Greg McKeown:
Welcome back, everybody. I’m your host, Greg McKeown, and I am here with you on this journey to learn how to be able to design a life that really matters.
Have you ever felt an intuitive insight pull you toward a particular direction? Have you ever had an experience that you knew was right even though you didn’t yet have evidence to support it? Well, today is part one in a two-part series. By the end of this episode, you will feel greater confidence in trusting the intuition in your life so that you can solve problems that are hidden below the surface.
Let’s get to it.
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Rich, welcome to the podcast.
Rich Horwath:
Greg, thanks very much. Great to be with you today.
Greg McKeown:
You talk about a strategic quotient, something that people need in order to be able to. What is this, and why does it matter?
Rich Horwath:
Well, for many years, we’ve heard IQ is important. In order to get hired, we need to have the intellectual capacity. Then for many years now, we’ve heard of EQ, the emotional quotient, the emotional intelligence. So it’s not enough just to have that smart aspect. We’ve got to also be able to connect with people to read the situation, to understand our emotions, and adapt. Now we want to talk a little bit about what does it mean to get to that next level, that C-suite level, that executive level.
Greg McKeown:
Yes.
Rich Horwath:
We need IQ. Yes, we need EQ, but what the research is finding is we also need that SQ, that strategic quotient, the ability to think, to plan, and to act strategically, not once a year when we do strategic planning, but on a continuous basis.
Greg McKeown:
When you say, the research shows that, what research is behind this work on SQ?
Rich Horwath:
So currently, we’ve got about 2,300 people that have taken the SQ. People from large organizations, small organizations, typically people, managers. And what we found is the assessment is really based on three areas. It’s acumen. So how do people think strategically? It’s allocation, how do people plan strategically, and then it’s action. How do people act strategically?
So the assessment looks at those three areas and then builds a composite score as well. And the research with the 2,300 people initially has found that the average score is around 69 out of a hundred. So certainly, there’s room for people to improve. And interestingly, a lot of the great work that you’ve done with Essentialism and following that up as well, we think about what can we do well and what can we stop doing in order to be more effective. That really targets the allocation part of the strategic quotient, and we’re finding that’s the lowest score of the three.
So your work has been very important for many years, and I’ve tried to add a little bit to that, just around resource allocation. What are we going to choose to do, and just as importantly, what are we going to choose not to do?
Greg McKeown:
Tell us more about you. Give us the Reader’s Digest version of your life.
Rich Horwath:
So about 25 years ago, and I know I’m dating myself now, I was working for a firm writing strategic plans, and we were in a strategic planning session, and at the break over coffee, one of the managers came up to me and said, “Rich, I just had my performance review. And my boss said I’m too tactical. I need to be more strategic. How do I do that?”
And so Greg, at that point, 25 years ago, we had Michael Porter’s books on strategy and corporate strategy, competitive strategy. We had some things from Hamil on strategy really at a corporate level. We didn’t really have anything for the individual leader to go from tactical to strategic.
So 21 years ago, I started my own company to really build on that passion to help people, the individuals out there, think, plan, and act strategically. Again, not once a year, but day in and day out. So they could really effectively maximize the resources, the time, the talent, and any budget they had to be as effective as possible in achieving their goals. So since then, I’ve been very fortunate to work with folks from all over the world and really give them an opportunity to roll up their sleeves and use practical tools to help them be more strategic on a regular basis.
Greg McKeown:
How did you start that business literally from, let’s say, the first three months of your business? Were you working as an executive coach to individuals or just sort of doing whatever work you could find as you started your own business?
Rich Horwath:
Great question. So I started initially doing strategic planning, so helping companies form that plan to go from where they are today to where they want to go in a year or two years, or three years, or five years. So we went through that entire process, and what I realized is that many people going through the process were simply using a check-the-box mentality.
We did a SWOT analysis, check the box off, we did this, check the box off, and there was little thinking going on. The plans were looking the same year for year, for year, exactly the same. So I stepped back after that first three to six months and said to myself, I really need to help people understand how to think in addition to planning.
Greg McKeown:
Okay, so that makes sense to me. The idea of having a strategic offsite where people do this thinking, get something written down, and then forget about it is a well-known phenomenon, right? I mean, I’ve seen that myself. I’ve participated in that myself. So what’s different in what you are doing when you say it’s broken before that suggests you fix something? What’s the fix?
Rich Horwath:
Right. So what’s broken is people, and the research supports this. Research out of McKinsey shows that 92% of managers allocate their resources exactly the same way year after year. However, as you’ve been in these offsite meetings, what we typically find is that first couple hours, we’re talking about all the changes that’s happening with the marketplace with the customers. Today we’re talking about things like what’s the impact of AI, ESG, all of these things that are impacting us. But when the plan is coming out of the end of the funnel, it looks the same as it did last year. People aren’t changing the way they allocate resources.
So intentionally, what I’ve done is I’ve given people very little leeway to say, you can’t do everything. We can’t take the peanut butter approach and spread the resources across everything. You get to do two things next year that will make or break your business. And so now what we’ve done is we’ve given people a finite sandbox to think and play in. And so because of that, they have to really determine where’s the area of focus and, just as important, what are those great eight things that we’re not going to do? So that’s what I’ve tried to do with the thinking aspect of being strategic is really force people to make the trade-offs that most people are unwilling to make.
Greg McKeown:
Okay. So I want to just break down the question even more and also enlarge it a little to people who are listening who aren’t executives in a business; maybe they’re not running a business at all. But the question is a human question, not a business question. If you just tilt the language a little bit, and I think that’s the spirit of what you’re doing. So what are the two things that will make or break your business or your life in the next year? Okay, so that’s an interesting phrase, make or break your life or business. How will someone even figure out what would make or break their life or business?
Rich Horwath:
Yes, great question. So again, when we think about make or break, we think about, first of all, what’s, and let’s step back even for a moment. What’s my purpose? What am I here to do? So we, first of all, need to understand what our purpose is.
Greg McKeown:
Absolutely everything within any of the above, anything within time management, within strategic planning, within quarterly personal offsites, daily planning. It doesn’t matter what the instrument is or the unit of time is in the end. Eventually, you get back to this massive question of what’s the whole purpose of it all? Do we sort of semi-ignore that as part of what you’re saying? What’s your answer to that question? How are people supposed to think through that question?
Rich Horwath:
Right? Great. Yeah. So what I would consider is both from a business and an individual perspective, I like to have people go through a purpose channeling exercise, and we’ll break it down very simply.
First of all, we think about what do we want to achieve in the grand scheme of things, business and personally. What do we want to achieve? Then what we want to consider is let’s go back in time in five to 10-year chunks and think about what were the moments when we were most engaged, where we were most fulfilled in reaching the things that we were trying to achieve at that point. What did those things look like? Then, if we’ve got those pockets of five to 10 years, let’s go back 20, 30 years. It can be hobbies, it can be athletics, it can be the arts, it can be business.
Now what I want you to do is let’s pull out the themes. What were the themes that were driving that were at the heart of those things? So it could be things like competition, it could be preparation, it could be excellence, it could be empathy. What were those themes? And now, once we pull those themes out, those then can act as channels for us to consider. These are the areas where we’ve been most engaged at a deeper level from a business standpoint or an individual standpoint.
Now, what we want to do is use those as the filter as we look at the opportunities before us individually or business-wise and say, which of these opportunities fits into these channels? And if they don’t fit into the channel, then that’s something that we probably would say that’s going to move outside of what we’re going to do.
Greg McKeown:
So there’s a famous idea that says success leaves clues. And what you just said could be restated as purpose leaves clues. So if you look back in your life, rather than asking the huge question, what’s the purpose of life? You’re saying, look back at the life already lived, and when did you feel most on target? When did you feel that your life was most in alignment with purpose? When did you feel life was most meaningful? And so from that, you’re extrapolating from that data, you say, well, therefore, that must be closer to what the purpose of your life needs to be and what you need to be designing around. Did I get that right? What did I get wrong?
Rich Horwath:
Yes, excellent. And just to build on what you said, if we’ve done a good job in coming up with those themes, we can see then how so many things in front of us today are extraneous. They’re noise. They don’t really contribute to what drives us. And that’s the thing I love about your work, Greg, is that you’ve helped people get back to the core of what really matters and how do I channel what I’m doing into those things that really matter. And just as importantly, how do we filter out the noise? Because I believe that’s what people need to do today. The average person checks their smartphone every 10 minutes, 96 times a day. That’s ridiculous. We need to be able to monotask, not multitask.
Greg McKeown:
Yeah. Well, there’s no argument from me or listeners about that. And the pressure in life itself, I think, has increased so substantially that people go to technology and go to social media, YouTube, Netflix, I’m putting all of that into it as well as a coping mechanism, which there is some advantage to it, but of course, it’s not as clean, let’s say, as other coping mechanisms are. We’re cluttering our minds even as we’re also taking a mental break from the other things that stressing us out and being overwhelming.
But let’s come back to this process now. So it’s not a hundred percent clear to me what you mean when you say pull out these themes, right? I understand what themes mean from what you’ve said. Empathy was a key element for when I felt my life was most in alignment with its purpose. So is that what you’re saying, just a series of keywords that name what it is that you’ve been doing that was most meaningful? Is this what you’re saying?
Rich Horwath:
I love your point there because what you’re doing is you’re getting to the real essence of the theme, and that’s the behavior we have to get to the behavioral aspect of it. So the theme is important because let’s use empathy. The theme of empathy is important. We’ve seen that in different facets of our life. That’s a resonating theme. But now what we want to do is determine what were the behaviors that we used to engage in empathy, and now looking at the job or the work or the hobby in front of us today, how do we take those behaviors that exhibit empathy and now use those in pursuit of the things that are in front of us? So you hit it exactly on the head. It’s not just the theme; it’s the behaviors that manifest the theme.
Greg McKeown:
Okay, so then, staying with empathy. If I look back at my life, for example, I can say, well, there’ve been an enormous number of moments that have felt disproportionately meaningful to me, that have involved empathy and particularly proactive, robust, restating listening, precision, understanding, pinpointing of issues within somebody’s life or a team’s circumstance and trying to unlock what’s kept them back. These would be some of the specific behavioral descriptions that you are alluding to. Yes?
Rich Horwath:
Yes.
Greg McKeown:
Okay. So now armed with that, what’s next?
Rich Horwath:
So next is then the channels themselves. So when we look at that, if we’re looking at this, let’s say, from a nonprofit perspective, we want to do more volunteering. So then we’d say, okay, based on your ability to have that pinpoint precision to understand needs to get into the deeper essence of what people are trying to do and listen to them, how could you use that in the community that you’re involved in?
So there might be a nonprofit healthcare organization in the community that’s not really in tune with what the needs are. Let’s say homelessness is an issue in our community. We want to help people. We want to make sure everyone has access to shelter. So you might say, I’m going to take my empathetic behaviors and skills and apply that to this nonprofit. I’m going to volunteer there, and I’m going to work with community leaders to interview them to understand what are the exact resources available in the community, and then I’m going to interview and talk with some of the people who don’t have shelter today, and then I’m going to try to connect those dots and make sure that we’re doing as much as we can with the resources we have in order to help those people find a good life.
Greg McKeown:
There’s quite a leap you just made there because we are going from behaviors, and then suddenly you are saying, well, we’re choosing channels, and you chose a nonprofit channel for our conversation. But of course, it’s something like an unlimited number of channels that somebody could be applying those sets of skills to. So how is somebody supposed to think through which channels in their life they should be applying something like their superpower to?
Rich Horwath:
Right? So again, it’s going to come back to what you talked about earlier; we talked about the idea of purpose. There’s always going to be certain activities, areas, topics, and organizations that hold greater interest to us. There’s many important causes today, but as you know, we can’t be involved in all the causes. We can’t spread our resources that thin because we’re not going to bring great value to anyone. So it really comes down to when you think about your purpose, and there’s books written on purpose, but for me, it really comes down to what are the values, the mission I have, the current purpose, and then the vision. What do I aspire to? If I’ve taken time to articulate those three things, my day-to-day values, the three to five traits that drive my behavior, the mission, why I’m here on earth, the things I’m meant to do, and then the vision, what I aspire to do in 10 years, if I’ve clarified each of those three items, that’s going to then point my interest to let’s say the homeless shelter work versus taking care of animals.
Greg McKeown:
Yeah. The thing is what you just said, what your answer is. I mean, I’m in favor of everything you just said, that if you can have clarity about everything that has worked for you in the past, if you can have clarity about your vision 10 years from now, and if you have clarity and if you have all that clarity, then that’s going to help you have more insight into what to choose. I mean, yes, that has to be true, but it’s still like, well, if you want clarity about what to do now, what you really need to have is clarity about all these other things in order to then have clarity about this, which might be your answer.
Is that your answer? Is that what you are saying? Hey, listen, you have to spend a lot of time, a lot of work going through a strategic planning process and making trade-offs to figure out what you want to achieve eventually, and then from that, translate that into your daily activities. Is this what you’re arguing?
Rich Horwath:
I would say it’s really about what are your goals. What are you trying to achieve? And again, the goals will come from purpose, but I think goals are more finite in nature. So the goal is really what are we trying to achieve? What am I trying to achieve based on, again, and to your point, the goals can often come from understanding what are my core competencies, so what’s my area of expertise, my knowledge, and what are my capabilities? What are my skills and resources?
So I often think, Greg, to your point, what are my goals? What do I want to achieve based on what my knowledge is and what my skills are? If I have no knowledge and no skills, I’m probably not going to be as valuable as you are, let’s say, giving a keynote speech if you have that knowledge and have that skill set. So the goal, to your point, is I dictate my interest and purpose and passion and channels by understanding what I’m trying to achieve based on my core competency, my area of expertise, and then my capabilities, my knowledge, and skillsets.
Greg McKeown:
Okay, so here’s my challenge back to you, right? Is what you are telling me right now, how it sounds to me, is strategic planning. I’m not saying people shouldn’t do more strategic planning. I think modern life eliminates so much space for thinking at all that life becomes almost for everyone, almost all of the time, reactive. So they’re just responding to the last email. They’ve got an endless to-do list that gets longer by the end of the day than it is at the beginning and end, right? And everybody listening to this recognizes this at least some of the time.
Now, what you are saying, I think, is you need to do more strategic planning, but I want to challenge just to understand this. Are you saying you have something new to offer about strategic planning that other people about strategic planning have not offered? Which I think is what you’re saying, or are you saying, look, common sense isn’t common practice. Modern life makes us not strategic planners. I’m advocating that we do more strategic planning. Which of those two, which is most true?
Rich Horwath:
What I’m saying is that we’re missing the thinking aspect of the plan, that what we’re seeing, and to your point, we’re always reacting where everyone’s like bumper cars at a carnival, where we’re bouncing from one thing to the next with no rhyme or reason. So what I’m saying is it’s not about the plan; it’s about the thinking that needs to go into the plan.
You talk in Essentialism about the importance of isolation, of removing yourself from the day to give yourself that opportunity to think, as you articulated earlier, which I absolutely think is crucial. So what I’m saying is not to do more strategic planning. What I’m saying is to take the time to generate insight, and I define an insight as a learning that leads to new value. Take the time by talking with others, getting different resources, gaining different perspectives that all will help you consider your purpose, your channels, your goals, your capabilities, and your competencies, so you can bring new value.
I think the thing I’m saying is new growth, whether it’s individually or from a business standpoint, requires new thinking. And what I’m saying is people don’t stop and don’t have the techniques to think in new ways. As you mentioned, they’re reacting. They’re not proactively thinking about where’s the new value that I can bring to my company, to my community, to my family.
Greg McKeown:
Yeah. Okay. So you are advocating for strategic thinking, not just strategic planning, and that’s a particular framing that I think seems most relevant in a business setting where strategic planning is happening and strategic thinking you’re saying is not happening. So that’s what you’re saying your value proposition is to a business, to an executive, to a manager in a personal setting.
It seems to me, at least, that it’s a little different because I think that it’s just so easy for people to live a life without even strategic planning. And I don’t mean every single person listening or watching this right now is perfectly reactive all of the time. I’m not saying that, but if you compare life now to, let’s say, 150 years ago, which was a much, much tougher life to live 150 years ago, we romanticized it, but it was extremely difficult to survive.
But there was plenty of time to think, and so now we have it reversed where surviving is much easier in most parts of the world, even though we tend to think of it being just living in endless violence in the world. It’s a much safer place than it was 150 years ago for most parts of the world now, much better health prospects and so on. So it’s like we’ve reversed it, which is much easier to survive in comparison to then, but much harder to think in comparison to then. Somebody once said to me, “I’m too busy living to think about life.”
Is that who you are writing to?
Rich Horwath:
We talked about the reactive. We need to live with intention. And again, intention comes back to taking the time to understand what’s important to us, what’s the value that we can bring, and how do we create that new value.
I often think from an individual standpoint, we need to adopt the business model. The business model, as you know, is three things: How do you create value? How do you deliver value? How do you capture value?
I’m a big fan individually of saying, let’s place that business model on ourselves as people and say, how am I creating value in the world? How am I delivering it? And then how am I capturing it for myself, my family, my friends, and so forth? If we do that…
Greg McKeown:
Slow that down again for people not familiar with that model. Okay, so this is three questions. Of course, it’s relevant to a business audience, but you’re saying to everybody generally three questions again are, one,
Rich Horwath:
How you create value.
Greg McKeown:
How do I create value? Two,
Rich Horwath:
How do you deliver value in your interactions? Your communication?
Greg McKeown:
Yeah. And then three, how do I capture value, which in a business setting is, okay, how do I get paid for the value I’m creating? But in a personal environment, it would be what?
Rich Horwath:
In a personal environment, it really comes down to the relationships. So when you think about capturing value, how fulfilling are the relationships that you’re in with other people, and how do they feel about the relationships with you? That’s really where the capture comes in individually, is the relationships.
Greg McKeown:
So if somebody wanted to build a more valuable relationship with somebody in their life, how could they do it using those three questions?
Rich Horwath:
I’m a big believer that people that were evaluated in the long run, not on our words alone, but on our actions, and the fundamental unit of an action is your behavior, which potentially can be your habit. So what I would say is look at your behaviors.
When you’re in a relationship with your partner, and you’re thinking about creating value, do you come home, throw your stuff on the sofa, and turn on the TV, or when are you creating value? Are you stopping at the store, picking up some groceries, and making their favorite meal that day? That’s a behavior that creates value. And then, when we think about delivery, how are we approaching other people? Are we approaching them with a question? Are we asking them about themselves? What’s new with them? Or are we just dumping our emotional laundry in their laps? So I’m a big believer, Greg, in behavior as part of that business model in creating, delivering, and capturing value.
Greg McKeown:
Thank you. Really, thank you for listening to this episode. What is one thing you can do immediately in the next 5 to 10 minutes to be able to turn this conversation into action in your life? And who is one person that you can share that action with so that they can help you be accountable, and you can help them?
For all of you who have written reviews on Apple Podcasts, thank you. If you haven’t done that already, you have the chance to get free access to the Essentialism Academy simply by writing a review, posting it there, and letting us know about it. Go to gregmckeown.com/essential for more details. Thank you, and I’ll see you next time.
