenomenon, but not necessarily use phenomenon. And at the same time, they can go as deep as they want. But the reality is, we are actually a combination of a scientist and an engineer and a psychologist, because we have to actually understand all these different things. There’s tools we use – like I talked about yesterday – called the time wall, I’m like, “Look, you have to actually make something shippable within this time frame, and if you find something that you can’t do, you have to cut something out.” And if they can’t figure out how to cut something out, this is how a project that’s supposed to be six weeks turns into two years, because we don’t know how to actually make the trade offs and understand what’s really important and not important.

And so to me, those are the kinds of signals of “Okay, we need to actually teach them how to frame these things better so they can actually make those trade offs.” I was very guilty of this early on, of saying, “Oh, I need to do more, I need to do more.” And finally, you have no more money, you have no more time. And that’s more of the reality of entrepreneurs is they actually know what the resource load is. This is why I think Jason says the notion of ‘a kick ass half versus a half assed fool’ is, you end up making the wrong trade offs, and you end up with something that just doesn’t do anything for anybody. That help?

Audience Member
Yeah, thanks for that. It’s interesting, managing those expectations with a team of engineers and a team of other people and just bringing everyone along for the journey.

Bob Moesta
So the thing that we talk about is rounds of prototypes. And we talk about scoping rabbit holes, because every project has this thing that can suck all your time out of it. And so we try to identify and see what they are upfront. And then even though we have what we call ‘imagined tasks’, when we start, there’s discovered tasks along the way that we never budgeted for. And at the same time, we don’t know what to do with them. And we spend more time actually managing the unknowns as opposed to the knowns. The knowns are almost like: if you know what to do, then go build it. But the reality is, the reason why we can’t go build is because of the unknowns. And so spending that time to figure out the unknowns first and flush out the discovered tasks is really the bulk of the real work for most people who are innovators.

Audience Member
Yeah, totally agree. Awesome. Thanks. Thank you.

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