Olivia: Alright Jackson, I have a fun little professional hierarchy for you. Who do you think the public trusts less: a corporate executive or a lobbyist? Jackson: Oof, that's a race to the bottom. My gut says lobbyist. They practically define backroom deals. Olivia: You'd think so, but you're wrong! A Gallup poll from around the time our book was written found only 15% of people rated the ethical standards of executives as 'high' or 'very high'. Jackson: Okay, 15% is terrible. What did lobbyists get? Olivia: Seven percent. So, yes, technically worse. But executives are down there in the mud with car salesmen and members of Congress. That public disgust, that profound lack of trust, is the crisis at the heart of the book we're discussing today. Jackson: A crisis that feels even more relevant now than it probably did then. What's the book? Olivia: It’s What Matters Now: How to Win in a World of Relentless Change, Ferocious Competition, and Unstoppable Innovation by Gary Hamel. And you're right about the timing. Hamel is one of the world's most influential business thinkers, a long-time professor at London Business School, and this book was his impassioned response to the wreckage of the 2008 financial crisis. Jackson: Ah, so this isn't just some academic thought experiment. This is a direct reaction to watching the whole system teeter on the edge of collapse. Olivia: Exactly. He argues that the management rulebook we've been using for a century is dangerously obsolete. And his first, and maybe most important, target is the idea of values.

Jackson: Okay, but let's be real, Olivia. 'Values' is one of those words I see on a motivational poster in a sterile corporate lobby. Every company's website has a 'Our Values' page. What makes Hamel's argument different from all that corporate fluff? Olivia: Because he argues it’s not about what’s written on the wall, it's about what happens when the pressure is on. He says the global economy has become a system that amplifies the impact of what he calls "ethical vandals." A single bad decision doesn't just hurt one company anymore. Jackson: It sounds like you have a story for me. Olivia: I do, and it's a chilling one from the book: the European Sovereign Debt Crisis. Remember when countries like Greece, Ireland, and Spain—the so-called 'PIGS'—were on the verge of economic collapse? Jackson: Vaguely. I mostly remember a lot of headlines about bailouts and austerity. Olivia: Well, Hamel drills down into the cause. A huge part of the problem was that major French and German banks had poured over 900 billion dollars into the debt of these struggling countries. They were chasing high returns, and they kept lending even when the risks were flashing bright red. Jackson: Why would they do that? That sounds like financial insanity. Olivia: Because of something called moral hazard. The banks knew they were so big and so interconnected that if things went south, their own governments—and by extension, the European Union—would have to bail them out to prevent a total meltdown. They were incentivized to take insane risks because they knew they wouldn't have to pay the ultimate price. Jackson: Wow. So they were gambling with entire countries' economies, knowing someone else would have to cover their losses. That’s not just a lack of values, that’s a system designed to reward recklessness. Olivia: Precisely. And that’s Hamel’s point. In our networked world, imprudent risks spread like a virus. He has this fantastic quote: "Like nuclear fission, self-interest works only as long as there's a containment vessel—a set of ethical principles that ensures enlightened self-interest doesn't melt down into unbridled selfishness." Jackson: And in that case, the containment vessel just completely failed. The meltdown was happening. Olivia: It almost did. And that’s why he says managers have to embrace a new role: the role of a steward. It’s not just about maximizing profit. It’s about fealty to a higher purpose, prudence in your decisions, and accountability to society, not just shareholders. Jackson: What does 'stewardship' actually look like, though? Is it just about being a nicer, more ethical boss? Olivia: It’s deeper than that. It’s about fundamentally changing the goal of the organization. And this connects to another key issue Hamel raises: passion. That same Gallup poll that showed low trust in executives also showed that most employees are disengaged at work. Jackson: Oh, I believe that. The 'quiet quitting' phenomenon is just the latest term for it. People show up, do the bare minimum, and go home. Olivia: Right. And Hamel’s take is blistering. He says, "If employees aren't as enthusiastic, impassioned, and excited as they could be, it's not because work sucks; it's because management blows." Jackson: That is a direct shot. No pulling punches there. Olivia: None. He argues that traditional management, with its focus on control and compliance, is designed to stamp out passion, initiative, and creativity. Stewardship, on the other hand, is about creating an environment that deserves those things. It’s about building an organization where people are proud to work, where they feel their values align with the company's. Jackson: So the values crisis and the passion crisis are the same problem. You can't have passionate, engaged employees if they don't trust the people in charge or believe in what the company stands for. Olivia: You've got it. And there are signs of a shift. The book points to the massive growth in socially responsible investing. Between 2005 and 2010, assets in these funds grew by 34%, while total assets under management grew by only 3%. Today, a huge chunk of all invested money is in socially-oriented funds. Jackson: So money is starting to follow morality, at least a little bit. People are voting with their dollars. Olivia: Exactly. A values revolution is already underway, whether companies are ready for it or not. But fixing the moral core is only half the battle. The other half is about survival in a world that is changing at a terrifying speed.

Jackson: Okay, so if the first part is about fixing the soul of a company, what's the second part about? Olivia: It's about fixing its body. Hamel argues that even if you have perfect values, you'll still go extinct if you can't adapt. He says the most important question for any organization today is this: "Are we changing as fast as the world around us?" And for most, the answer is a resounding no. Jackson: I feel like every business leader says they're all about 'innovation' and 'agility'. It’s another one of those buzzwords. Give me a real-world example of what he means. Olivia: The book gives the perfect, brutal case study: the mobile phone industry. It’s a corporate graveyard. Let’s take a quick walk through it. Who was the king in the 80s? Jackson: Motorola, right? With those giant brick phones that finance guys had in movies. Olivia: Exactly. They were the undisputed leader. Then, in the 90s, who took over? Jackson: Nokia. Everyone had a Nokia. They were indestructible and the battery lasted for a week. They seemed unbeatable. They had something like 40% of the market. Olivia: Unbeatable. Then in the early 2000s, a new player changed the game, especially for business. Jackson: BlackBerry. The 'CrackBerry'. It turned the phone into an email machine. Every executive was glued to that little keyboard. Olivia: Right. So you have three successive dynasties: Motorola, Nokia, BlackBerry. Each one was a titan. Each one dominated its era. And then what happened in 2007? Jackson: The iPhone. Olivia: The iPhone. And it didn't just compete with them; it made their entire business model obsolete overnight. Apple wasn't selling a phone; it was selling a powerful, beautiful, handheld computer. And in a few short years, those previous giants were either bankrupt, sold for parts, or rendered completely irrelevant. Jackson: That is a stunningly fast collapse. It’s like watching a sped-up nature documentary about corporate dinosaurs seeing the meteor for the first time. It's genuinely terrifying. Olivia: It is! And that's Hamel's core point about adaptability. He says, "In a world of mind-flipping change, what matters is not merely a company's competitive advantage at a point in time, but its evolutionary advantage over time." Nokia was incredibly efficient at making plastic candy-bar phones. That was their competitive advantage. But they had zero evolutionary advantage. They couldn't morph into a software and design company. Jackson: But why is that so hard? Why couldn't a company like Nokia, with all its money and engineers, just copy the iPhone? Is it just arrogance from being at the top? Olivia: Arrogance is part of it. Hamel talks about the "corrupting effects of success." When you're winning, your existing strategy gets calcified. It becomes dogma. Questioning it is seen as heresy. Organizations are built for efficiency and predictability, which is the exact opposite of what you need for adaptation. Adaptation is messy, experimental, and unpredictable. Jackson: So the very things that make a company successful and profitable in the short term are the things that make it brittle and vulnerable in the long term. Olivia: You've hit the nail on the head. That's the paradox. Companies are brilliant at getting better at what they already do. They are terrible at becoming something new. Think about social media: Friendster was first, then MySpace dominated, then Facebook came along and ate everyone's lunch. The pace of change is just relentless. Jackson: It feels like these two big ideas are deeply connected. The values problem and the adaptability problem. Olivia: How so? Jackson: Well, if your company's only value is maximizing next quarter's profit—the kind of thinking that led to the debt crisis—then you're never going to make the scary, expensive, long-term investments required to truly adapt. You're not going to cannibalize your own successful product to create the next big thing, because that would hurt short-term earnings. Olivia: That is a brilliant connection, Jackson. And it leads directly to Hamel's ultimate point. He says the reason companies lack values and fail to adapt isn't because of a few bad managers or a faulty process. It's because the entire ideology of management is broken.

Jackson: The ideology of management? That sounds big. What does he mean by that? Olivia: He means the deep, often invisible, set of beliefs that underpin how we run organizations. For the last 100 years, that ideology has been about one thing: control. It's about top-down authority, rigid hierarchies, standardization, and predictability. It's a machine-age model designed to get compliant behavior from human beings. Jackson: And that control-based system is fundamentally at odds with everything we've been talking about. Olivia: Completely. You can't command passion. You can't schedule a brilliant, game-changing insight for next Tuesday at 2 PM. You can't create a five-year plan for adaptation when the world changes every five months. The old ideology of control actively strangles the very things we need most now: values, passion, innovation, and adaptability. Jackson: So what's the alternative ideology? Olivia: It's one based on freedom, community, and purpose. He profiles companies like W. L. Gore, the makers of Gore-Tex, which operates almost without a formal hierarchy. Or Morning Star, a tomato processor, where employees essentially manage themselves and negotiate their responsibilities with their peers. They are living proof that you can build highly successful organizations on a different set of principles. Jackson: It sounds radical. And maybe a little chaotic. Olivia: It is radical! That's the point. Hamel is a revolutionary, and he's calling for a revolution in management. He says we need to stop asking, "How do we get employees to better serve the organization?" and start asking, "How do we build organizations that deserve the extraordinary gifts that employees could bring to work?" Jackson: I love that reframing. It flips the entire power dynamic. It's not about what the company can extract from you, but what it can create for you, so you can give your best. Olivia: Exactly. It's about building organizations that are as human as the people inside them. That’s the ultimate goal. Jackson: So, if we're wrapping this all up, what's the one thing a listener should take away from Hamel's message? If they're not a CEO who can reinvent the company, what can they do? Olivia: I think Hamel would say to start by becoming a thoughtful heretic. Start by questioning the unquestionable. He'd want you to go to work tomorrow and ask yourself, and maybe your team, one simple question: "What is a deeply held belief in our company that we never challenge, that might be stopping us from seeing the future?" Jackson: That’s a powerful and slightly dangerous question to ask. Olivia: All the most important questions are. And that’s what matters now. Jackson: I love that. And I encourage everyone listening to think about that question. What's the sacred cow at your workplace that needs to be challenged? Let us know your thoughts. We’d love to hear them. Olivia: This is Aibrary, signing off.