The Companies That Sound Most Confident May Be the Ones to Worry About

**Phil LeBrun** (0:02)
I met a CEO years ago. I read this shareholder report, talked about digital transformation everywhere. I said, what is this digital transformation? He said, well, we haven't started yet, but it's added $5 to the stock price.

**Rachel Warren** (0:17)
That was Phil LeBrun, former CIO of McDonald's. He joined me along with Dr. Yana Werner, AWS executive advisor, to talk about their book, The Octopus Organization. I'm Motley Fool analyst, Rachel Warren. Phil and Yana unpacked why 70% to 90% of corporate transformations fail, what those warning signs actually look like buried in an earnings call, and how to tell whether a company's AI strategy is a genuine competitive edge or just a stock price talking point. Enjoy.
Hello, everyone, and welcome back to Motley Fool Conversations. I'm Motley Fool analyst, Rachel Warren. Today, I'm excited to welcome Phil LeBrun and Dr. Yana Werner to the show.
They are advisors to Fortune 500 leaders at Amazon Web Services and co-authors of the brilliant new Harvard Business Review Press book, The Octopus Organization, a Guide to Thriving in a World of Continuous Transformation. Dr. Yana Werner is a global keynote speaker, executive advisor and business school guest lecturer at world-class institutions like Oxford and London School of Economics. She currently serves as an executive in residence at AWS, advising Fortune 500 executive teams on innovation, AI strategy and change management. Throughout her career, Yana has led massive digital transformations in financial services, scaled tech startups to successful acquisitions, and built AWS's enterprise transformation practice across Europe, the Middle East, and Africa. Phil LeBron is the former international CIO of McDonald's Corporation, global keynote speaker and university guest lecturer. Phil now leads the global AWS executives and residence team. It's a group of former enterprise and public sector leaders to mentor Fortune 500 companies on cloud technology, generative AI, culture, and organizational agility. Phil, Jana, welcome to the show.

**Jana Werner** (2:02)
Thank you, Ruth. Thank you so much for having us.

**Rachel Warren** (2:05)
I'm excited to talk through a lot of the core themes of the book as well today. But I have to ask, why the octopus metaphor? That seems to be a foundational question to ask.

**Jana Werner** (2:15)
That's a fair question. Well, we got inspired because we didn't want to name a company. No company is this ideal model of what we're talking about. Companies can strive through to become a bit more adaptive, more iterative, more intelligent at the edges. But even when you do, you might snap back.
We wanted to pour it into a metaphor that relates to people. We found, we learned that the octopus is absurdly sophisticated in adaptation and in changing and adapting to environments. Its skin, its textures, its color, it even can change its RNA. For example, if it switches from cold to hot water, it can change its RNA, its chemical makeup within hours. But most importantly, two-thirds of an octopus' intelligence is neurons on its arms. So they can operate, sense, and react, and act independently and quickly, and don't always just need to go to the center. We need more of that in our organizations, less of this traditional centric way of doing things. So there's the octopus. It also can play the piano, but that's a really useless fact that's not going to help.

**Rachel Warren** (3:17)
So it's a fascinating point. I think it also really sets us up well for today's discussion. One of the things I wanted to get both your thoughts on, we're in a time where globally enterprises, companies across industries are pouring billions of dollars into AI, infrastructure, migrations, a new wave of digital transformation, if you will. But we know that the data shows that there are a significant number of large-scale transformations that ultimately fail. So I wonder from your respective vantage points, why does corporate change consistently fracture or fail? And what are maybe the hallmarks that that's going to happen rather than achieve success?

**Phil LeBrun** (3:55)
The data has been pretty consistent over the past few decades. Seventy to ninety percent of transformations don't see the benefits that were predicted when they were started. And much of what we found is we apply old ways of thinking to an old organizational model and expect something new to result.
So we use the metaphor of a tin man to describe organizations that are still based on 19th and 20th century norms. So the tin man in Wizard of Oz was heartless, slow moving, creaking, rusting. And if we look at organizations and how they operate today, often they're operated like machines.
And if you think back to the 19th century with factories, for instance, where people were measured on producing more and more nails or cars or whatever it may be, it's all about compliance and predictability, measuring the tasks, measuring the individual. It's sort of worked then, but we're in a complex world now where a small change in one area of the business has this ripple effect, the second, third, fourth, fifth order impact that's really, really hard to predict if you can even predict them at all. So we are still applying that sort of project planning five-year plan to try and change an organization to be one that is more adaptive and resilient. And it's like trying to predict the future. It simply doesn't work.