Digital transformation and innovation require data-driven leadership combined with intuition to create a humanistic digital culture. It’s an approach to leadership training that resonates with systems thinking and change management, according to Rishad Tobaccowala, former Chief Growth Officer of Publicis Groupe. Rishad explains that effective corporate cultures, based on data and storytelling, support both financial success and corporate agility.

About Rishad Tobaccowala: Rishad’s key skill is getting people to see, think and feel differently about how to grow themselves, their teams and their company. He does this through distilling 40 years of global learning and wisdom and communicating in a way that is provocative, pragmatic and inspirational.

Rishad is Chief Growth Officer and member of the Management Committee of Publicis Groupe, the world’s third-largest communication firm with 80,000 employees. He was named by BusinessWeek as one of the top business leaders for his pioneering innovation and TIME magazine dubbed him one of five “Marketing Innovators.​ Rishad’s first book “Restoring the Soul of Business: Staying Human in the Age of Data” was published globally in January, 2020. His writings can be found on the Re-Inventing blog.

Transcript

This transcript was edited lightly.

Introduction

Michael Krigsman: In an age of data obsession, everything is data-driven. On organizations, what is the impact? We are speaking with Rishad Tobaccowala. Rishad, you've written this excellent book. It's called Restoring the Soul of Business. Tell us about Publicis Groupe and tell us about the book that you've written.

Rishad Tobaccowala: Right now, I continue to be at the Publicis Groupe as a senior advisor but I have spent my entire 37-year career at either Publicis or a predecessor company that they bought called Leo Burnett, the advertising agency. I have basically done pretty much anything that can be done in the world of marketing and advertising.

I worked in creative agencies like Leo Burnett. I have worked in media companies like Starcom and Zenith. I have been the chairman of big digital agencies like Digitas and Razorfish.

I have worked in the corporate role as both the chief growth officer and prior to which I was the chief strategist of the Publicis Groupe. I've also started a lot of companies for the company, small companies that scaled up into bigger companies like Starcom IP, Giant Step, and Denuo.

What is the Premise of your Book, Restoring the Soul of Business?

Michael Krigsman: How did you evolve from being a data person to writing a book? Is it fair to characterize it as the danger of being overly obsessed with data? Is that a correct characterization?

Rishad Tobaccowala: The book's central premise is that individuals, companies, and teams do best when you combine the story and the spreadsheet. The spreadsheet of a business is the data of the business. Obviously, it's the P&L, the customer information, all of those things which are left brain, mathematical, computed, computer-wise.

The right side of the business, which I call the story of the business, is the purpose, the values, the meaning, the culture, the way people communicate in a business. Successful companies need to combine both. When you basically tilt towards the left and what I was beginning to see over the last five, six years because of the prevalence of data, because of the rise of companies that were fueled by data, I was seeing businesses tilting more and more towards the spreadsheet versus the story. I began to realize that there were three big problems because of that.

The first was, more and more of the employees of companies were getting disengaged because, when decisions were being done by math and machine, they felt left out. That was number one.

Number two is that, because of that, people were starting to make big mistakes. For instance, Wells Fargo decided that opening accounts was what they needed to do, and so people began to open fake accounts. At the same stage, now you understand that somewhat the same issues happened with Boeing when they had to get the 737 Max out there. When you begin to have companies where it's all about, let's make the numbers work or let's make the math have a decision, you also began to have stock market issues, so the company's market valuation dropped.

The third, from a societal impact, especially when you have larger companies like, let's say today, Facebook, they focus so much on their own, I would say, results and are fixating on consumers, they forget that they have a societal impact, which is, we are not just ingesters of things. We are citizens of countries. We are parts of community. There was this backlash against companies who were only focusing on the left brain, as there has been a backlash on Facebook, as there has been a backlash on other companies.

My thought was, let's restore the order and recognize that it's about story and spreadsheet. Spreadsheet-only doesn't work. On the other hand, we are living in an age of technology and data and story only also doesn't work. At a company that is all story and all making up stuff without a spreadsheet is WeWork. Right?

On one hand, you can basically have all about, "Hey, this is a new world order and it's all about community," doesn't work or spreadsheet doesn't work. You have to combine the two. The book is, let's get back to combining the spreadsheet and the story and that is what the soul of a company is.

Michael Krigsman: A spreadsheet, we can say, is data. Is there a word that you would use to sum up the story side?

Rishad Tobaccowala: Humanity. Human. The reason I believe that is the following. Data is very important, as we live in a data-driven, Silicon and digital world.

On the other hand, you and I, until the singularity, are carbon-based analog feeling people. We make decisions with our hearts and we use numbers to justify what we just did.

As a result, the story part of it is what humans feel, humans think, and humans hope. Therefore, I call the story part of the culture of a company, the emotions of a company, and the talent of a company.

The Objectives of Business

Michael Krigsman: Aren't businesses, managers, in business to make money and that's about it?

Rishad Tobaccowala: There are two philosophies. As you know, I am speaking from Chicago. I'm a graduate of the University of Chicago Business School. Milton Friedman famously basically said, "The only reason companies exist is to maximize shareholder value," which is number one. The Chicago School of Antitrust basically said, "Antitrust doesn't matter. The only thing that matters is whether it impacts the consumer badly or not."

Now, since then, two things have basically begun to happen. First is, the Chicago School has adapted and they just recently had a major event in 2019 where they basically talked about saving capitalism from the capitalists and about the fact that competition was being eroded, which was one. But more important, and specifically to your question, they also now basically believe that sometimes the best way to make money is to actually focus on something besides the scoreboard.

The way I look at it is, business has three key things. It has a customer, which is what I call the ball; a player, which is the talent; and the scoreboard, which is the P&L. If you only manage the P&L, you lose focus on the ball, which is the customer, and you lose focus on the talent.

I truly believe the reason people like Larry Fink at BlackRock are now asking people to focus on the citizen versus just the consumer is because it is good for business because people actually care about the values of a company. Talent decides what company to join or not join, especially talent that's very difficult to get, on what the values of a company are and whether it's a good environment and a good culture.

My basic belief is, if you want to make more money, you have to pay attention to the humanity of both your customers, of your employees, and of basically your clients. Otherwise, you actually will be focusing on the scoreboard and you won't have any clue that the game has changed and the ball has not become a ball and everybody has left the court.

The Weakness of Data without Story and Intuition

Michael Krigsman: But isn't one role of data to help one understand the nature of change and, therefore, discern the types of disruptions that may be happening around oneself and around the company?

Rishad Tobaccowala: Absolutely. Again, the book is about how to have data plus the story. In the chapter on data, what I do believe is data, that's exactly what it is – data. A higher level of data is information. A higher level of information is insight. The highest level of it all is meaning. My opening chapter is called "Too Much Math, Too Little Meaning," right?

Now, just so that you know, besides this degree in finance and marketing from the University of Chicago, I have an advanced degree in mathematics as my undergraduate degree, so I am all pro data, pro math, pro everything, right? However, just having numbers doesn't mean you have meaning. You have to basically do certain things.

My basic belief is, I saw people misread numbers or not actually understand what the numbers were. In the book, I talk about six I's, which is not like six eyes like six noses, but the letter I. One of them is, how do you actually interrogate the data?

There are too many people who basically say, "Here's what the data told me to do." I say, "Give me a perspective of why you say so. Give me something provocative which tells me that maybe the data is wrong. Then give me a point of view on how I should use the data and what it means."

That's what we have to do and that's what humans bring. The data never gives you the answer. If the data itself gives you the answer, which it does in things like trading and a whole bunch of other stuff, then in effect, you will not have a job.

Whenever someone says, "The data in the spreadsheet told me to do this," I say, "Thank you very much. Please make sure you get a new job on your way out," because I don't need you anymore. I can read the numbers as well as anybody else.

Spreadsheets and Machine Learning are Backward-Looking

Michael Krigsman: I interviewed, as part of CXOTalk, Cathy Engelbert, who is currently the commissioner of the Women's NBA and she previously was the CEO of Deloitte, together with Alicia Tillman, who is the chief marketing officer of SAP. They were talking about women in technology and Cathy said that when companies look at spreadsheets, it hurts women. I think it's a perfect example of what you were just describing.

Rishad Tobaccowala: Yes because you must recognize that, in most cases, spreadsheets, as well as current state of machine learning, is backward-looking. Right? Innovation, change, and hope comes from being forward-looking. I often tell people, "If you are stuck in a spreadsheet, you are stuck in a cell."

Michael Krigsman: That's really interesting. Can you elaborate on that, spreadsheets and machine learning today are backward-looking?

Rishad Tobaccowala: Right because, in effect, machine learning is training people and training machines on a whole bunch of data. The data has to be backward-looking because you don't have forward-looking data because the future has not happened yet.

Machine learning has two things. A) It's backward-looking. B) As was mentioned and I quote her in my book, there was this lady who basically said that in many ways an algorithm is nothing but opinions embedded in code. Okay?

There are human beings behind this. It's not like some machine wrote the algorithm. What basically begins to happen is, again and again, you're seeing backward biases. Backward biases either because it's the past or the bias of the algorithm writer.

In the United States, the algorithm writer is more likely to basically be a young to middle-aged white man. To a great extent, we are embedding the dreams and hopes of the middle-aged white man. They want to sit at home and watch television and have food delivered to them, so you have lots of delivery services.

Michael Krigsman: This shapes so much of our world and it's hidden. We don't see it.

Rishad Tobaccowala: It is one of the key things that, basically, in my six I's, in addition to interrogating the data, interpreting the data, and investigating the data, I ask people to do three other things. The first one is, imagine if the data was wrong or what else the data is saying, which is to bring yourself into it, which is number one.

Number two is, please be inclusive. Get other people to look at the data because if you only have a few people looking at the data, they may not actually see things.

There's this famous Pepsi commercial where they basically thought that giving some Pepsi would solve Black Lives Matter, if you remember that. I have no doubt that everybody in the room either was Caucasian or, if they were anybody who was African American, they were not given the opportunity to speak. Right?

One of the key things I always talk about data and the reason why diversity or inclusive is important is, we are living in a world which is multicultural, multipolar, and global, and we better get used to it. There's nothing you can do to stop it. Right?

But in that particular world, having diverse faces is not the same as having diverse voices. A big part of it is, because data can be used as a weapon, we have to be very, very careful. I know how powerful it is. My whole stuff is, we have to basically include other things. Otherwise, it'll go rogue on us.

Monopolies and Holistic Business Leadership

Michael Krigsman: We have a question from Twitter. Arsalan Khan makes the comment that a holistic approach to business is very important considering the societal impacts. However, what about monopolies and duopolies, which have no interest in being holistic and, yet, at the same time, have a tremendous impact on our lives?

Rishad Tobaccowala: The areas where we are seeing sort of monopoly type of existence are really in the technology platforms. The way I look at it is, if you look in the United States, you basically have three monopolies. Of course, they all define themselves differently but, the reality is, you've got three sort of monopolies.

One is the monopoly of information, which is, if you're looking for information, Google is the place you go.

The other is the monopoly of communication. Because the FDC was asleep, you basically have Facebook, WhatsApp, and Instagram all owned by the same company, which is a monopoly of communication.

The third is having, at least in the United States, the monopoly of transaction, which is Amazon. Right? They can talk about what percentage they have but, as a book person, 55% of my sales and 55% of all books are sold through one person. If I can't keep the algorithm on Amazon happy, it doesn't matter what I did. That's a problem.

That's a problem. What happens is, that is one of the reasons why you're beginning to have a backlash happening today where people are beginning to ask, what has happened with these platforms?

Now, interestingly, inside these places, like for instance inside Google, people themselves are protesting. Right? What we have to basically understand is, we should not allow any particular company to ever become so powerful because we are no longer looking backward. We're looking at a future where these companies and what they do are not advertising operating systems. They run society operating systems.

Balancing Corporate Profit and Organizational Responsibility

Michael Krigsman: To what extent do you think organizations, and is this necessary, sacrifice profit and potentially even revenue in order to make balanced decisions that affect the broader welfare?

Rishad Tobaccowala: In my book, I mention company after company that have made those decisions and have tended to be more successful than any other company. An example that I use and the CEO of this company actually has been one of the people who have endorsed my book is Adobe. If you look at Adobe, they have a culture that places attention to both the people and the technology. They do amazing things, which I've sort of understood inside, but also think about the fact that Adobe made two or three decisions that were so significant and seemed so stupid, which turned out to be fine.

Right now, if I understand right, Adobe has basically overtaken both Oracle and SAP in market cap. If you think about it, seven or eight years ago when they made a decision to go all-in on cloud, their revenues fell and their stock price fell dramatically. I think it was like $20, $25, or something like that. Now it's like $275. Right?

My whole basic belief is, the math told you not to do that. Leadership and imagination of Shantanu Narayen and his team told them this is where the future was going. IBM failed to do that. They did it. Oracle didn't do it as much.

My belief is, if I look for leadership, I look for people who understand the trends. He obviously understood the data. He understood what was going on. That inspires people to make changes and does amazing things.

Similarly, when you think about it, Disney is going to lose money over the next two, three years. Definitely, the direct business of Disney because of their decision to invest humongous on Disney+ and on Hulu and on ESPN+ to take back all the revenue that they were getting from licensing their stuff to Netflix. What happened? Their stock price started going up.

My whole basic belief is, if you actually think world-class leaders don't understand that it's combining the two, then you wouldn't have amazing companies. Every company that fails is a company that has a leader that only uses the numbers.

Scaling Business Strategy for Digital Leadership and Innovation

Michael Krigsman: Aren't you really saying that, well, it's this kind of magical, ephemeral quality that's really important? It's like creativity, but it's hard to bottle it. How do we scale that?

Rishad Tobaccowala: There are many ways to scale it. One way is to potentially read my book because what I basically did was identified the ways you could actually scale that. I'll give you a few of them.

The first is, you've got to basically have companies where people can actually speak up and speak truth to power. I call that chapter "The Turd on the Table." Organizations that allow people to speak up are organizations that scale humanity, ideas, and innovation. How you do that is called "The Turd on the Table."

The second is, spreadsheets don't change. The entire idea when people talk about, "I'm doing M&A to change and transform my company," I say, "No. The only way you can transform a company is either you upgrade the people or you change the people – period, over and out." Everything else is a goddamn press release. Right?

What happens is, you have to realize that change sucks, that people hate change. If you want to scale change, you've got to begin and understand that change sucks and how do you manage change? "Turd on the Table" is one. Change sucks is a second one.

The third one, which we are failing to understand, which is my previous point, is all of society. I watch what I eat and I exercise, but we're fixated on food and exercise. What separates us from monkeys is not our goddamn stomach. It's our minds.

Why aren't we thinking about something more than our physical operating systems? Why aren't we upgrading our mental operating systems? In a world where we're in the tenth operating system for Mac OS and the thirteenth one for iOS, how come human beings are barely at number two?

Another chapter is, how do you actually upgrade your mental operating system, which includes training? My belief is, "Turd on the Table," change sucks, upgrade your mental operating system as scalable ways that most successful companies have made change happen.

Human beings scale and are more inspiring than any pile of data and numbers. When you combine the two, they beat everybody. Just like take a great chess player with a machine, they'll beat any machine. Yes, the machine can beat the chess player today, but a chess player plus a machine will beat the machine.

Michael Krigsman: Upgrading the human operating system seems like a pretty large task and there are entire very large bodies of thought ranging from Hinduism to Buddhism, even Christianity. I'm not meaning to take this in a religious direction, but my point is that making change not only sucks but it's really hard. In a practical way, what can business leaders do to help drive that kind of change at that level that you're describing?

Rishad Tobaccowala: Basically, upgrading the mental operating system. I'm not trying to upgrade all of humanity, which is a religious thing. It's upgrading the mental operating system.

If I'm upgrading the mental operating system, I basically tell everybody, hey, look. These are the three key things you can do. Spend one hour learning every day.

The world is changing so much. Most people are going to work for 50 years. Most companies last for 15. You will outlast three companies. The reality of it is, if you're not investing in learning one hour a day, just like you're investing in exercising and fixating on food, you're going to be outdated – number one.

Number two is, try to do one new thing every day. The only time we get alive is when we fall out of the itinerary of day-to-day rituals. Go to a new restaurant. Walk in a different place. See something.

Third, which is the most difficult and most important today because of technology's polarization is, build the case for the exact opposite of what you believe. I truly believe that if you cannot build the case of the exact opposite of what you believe, I don't think you even know why you believe what you believe.

Those are three things that are very simple, anybody can do right away to upgrade their mental operating system. Similarly, when it basically comes to change sucks, first identify and recognize that change sucks and, therefore, recognize it'll take much longer because you are dealing with humans.

There is fast change. Fast change basically happens with fashion. Slow change happens with humans.

One is, talk to humans. Repeat. Figure out how that gets done.

Most importantly is this; incentivize change behavior. Do not punish people when they change.

What tends to happen is, I see again and again companies basically talking about change and then incentivizing today's results. Incentivizing people who run today's companies. Incentivizing people who have power based on client relationships of today.

If you want to do something different, don't put out a press release. Change your incentive plans.

How to Incentivize Culture, Behavior, and Business Model Change?

Michael Krigsman: In order to incentivize change, it means that leadership must have clarity about the nature of the change that they're trying to accomplish without mixed feelings about it. This seems relatively rare.

Rishad Tobaccowala: It is because there are two things that they also need to do. One is, there's the previous CEO of Best Buy was basically asked what his thoughts were about change management. His answer was, "Yes." Right?

To a great extent, management, if they don't upgrade their own minds, they should get out. In many companies, management is the issue. It's not the people. They lay off the people, but they don't know what they're doing, which is number one.

Second is this, and I'm going to use a couple of mental health terms. Neither of them, when I use this, is to in any way think that these mental health things are not very important. But I'm going to use it because of a book that Andy Grove wrote.

Andy Grove wrote a very famous book called Only the Paranoid Survive. One of the reasons I think Intellis has its problems is because, in a connected and collaborative world, it saw everybody as competition. You cannot, in today's collaborative, connected world, basically believe you can do it alone and have a hedgehog or a porcupine strategy where everybody sucks.

Microsoft used to have that until Satya Nadella came up and basically said, "Let's have a growth mindset and let's figure out that Windows is the past and the cloud is the future." What basically begins to happen is, one, don't think about paranoia.

I believe, and this is the way businesses should succeed, is, in the future, it's not the paranoid will survive; only the schizophrenic will thrive. What I mean is, you need to run two business models. Every CEO has to deliver enough numbers today in order to keep his job, keep the stock price up, and attract talent – without a doubt. But he also or she has to run a model optimized for tomorrow.

The problem is those two models are very different. They require different people, different measurement systems, and different incentives. What they try to do is they try to put them together, which means they don't do today well or tomorrow well, and they do this horrible slushy of ideas.

Michael Krigsman: My background is with the enterprise software business. During the transition from on-premise software to cloud, this has been a real problem for many established software companies because they're running two business models. They have the on-premise business model and now they have to adopt the cloud business model and making the transition and running these two business models, which also is, in a way, what happens with digital transformation in general. This is a very, very hard thing to do.

Rishad Tobaccowala: It is a very hard thing to do, which is why running it schizophrenically basically says, "It's so hard, you have to be mentally insane to a certain point," right? But you need two complete models, which sometimes means that you have a leader, like for instance if you think about it, Satya Nadella ran cloud and Steve Ballmer ran everything else. [Laughter] Everything else didn't work out that well; the cloud did.

What basically happened is, you have to sort of recognize that sometimes you have the future leader of a company often is working in the slime. One of my basic beliefs is, the future comes from the slime and not the heavens.

I have seen this again and again because I work with senior management and amazingly smart people. Eventually, they benchmark everything against each other. My thing is being less pathetic than other pathetic people still makes you pathetic.

Similarly, IBM did not see Microsoft. Microsoft did not see Google. Google did not see Facebook. You see this again and again and again because people basically hang out together. They go to Davos, which I go to, too. They hang out there and everybody basically blows kisses at each other and they don't know what the hell is going on. If senior management doesn't spend at least 20% of their time talking to people they don't know, go outside their industry, they will have a nightmare coming.

Michael Krigsman: Step outside their comfort zone, clearly.

Rishad Tobaccowala: Step out of their comfort zone and they have to think because every time this happens it's like Gillette taken on by Dollar Shave Club because Gillette and Schick basically thought the future was adding more and more blades, charging more and more money. Just as an extent that when you go to Walgreens to buy a blade, you feel like a goddamn shoplifter because you've got to get somebody to open the thing for you, right?

Someone basically came in and said, "How many blades do you need?" Here's Dollar Shave Club or Harry's. Wow. There we go. You have to write down your market cap.

By the way, the people at the P&G, et cetera, or the world are so smart, they saw this but the incentive systems, I even heard one of the CEOs of P&G A.G. Lafley saying he made a mistake because he basically made a decision on profit and losses.

Let me assure you; all of these companies have amazingly smart people. They have amazing, smart everything. But they then basically say, "We can't do it because the numbers tell us we can't do it." My whole stuff is, then what are you a leader for?

Michael Krigsman: A business leader recently told me that when a company has too many resources available that that can cause a set of problems in and of itself. I'm thinking of the P&G example you were just describing.

Rishad Tobaccowala: Yes because here's what begins to happen. There are two types of scale. This is the key thing that most businesses are struggling with is what I call old scale and new scale. Successful businesses have to have old and new.

There are some people who say it's all new-scale or only old-scale. Let me explain that. I'm going to do it broadly in the world of marketing because it's a world I understand, but I think this is true across the world.

For old scale, it's scale of manufacturing so you can bring prices down; scale of distribution so you can get yourself into the Walmart, et cetera, of the world; scale of resources so that you can basically hire people; and scale of spending. If you spend more money, you get better magazine placement, you get primetime television commercials, et cetera. Those are old scale. I think those are still important, but less and less important, but not unimportant.

New scale is scale of networks and data, scale of influence, and scale of talent. The example I use is our older daughter. My daughters are in their late 20s and early 30s. As they were growing up, they were watching Keeping Up with the Kardashians. I thought I brought them up wrong and their mother was watching it too. I said, "What is this nonsense you're watching?" They said, "These are successful businesspeople. Please leave the room." So, I said, "Okay."

Then they sent me once a cover of Forbes where Kylie Jenner was the fastest or youngest billionaire. I then looked into her company and began to realize that she had built a billion-dollar company. She sold 40% to Cody and she had built it with the following scale.

Her scale of resources was 55 people. Her scale of manufacturing was everything was actually basically done by a company called Pure Beauty. Her scale of distribution was something called Shopify. Her scale of spending was 120 million Instagram accounts that she spoke to. New scale.

My basic belief is, new scale is the slime. I'm not calling those people slime but the future is slime. But if you only think about new scale, you get yourself into a problem like Casper because all these direct-to-consumer companies, eventually what do they do? They run out of money because all their money, they're competing with each other and only Google, Amazon, and Facebook makes money. Nobody else makes money. You need offline and online, so companies like Warby Parker, et cetera, have figured that out and are doing it extremely well.

Michael Krigsman: Sal Rasa asks, "How have cultural and change challenges developed as companies have become more and more data-driven over time?"

Rishad Tobaccowala: The three things that have happened is, one, that they have basically started having meetings about data versus about having meetings between people. One of the chapters basically says, have more meetings versus less meetings, because I got so fixated by all these time and management experts talking about minimizing the number of meetings and only going to meetings where you can extract value, which is total and complete bullshit. None of them have actually worked in the real world.

I basically believe the reason people are besotted with how bad meetings are because they're not meetings. They're basically groups of people gathered around display screens looking at numbers. That's not a meeting.

That's basically like watching TV, but there are numbers on the TV. Okay? That's what it is. I think a meeting is when two people or four people or five people look at each other and talk without an interface.

One of the key things that basically I've figured out is, cultures of companies are falling apart because of the following things. One is people are discussing data. Data is nice and clean; people are messy. Let's talk about people, cultures, and feelings, which you have to do in a meeting without a screen.

The second thing, to a great extent, that I think data has unfortunately led to, which is impacting culture is a big part of what data has led to is, let's reduce real estate. Let's open into this open seating stuff. Let everybody work in a disturbed network and WeWork.

I'm a big believer in that for the following reasons, which is, it allows people to work from home and, therefore, they can look after their families or their aged ones. It allows people who may not be able to live in expensive places to be involved. There is a lot of good in that. But there's also a lot of bad in that and we have to find ways to offset that.

The first is, you never actually know the other person. You don't know whether they're actually paying any attention, right? At some particular stage, the data-driven world simply basically says, cut costs. I've never seen a data-driven world that basically says, "Invest more in human beings. Increase costs." Therefore, it can't be good because if I already know what the answer is, you don't have to show me the numbers.

How to Recognize an Organization that is Data-Myopic?

Michael Krigsman: We have another question from Twitter, which is, "In your book you use the term being data myopic. How can somebody recognize if their organization is data myopic and has these problems?"

Rishad Tobaccowala: A few thoughts on that. Are we asking data-driven questions or are we asking questions that data can answer? My thing is, ask a question. Don't necessarily just look at the data for the answer.

Data can reveal challenges, issues, and things you need to look at, but that doesn't necessarily mean they have the answer for it. Obviously, sometimes when you look at data, to your earlier point, it reveals certain things, but investigate that. That's number one.

Number two is, can you make sure that when somebody basically asks, should you ask, "Is this data for real?" One of the examples I use is, I think, the gentleman at American Express saying, "We figured out that 80% of the data we were collecting was irrelevant and not valid."

In fact, the third thing I would basically say is, make absolutely certain that if your company and the team around cannot add something more to the data then the data itself is another sign you're data myopic. I always basically say to people, can you talk to me in English without a number?

Why is Combining Spreadsheet and Story so Important?

Michael Krigsman: Why is all of this so important to you? You're a data-driven guy, a mathematician. Why is this so important?

Rishad Tobaccowala: It was important because of the following reasons. The first reason it was important is, my job is to help my clients and my job is to help grow teams. What I was beginning to realize is my clients were making decisions that I thought were wrong. I started looking to prove to them that I was right and they were wrong. That was how I started.

First it was like, hey, I've got to keep my clients in business. This is what I've got to do, which is number one. Not that they needed me but if they needed some advice, I would give that to them. That was one.

The second, it was this. I am fixated on the fact that successful companies only work because they've got a superior share of great talent. There was a number I read, which is in the book, which is 56% of people in the United States are not engaged at work. My thing is, if we can improve that 56%, isn't that better than almost anything else we can do in cost savings and other kinds of stuff?

What I realize is the reason the 56% was not engaged at work is because either all agency had been taken away from them because they were just reading data, they were treated like cogs in a machine, they were treated as basically manufacturing units, as people not people with dreams.

What they were looking for from work, in addition to fame, money, and power, which many of us look for, they were also looking for growth. Could they grow? They were looking for connections. Can they connect to other people? They were looking for purpose, meaning, and values of their companies.

What I was beginning to realize is smart companies were beginning to have a big problem attracting talent sometimes just by paying them with money. I said, "Look. My basic belief is, unless you have superior talent, you can't win," which is number one. Number two is, companies that combine are doing better than companies that are not combining. In both cases, fixating on data hurts my own company because we lose talent, or my clients get hurt and, therefore, eventually my company will get hurt because we only get paid by them. My whole thing was, let's do that.

Now, I had two advantages, which is why I'm now speaking. One is, because I was a pioneer in digital, because of my undergraduate degree in mathematics and my MBA, and because I'm Indian so people think Indians know how to do number, the general stuff is if this guy is talking, it's not because he doesn't understand numbers, doesn't understand data, and is scared of it. Remember, my stuff is both. I keep saying both, not one; not the other.

The second is, over time, I became senior enough and got enough of a reputation. Now I'm in a particular place, especially now that I'm an advisor, I can say what I think and nobody can basically fire my company. They can fire me, but I'm a company of one, which is fine. I'm already fired. I'm not fired, but you understand.

What tends to basically happen is that there was a voice and I was beginning to realize that this is not necessarily my voice. It's the voice of my clients. It's the voice of the people I've worked with because when I sit with them, they said, "This is what we really feel, but we're not in a position to say, so I'm now saying."

Michael Krigsman: We have a very interesting question from Twitter. This is from Passionately Curious. I'm just going to read this. It's fairly long. Okay? She says, "AI bias is rarely nefarious. It's flawed logic and overconfidence in math. Therefore, you should build into your processes algorithm bias audits that include diverse perspectives, cultural anthropology, and cognitive science, so it's both logic and psychological."

Rishad Tobaccowala: I completely agree. That's the reason. That's the spreadsheet and the story. The entire thing about too much math, too little meaning, I basically talk about bringing in diverse perspectives. I have a chapter on algorithms, which I basically call "Robots Compute, People Dream." Unless you have the computation, people, and the dreamers together, our algorithms will basically be written for Silicon Valley who are disconnected from the reality of the world.

Advice for Individual Team Contributors

Michael Krigsman: Advice for individual contributors who are listening and saying, "What do I do? How can I drive this kind of change, because this makes sense?"

Rishad Tobaccowala: I would say, do a couple of things. One is, recognize that every single person is talented and you are a talented leader even if you are a company of one or an individual contributor. Ask yourself just the following five. Ask yourself how you build these five characteristics very quickly.

One is, you've got to have capability. You have to be good at something and not good at a whole bunch of things. One is capability.

The second is, do you have integrity? Will people trust you? I believe trust is speed. What people are looking for and the currency of the future is people who have trust.

The third, fourth, and fifth are about openness to others, which is, are you empathetic, can you inspire people, and are you vulnerable? If you have those five characteristics, you will be very, very successful. If you want to know more about how to do that, that happens to be a chapter in my book too.

Advice to Senior Business Leaders

Michael Krigsman: My final question is, what advice do you have for business leaders who are watching this and they're saying, "Yes, this sounds great. What do I do?"

Rishad Tobaccowala: I think most business leaders and almost every business leader I have seen, I have learned from because they're so smart. However, they have outsmarted themselves. They are anticipating something else. They're living in other people's minds. I say, "Why don't you live in your mind? Why don't you live in your heart?"

Instinctively, I think most business leaders know what the right thing to do is. They're imagining that someone else is telling them to do something else. Don't follow the siren song of somebody and clash your company against the rock. Believe in yourself.

Michael Krigsman: I find that strange in a way because, when we think of business leaders, we think of self-directed, powerful, clear. You're saying internally driven. You're saying that that's often not the case.

Rishad Tobaccowala: It's not often the case because I often have the great opportunity of having drinks with these gentlemen and ladies. After a couple of drinks, I ask them a simple question, "What's bothering you?" The number one answer is, "Am I relevant for today?" Number two is, "Is my company's business model relevant for today?" Number three, which sometimes is number one because I'm there, is, "Is your agency relevant for today?" [Laughter] Right?

Outside of the fact that they think I might be irrelevant and my company might be irrelevant, which is my problem to fix, the other two is their business model. What I find surprising always is they always say whether they are relevant because they're doubting themselves because the world has changed so much.

Michael Krigsman: Those are essentially the existential questions. Are we going to be around for a long time?

Rishad Tobaccowala: Yes. My whole basic belief is, we are not, so why don't you make time valuable? In fact, as you know, the opening of my book called "Why This Book?" simply says time is the only thing you have, so why should you spend any time with your book? We forget this.

I keep reminding people. Whatever your age is, minus it from 80, 8-0, because around that you'll basically break down completely. Right? Multiply it by 300 because, for 60 days, you may be like marijuana fog. Those are the number of days you've got left. Then when people basically ask you to do things that take up your time, recognize you're giving up your life.

My whole thing, as I keep reminding senior people is, the whole point of having money is not to make decisions on money. Why did you have so much money to still make decisions on money? You failed.

Michael Krigsman: I can tell you I have enjoyed spending my time with both the book and with you, Rishad. Thank you very much for taking your time to be with us today.

Rishad Tobaccowala: Thank you for having me and for your audience to listen or watch. Thank you.

Michael Krigsman: We've been speaking with Rishad Tobaccowala. He is the former chief growth officer of Publicis Groupe. He's the author of this very interesting book—I'm trying to aim it so you don't see a shine—Restoring the Soul of Business: Staying Human in the Age of Data. He's got a great message. Thank you too, Rishad, for the insightful conversation today.

Everybody, before you go, please subscribe on YouTube and subscribe to our newsletter. We have amazing shows coming up. Check out CXOTalk.com and we will see you soon. Have a great day. Bye-bye.

This transcript was edited lightly.

Introduction

Michael Krigsman: In an age of data obsession, everything is data-driven. On organizations, what is the impact? We are speaking with Rishad Tobaccowala. Rishad, you've written this excellent book. It's called Restoring the Soul of Business. Tell us about Publicis Groupe and tell us about the book that you've written.

Rishad Tobaccowala: Right now, I continue to be at the Publicis Groupe as a senior advisor but I have spent my entire 37-year career at either Publicis or a predecessor company that they bought called Leo Burnett, the advertising agency. I have basically done pretty much anything that can be done in the world of marketing and advertising.

I worked in creative agencies like Leo Burnett. I have worked in media companies like Starcom and Zenith. I have been the chairman of big digital agencies like Digitas and Razorfish.

I have worked in the corporate role as both the chief growth officer and prior to which I was the chief strategist of the Publicis Groupe. I've also started a lot of companies for the company, small companies that scaled up into bigger companies like Starcom IP, Giant Step, and Denuo.

What is the Premise of your Book, Restoring the Soul of Business?

Michael Krigsman: How did you evolve from being a data person to writing a book? Is it fair to characterize it as the danger of being overly obsessed with data? Is that a correct characterization?

Rishad Tobaccowala: The book's central premise is that individuals, companies, and teams do best when you combine the story and the spreadsheet. The spreadsheet of a business is the data of the business. Obviously, it's the P&L, the customer information, all of those things which are left brain, mathematical, computed, computer-wise.

The right side of the business, which I call the story of the business, is the purpose, the values, the meaning, the culture, the way people communicate in a business. Successful companies need to combine both. When you basically tilt towards the left and what I was beginning to see over the last five, six years because of the prevalence of data, because of the rise of companies that were fueled by data, I was seeing businesses tilting more and more towards the spreadsheet versus the story. I began to realize that there were three big problems because of that.

The first was, more and more of the employees of companies were getting disengaged because, when decisions were being done by math and machine, they felt left out. That was number one.

Number two is that, because of that, people were starting to make big mistakes. For instance, Wells Fargo decided that opening accounts was what they needed to do, and so people began to open fake accounts. At the same stage, now you understand that somewhat the same issues happened with Boeing when they had to get the 737 Max out there. When you begin to have companies where it's all about, let's make the numbers work or let's make the math have a decision, you also began to have stock market issues, so the company's market valuation dropped.

The third, from a societal impact, especially when you have larger companies like, let's say today, Facebook, they focus so much on their own, I would say, results and are fixating on consumers, they forget that they have a societal impact, which is, we are not just ingesters of things. We are citizens of countries. We are parts of community. There was this backlash against companies who were only focusing on the left brain, as there has been a backlash on Facebook, as there has been a backlash on other companies.

My thought was, let's restore the order and recognize that it's about story and spreadsheet. Spreadsheet-only doesn't work. On the other hand, we are living in an age of technology and data and story only also doesn't work. At a company that is all story and all making up stuff without a spreadsheet is WeWork. Right?

On one hand, you can basically have all about, "Hey, this is a new world order and it's all about community," doesn't work or spreadsheet doesn't work. You have to combine the two. The book is, let's get back to combining the spreadsheet and the story and that is what the soul of a company is.

Michael Krigsman: A spreadsheet, we can say, is data. Is there a word that you would use to sum up the story side?

Rishad Tobaccowala: Humanity. Human. The reason I believe that is the following. Data is very important, as we live in a data-driven, Silicon and digital world.

On the other hand, you and I, until the singularity, are carbon-based analog feeling people. We make decisions with our hearts and we use numbers to justify what we just did.

As a result, the story part of it is what humans feel, humans think, and humans hope. Therefore, I call the story part of the culture of a company, the emotions of a company, and the talent of a company.

The Objectives of Business

Michael Krigsman: Aren't businesses, managers, in business to make money and that's about it?

Rishad Tobaccowala: There are two philosophies. As you know, I am speaking from Chicago. I'm a graduate of the University of Chicago Business School. Milton Friedman famously basically said, "The only reason companies exist is to maximize shareholder value," which is number one. The Chicago School of Antitrust basically said, "Antitrust doesn't matter. The only thing that matters is whether it impacts the consumer badly or not."

Now, since then, two things have basically begun to happen. First is, the Chicago School has adapted and they just recently had a major event in 2019 where they basically talked about saving capitalism from the capitalists and about the fact that competition was being eroded, which was one. But more important, and specifically to your question, they also now basically believe that sometimes the best way to make money is to actually focus on something besides the scoreboard.

The way I look at it is, business has three key things. It has a customer, which is what I call the ball; a player, which is the talent; and the scoreboard, which is the P&L. If you only manage the P&L, you lose focus on the ball, which is the customer, and you lose focus on the talent.

I truly believe the reason people like Larry Fink at BlackRock are now asking people to focus on the citizen versus just the consumer is because it is good for business because people actually care about the values of a company. Talent decides what company to join or not join, especially talent that's very difficult to get, on what the values of a company are and whether it's a good environment and a good culture.

My basic belief is, if you want to make more money, you have to pay attention to the humanity of both your customers, of your employees, and of basically your clients. Otherwise, you actually will be focusing on the scoreboard and you won't have any clue that the game has changed and the ball has not become a ball and everybody has left the court.

The Weakness of Data without Story and Intuition

Michael Krigsman: But isn't one role of data to help one understand the nature of change and, therefore, discern the types of disruptions that may be happening around oneself and around the company?

Rishad Tobaccowala: Absolutely. Again, the book is about how to have data plus the story. In the chapter on data, what I do believe is data, that's exactly what it is – data. A higher level of data is information. A higher level of information is insight. The highest level of it all is meaning. My opening chapter is called "Too Much Math, Too Little Meaning," right?

Now, just so that you know, besides this degree in finance and marketing from the University of Chicago, I have an advanced degree in mathematics as my undergraduate degree, so I am all pro data, pro math, pro everything, right? However, just having numbers doesn't mean you have meaning. You have to basically do certain things.

My basic belief is, I saw people misread numbers or not actually understand what the numbers were. In the book, I talk about six I's, which is not like six eyes like six noses, but the letter I. One of them is, how do you actually interrogate the data?

There are too many people who basically say, "Here's what the data told me to do." I say, "Give me a perspective of why you say so. Give me something provocative which tells me that maybe the data is wrong. Then give me a point of view on how I should use the data and what it means."

That's what we have to do and that's what humans bring. The data never gives you the answer. If the data itself gives you the answer, which it does in things like trading and a whole bunch of other stuff, then in effect, you will not have a job.

Whenever someone says, "The data in the spreadsheet told me to do this," I say, "Thank you very much. Please make sure you get a new job on your way out," because I don't need you anymore. I can read the numbers as well as anybody else.

Spreadsheets and Machine Learning are Backward-Looking

Michael Krigsman: I interviewed, as part of CXOTalk, Cathy Engelbert, who is currently the commissioner of the Women's NBA and she previously was the CEO of Deloitte, together with Alicia Tillman, who is the chief marketing officer of SAP. They were talking about women in technology and Cathy said that when companies look at spreadsheets, it hurts women. I think it's a perfect example of what you were just describing.

Rishad Tobaccowala: Yes because you must recognize that, in most cases, spreadsheets, as well as current state of machine learning, is backward-looking. Right? Innovation, change, and hope comes from being forward-looking. I often tell people, "If you are stuck in a spreadsheet, you are stuck in a cell."

Michael Krigsman: That's really interesting. Can you elaborate on that, spreadsheets and machine learning today are backward-looking?

Rishad Tobaccowala: Right because, in effect, machine learning is training people and training machines on a whole bunch of data. The data has to be backward-looking because you don't have forward-looking data because the future has not happened yet.

Machine learning has two things. A) It's backward-looking. B) As was mentioned and I quote her in my book, there was this lady who basically said that in many ways an algorithm is nothing but opinions embedded in code. Okay?

There are human beings behind this. It's not like some machine wrote the algorithm. What basically begins to happen is, again and again, you're seeing backward biases. Backward biases either because it's the past or the bias of the algorithm writer.

In the United States, the algorithm writer is more likely to basically be a young to middle-aged white man. To a great extent, we are embedding the dreams and hopes of the middle-aged white man. They want to sit at home and watch television and have food delivered to them, so you have lots of delivery services.

Michael Krigsman: This shapes so much of our world and it's hidden. We don't see it.

Rishad Tobaccowala: It is one of the key things that, basically, in my six I's, in addition to interrogating the data, interpreting the data, and investigating the data, I ask people to do three other things. The first one is, imagine if the data was wrong or what else the data is saying, which is to bring yourself into it, which is number one.

Number two is, please be inclusive. Get other people to look at the data because if you only have a few people looking at the data, they may not actually see things.

There's this famous Pepsi commercial where they basically thought that giving some Pepsi would solve Black Lives Matter, if you remember that. I have no doubt that everybody in the room either was Caucasian or, if they were anybody who was African American, they were not given the opportunity to speak. Right?

One of the key things I always talk about data and the reason why diversity or inclusive is important is, we are living in a world which is multicultural, multipolar, and global, and we better get used to it. There's nothing you can do to stop it. Right?

But in that particular world, having diverse faces is not the same as having diverse voices. A big part of it is, because data can be used as a weapon, we have to be very, very careful. I know how powerful it is. My whole stuff is, we have to basically include other things. Otherwise, it'll go rogue on us.

Monopolies and Holistic Business Leadership

Michael Krigsman: We have a question from Twitter. Arsalan Khan makes the comment that a holistic approach to business is very important considering the societal impacts. However, what about monopolies and duopolies, which have no interest in being holistic and, yet, at the same time, have a tremendous impact on our lives?

Rishad Tobaccowala: The areas where we are seeing sort of monopoly type of existence are really in the technology platforms. The way I look at it is, if you look in the United States, you basically have three monopolies. Of course, they all define themselves differently but, the reality is, you've got three sort of monopolies.

One is the monopoly of information, which is, if you're looking for information, Google is the place you go.

The other is the monopoly of communication. Because the FDC was asleep, you basically have Facebook, WhatsApp, and Instagram all owned by the same company, which is a monopoly of communication.

The third is having, at least in the United States, the monopoly of transaction, which is Amazon. Right? They can talk about what percentage they have but, as a book person, 55% of my sales and 55% of all books are sold through one person. If I can't keep the algorithm on Amazon happy, it doesn't matter what I did. That's a problem.

That's a problem. What happens is, that is one of the reasons why you're beginning to have a backlash happening today where people are beginning to ask, what has happened with these platforms?

Now, interestingly, inside these places, like for instance inside Google, people themselves are protesting. Right? What we have to basically understand is, we should not allow any particular company to ever become so powerful because we are no longer looking backward. We're looking at a future where these companies and what they do are not advertising operating systems. They run society operating systems.

Balancing Corporate Profit and Organizational Responsibility

Michael Krigsman: To what extent do you think organizations, and is this necessary, sacrifice profit and potentially even revenue in order to make balanced decisions that affect the broader welfare?

Rishad Tobaccowala: In my book, I mention company after company that have made those decisions and have tended to be more successful than any other company. An example that I use and the CEO of this company actually has been one of the people who have endorsed my book is Adobe. If you look at Adobe, they have a culture that places attention to both the people and the technology. They do amazing things, which I've sort of understood inside, but also think about the fact that Adobe made two or three decisions that were so significant and seemed so stupid, which turned out to be fine.

Right now, if I understand right, Adobe has basically overtaken both Oracle and SAP in market cap. If you think about it, seven or eight years ago when they made a decision to go all-in on cloud, their revenues fell and their stock price fell dramatically. I think it was like $20, $25, or something like that. Now it's like $275. Right?

My whole basic belief is, the math told you not to do that. Leadership and imagination of Shantanu Narayen and his team told them this is where the future was going. IBM failed to do that. They did it. Oracle didn't do it as much.

My belief is, if I look for leadership, I look for people who understand the trends. He obviously understood the data. He understood what was going on. That inspires people to make changes and does amazing things.

Similarly, when you think about it, Disney is going to lose money over the next two, three years. Definitely, the direct business of Disney because of their decision to invest humongous on Disney+ and on Hulu and on ESPN+ to take back all the revenue that they were getting from licensing their stuff to Netflix. What happened? Their stock price started going up.

My whole basic belief is, if you actually think world-class leaders don't understand that it's combining the two, then you wouldn't have amazing companies. Every company that fails is a company that has a leader that only uses the numbers.

Scaling Business Strategy for Digital Leadership and Innovation

Michael Krigsman: Aren't you really saying that, well, it's this kind of magical, ephemeral quality that's really important? It's like creativity, but it's hard to bottle it. How do we scale that?

Rishad Tobaccowala: There are many ways to scale it. One way is to potentially read my book because what I basically did was identified the ways you could actually scale that. I'll give you a few of them.

The first is, you've got to basically have companies where people can actually speak up and speak truth to power. I call that chapter "The Turd on the Table." Organizations that allow people to speak up are organizations that scale humanity, ideas, and innovation. How you do that is called "The Turd on the Table."

The second is, spreadsheets don't change. The entire idea when people talk about, "I'm doing M&A to change and transform my company," I say, "No. The only way you can transform a company is either you upgrade the people or you change the people – period, over and out." Everything else is a goddamn press release. Right?

What happens is, you have to realize that change sucks, that people hate change. If you want to scale change, you've got to begin and understand that change sucks and how do you manage change? "Turd on the Table" is one. Change sucks is a second one.

The third one, which we are failing to understand, which is my previous point, is all of society. I watch what I eat and I exercise, but we're fixated on food and exercise. What separates us from monkeys is not our goddamn stomach. It's our minds.

Why aren't we thinking about something more than our physical operating systems? Why aren't we upgrading our mental operating systems? In a world where we're in the tenth operating system for Mac OS and the thirteenth one for iOS, how come human beings are barely at number two?

Another chapter is, how do you actually upgrade your mental operating system, which includes training? My belief is, "Turd on the Table," change sucks, upgrade your mental operating system as scalable ways that most successful companies have made change happen.

Human beings scale and are more inspiring than any pile of data and numbers. When you combine the two, they beat everybody. Just like take a great chess player with a machine, they'll beat any machine. Yes, the machine can beat the chess player today, but a chess player plus a machine will beat the machine.

Michael Krigsman: Upgrading the human operating system seems like a pretty large task and there are entire very large bodies of thought ranging from Hinduism to Buddhism, even Christianity. I'm not meaning to take this in a religious direction, but my point is that making change not only sucks but it's really hard. In a practical way, what can business leaders do to help drive that kind of change at that level that you're describing?

Rishad Tobaccowala: Basically, upgrading the mental operating system. I'm not trying to upgrade all of humanity, which is a religious thing. It's upgrading the mental operating system.

If I'm upgrading the mental operating system, I basically tell everybody, hey, look. These are the three key things you can do. Spend one hour learning every day.

The world is changing so much. Most people are going to work for 50 years. Most companies last for 15. You will outlast three companies. The reality of it is, if you're not investing in learning one hour a day, just like you're investing in exercising and fixating on food, you're going to be outdated – number one.

Number two is, try to do one new thing every day. The only time we get alive is when we fall out of the itinerary of day-to-day rituals. Go to a new restaurant. Walk in a different place. See something.

Third, which is the most difficult and most important today because of technology's polarization is, build the case for the exact opposite of what you believe. I truly believe that if you cannot build the case of the exact opposite of what you believe, I don't think you even know why you believe what you believe.

Those are three things that are very simple, anybody can do right away to upgrade their mental operating system. Similarly, when it basically comes to change sucks, first identify and recognize that change sucks and, therefore, recognize it'll take much longer because you are dealing with humans.

There is fast change. Fast change basically happens with fashion. Slow change happens with humans.

One is, talk to humans. Repeat. Figure out how that gets done.

Most importantly is this; incentivize change behavior. Do not punish people when they change.

What tends to happen is, I see again and again companies basically talking about change and then incentivizing today's results. Incentivizing people who run today's companies. Incentivizing people who have power based on client relationships of today.

If you want to do something different, don't put out a press release. Change your incentive plans.

How to Incentivize Culture, Behavior, and Business Model Change?

Michael Krigsman: In order to incentivize change, it means that leadership must have clarity about the nature of the change that they're trying to accomplish without mixed feelings about it. This seems relatively rare.

Rishad Tobaccowala: It is because there are two things that they also need to do. One is, there's the previous CEO of Best Buy was basically asked what his thoughts were about change management. His answer was, "Yes." Right?

To a great extent, management, if they don't upgrade their own minds, they should get out. In many companies, management is the issue. It's not the people. They lay off the people, but they don't know what they're doing, which is number one.

Second is this, and I'm going to use a couple of mental health terms. Neither of them, when I use this, is to in any way think that these mental health things are not very important. But I'm going to use it because of a book that Andy Grove wrote.

Andy Grove wrote a very famous book called Only the Paranoid Survive. One of the reasons I think Intellis has its problems is because, in a connected and collaborative world, it saw everybody as competition. You cannot, in today's collaborative, connected world, basically believe you can do it alone and have a hedgehog or a porcupine strategy where everybody sucks.

Microsoft used to have that until Satya Nadella came up and basically said, "Let's have a growth mindset and let's figure out that Windows is the past and the cloud is the future." What basically begins to happen is, one, don't think about paranoia.

I believe, and this is the way businesses should succeed, is, in the future, it's not the paranoid will survive; only the schizophrenic will thrive. What I mean is, you need to run two business models. Every CEO has to deliver enough numbers today in order to keep his job, keep the stock price up, and attract talent – without a doubt. But he also or she has to run a model optimized for tomorrow.

The problem is those two models are very different. They require different people, different measurement systems, and different incentives. What they try to do is they try to put them together, which means they don't do today well or tomorrow well, and they do this horrible slushy of ideas.

Michael Krigsman: My background is with the enterprise software business. During the transition from on-premise software to cloud, this has been a real problem for many established software companies because they're running two business models. They have the on-premise business model and now they have to adopt the cloud business model and making the transition and running these two business models, which also is, in a way, what happens with digital transformation in general. This is a very, very hard thing to do.

Rishad Tobaccowala: It is a very hard thing to do, which is why running it schizophrenically basically says, "It's so hard, you have to be mentally insane to a certain point," right? But you need two complete models, which sometimes means that you have a leader, like for instance if you think about it, Satya Nadella ran cloud and Steve Ballmer ran everything else. [Laughter] Everything else didn't work out that well; the cloud did.

What basically happened is, you have to sort of recognize that sometimes you have the future leader of a company often is working in the slime. One of my basic beliefs is, the future comes from the slime and not the heavens.

I have seen this again and again because I work with senior management and amazingly smart people. Eventually, they benchmark everything against each other. My thing is being less pathetic than other pathetic people still makes you pathetic.

Similarly, IBM did not see Microsoft. Microsoft did not see Google. Google did not see Facebook. You see this again and again and again because people basically hang out together. They go to Davos, which I go to, too. They hang out there and everybody basically blows kisses at each other and they don't know what the hell is going on. If senior management doesn't spend at least 20% of their time talking to people they don't know, go outside their industry, they will have a nightmare coming.

Michael Krigsman: Step outside their comfort zone, clearly.

Rishad Tobaccowala: Step out of their comfort zone and they have to think because every time this happens it's like Gillette taken on by Dollar Shave Club because Gillette and Schick basically thought the future was adding more and more blades, charging more and more money. Just as an extent that when you go to Walgreens to buy a blade, you feel like a goddamn shoplifter because you've got to get somebody to open the thing for you, right?

Someone basically came in and said, "How many blades do you need?" Here's Dollar Shave Club or Harry's. Wow. There we go. You have to write down your market cap.

By the way, the people at the P&G, et cetera, or the world are so smart, they saw this but the incentive systems, I even heard one of the CEOs of P&G A.G. Lafley saying he made a mistake because he basically made a decision on profit and losses.

Let me assure you; all of these companies have amazingly smart people. They have amazing, smart everything. But they then basically say, "We can't do it because the numbers tell us we can't do it." My whole stuff is, then what are you a leader for?

Michael Krigsman: A business leader recently told me that when a company has too many resources available that that can cause a set of problems in and of itself. I'm thinking of the P&G example you were just describing.

Rishad Tobaccowala: Yes because here's what begins to happen. There are two types of scale. This is the key thing that most businesses are struggling with is what I call old scale and new scale. Successful businesses have to have old and new.

There are some people who say it's all new-scale or only old-scale. Let me explain that. I'm going to do it broadly in the world of marketing because it's a world I understand, but I think this is true across the world.

For old scale, it's scale of manufacturing so you can bring prices down; scale of distribution so you can get yourself into the Walmart, et cetera, of the world; scale of resources so that you can basically hire people; and scale of spending. If you spend more money, you get better magazine placement, you get primetime television commercials, et cetera. Those are old scale. I think those are still important, but less and less important, but not unimportant.

New scale is scale of networks and data, scale of influence, and scale of talent. The example I use is our older daughter. My daughters are in their late 20s and early 30s. As they were growing up, they were watching Keeping Up with the Kardashians. I thought I brought them up wrong and their mother was watching it too. I said, "What is this nonsense you're watching?" They said, "These are successful businesspeople. Please leave the room." So, I said, "Okay."

Then they sent me once a cover of Forbes where Kylie Jenner was the fastest or youngest billionaire. I then looked into her company and began to realize that she had built a billion-dollar company. She sold 40% to Cody and she had built it with the following scale.

Her scale of resources was 55 people. Her scale of manufacturing was everything was actually basically done by a company called Pure Beauty. Her scale of distribution was something called Shopify. Her scale of spending was 120 million Instagram accounts that she spoke to. New scale.

My basic belief is, new scale is the slime. I'm not calling those people slime but the future is slime. But if you only think about new scale, you get yourself into a problem like Casper because all these direct-to-consumer companies, eventually what do they do? They run out of money because all their money, they're competing with each other and only Google, Amazon, and Facebook makes money. Nobody else makes money. You need offline and online, so companies like Warby Parker, et cetera, have figured that out and are doing it extremely well.

Michael Krigsman: Sal Rasa asks, "How have cultural and change challenges developed as companies have become more and more data-driven over time?"

Rishad Tobaccowala: The three things that have happened is, one, that they have basically started having meetings about data versus about having meetings between people. One of the chapters basically says, have more meetings versus less meetings, because I got so fixated by all these time and management experts talking about minimizing the number of meetings and only going to meetings where you can extract value, which is total and complete bullshit. None of them have actually worked in the real world.

I basically believe the reason people are besotted with how bad meetings are because they're not meetings. They're basically groups of people gathered around display screens looking at numbers. That's not a meeting.

That's basically like watching TV, but there are numbers on the TV. Okay? That's what it is. I think a meeting is when two people or four people or five people look at each other and talk without an interface.

One of the key things that basically I've figured out is, cultures of companies are falling apart because of the following things. One is people are discussing data. Data is nice and clean; people are messy. Let's talk about people, cultures, and feelings, which you have to do in a meeting without a screen.

The second thing, to a great extent, that I think data has unfortunately led to, which is impacting culture is a big part of what data has led to is, let's reduce real estate. Let's open into this open seating stuff. Let everybody work in a disturbed network and WeWork.

I'm a big believer in that for the following reasons, which is, it allows people to work from home and, therefore, they can look after their families or their aged ones. It allows people who may not be able to live in expensive places to be involved. There is a lot of good in that. But there's also a lot of bad in that and we have to find ways to offset that.

The first is, you never actually know the other person. You don't know whether they're actually paying any attention, right? At some particular stage, the data-driven world simply basically says, cut costs. I've never seen a data-driven world that basically says, "Invest more in human beings. Increase costs." Therefore, it can't be good because if I already know what the answer is, you don't have to show me the numbers.

How to Recognize an Organization that is Data-Myopic?

Michael Krigsman: We have another question from Twitter, which is, "In your book you use the term being data myopic. How can somebody recognize if their organization is data myopic and has these problems?"

Rishad Tobaccowala: A few thoughts on that. Are we asking data-driven questions or are we asking questions that data can answer? My thing is, ask a question. Don't necessarily just look at the data for the answer.

Data can reveal challenges, issues, and things you need to look at, but that doesn't necessarily mean they have the answer for it. Obviously, sometimes when you look at data, to your earlier point, it reveals certain things, but investigate that. That's number one.

Number two is, can you make sure that when somebody basically asks, should you ask, "Is this data for real?" One of the examples I use is, I think, the gentleman at American Express saying, "We figured out that 80% of the data we were collecting was irrelevant and not valid."

In fact, the third thing I would basically say is, make absolutely certain that if your company and the team around cannot add something more to the data then the data itself is another sign you're data myopic. I always basically say to people, can you talk to me in English without a number?

Why is Combining Spreadsheet and Story so Important?

Michael Krigsman: Why is all of this so important to you? You're a data-driven guy, a mathematician. Why is this so important?

Rishad Tobaccowala: It was important because of the following reasons. The first reason it was important is, my job is to help my clients and my job is to help grow teams. What I was beginning to realize is my clients were making decisions that I thought were wrong. I started looking to prove to them that I was right and they were wrong. That was how I started.

First it was like, hey, I've got to keep my clients in business. This is what I've got to do, which is number one. Not that they needed me but if they needed some advice, I would give that to them. That was one.

The second, it was this. I am fixated on the fact that successful companies only work because they've got a superior share of great talent. There was a number I read, which is in the book, which is 56% of people in the United States are not engaged at work. My thing is, if we can improve that 56%, isn't that better than almost anything else we can do in cost savings and other kinds of stuff?

What I realize is the reason the 56% was not engaged at work is because either all agency had been taken away from them because they were just reading data, they were treated like cogs in a machine, they were treated as basically manufacturing units, as people not people with dreams.

What they were looking for from work, in addition to fame, money, and power, which many of us look for, they were also looking for growth. Could they grow? They were looking for connections. Can they connect to other people? They were looking for purpose, meaning, and values of their companies.

What I was beginning to realize is smart companies were beginning to have a big problem attracting talent sometimes just by paying them with money. I said, "Look. My basic belief is, unless you have superior talent, you can't win," which is number one. Number two is, companies that combine are doing better than companies that are not combining. In both cases, fixating on data hurts my own company because we lose talent, or my clients get hurt and, therefore, eventually my company will get hurt because we only get paid by them. My whole thing was, let's do that.

Now, I had two advantages, which is why I'm now speaking. One is, because I was a pioneer in digital, because of my undergraduate degree in mathematics and my MBA, and because I'm Indian so people think Indians know how to do number, the general stuff is if this guy is talking, it's not because he doesn't understand numbers, doesn't understand data, and is scared of it. Remember, my stuff is both. I keep saying both, not one; not the other.

The second is, over time, I became senior enough and got enough of a reputation. Now I'm in a particular place, especially now that I'm an advisor, I can say what I think and nobody can basically fire my company. They can fire me, but I'm a company of one, which is fine. I'm already fired. I'm not fired, but you understand.

What tends to basically happen is that there was a voice and I was beginning to realize that this is not necessarily my voice. It's the voice of my clients. It's the voice of the people I've worked with because when I sit with them, they said, "This is what we really feel, but we're not in a position to say, so I'm now saying."

Michael Krigsman: We have a very interesting question from Twitter. This is from Passionately Curious. I'm just going to read this. It's fairly long. Okay? She says, "AI bias is rarely nefarious. It's flawed logic and overconfidence in math. Therefore, you should build into your processes algorithm bias audits that include diverse perspectives, cultural anthropology, and cognitive science, so it's both logic and psychological."

Rishad Tobaccowala: I completely agree. That's the reason. That's the spreadsheet and the story. The entire thing about too much math, too little meaning, I basically talk about bringing in diverse perspectives. I have a chapter on algorithms, which I basically call "Robots Compute, People Dream." Unless you have the computation, people, and the dreamers together, our algorithms will basically be written for Silicon Valley who are disconnected from the reality of the world.

Advice for Individual Team Contributors

Michael Krigsman: Advice for individual contributors who are listening and saying, "What do I do? How can I drive this kind of change, because this makes sense?"

Rishad Tobaccowala: I would say, do a couple of things. One is, recognize that every single person is talented and you are a talented leader even if you are a company of one or an individual contributor. Ask yourself just the following five. Ask yourself how you build these five characteristics very quickly.

One is, you've got to have capability. You have to be good at something and not good at a whole bunch of things. One is capability.

The second is, do you have integrity? Will people trust you? I believe trust is speed. What people are looking for and the currency of the future is people who have trust.

The third, fourth, and fifth are about openness to others, which is, are you empathetic, can you inspire people, and are you vulnerable? If you have those five characteristics, you will be very, very successful. If you want to know more about how to do that, that happens to be a chapter in my book too.

Advice to Senior Business Leaders

Michael Krigsman: My final question is, what advice do you have for business leaders who are watching this and they're saying, "Yes, this sounds great. What do I do?"

Rishad Tobaccowala: I think most business leaders and almost every business leader I have seen, I have learned from because they're so smart. However, they have outsmarted themselves. They are anticipating something else. They're living in other people's minds. I say, "Why don't you live in your mind? Why don't you live in your heart?"

Instinctively, I think most business leaders know what the right thing to do is. They're imagining that someone else is telling them to do something else. Don't follow the siren song of somebody and clash your company against the rock. Believe in yourself.

Michael Krigsman: I find that strange in a way because, when we think of business leaders, we think of self-directed, powerful, clear. You're saying internally driven. You're saying that that's often not the case.

Rishad Tobaccowala: It's not often the case because I often have the great opportunity of having drinks with these gentlemen and ladies. After a couple of drinks, I ask them a simple question, "What's bothering you?" The number one answer is, "Am I relevant for today?" Number two is, "Is my company's business model relevant for today?" Number three, which sometimes is number one because I'm there, is, "Is your agency relevant for today?" [Laughter] Right?

Outside of the fact that they think I might be irrelevant and my company might be irrelevant, which is my problem to fix, the other two is their business model. What I find surprising always is they always say whether they are relevant because they're doubting themselves because the world has changed so much.

Michael Krigsman: Those are essentially the existential questions. Are we going to be around for a long time?

Rishad Tobaccowala: Yes. My whole basic belief is, we are not, so why don't you make time valuable? In fact, as you know, the opening of my book called "Why This Book?" simply says time is the only thing you have, so why should you spend any time with your book? We forget this.

I keep reminding people. Whatever your age is, minus it from 80, 8-0, because around that you'll basically break down completely. Right? Multiply it by 300 because, for 60 days, you may be like marijuana fog. Those are the number of days you've got left. Then when people basically ask you to do things that take up your time, recognize you're giving up your life.

My whole thing, as I keep reminding senior people is, the whole point of having money is not to make decisions on money. Why did you have so much money to still make decisions on money? You failed.

Michael Krigsman: I can tell you I have enjoyed spending my time with both the book and with you, Rishad. Thank you very much for taking your time to be with us today.

Rishad Tobaccowala: Thank you for having me and for your audience to listen or watch. Thank you.

Michael Krigsman: We've been speaking with Rishad Tobaccowala. He is the former chief growth officer of Publicis Groupe. He's the author of this very interesting book—I'm trying to aim it so you don't see a shine—Restoring the Soul of Business: Staying Human in the Age of Data. He's got a great message. Thank you too, Rishad, for the insightful conversation today.

Everybody, before you go, please subscribe on YouTube and subscribe to our newsletter. We have amazing shows coming up. Check out CXOTalk.com and we will see you soon. Have a great day. Bye-bye.