21. How Can Design Theory Transform Your Organization? with ASU President, Dr. Michael M. Crow

Game-changing organizational transformation requires vision, cultural metamorphosis, and creativity executed by talent dedicated to a shared mission. Hear how Dr. Michael M. Crow left the Ivy League to restructure Arizona State University into one of the top public research institutions, and how his model and team – committed to access, excellence, and societal impact – are changing the way we think about the design of public and private enterprises.

Transcript

David Morris  00:09

Welcome to the HiPERleadership Podcast. I am your host, David Morris, CEO and founder of HiPER Solutions. At HiPER Solutions, our mission is to bring positive change to the world. Leaders today are faced with an unprecedented change; and yet, even the best leaders have had to toss out their standard playbook and think outside the box. Our intent with the HiPERleadership Podcast is to share best practices so that you, our listeners, can gain some actionable and practical approaches to your next big-bet endeavor. Today, our guest is Michael Crow, President of Arizona State University. Founded in 1885, ASU is one of the largest public universities in the United States, and for years it had the reputation of being a more regional party school. But it wasn't until Michael joined in the year round 2002 that the school was transformed from party school to being ranked the most innovative university in the country since 2014. In today's episode, Michael will share the journey that he and the ASU community embarked on and the lessons learned that we can apply to our own businesses. Hi, Michael, thank you for joining us.

Michael Crow  01:25

Happy to be here, David.

David Morris  01:26

You know, Michael, when a mutual friend described you I just thought that what you have pulled off over the last 19 years or so was so broadly applicable to government organizations and private sector, etc. Really, really remarkable. Maybe you could help us understand a little bit about the opportunity you saw in front of you when you came in day one, and you were beginning to put together your design aspirations.

Michael Crow  01:56

Yeah. So the the marketing opportunity, if you will, David, was that American public higher education - 800 institutions at the university and college level, millions of students for the last 40 years - [has] been bouncing around at its peak performance level, and has actually been declining in terms of success. And so clearly, what's happened in that model over time is that many of the public [universities] like Berkeley or Michigan - schools like that - have gone off on a very research intensive pathway. They only admit A students from high school [or] A-plus students from high school now; and the others, including ASU at the time, was left with this notion of, well, just do the best that you can, and, you know, you've got to handle the broader population out there. And you can't take on this pathway to simultaneous attainment of excellence and access. And so I said, well, that's basically a design problem that hasn't been addressed, and we need to address it. The opportunity here in a new state, like Arizona, with a place that wasn't fully evolved yet was to try to create an institution that could live up to the ideals of American democracy: egalitarian access, people moving forward from every family background, innovation, the spirit of innovation, all these things coming together. So we said, well, let's build a new kind of American university - we call it the New American University - where high levels of egalitarian access, unbelievable levels of academic achievement and academic excellence and deep, deep commitment to the success of the United States and the success of our communities; and let's build a new kind of institution that can do that. So the first thing that I was able to do was to lay down a proposal to the community here, the faculty, and the broader community here about what the aspirational goals could be for such an institution. So I laid down eight design aspirations around the idea of a core rethinking of the purpose, or the charter, of the institution and initially made that as a proposal to this community in the fall of 2002.

David Morris  03:50

What was the difference, Michael, in when you got tapped on the shoulder to become the president, and they explained to you what they wanted you to do, versus what you laid out a few months into your role in this entire design aspiration?

Michael Crow  04:04

Yeah, so I was the, I was a faculty member at Columbia University; I was the Deputy Provost there for 11 years. I was the chief research officer there; and I got tapped by the folks out here in Arizona to come out, and they said, whatever isn't working in the other states, in the public universities, we don't want that. What we have here isn't where we want it to be. We need an innovative, creative leader of the university, with the emphasis on the word leader, which isn't allowed in a lot of institutions. And we need you to come in here and see if you can get this kicked off and move in a new direction. I said, great. I mean, fantastic. I mean, for me, it was like an unbelievable opportunity at sort of a national scale to think about the redesign, or the new design, for public universities. And so the real purpose was getting down this notion of what is a public university supposed to be. How could it become more entrepreneurial, more impactful, less reliant on government bureaucracy and government models, less reliant on government funding? How could it be more impactful across a broader spectrum of students and families and lives? How can it be more impactful globally? How can we change up the knowledge that we're producing? So I outlined all of those things as things that we would aspirationally work toward. [I] drew them all, by the way, from previous experience, previous failings, previous achievements, previous expectations, demands, all that; and then laid that out and said, you know, let's try to move in these directions.

David Morris  05:26

How long did you think it would take?

Michael Crow  05:28

Basically, thought that it would take 25 to 50 years. What I mean by that is that universities are - the concept of universities are as old as Plato's Academy - so thousands of years. The actual construct of universities in the U.S. are largely based on European models that are about 1000 years old [and] medieval in their orientation, with some more recent German models of technical institute's from the 18th and 19th centuries. And so we've brought all those things together to the United States. And so to change something here, I thought it might take two years to sell the design, have some quick wins, win the team over, enroll everybody in these new directions, you know, get cultural transformation underway. Maybe four or five additional years to start demonstrating the model and moving against these design aspirations and changing everything - productivity, output, efficiency, efficacy, everything - changing everything; and that at that point, we would then have the new model to move forward. And that having been here 19 years, that's about the way that it worked, give or take. It's a process that requires intense focus on design, intense focus on culture change - high speed culture change - intense focus on metrics, measurements, risk taking - you know, all these things that had to be put in place. That initial part took about two years.

David Morris  06:44

Yeah, you know, just thinking about other transformations; and whether it's GE with Jack Welch, where I don't know if people described you like him in terms of the amount of years he was in the role versus, say, Alan Mulally at a Ford, where he did a transformation but it was much shorter. I'm curious when I saw how many years it did take for you to do this. If you're a board of directors, and you're looking to bring a CEO in to go pull off a massive transformation, how important it is to really make sure that person is prepared to do something for 10 or 20 years?

Michael Crow  07:15

Well, I mean, I think if you're really looking at significant transformation, those kinds of timeframes are necessary. Otherwise, they're transitory. You don't even know for several years, whether or not your transformations have really had an impact in the market -  whether or not they've had an impact on the product, the finances, [or] all those things together - you only have guesses. If one is truly interested in transformation, you have to get it started right away; you have to give up if that start has failed and start again; and then if you do get it going, you've got to nurture it. Now we're past the transformation. The transformation was five to seven years; and then we've got 10-plus years of dramatic performance outcomes and enhancements and improvements and finances and quality and so forth after that design process was implemented.

David Morris  08:05

If you think about the metrics, either in the original design aspiration, or you know, really across the first year, I'm wondering which of those metrics you knew you would be able to demonstrate in the first few years versus which ones you really knew is going to take 10-15 years?

Michael Crow  08:21

Well on all of them, I knew that we could get started. So one of the design principles that we brought to bear was to have aspirational designs that we communicated over and over of where we want it to go. So intellectual fusion was one of our design aspirations, meaning let's not be trapped inside all these old disciplines. Once we began implementing intellectual fusion as a design aspiration, and then began seeing our research profile change; you know, we're one of the five leading research universities on the planet right now that doesn't have a medical school like MIT and a few others. So we're at 700 million a year of research expenditures; we were a tiny fraction of that back then. All of that came about, so you could begin winning almost immediately in reconfiguring your design; you started winning new resources. That began happening immediately and at significant scale; and that then became an indicator to the rest of the enterprise, that these kinds of design changes and what we call the "design-build process:" you design what you need to launch something. You don't take the time to design everything. So you design and launch and then keep building what you're doing very rapidly. If the design looks like it's going to fail, you discard it almost immediately, launch a second design, [and] third design to get things going. And so we implemented that process heavily in the research expansion space, and it was very, very significantly positive in terms of its outcomes.

David Morris  09:41

I really like how you phase that and you metric it. You know, I was very intrigued by the design aspiration and the document you put forth in the beginning. As you reflect back, how critical was that? And what were the aspects of it that really stood the test of time?

Michael Crow  09:57

Well, you know, every organization has got to focus on the issue of the three central questions: the why, the what, and the how. So why are we here? So a lot of the design aspiration was driven by us articulating with very focused precision, non-generic. You know, we're just not in "Sector A" performing "Function B." This is our specific charter, our specific purpose. And then the design aspirations were, if you will, the how - how are we going to do this? Then, that is we're going to change these operational outcomes of the institution. We're going to become more entrepreneurial in all ways: everything that we do, everything that we touch, everything that we move forward as a part of our design. Then you measure things against that. These things were absolutely essential to winning over the, what I call, enrollment - winning over the the staff, the faculty, the support crews, everything that's, you know, in our 30,000 employees, everything that makes this thing work. They've got to understand what all of this is. And so we laid out a new path - no new design, no new path, no new design, no new outcomes - all you can do is tweak outcomes in any given design. Design is the central driver that, I would say to your listeners, that's absolutely unequivocally where one must focus. Otherwise, it's all just tweaking; the gaining of a few percentage points of efficiency gain, as opposed to a fundamental difference. You know, when I took office, we had about 40,000 students. We weren't particularly effective at graduating them; they weren't particularly diverse. We have 150,000 degree-seeking students, now. We're producing five times the number of graduates. We're doing more than five times the level of research. We have 25 times the level of learners. I won't go through all of this. You know, we doubled the four year graduation rate, changed all of our outcomes of our market impact [and] of our graduates and all these other kinds of things, while diversifying our student body at scale across the scale of our society. Our staff, in fact, they [and the student body] are about the same size. And so we became unbelievably efficient and effective and efficacious. But it was not because we tweaked and took traditional managerial approaches. We took design management approaches: why are we here; what are we attempting to accomplish; and then lastly, how are we going to do that?

David Morris  12:05

So that why, what, and how - was that pretty much all covered in the document that you put together a few months in?

Michael Crow  12:12

The why, absolutely and precisely. The what, in terms of these aspirations, absolutely. The how - you know, how exactly we would get it done - I said, "Well, that depends on the terrain, that depends on the circumstance and the environment, the market conditions." So the how is going to be variable, and that's where we have to make decisions; but we're making those decisions against what? We're not making those decisions just to get us a better market position, you know, a better market share, [or] better enrollment outcome. Those are not what we're driving for because the why and the what define that, but the how is much more adaptive, and much more real-time. So the other thing we worked on was to speed up all clock speeds; all decision-making clock speeds got sped up to real time from academic time. And that gave us a powerful additional thing to be able to work with, and that was the change in our clock speed.

David Morris  13:01

Michael, I want to get back to the why and the what for a moment. Again, this was a 40-plus page document. It really blew my mind. 

Michael Crow  13:08

Yeah. 

David Morris  13:09

And I guess the question I have for you is how do you put that together? When you're new in the seat and you've spent a few months and you've put together the why and the what; how do you do that?

Michael Crow  13:19

You spend a few months listening to everybody to get a sense of where we were at the time - what the institution's aspirations were. I had hundreds of meetings, talking to community leaders, industrial leaders, political leaders, listening to all of them. I was already up to speed on all of the philosophical arguments about the need for new kinds of public universities. I had spent time studying the writing of Frank Rhodes, President of Cornell University at the time, that had written this book called Creating the Future where he said we're never going to make it to where we want to go unless we have new kinds of universities; and he had been president at Cornell for 12 years. Jim Duderstadt, President at University of Michigan, wrote a book on creating the 21st century - creating the university of the 21st century. He said [that] we're never going to get there unless we construct these new designs. I went back and looked at, you know, all of the different arguments for new kinds of designs, new kinds of universities, and so forth; and so after listening to everyone internal to the university, external to the university, all the constituent groups; traveling across the entire state, meeting with Native American community leaders and minority community leaders, and, as I said, corporate leaders, education leaders, everybody. Blending all of that together, I basically said that my license, if you will, was to propose after that a design aspiration model, which is what I did, and then to lay it out and to see if it could work and that that was why I was appointed. And I spent an intensive several months doing that after having spent an intensive many years being a part of higher education; studying higher education; driving innovation forward; helping things to move forward; and trying to figure out why it was that, at the time, we were on a path where we weren't doing as well in higher education as we're going to need to do over the next few decades. And other comers -  you know, the PRC, the Republic of Korea, Singapore - others were now really manifestly changing their designs for higher education. And we weren't keeping up with them on many fronts, as we can see, in some ways, now. I brought all of that together as a design opportunity. We have an opportunity now to do something other than run something; do something other than "manage the railroad," so to speak, but to build a new railroad. In fact, we even use that analogy. Just we're going to throw the tracks away of normal university operations and we're going to go off road with off-wheelers and see what happens.

David Morris  15:37

As you think about assembling the team to then go make the how happen, how much did you have to change up the team?

Michael Crow  15:43

All of it. Not immediately and not out of any sort of harsh approach, but we needed new energy, new ideas, new leadership, new models for moving forward; and so that ultimately meant then a new team that came in to move these things forward. Not that the people that were here were not adequate; it wasn't that they weren't adequate. It's just that we needed unbelievable energy without any constraint, relative to what we'd had done or not done in the past, to be able to move forward. And that's ultimately where we needed to get.

David Morris  16:14

Another thing you mentioned earlier, which struck me as just if you're gonna commit to a true transformation of this scale, being there more than five years is important - I mean, in this case, 19 years - to be able to see if it actually worked; and to be able to pressure test it so it's really sustainable.

Michael Crow  16:31

Well, not only to see if it worked or not; but to take your, as you said, pressure test your designs; and then, as I said, use the phrase "design build" and go back into the exact same design and modify that design. So there's this movie called The World's Fastest Indian, which has nothing to do with running; it has to do with a guy that spent 47 years modifying inch by inch an Indian motorcycle, the old company, to become the fastest motorcycle under 400 cc's ever made. And what it was was a process of continuous innovation - change this, change this, change this, change this, change this, change this, change this, [etc.] So he took ultimately what was a motorcycle from the 1920s, and by the time he won this fastest race in the 1960s, he had done it by 1000s of innovations - that is little, tiny incremental design changes. Well, that's what this process that we've been doing here is - is design, build, adjust, design, build, adjust, move forward, move forward, adjust, adjust, redesign, design, design - and so it's that process against the why and the what objectives.

David Morris  17:29

And of all of the challenges that you and [the] team had overcome, what would you say the trickiest one was? What required the most amount of iterations on that design?

Michael Crow  17:39

Well, the trickiest is dealing with the core faculty because, as a faculty member, we all came out of other PhD programs, other research universities that are in, to one way or another, a different design or a more traditional culture. And so how do you convince people now to be a great English professor or a great chemistry professor in a completely new type of institution, which is scaling and adjusting and technology-ising and moving forward in different ways? And so the trickiest thing here is to alter the culture, the core culture. So we had to go from a faculty-centric culture, which most universities are, to a student-centric culture. And that's very, very tricky and very difficult, but we were able to successfully do that here.

David Morris  18:20

And the biggest aha out of that - a transferable best practice?

Michael Crow  18:24

The biggest transferable best practice is to - you don't do that in an argumentative way. You do that in a shared objective way. So here's the objective that we're working toward. I've got some ideas that can possibly take us to attain those objectives. They may not be the best ideas, but what ideas do you have? By allowing them the spreading out of the design process by empowering people throughout the organization to act as design agents, giving design agency to people throughout the organization; and the second that I was able to figure that out, things got much easier, moved much more quickly, produce vastly better outcomes, and now have become self-sustaining. So we have a design machine, now, that's just unbelievably innovative. That was the aha moment for me was that not try to manage the design process, but to try to create a design agency, giving design agency to staff and employees and faculty.

David Morris  19:21

That's really the ultimate, and I'm just sort of reflecting back to Pixar having had done a lot of that.

Michael Crow  19:26

I studied that pretty closely, and a number of other organizations that were able to do that, and found that they were vastly superior. You know, the old theory, x-models of management and control and span of control and limiting design and hierarchy. Those are useful only in very limited settings. And even in those limited settings, they don't even work. A marine squad in combat, even that's a very, very adaptive thing. So you just have to basically move in a direction where you allow for design and creativity. In fact, what we really ended up realizing was that we had defeated that bureaucratic trap that are different apartments that our faculty had lived in. We defeated bureaucracy - not totally, but sufficiently - to empower levels of creative thinking about what we're doing and how we're doing it. So during COVID, for instance, we produced 50 new online degree programs during COVID from our core faculty. We've produced whole new ways of teaching and learning in virtual reality during COVID from our faculty. It's been very, very inspiring; and you know, just fun to be a part of.

David Morris  20:25

Yeah, and just closing on that topic of metrics - I really love that design agency, huge aha, very transferable - is just going back to metrics that you committed to when you first joined versus where they're at now, what surpassed even your expectations?

Michael Crow  20:41

We blew by everything. I mean, I was not prepared for the rate of change that we experienced. And so enrollment, graduation rate, retention rate, diversification, financial metrics, research metrics, research performance metrics, patents, spin-out companies, everything went by everything that we had set because no university had ever been as technologically empowered as we ended up becoming. So we have these huge assets around the country that have not been designed agency empowered, have not been technologically enabled. And so they're underperforming. And so what, what I realized was that I didn't realize how much these things would lead to performance changes. You should see our design metrics now. I mean, they're unbelievable. We're just so excited about being able to lay down truly social-scale transformational metrics, relative to students in diversity, and graduation, and research and impact and all those things. And so that's been a very powerful thing for us. What the most significant financial metric? Just in terms of when you came in, it was producing x; and what's it at now on the financial dimension? Well, when I came in, we had about $750 million of revenue; but 65% of that revenue came from a state appropriation. Our revenue this year is 4.3 billion, and the state appropriation is a tiny percentage, 8 percent, of our total revenue. So we're basically operating a public enterprise university funded through entrepreneurial activity, which then gives the state a way to ultimately invest in students attending the university and the university funds itself. That's a huge transformation of the model.

David Morris  22:10

Mind boggling. Transitioning to recruitment, if you're the president of the United States or a governor or a Fortune 100 chair and, in any of these cases, you're looking to bring in a change agent, a leader, to come in and really digitally transform an organization; if you're in those shoes, and you're looking to hire someone like you, you know, back 19 years ago, what are some of the traits you would look for in recruiting someone like you?

Michael Crow  22:37

Yeah, so there's got to be an intellectual agility; you're looking for not a polymath, but a polymathic capable person, that is they can move between subjects. If they're overly specialized in one thing, then they won't get it done because they can't think at the design scale. Second, you've got to get people who understand the design process, design creativity, design engagement, the drivers of design. A third thing is intellectual agility. You don't want someone who can't move from subject a to subject b to subject c. They're flexible; they're moving; their mind is adjusting. They're using things in different ways. And then, at least in our case, massive amounts of intellectual empathy. If you can't understand workers and their needs and their families, and what it takes to make an organization successful in the complex social environment that we're in - labor environment that we're in - you're not going to succeed. The old models are dead; and I think, thankfully so. What you pay people, how you pay people, where they work - all these things - you've got to have empathy. So I look for all of those things.

David Morris  23:41

To what extent do you find, Michael, you can pick up on that in an interview versus references? Or how else would you evaluate that person if you are chairing the search committee?

Michael Crow  23:50

References are useful. Mostly what you're looking for in references are critical error functions. You know, so it is the interview; it's the engagement with the person. I spent a lot of time talking about a person's life purpose, like why do you exist? What did you want to do the day you graduated from high school? Why did you go to college? Mom, why did you go to college? You wanted to go to college? Why did you pick that? Why did you study that? I would pin down on trying to figure out who you are. It's not an assessment, a critical assessment, like a is better than b or b is better than c, but I'm looking for, I'm looking for e, f, and g qualities that were probably present in a person for most of their life, and then were enhanced through their education and experience so that the interview and the interaction and the dynamic discussions. You know, I'm trying to hire someone right now that I probably spent 20 hours with them. That's how important the role is and how important it is for me to understand that person. They can't do that with every position, but for your key positions, you better do that.

David Morris  24:48

Really, really good guidance, Michael. It's been terrific. Anything else you would like to add to the journey?

Michael Crow  24:54

No, I'll send you some other stuff beyond that initial document that you read because we've gone a long way since then, and you'll see some of the things that we've been able to do so interview was great; I enjoyed the interview; and and hope that it's useful.

David Morris  25:04

Thank you. And to our listeners thank you for your continued support and feedback. Be sure to subscribe to the HiPERleadership Podcast on your favorite platform so you are the first to know of new episodes with exciting guests. And if you are tasked with leading a big change initiative, visit our website at hipersolutions.com to learn more about how our playbook can increase the likelihood of success while de-risking the change initiative.