Bob Perkins: He Marketed Playboy, Pizza Hut & Calvin Klein. Here's What He Thinks Kills Most Companies.

Bob Perkins:

I was saying, they're going to kill you because they're going to get fast, because AI will make it easy. And B, they're going to understand their ability to absorb risk is greater than yours and they can outbid you. And he said, "Oh, that'll never happen." And his wife, bless her heart, says, "Bob, it's a good thing he's 75 because he won't be in business when your prophecy comes true."

Ray J. Green:

Hey. Welcome back. That was Bob Perkins, who was head of marketing at Calvin Klein. He was CMO at Pizza Hut and drove record sales there. He was head of marketing and EVP at Playboy. Also, a political fundraiser, which I, which I used to do is where I met Bob. He started https://www.google.com/search?q=chamberbiz.com within the U.S. Chamber of Commerce for less than $2 million.

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He's been a mentor of mine for a long time. I wanted to talk to him about his thesis that the companies that are going to win right now are not going to be the companies that have the best strategies and the best planning, as has been the case in the past, but that it's going to be the companies that execute the best and adapt and adjust the fastest.

And the fact that most businesses that were built more than a few years ago simply aren't built for that. And what that means to the landscape. So that's what we're gonna talk about, amongst many other things. Let's get after it. Welcome, Bob. Glad to have you. Look forward to diving in.

Bob Perkins:

Glad to be here. And I look forward to a wide range of interesting topics.

Ray J. Green:

All right. We'll try to make it as interesting as possible for everyone. I actually want to ask you a question that wasn't on my interview script and something based on what you literally just said as we were talking about this. You said something that it was like, marketing's not really a business anymore.

As you're talking about your background and having worked at Pizza Hut and Playboy and politics in the Senate, and you said, "Well, marketing's not the same business or not much of a business anymore." What do you mean?

Bob Perkins:

I made that quite literally, actually. So let's back up a little bit. In the 50s and 60s, the world was pretty homogenous. There were only a few ways to reach people. And therefore, if you think of marketing as having two legs, two wings to the airplane, it's got to create the message wing and it's got to create the pipes to deliver the message.

Creating the pipes to deliver the message was not very complicated: four TV networks and so many newspapers and so many billboards. I mean, you know, so all the focus was on create the message. The message was created very top down. And you got consumers in a room and you did market research. But essentially, at the end of the day, a bunch of people got in the room and looked at all the data they could collect, and they made a decision.

So here it is 50 years later, just a or 60 years later, let's just say 50 years later, the pipes are all over the parking lot. I mean, you've got more pipes than you can shake a stick at. And the only way you can possibly select those and measure those is a huge amount of AI and statistical modeling.

So in the old days, you said "I really like The Ed Sullivan Show." In the new days, you say, "Here's what all the numbers say. Here's our target audience." All that stuff comes to you in the form of facts. So you don't need to be very smart to make the decision because the facts make the decision for you.

On the creative side, you have so much feedback and you have influencers and you have so many people out there creating messages that it's almost impossible to create a message top down. And yes, brands like—let's use brands that have been around for a long, long time—eventually develop a patina. They develop a sheen. Pick Nike, pick Pizza Hut. It's not the old "get everybody in a room and figure it out and do it." It's more "watch what's going on in the real world and then press ahead and do more of it."

And now you have synthetic audiences. A good friend of mine is creating a synthetic AI—it's top secret so I won't tell the audience the idea—but he's picked a very specific group of people. Let's just say he's picked advertisers in the pizza industry. He's built the synthetic audience of pizza eaters across the country, and you could run every idea against his synthetic audience and get the "do they like or do they not like it?"

So the business has really changed dramatically, and I just read a McKinsey study that said marketing is going to be one of the first industries totally consumed by AI, and I think that's why. I think it's becoming much less creatively driven and much more factually driven. And, well, that has lots of... I'm not decrying that. I'm not saying that's bad. This is not a rant against the future. This is just an observation that marketing is a very different business than it used to be. It will be unrecognizable in 5 or 6 years.

Ray J. Green:

In your view, does that mean the value of being creative or the creative aspect of marketing to me is less valuable today? I just did a post recently...

Bob Perkins:

A golf instructor can tell you how to hit a bunker shot. Only you can hit a bunker shot. To the extent the creative is telling you what to do, it's going to get done by AI. I mean, I take this on the old view of, boy, you know, machines can only be creative... suffers from a really consistent consistency.

I've talked to a lot of my buddies in the advertising business, and I don't know if you saw this recently in San Francisco, an autonomous vehicle, a Waymo cab, hit a seven-year-old kid who darted out in front of a parked SUV. And what the statistics show is the Waymo slowed down and hit the kid at seven miles an hour. And a normal human driving at the speed limit, which of course, no one ever does, would hit the kid at 15 miles an hour.

So what's your criterion in this case for success? Is it that you never kill somebody, or you killed fewer people than human drivers? Apply that to the creative process. What's your success criterion? Is this one of the ten best ads ever made in the world? Probably not. Is this better than the average ad? Probably. And are you willing to spend $3 million for a crapshoot that you get one of the ten best ads ever made? Go through your history books and see who made the ten best ads last year and ask yourself, was that worth the money?

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So Apple has the best Super Bowl ad ever made, and the worst Super Bowl ad ever made back to back by the same people spending the same amount of money trying to do the same thing. When you think of risk analysis, a lot of sharp bean counters are going to say, "Hey, the risks aren't worth the reward," and it's going to be hard to argue with them because they're going to have a spreadsheet.

So I think marketing's going to disappear, except what's going to become more important in your world: sales. For a long, long time, you're going to have to call a person up and sell something, particularly B2B. At the end of the day, the human touch was really great. Somebody wanted to talk to somebody. Somebody wanted some reassurance. Somebody wanted to know their problem was going to be solved.

You know more about this than I do, but the old classic marketing—"we're going to create a brand"—is changing dramatically. And I think that the role of creativity will be just as important, but it won't be human creativity. In fact, OpenAI is writing the Super Bowl ad made by AI, they allege. I have no idea. I haven't seen it. And then we'll all say, "Well, it wasn't that good," but that might not be the right question. The right question is, is it better than average? And was it worth $3 million to make an average Super Bowl commercial, let alone $7 million to buy the 30s to run it, let alone the $7 million you spent to promote it and hype it?

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Ray J. Green:

To your point, it's always learning. It's capable of... if, like you said, it's always learning and you're capable of feeding it a ton of data, and it's figuring out, "All right, these are the ads that are better." It seems inevitable. At some point it figures out what the recipe is for the 1% ad.

Even, you know, you have a client that does, let's say they have 20 sales reps doing calls a day. That's 160 calls. So that's whatever it is a month. You very quickly are going to develop a base that you can feed into AI. Every morning you can come in and say, "What did we learn yesterday that we didn't know before yesterday? What are the three new techniques? What's changing in the environment? How do we need to change our KPI?" When I've done a little bit of that today, it's okay. But it's going to get so much better.

Bob Perkins:

And that goes back to decision making. If you came into the CEO's office and said, "Hey, the last two days we've done 320 calls, 32 of those calls have started to focus on this new feature that people want that we've never talked about. I need you to crank this feature in and be able to sell it." When you were able to sell it on Friday, everyone's going to go, "Oh, wait, slow down."

And the answer is AI is a probability machine. So let's just say the risk of being wrong is 20%. Let's say you're asking the CEO to spend $2 million. Well, 20% of two million is $400,000. The right question is, can we afford to lose $400,000? You got an 80% chance of winning. And the ROI on that is, let's say 10x, you're now risking $400,000 to get a $20 million return. That should be a no-brainer.

Ray J. Green:

You take the sales piece. So you've got whatever, 20 salespeople and they're doing eight sales calls a day. And to your point, you can use AI today to get like a recap every day and make adjustments. But what it's really doing, if you're a good sales leader, is it's just accelerating what you should be doing anyway, right?

Like in the old days, which for me was just a few years ago, you would take calls and sit and listen to them, make notes, mark them up, fill out a call scorecard. You can get through a handful a day, and then you make some adjustments based on 4 or 5 inputs and you go, "Okay."

But using my judgment, which is kind of in a vacuum based on my 20 years of experience, we make the adjustments. When you incorporate AI, it's the same process. I'm just now able to analyze all of the calls more efficiently at scale, and use more than my own 20 years of experience—use that of basically every other sales author and teacher, and so on. As long as I put the guardrails up properly, train it properly, and build the machine in a way that gets me a consistent output, then what I'm able to do is make those decisions just a shitload faster.

Right. And it reminds me of the post that you had... You had a post recently on the OODA Loop, and it kind of ties into this because it accelerates one part of this, which is the analysis. Like I can get the data faster, I can run through it faster and I can get more efficient output. But there still becomes this other bottleneck, which is: "Okay, cool. Now what?"

Now you've got a ton of information. What does that mean? So you're a former pilot. So I think the OODA Loop, the Boyd Loop, is more important to you. You understand it more, appreciate it more. Can you share what the Boyd Loop/OODA Loop is? And how does it tie into AI and what we're talking about?

Bob Perkins:

Well, I was at Chiat/Day. One of our early clients was Dell Computer, when Dell was just a tiny little company in Austin, Texas. We sort of adopted the old Avis ad, "We're number two." Avis was number two when Mary Wells Lawrence wrote that line, but Dell was certainly not number two to Compaq when they wrote that line.

Dell had a centralized call center in Austin because that's all they could handle. And if you had a question, you literally would stand up and yell, "Who knows how to use Microsoft?" There was no bureaucracy. You were just sitting next to people taking calls. This was the old days.

We're going to go back to the Boyd Loop. Boyd was a fighter pilot, very good. But he was mostly a strategist and philosopher. And he was the first guy to really think of air-to-air combat as ballet. So he wrote down every maneuver you could do in air-to-air combat and then choreographed them. "If they do this, you do that."

Using that analogy, he developed what he called the Boyd Loop, which was: First, you have to Orient yourself, because if you're flying a fighter jet and you're upside down, that takes a second. Then you have to Observe what's going on. "They did this." Now you have to Decide what that is and then you have to Act (Do it).

So he was known as "40-Second Boyd" because in the air combat back then—not so much now because of radar—you had to get on your enemy's tail to shoot them down. If they were behind you, they were safe. If they were in front of you, they were your target. So he could get on their tail... he could get behind any fighter pilot in 40 seconds. That was his claim to fame.

So you and I have been in business a long time. And what does everybody say about any company with more than 100 employees? "Well, it became bureaucratic." Bureaucracy slows down decision making. Organizations become risk averse.

The Boyd Loop... AI makes risk analysis a lot better. So it should be easier to decide: "Hey, we can make 20 million, we can lose 400,000. We can afford to lose 400,000. Let's do it." That should be a decision that takes no time. But no. "We need to get the finance committee together. We need to talk about this."

Because once the action happens, the people below you are used to doing what they're told. Business has built a squadron of people who are used to doing what they're told and they're generally pretty good at it. That's why all these companies are worth hundreds of billions of dollars.

If you think of the arms and legs of a company just waiting for the right instruction, how fast can you get them the right instruction? AI should make it easier to observe what's going on. And it should make it easier to make a decision.

A classic example: I was at a dinner party with a guy that owned 4 or 5 very successful regional banks. Good guy. His wife was the president of a mid-sized university. My friend was saying, "Well, the regional banks will never be displaced by the money center banks because we can make decisions so fast."

It's true that in the past, the loan committee at your bank was probably you, and the loan committee at Chase was probably three levels of approval. But as AI shortens that cycle and gets more data, Chase begins to realize that their competitive advantage with you is their ability to absorb risks. They can make ten bets knowing they're going to lose four of them, because those losses will not sink them.

I was saying, "They're going to kill you because they're going to get fast, because AI will make it easy. And B, they're going to understand their ability to absorb risk is greater than yours, and they can outbid you." And he said, "Oh, that'll never happen." And his wife, bless her heart, says, "Bob, it's a good thing he's 75 because he won't be in business when your prophecy comes true."

As I said earlier about margin, we've always thought of strategy as a top-down development. When I was at Pizza Hut, even if the regional office in the southeast said, "Man, there's something wrong here. We're just not selling as many pineapple pizzas as we used to," there wasn't any way to feedback that note.

But AI will climb onto that in a heartbeat. You can't say, "Okay, now we're going to give that to Bob and the marketing committee and hope that they get together every two weeks and make the right decision." You got to have the flexibility to say, "How are we going to react to this information in real time?"

So the definition of strategy changes. It's very much along the lines of the post that you wrote the other day. It was about companies that have been good at strategic planning versus the companies where the competitive advantage is execution based.

Ray J. Green:

And you know, it goes from this idea of planning being the competitive advantage versus the company who just says, "Hey, we're just going to go," and they're really good at execution, agile, and able to adapt quickly. How are you seeing that play out?

Bob Perkins:

I think it's going to take a whole generation of leadership to be able to accept that. I think the average 50-year-old senior executive who's been in business for 20 years is going to have a very hard time giving up what they perceive is their power base. "My power base is I run the marketing committee. We get judged by sales. We're doing a great job."

What I hear Perkins saying is you've got to empower these people and give them the ability to make changes and risk real money. This is not "Hey, we know for sure what we're doing," this is "We're going to let these people take a risky path because we can afford it."

Trading desks are getting more and more authority. Of course, they're all using all the quant tools God ever made. But if you make $200 million, doing it just becomes the cost of sales. "What's it going to cost to do business? Well, we have to set aside 3% every month so when somebody goes off the rails and does something unbelievably stupid, we have the controls in place so they can't bankrupt the company." That kind of change of attitude will take a generation to take hold.

Ray J. Green:

Say you're talking to that 50-year-old CEO today that says, "You know what? I do get it. I'm willing to give up my power base. I want to move from strategic planning to execution strength. What changes do I need to make within my organization? How do I start to make that change?"

Bob Perkins:

In the software development business, they do a thing called sprints. So I would say you have to do three things:

You have to significantly improve the way information flows up to you. Back to your call sheet analogy: all the data is there, but are you smart enough to know there aren't enough hours in the day to read it all? So how do you get information to flow up?

You have to empower your people who are flowing that information up to you to flow solutions with it. You have to teach people to flow solutions up from the bottom.

You have to give people the budget flexibility to make mistakes without losing their job—within limits. If you run a Pizza Hut in Des Moines and sales are off, can you get 500 bucks to try something out?

And I would add a fourth bucket: I would have somebody who spent their whole day every day worried about your cheapest competitor. Competitors almost always emerge from the bottom up. Ford's competition was Kia and Hyundai and Toyota. They didn't come from Chrysler. So pay attention to those competitors. "What are they doing right that I can steal?"

And fifth, specifically: Don't boil the ocean. Go to management and say, "I want to take the southeast region. Let's just see if we can make a test case out of this." The idea that you're going to get the whole organization to shift overnight is a pipe dream.

Ray J. Green:

That ties into the Innovator's Dilemma. One of the reasons the smaller, cheaper competitors creep up on you is because you ignore them, but because they're smaller, they can niche down, they can go a little bit deeper on something. They're more agile. And before you know it, you've got a legitimate problem on your hands. So like you're saying, don't boil the ocean, go to the smaller groups.

Bob Perkins:

Yeah. If you get a little regional test bed going, you're not as threatening to the rest of the organization if it blows up. One of the things that McKinsey always says is you need a "burning platform." If people don't think the business is burning, no one will change.

It's like telling a golfer, "You just won the Masters. You need to change your swing." And they go, "Well, help me out here. I just won the Masters. I want to keep this swing."

Ray J. Green:

So when McKinsey says you need a burning platform, is that primarily aimed at creating urgency within the team for execution?

Bob Perkins:

I think it's the only way you get senior management to dedicate the resources and time. Newton got the Nobel Prize for the law of inertia: Things in motion tend to stay in motion. Things at rest tend to stay at rest. Nothing illustrates that better than the inertia of a large bureaucratic organization.

The New England Patriots went 1-1. Then Brady left. Then they got rid of Belichick. Then they got a new coach. And now they're at the Super Bowl again. That's the kind of housecleaning that historically has been necessary for a significant change.

I saw something recently on Bob Kraft where he said they make bigger changes faster than any other organization. He credited the speed of their recovery from the Brady-Belichick era to what seems to be really good unity: "We make hard decisions faster than anybody else in the NFL." That is the Boyd Loop. We observed, we oriented, we decided, and we acted.

People underestimate the evolutionary power of the group. Nobody wants to be thrown out of the group. If you got thrown out of the group on the Savannah, you died. A lot of resistance to change isn't being a jerk or stupid; it's looking around the room and saying, "Gee, if I am for this and the rest of the group isn't..." It's in the emotional DNA.

If you look at Amazon, Bezos starts groups and then gets rid of them wholesale. "Let's just start over. A clean sheet of paper is more valuable than a crowded sheet of paper."

Ray J. Green:

Have you read the book Sapiens? It's about the evolution of the human species. One of my takeaways was similar to what you're saying about the power of the group. We didn't survive as a species because we were the fastest or smartest; we were good at banding together. We're hardwired to want to be in a group, which is why we're hardwired to people-please.

Bob Perkins:

The Geek Way is another great book. I heard something recently, maybe Alex Hormozi talking about Elon Musk, asking why so many tech leaders have some neurodiversity, like autism. And the answer was: because we're so hardwired to do what the group wants, when you have something like autism, your disposition is less in tune with what the group wants. You're much more data-focused. You're immune to the community dynamic.

Ray J. Green:

Do you think there's any truth to that?

Bob Perkins:

I think that makes total sense. I have a natural immunity to it. For reasons that aren't relevant, I decided I should have a little morning mantra. I bought 365 cards to stimulate gratitude. But I'm constantly amazed—once a week I get a card: "Don't care what other people think. Be your own person." That just shows how this need to be liked has permeated all of us. What is gratitude? Gratitude is not caring as much about what people think and caring more about what you think.

So back to Bob Kraft and the OODA Loop. The process is Observe, Orient, Decide, Act. One bottleneck is Orient. One bottleneck is Decide. But the other part is Act. That's the other bottleneck. I see a lot of people get stuck at the decision made. They know they should do this thing, but there's a disconnect between decision and action. Is that the next bottleneck?

Ray J. Green:

I read your posts about salespeople, and a lot of it says you probably know what to do, but you don't do it because it's hard.

Bob Perkins:

It's absolutely essential that the actions be described in three ways:

Are you sure the person can do it?

Are you sure they understand that this is going to be uncomfortable and for a while it's not going to work, and we love you anyway?

Is there a little reward to it?

"Act" is the most aggressive form of change in the Boyd Loop. Acting is getting a lot of people to do what you want them to do. A good friend of my wife's produced plays on Broadway. They rehearse forever. Why? Because acting is a difficult task; it's a skill set. But in the business world, we say, "Okay, we have a new product. Here's what you say about it. Now get out there and do it," without days of rehearsal.

It's easy to see how Acting gets confused with following orders. It's not a following order game. You still have to get them on the parade field working all day to get them to do it. That's what the new skill set is going to be: teaching people how to act, how to execute.

Ray J. Green:

Is that teachable? Or is that something somebody is born with?

Bob Perkins:

I would disagree with you. I would say that yes, you're going very fast, but you have to have done it enough times so you can say, "They're going left. I have three options. I'm doing option two." That requires training. The idea that it's intuitive is overrated.

Somebody once asked Tiger Woods, "What's the most important trait of a successful professional golfer?" Tiger said, "You have to like to practice." If you won't hit balls six hours a day, you will never be a professional golfer. Whether it's being a fighter pilot or a salesperson, the practice part is really important.

A friend of mine is a radiologist. He was talking about how computers are reading X-rays better than people. Why? The average computer reads an X-ray, and in a second it gets graded. They have this great feedback loop. The average radiologist reads an X-ray, sends it off, and never hears from anybody again. Practice requires feedback. In the golf world, it's called "deliberate practice."

Ray J. Green:

It's like the difference between driving to work and learning how to drive a racecar. Driving to work does not prepare you for Formula One.

Coming back to the Super Bowl ads... Have you seen Anthropic's ads?

Bob Perkins:

No. I assume they're created by AI too.

Ray J. Green:

So the setting is this woman sitting down talking to another person who represents AI. She says, "I want to start a business." And the AI says, "Absolutely, I can help you do that." And it starts listing steps: "Step 1: Understand your target market. Step 3: Financing can be difficult, apply for a payday loan..."

It was targeting the fact that OpenAI announced they're going to allow advertising on their lower tiers. People go to AI for answers. If advertising is part of this, does it start changing the answers? What is your take on OpenAI and advertising?

Bob Perkins:

Tactics follow strategy. If the strategy is to have a successful business, you need money. OpenAI is not making enough money by the subscription model. So they either have to quit spending money or find a new revenue source. Like 90% of OpenAI users use it twice a week or less. So they're only doing this because they desperately need the money.

People are cheap. If given the option, people would rather see advertising than pay more. The advertising model is a very profitable way for everybody to get money. OpenAI is saying, "Guys, I don't care where you put us, we need money to grow our business." Unless you have a better tactic, advertising is going to be the winning tactic.

Ray J. Green:

I agree to an extent. But something makes Claude (Anthropic) really concrete because at the end of this ad it says "Ads are coming to AI, not Claude." So they're putting a stake in the ground.

Bob Perkins:

First of all, if you own Claude, you must be wildly frustrated because you clearly have a better product. I'm a Claude fan. But ChatGPT has millions more users. So what Anthropic is doing is saying, "How do we get millions of users?" They're going after competitors' customers. "If we can get half of their users to come to us, it's a win."

In two years, they'll say, "Well, we now have Claude Prime. Claude has advertising, but Claude Prime doesn't."

Ray J. Green:

So you think they'll have to retract that at some point?

Bob Perkins:

I think tactics follow strategy. If they have a different strategy that doesn't need the incremental revenue, they won't. But right now, it's a great marketing tactic to capture competitors' users.

Ray J. Green:

When your attention becomes the core product... once your attention becomes the product, it changes the product strategy to less about being a good product and more about "what can I do to keep people sitting here?"

Bob Perkins:

Name a popular medium used by more than 20 million people that isn't advertiser-supported. Clearly the presence of ads is not causing anybody to turn anything off.

Ray J. Green:

Is there anything else we haven't talked about regarding AI challenges?

Bob Perkins:

I think the most interesting question is: "What should my grandkids study?" Five years ago, I would have said: "Master mathematics and learn how to motivate people to do shit." Because if you understand math, you can make any business decision. If you understand people, you can implement it.

I haven't given up on the people part, but the math thing... it's not clear to me that's not yesterday's skill set.

Ray J. Green:

How do you think AI affects politics/political marketing?

Bob Perkins:

When I was in politics, you had to get 51% of the vote. You did that by looking for issues that 51% of people agreed on. The new strategy is: find ten issues that 5% of people care about passionately. You get ten of those, you have 51%. AI makes it much easier to fragment the voting population.

I don't see it being a positive. The lack of common consensus... nobody watches the same news anymore. I can see you building a coalition to win the election, but I don't see how you govern that way. I don't see how you generate consensus for big issues like the deficit when the electorate is highly fragmented.

Ray J. Green:

Two final questions. Your wife, Joni, has had a very successful career. What have you learned from her?

Bob Perkins:

She has only done one thing in her life: read, edit, and publish books. She was really good at it. Her respect for the craft is inspiring to me. And secondly, she's much more gentle, much more forgiving, much more warm-hearted.

A funny story: I'm president of this condo board. Joni reads my emails and says, "Bob, your emails are accurate but you come across as such a jerk. Can't you warm them up?" So I started to write my email, give it to Claude and say, "Claude, make this warmer." Three months later, she says, "You're really developing some empathy." I said, "Honey, that's Claude."

Ray J. Green:

That's awesome. If you could go back and mentor a 40-year-old you, what would you tell yourself?

Bob Perkins:

"Don't go to Playboy." But seriously... stay in one place longer. I always thought of myself as a strategy thinker, not a leader. When I was at Pizza Hut, they asked me to run Australia. I said no because I didn't want to deal with store people every day. I would have told my younger self: Stay in one place longer, increase your skill set, and get better at leading people. That's the skill I should have developed better. It's not a skill that is easily developed.

Ray J. Green:

Bob, I appreciate your time. As always, I'm gonna go back and listen to this because this is very fun for me. Thank you and appreciate all the insights.