Vaughn Tan – Quality and Innovation

**Patrick O'Shaughnessy** (0:04)
Hello and welcome everyone. I'm Patrick O'Shaughnessy and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, methods, stories, and of strategies that will help you better invest both your time and your money. You can learn more and stay up to date at investorfieldguide.com.

**SPEAKER_1** (0:24)
Patrick O'Shaughnessy is the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.
Clients of O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.

**Patrick O'Shaughnessy** (0:49)
My guest today is Vaughn Tan who studies quality innovation and organizational behavior. His resume is bonkers. He's a PhD from Harvard, was an infantry signals logistician in the Republic of Singapore Army, then worked at Google on advertising, Earth, maps, spaceflight and fusion tables. He's also been a wood sculptor. But the topic of our conversation is how to foster quality and innovation in ourselves and inside of companies, lessons he learned in part by studying inside of some of the world's best restaurants.
If you enjoy this conversation, I recommend you also check out his brand new book, The Uncertainty Mindset Innovation Insights from the Frontiers of Food, which is linked in the show notes. Now please enjoy my conversation with Vaughn Tan.

**Vaughn Tan** (1:32)
Over time, I've begun to realize that everyone who makes something that I really like has some extremely unusual idea of what quality means for that thing, right? So whether it's a chef who's making what he or she thinks is really high quality food or a farmer who's growing what he or she thinks is really high quality produce or a furniture maker, I used to be a furniture maker, who's making what he or she thinks is really high quality furniture. They always have some definition of quality, some set of criteria that I don't know about, but when I hear about it, I'm like, yes, that makes sense and that explains why you do what you do.
And also now makes me want to use that as a standard for quality. I just want to ask people, you make this thing, whether it's a knife or a business or furniture or food, tell me what's important to you when you're making it.
Tell me what's not important to you when you're making it. Tell me why and tell me how you got to this point, because everyone always goes through these like evolutions and how they think about quality. And that's really what I'm trying to get to, right? Like how their idea of quality is different from everyone else's idea of quality and how that makes a difference in what they're doing.

**Patrick O'Shaughnessy** (2:36)
What's one example of a person and their interesting definition of quality that you've talked to?

**Vaughn Tan** (2:41)
My favorite wine bar in the world is a bar in Copenhagen called Vittstranden. And the guy who started it was, I mean, we ended up spending two and a half hours talking about it.
And his idea of quality in a wine bar or any kind of hospitality establishment is these are his words, actually. It's a place where if you come, you are forced to, but also enjoy meeting people that you would not normally meet. So the moment he said that I completely understood why I love this place so much, because that's exactly what happens. You go there, you always meet someone that you weren't expecting to meet. They become people that you sometimes know for a long time.
It's a really wonderful place. I think actually that this is something, it'll sound a bit like a tangent, but it's not a tangent.
In the strategy world as well, one of the default assumptions of strategy thinking is that everyone's pursuing the same outcome. That's how you can compare all these different strategies for achieving the same outcome and see which strategy gets you that outcome the most. That's actually not true. Lots of companies choose to pursue different outcomes and that's what makes them innovative and successful. I think this idea that there is lots and lots of heterogeneity in terms of what thing you're pursuing, that's actually where interesting strategy begins. I think it will be the same. Nobody ever makes a really, really great product by wanting to make a product like everybody else does. They always make a really great thing by figuring out why all the other stuff that exists in the market is not quite right for them and then they go and they fix this problem.