Play Bold: Balancing the forces with the EmbraerX CEO Daniel Moczydlower

ABOUT THIS EPISODE

Welcome to Play Bold episode 2. We’ll be listening to the Star Wars fan and CEO of EmbraerX Daniel Moczydlower. He is resharpening the urban mobility industry with flying autonomous vehicles. His focus is on diversity, culture, technology and unexpected ways of working, all at once, to instill results in a conservative industry. Get ready for a space ride with Daniel and Magnus.

The playbond podcast the new book byMagnus Penker Play Bold. How To win the business game through creativedestruction is coming soon, dive deeper with the latest podcast episode andguests. Answering questions from Magnus and sharing their stories. Welcome to playbolt episode to getready to lunch, a star wars fan and CEO of imbrerex Daniel Muchid loverexplains how he is resharpening, the urban mobility industry with flyingautonymous vehicles. His focus is on diversity, culture, technology andunexpected ways of working to instill results in a conservative industry allat once get ready for a space ride. Wel Come to nihts episode of playbold Ttryto have the great pleasure of having Daniel Marchid over, which is theembirr ex co and the vice present of corporate innevation, digitivtransirmation and new business development at embreyer in Brasil. Heis tecam is a chemical engineer by education and the serious store war fannow working with. May I call it stor wars technology welcome to play boldDaniel, it's great to have you. Thank you so much Margenus for theinvitation for the kind introduction. I'm really excited to be joining you for the podcast. Thank you. They Neel Ourun Embroox, that is amarket accelerated, committed to develop solution that transformed life's experiences. Would you call that an innovationcenter or what is it? Well, I wouldn't call it an innovation center per se,but it's the emperr answer to the to the Dilema of how to keep innovation flowing inthe pace that we need, given the the the speed that things are happening in our market and outside our markets.To be honest, with all the technology trends that we perceive with all thechanges that we see in society as well, we started to wander about five fouryears ago. If everything we have been doing around innovation was enough andwe came to the conclusion. It was not, and it's not to say that mbriar is notan innovative company. You know embriar it kind of has its innovation embeddedin in our DNA. As a brief comment, last week, our visionaryfounder engineer or Zili Silver, he celebrated his ninetith anniversary.Yes, his of course he's not with the company any longer, but he was h, thefounder and the one who originally sold the idea. You know to the firstinvestor, which came to be the Brazilian government back in the s whenBrazil was still much of you know an agricultural country, exporter O ofagricultural commodities. He came up with his dream of manufacturingaircraft in a third word country, and you know it was very hard to get anyoneat all convinced about it, but Aziris was was the the perfect interpreneur and innovator he still isby the way, even though he's retired, he keeps working as a big supporter ofeducational initiatives in the country, innovation, Initiatim, so its abrilliant brilliant mind. So we can say that innovation has been part of theembreor history from the early starts, and you know, after the companytransitioned from being a supplier of military transport aircraft to theBrazilian government to make it to the word stage and compete had to head withthe major north, American and European manufactures, and just you know thesimple fact that we are still alive that we're still competing in this very,very tough market. You know, I think it's a proof that empria has beenreally a very novative company today about you,know half of our revenues herives from innovations introducit in the recentsix years, which is quite amazing, specially in the AV issueindustry, because, as you know, it's a very conservative industry as it needsto be when it comes to safety regulation. How to certify technologyso to keep innovating in this industry is a very tough challenge andI can say embrea has been doing a...

...pretty good job at it. But even with this conclusion, we thought fivefour years ago that it was not enough, and why is that we started to seetrends like the focus that is absolutely needed in sustainability.You know around sustainable mobilityeletrification, but also artificial intelligence autonomy systems that arecapable to operate with a very high level of automation. We started to seethis trends developed in other industries and it was clear to us thatthey would all hit our industry of aviation very hard, and it was not amatter of if it was a matter of when and how fast. So there are differentpredictions on how long it would take for thedisruption to happen, but no doubt it will happen and the main reason why itwill happen is because it's needed yeah society requires it. Our Customer Nidsit right the passengers. They want to have a fordable mobility. They want tohave sustainable mobility, they want to have us moveright and when I talk aboutthe ride is not just from the moment they are already boarding the aircraft.It's all the experience. You know to Book Your Journey to plan your journeyand to make it happen. So how were we going to address it? Andyou ask get the question if it's an innovation center, but we really wantedto have the business driving the decision. So some of the lessons learned that we hadand, of course we had a very strong technology development group already,and it was not about accelerating the development of new technologies. It wasmuch more about the need to experiment with new business models, new ways tointeract with partners outside of the company. You know new ways to makeideas flow from the concept to something we can actually be offeringthe market in very, very short cycles, something that aviation has to behonest has never seen before, and that was the task we saw in front of us and that's why wecreated embrorx to be as you describe it, the market accelerator. It's aboutreally making this bold ideas become real,become mature and become a reality in such a way that we can create realimpacts to people's lives and that's a I think, th e, the purposethat is moving us. You know to face this huge challenge of acceleratinginnovation working in a different way inside the company that is alreadyperceived and perceives itself as being pretty innovative. So it's been quite achallenge and, and a lot of learning has been taken placeever since we started this disventure you're listening to Magus, penker andguests on the playbold podcast. So you mentioning like a higher purpose and it seemsreally important to you, Bost of you, ten, Bayern and y organiation runningthe innovation orm. If I may say so, you tell he'll tell us a little bitmore about higher purpose and why you foresee that that's animportant factor,that's a great question, Maginusan and one that I believe the current generation and you know theyounger generations. They are very, very good. A at you know, pausingsuch questions to us to do the executives more and more. We perceive that thereal competition in the market is for talents, and we perceive that talentedpeople they don't want to serve. You know the simple interest of the shareholders of thecompany. They want to be part of something that is larger, that isbigger that is capable to create a legacy. If you will, or at least acontribution, they can feel proud of beauty, and this has been a very strongsentiment in the history of embror. If you were to ask me why I thinkembrioiss still alive, as I mentioned before. Of course, there are many. You knowbusiness related or technical, related explanations I could offer, but what Imyself truly believe it is a sentiment. It is a feeling that was there from thestart, because the task was so hard.

You know to establish a High TechCompany to compete, gooblly out of a country that has so many challengeslike Brazi that felt, like you know, climbing the highest mounting Yean thatwas inspiring. It was an inspiry mission, it inspired our founders,inspird, our pioneears pioneers, and it keeps inspiring us to this day. Butagain as we have to move forward, we started to realize. Even this, you knowclimb in the high mountain is not enough as an inspiration F for thecurrent generation and thank God this is happening because I'm really excited to see how sustainability isbecoming. You know the top one item in the future generations agenda. We needto make sure we, you know, serve our purpose and servour market serv, ourcustomers, without creating a problem for our. You know: children, ourGRANDSENS, to have to solve it it's pretty much. On the contrary, we really need to create businesses that are capable to be. Youknow, sustainable in every sense, not only economically abut, socially andenvironmentally and and in our industry. This is is becoming really the top item in every Co'sagender. We know the contribution of aviation tooverall emissions today is still a small percentage, but if we don'tmove, this percentage will grow because everybody else you know, is doing theirhomework, so the industry has made some very bold commitments to you know, luring the mission andeventually becoming carbon neutrop, which is quite a challenge from theengineering perspective. When it comes, you know to flyin machines Yeph, and that we believe is the inspirationthat we need is. How can we impact all of ourindustry and emberr x is kind of the thespairhead movement we're looking atthe new market, we're looking at smaller vehicles that we believe Wel have a very strongcontribution to mobility, around big cities with the electrical verticaltakeoff and landing aircraft. But it's you know it's thespark of the rebellion you maysion, I a star wars, fim right,Thao rebellios are built on hope. That's one of t e the phrases fromrogue one movie that I like very much and we need to be the spark of therebellion you know if we can make it work for smaller aircraft. This isgoing to be just the beginning of a big transformation that we are sure will help the rest of the industry tofind the solutions to go beyond, and that's really the big purpose that we are serving. You know as a basis fofor the business we're trying to build the playbold podcast find out more atinnovation, re, hudred and sixtycom forward s play bold. I it's Santasticto hear and I'm your first Paki a big mountain and whenit's not enough, you pickit even bigin mountain and now him for for the moonand beyond, and I'm thinking about from my Home County Sedan. We have in RadCAMPRA that founded ITHIA. He planned for his death for at least forty years. It was never set eside a d and he you know his spiritis still aroundthere, and I think that you built in from the beginning to Te Sellan,Stateis, crow and now weu go for sustainability. I'm strongly believethat what you do wilh inspire other people, if you, if you can fly machinearound in a sustainable way as Syou wish to do with mall series, nothing is impossible of that. SRIHT. The IMPOSIB will be possible, sorubeos really important to show this that it is possible exactly yeah,exactly er, so excited to see. You know that the positive energy that thischallenge is unlishing all across the globe. You know we do have strongcoperation with research institutions in Europe, US you know: Asia, Brazil and wheneverwe come to our partners with the challenges weneed to face when they understand what...

...is the you know the big picture, andwhat is that that you're trying to achieve it's unbelievable? How peopleare really really trilled by you know, making this generationcontributions to tackle one of the the most. You know important challenges Ibelieve, with face as human kind. Today, absolutely we have to fix it. Wewillextens sexteens that otherwise well not be around. So it's say we ontheboad land textinction, so so like Senson. So we have to find ways around that andthat leave me Totil, the next questio I would like to post you. We need to findnew way of working new materials, new solutions, new this is modelisem. We have to invent so many things andand sadly y end up in handling you know or dealing with they unknown and theproblem with unknown is that it is unknown. You don't know how to fix it.But what have you learned from from from a calture and the leadership pointof you? How do you lead a company navigating in the unknown? That's really th the. I would say that the tentionpoint that we have been living and exploring here at Mbrax, and I will notpretend to have the answer, because you know it is a learning journey for us, but I can share some of the insights wehave been collecting along the way because I tend to think we are in akind of privileged position to address your question, and why is that aviation industry may be from anengineering design perspective comparing to many other industries?Maybe is if not the one it', certainly among the the top ones that learned how to to deal with uncertaintyor with you know, with the unknown in a very, very robust and safe manner. Ifwe take a look at the safety records for aviation, it is very hard to beatvery hard to matchin any other industry how this industry has been capable tokeep improving ear after a year after year, learning from each and every event.Sharing that knowledge and developing you know, processes and procedures thatcan cope with the level of uncertainty, a probability of affairs, for example,when we think about the aircraft as a system today is very very hard to have. Youknow a system faiure that will bring down an aircraft. It's I mean thelikelihood is really relix is extremely low and that's not the same thing assaying that we do not have fars the Fars are going to be there. There'salways going to be. You know a factor, but this industry has learned how todeal with them, how to design for Tham how to create the level of redundancyand protection and safety that we will cope with that in such a way that, evenif one component or a subhsystem is to fail, the overall system will keepoperating safely or at least will be capable to land a safely. This hascreated a very strong culture in aviation, about how to dol, with withthe uncertainty and theyall know, and the general answer has been billed veryrobust processes go through it very, very carefully make sure you examine to all the levelsof depth that are needed. Every decision that you need to make which, in the end, can be labeled as avery conservative culture and, as I said, all of a sudden, we arefacing disruptions and needs that you know they will not wait for all ofthose processes to be completed. We need to reinvent ourselves. We need torivent R, our industry ways of doing things and that's why we decided toestablish embror x because we really needed. You know, like a safeer place,to experiments, to try and to make mistakes and, of course, never doopardizingsafety, but we need to find a way to act quicker to be simpler, but still todo it with the same level of safety,...

...and that is the constraint that makesit so so hard and so difficult, and the very first barrier that we learned wehave to overcome is a cultural barrier. It's not a technical on it's a coature,it's about how people feel you know comfortable or not comfortable abouttaking risks about making a risky decision, even if it's in a very early stage ofthe development. Even if we're talking about you know. Oh it's a prototypethat there's not going to be anybody on board. This is just a prototized, butthe colture is the same. The coatureis still there and people that they will.You know even subconsciously ncautiously. They will try to embed thesame level of safety and conservativeness ineverything they're doing not because you know they. The simple reason is they want to do itright. They want to do what they feel is best and that's how they learn it todo, and we have been you know, facing th.The very very interesting challenge to you know go against such assumptionsand- and you know provoking hand coming up with well l. let's try somethingdifferent a about the project. I may have an issue. Well, let's, let's havethe issue: Let's learn from the issue, let's see, maybe not and weare trying to do it by you knowaddressing the culture change by creating kind of a healthy mix ofpeople. You know who've been with the industry for a very long time who knowthe DOS and don't who know the typical hurdoes, but also bringing people fromthe outside, bringing people who are very young or people who areexperienced in totally different kinds of industries or sectors and createthis. You know a big hybrid lot. I this mixture where conflict we willrise and then wehave to deal with another culture challenge which is not to see conflictas a negative thing exactly as a dreat buts, respectful conflict, its a goodthing and it's needid. If we WAN eeted, the playbold podcast, find out more atinnovation, re, hudred and sixtycom forward s play bold. Could you elaborate little bit more onthat community? Is it edutatial background or personalities or what youlook for the createst divorse mix of people driving creative, the constructive conflicts? It is a very, very hard task. Maybe I would rank it as the number onetask, because you know it it's not about bringing in a very original thinker or someone whois open to conflict and just you know, bring bring the guy in, he will be destroyed, I mean he will destroy and be destroyed. It issomething that is difficult to accomplish, because what we're talkingabout is not creating a new culture out of scratch. It is about transforming anexisting culture and building on straphs. Right, of course, is a totallydifferent scenario. If you're talking about starting a new company reallyfrom scratch right a total start up there, you can count on the personality,the mindset, the style, leadership style of the founders because they willrepresent. You know in the beginning a hundred percent of the employees andthey will still have a very strong influence in the years to come. Sothat's a thing and that's a path that is, you know needed. We certainlyneed the startups of the world to join us and to help us and to address andtackle many of the challenges that we won't be able to do it inside the bigcompanies. But on the other hand, they cannot do it or by themselves theycannot do it alone. The big operations of the world I mean for sure many will not be around in tenyears time, but the others. You know they are the true game changers theyare the ones who have access to capital, to you know to the the all theinfrastructure that is needed to transform the global economy. So wecannot close our eyes to that and say forget about the big coporations of theword, because they are the dinosaurs, they won't survive. That's not true. Weneed to transform such companies, we need to evolve the cultures and againthe simple fact that they are alive and strong and Numation Ikea. I mationEMBREA. We could mention several other big names.

You know this companies. They have very strong,very strong aspects of their culture, that it's I mean it would be t e th,the worst thing for the globe to waste such kno. How and such strong aspectsof the culture, but on the other hand there are other aspects that they needto evolve. They cannot be frozen in time. Everything that has worked for UStwenty years ago, thirty years ago, even ten years ago, may not be good enough going forward.So when it comes to listening, you know actively listening being open to changeher mind being open to be challenged. That is in our particular example. Oneof the key priorities we set ourselves as a pillar of our own culturaltransformation and one that embre x is trying to tospare head, is reallyseeing conflict as something that can be respectful can be positive and, inthe end, is deeply needed to allow for innovation to thrive and again comingfrom a culture where we have this. You knowvery high respect for all of our master Gedis, our master Yodus in our Council.You know the senior aronaltics engineers these guys are like the girlshat. They are respected, wordwide wherever they go and very rightfully soI mean they deserve all their respect. But that is different from saying. Wecannot challenge them and we cannot bring new ideas for them to you know to think about and to helpus create a different future, and that's not easily done because thislevel of respect when it's so high, you know it makes people shy away from theconflict shy away from from, and it's not because you know, I knowthey want to listen to me. It's again, it's subcontious, it's its part of thethe culture that you know. You don't talk about, there's no written room,nobody never told you, you shouldn't do it, but it's like you know, commonsense that who am I to you know, come up with a new idea in front of thiscouncil of Jadi Masters. It's it's intimidating and what you're trying todo is Briagh the gap. You know it. It show that they are pretty much. On thecontrary, they are open to that and they are anctious to be challenged andto take part in the conflict and, to be honest, one of the best experiences wehave had an embrir evert precedes embra x by many years itsabout ten years earlier. It's when we started a program back, then we had a search in themend.We were very happy about. It was a very good time for a viation industryand forEmbria, and we for saw there would be a lack of aronotics engineers in themarket to serve our our business purposes.Right. If we talk al a hundred percent of thegraduates in every year in Brazi, it would not be enough and we knew it would be very hard toattract foreign talents to Brazil because of the language barrier,because you know it's a faraway country that many people still associate onlyto you know carnival or it is a nice country, butto go there to work as aronautics engineer. Maybe people would doubt thatit's again an image were trying to change as as a country, but that was aclear barrier, so we said well, let's invest in developing our own engineers, so inpartnership with the top engineering school in Ar Anatics in Brazil, ITArecreated this master program one year and a half program where we wouldenroll engineers from every other speciality apart from aronatics andtake one year and a half to make them into aeronautics and aviation engineers andthe way we did it, I think, was really inovative and tountil today I still think it it's quite impressive, because it's not justacademic. You know. Of course, we have the university professors steaching,but we also bring in the engineers from embryr o to instruct to teach andspecially in the last cycle of the program when we give the students thechallenge to design their new aircraft, but is not just the aircraft. Is thebusiness plan how to enter the market?...

How to compete? What's the price point,what is the cost? What is the manufacture? Then Testru strategy? Youknow it's a complete business, an that they have to come up with and how theydo it because they lack the experience, ofcourse, but that's when they team up with the most experienced engineers inthe company, the ones that are about to retire and many that are alread retired,that ask us to come back and work with the students, and that is the best waywe have ever found to bridge the gap. You know because this shows the newly graduates, even though theyhave zero experience, those you know master gendice at I mation. They areopen to their ideas, theyare open to their questions and they are open todebate and discuss, and this exchange has been so fruitful and it's like aseed. You know as this newly graduate joine the company and as time goes by,they become a higher percentage of our body of employees. These are people whohave learned in a different way. They have learned at they can respect theirmentors their siniors, but they can still challenge them and they can stillcome up with new ideas, and it's no surprise that the the ones who werepart of this program are really becoming. You know. The next generationof leaders of Embrir, I think, is a very nice story to share, because it'syou know our own practical way of addressing this discultural challenge.But again it's a very good thing. We have is not enough and we keepexploring other ways. It's a every day is a challenge you'relistening to Magnus penker and guests on the playbold podcast, so you mencinefailures several times and how important that is. Thet. Is there anyany things? That is a failure in the past that you tornd into sucsess thatyou could share with us in the history of our company. We did have some. Youknow failed product lounches from from the market perspectvperspective, there is one that is kind of you know emblematic it's like embrirOneo one. You join the company. You need to learn about that story, whichis important because there is no use for a lesson learnet that no one hasever heard of that pright. So we had this very you know bold product that we setourselves to develop. It was called the CBA one. Two tree was a very advancedaircraftfo for the time and from a purely you know, technical perspective from theengineering aspect. It was quite an accomplishment that wewere able to build and fly the prototype because we had to face somany challenges to make it. You know technically viable,and that was back probably was the last project undertook by Ambria when it wasStila Tate on company, and it was one of the reasons why the company almostcame to bankruptcy. We went almost belly up because of that field, productlounch, because in the end there was not a market for the product. It wastoo expensive for what the customers were looking for. So so it's kind of alesson for us that that we cannot follow you off with our solution. IUNOVATION is about serving. You know,a need of the customer and fitting a very narrow solution,space where it's gotta deliver the fallow. For you know the cost that thecustomer recognizes is a good business for for the customerright, and that was a very hard lesson for us as a company and that again think froma cultural perspective. This was a company built by engineers run byengineers, O engineers, who very rightfully so were very proud of theirengineering achievement. But as we were moving from being a supplier to youknow to just one customer that was the presidian airforce to competing in theglobal stage and serving commercial airlines, a big transformation was needed backthen, and it was a cultural transformation as well. We learned that we really need to havethe business imperatives you know at the same level...

...as the technical n and he engineering requirements as well. So that's wherewe really invested in our market intelligence units, where we started tofocus a lot on on marketing and not only on th the product developmentitself and that's when we learn it is no sense talking about successfulengineering, design or a successful product, because it ties up to themarket it all has to fit. You know that was a hard lesson that we learnedand that has been guiding us ever since, and I believe when we start the numberX, that's why we knew the business had to be the focus right, we're talking about creating a businessinnovation company, a business disruptor. It was not about disruptivetechnologies for the sake of technology. It was about disruptive business models.How can we really bring value to our customers and that may involve, forexample, the combination of technologies that are already therethat are already mature may not need to be further developed ormaybe just need to be customized. The real question is: How can I bring valueto our market to our customer in the shortest time possible, and I mean weare using to think it's always about developing a new technology and thatneeds not to be the case. I mean you have to be open. So that's hardlearned lessons off of the embrea. Is it's a great story? It contains all theimportant elements I would say when you work in in Embroyar accent,and you really work with disruptive business and andyou can, you can prove your case, then I guess you have to scale it up. You need totransfer it back to the matership to the MODY company. What could you sharewhat's important when you try to do that? Well, that's a almost a description of where we aretoday with our IITOP challenge, our EVITO aircraft and I'll talk aboutagame what we have been learning and some of the solutions that have beenchosen by us. I will not you know or just caution our audience. There's norecipe that there's no way we can say there's an answer like one size fitsall. It will depend a lot on the business that you're pursuingthe innovation you are working on. You may come to different assers and in thepast we have faced a challengis exactly whenwe hit this this moment when your innovative business is gaining traction, what to do with it where to fit how to make it work with the big organization and- and theanswer may range from well. This may fit an existing business of the companyand it will be tough because it's like, even though it's coming frompeople who work for the company, it will be perceived as they' not inventedhere from the existing business unit. So so it's a very delicate maneuver.You know to make sure this fit will be accepted, recognize it and that it willbe supported by the existing business unit. Another possible answer is this: May Bebig enough or relevant enough to be structured as a new business unit ofthe company, and that means assigning. You know its all management and givinga proper level of autonomy for this business unit to be run but again,herry delicate maneuver. The board has a strong say on that: What will hittell the investors about the future of the company? Ifyou're establishing you know a new business unit around this, this business you areiunovating around it is. It is challenging, of course, but there'sstill another answer, which is the one we picked at embro x at this moment,which is the spin of sometimes the the disruption is so dramatic and it may have a celeration needs thatgo beyond t the capacity of the company...

...to support all by itself, which means you need partners. You need to be open to to a differentway, to fund your innovation, Your Business innovitional efforts and that's why we lounched of Tobbrlast year, a company called evy urban armobility solutions, it's the spin ofthe very first spin of of ambrer x, because in our particular business casewe are convinced it is the best way to accelerate the project and to make ithit the market sooner rather than later so embriawiwo keep being a majoritypartner. WIWILL keep their supporting, but we are opening ourselves to a newway of running the business and, as you can imagine, it is a very challenging discussion andTebat inside the company. Before we get to this level of decision and just to finalize you know the range in one extreme, you could be. You keep running the business underyour inculbator. If it's okay to be, you know a certain size, that's apossibility, the other extreme! You just decide. This will not fit thecompany strategy after all, and you sell it and you leave you exit a teatbusiness, which does not mean you have not created Valo for your company andfor society, because someone else will take over and bring it. You know to thenext level of vallow creation so and in between ther are all of these differentalternatives that you, you at least have to analyze. What is the best answer in each context,but I mean we've studied a lot of cases in our industry and other industriesand wivhe note sait. It is so frequent, unfortunately, that you know valuablethat effort, innovational efforts that makea lot of sense. They die at this very moment because they cannot find the fit inside the organization and the organizationl eventually killsit, if not by a decision. Just you know started to death because it does not become a priorityor is not prioritized enough, and it's very tough. I'm not saying that as acriticis, because I know how tough it is both to be on the side of the bigoperation that has to make the budget allocation and t e priority strategyofdecisions and to be on the side of the smaller innovationunit. You know that is trying to sell the cases trying O to convince thestake holders that it is worth pursuing. You're listening to Magnus penker andguests on the playbold podcast in one of my books, I I wrote about Scott Maccnili. I hadit's the founder of son microsystem and I had a lounce with him in Silycovalli,maybe ten years ago, and I asked him- you know over a pizza Scottol, how? How did you manage todrive inovation in because they have thit Teid, recalled innovation that, butthey had like a son, MAG system system lab and how were you able to transferthat into the COMPA arsite exactly the same question and he told me magness, Irecruited the best people in the world and and then I asked Hem, of course,how we did that and that's another story. And then I asked him, but but when Ticanop pall this inventand, how do you make sure that it's, you know notreacted? And he told me that I give everybody in our lab twenty four monthsand they have to road shows every six months and if anyone in the world like theidea they had to take the family and t e have to move their. Otherwise theyfired, and I told him Mi you know in the s in the s eventually and he agreed, I tocelebito outdatedmanagement style it lorked back then reasonably. I come to the conclusion with ourclients working that most likely the combination of models. Sometimes youwould like to run satellite. Sometimes we have a sent central in laborth or orOrm, and sometimes you try to integrate it and work more holistically in thecompany.

But I also recently client asked me about what I callspenings wout. I try to basically avby themselves into markets. I have mydoubts. I have not seen many successful cases and I work with a lot of LorgeCorporation that done that I the past. It would be very interesting to hearyou take on that. Do you believe it's possible systematically and successfully overand over again by store, tats and integrate them into a large copration? Another great question and we've been you know, experimentin with that, I would say I nrecent ears. EMBREA has not been you know very strong acquire of companies, but Wi'th we'vh been, you know,experimenting I would I would describe as as that wet a reasonable level of success. But,but it is tricky is not easy and again, the mainchallenge to be overcome to be addressed is culture. Yeah is how doyou, you know, make sure your acquisition, yourspinning strategy, will not kill the value that you have paid for Xact. That's a that's, a very, very difficultbalance to strike, so you can have from the you know, Jack Wel approach of integrating asfast as possible, and just you know, coming with your strong and winningculture and that's okay. If the business you're acquiring is exactly inthe same you know, area is a direct competitor. Is someone who is alreadyworking in very similar activities? That's you know. That's a strategy isnot my preferred one 'Llyou, honest aboutit, but that'sthat's an approach. Yeah. The other approach is to keep thecompany as close to you, know autonomos or independent as possible to preservethe culture, but then there's a lot of missid opportunities. If you're not close enough, okay, thecompany may keep doing good, keep doing fine, being profitable growing, butmaybe you're missing that the chance to accelerate that growth you're missingthe chast to bring in a lot of valuable lessons, and you know positive conflicts if you try to work cosely together. So again, it's a matter of finding thebalance and that's a another learning from the Geddi right is the balance ofthe force. But how can you find the rihtas great? That's the balance. Youknow the one who will bring balance to the force, yeah Tink, his a great wayoff of elfare actually rap up this interview. It has beenamazing to listening to you and also to make sure to balance all the forces sfinally before we am this epic interview. There is a lot of youknow, executives and experts and also am to put our research listening tothis podcast. What advice would you like to give to them if they plan tostart up some sort of like in rasis center, less or Inicative,something that is not in the main company rorder outside? What so e thinkabout, I would say, and maybe I'll be biasedin my advice, because right now, I'm the CO of the X unit right, I'm the onekind of the outsider for the time te Il Migt, be that strongly biased, because one of my previous rules was technologydevelopment for the mathership. So I kind of had the privilege to be usingboth hats, and hopefully this will bring me to to a balane advice. I would say whatever it is. The modelthat the corporation is looking at is very, very important to make a clearcase to all the leadership about why you'redoing it and what is that that you want to achieve, because you need to gainsupport of the entire company Leadership D and people may ask: Oh,why does the you know manufacturing...

...leader cares about it? Why is itimportant to the tax team? Why is it important to AAR it's important toeverybody because we're talking about the long term, sustainability of thecompany it's about survival? So you know it is a task that is verychallenging and no matter how brilliant is the team that you are signe to runyour x unit? They will never succeed if they are not strongly supported by themothership by the rest of the company and I'm not talking about the tolerated. I'm really talking about himsupor beingseen s as you know, thes guys they are the ones who are trying to give us afuture. They are taking a very high risk. Reputation or is career, is and theyaredoing it to make sure our company has a sustainable future. So whatever it isthat I can do to help, let's do and if there's nothing I can do to help atleast I should be cheering for them to be successful. Instead of you know thetolerating mode where okay they're there, but I'm here I'm really doingtha. You know the important stuff. Why Al these guys? A E dreaming, because Imean sooner rather than later, it will come to a budget discussion or toassigning talents inside the organization and no matter how big theorganization is. Resources will always be a constraint and you will have todeal with tough decisions, and the best thing that can happen is for the entireleadership company to get together and acknowledge. There is some of our you know, energy of ourcapacity that needs to be dedicated to the future. That needs to be dedicatedto disruption, to doing things in a different way, and- and this isimportant not just for the ones working for the x unit- it's important for allof us, and if we can, you know somehow achievethis consensus and have you know the mothership being very clear about? Whyis the extnit be established? What part Havl benined and how critical it is foreveryone to support it? That's a very important way to start it is dangerous.You know if the the top leader like the co or are you know the chairming of the board if it comesfrom the top as just an another initiative, many people across theorganization will think that I mean that's fancy, that's the hype, that'syou know, everybody's doing it so will be doing as well. It's a bad way tostart. The best thing to do is before you even announce it or created it's tohave a big debate and get engagement so that the entire leadership of thecompany understands and supports. What's about to be done, I would say:That's the most important first step. There are many other important stepsalong the journey, but it's important to you know be off to a good start atat least thank you for sharing that Daniel. It has been a really a pleasureto have Yesi Gess. So thank you so much keep in touch. Thank you, my GanessTanke Yu. So much. Thank you for the audience as well for listening, and Ihope we will. We made tha valuable contribution to all the innovators andenterpreneurs. You know the companies of any size around the globe. We hopewe can inspire all of them and we hope we can have you all flying around inour evy Ivi Tos Yo, looking forward very soon yeah. Thank you, O Luch.Thank you and, of course, thank you for listeningto don't forget to find out more about magnesis neewbook by visitinginnovation, thre, hured and Sixtycom forwardplaybold, and join Magnus nextweek when, on episode, three of this new season of playboad he'll be joinedby Luca Prosati, the chief business innovation officer for the well leadingcruising company MSC until next time stay safe and play bold.

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