Colin (00:01.57)

Hello and welcome to The Growth System, the podcast that looks at B2B growth through a systems thinking lens. I'm Colin Shakespeare.

Chris (00:09.016)

and I'm Chris Baylis.

Colin (00:11.39)

And today we're going to move on to the next dimension of our growth team operating system and taking a bit of a systems view of what lies underneath that. We're moving on from the last few episodes, we're really talking about, I guess Chris, sort of deep structural principles and what we call the orientation segment, I guess, of the growth team operating system. And now we're

kind of moving more towards the rubber meets the road and what we call operations. So today's subject is resources. Now that can mean a lot of things to a lot of people. I guess we're talking about the sort of strategic role of resources within the growth team. I wonder if Chris, if maybe you could dive into that a little bit and can expand on what we mean by resources here.

Chris (01:04.748)

Yeah, absolutely. So this is very deliberately the kind of first step in the kind of operations layer of the operating system. Because as anybody who works in any business knows, know, budget is important, but so is time.

and so are the many and various other assets that we use. So the resources dimension is really about how we invest those assets in achieving the outcomes that we've defined within the sort of...

orientation phase that you just mentioned. So, you know, how we're working towards our purpose, you know, how are we working within the realms and context of our values? How are we moving towards our strategy and the measurables that we've defined? And, allocating resources is obviously a big part of that, because, you know, allocating resources tells us what we've got to spend, you know, literatively and figuratively to achieve those things. And

When we start talking about resources, I think that we've already alluded to the fact that resources are not a sort of homogenous thing, that there are different types and they have their own unique roles and their own sort strategic implications. And there's plenty of kind of information out there.

lots of people have different views on these things as always but something that I've always quite liked in terms of strategic resource allocation actually comes from a book called Managing from Clarity. It's actually quite an old book, really difficult to get your hands on but yeah it's one of those, it's out of print and I think clearly some people like me

Colin (02:44.152)

Very expensive as well I noticed.

Chris (02:51.02)

agree it's still worth buying. So there's a bit of competition there. But if you can lay your hands on a copy, it's an interesting read, albeit not one for for late night before bed. And they talk about the sort of concept of tradable versus non tradable resources. If I knew what Elon Musk meant about things that were sort of fungible and non fungible, there might be a relationship. But but but ultimately, you know, what what they talk about there is

Tradeable resources being things that can be bought and sold or indeed just transferred on the open market. So these could be physical assets, it could be financial capital, could be technology, it could even be something like outsourced services. And they contrast against our non-tradeable resources, things that can't easily be transferred or replicated. So this could be as deep as something like structure.

or brand reputation could be kind of strategic customer relationships. But actually, a lot of what we'll talk about there is things like internal processes and employee expertise. And to some degree, employees themselves, albeit there is a sort of transition zone there into what can be traded, I suppose. And when we think about resource allocation,

it's pretty clear that there is a competitive advantage that comes from your non-tradable resources because they are the things that by definition can't be purchased, you can't be outspended on. You know, they are things that are intrinsic to you and they take a while to catch up with, whereas tradable resources, you know, if you have the assets can be acquired. So I think it's important to kind of have that view of the world and it kind of

contrasts, guess, with the sort of, I don't know, tangible versus intangible view. You know, similar thought process, I guess, but you know, physical assets, inventory, financial capital, versus the sort of intangibles of, you know, knowledge, and intellectual property, perhaps. So I think we think about these different classifications of resources and, and really

Chris (05:12.782)

how we think about those strategically and how we deploy those has a significant bearing on how we get towards our higher purpose and our strategy.

Colin (05:23.16)

So resources is a lot, I guess when people think about resources, we generally think about tangible resources or I guess.

Colin (05:34.19)

particular book, taking that particular view, tradable resources. But actually, think an important takeaway from this section is that, as you say, intangible resources are what really drives long term growth and resilience, but also requires sort of handling carefully with investment and sort careful management. And I guess probably in some cases, a kind of long term view, right.

Chris (06:04.068)

100%. And I think that long term view is really important because it speaks to something that I know we'll talk about later, which is how we manage and develop resources. I think as a marketer, when someone says to me, how are we going to allocate our resources, it's really easy to just hear, how are we going to spend the budget? And that is

of course, a big part of, of, you know, how we achieve things strategically in the Grace team, we've got to spend whatever money we have wisely, but we've also got to understand the system relationship between our metrics, desired outcomes, and our resources, which has obviously a bearing on what is achievable in reality. And

Whilst we will by no means dwell on budget in this session, I think it is worth pointing out right up the front end that a disparity between resources and the metrics that have been stated by the management team is a common systems issue that is encountered by a great many businesses sadly and one that we see all too frequently, particularly when new customers come to us.

Colin (07:23.052)

Yeah, indeed.

Chris (07:31.052)

So let's, shall we say, talk a little bit about the allocation then. Certainly in the sort of operating system view on resources, know, allocation is kind of what it's all about. How are we going to strategically deploy those resources to get what we want to get, you know, to get us to purpose, to get to...

the set of metrics and the strategic end game that we have defined within whatever period it is we're planning, typically a financial year. And of course, you know, this is the growth system. So I would be remiss to not use the word alignment, you know, within the first 10 minutes of the episode. And I think, you know, resource alignment is something that isn't talked about a great deal.

but it is one of the many, many things that need to be aligned to have an effective grade system. And it's also something that leads to significant inefficiencies, know, poor strategic execution, dare I say confusion is the sort of lack of alignment that comes from the way that resources seem to get deployed within a lot of organizations. And

There are two kinds of alignment, I think, in the context of resources, particularly, because they are about opportunity. And I think this is something that is worth mentioning at this point, that when we come to resource allocation, it's not just as simple as where are we going to put this whatever, this budget, this person to achieve our strategy, but what is the opportunity cost of that? And I think that's where alignment

is a really good mechanism for managing the sort of opportunity cost conversation. And on a previous episode, we talked about even overstatements. And I think that that that definitely has a bearing when we're talking about resource allocation and alignment. But the two kinds of alignment we think about would be internal alignment. So are our resources internally aligned to our organization's core objectives?

Chris (09:54.218)

And that sounds such a blindingly obvious one, doesn't it? you know, in a growth team, of course, what our objective is more leads, more customers, more opportunities, more relationships. So are our resources aligned to that? Well, almost certainly they are, but you need to dig a little bit deeper, I think.

And actually, one of those forms of internal alignment are the one I alluded to a second ago, which is, do we have enough resources to get us to the objectives that have been set by the organization? And that is a missing step that I think human nature, I don't know what it is actually, we must perhaps we should get a psychologist on the podcast at some point to talk about this one because...

I'm sure you've observed this, and I have observed this all too many times. When we go through the budget process, and we've talked about budgeting on the show before, I think we probably talked about November last year sometime, and what we talked about then was certainly this sort of phenomenon where...

We'll sweat and put a plan together and we'll submit a budget to management and that budget will tell us how we're going to achieve all of our goals. And hopefully if we've got our, you know, proverbial together, then we will have aligned that allocation, that request for resources to what is actually achievable. We'll look at the metrics we've achieved in the last year. And we will say, okay, well, if you want X, then you're going to need to spend Y.

And so often we then get kicked back and say, okay, well, that's very nice, but we actually need you to achieve 10 % more than that. And we're going to give you 30 % less.

Chris (11:49.098)

And yet, rather than saying, you know, no bloody way, we all say, okay, well, we'll just retweet the metrics, then we'll create a fantasy version where actually we've got to achieve double the performance we did last year to get anywhere near and that's somehow going to be fine. And we sort of exist in this fantasy land where someone's made a funnel in reverse that makes it just about work. And everyone thinks that, you know, hypothetically, that might be possible with the following wind and we try and do it.

And that is a lack of internal alignment in action there. Our resources are not actually internally aligned to our objectives. The other form is external alignment. And that is matching resources with market opportunities, competitive dynamics, changing customer needs. And this is a much harder thing to do because...

Many organizations I think are, it's to say, fairly introspective. They think about themselves and how they're gonna present what they've got to the market. They are not that good at listening to the market, to seeing the, we've talked about the sort of quiet signals before.

you know, the sort of changing market landscape. was, because I'm a sad individual, was musing on what's going to happen to Google to myself this morning as I was driving the children to school. That, you know, we have a customer that's trying to land Google as a, as a client. They're a good way down the road there. They're very excited to be, you know, dealing with a Fortune 10 company, you know, a sort of global powerhouse of an organization.

And yet to me, and I don't know whether you agree Colin, but it just seems like Google's maybe missed the boat a little bit on the sort of changing market dynamics on the sort of evolving customer needs around search because I don't know about you, but I do most of my search now using perplexity or chat GPT or something like that. What I don't do is spend a lot of in the sub.

Colin (13:52.174)

Yeah, there's a middleman between us and Google nowadays sort of thing. And I guess even when you ask a question to Google now, if you get a sensible answer, it probably comes from their AI from Gemini. And obviously that must be affecting the commercial model. If you think about what's really the value in Google Ads if everyone is asking the question of an LLM somewhere.

Chris (14:21.185)

Absolutely.

Colin (14:21.614)

So this and I feel like I feel like Google tried to take a step down I'm not an expert in this but I feel like Google tried to take a step in that direction with Gemini and it was a missed step like it wasn't it wasn't ready to compete.

Chris (14:33.412)

It was too little too late. mean, and it's not very good. mean, in my humble opinion, and hopefully Google's, know, defamation department aren't listening to the podcast, but I just, I mean, I just, you know, we are squirrel alert here, but I just even tried to ask Gemini to change something in a spreadsheet from US to UK English when he couldn't do it.

Colin (14:43.374)

Hahaha!

Chris (14:57.988)

And it feels like the market has shifted and Google hasn't shifted with it. And I think that is an interesting thing of around external resource alignment. They've been gazing in a different direction while the markets turned off the path that they were traveling down. And they've probably not aligned their resource allocation to the sort of competitive dynamics and to the market opportunity.

Colin (15:27.406)

Yes, guess really integrating all these sort sort of an internally aligned view of your resources and that crucial external alignment with market opportunities and the competitive dynamics and what the market is saying it needs is absolutely crucial. And, you know, it can be the difference between success or failure. I just want to

pull back to something and kind of zoom out a bit to something you said earlier about resource allocation. It relates back to something we said in the strategy episode where it's kind of about, you were talking about the opportunity cost of allocating your resources to somewhere, to a certain area. And that's kind of like what you said in the strategy episode about strategies, about deciding what not to do. And it got me thinking about the...

Yes, we've moved on to the kind of operations side of things here, but actually a lot of what we do here is kind of defined or influenced at least and shaped by what we decided in the structuring orientation segment, like in strategy and also in the purpose and values side of things. Like surely that is also subtly guiding.

Chris (16:51.0)

Mm-hmm.

Colin (16:54.902)

our decisions on how we deploy resources.

Chris (16:58.38)

Yeah, absolutely. think that strategy is a fairly obvious one, but or equally a huge focus in terms of kind of resource allocation and that sort of internal alignment view. I think that there is, you you're absolutely right. There is a sort of secondary internal alignment view here, which is does our resource allocation

actually align with our purpose and values. And as an example, I think that there are some, you know, dare I say kind of ethical components to this, you know, if we are a company whose, you know, core values are around sustainability, or at least we say to the market we are, then if we're not investing our resources in

green technologies, or if we're not restricting partnerships with certain suppliers that don't meet our kind of ethical standards, or we're not acting in a way that is aligned with that sort of core value of sustainability. Like, we have 50 offices around the world and we're making people drive into and sit at desks in them every day and have a massive carbon footprint because of those choices. Then we have an ethical kind of

quandary that comes from resource misalignment fundamentally. And because of that, we're kind of creating a brand issue. We have a kind of credibility gap, if you like, between what we say and what we do. And that does have a resource component.

I think also there is like a sort of prioritization lens that comes through this kind of alignment of purpose and values of resources that is around. I don't know, like let's use an example like customer centricity. You know, we're saying that, you know, we are all about the customer. The customer is the center of our world. Then surely that must mean that to be aligned with that value of customer centricity, then

Chris (19:17.438)

we must be investing heavily every single year into kind of client support infrastructure, whatever that means for us, whether it's help desks or, you know, client partners in our consultancy business as it is for us, or whatever that might be, it's around, you know, ensuring that we've got big old training budgets that are, you know, driving people to make sure that they've got the sort of

we would use the phrase mastery and we use the phrase mastery in the operating system to ensure that they have all the skills to deliver amazing kind of customer experiences. And that's one of those investments that

is easy to take a misstep on because the short term ROI on spending a load of money on training to give people great customer experiences is not direct ROI. know, it almost certainly can be measured in reduction in churn rate or, you know, a great referrals volume from, you know, clients that are raving about how great you are. But, it, you know, if you've got to make a choice, if you've got to kind of,

know, decide what not to do, and you've got a finite pot of money as every business does, even if you Google, then

you know, do you chase the ROI that's direct? Do you align to your values? I think that's quite a real quandary that when you say, well, if you're going to be customer centric, you've got to be, you know, investing in clients. Well, that's really easy to say, but are you actually doing that in terms of your resource allocation? And, you know, I think that's something to that needs to be considered.

Colin (20:56.738)

Isn't it the case that if you don't give that due consideration or you don't, I guess, achieve that level of alignment with your sort of values and purpose and how you allocate resources, then cynicism and cultural drift effectively weakens the system from within. And I guess the converse is true if you get that alignment right.

Chris (21:14.884)

Mm-hmm.

Chris (21:22.552)

Yeah.

Exactly. And this is something that I can't remember whether we've said in this episode, but we've certainly said, you know, many times before that system behavior is not what you want it to be. It's what it emerges from the way that you structure the system. And you that phrase, you use kind of cultural drift, you know, that, that's a, you know, quite a nice way of kind of saying, well, actually, your culture becomes what you do. And if you don't do what you say, then

there's no point saying it because your culture becomes whatever it is that you've prioritized based on your resource allocation. And that's why resource allocation, as much as sounds like really boring topic, fundamentally is the driver of a great many things in terms of the true structure of the system and therefore the emergent properties that you get from that structure.

Colin (22:14.19)

It's almost like a measure of alignment between those deep structuring principles and how things are actually done, right? Like how much did you put your money or your resources where your mouth is?

Chris (22:25.02)

Yes, you stole the words from my mouth there Colin, that's exactly the phrase I was going to use. Yeah, I think that's, yeah, we can sometimes disappear up our academic sort of fundament with these episodes. But yeah, there are so many phrases in life that really are about systems and resource allocation, you put your money where your mouth is. And that is exactly what we've been talking about there. So what next do you think?

Colin (22:28.428)

Colin (22:53.218)

Yeah, I guess the question that I have is...

Colin (23:01.622)

Maybe it's not a question. I think there's an idea or a perception out there that's kind of almost not usually explicitly stated, but an idea that acquiring more assets, more talent, more capital, in other words, more resources is a route to success. Like that sort of typical strategic thinking resource accumulation is on the route to success. What would you

Chris (23:27.341)

Mm.

Absolutely.

Colin (23:31.436)

What would be your take on that?

Chris (23:33.624)

Yeah, I think that's such an interesting one, because you're right, like traditional strategic thinking does emphasize accumulation of resources, you know, more money, more assets, more balance sheet value. that is driven by, what is that driven by? I mean, financial markets, investors, you know, the stakeholder view.

you know, the domination of kind of P and VC money in most organizations. You know, more and more is good, know, greed is good. And, and that is a, I don't know, was at the root of capitalism, you'd probably be better placed to answer that question than me. But so I think that sort of capitalist mindset, that resource accumulation mindset.

hugely prevalent and I think you could also say it's real life, you know, maybe there isn't an alternative view to that in a sort of capitalist commercial for-profit world, but I would somewhat challenge that being a strategic endeavour that trumps all else. And one of the things that I would say to kind of challenge that, and maybe it's not

it's not an it's not a or it's an and is the resources are a lever that you can pull to affect system change. You know, we talk a lot about system leverage often, you know, what are the levers we can pull to change the direction of the ship to change the immersion behaviors we're getting from the system. And if we

leverage our resources correctly, we deploy them in the right way, then we can, I believe, deliver strategic advantage, know, competitive advantage through the sort of resource leverage view versus the resource accumulation view. And, you know, that is really, I guess, related to kind of how we

Chris (25:48.874)

actually the mechanism by which we deploy resources to affect system change. And if you think about this as a byword, almost for efficiency, yeah, if we're using resource allocation to do things like break down silos, you know, I think that's a really, really interesting one in our world that

If you deploy a budget at an org level and you make people compete for it, which is fundamentally how most budgets are allocated, there's a finite pot, everyone puts their bid in at the auction and we see who wins in at the end. That is a really great way to break down alignment. And the sort of resource leverage view here could be that actually

in the gross team, if we give you one budget and you need to share that and you need to collaborate on that and you need to break it down as a team to get the best achievement of your shared goals as a team, because that has to happen in lock stack. think we're shared goal setting that if you then have shared goals and you have shared resources. And I think that that

There is a parallel there which is really powerful in helping you break down silos and drive kind of cross-functional collaboration because you move the competitive mindset and you shift it to be a collaboration mindset. I also think that in the world of AI that we are living in now and have already referenced in the episode,

The tooling that you use and the way that you enable your teams with technology to multiply the efficiency and reach of limited resources, I think is an interesting one.

Chris (27:54.198)

I'm not a great one for the sort of, you know, factory kind of, you know, black sort of dark satanic mills mindset of mechanisation and get rid of the people in AI being the next wave of that. But

But certainly there is a view of resource deployment. If you can deploy technology like AI intelligently, then you can use your resources more efficiently across the organization. If you can use tools like automation and integration more efficiently to drive more efficiency, should I say you can either deploy less.

resource to that, so you can use the method of allocation as the leverage point to then free stuff up in other areas. And in a similar vein, process optimization, streamlining the way that your workflows are deployed.

ensuring that you've got the sort of feedback loops in place to ensure that resource deployment is is kind of value driven. So we have those kind of All of those things kind of switch that mindset from just accumulate more spend more spend your way out of a problem growth at all costs and these things that now feel very 10 years ago.

to having a system leverage mindset. Okay, we've got resources. How can we leverage those resources to get the best overall system effect? And that was probably quite a long way of explaining it.

Colin (29:27.854)

Yeah, or if it could be super reductive, it's kind of not the size of your resources, but how you use them that counts. It's funny you used the Google example. It got me thinking that organizations that I've anecdotally observed really leveraging the resources at a more optimal level tend to be leaner organizations. This isn't just in the business world, but even in sort

Chris (29:36.875)

Absolutely another good one.

Colin (29:56.846)

geopolitics, state building, sports teams, all sorts of areas where I guess when you're much more acutely aware, because you have to be, of how finite your resources are, then there's a survival imperative, I guess, to leverage those in the most optimal way possible if you look at sort of small and medium sized.

countries or underdog football teams, Nottingham Forest this year in the Premier League or there's countless examples across life. then conversely, have a behemoth like Google in the business world that seems slow to react to the market needs or it's been in the news lately, lot of the inefficiency in the US federal government and staying away from the politics of that.

Clearly, very few other countries in history, if any, could even conceive of a situation where you're overspending $2 trillion a year, partly because there is a lack of a sense of how finite the resources are there, and hence less imperative to leverage those. So I think if it offers any words of encouragement to the listeners, you're probably more in this medium and sometimes small.

Chris (31:02.755)

Mm.

Colin (31:22.594)

business sort of segments, then actually there's probably an advantage to be leveraged there, knowing how finite your resources are.

Chris (31:29.806)

Yeah.

Absolutely about wishing to bang on about Google too much. I do think this is a quiet signal, maybe not such a quiet signal from the market that we're seeing out there in the external environment. Google, which was always held up as a forward thinking, agile, almost a byword for being something which was super intelligent, super smart, super ahead of the market, has matured to such an degree that it is down

I say looking a bit more like a legacy technology organization now. And that is something that they may course correct. It's something that they may wake up to and shake up. But yeah, certainly the paradigm through which we can view resource allocation has shifted. I was...

I saw a post on LinkedIn, was one of these, who knows how much you want to trust it, but I thought actually it made an interesting point as a sort of heuristic, if nothing else, that the benchmark at which you can now set up a business has changed through the sensible use of AI, rational deployment of resources, the reduction in requirement for headcount to take things to market,

increasing kind of personalization that's available and kind of the way that that has been democratized means that a business that might have needed a thousand customers to break even might only need a hundred now. And therefore, different markets open up that maybe weren't commercially viable before. And I think that should give a lot of heart, as you say, to small organizations that you can take the fight to the big guys, because if you're agile and you can make decisions fast, you can pivot the deployment of your

Chris (33:26.224)

resources quickly, you know, you've there are opportunities there to compete in a way that perhaps weren't there, you know, five years ago, two years ago.

Colin (33:39.646)

perhaps the giant, whether it's the United States or Manchester City or Google or whatever sort of field that we're talking in, that giant might not be able to compete the way that you can. You might be able to do something that they can't. You raised something that I'd quite like to dive into there, Chris, about how you shift your resource allocation. And clearly, we want to be proactive and predictive, but sometimes

you're necessarily reactive sort of shocks happen. And I guess in systems thinking, if we're thinking about rebalancing sort of one area, we think about how that might strain another, if it's not kind of carefully orchestrated, it'd be interesting to dive into that because, know, reallocating resources is something that we in our day jobs, guess, will be advising our clients on.

be interesting to dive in a little bit to some of the principles that lie behind how we do that.

Chris (34:41.035)

Mm.

Yeah.

I think there's a couple of things going on there for me in terms of that sort of, you know, resource deployment view of the world. One is really, I guess, obvious, maybe to us at least, which is, if you, we talk a lot about goal conflict.

and goal alignment and horizontal alignment of goals. And we tend to talk about that through the sort of goal setting paradigm, the behavioral paradigm, you know, people doing the right thing is creating the right system effect. But it is equally true in terms of resource deployment. If you have a notional, you know, million dollar budget, and you put

800 grand into marketing, which you know, we see startups do, then what you're doing there, potentially saying, well, actually, they're only 200 grand left for the rest of the business, you know, for R &D for product development for, you know, sales, maybe.

Chris (35:56.612)

If what you've got there is kind of resource allocation conflict, you've got a tidal wave potentially, assuming you've spent that money effectively coming from your pipeline generation activity in marketing, and it's going to smash right into your sales team who are going to be underfunded and understaffed who maybe aren't going to be able to close that. It's going to put a tidal wave of new customers potentially into your product if you're a SaaS platform and the infrastructure might fall over. So you've got to balance

resource allocation to match goal allocations. think that there is a relationship there. what I think is perhaps more in line with the point you were making is the what you might call adaptive or reactive resource allocation. So you spot a signal from a client or a technology trend or a

you know, some other sort of market signal. You know, you're a tech company and, you know, everyone's talking about this AI thing. So you better pile a load of money into making sure you've launched a bunch of AI features. Well, what's the impact of that? You know, have you taken that money away from the dev team that's doing crucial fixes? You know, have you just added to your backlog? You know, are you

somehow reducing your ability to do things elsewhere, but kind of more so than that, you know, what is the human effect? And I think that's an under-talked-about point, is that resource allocation and dynamic resource allocation sounds great.

at a sort of hypothetical business studies view of the organization. But what it doesn't take into account is the sort of human and cognitive impact of resource allocation. Because if you are a

Colin (37:53.454)

Yeah, I guess humans are not the cloud. We can't just operate as some elastic pool of

Chris (37:58.308)

spin them up, spin them down, but it's not even like the human job issue, where we're spinning down resources we don't want in one area, albeit that might be a factor. It's actually what I was thinking about is the, if you're a budget owner and you've got your plans for the year and you're set out and you're going after it, and then a hand comes down from on high, like,

you know, Monty Python, and it sort of scoops up your budget pot and takes it away and drops it to, you know, someone else in your middle management tier and says, actually, you're far more important than these guys, you have the money. You know, what does that do to the mindset of the team?

you know, are they going to be like, yeah, well, that makes perfect sense for the organization. So, you know, we'll just, we'll just kick back and we'll, we'll put all of our plans on hold and we'll just, you know, do whatever and worry about our jobs now that actually we haven't got enough to do. Or are they just going to get really despondent? You know, are they going to stop being concerned about what other teams do? Are they going to start?

resisting collaboration, are they going to start avoiding risk? Are they going to start hoarding budget?

Colin (39:14.786)

Gatekeeping management information is one of the key ones that I've seen, like not just gatekeeping, but also, shall we say, manipulating information. That's quite generous. In order to de-risk their own personal situation.

Chris (39:19.373)

Yeah.

Chris (39:32.108)

Exactly. And that is a way of baking in misalignment of driving a wedge between different teams in the org, because you're kind of creating a, what you might call a scarcity mindset. They're worried that it's always going to be taken away or that there's not going to be enough. And then they're going to start acting in a way that puts the wall up around their little fiefdom.

and tries to keep the budget barbarians away from the gate. And that's going to create some fairly substantial negative reinforcing loops in that part of the system that are going to propagate fear.

lack of psychological safety, internal competition and all sorts of other bad things are going to happen because you've cleverly dynamically reallocated your resources. So I think it's just coming back to that. You must always have a system view of the issue and the humans are the most complex part of the system almost inevitably. I think there's a flip side of that. If you're a sort of organization that...

invests a lot in cross-functional projects. You you sort of plough money into that stuff. You know, really

sort of foster a sense of shared success by the way that you structure the org and the way that you allocate resources, then you can do the opposite, right? Employees are going to start reciprocating with creative contributions across the org. They're going to start thinking in the big picture. They're going to start thinking about how they can think across teams. They're going to think just generally in sort of a cross-functional teaming way.

Chris (41:12.17)

so that they are going to really have a different mindset that's going to drive a different pattern of behavior that's going to, and we talked about this a lot I think in the last section around orientation around these kind of deep structuring principles and the mental model.

of the employees, of the contributors within your teams and resource allocation and the patterns that individual contributors see around resource allocation, the, you know, putting the money where your mouth is, walking the talk, whatever phrase you want to use, that is going to have a direct impact on the mental model they have of how the business operates and it will directly impact their.

way that they respond to situations. So I didn't want go back to deep structure, but it's kind of everywhere.

Colin (41:59.65)

Yeah, yeah, yeah. We promise, we are slowly moving on from deep structure. Something that I've been thinking about as you were saying that is that this little part of what we're talking about, resources, got me thinking that it's not just about a data point, like as in this is how many of this resource we've got and this is how much of that resource we've got. There's another harder to measure element there, which is about the perceived

so a resource climate. When you went into the scarcity mindset, I was getting horrible flashbacks about being in that of circle, the wagons situation. And very occasionally, say current situation is probably one of these, of being in the converse mindset to that. it's super important to think about that perceptions here, which is a little bit harder.

and requires a bit more deeper thought in a collaborative environment than just some data points.

Chris (43:06.818)

Yeah absolutely and

I think that that's probably got a relationship to the fact that it's easy to perceive resources as static in organizations. And to some degree, we kind of propagate that myth of static resources in the way that a lot of organizations are managed. You you have your budget for the year, and that includes how many people you can have and, you know, how much cash you can spend and

I don't know how much engineering resource time you can have, whatever it might be. We tend to plan in a long range view and I'm not against that. But when we think specifically about resources, resources are inherently by their nature dynamic. They change and evolve over time. Whilst the budget review which drives the human capital view,

appears to be static. In reality, it's not because everybody has targets, you know, budgets are predicated on targets being achieved. If those targets aren't achieved, you know, the available resource goes down and has to be reprofiled. If we overachieve on those targets and essentially, and then potentially there's an accumulation of additional resources yet to be deployed and maybe that's deployed to shareholders, but you know,

Fair enough, but I think that what we can also consider here is actually those kind of intangible, non-tradable resources here to come back to that thing we talking about at the start, something that I observe, and then think potentially because we are in a consultancy business, what we sell is our knowledge and our expertise that

Chris (45:08.256)

If we think about kind of knowledge as a non-tradable resource, well, knowledge grows through experience. You know, it grows over time, invariably because experience and time are tightly coupled as concepts typically. You know, they grow through feedback and getting stuff wrong. It grows through our product innovation and our product development. So...

The things that we know how to do as an organization are inherently not static. That should be an accumulating pool as it's non-tradable over time. And that is something that has a direct relationship, of course, to deployment and backup to strategy. And I think that's something that is easy to miss in the melee of long range planning that

At the end of this year, we probably know how to do a bunch more stuff than we knew at the end of the previous year. And that might have an impact on something like pricing. It might have an impact on something like service portfolio. You know, the way that we bring

through resource, know, through tradable resource allocation, money in hiring people will have a direct impact on our non-tradable resources. We might have hired someone that knows how to do something no one else in the org knew how to do before. So the way that we kind of consciously reassess our portfolio of resources and how we leverage that, you know, coming back to the leaver's idea to create strategic advantage needs to be something that's based into the workflows of the organization. And we'll talk about

in the next couple of weeks.

Colin (47:00.876)

Yeah.

There's an area that I think that we should cover. I know we're running a little bit short of time, an area that we really, really should cover is more about velocity. In a nutshell, it really matters how quickly you can reconfigure your resources into a particular direction. This actually reminds me again of a kind non-business example, which is really around something that's been in the news a lot recently, which is European defense.

And there's this tendency from analysts to put up a bunch of data points and say, well, look at the strength of European security forces. Look at the numbers and how many, I don't know, tanks and artillery pieces they have or something like that. What really matters though is if, say, for example, in the case of European defense, if you had to move those resources to the Baltic states, do you have the capability in two weeks, do you have the capability to do that? Well, no, we don't.

We can't do over land and we can't do it over the sea. So in actual fact, it doesn't really matter that we have all these resources that in theory you could redeploy somewhere else because simply we don't have the ability to reconfigure those resources at sufficient velocity. And that's the major strategic problem. Now know that's a non-business example, but it's just something that's, I guess, a cogent example that's really being talked about a lot at the moment. But from a business context, I think it's...

directly relevant as well. Ultimately, a competitive advantage is going to go to those who can pivot more quickly.

Chris (48:40.483)

Yeah.

Yeah, 100%. I mean, that kind of comes back to our Google example. Google has perhaps proven that the speed at which it can shift its resources around the org is perhaps not as fast as it could be, should be. Maybe that was a signals issue. Maybe it just didn't see it coming. But maybe it did see it coming, and it's about to launch something next week that's going to blow over out the water. Who knows? But actually, yeah, the speed at which you can kind of shift and pivot

is something that has a direct impact on your kind of strategic, you know, the ability to achieve your kind of strategic goals to deliver on purpose. I think that the velocity, as you said, the kind of the ability to reconfigure and address new challenges is something that is

intrinsic to the op rhythm to the kind of operational structures within the organization and and I think that I will keep my powder dry on that one until we start talking about structure and authority in in some future episodes but but yeah I think it's a really important point.

Colin (49:59.542)

Yeah, OK, OK, that's fine. We'll keep our powder dry on that one. But I definitely would like to return to that later in the series. I'm sure we will. What about in that case, then, a little nod to the role of, and this is one that's directly relevant to own personal experience, the role of leadership and authority, I guess. I don't want to step on the toes of the authority themes that we might cover later.

Chris (50:24.184)

Thank

Colin (50:26.764)

Really specifically around resource management, like how do you see the role of leadership there?

Chris (50:34.5)

I mean, I think that is the role of leadership. Ultimately, I don't think that's a role. think that's probably the role is kind of resource management and resource allocation because, you know, we've got a

as leadership teams ensure that we are investing in the things that are going to get us to our goals and get us to our purpose. And we're deploying those things in a way that gives us the best opportunity of doing so. And I think that the advice perhaps I would give here if we want to frame the point that way is that the efficacy

of leadership in resource management and resource allocation really comes down to recognising the difference between tradable and non-tradable. It's not all about the financial metrics and I think that's a really, really key point that's really difficult to see beyond.

particularly in an organization with lots of shareholders that are really only really concerned about the financial metrics. Not all critical resources show up on the balance sheet. So we've got to have a broad view of resource allocation. I think also that there is an importance in investing in kind of long-term capability. So I mentioned kind of people and mastery a little bit earlier on. think that

investing in putting our money where our mouth is, know, focusing on culture, focusing on values, focusing on development of people, you know, investing in knowledge and mastery as a resource, you know, investing in innovation, you know, that is all long term view stuff. And I think that it is proven to be more impactful than kind of short term.

Chris (52:38.276)

you know, asset accumulation focus. And I think the other thing in terms of leadership actually is, I don't know, creating a mindset of resource consciousness, I guess. I used to work a great many years ago for Jaguar Land Rover. And I don't remember any of their values, but for some reason, one of them stuck with me.

which was treat the organization's money like it's your own, spend the organization's money like it's your own, perhaps it was, but this was at a time I was working for them when they were the absolute smallest premium manufacturer by a country mile, they didn't really have a lot of money and they sort of encouraged employees to think about how they use time.

and money, you know, to achieve what they wanted in their role. I think that that sort of it reminds me a little bit of the sort of, you know, we were talking about the electricity meters being in the hallway example, I think that was last week. You know, I think that if we share information, if we kind of create a resource conscious culture within the organization, then we can share the burden of

sensibly allocating resources. We can almost make it a structural principle. We can make it part of the mental model. And we can then say that actually the leader is not just purely the leadership team's role, it's the whole organization has a resource conscious view. And if you then

seen to be sort of walking the talk in terms of investing in the long term of having that tight alignment to some of those deep structuring principles and kind of seeing beyond the financial metrics, whilst of course, you know, recognizing the financial metrics need to be where they were, then, you know, then I think you're doing good jobs, a leadership team in managing resource. I think I'd probably also just say a word, perhaps in a more practical sense around kind of leadership and resources is that

Chris (54:45.112)

big trend that I see in the tech space over the last, I don't know, 10 years is around partnerships, is kind of extending the org boundary. And actually, I, someone was telling me a little while ago, to be fair, that

Now, VCs, investors, financial markets actually look at things like tech companies that have big networks of implementation partners, for instance, as being worth more.

Colin (55:17.166)

The network is a resource in itself,

Chris (55:19.68)

Exactly that, yeah. And they see that, you know, having those kind of relationships with partners to help them, you know, to help them sell, that kind of sharing the sharing the wealth in terms of, you know, what is generated when it's closed with a partner network, creating opportunities for others to create wealth from the product, and having that kind of network effect.

is great in terms of being able to scale at speed for minimum resources. HubSpot is a great example. We've been a HubSpot partner for years and years and years and they've grown that business and taken the fight to Salesforce on their partner community. I don't think it's quite the same anymore, but at one point, 80 % of all the business was being closed by partners and they were paying partners well for that, but only after stuff sold. They were giving 20 % or whatever it was.

to every partner that closed a deal off the lifetime revenue, you know, which is something they've just taken away, which is perhaps a separate conversation, but how do you manage partners over time? But also, you know, sharing the success means that you can share the budget and you can kind of maximise, know, you can share the risk to some degree of expansion. And I think that

having a flexible view of the organization's boundary and looking at partnerships and alliances and vendor relationships to create the function of a kind of expanded resource pool, whether that is human capital or financial resources or intellectual property, is something that I think is a big trend in B2B that will continue to sort of flourish because it makes so much sense.

Colin (57:04.844)

Yeah, I'd be really interested to dive into that more. At some point, we're definitely running out of time. I wonder if we could say a little bit about, talking back to you, last week's episode really about measurement. How do we measure the effectiveness of our resource allocation and what we do with resources? Obviously, we've already been well warned about relying too heavily on just the financial metrics, although that

clearly will always be front and center. So an example I can think of is, you know, thinking about how that agility piece, like how quickly can an organization reallocate resources in response to change? So like, you know, that takes us back to things like the European defense example, like clearly the data points look great until you look at that side of things. So, like, I guess there are other areas that we need to be measuring.

to measure resource effectiveness as well.

Chris (58:04.9)

I think in deference to the complete lack of time we have left, I would say one thing, and mostly just because it's an example I've been working on today, ignoring the financial resources, because I think people understand pretty well how to measure financial resources, as you say.

intellectual property and intellectual capital, you know, I think that's a really interesting thing to measure. And a task I've been doing today is putting together a new process for building personal development plans and linking that back within those personal development plans to measurables effectively.

how are we spotting gaps for knowledge? How are we

building plans to close those gaps in knowledge or expand those already significant capabilities to create further competitive advantage. What are we going to do to close them? How are we going to measure whether those things have been successful? I think if you can start viewing your HR team, if you have one as part of that strategic capability in the business and using that as a framework to measure

non-transferable resource, that I think is something that I would definitely be thinking about there.

Colin (59:31.714)

Yeah, guess that there are a few areas we could probably dive into and probably double the length of the episode, but let's not do that to the listeners. Any sort of key general takeaways you want to highlight before we kind of move to close?

Chris (59:41.252)

Yeah.

Chris (59:48.876)

Yeah, I think that the big one for me is think about resources levers to activate, you know, as mechanisms for achieving strategy. So how

aligned and how efficient they are, how well they are integrated into the strategic endeavors of the organization and how aligned they are to the things that you are trying to achieve, you know, they are a system lever, a quite significant one. I would also say that a big outtake for me is thinking about

culture and expertise and relationships as being part of your resource stack and something that needs to be nurtured and protected and deployed effectively. And what else? Alignment. Let's say alignment. It's always alignment. Alignment. More alignment, more of the time.

Colin (01:00:44.878)

Just say alignment and everyone will know what you mean by now. Yeah, think unfortunately I'm gonna have to stop us there because we've just gone over the hour mark. So thank you to everyone who's still with us after that hour. So that's all we've got time for this week.

Chris (01:01:02.712)

Yeah.

Colin (01:01:09.742)

please don't forget to follow and rate the podcast. It really helps us to bring the content to wider audience. And as always, we'd really appreciate a moment of time to tell you, to tell us what you think. The feedback really matters to us and has in fact had an influence in the past on how we actually sort of structure the episodes. I guess I should better wrap up and let us get on with our day. But the growth system is

Chris (01:01:25.412)

Absolutely.

Colin (01:01:39.736)

brought to you by us, that's Rebspace, a growth system consultancy that connects B2B organizations with the future of growth. So we offer consultancy, education and apply delivery services. That's all we've got time for this week. Thanks very much. See you next week.

Chris (01:01:58.446)

Thanks for listening.