Transcript – Heuristic Podcast with Per Bylund

Below is the transcript for Heuristic Podcast #11 – Prompt Grassroots Decision Making Often with Per Bylund.

Alicia: Hi there, it’s Alicia with another heuristic podcast. And today I’m with Per Bylund and he is an associate professor of entrepreneurship and the records Johnston professor free enterprise and the school of entrepreneurship at Oklahoma state university. Now that’s a mouth full and that’s a lot of very interesting things. And one reason I wanted to be sure to speak with him is because of this blend of entrepreneurship and academia and economics that I think that Austrian economics, in particular, that I find to be very, very fascinating. So thank you Per. Is there anything that you’d like to add about yourself for people to know?

Per Bylund: I don’t think so. You covered the main parts of it, but I guess you could add that I’m a Fellow with the Mises Institute, and the Mises Institute website is the world’s largest economics website. I’m not sure that means a whole lot, but in this case, it’s really big because they have constantly new material and plenty of books and really scholarly works too that are just free for everybody.

Alicia: Well, thank goodness that people are writing… Well, I know what the Mises Institute is, so I’m ashamed that I did not mention that and it’s very impressive to me. I have made an effort to read some of Mises, but hoo, it’s dense!

Per Bylund: The problem is when someone is writing in their second language, it typically ends up dense. And if your first language then is German, it’s even worse. And that is, unfortunately, the case with most Austrians.

Alicia: Yeah. Okay. Well, see that explains everything but I like dense stuff, but I do get challenged by that. And I’m like, wow, this is someone that’s smarter than me, but let’s see what I can pick up.

I do like having people like you who can interpret things and make it a little bit more, I don’t know, understandable by the layperson <laugh> by the lay entrepreneur like me. But anyway, so the heuristic today is prompt grassroots decision making often. And one of the reasons why I bring that up and just, I guess, clarification for you or anybody that’s listening that doesn’t know. My background is in human resources, I’m running a fractional human resources firm for very many entrepreneurs. So, I make it very entrepreneur-friendly.

One thing I learned is sometimes folks need a little reminder to push decisions down and out into where there is skin in the game. Where the people making decisions about things are the people that are doing the things. It helps keep from getting too much top-down. But that’s where I came from in terms of writing this heuristic.

I was just curious. From your perspective, what does it mean to you?

Per Bylund: Well, I think it’s spot on but maybe not strong enough, cause I would say push decisions down as far as possible, as often as possible. Simply because people in general and people that are close to doing the things have a lot of information and a lot of understanding that it’s really, really difficult to transfer and communicate to decision-makers.

You will have to sort of translate it into, well, in scholarship we would do it through mathematical models, but in organizations, you would do it through different kinds of statistics and calculations of different metrics and things like that. And you lose a lot of information.

In order to produce a good result and a reasonable decision, really, you should make decisions as far down as possible. And I think in general, we, as people, we really like to control stuff. So we want to push things up and then we want to make sure that we have things under control. And when I teach entrepreneurship, I talk to my students about that too.

That, as an entrepreneur, you don’t want to let go and you want to keep everything in -house and you should hire another person whom you can use, even if it’s just for part-time whatever, but then you have that resource in house and you can rely on it. Well, I mean, you’re losing a lot of information too, and you’re losing a lot of flexibility because suddenly you have that person in-house and all the costs with that person being in-house, whether or not you use that person’s skills.

It’s usually better to just let go and in this case, let the market mechanism, the price mechanism be what coordinates resources instead. Buy the services from others and outsource as much as possible, focusing on where you contribute the most value.

Alicia: I mean, entrepreneurs, and I’ve learned that I’m more of an entrepreneur than an HR person by far. Anybody that knows me well realizes that. But there is an element of “this isn’t getting done right”, so I want to control it and I want to do things differently and I’m boots strapped, so I’ll do this myself.

Why would I want to do otherwise? It’s scary. It’s scary to let go and it’s scary to take on an additional cost if you can’t a hundred percent forecast what the future brings. I know that that’s something that I feel, and I think a lot of entrepreneurs feel that as well.

Per Bylund: Of course, entrepreneurs are the ones who bear all the uncertainty in the market. I mean, for them they have all the skin in the game possible so they could lose everything. So of course, bearing that uncertainty and then, yeah, let’s bear some more uncertainty. That’s probably not at the very top of their list. <laugh> They want to avoid uncertainty if they can.

When you avoid uncertainty, you also avoid the potential to create value and you also avoid the ability to be flexible and all of this stuff. So you lose a lot that you might not think about just because you want to control instead. And control always leads to a lot of waste and a lot of costs that are entirely unnecessary.

Alicia: Well, I think of a time before I was an entrepreneur where I came in early about 60 employees or so, at a very fast-growing organization and reported directly to the founder. And it’s something as simple as people on the front, grassroots, I was hearing, we really need an employee handbook. Which is not the most exciting thing in the world to deal with, but a lot of people are like, “I just need to know where to go to get answers to these sorts of questions.” And then I go to the CEO and he’s like oh, bureaucracy, no, no, no. <Laugh>  I’m like, surely we could make something that’s not too bureaucratic.

But in the end, I kept pressing not because I cared if he had a handbook or not, but people kept asking for one from me. It really ended up being very much a grassroots decision. Because without that, I definitely would’ve waited longer to get something into place. So that’s just sort of an example I know that I’ve got from my experience.

Now, you mentioned as an academic that, you know, put mathematical models… I guess if you were to kind of put it in lay terms, sort of like, what mathematically do you see happen when decisions are made at the wrong level of fidelity?

Per Bylund: Well, the wrong level, I mean, what is the right level? That it’s really really difficult to know. In a sense, you mentioned by bureaucracy and very often you push decisions up because then you are safe like you say, you’re saving your own skin.

If your boss tells you what to do, it’s not really your fault. And then you can…like everybody nowadays, they say, well, I’m just doing my job. Which means I have no responsibility whatsoever, it doesn’t matter what I do.

That’s a really cowardly way of acting, I think. It’s also not taking your job or the world seriously. So I think instead we should probably take more responsibility and management should encourage people to take as many decisions as possible, as close to customers as possible.

I don’t know if you recall, but there was the CEO of Scandinavian airlines back in the eighties, he changed up the organization completely and made that airline a profitable airline, which was unheard of pretty much <laugh>.

Alicia: Yeah. Back then. Mm hm.

Per Bylund: And he changed it by simply turning the pyramid around. Instead of having the pyramid with like the CEO on top and then more and more bosses, and then eventually the workers far down, he said, no, it’s all directed towards the customer. You have the people working closest to the customer and they’re supposed to give the customer all the value they can. Then the first-level managers they’re supposed to support those people, providing value to the customers. And then the next-level managers should support the first-level managers and so forth.

I’m not sure if just adopting that model changes things a whole lot, but changing that mindset, thinking that no, it’s the customer first, that puts the decision making so much closer to where the value is actually at, which is with the customer. It sort of clarifies the role of management too because you pointed out, at least reading between the lines <laugh>, you pointed out the difference between management and leadership.

And management is sort of direction, you’re pointing the way and everybody needs to follow and it’s basically followed by a punishment. If you don’t do what the boss says, you’re punished. But leadership it’s a position you are granted by others. They tell you or they show you that they’re willing to follow your leadership because you have earned it. You have authority that is not based on power or coercion or what have you, in a force or anything like that. It’s not about punishment, it’s about value and people trust in you, they know that your judgment is sound and all of this stuff.

I think more organizations should consider leadership, which is sort of a fuzzy term. It’s hard to put that in an organizational chart. Not necessarily do away with hierarchies because you still need some responsibility on different levels. But at least open up for leadership more than management because that opens a lot of potential for value creation rather than simply trying to milk the market with what you already got.

Alicia: I’ve been lucky to learn from some people who learned directly from a man named Elliot Jacques, who started in psychology and he moved into working with organizations. He came up with something called Requisite Organization, which is basically him trying to figure out how could he rethink the workplace and the roles and how they interacted to make it more trust inducing. So they could set up for trust.

From that, one thing that… And I’ve actually made a distinction, you’re right, leadership and management, everyone’s got their own definition of that. And sometimes it’s like, management’s a bad thing and leadership’s a good thing. I’m like, oh, come on.

What I learned from Elliot Jacques’ work is that management is really an act of service. Actually, management means responsibility for the collective outputs of a group of people. If somebody isn’t performing, it’s fundamentally on their shoulders. Just removing somebody and casting the blame down isn’t necessarily the first thing that anybody should do. In fact, it’s very often a sign of bad management.

When we look at leadership, and I think this is really consistent with what you said, leadership is defined by the presence of followers. That’s how I like to say it because there are good leaders and bad leaders, sure. Or people leading in a direction that we agree with and people leading in a direction that we don’t agree with. But if there are followers, then you have a leader. I think the most relevant thing here, especially if we’re going to look at the grassroots thinking is that a great manager is going to do grassroots decision making if they really take their job seriously. In the way that you and I have framed it.

Per Bylund: No, I agree. The view of the manager as sort of a provider of a service, I like that definition a lot. The problem really goes back to what we talked about before that people want to have control. If you are the manager and it’s your responsibility, the output of that module or that part of the organization or whatever it is, the instinct is to control and set boundaries.

And as you said, push out the guy who might not be a good fit, quick solutions, and just structure things, we need more procedures, all of that stuff. I mean, the university is great, that sort of thing. I looked at the website and the procedures that I have to sort of keep in mind all the time and follow there are over 250 of them, I think.

Alicia: Oh sure. You can remember those <laugh>

Per Bylund: Yeah, of course. And they have nothing to do with how I teach or how I do research, which is my main task. So this is just other stuff <laugh>. And it’s impossible, it just means that everybody will just ignore those. So those procedures mean nothing at all, but then the university is safe because they can always say, oh, you didn’t follow the procedure. That sort of thing.

But that’s also about control and it’s about finding someone to blame if it goes wrong, instead of what you were talking about, a manager who is much more mature in a sense and responsible in a sort of listening way. So instead of controlling and then excluding and blaming, what you do is say no, okay, that was my fault. I should have helped you. I should have supported you better. I should have told you more about what I expected. I should have been more open with what everybody was aiming for, where we’re headed with this, that sort of thing. So that people can actually do the right thing.

Because, very often, I think people do the wrong thing because they simply don’t know, or they are afraid of being penalized for doing the wrong thing. So therefore, they do nothing and that makes you a bureaucrat. I think that makes you sort of a sad person. <Laugh>

I mean, we are individuals, right? I mean, we want to be good at what we do. We want to contribute, we want to be a part of a community, all of this stuff. So then putting us in a cubicle and say, this is the procedure, follow it. It sort of makes you into like a monkey or an adjusted machine. Yeah, exactly. And that is sort of dehumanizing in a sense, right

Alicia: It’s not just sort of, it is.

Per Bylund: Yeah. Well, it depends on how you do it. But it could be very dehumanizing. It could also be sort of dehumanizing and sometimes you just need some tasks carried out. Then those would be sort of entry-level jobs maybe. But beyond that, you should let go of control and you should create the community and empower these people to do the right thing rather than penalize them if they don’t follow a procedure.

Alicia: I have a very smart friend who says there are two types of connective tissue in an organization, one being fear or coercion and then the other being trust. You’re always going to have some of both, it’s impossible to have just one.

But the more that you can emphasize trust, the less entropy that you’re going to have in the organization. And there’s just a lot of different ways to do that. You know, getting decisions at the right level. Because each of us is a little different, like what I’m good at and the types of decisions, not everybody wants to make decisions like the senior VP of Product in a large corporate organization. Some people are like, no, just give me something pretty concrete to work on and I’m happy. It’s really in my wheelhouse. So figuring out how to get those sorts of things set up actually helps, get those decisions I think in the right place.

And so grassroots, I guess, depends on the audience a little bit.

Per Bylund: To look at each route, right. And see where can I plant this? I mean, I don’t extend that analogy too long, but…

Alicia: That story about Scandinavian airlines, I’ve read that somewhere. That sounds really familiar. And it makes sense to me.

If we need to visually flip the pyramid upside down so that we can think differently, then I think that’s great. Another thing is that you work in an institution, it’s going to have bureaucracy. And of course, my playground is I’m an entrepreneur with a small business. We serve small businesses and organizations. What I love about that is there’s nobody in the organization that is yet too far away from the customer experience. So to me, I think that that helps a lot, depending on, I guess, the orientation of the ownership.

Per Bylund: Oh yeah. I mean everybody’s involved, right, in a different way. And for the university, since you mentioned that, we don’t actually have a customer, so people…

Alicia: Who is the customer?

Per Bylund: We don’t know. I think that is the best answer.

Because you would want to think that it’s the students paying tuition, but a large part of the big university is really research and research depends on research funding, which you get from pretty much the federal government and sometimes private sector, but not a whole lot. And how do you get the funding? Well, you have to prove yourself, which means you have to publish in journals.

So you have plenty of different customers, but no one is really paying for the service. Even the students they’re paying tuition, but it’s typically through student debt and tuition just follows whatever the student debt level is, whatever funding they can get. That’s the tuition we charge pretty much. I mean, there’s research on that, that as soon as the government increases student financing, tuition follows immediately, just as much <laugh>.

So, I mean, it’s just the government’s giving us money and then many of the students are simply not interested in learning stuff, they’re interested in getting a degree cause that’s what we provide. And then you don’t have to put a whole lot of effort into teaching. So the money where it comes from how we…There is no customer, which is part of the reason why it’s so…

Alicia: I would say it’s the research, like you said, the grants for sure, and the alumni through sports. Well, I went to the University of Georgia where football’s very big. So maybe, well, I mean, I’m sure in  Oklahoma football’s also big too.

Per Bylund: That’s exactly right. The biggest customer is really whoever watches football on TV, college football cause that’s probably the biggest revenue stream that we have in the university, which has absolutely nothing to do with teaching and research

Alicia: Mm-hmm or learning.

Per Bylund: Yeah. I love that.

Alicia: Before I started my business, I worked for an organization called Research Square, before that American journal experts and they edit academic articles. So its a lot of academics or academic escapees, I guess once an academic always an academic. But there was a lot of energy around trying to rethink the publication, I don’t know, ecosystem. You know, peer review, it works kind of, but it’s not great. I think now they even have, this was in the nascent time when I was there, what they call it, pre-prints. And that’s kind of the big thing.

But I do remember thinking that that sort of what kind of led me down that that thought process is, well, a lot of these people are escaping academia either because there’s more supply than demand for professorship. So congrats to you for snagging one of them, I mean, that’s this no small feat.

Per Bylund: It is hard.

Alicia: The actual things that it required to be successful have very little to nothing to do with actually teaching students, <laugh> so have a great football team with wealthy alum and get lots of grant-funding. Grant funders are sort of the biggest customers. And it’s no wonder it’s a mess. It’s not about learning.

Per Bylund: <Laugh> well, it also explains why campuses look beautiful and how they’re always new buildings and how there’s like a big department on campus who are just working with like flowers and stuff like that. I mean obviously, flowers have nothing to do with learning. It’s good to be in a place that is beautiful. I mean, I’m not complaining about that, but why do you have all that stuff?

And why do you have buildings that look like they were built in the 17 hundreds and really big, but the functionality is like, ah, I don’t know. Well, why? Because that is what you’re selling. You’re selling a sense of community. You want all the students, that’s what all those, basically the first couple of years are all about. I mean, creating a community and saying that, oh, we are Oklahoma state university, class of, right. And then you can become an alum and contribute in the future. So we’re selling that, the spirit.

And at Oklahoma state, we have the cowboy code and we have all of this stuff and all these events and everything like that, which I’m not part of at all as faculty, of course, I can, I guess go to some of the events, but I’m not expected to and it would be fun if I’m there, I suppose, but no one expects that I’m there and it doesn’t contribute at all to what I do really. So it’s for the students and parents and for creating a new generation of alums to donate money, to get even fancier buildings, I guess.

Alicia: That is the machine, isn’t it? So when you teach or like what’s entailed in an entrepreneurship program? Cause it seems almost, you know, they didn’t have that at my age. We had business school, but there was no entrepreneurship program. It’s kind of an interesting thing because I mean, I think the best way to learn entrepreneurship is very often just by doing entrepreneurship. So I’m just curious sort of what approach you see taken to, I guess, set people on that path.

Per Bylund: In a sense it’s a field that is changing, trying to figure out how to do it the best way possible. A big question is can you teach entrepreneurship, and you sort of asked that question. And the answer is if you mean how to be successful and make a ton of money, then obviously no, because then I wouldn’t teach it, I would do it. But if the question is, can you teach people to think the right way about it and avoid common mistakes? And absolutely, yes. What we teach and what I think traditionally it has been i simply every class, you produce a business plan. You go through the motions, and you learn the structure of the business plan. Then you have a business plan at the end and then you get a grade and then you walk through the motions, that sort of thing.

I think we’re shifting more towards talking about entrepreneurship. We used to have anyway, a course on creativity and creative thinking. It was a way of pushing students to think outside the box and thinking about things in new ways. I do a lot of discussion-based courses. I basically try to be as provocative as possible in sort of a scholarly fashion and push people to argue for their point of view and see things in different perspectives, which helps them also see other opportunities.

We also have a bunch of the hands-on stuff, so we have plenty of activities and we have a center for helping students start their own firms while they’re students. We take part in a lot of business plan competitions, so we have faculty dedicated pretty much to supporting students in making a very powerful pitch. In seeking funding all over the country, maybe even internationally, things like that.

So we’re sort of pushing them in the entrepreneurship direction, using all the tools that we have, but we’re also always trying to figure out how to renew ourselves and how we can do better. Because entrepreneurship is a hot topic and everybody wants an entrepreneurship program. Everybody wants more entrepreneurs in society. And politicians say that oh, entrepreneurs are the job makers.

I mean, what I teach my student is basically, well, create value, don’t create jobs. I mean, <laugh>, if you can create the value with fewer jobs, then do it, cause jobs are a cost, right? So don’t create jobs for the sake of creating jobs, you’re not in the charity business.

Alicia: Or create value, don’t go seeking money. The money will come if you create value. I think that’s a mistake some people make.

Per Bylund: Exactly. That’s where I can take a lot from Austrian economics where they put the consumer’s valuation at the very core.

What I teach my students all the time is that a lot of entrepreneurs make the mistake of thinking I want to do this. And then they start calculating, how much does it cost to produce this thing? And then they add the profit markup and the profit margin, and then that’s the price. And then they go out and try to sell it.

I tell them, yeah, that’s how you produce the thing. You had to produce it before you sell it. But that’s not how you should think about it. You should think about it exactly the other way around. I mean, how does this provide someone with value, and who is that someone? And how do you tweak it to get the most value possible out of it? And at what price are they more than willing to buy the product? Because then it will sell itself.

Then your job is to figure out how can you produce that thing at a cost lower than the price. So you’re choosing the cost for your business, that’s basically what you’re doing, right. At least, in the beginning, and then you’re going to have a problem with legacy costs and things like that when you’re running the business, that’s a different matter. But when you’re starting, you should figure out the cost structure. And there are plenty of different ways of doing things.

That’s your task, first find that there is value or that you hope there is value, and then figure out how to produce that at a cost that allows the product to sell itself. It really is a lot about how to think about things. That’s why we talked about it a minute ago, why I’m so upset with this control and bureaucratic mindset cause it’s the very opposite of entrepreneurship.

Alicia: Yeah, it is. Well, there are a lot of entrepreneurs that wish more of their team would feel the way they do about their business. And as an entrepreneur, I appreciate that quite a bit. And there’s also the recognition that it’s never quite going to be <Laugh> the same. There’s that job mentality versus, I’ve seen this in terms of some people who get into consulting and their approach to pricing is here’s what I want to make <laugh>.

Per Bylund: Sometimes it works, sometimes it doesn’t. And I mean, even big businesses, I’ve written a couple of columns on the cost-plus pricing method. Mm-, which is exactly the wrong way to go about things. Even for old mature businesses where they already have sort of a capital structure and everything.

Proctor and Gamble, say they’re going to produce a new detergent or something. So they already have all the research, they already have the machines and all this stuff, so they will just add the profit margin and that’s it. Which means they’re probably leaving a lot of money on the table. Or they’re doing it wrong because they’re not thinking of the value. They’re just thinking about the gap or something like that.

I really hate the cost-plus method. Unfortunately, that’s a big thing in when you teach MBA students, <laugh> you teach them to use the cost-plus method, which well, it sucks. That’s not how to think about the economy or the market.

Alicia: It’s like that value that I get is worth more to me than the money than I’m going to give you <laugh> and in comparison to my alternatives, which include not doing anything <laugh>

Per Bylund: Right. The more profit in that sense you offer to the customer, the easier it is to sell your product. You don’t have to spend a lot of money on marketing and advertising and making sure that they know you exist because people are going to find out anyway. I’m not saying if you build it, they will come. Not that sort of thing, but you can help yourself. If you do it the other way around, I mean, you’re just making your own life hard. Why would you do that?

Alicia: I know we’ve gone for off-field from the heuristic, but I don’t care. So, what else, what are some other, I don’t know, nuggets of wisdom from Austria economics as they apply to entrepreneurship?

Per Bylund: Oh, there’s plenty. I mean, we have the economics for business podcast with a new episode every week, which is just on that basically just applying thoughts from economics. I mean the same thing with my columns for Entrepreneur magazine, they’re all more than 50 by now. They’re also based in Austrian economics and just taking tidbits and little key phrases here and there about how entrepreneurship is core.

One thing to think about is what we talked about, subjective value and that sort of thing, but also entrepreneurship as the driving force of the economy. As an Austrian, I like to quote Mises. What that really means is that when you think about any industry, it can look like those giants, there is no way you can compete with those giants because they’re so big and so powerful and everything like that. But all it takes is just someone inventing something that consumers like a little more and then that giant will topple and fall. Because there’s really no such thing as market power unless there are plenty of restrictions on the market of course so that no one can compete with and that’s a different matter.

Economically speaking in a model of the free economy or something that, then really big business means a lot of bureaucracy. It means a lot of legacies. It means being really slow to change and that sort of thing, which is really an opportunity for entrepreneurs. And economics makes this clear.

Alicia: I’ve got a number of clients in auto repair services and very often in the trades where they are figuring out, you know, I did one of these (podcasts) earlier on a similar topic. And the service, they care about providing great service to the client. How you woo somebody from going to their dealer to get their car fixed rather than going to this other regional provider is by knowing that you can trust them and that the relationship that the customer experience is that good. And his philosophy is that your people are owning it to provide the level of service that they experience internally <laugh>. And as obvious as that sounds, I would say that’s an innovation and a differentiator if you brand it well. There’s real success that he’s seeing from that approach.

I’m seeing that also, a similar kind of an approach in pest control. These are industries that you wouldn’t even expect it. And when you do that, when you unleash the capabilities of the people on the front line and treat them humanely, as in contrast to what we talked about earlier, that grassroots decision making happens a lot more seamlessly.

Per Bylund: Yeah, and empower them. I mean, make them look for these opportunities, because the frontline personnel, they are the ones interacting with the customers. They hear a lot of things, and they might not write it down or remember it, but then they have a pretty good idea after a while, what customers are looking for and whether you actually provide it.

Entrepreneurship is just about rethinking what you’re doing and trying to figure out what is the greatest value that we can produce. I think one of these great examples, there are plenty in history, but one of these great examples in the present is Volvo, the automobile manufacturer. They started a while ago with a plan or strategy, they’re going to stop selling cars. It seems ridiculous because what they do is manufacture cars. But instead, what they’re going to do is they’re going to sell subscriptions much like Spotify replaced CD albums. And I think what they’re going to do, but they’re not ready for it yet, is to simply make their dealerships into service stations. And then have you subscribed to say you’ve subscribed into their midsize SUV or whatever. And then whenever you’re not using it, it’s a self-driving car, so it will go somewhere else.

So I’m guessing that with a subscription like this, say that your car will take you to the airport, you will go somewhere and a similar car will pick you up because you have a subscription to one car, while your car is transporting someone else at home. They’re completely reshaping automobile manufacturing and sales. Because suddenly you don’t have to put up like 30-$50,000 or whatever it is up front or go through financing and that sort of thing. Instead, you pay a monthly fee and you know you always have a car. And they take care of everything, insurance, repairs and everything like that.

So that’s the value for the customer. The value is not having a car in my driveway. That’s not why I buy a car. I buy it for a reason. I want comfortable travel and I want to be able to decide myself when I go somewhere and when I don’t, that sort of thing. Well, I don’t need a car in my driveway for that. Most of the time the car is just parked somewhere. So they just thought, well with self-driving cars becoming a thing and they put a lot of money into developing their own system for that, then how about if we just…

They’re obviously so comfortable with their quality level that they’re like, well, why don’t we just take full responsibility for this and save that trouble for all our customers. They don’t have to deal with insurance companies. They don’t have to deal with repairs. They don’t have to go to the repair shop where, like you mentioned, it might be one of those fancy repair shops where you get coffee, but they will oversell you like crazy. So <laugh>, they will find another dozen errors with your car and they will basically do nothing, but they will charge you $1,500 for it. <Laugh> That sort of thing.

So instead of that, Volvo will just say, no, we’ll take care of it. And in a while, the car will drive itself to us or we will just come and pick it up or whatever and take care of it. So don’t worry, you’re in safe hands, that sort of thing, which is the value of that type of car. It’s enormous for a lot of people.

Alicia: Well, it’s not the car that you’re buying it’s like freedom, freedom of transportation, and freedom of maintenance and the headaches of owning a vehicle.

Per Bylund: Right. Exactly. It’s your personal transportation. And if they can pull it off with self-driving cars, then it could be anywhere in the world. So you don’t have to ship your car if you go to Europe or something for a month, you can just, whenever you get off the plane in Paris, there’s your car picking up and you don’t have to bother with maps or anything like that either, the car can just take you wherever you want to go. I mean, that sounds fantastic to me. And they’re almost there.

Alicia: Well, I think, things are getting a lot closer. I have a client who’s got a Tesla and he was telling me, so he had to take his car to a place to get it fixed. He was using one of his organization’s vans to get to somewhere he needed to go. And he is like, oh my gosh, I’m so spoiled. I don’t remember how to change lanes without being guided through it, I have to think. So obviously the technology is actually very, very advanced and…

Per Bylund: Oh, absolutely. What’s interesting with Tesla, I think they probably have the same goal as VOLVO or something similar but they’re still selling the cars. They’re not offering a subscription, which is a little bit odd. Maybe it’s because they don’t have enough of an infrastructure for replacing batteries and things like that maybe, but I’m sure they’re aiming for it.

Alicia: I mean, Elon Musk and I mean yeah, large organizations can be good at a variety of things, but I find that they’re mostly good at a particular thing. And then they’re secondarily good at other things and probably bad at other stuff. I think fundamentally Tesla is an engineering, almost like a geeks’ car, right? You know, it’s the cool factor that owning this thing that can do all sorts of the coolest, best, most interesting things is like the pitch. It’s not so much the Volvo pitch, which is like freedom for convenient transportation, safety, and freedom from headaches. It’s a different orientation. Even if a lot of the solutions might look the same, they’re not necessarily creating the same exact value proposition.

Per Bylund: Right. And I mean, businesses should have different business models playing off of the strengths they have and things like that. But I mean the business model can be your superpower in the business and should be.

Alicia: It should be. I think that those are the types of businesses that are game-changers. Like when you look at blockbuster and Netflix and then Netflix changing how do you deliver content and entertainment. It was the model that was the innovation more than anything.

But anyway, well, this is very, very interesting. And as we, I guess aim towards the end here, is there anything else that I should be asking or might be interesting? I will definitely find a link to your podcast and other information, and I’ll include that in the notes. But anything about the heuristic or anything at all? Closing thoughts?

Per Bylund: I’m not sure. I mean, I think it makes sense to always think about your customer. I mean, we talked about it in terms of business, but I think it makes sense in your personal life as well. In a market setting and in a social setting, the best way to serve yourself is to serve others. You get more back by providing more to others. I think that always makes sense.

Even Adam Smith understood this back in 1776, when he talked about the invisible hand, that sort of thing. It was all about serving others and thereby you serve yourself. Because they will be happy and satisfied customers. So that’s a good motto to have in life, I think.

Alicia: Yes. Well, thank you for offering to provide value to me and anyone who might listen. I will definitely let you know when we get this edited and uploaded. But I’m honored to get a chance to speak with you, Per. Thank you so much.

Per Bylund: Thank you. This was fun.

Alicia: All right. Great.

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