Turning failure into a learning opportunity for growth.
An interview with Don Schmincke about becoming blinded by the tools we use and making the best of entrepreneurial losses.
What happens when the tools we use to analyze and take control of our environments become the cause of our destruction?
Is your company using the tools they have at their disposal?
Or are the tools using you?
Our guest today is Don Schmincke an explorer, researcher, and partner with The Pacific Institute. He is also the author of Winners and Losers: Entrepreneurial Lessons from 30,000 CEOs on How to Come Out on Top, which teaches entrepreneurs how to win powerfully!
Our conversation begins with Don telling us how he went from almost dropping out of high school, to learning technology and ultimately strategy and leadership. While working at John Hopkins he began to find an astonishingly high failure rate in management theory – and he knew he could help.
Don goes on to explain the seduction of tools. Why we believe they can save us, allowing us to analyze and control our environments. And how we can easily fall to letting the tools use us because without altering human decision making through true transition, the tools won’t change the choices we make.
With such a high failure rate many might think diving into the entrepreneurial pool would be foolhardy. However, Don gives us hope by telling us about losing powerfully – taking the loss and learning from it, picking ourselves up and becoming stronger from it.
Three Key Takeaways
- It doesn’t matter how good your theory is if it doesn’t have a measurable impact.
- We get seduced by our tools because we think they will save us. But without changing how we think the tools won’t change the outcome.
- Formulation without execution is just a good idea on a shelf.
If you need a strategy to bring your thought leadership to market, Thought Leadership Leverage can assist you! Contact us for more information. In addition, we can help you implement marketing, research, and sales. Let us help you so you can devote yourself to what you do best.
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Transcript
Bill Sherman Thought leadership often means challenging the established order and saying, I think you’ve got it wrong. And for some people, it’s easier to step up and make that claim with confidence. Research, data and expertise all play a part in challenging the established order, but it goes deeper. Expanding your horizons, noticing what others aren’t seeing, and actually investing the time to reevaluate the things that everyone knows. That’s why I invited Don Shrinker, researcher and author of Winners and Losers, as well as partner with the Pacific Institute. In today’s episode, we’ll explore how Don has developed his questioning ability, his ability to notice patterns and his skill as a teacher and researcher. I’m Bill Sherman and you’re listening to Leveraging Thought leadership. Ready? Let’s begin. Welcome to the show, Don.
Don Schminke Thanks for having me.
Bill Sherman So I want to begin with a question for you. When you were young, say, high school or your early twenties, did you envision yourself getting into the world of thought leadership? Or where did you see yourself going?
Don Schminke I didn’t see anything like this. I was. I was in a rock band, so I thought, What the hell, I’m gonna do something great. And so I left the Grateful Dead and stopped teasing. And I went to so. It was more around. I started getting interested in technology. And this is back, you know, when computers were, you had to push buttons to enter code and some dating myself. And so I started getting really interested in science and engineering, and that’s kind of where it all began. But before that, I, I just, I just love learning, but I just I’m not saying I was successful at it since I was dropped out of high school, but I never thought I’d be doing this.
Bill Sherman So let’s talk about a little bit of that journey into the research. You said, okay, you started on the computer and the technology side, but you evolved into strategy, leadership, soft skills, which is quite a jump. How did that happen?
Don Schminke When I left M.I.T., I went to Hopkins and started doing work in a human grouping and how humans organize and administer. And that got me interested in and looking at humans and had automated back when I was an idea of Harvard automated, the Harvard and MIT biomedical lab ended, then getting published in that. And then I did some work at Pfizer Medical System. So I kind of got around exploring humans from a medical physiological perspective. But at Hopkins I was challenged by some students because I ended up teaching adjunct at there the executive MBA program.
Bill Sherman And you were teaching strategy and leadership, right?
Don Schminke Yeah, Yeah. I ended up teaching that. It didn’t start off that way. I was really looking at. I was experimenting with CEO groups and looking at what was working and what wasn’t. And that’s when students were saying, hey, look, why is it that we’re having such a hard time implementing these bestselling management theories? So as I did more research on the scholarly journals. There were millions of papers being published on the failure rates of management theory, and no one was publishing that. So I thought, well, take a look at this. And I started using biology, evolutionary genetics and ancient studies to see if there were any common patterns. And it was that’s where I started getting involved in leadership and culture and what drives higher performance in organizations because, you know, I saw a lot of theories and publications out there, and I thought they were wonderful, but the CEOs couldn’t produce any balance sheet impact. And I’m like, wait a minute, this is it doesn’t matter how great your theory is, you should be able to measure a bottom line balance sheet or piano impact and application. And they were all coming up short. And I’m thinking, this is not right. Something is missing. So that’s what started me off.
Bill Sherman Well, and that leads to the question, right, is the good idea that’s on the shelf not being implemented correctly? Is there a fundamental problem with the idea itself? And so where is the gap in that knowing doing gap, Right.
Don Schminke Yeah, right. Yeah. And I think a lot of it was when we started this is where the anther part, the anthropologists on our team really steered me in a different direction because we started looking at 5000 years of management theory and the failure rates of current management theory and started seeing that the we were getting confused by our tools and so.
Bill Sherman More on that.
Don Schminke Yeah it was it was interesting when I did the when I did high altitude leadership with Chris Warner, we were I met Chris climbing in the Andes and he was going to go off to do this NBC special on it on his third attempt at K2, which is the Death Mountain. I mean, that’s ten times higher on K2 than Everest, because it’s a vertical climb. It’s not a hike. But in the process, he had he had pulled dead climbers off of mountains many years. And as we were doing this research on humans and death zone environments above 8000 meters, I started noticing that that the dead climbers were clutching their tools. In other words, there was something about our tools. We get very seduced, too, because I said, Chris, you know, I see dead companies. Same thing. You get dead companies are clutching their tools and, you know, their systems, their programs, their the processes. They’re using their new software packages, whatever they’ve got, and they’re dead. So I said, what is that? What are we missing? And it would lead us to look at tool seduction in a very serious way, which then further research exposed that we get seduced because we think tools will save us. And it’s an issue for safety. In other words, the human instinct, like most animals, want to be safe. So we think we can be safe by controlling the world. And so we use analysis to understand the world so we can control it more. And they develop the tools to help us do that. And that’s all really great because a lot of tools to help us survive. A lot of tools keep us safe. A lot of tools work. But when we get seduced by them, then we forget, like, why are we doing this? And so a lot of dead companies weren’t really using their tools. The tools were using them. And this led us back to the anthropological dimension to look at what’s why is it that we throw tools at problems, a bunch of books, a bunch of TED talks, a bunch of trainers, a bunch of coaches. At the end of the day, you still get at that company. And it turns out that until you alter human decision, nothing will really, really change. And throwing tools at a problem doesn’t alter human decision. It doesn’t alter human behavior. What really alters human behavior is the transitioning of beliefs. In other words, belief management is the missing piece. If we did it from that angle, we have much more success. And that’s what we ended up doing well.
Bill Sherman And I think one of the things that may be hard, but also necessarily true and if you’re practicing thought leadership is the most brilliant framework, the best two by two diagram for a as a consultant, etc. isn’t going to change the world on its own. You have to cross that gap to get to the people who need it, get them to adopt an idea and then say, How does this impact and where do I use it effectively? And if you cannot cross that gap and you leave that chasm unfilled. You’re not going to create impact. You’re not going to, as you said. Be measurable on the bottom line. Yeah.
Don Schminke Yeah, yeah. So I think if we when we started looking at resurrecting failed change programs and redoing how strategy was occurring in a corporation, we started measuring 2 to 3 times sales growth, sometimes ten times their sales within a few years. So by seeing the sales increase so rapidly and dramatically, we knew that we were on to something. And that’s what ended up evolving into, Well, you know, what we have today and we’re still learning, we’re still experimenting and making mistakes, but the models are growing well. So today I train about 700 CEOs a year and in the current state of this framework, and that’s good because it’s a good testing field. CEOs are cynical and they’ve seen every read every book, seen every speaker. So for them to come up and say, wow, this is different and then see them apply it and then call me back and say, here’s what happened, it’s great. So I’m just having a lot of fun learning more and teaching it.
Bill Sherman So you alluded to a framework that is evolving and growing. One of the key components of that framework and how has it evolved over time?
Don Schminke The components. I think it has to be a has to have a component of being applicable like a like immediately, in other words, to directly impact a concern or an issue. So if I’m an audience of CEOs, I’ll say, okay, well, what are your main issues? Or let’s keep, you know, awake at night and, you know, I’ll get a dozen different things that that’s a problem. But being able to then say, okay, let’s take a look at your world now and let’s look at this framework here. How would that impact that? Or have you been doing this or actually going in and implementing it personally? We begin to see that application is really, really important. And it was more than just knowledge because initially I was I was I was somewhat arrogant, I think. I just thought, well, this is great thought leadership, This is great. I want to teach you why findings and it’ll change the world. And it was.
Bill Sherman Just coming down from the mountain. I bring you these commandments, right?
Don Schminke Yeah. And it was all bullshit. I mean, I mean, at the end of the day, if I was working it in the system, we can make it work. But it wasn’t something that I was teaching properly. So I began to look at elements of, you know, you need to test it yourself. You need to be willing to lose money, you need to be willing to fail. You need to be willing to just really make sure it works. And then it has to be taught in a way where people can apply it. Like, what are the case studies that prove this works? What’s the medical science? So and a lot of our theories, we have the biological and medical reasons that even go back to, you know, human evolution. Here’s why it works. So it becomes blindingly obvious. It’s not something somebody has to study. It’s like it’s like a head slap. So, you know, I wanted to teach head slaps.
Bill Sherman Like. Right, right. Well, and what I talk about that is when you have an effective idea, someone goes, Hmm, I haven’t thought about it that way before. I haven’t heard it that way before. But you got me interested. I’m not even sure I agree with you, but tell me more.
Don Schminke Right.
Bill Sherman And that permission to tell me more opens up a new conversation in someone’s mind to say, okay, I’m going to evaluate this, but let’s figure this out. And one of the things that for a head slap in some ways to me when we were talking about some of your body of work was the concept of losing powerfully. Right. We’re they’re almost antonyms by nature. Right, Right, right. It’s like, well, if you lose, how do you do it? Powerfully. So why don’t we spend a moment there, unpack that, and let’s use that as an example of, like you said, that aha moment.
Don Schminke Yeah, that’s funny you mention that because since we spoke, the book has is being released winners and Losers and it’s it’s in that element and doing the research because I had I had people come up to me and say, well you know, you’re training all these CEOs who trained about 30,000 or more and but what about the entrepreneur, sort of the people starting out? What about that? And I’m like, well, you know, we’ve got, you know, a million books out there for entrepreneurs and courses and they say, yeah, but there’s not millions of new entrepreneurs, right? So I thought, okay, I love failure.
Bill Sherman Rate on that is abysmally bad. Yeah.
Don Schminke Yeah, you’re right. And so I thought, well now that’s a challenge because what an interesting area research is. I love researching for failure rates and as I started looking at successful entrepreneurs, there were a lot of books written about, you know, what they did right and how they did this, how they did that. But I when I dug deeper, I found out that they were at the end of a string of failures and no one was publishing that, you know, you know, like Richard Branson, like one of the most famous write and he’s there in the league. And you know, what happened to Virgin Cola like that didn’t work as cars couldn’t rev up his Virgin Digital then Now there’s like a dozen failures. But I want to hear him talk And he held a they talk about as most entrepreneurs will they’ll say yeah we screw this up. I feel that there’s a bit of that. So what I began to realize that we have a lot of books on winning, but not a lot of books on losing. And I think we need to teach how to lose powerfully. In other words, if you want to be a great entrepreneur or intrepid or in a company, you have to follow a certain path where you’re not avoiding losing, but you’re using losing for its power. And its power can be and shifting your beliefs. This power can be, you know, uncoupling what you thought was, you know, going to work. You realize now it can fail, but also a learning. And so it all comes down to the piece of learning. And I found that for entrepreneurs, it wasn’t just because, you know, we have a lot of books out there won’t fail fast and do this and it and that’s all great because these are. Or, you know, usually came out of like the high-tech industry. You know, you got to feel fashion. Clemens is failing that way. It’s a little different than failing as an entrepreneur because feeling that way is you have like a somber team meeting. Well, our project failed. What did we learn? You know, and then you go to watch an entrepreneur just lost their house. Yep. You know, might have lost their marriage, might not have seen their kids. Their whole life is collapsing. That’s a little different than having a sad team meeting.
Bill Sherman May have recruited team members who are close to them and convinced them to leave security and they feel personally responsible. That list of burdens just keep adding up. And that mental voice of I failed, right?
Don Schminke Yeah.
Bill Sherman Can be devastating.
Don Schminke Yes. And it was in those moments and in the book, I hopefully make a pronounced enough is do not run from those moments, because those are the moments. Those are the moments where you can now learn to lose powerfully and you rise up stronger. And that was a pattern. We we saw all these entrepreneurs over success. What was in those moments. They pick themselves up and were stronger. And so I think we should teach that.
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Bill Sherman And you make the point that you said, Hey, this idea and this book came about because you said I thinking think we’re teaching entrepreneurship wrong in this regard. Right. Yeah. Yeah. So there’s a little bit of a burr under the saddle for you to go. Let’s flip how this is being taught and how it’s being considered. Instead of getting everyone to think about chasing the big win, the IPO and the exit and everything, it’s like, no, be ready to lose because you most likely will. But that’s the tuition you’re paying for the lesson.
Don Schminke Yeah, that’s like if you’re not willing to take that journey, then don’t take the journey because it shouldn’t be for everyone. You know, we don’t want to have too many entrepreneurs. We have a world of chaos.
Bill Sherman Yeah. So I, I want to circle back to a question and just something that you stated and I want to ask a question. You said I started studying failure rates. And given your background in engineering, I think there may be a connection there between the two. Because if I remember right, early in your career, you were looking at guidance systems on missiles versus now failure rates of entrepreneurs. And the connective tissue is why did this go wrong? So let me ask you, is that a lens you use to look at the world?
Don Schminke You know. Interesting point you’re making, because I never thought about it as something that purposefully came out of that. But I think you’re right. I think yeah. And as we went through and studied failures, I mean, that happens naturally in engineering when you’re, you know, developing new designs. I mean, I’ve seen nuclear missiles go on, cartwheels on in front of my face. And so you learn a lot from those failures. And they’re very expensive. So that may be where I was kind of used to it. So when we, you know, flipping entrepreneurship around was just one angle. We had so much support from a lot of brilliant people and CEOs. So when we when we flipped how strategic planning occurs that came out of that approaches by how when we when we flipped how leadership occurs it came out and it’s what CEOs are like is when I’m doing these workshops it’s like, oh my God, this is like the opposite way of looking at it. But it makes more sense. It’s evidence based. It’s got scientific and ancient support. So it really becomes really fun as a teacher because I, you know, we’re flipping a student’s mind, and that’s always a fabulous experience for a teacher, you know, to see that happen with a student.
Bill Sherman Whether it’s in the formal classroom or you’re working with adults who are leaders, that moment where you can see the light bulb come on is absolutely the pay off on your typical who’s guiding. Yeah. So. You’ve reached from a number of different fields you’ve met, mentioned the anthropological perspective, you talked about neurology and that you look at things in a much more broad and inclusive way and saying, What does this bring to the topic at hand. Yeah, that that come to be have ADHD, but it allows you.
Don Schminke So it’s easy.
Bill Sherman To spot things and say hey, this may connect in right.
Don Schminke Yeah. Yeah. And as I ran into a lot of scientists and entrepreneurs, I mean they were, they had the same affliction, which is interesting because I don’t think it’s a deficit. The more I see research come out and I talk to some brilliant people that are like scientific in this area of looking at this pattern. And it’s almost like there’s never it’s not attention deficit. There was never a deficit. There’s almost an attention overwhelm, you know, in other words, there’s too much attention. And to, you know, somebody might focus on two or three things. We’re focusing on 300 now that it sucks when you’re trying to have relationships and things like that and a family. But it really when you’re looking at research, it’s helpful to pull together hundreds of different points to see where the intersections could be or test them. And so that’s why a lot of entrepreneurs can take a risk so willingly, because they’re seeing the world in a way that others aren’t seeing it, but they’re feeling their way to this possibility. So for me, like when we like and it was interesting when we flipped strategic planning around because the strategic planning failure rates are so high, we started looking at the autopsies and we started seeing that the companies that were rising up weren’t using analysis. That’s a total flip, right? I mean, because that was part of the problem when I was teaching at Hopkins and the graduate school was teaching analysis, I was teaching analytical models and pricing analysis, market analysis. SWOT analysis is a dig at SWOT analysis. And it was all bullshit because at the end of the day, somebody that company said those things. Mm hmm. These other companies that rose up from nothing and all the experts said they’re never going to make it, but they ended up rising up and dominating the market is they had intuition. There was something about shifting other beliefs again, that allow the two things. So when we started applying, that company started taking off like crazy. So it’s a matter of taking all these disjointed areas of science and engineering and history and philosophy and experimenting with how to alter how we are approaching leadership and the evolution of companies. And it was never a plan. It was just sort of a normal, fun exploration that I made a lot of mistakes and learned from them. And then and having some great CEOs around me. I mean, it was just I never had a problem, fortunately, to get, you know, a dozen CEOs or more to join up. I never had a problem finding brilliant people to say, hey, can you work with me on this? So I’ve been really privileged and grateful for all the help I’ve gotten from very disparate areas, everything from sociology to anthropology to, you know, physics. I yeah, that’s what happened. So. But was it a plan? No, it just emerged.
Bill Sherman And there’s beauty in that, right? But you have to be, like you said, open and receptive to it and to be able to see. Here’s an insight that may have applicability to a problem that I’m trying to solve, which is exactly like when you’re talking to a CEO or an entrepreneur, the same sort of thing. And so I would argue in many ways, the practice of thought leadership is not only going deep in your area, but being able to scan environmentally across and say, where are the insights elsewhere that help me understand the problem I’m trying to solve in a better way or gives me a better tool to move forward?
Don Schminke Yeah, and I think that’s and that’s it. And if you’re not open to it, you won’t see it. I like, you know, how I had to leave the university system and fund my own research because it’s difficult to get money to say I’m going to do an expedition somewhere in Southeast Asia. Africa. Well, why are you going? I don’t know. What are you going to discover? I don’t know. You know how it like?
Bill Sherman It’s like I knew what I was going to discover. I’d have written the paper already.
Don Schminke Right, Exactly. So in every one of these, you know, adds so many expeditions. I always learn something just because of what you said. I was just open to seeing what was going on. And you know, how we teach wise leadership theory failing and then can we reverse that? So I might be in a tribe somewhere. I may be in a lost civilization in the Himalayas. I may be like I visited a 10,000 year old tribe in the Atlas Mountains in Africa. I learned something about us as a species, but also how to teach leadership differently. And then we start applying it. And because, you know, if it’s bad news, I’m just going to or it’s not going to work, I’m going to want to hear about it. I’m going to have a hundred CEOs say, Hey, that’s screwed up.
Bill Sherman Good idea, but not for us. Right? Exactly. Yeah. So as we begin to wrap up, Don, I want to ask a couple of questions. And the first one being. Now that you’ve been practicing thought leadership as long as you have. What advice would you give your younger self? And the reason I ask is many listeners here are starting out on the journey rather than having spent a career. What do you wish you knew or what would you tell yourself?
Don Schminke Oh geez, we don’t have that much time. But I mean, you know, it’s different. There’s two areas. There’s the formulation and there’s the execution. And of course, in the formulation, we’ve been talking a lot about that. But the execution part, I think, is important because otherwise it’s just us with a good idea. And I’ve got you know, I’ve had shelves of good ideas that went nowhere. And I think in the execution piece, we have to sort of give up executing, allow someone else to come to us to help with that. And that was a struggle I’ve always had, because if I’m if I’m executing, I’m not having time for a research and publishing and vice versa. So like, fortunately, what I did is I actually reached out to a thousand CEOs and actually one group came out the Pacific Institute, which is where I’m now partnering with them in this new book that we just released, Winners and Losers. And it’s interesting because they were started by Lou Tice, who actually is the guy 50 years ago who created the word mindset in the term Find your way. Like this all started half a century ago. And he did what I was doing by connecting with these brilliant scientists and thought leaders and all that to put it all together. So I’m sort of it’s been great by they now we are now looking at having me leveraged with some execution capacity beyond just me giving speeches and working with companies. And I have a small team, but this just takes it to a whole new level. So I think my first piece of advice says, hey, find that that capacity to leverage and scale what you’re doing, because if you’re spending that much time creating thought leadership, you’re really going to diminish that. If you’re going to spend so much time trying to run a business. So makes sense.
Bill Sherman Well, and there are two separate skill sets, right? The ability to look and say, what is the insight here and to craft and to polish that insight versus to understand how to design and run a marketing campaign or sell into enterprise. Those are things that, you know, as an entrepreneur, if you’re running a fall leadership-based business.
Don Schminke Yeah.
Bill Sherman Those are a lot of balls to juggle.
Don Schminke There’s a lot of balls. And my staff will tell you, you know, is just too many. And not that I haven’t tried. I mean, my mistake was I guess to build on that is I hired like four or five teams to take this on in the past, and they all failed because they weren’t at the level of thinking to take the idea and channel it. You know what I mean? Right. Right. So I had to fire them. And some of these are brilliant people. They weren’t stupid. It’s just that they didn’t get the concept. So as a thought leader, there needs to be that what they call it, that integrator. I think that’s sort of the chief of staff or whatever. They can take the pieces that can work and put them into scalability.
Bill Sherman I love that. And then the final question. You’ve talked about your new book, Winners and Losers, and we’ll put that in the show notes for people who are interested. Okay. My question for you is, who’s work in your field and you can to find out how you want do you think more people should know about and be reading?
Don Schminke Oh, geez. You know, I’m so grateful to so many people. It’s hard to add the all different dimensions. You know, the. That’s funny. That’s funny. Some of the people that I rely on aren’t really in the business area, but I probably should be like Dr. David Buss. Three revolutionized evolutionary psychology. Basically one of the founders, he’s now a left. Cambridge is now in Austin running a lab there. So he and I talk occasionally. Maybe I’ll do a book at some point. George Storch, who started the Lean manufacturing Revolution, I love hanging out with him. He’s just he follows my ideas. I’m following his he critiques my work. I love it. I love it. And so he’s written a number of Harvard Business Review papers. His new work on the OODA loop is fascinating. Look at that. So I. Wakeman, I mean, she came out naturally competent. She would never admit this, but society are so friggin comedy. She came out of sociology and transformed reality-based leadership is what her thing was. So, you know, we’re good friends, and I just feel like I’m just it’s just fortunate. I’m blessed to have people like that around me. But they’re all different eras, you know what I mean? Right? Right. One area just.
Bill Sherman Exactly. And what I like being able to do on this show is to expand people’s horizon, not only by listening to the guest, but one step beyond to say what are they reading, they getting inspiration from. So, Dan, thank you very much for joining us today to talk about your work. And good luck with the launch of the book.
Don Schminke Right? Thanks for having me.
Bill Sherman If you’re interested in organizational thought leadership, then I invite you to subscribe to the OrgTL newsletter. Each month we talk about the people who create, curate and deploy thought leadership on behalf of their organizations. Go to the website. OrgTL.com and choose ‘join our newsletter’. I’ll leave a link to the website as well as my LinkedIn profile in the show notes. Thanks for listening and I look forward to hearing what you thought of the show.