WEBVTT - Bloomberg Markets: Bernardi on The Inversion Factor

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<v Speaker 1>This is Bloomberg Markets with Gerrol Mazer and Grey Johnson

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<v Speaker 1>on Bloomberg Radio. Well, this time to start thinking differently,

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<v Speaker 1>and if you're not already doing so. Linda Burn Bernardi

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<v Speaker 1>is chief executive officer of the consulting firm Stratera Partners

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<v Speaker 1>from our IBM, chief innovation officer of Internet of Things

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<v Speaker 1>in the Cloud, her book The Inversion Factor, How to

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<v Speaker 1>Thrive in the IoT Economy, and she joins us on

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<v Speaker 1>the phone from Seattle. Linda Bernardi, nice to have you

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<v Speaker 1>here with us. UM. Tell us a little bit about

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<v Speaker 1>this book and why you wrote it. Pleasure to be here,

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<v Speaker 1>Thank you. Um. The Inversion Factor is really about the

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<v Speaker 1>change in paradigm that's happening in all companies, in particular

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<v Speaker 1>traditional companies where they used to develop products based on

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<v Speaker 1>specifications or what the company thought they should delover developed

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<v Speaker 1>and instead understanding consumers at such a level through artificial intelligence,

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<v Speaker 1>machine learning deep learning. Know that companies can begin developing

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<v Speaker 1>things based on the needs of the consumer and at

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<v Speaker 1>times that could be completely different than developing the products

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<v Speaker 1>in the traditional way. So I wrote The Inversion Factor

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<v Speaker 1>to really begin this critical dialogue because we're used to

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<v Speaker 1>companies like Uber and Airbnb from from the beginning being

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<v Speaker 1>this way and operating this way. But we have thousands

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<v Speaker 1>of companies that need to begin to shift their thinking

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<v Speaker 1>to survive in the new world. So give me an

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<v Speaker 1>example of someone who has shifted really nicely and someone

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<v Speaker 1>who has not. Well, um, not to name names, but

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<v Speaker 1>if you look at, for instance, a company like Microsoft.

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<v Speaker 1>Microsoft was a very traditional software company that initially really

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<v Speaker 1>didn't migrate to the cloud, and then they began to

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<v Speaker 1>develop cloud services and maybe perhaps through the pressure of Amazon,

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<v Speaker 1>began to shift radically and now very much operate in

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<v Speaker 1>that zone. So when you think about Amazon to excuse me,

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<v Speaker 1>Microsoft today, you think about them operating in that zone.

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<v Speaker 1>Whereas there are a lot of companies and honestly, I

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<v Speaker 1>really don't want to name names, but there are so

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<v Speaker 1>many that are still developing products in that are that

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<v Speaker 1>is exactly how they used to develop it before. One

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<v Speaker 1>very clear example is think about Tesla versus the rest

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<v Speaker 1>of the auto industry and think about how Tesla, every

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<v Speaker 1>movement that you make in that car is continuously noted, understood,

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<v Speaker 1>improved upon, and acted upon, to the point that the

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<v Speaker 1>communication between Tesla and the car is happening without the

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<v Speaker 1>driver needing to be involved. That's a radical shift than

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<v Speaker 1>how pretty much the majority of the auto industry has operated.

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<v Speaker 1>Another example, fair enough, fair enough, but some folks would argue,

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<v Speaker 1>and there are a lot of people out there, certainly

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<v Speaker 1>rooting for Elon Musk find it really interesting how he's

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<v Speaker 1>disrupting kind of state industries and thinking differently and approaching

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<v Speaker 1>things differently and how to do in his view certainly,

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<v Speaker 1>how to do things maybe in a better way. Tesla

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<v Speaker 1>has yet to make money, and we have yet to say.

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<v Speaker 1>Anytime we talk about Tesla, there's always somebody who comes

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<v Speaker 1>out and says, well, wait a minute, though, you know,

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<v Speaker 1>we'll see if he can make a go at it

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<v Speaker 1>and whether or not he can be successful. So that

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<v Speaker 1>is true, that is true, right, But part of it

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<v Speaker 1>is also because Tesla is a newer company, and um,

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<v Speaker 1>I mean, is it making money. Yes, people are buying cars,

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<v Speaker 1>but is it making money to to sort of go

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<v Speaker 1>into black That remains to be seen. But in terms

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<v Speaker 1>of how it has changed, it changed or inverted the

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<v Speaker 1>auto business in terms of how we think about a car, right,

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<v Speaker 1>and an inversion sometimes at the beginning you don't necessarily

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<v Speaker 1>make money. If you think about Amazon or Google putting

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<v Speaker 1>these boxes in your home, Echo or Google at home,

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<v Speaker 1>you know, at the beginning those boxes aren't making money.

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<v Speaker 1>But what they're doing is they're completely changing how business

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<v Speaker 1>is going to take place. And eventually you're going to

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<v Speaker 1>walk into your dining room and you're going to talk

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<v Speaker 1>to a box. You're going to order everything that you need. Now,

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<v Speaker 1>did that box at the beginning make money remains to

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<v Speaker 1>be seen, but these are transformational ways thinking and changing businesses.

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<v Speaker 1>Another maybe example is think about Airbnb and how it

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<v Speaker 1>has grown versus, for instance, traditional hotels, brick and mortar hotels,

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<v Speaker 1>and think about all the expenses and thinking that a

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<v Speaker 1>Sheraton or a Weston has to go through versus the

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<v Speaker 1>fact that every every day, every instant, people are putting

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<v Speaker 1>properties or assets onto Airbnb, and it's allowing it to

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<v Speaker 1>think very differently in terms of how it can serve

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<v Speaker 1>the public. Ultimately, the experience is staying a night in

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<v Speaker 1>a different bed. Right, used to be a hotel Airbnb? Right? No, no, no,

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<v Speaker 1>and and right We've seen a lot of industries certainly disrupted.

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<v Speaker 1>So I'm just thinking, if there is a business owner

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<v Speaker 1>out there. Maybe they've got a small company, maybe they've

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<v Speaker 1>got a middle market size company, maybe they've got a

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<v Speaker 1>large company. I mean, so, how how do you like?

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<v Speaker 1>What are your one or two three pieces of advice

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<v Speaker 1>and kind of how to think differently? Right, So, first

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<v Speaker 1>of all, our time won't permit to talk about the

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<v Speaker 1>arc at texture and how all of that is changing.

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<v Speaker 1>And that's all in the book. But in chapter nine

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<v Speaker 1>we present a roadmap of eleven very specific steps that

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<v Speaker 1>starts at the very beginning. The most important thing about

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<v Speaker 1>a business owner medium, small, large is to think differently

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<v Speaker 1>and have a vision about where they're going. And the

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<v Speaker 1>second thing is to be able to take a risk.

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<v Speaker 1>If they're not taking a risk, inversion is never going

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<v Speaker 1>to happen because if you're just playing safely around the

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<v Speaker 1>same borders, all you're doing is developing another version of

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<v Speaker 1>the same product. And so through the steps that we offer,

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<v Speaker 1>really thinking about the vision, strategically, thinking about how you're

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<v Speaker 1>willing to take a risk, tolerate some level of failure,

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<v Speaker 1>and allow yourself to open up new business opportunities. Then

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<v Speaker 1>we take the business owner through a lot of the

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<v Speaker 1>intricate steps afterwards in terms of how to go from

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<v Speaker 1>not being an inverted company as in a traditional company

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<v Speaker 1>into becoming a fully inverted company. Interesting, do you feel

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<v Speaker 1>like a lot of the companies that have been around

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<v Speaker 1>for decades, it's um the old household names. They've either

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<v Speaker 1>you know that most of them are not doing that

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<v Speaker 1>this yet or what Yeah, there is tremendous amount of

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<v Speaker 1>risk aversion the larger the company is. I mean I

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<v Speaker 1>was certainly at I d M, where it was close

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<v Speaker 1>to over four hundred thousand people and a hundred year

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<v Speaker 1>old history. Part of what makes to inversion difficult is

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<v Speaker 1>because you have tens and thousands of customers that you're

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<v Speaker 1>supporting in the old model. So the idea here isn't

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<v Speaker 1>abandoned ship, throw everything away and jump in, but really

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<v Speaker 1>begin to think about innovation more actively. And oftentimes big,

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<v Speaker 1>traditional even successful companies think about innovation to acquisition. They

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<v Speaker 1>didn't seem to think the only way I could do

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<v Speaker 1>this is by buying another startup, right, because suddenly that

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<v Speaker 1>culture is going to come in and really sort of

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<v Speaker 1>infuse and create change. To truth is um. You know,

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<v Speaker 1>inversion has three elements. There's innovation, there's technology, and then

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<v Speaker 1>there's culture. If the culture of the company top down

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<v Speaker 1>and bottom up, doesn't support wanting to invert. Right. It

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<v Speaker 1>doesn't matter what technology come in, inversion will fail. So

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<v Speaker 1>all right, It's an opportunity and necessity at the same

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<v Speaker 1>time to think about inversion. Linda Bernardi, thank you so much,

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<v Speaker 1>CEO at Stratera Partners, a consulting firm, on the phone

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<v Speaker 1>in Seattle, her book The Inversion Factor, How to Thrive

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<v Speaker 1>in the IoT Economy. Speaking of just the online economy,

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<v Speaker 1>Carl's Jr. The chain formerly run by one time Trump

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<v Speaker 1>Cabinet nominee Andy Pudster is um apparently reaching out to

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<v Speaker 1>Amazon saying hey, please buy us. That's what they're doing.

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<v Speaker 1>It's one of our most read stories at Bloomberg. You've

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<v Speaker 1>been listening to Bloomberg Market's Carol Masster Corey Johnson right

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<v Speaker 1>here on Bloomberg Radio.