How the Geeks Redefined the Rules of Management

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1:13Welcome to Harvard Business Reviews, the new world of work. I'm Adi Ignatius, editor in chief of HBR. Each week on the show, I interview a CEO, a thought leader, somebody to inspire us, to educate us on the changing dynamics of the workplace. Our viewers come from all over the world, and they work at everything from Fortune 500 corporations to fledgling startups, from family businesses to nonprofits. The aim of this show is to give insights for everyone as they navigate this transitional moment in how we organize ourselves in the business world. So on tonight's episode, we have another great guest, Andrew McAfee, a principal research scientist at the MIT Sloan School of Management.

1:50I'll come back with a proper introduction for him in a moment. But first, let's hear from our friends at KPMG, this season's sponsor for the New World of Work. At KPMG, it's our people who make the difference for our clients. Talented teams leveraging the right technology to uncover insights that illuminate opportunity. Ready to make the difference together?

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2:56So on with the show. My guest today is Andrew McAfee, a principal research scientist at the MIT Sloan School of Management. His research focuses on how information technology changes how companies perform, how they organize themselves, and how they compete. He's a frequent contributor to HBR and is the author of the forthcoming book, The Geek Way, The Radical Mindset That Drives Extraordinary Results. The book is out in mid-November, but you can pre-order it now wherever you pre-order your books. So Andy, welcome.

3:27Andrew McAfee:Andy, it's great to be here. Thank you. Yeah, it's great to have you. It's exciting about the book. So I've read the book. It is a great read. It lavishes fulsome praise on geeks in business, not just for their technological innovation, but also for developing an approach to business itself that you've come to respect. So there's a lot to talk about. Let's start with definition. So how do you define a geek? Yeah. So I'm walking away from the computer-based definition of a geek, which was kind of where it started. And my definition is two-part. For me, a geek is somebody who gets obsessed with a hard problem and is willing to embrace unconventional solutions.

4:08Andrew McAfee:And for me, the patron saint of geeks is probably Maria Montessori, who about 100 years ago got obsessed with the problem of how do you educate young children best and came up with the Montessori educational method, which is this radical departure from the industrial scale model of schools that was dominant then and sadly still dominant now. So think about Maria Montessori when you think about a geek. Okay. So, okay. So there's a definition. And then how do you define the geek way that you're talking about in the book? What is the geek way? So the particular geeks that I got excited about that led me to write the book were not educational geeks like Maria Montessori.

4:45Andrew McAfee:They were business geeks. They were a group of people, you know, concentrated but not exclusive to the West Coast of the U.S., who got obsessed with this problem of how do we run a company in an age of really fast technological change and lots of uncertainty. When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications, and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a$75 sponsored job credit at Indeed.com slash podcast.

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6:00Andrew McAfee:Particular, how do we avoid some of the classic dysfunctions of the internet era? And the geek way is what they've come up with. It's the, you know, business model or the culture or the set of norms that they've settled on to try to accomplish that really hard goal. so if you're watching this if you have questions yourself for Andy McAfee put them in the chat we'll get to as many audience questions later as possible um okay so really you know the way you're defining geeks the way you're defining geek way I mean it seems to be I'm trying to think of other terms that that we might have used other coinages um you know lifelong learner but that's not quite it.

6:39It's sort of people who nerd out on, in this case, management, right? Processes of management.

6:48Andrew McAfee:Obsessive maverick is my preferred phrase for a geek. And the obsessive mavericks that I got really interested in were the ones who dove in, again, on this problem of how do we run a company and keep doing well in our markets and avoid the dysfunctions that seem to plague so many successful companies as they get older and bigger? How do we avoid those dysfunctions? How do we do something that's higher performing, more sustainable, and a better place to work? So as I read the book, some of those attributes you talked about, I mean, they had to do with speed, they had to do with experimentation.

7:25You know, is this just another term for being digital or for applying design thinking of the business? I mean, is that, are we talking the same thing here?

7:34Andrew McAfee:No, I don't think so. Audie, you remember Quibi, right? The Jeffrey Katzenberg-led video startup that was going to do short-form videos and was going to change the way we consume entertainment? Quibi was entirely digital. It was a completely digital enterprise. It was a miserable failure. They raised$1.75 billion. They shut down within 200 days of their launch. It was just a catastrophe. It was a completely digital enterprise. Netflix is a geek company. They follow all four of my great geek norms of science, ownership, speed, and openness. And I think their results speak for themselves. So geek for me is entirely separate from digital.

8:14Andrew McAfee:You can be a non-digital geek, and you can certainly be very digital and not geeky at all. Yeah, okay. I mean, when I meant digital, I meant more of a mindset than a product. So it sounds like, so the Quibi thing is an interesting example that I guess what was missing in terms of from your framework was the openness, right? I mean, that you had a powerful guy who had been successful, Kassentine, who wasn't listening to any evidence. to his peers, to his colleagues, to his advisors. He just didn't appear to be a great listener, which is this kind of archetypal, stereotypical trap that a lot of industrial era companies fall into.

8:57Andrew McAfee:And tech leaders also fall into this trap quite often. You become enamored of your own success and you really stop listening. It's incredibly common. And one of the things that I really think is powerful and that I respect about people like Reed Hastings at Netflix is he was able to build a business that got important decisions right when he himself was wrong about them. And in the book, I talk about a couple of them. He was dead flat wrong about the utility of downloading to the Netflix app. He thought it wouldn't be very useful at all. It's incredibly useful. He was wrong about the importance of kids programming for Netflix.

9:32Andrew McAfee:And he admits this in the book, No Rules Rules that he wrote with Aaron Meyer. But he successfully worked hard on building a company that would correct him, the boss, the high status, prestigious person at the top of the organization. It's part of this great geek norm of openness that I talk about. How do you build a company that will get it right when the person at the top of the org chart is wrong? Man, that's a hard problem. It's a hard problem. And I'm sure some people are going to read your book. When you need to build up your team to handle the growing chaos at work? Use Indeed Sponsored Jobs.

10:06It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications, and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a$75 sponsored job credit at Indeed.com slash podcast. That's Indeed.com slash podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed-sponsored jobs. Want smoother, brighter skin without adding another complicated step to your routine? Try Daily Microfoliant from Dermalogica. This exfoliating powder activates with water to gently polish away dull, flaky skin, leaving it feeling smoother and looking brighter.

10:46It's gentle enough to use every day, so keeping your skin looking healthy and fresh is easy. Ready to see the difference? Visit Dermalogica.com and use code SMOOTH at CART for an exclusive gift with your $65 purchase. I think, you know, hang on, you know, a lot of these companies we're talking about are not exclusively, but are, you know, Silicon Valley startups or somewhere in that realm. The popular perception, you know, I would say is, you know, these are not cultures that you necessarily want to emulate, that they're often, you know, male-dominated, broke cultures that you may have the boss frequently in these cases is a kind of overly demanding bully individual.

11:31So how do you square all this?

11:34Andrew McAfee:And there clearly is some of that going on in the Valley, right? There are toxic cultures. You mentioned the bro culture. I would say that Theranos is one of the most toxic cultures I've ever heard about was headquartered in Silicon Valley. So I don't think those are geek companies at all. They might be in the right geographic location, but they're not following the geek way, which is, again, about these norms and about creating a culture that is fast moving, free flowing, argumentative, autonomous, evidence driven, and pretty egalitarian. That's the goal of the geek way. Now, you point out some of these companies that I do think follow the geek way are still too pale, stale and male.

12:14Andrew McAfee:And I think that's absolutely true. The evidence is pretty clear on this. I hope that gets better over time. But you said something that I disagree with is that a lot of these cultures, that they're not good places to work. That's true in some cases. Remember when LinkedIn did its top attractors survey, I believe in 2016, they said, look, we're just going to look at objective criteria. We're going to look at which company pages get viewed the most often by LinkedIn members, which companies get the most interest from LinkedIn members, the most applications. And where do people stick around when they take their first job?

12:48Andrew McAfee:The top 11 attractors in the LinkedIn list were all companies headquartered on the West Coast in the industry that we loosely call tech. The geek culture is an extremely attractive culture to work in. So, again, if you have questions, viewers have questions for Andy, please put them into the chat. I'll get to them later. Yeah. So one thing I've always wondered is, you know, some of these, let's say, founders, entrepreneurs who got into whatever they got into because they wanted to make the world a better place. And, you know, Sergey and Larry in their garage trying to, you know, systematize our access to all the world's information.

13:34You know, these are sort of great ideals when they when they are actually running companies. You know, they not only are trying to run a company. Great. They become killers. You know, I mean, wanting to wipe out the competition to, you know, foster monopolistic practices to just grab up as much market share as possible.

13:51Andrew McAfee:Is any of this new? No, I'm serious. Were the businesses of previous eras cuddly? Did they want their competitors to succeed? Were they trying to rise all boats? Adia, I don't need to tell you that capitalism is an inherently competitive process. These companies are very, very good performers. If you want to use the adjective killer for them, I think that's by design. You're not in business not to succeed. You want to grow your market share. You want to grow your profits. You want to grow. That is often at the expense of somebody else. I think it's for the courts to decide whether they meet the definition of monopolist.

14:28Andrew McAfee:It's a word we toss around a lot. I think the courts so far have tossed out a lot of the recent lawsuits against some of these giant tech companies. I don't think they meet the definition of monopolist. I think in general, for a lot of these companies, the competition is one click away. And is Tesla a monopolist in the auto industry? You simply can't make that case. SpaceX has become pretty close to a monopolist in the rockets and satellites industry, but they didn't start that way. And they've become so large and influential because.

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16:00Andrew McAfee:They do the job better. All right, so let's talk about companies that are doing it right. As you say, this is not universally for digital companies. Some follow the geek ways you've laid it out. Some don't. You mentioned a couple, you know, So, or maybe a different question is how many companies, large, small, digital, otherwise, live into these principles, do you think? I think that's a really interesting question, and I don't have a great way to answer it yet, because the only way that I can think to answer it is to administer a survey to everybody and get them to fill it out. That's just not going to work.

16:34Andrew McAfee:They're not going to fill out that survey. But you can look at what we know about the cultures at these companies. You can also look at the fantastic Culture 500 research that Don and Charlie Sull did, published in a competitor magazine of yours, Sloan Management Review, where they grabbed all of the LinkedIn reviews and they put them through a machine learning analysis to see what companies' own employees said about them. And the three areas that I was most interested in were execution, agility, and innovation. And wow, the scores for companies clustered on the West Coast, clustered in Silicon Valley, clustered in industries that we call high tech, those scores are off the charts.

17:18Andrew McAfee:There's not any real competition for them. So there's something brewing on the West Coast in industries that we label high tech for reasons that I don't like very much. There's something brewing that's new, that is different than what's going on elsewhere in the economy. And that's pretty demonstrably powerful. The label that I hang on that is the geek way. So was Steve Jobs a geek and did his Apple follow the geek way or was that a different model? And Jobs has some really classic non-geek characteristics. He believed that he knew best, right? He had a very, very large ego. He also screamed at his subordinates all the time, which I think is absolutely not what an open leader does.

18:00Andrew McAfee:However, I interviewed Eric Schmidt for the book, and I brought this up to him. And he said, look, I was on Apple's board for a while. I knew Steve pretty well. He said Steve was a tough person in all those ways. But he learned that if you want to stay on top, you have to listen to the people around you. You have to stop thinking that you have all the answers. We see a really clear example of that with the App Store. And Audie, like you probably remember, Jobs did not want to open up his beautiful, perfect walled garden iPhone to outside developers. He had to be talked into it. He eventually realized that he was wrong about that.

18:33Andrew McAfee:So there is a little bit of that openness going on. One thing that Apple is pretty fanatic about, as I understand it, is they make decisions based on evidence. And whether or not that's a huge A-B testing infrastructure is one thing. Apple loves to demo features and gets everybody in the room to look at this and say, for example, is it better to have blurry portrait photos where you can adjust the blur before you take the picture? The instant they did a demo, they had the answer to that question. They did not sit around and argue from their different points of view. they said, okay, let's run an experiment.

19:07Andrew McAfee:Let's do a demo here. That's an extremely geeky approach. I mean, one of the interesting things about jobs, and certainly something he would say about it, he would have said about himself, he did say about himself, was that he didn't and that one shouldn't slavishly follow the focus groups, that people don't know what they want. So in a sense, yeah, the data, but not necessarily. And a combination of let's get input, but there is a lot of kind of personal touch, personal feel. It's like it's sort of like money ball versus the old school. And maybe the answer is a combination of skills. Absolutely.

19:42Andrew McAfee:And Ted Sarandos, who's the co-CEO of Netflix, says our decision making is pretty algorithmic. It's 70-30 algorithmic versus human judgment. But he said, if anything, the human judgment is on top, if that makes any sense. And I think that makes a ton of sense because this norm of science that I talk about in the book.

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21:00Andrew McAfee:Book and that the geeks are pretty passionate about. It's not just dry analysis and do whatever the data says. That's an inaccurate caricature. Science is about settling arguments with evidence. It's a ground rule for how you're going to come to a decision. You're going to do a test. You're going to do an experiment. You're going to sit around in a group and argue about it. And if you can't agree, what evidence is going to settle this issue? Science is this inherently deeply social, deeply argumentative process with a ground rule. Evidence is the queen here. That's what we're going to follow. And a lot of the geek companies that I respect do that as naturally as breathing.

21:39So one of the examples in your book of geek culture triumphing is Microsoft. And specifically, you know, when Satya Nadella came in and kind of rekindled that early success and more. Talk a little bit about what he got right, particularly in the framework.

21:57Andrew McAfee:Adi, can you think of a more impressive corporate turnaround story in living memory? No, Microsoft went from the tech company we liked least to, you know, maybe the one we like best. And if you were an investor, you really didn't like it for about a decade. The stock price was flat as a corpse's EKG. And then Nadella took over and it's become one of the most valuable companies in the world. It's an astonishing comeback story. So I got to interview Nadella for the book and he'd made brilliant strategic moves, a bunch of them. You have Microsoft embracing open source. Wow. But I was interested in the cultural changes that he made.

22:33Andrew McAfee:And he did a couple of things that I think are straight out of the geek playbook. Some of them are obvious. He embraced agile development methods as widely and quickly as possible inside Microsoft. He did a couple of things to reduce the sclerotic bureaucracy that was in place at Microsoft, which was just hamstring their ability to do anything important out there in the world. One of the brilliant things he did was say, look, you cannot own a digital resource inside Microsoft. You cannot own the data. You cannot own the code. And what he meant by that was you can't be the gatekeeper. You can't say yes or no to other groups who might want to use it.