Chapter 5

Principle Three: Reverse Engineer Yourself

‘Discovery is seeing what everybody else has seen, and thinking what nobody else has thought.’

Albert Szent-Györgyi

Chapter 4 was about starting to realise the abundance of resources any company has acquired without noticing it. We did this by ­providing examples and prompts, and in particular by contrasting the conventional balance sheet view of resources with the entrepreneurial view. Starting this way builds confidence and can spark inspiration.

In this chapter, we’ll be drilling deeper into the details of your own unique vault of what I call your implied resources. An implied resource is something that logically must be there for the things you do to work. I find that people often overlook or discount these resources. Building off your implied resources can lead to growth options that are:

GoCo Gets Granular

GoCo owns GoCompare, one of the UK’s leading financial product price comparison websites. Founded as an insurance comparison site in 2006, the business expanded by adding naturally adjacent categories such as energy, loans and broadband.

But it has gone much further than that, partly because it had to. Its competitors had built up similar positions and it was hard for customers to tell the difference. As CEO Matthew Crummack explained to me, ‘The comparison site market had got to the point where everyone thought that success was only ever about whose TV advert people would remember: our opera singer vs the competition’s furry animals.’

Matthew and his team saw that view as extremely limiting. After all, the hassles customers have in navigating the opaque financial services market are confusing and costly. The potential solutions are sophisticated and can bring them a lot of extra value.

One of those solutions is auto-switching, which GoCo added through the development of WeFlip and the acquisition of Look After My Bills. Since then GoCo has continued its development using the kind of approach we’ll focus on in this chapter.

Sorting through its resources, the GoCo team recognised the opportunity to bundle them up into an architecture they call SaveStack. SaveStack consists of a collection of elements each providing a ‘microservice’. Each does a single useful job to help customers manage household finances. So there are microservices for payments, for switching suppliers, for shopping and so on. These elements talk to each other to provide various tailored solutions to the customer.

The fascinating thing is that this quickly became more than an elegant approach to software engineering. Why? Well, the more the team followed the SaveStack approach, the more innovative possibilities it gave them.

For example, they realised they could take the same microservices they used internally, package them appropriately, and offer them to external partners. So now, Virgin Bank uses the capabilities of SaveStack to enable its bank account customers to switch energy suppliers. From the customer point of view, this is all part of a seamless experience within their Virgin account.

SaveStack is an example of a granular ‘LEGO Technic’ way to do more with what you already have working. Let’s look more closely at that approach.

Level 3: Implied Resources

The scanning tools we used in the previous chapter are based on analogy: I’ve given you some examples and suggested you see if you can find something similar. This can be very effective, but it does tend to lock people into fixed categories of thinking. It can be hard to escape from those categories. Especially if you’re thinking in large LEGO block terms, the possibilities for reconfiguring things are limited.

So in this chapter we go more granular. The idea is to look at the specific things that work in your business directly, without likening them to other examples, and to reverse engineer the results-producing mechanisms you have. This is where you’re most likely to find unique and hard-to-copy ideas.

How programmers constantly reuse stuff that already works

Some of the most powerful insights about reusability come from computer programming. These insights apply more widely than just to writing apps. I first came across them in my undergraduate days as a computer science student. But it’s not necessary to understand all the inner workings of computers: the principle I want to share is quite intuitive.

One of the most important lessons a new programmer learns is that if you organise things right, you can reuse the same bits of computer code to do lots of different – but related – jobs for you. Here are a couple of examples:

Creating a general ‘tabulator’ or a ‘sorter’ has lots of advantages. The most obvious one is that once you’ve got something working, you can reuse it in new situations, and you’ll have saved lots of time.

During the early stages of learning to program, a lot of what you are learning is to spot opportunities to reuse code this way. You start by generalising code to cover different but obviously related problems. The real art is to transfer code between jobs that don’t necessarily look related.

You don’t need to know the details of how to code to grasp the idea. For example, let’s say you start with the code to draw a 5 cm circle across in the centre of the screen.

The next step in learning to program might be to generalise that code so that it could draw a circle of any size in the centre of the screen.

Then you could generalise it further to draw a circle of any size, in any position on the screen.

Then you could repeat the pattern twice, centred on two points, to draw a Venn diagram.

You could even repeat a few more times, with two sizes, so as to draw the Olympic rings.

And so on.

Reverse engineering what’s already working

This is where things get interesting. Once you get the idea of generalising code, you can work in the opposite direction. Any experienced programmer can interact with a piece of software and figure out what must be there in order for it to happen, at least in outline. In other words you can reverse engineer your way back to identify the implicit resources!

So if you saw a program that drew Olympic rings, you could make some inferences; for example,

Going further, we can infer other resources and possibilities. For example, the code must be relying on the ability to light up any specified pixel, and therefore could draw other shapes you might want.

How does this apply to the hunt for resources?

In our hunt for resources, we can look at things that are working in the business and infer what must be there that we might be able to apply elsewhere. This is what I was driving at with the discussion of GoCo. GoCo didn’t start out providing software services to banks, but it noticed that if it packaged up the microservices it relied on in the right way, a new growth opportunity opened up.

Or consider this example in a very different sector. McDonald’s doesn’t seem to be a property company, but that’s how Ray Kroc characterised it in a discussion with University of Texas MBA students. Maybe it’s best to see the twenty-first century McDonalds as both a property company and an operating company. The operating company has rediscovered a number of times in its history the value of staying close to its core: burgers. What about the property company? One of its implicit resources is great expertise in footfall analysis, vital for selecting prime sites for new restaurants. Could that form the basis of a consulting offering to other retailers or even to town planners? Note that I’m not saying that they should to this, that’s a strategic choice dependent on many other factors. But for our purposes, it makes a good illustration of this chapter’s theme of reverse engineering yourself.

To keep things tidy, you can use a table like Figure 5.1 to describe an implicit resource, ways of packaging it, and the value for that for clients.

How might these value-producing elements look in a Car Wash framework? Have a look at Figure 5.2.

This is just a thought experiment, but I think it’s possible to imagine such a consultancy offer being attractive. We’ve already seen that Lotus Cars makes around half its revenue from engineering consultancy based on know-how it built up in racing and sports car design, and Unipart – originally a car parts supplier – built a profitable consulting arm focusing on sales and factory improvement.

The value of looking for implied resources

To succeed in a competitive business, you have to offer customers a clear and different choice. If you are the same as everyone else, customers will just choose whoever is cheapest or most convenient. But being different feels risky. There will be many voices in favour of the safe, the proven, the ‘industry best practice’. These voices often discount the risk of being indistinguishable from competitors. Starting with what works, and particularly starting by leveraging your implied resources, offers a way out of the dilemma. The more you build off things you are already doing uniquely well, the more chance of distinguishing yourself at acceptable risk.

How to Look for Implied Capabilities and Resources

1. Ask: ‘How do we ‘do’ our product?’

Think back to the computer programming metaphor. The essential point is that any specific behaviour implies a more general capability.

2. Ask: “How do we ‘do’ our business, and how else can we use that?”

Look now at the wider set of activities in your business.

3. Look for excellence outside your core areas

In case the first two methods are too analytic for your tastes, try this approach suggested by Rooney Anand, former CEO of Greene King plc (and now Chairman of WorldSkills UK). Look for corporate old wives’ tales and trusted mechanisms that are not part of the core overt business, yet are key to success. It could be for example the way your business forecasts, buys, tests, sells or solves problems. You’re looking for areas that haven’t changed over the years. Not because of inertia, but because they are really good, often because they were developed by a real enthusiast.

Examples that are non-core:

The natural point of focus in a business is on the core elements. After all, these are seen as the ones that maximise value to the client or customer; they’re obvious. People often think of old processes as the domain of middle management, and as a place where problems and waste reside. This is axiomatic in the once-popular idea of ‘reengineering the corporation’. But sometimes, the opposite can be true.

I remember hearing an interview with Jonathan Miller, the poly­math doctor, computer researcher and theatre director. He was asked what the most important innovation in medicine had been in the twentieth century. His answer was a surprise: not penicillin, or better anaesthetics or better surgical techniques, but ‘better nursing’. Now, you can certainly make an argument that instead it should have been the other things, but this shows Miller’s sparkling intelligence and his ability to think more contextually.

Similarly, look at Formula One. The emphasis tends to be on the drivers and the car designer. But what about the pit crew? Their supporting role in the sport itself has been much appreciated of course, but their skills have also enabled F1 teams to consult on the organisation of surgical teams. Pit crews have learned a lot about extremely lean, error-free and fast coordination through the arms race in pitstops, and this know-how turns out to have valuable application in other areas.

The trend towards outsourcing and shared service centres has often positioned non-core activities as the Cinderella parts of the business. Yet is that the best way to look at it? The logic of ­outsourcing is that other people can do it better than you. But that’s not always the case. And if you’re better, maybe you can become a value creator for someone else.

4. Stand an old cliché on its head

An old cliché for creativity is to ask, ‘How many uses can you find for a brick?’ The brick question is actually a good exercise, although you are more likely to find distinctive applications if you identify an implied resource and then ask, ‘How many uses can you find for that?’ So for example, ‘how many uses can you find for huge experience of footfall analysis in urban areas?’

There’s some really interesting psychology here. In their book Inside the Box, Boyd and Goldenberg report research by Fiske.1 People are much more able to answer questions of the form ‘What other problems can you solve with this?’ than they are answering questions of the form ‘How many ways can you think of to solve this problem?’

We are actually more ingenious and prolific when we answer the first question than the second, and historians of invention think that more progress has resulted from the former.

5. Explore the significance of anomalies

One of the best places to search for implied resources is in the exceptions to day-to-day performance. Performance in businesses is rarely evenly distributed. But the tendency of management reports is to average things out, meaning they can hide important factors (recall that old joke about a statistician who drowned crossing a river of an average depth of two feet).

Whatever your average performance, it’s likely some of your interactions with the world have standout levels of performance. They are too often discounted as anomalies.

Elite organisations and top performers are much more acutely attuned to positive anomalies. They are also more appreciative of the significance of things. For example, the MIT first-year ­programming course described the course like this:

‘By learning to program you will acquire one of the most significant and powerful problem-solving processes known to humankind.’

Most course descriptions would have said: ‘Programming is a well-paid job’ or something similarly mundane.

So how do you sensitise yourself to positive anomalies? You can use both formal and informal ways of going about it. You could do some complex analysis of quantitative measures, but you can also do it qualitatively by being alert to surprises.

For example, call centres are notoriously bad at customer service, so when they’ve been good, I have on occasion asked to speak to the operator’s supervisor. The operator is usually crestfallen until I reassure them, thinking I’m about to complain. The supervisor is even more surprised. After the call, I always wonder if they will take the opportunity to figure out what that operator is doing well and to spread that internal best practice around the call centre?

Systematic things to do

6. When is a by-product not a by-product?

There’s often an emphasis on the negative by-products of processes – for example the NOx emission created by internal combustion engines. But sometimes by-products can be incredibly positive.

Consider this: Michael Smets, Professor of Management at Saïd Business School at Oxford University, drew my attention to the ­fascinating example of chickpea water, or Aquafaba. Aquafaba is the viscous water resulting when chickpeas are cooked. It turns out to have application as a vegan egg white substitute that can be used both at home and in the mass production of vegan food products including meringues and marshmallows.

7. Flip your mental frame with scaling: Ask, ‘How come we aren’t worse?’

I was in a first meeting with the operations director of a shopping centre. We talked about how things were going in general, and the director happened to mention a recent employee satisfaction survey that had produced very disappointing results. Actually he confided, the management team felt pretty demoralised about it. Clearly the poor feedback needed to be addressed. But to do that effectively, we had to do something about management morale so they could engage with the issue with positive expectations. Currently their opinion of the business was being framed by the survey results. To help connect the director with the resources he had available, I had to rebalance his mental framing of the situation.

I said:

‘Well, despite the disappointment of that survey, we have other information. As you’d expect, I did a Google search before coming here today. I believe you have 50,000 visitors a day. That’s up 7% on last year. Somehow, the vast majority of those visits go smoothly. People do their shopping, eat and use the various facilities. Some of them temporarily lose their kids and are reunited with them by your staff. There are first-aid incidents that are handled without drama. I’ve visited as a “civilian” many times myself, and know from my own experience that when a friend of mine lost their phone in a cafe, your staff handled it with cheer and reassurance. They found the phone for him and seemed delighted to have helped. So I know that at least some of your staff members have pride in their work. I also know that I personally have never had a bad experience in many visits. And come to think of it, I’ve never heard anyone else complain either. So, although this is all anecdotal, and although you’ve clearly got an issue to address here, you must be doing some things right. In fact, a load of people must be doing a load of things right. If we were to work together, that’s what I’d want to start with.’

The director’s mood visibly brightened, and at the end of the meeting, he said to me: ‘Your comment completely transformed my perception of how we’re doing. I feel a hundred times better.’ As you can imagine, we started working together soon after.

Even an average performer is doing lots right. We don’t tend to focus on that. Here’s a brilliant technique – called Scaling – for flipping people’s mindsets. It’s a technique from the world of solution-focused therapy that has also proven its worth in business.

Here are the steps.

We’ll revisit this scaling idea with a new twist in the Epilogue: ‘You go first.’

8. Recognise your survival and resilience resources

This approach is based on the following premise: to survive, you must have dealt with various challenges. To do that, you must have drawn on effective resources. There are basically three ways to handle survival challenges.

Where have your company’s responses to challenges – for example, the recent COVID-19 crisis – left you stronger, so that you can teach, consult, invent, or otherwise transfer those resources to new situations?

A Reinvention Thought Experiment: Giving ‘Sin Stocks’ a Way Out

‘Always give your enemy a way out.
If you totally surround them, they will fight even more fiercely.
With a way out, they will not.’

-Sun Tzu, The Art of War

This final example pushes the idea of using implicit resources by applying it to a very hard situation: reinventing a company facing an existential threat.

With the rise of Socially Responsible Investing (SRI) and the Environmental, Social and Corporate Governance (ESG) agenda more generally, there are many industries which are experiencing pressures from governments, health organisations, campaign groups and even shareholders. What is the future for companies with questionable ethics?

Some will no doubt attempt to ‘fight even more fiercely.’ But others might be open to change if they could see an escape route. However, even if they want to unwind their activities, it may be very difficult, in no small part because of many people whose economic futures depend on their continued existence. Take the tobacco industry, for example. As badly as individual growers have sometimes been treated, they still depend on cigarette manufacturers for their livelihoods. And many otherwise innocent pensioners may also depend on the preservation of value in these companies.

Let’s say a cigarette company decides to get out of tobacco completely. And they don’t want to cram into the overcrowded temporary life raft of vaping, judging it economically shaky, and no more than a moral half-way house unlikely to satisfy dissenting stakeholders.

What do they do? Well, what if they start by looking for what works – what are cigarette manufacturers good at? They certainly used to be world leading in sales and marketing – in the history of advertising it’s hard to think of a more iconic image than The Marlboro Man. But governments have severely limited what cigarette companies can say and do over the last few decades. Marketing is unlikely to be a strong suit now. They need to look somewhere else.

How about procurement and logistics? Buying is extremely ­challenging: how do you maintain consistency with all the agricultural variables at play? And what about the capability to distribute to hundreds of thousands (millions?) of locations globally, often in places with challenging infrastructure?

What have cigarette companies had to learn in order to do that? What are the underlying routines, know-how and relationships? And: what else could these things be used for?

For example, how might those provide support for online e-commerce distribution? Or medical distribution? What about synchronising large networks of small producers of other crops, such as sorghum? (Sorghum is increasingly in demand. It’s used for food, in sorghum syrup or ‘sorghum molasses’, as animal fodder, in the production of alcoholic beverages, and in biofuels.) In case this thought experiment seems fanciful, did you know that Coca-Cola, a business with comparable abilities to get their product to far-flung locations, uses this capability to distribute medicines in their existing boxes? They pack them in the spaces between the necks of the bottles.

An ethically questionable business is unlikely to unwind its harmful activities without an economic path for it to do so. Starting with what works may be its best chance of a way out.

Summing Up: Will a Great Idea Work in Practice?

In my experience, teams find the process of uncovering new ways they might use overlooked resources – whether generic, hidden or implicit – extremely energising. It’s great to come up with new ideas like this, but just because they are based on what is already working doesn’t mean that they will work themselves. So, in the next chapter, we’ll bring some scientific humility to temper any alchemical hubris, and let the world teach us what works.