June 11, 2025
[Full Podcast transcript at end of page]
If you’re a corporate leader trying to build businesses beyond your core, you’ve probably felt the tension: move too fast and you break things; move too slow and you miss the window.
That’s why our recent conversation with Todd James was so valuable. Todd has helped build and scale businesses at Fidelity, Kroger, and most recently 84.51°—a wholly owned subsidiary of Kroger focused on retail data science, media, and insights. Today, he’s the founder of Aurora Insights, where he’s helping companies build real AI strategies (not just decks with “ChatGPT” slapped on page 2).
Todd has seen the full spectrum: standalone ventures, embedded business units, innovation theater, and true operational transformation. And he’s brutally honest about what works—and what doesn’t.
Here are our biggest takeaways from the episode:
When Kroger created 84.51°, it wasn’t just about launching a data company—it was about giving that business enough space to operate independently. Different culture. Different space. Different org chart.
That space enabled speed. Autonomy. Focus.
But there’s a cost: when you’re too far from the core, you lose business intimacy. As Todd put it: “If you don’t have enough context to deliver value, you’re too far away.”
Success means constantly tuning the dial between independence and integration. Most companies treat this like a switch. Todd treats it like a spectrum—and that flexibility is what keeps ventures alive past year one.
We’ve seen this in our own work—and Todd confirmed it: even when the venture is great, distribution will kill you if you don’t get it right.
He shared the classic scenario: a new business has a killer product, but it’s being sold by a different sales team. That creates friction internally (“Why didn’t our sales team mention this product?”) and confusion externally (“Who are you, and where’s my usual rep?”)
The best adjacent businesses balance independence with shared go-to-market clarity. If the customer doesn’t know who to call, your innovation dies in the inbox.
One of our favorite moments was when Todd said: “Business isn’t analog. It’s digital.”
What he meant was: stop looking for one-size-fits-all org structures. Sometimes a new venture belongs inside the core. Sometimes it doesn’t. Sometimes it starts outside and moves in.
The key is setting up the right telemetry to know when to pivot:
That level of objectivity is hard to maintain when you’re deep in the weeds. But it’s what separates innovation that scales from innovation that stalls.
Todd made a bold claim: We’re in the middle of a once-in-a-lifetime global replatforming.
Most companies say they’re “doing AI.” But what they’re really doing is experimenting on the sidelines—not integrating AI into their strategy, ops, or talent systems.
According to Todd, the difference between dabbling and scaling is 60% higher profitability and 2–6x better total shareholder return. That’s not hype. That’s data.
And the solution isn’t another AI task force—it’s embedding AI into business strategy, not sitting it in a corner.
We asked Todd about venture studios. His response?
“They’ll become more important—not less.”
Why? Because the pace of change is now faster outside the company than inside. Studios create the infrastructure for systematic collaboration between outside innovators and internal operators. They act as a pressure valve, a speed booster, and a culture shifter.
But—and this is key—they only work if leadership is committed. Otherwise, you end up with a pretty logo and no velocity.
Todd reminded us that not all innovation starts in the C-suite. In fact, many of the most effective changes happen two or three levels below—when cross-functional teams build together, day to day.
But even then, leadership matters.
If the C-suite doesn’t see the momentum, validate it, and resource it, those pockets of innovation die in the shadows. The best orgs make it easy for those ideas to rise—and for experiments to scale.
We’re grateful Todd joined us on Beyond the Core. He’s a rare mix of strategic thinker and systems-level doer—and if you’re building businesses inside a large company, his wisdom is essential.
Listen to the full episode above—and stay tuned for more tactical conversations from the edge of innovation.
— Ben & Marcus
Highline Beta
Todd James 00:00
Part of the benefit of beyond the core, and one of the reasons why it's good to do that, it's kind of hard to hide the financials. When it's a separate, distinct entity, it doesn't get blurred in. Well, that's not my fault. That's the underlying platform that's serving these other Oh, it's your platform. It's not my operations, yeah, it's your operations. It's not my sales. You see where it goes. It becomes very clear. So I think you have financial clarity if you set these up correctly. Now you can do anything you want. You can do a lot with Financials, right? Yes, how you structure, how you track what level, but there is a simplicity to a distinct and discrete P, L,
Ben Yoskovitz 00:41
Todd. It's great to see you again. Thank you for joining us. We met. Maybe it was about a year ago or so. I can't remember exactly when, when you were at 8451 which is a fascinating company, and you'll tell us a little bit about it. You know, a data company that came out of Kroger, that works with a whole variety of other businesses, a subsidiary New Venture focused on growth that emerged out of Kroger. You're no longer at 8451 I know you've now gone off to start your own business, Aurora insights, and you know that'll be something we can talk about as well. Focus on AI, which has been a thread through your career. So maybe we jump right in and share a little bit with us about, you know what? What is 8451 and what was your role there, and thinking about that as growth beyond the core.
Todd James 01:31
Yeah, I'd be happy to, I obviously exciting times, so there's a lot going on and but yeah, I'd be, I mean, I was at 8451 and spent time at Fidelity before then. So I think there's some real good opportunities to talk about beyond the core. But yeah, I think pulling back some of the mystery from what 8451 is like, I remember walking into a conference up in Boston, and someone was talking about this company in Cincinnati that had all these numbers. And like you said, it's a data company to really need things, and everyone's always what's 8451 so I'll you know, I was there for about four years. I was also part of Kroger during the time. I had roles in both, but, but let me just start with 8451 I'd be happy to talk about that because I was really enjoyed spending my time there. It's a it's a wholly owned subsidiary of Kroger. It is a retail insights media company that basically helps CPGs understand the path to purchase using data for their products. And it's also a retail media company that provides them opportunities to have a closed loop and to be able to activate against those insights. And I think broader than that, 8451 it's a data science company for Kroger. So there's on the commercial side, we have that insights business, or 8451 has that insights business, you can tell I'm still fresh, only a few weeks since I left there, but has insights business, a media business, a venture capital business that's pretty exciting around identifying companies in the in the food space. Use the science to identify it, and then when you invest, you put them on the shelves at Kroger. So that's commercial side. And that's about 60% of 8451 the other 40% is that basically the data science arm for the parent company, so around all the artificial intelligence. So, and what's interesting the numbers 8451 and I love this is, is is the longitude of Cincinnati, where Kroger and 8451 or sit. And so if you queue to longitudinal analysis, that's where the four numbers with the decimal point the degree sign come from. So yeah, it was, it was special place for me. I enjoyed being there. Also created a really good opportunity through that role I probably, probably spent, when I first started, most of my time at 8451 by the time I left, I was spending probably a little over half the time in Kroger, where, you know, with an 8451 I was Chief Data tech technology officer for that company. But at Kroger, I had the opportunity to run AI for the company enterprise data as well as the R and D group. So interesting role, you get to work in a separate subsidiary, and you also get to deal with a whole different set of opportunities in $140 billion retailer that gives a lot of diversity of the role. It
Ben Yoskovitz 04:43
just seems like it was a bold I know you weren't there when they when they created 8451 but like that's a bold move, and maybe a rare move for a company of Kroger size, to create the subsidiary. And you've maybe seen similar things that. Others as well. Like, how do companies get to a place where they say we're going to go create this net new business, it will be valuable to our core, but they're also, of course, selling to other CPGs. They're selling to other retailers. So to me, how do you think about that strategically, when you, when you, when you look at sort of, really taking big, big bets,
Todd James 05:20
you know, first of all, I would, you know, I give a lot of credit to the leadership at the time at Kroger, as well as the dunnhumby team that was part of that move that moved into 8451 you know, Kroger, if you go back to the start of the business with Barney Kroger, back in the 1800s you know, it's a company that always tries to innovate and always looks ahead. And it's an industry that moves very fast. So, you know, there was, there was an understanding there at the time, that the opportunity existed to think a little bit differently about the traditional grocery space, to be able to use data to better help customers have a more seamless experience, to be able to help CPGs better understand the path to purchase for their customers. So, yeah, I, I think it was the a very bold move at the time, and in a lot of ways, was ahead of the industry. And it's, you know, I give a lot of credit, we were part of a lot of change along the way to continue to evolve that model. But, but to your question, I think where you're going is, like, why separate? I mean, it's a wholly owned subsidiary, right? It's, it's off on the side. And if you, if you've been to the facility, you've got, you know, a traditional corporate environment for Kroger, which exciting place to work, a lot of exciting technology passion in the stores. But if you know So, but, but you get, you get what you think you'd get from a large corporate environment. When you go into the buildings and you see the field, 8451 was built very different, like, if you've been in the offices, all open space, my desk, the President's desk, sitting at a long row of tables, just like everyone else's no offices. You know, there was, there was a desire to create a very different kind of look, feel and culture within that space, a culture that aligned to the parent company, but nonetheless a very different environment, a very different culture that I think, kind of set it apart. So, you know, give a lot of credit there. You know, I've seen this in other places. I mean, you see businesses get incubated within financial services. You see, we could talk about a government example, if you ever want to dig into that, there's, there's some pretty good examples of where you're able to do that. But what I would say is, is, I think the desire was to create something that could still sit on the outside and be able to provide some of those provocative opinions based on data, to be able to challenge, to have that distance, so that you're not absorbed in the day to day, where there could be some more clarity around the insights that are being driven from the data. And there's also reasons too, when you start working with a broader marketplace, there's, there's, there's value in having a distinct brand for a set of offerings that's different than what the core company had. So I think those drove to a lot of the decisions.
Marcus Daniels 08:12
And I think you just said it right there. Having a bit of that distance creates the right kind of third space. Talk a little bit about, I mean, in fact, the events so much in your career on the digital transformation side, but as well, having this role that was kind of going in, inside and outside, which I think was quite interesting from a different lens on just how to build adjacent businesses.
Todd James 08:33
Yeah, it's interesting. I you know, when I was at I spent 15 years at fidelity, and before that, I was at Deloitte, you saw, you saw a lot of different things, and there's some some common threads. But then I'll get back to a little bit what's different, probably in my last role. You know, there's always a desire when you're starting something new, to give it enough space, one to be creative, to be able to make mistakes at a lesser level, you sacrifice scale a bit. And so, you know, I remember in financial services, there were times where new businesses, like the stock plan business at Fidelity and the human resource payroll business that they stood up, keeping that separate from the financial services to, you know, for several reasons. One, you want to be able to create that space, to innovate, to grow. You also want to be in a position where you're not necessarily getting crushed by the machine. And I think that desire was also there. And one of the was one of the reasons, when you know, Kroger was or 8451 was established as a distinct entity. It gave it that separation, that ability to move speed at speed. What's a little bit different, I think, from from being on the inside, like the examples I said in financial services, these businesses still set within the core company. They were still part of the core company, and. And, you know, in some ways that was better for when it reaches scale. It makes a little bit easier to make the integration. It's still the same culture, it's still the same business environment, same badges, same offices. You walk down the hall and interact with the subsidiary, do get a little more distance. And I think there's pros and cons to that right. Early on, lot of pros and cons for being able to operate at a different speed. Right? You've, you've got a data science business that needs to build up an infrastructure quickly to be able to serve a set of external clients. You also, you're looking at a grocery that's, you know, supporting 2500 stores, 100 $40 billion business, you know, dealing with point of sale, dealing with supply chain, you know, there's, it's a little bit easier to move fast and break things when you're separate from that, like you don't want to move fast and break grocery retail and shut down people's ability to buy milk and eggs, Right? That's so, you know, I do think that separation in that environment was, was really, really good. And I think, I mean, I think it served the organization really, really well as it built. And, you know, 8451 has been a very successful entity within, within the larger company, there's trade offs too, right? You know, if you look on when you set aside a separate entity, you know, one of the things that I learned pretty quickly when I got there is from the commercial side that separation was key. That separation the ability to move at pace, the ability to make localized technical decisions that don't impact the parent company, and to be able to work out of out of an investment stream that's generated through your profits, allows you to move a lot quicker. But on that Kroger model side, early on, you know, it creates a lot of independence, and that's that's strong, that ability to be the data science arm for Kroger, you have the independence. You do run the risk sometimes of being a little too far from the business, and you lose a little bit of business intimacy. So there's a give and take between where you want to be independent, where you want to be able to move fast, and where, quite frankly, you need to be on the floor, you need to be intimate, you need to be part of that business. And when you have different cultures and you have different structures for how you think about compensation, and different systems, even to collaborate across businesses. You know that just as there's benefits, there's also
Marcus Daniels 12:29
a little bit of a tax. Yeah, Todd, what was the balance and talent that had to institutional knowledge that kind of moved over? Or what do you think is the best balance of having of external, internal talent?
Todd James 12:40
I think you need both. I think there are places where you can isolate and you have the benefit of saying, you know, we can operate within the context of this distinct business, whether it's a business within a financial services company, or it's part of a distinct, discrete subsidiary of a company. For me, if you are not in a position where you have sufficient context to deliver value, then you're too far away from the business. If there are a cultural or a technical separation that makes it hard, you can actually delay the pace and the impact that you have. And there's no perfect answer, and I'm not saying one company did something right, another company did something wrong. This is a balance that you have to kind of work with, because think too you have different businesses within a large business or subsidiary. There are different brands. They're, they're co opted, but they're different brands. They attract different people who want different things from their career. So it's, it's a real balance. But I think if you know, if you get to a point where you are seeing part of your value proposition degrade, or maybe not move as fast as you would like it too. That's when you have to start to pivot. And I've seen that happen in two angles, right? I've seen it where a company reaches you, incubate it, and at some point, if the business is successful, that trade off for intimacy, for pace, that gets outweighed by the ability to say, let's start pushing our platforms together to get scale. Let's integrate our sales teams, and we'll come back to that, right? If you're confusing the market. I've also seen cases where you know you you're operating so independently that you know there, there's value. And that's something we were really focused on at 8451 on that part of the business that was focused on Kroger is, where your 8451 badge? Where your Kroger badge? But we're going to form teams using structures like agile that allow us to push the right people on the right team, get them as close as possible to the business. Yeah. Move with pace. And some of the benefits we started to see there is, yeah, you might lose a little bit of your independence, but you're also understanding the nature of the work a lot better, and you're starting to get more organic ideas, and you're building at scale to be able to insert high velocity science at the point of consumption, as opposed to moving from one tech pipeline to another tech pipeline, here's here's a scored model. Are you ready to accept it? It's much easier to work hand in hand with the tech teams from the right organizations to build science into that point of consumption, either for a customer, for an associate. So those are some of the balances you have to think about. The other one I saw is sometimes your independence and your desire, especially less with a separate, branded subsidiary, but, but, but it can happen there. But more when you're within a large company and you've got a group that's discrete, and they are full stack, and they have everything from their technology to their operations, to their own sales force, because they understand the product and they can sell it, and they can do it really well. Challenge they run into is, you've got a customer going, Hey, I talked to one of you yesterday, and it was salesperson for the main line. It was a salesperson for the subsidiary. And you can start to confuse your customers. And that's a balance that you have to watch as well.
Ben Yoskovitz 16:20
Yeah, we actually saw that working with some companies where they had sort of a separate group doing, you know, new innovative products. They would bring those to the customer, and the customer would be like, or they bring them to the sales person, and the sales person would say, I don't want to sell this new thing. I gotta, I have quota on this other thing. So then you would end run around your own sales people to try to go direct to the customer, and the customer would be like, Who are you and why are you selling you this random thing? Where's John? My sales guy. He's the guy I always buy from, so that that go to market, distribution
Todd James 16:51
is tough. I talked to him yesterday. Why didn't he bring this up? Why didn't he tell me about your offering and you're looking and in a large company, it's very easy. If Mary was there the day before. Mary surely would like to talk about it, but she might not know enough about the product, because Billy represents the product. And no offense to Mary and Billy, whoever they may be, but you nailed it. I mean, that's, that's the challenge, it
Ben Yoskovitz 17:15
sounds to me like, because you've, you've, you've worked in a variety of subsidiary, internal, whole variety of different case to me, is it, is it just case by case? At this point, I
Todd James 17:25
would put it even more more simply, right? It's you may have to recalibrate a little bit as the business goes. I mean, every business you grow, and we can even talk on a more micro level, at a team level, where you do this even within businesses, and you give full autonomy to a product team to be able to deliver and support their product end to end. At some point, the volumes get enough that if you don't get scale on the O and M side of that business, on the operations and maintenance and think differently about that, you start to degrade your ability to innovate. And so, you know, that's part of the dial. Where do you have to start thinking of, do I push it into the larger corporate infrastructure that's built for scale, so that we can continue to innovate? Because you reach that breaking point, and I think that's what's so critical to be able to manage and look for, and by the way, that creates all kinds of cultural things, right? Because all of us as business people, we want our arms around all of it. You're going to hold me accountable. I want end to end accountability. Who doesn't? And now you're saying, I've been doing this for years. I grew it. I was successful. But there's an acknowledgement that some of what you're doing maybe become a division, as opposed to an independent business within a company, and that's where you're dealing, not just with the business and the the dial doesn't just turn the the how you operate. It also kind of turns the culture and the emotional aspects of people that have been very passionate about their independence and building that business. And that's tough to work through, and that's, by the way, you want passionate people that feel ownership. And then you're going in and you're telling them, Hey, maybe that part of it should go here and we should plug it into the main record keeping system. Or maybe that should be something that we hand over to the tech team and the parent company. That's tough, and
Marcus Daniels 19:18
it should be, yeah, I'm curious. I know you've had so much experience in different organizations building beyond the core. How have you seen the best cases of convincing skeptical execs to build businesses beyond the core? Because you've seen a lot of exciting and I think, really successful initiatives in different organizations, where, in most cases, it's hard to even get there,
Todd James 19:40
yeah, it's, it's funny. I have yet to see, and we'll talk. I've seen organic teams that come up right organic product teams down in the organization, where it kind of bubbles up, and you don't need a lot of top down. It's an experiment that a couple of executives, or even a couple of managers decide. Had to run. That's different. I think what you're talking about is, hey, this new business, it may feel like retirement, but it's not necessarily going to sit in the retirement business. Or hey, this new business is a wholly owned subsidiary, as opposed to a division. Those are I've never seen that work without the highest levels of leadership decision making to drive and support that, and to and to have a leadership team that is CO supporting each other, understanding why that is like it's not just to say where I've seen this work. It's it's not just the CEO or the chairman coming in and saying, this needs to happen. It's broader understanding and advocacy across the leadership team, because from time to time, discussions come up, should we do this, and should we do that? And where you have a group of leaders that are sorting through and going, Is this the time? Is it not the time, and able to disagree with each other to get to the right point, but you've got people that understand why it is, so they can make that decision for non parochial reasons. I think that's the most important aspect. I don't know how you do it without that support, because otherwise someone is going to be influential enough to go back and go I can see what that can do for my business, and I'm going to pull it in. The problem with that is, is you don't want to do that. If you pull it in, you lose visibility from a financial and you, you know, the term I've heard and I've used it, is, you bring them in too quick, you break them, you absorb them. They get absorbed. They get swallowed. It's not, you know, it's not even necessarily intentional, yeah, yeah. No one. No one wants to do that. But if you pull it in so soon, it becomes part of the machine, and you never really get to figure out what it is.
Ben Yoskovitz 21:46
But do you think there is a way to, let's say you're not a C level and you see an opportunity to do something innovative, disruptive growth oriented outside of incremental innovation? Do you think there's a way to go to the C level and be like, folks, we should do this. Or do you think the C level has to wake up one day and say, I think we should do it? Depends
Todd James 22:06
on size and scope. I'm talking like business unit level, right? Building a business, acquiring a business, it's a major investment. Those decisions with that money level is going to be at that level anyway, even if it's within a business. So they have to sit there where I see the opportunity. I think your question's going is companies that I've worked with that really push that are open to experimentation, and a lot of times that experimentation can happen two, three levels below the sea level. And you know, the best example is you want to do full stack product teams, and you want to integrate across businesses. And do you want to be able to say, I want to break down barriers instead of a team over here? Does science? A team over here? Does tech? And a team over here trains the people to absorb in the business? Let's put them together virtually. Those types of decisions to prove a concept. I actually think everyone in an organization, a good organization, should be empowered to be able to do that, to be able to test it, to be able to try it, because that's where you start to learn and say, Hey, here's a new way of working, and that does get the attention, and that does get the opportunity to push it and and a lot of times it's stuff that doesn't require, hey, we're going to call it a new business and make it we're not going to name it, but what you can say is how they're working. Here is a great example. We know it works. We know it drives more value. Let's port it across to these other opportunities and make it a new way of working. And that bottoms up innovation between you and me is probably more important than where we started the discussion,
Ben Yoskovitz 23:45
right? And that sounds like to me, there's a little bit of org design there. It's the sort of a cross functional team that gets together to go do something, as opposed to a researcher saying, I researched a thing, I got an insight. Now I throw it over to the product team. The product team scopes it out. Now they throw it over the wall or the fence to the dev team. The dev team built but that's disaster
Todd James 24:07
that jump. Are so many opportunities. Each one goes to a new queue. I get done here, then I get to the back of the next line, then I get to the back of the next line. And there's so many opportunities to break. I it can be org design. I actually think one of the beautiful things like add agile methodologies, and you can talk about what model use and how they're implemented, but there is a beauty to we're going to put you together. We're going to hold you to a common goal. We're not going to change your badge. We're not going to change your reporting structure. But day to day, this individual is driving the tasking on behalf of the business. And no matter where you sit, organizationally, you're going to support that day to day. Now, the existing managers, you know, they're still weighing in on staffing decisions, performance and everything else but talent development. So that you know you have a data science lead developing a data science person that's probably pretty good. Good to keep that functional alignment, but it gives you flexibility to test stuff without a major reorganization. Yeah, it's more creating a squad that could lead to that. I've seen it lead to that. We're like, Well, this looks like a team. Person in charge and their leaders know how to develop all these different functional we're kind of playing around here. Let's just make it a team. I'll have to, and generally, I wouldn't suggest starting there.
Marcus Daniels 25:26
Yeah, you kind of noticed having ownership is such a critical component. And like you described before, it can come bottom up or top down, and who's really championing it, I guess the question I would have is, how does it really go towards to, you know, learning from the mistakes of starting, you know, adjacent businesses. Do you have any, you know, advice or perspective on that from all your experience?
Todd James 25:47
Yeah. I mean, I've seen mistakes.
Ben Yoskovitz 25:51
I mean, there was never made any mistakes. He's only seen them, only seen the mistakes. Just Just to point that you
Todd James 25:57
want to have a separate podcast on my mistakes, yet you should do that because, and I'll be honest, anyone that has anything worth listening to has made mistakes, right? Otherwise they're not testing themselves. We will. We will appeal to people's better angels and just say everyone's made mistakes, and we'll tell the truth. But here's, here's where I think it's happened, and I've seen it happen with business. There was a business at one point in my career, and I won't for the mistakes. I won't talk about the companies. And as a consultant, you can never figure it out. Was it when he worked at or was it a consultant?
Ben Yoskovitz 26:35
100% no, we don't need to. We don't need to name companies now. Yeah, it was,
Todd James 26:40
it was a business. It was built. It was a an offering that was not core to the nature of the business, but it was complimentary. So I'll give you just a simple example. You know, if you were to take it to a product, potato chips and beer are different, but on a Sunday, they're complimentary, right? So it was a service that when you went to this particular it was a B to B buy, and you went to him, he said, Here's my core. A lot of times they'd say, can't you take care of this for me as well? And so they stood up in adjacency to take care of that as well. Makes sense. And I evaluated three times, and each time I said, we shouldn't be doing this. And the third time stopped, right? But evaluated three times, looking at this, this nature, I think I'm sorry I did twice. Someone else came in and came to the same conclusion between my first and second time and and what, happened there was, it's tough, because for the people on the sales team, they're like, I want to be able to offer this, because it helps me against the competitor. There was a little bit of data, because you got to look at data at all times that said it actually creates a little bit of stickiness around client retention. So you're like, Well, maybe it's worth to do. When you got into the data, you started looking that varied based on market size, and then you started looking and saying, even within that market size, there are different economics. So we were losing a lot more where it didn't matter, and not making as much overall where it did matter. But it wasn't a clear cut yes or no. In the end, it wasn't a business that that organization was able to scale, wasn't a business that was able to be profitable. So you know, at some point you come up with different alternatives. But the challenge there is you can hang on too long, and you can, you can bleed for some companies, they can afford to do that. You know, my favorite example, my understanding, you know, talking about different company is, like, you look at Fidelity, I don't think they didn't come out of the gate making a lot of money on their 401, K is my understanding. It took a while for that, but that was clearly something we're sticking with right, a new offering. So, you know, there are times to make that bold bet and to ride out the storm so you don't want to jump too soon and miss that opportunity. There are also times where you realize you're not in storms. You're you actually put the boat in the rapids, and it's
Marcus Daniels 29:18
never going to change. Do you think going back if they had maybe a more robust validation phase to take a decision quicker. That would have benefited building these businesses beyond the core, or was it just entrenched? I think there are things you can do.
Todd James 29:31
I do think part of the benefit of beyond the core, and one of the reasons why it's good to do that, it's kind of hard to hide the financials when it's a separate, distinct entity, it doesn't get blurred in. Well, that's not my fault. That's the underlying platform that's serving these other No, it's your platform. It's not my operations, yeah, it's your operations. It's not my sales. You see where it goes. It becomes very clear. So I, I think you have financial clarity if you set these up. Directly. Now you can do anything you want. You can do a lot with Financials, right? How you structure, how you track what level, but there is a simplicity to a distinct and discrete P and L that allows you should be able to track those. I think it's more you, you've got to be able to look at the trends, and you have to be able to de average, to to understand because if you want to catch it earlier, it's probably not as simple as just looking at the financials. You're probably looking and saying, let's, let's look at the market segments. Where are they profitable? Where are they not? What is the trajectory around the profitability? Is there increased government regulation on fees that are likely to impact it? Is there increasing competition that's going to impact us in a particular area? And so that idea of de averaging and understanding the trends, like, if you you know, the worst thing in the world to do is to say, I'm making money here. It's not big, but in three years, it's going to be as big as I want, and I might not want to do the rest, or I can carry the rest so that it doesn't matter, and walk away, as opposed to sitting there and not realizing where you're making money is going to continue to decrease, and you should probably back out of the entity. So it's it's more nuanced. Probably the best things, like everything you say is, do you have the right telemetry? But also, I think you need, I would say mature, objective leadership, which we all strive to, but we are never at it. Yeah, I'm sure if you pulled Warren Buffett in here, and who knows, but he may not, but I would think he would probably be able to say at times he was not as objective as he wanted to be, and so but objectivity over desire for control and performance. You need to be dispassionate and objective about the performance of these businesses. I think is one of the
Ben Yoskovitz 32:01
which is not easy, not easy to do
Todd James 32:02
now because you're in it. I mean, people are working, you know, 14 hour days, driving these businesses. They put their heart, their soul, and that's what you want. You want that kind of individual. But you also need someone kind of step back and go, I gotta go in and kill this. And here's I got. I gotta take this thing that is my job that I have built, that I now have enough information about to say it's not going to work this way anymore. Yeah,
Ben Yoskovitz 32:27
hard to hard to have the courage to do that, because in my experience, working with big companies, the notion of failure is not, we're not. Nobody's celebrating failure. So it's hard, I think, for folks to look at it objectively. Say I just spend X, amount of time, y, amount of dollars. I know this thing's not going to work, but if I could just push it a little further, maybe it'll be somebody else's
Todd James 32:47
problem. I think it's even I've always been successful. I'll get through this. I've got a good team, right? And it's hard, but I objectivity program, planned, objectivity, leadership. Objectivity is very important.
Marcus Daniels 33:02
It's hard in the corporate context embrace failure, whereas in the startup context, that's part of the learning cycle, right? And so having a business beyond the core and in the adjacency gives a little bit of both, right? You can have more courage, maybe more transparency. Like you said, the P and L is is available there now, in the advent of AI, I know you've been such an early adopter in leadership in AI, specifically, it's changing how we're building businesses beyond the core. Would love to hear some of your own thoughts now, in 2025 how that's really radically changing building businesses beyond the core, to
Todd James 33:35
be honest, and I'm very passionate on this point. I do think we are at a once, once in a lifetime map, withstanding, something with quantum but a once in a lifetime, global replatforming. And I do think, to your point, this idea beyond, to push the barriers, to move beyond the core and change is critical. And I'll come back to one of the reasons why it's hard, because I've seen some shifts when you do this effectively on who's in what chairs. That changes. Typically, as you you start to become a more digital and data driven business, as opposed to your traditional operations. But what I would say is, here's here's what I've seen, everyone's talking about AI. I had someone give me, and I can't say it, can't say it on a podcast the way it was said, but it was brilliant comparing AI to teenagers. But what I would say is everyone's trying it, and they're talking about it. Some of what they're talking about is true, some of it's not. Some of it's overplayed. But the brutal reality when you look at the data, those companies that have shifted their culture have not kept AI as separate from a strategy, something we're doing, but actually embedded it into the strategy. Start. To either evolve their teams and their leaders, or, in certain cases, acquire new talents and skills, not just to manufacture it, but to run a data driven business. Right? You're doing a supply chain. You need someone who understands how to run an AI driven, data driven supply chain, or financial product organization or name your offering, but those companies that are doing that, as opposed to those companies that say, I have an AI use case, or, yeah, we're doing some reporting. The data is starting to tell a story like, I think the stat now is, and it's like 70 to 78% of companies say, Look, we're doing this. And that's up from like 50 some percent. And it was like 5355 in 2023, so in 2024, 78 you're like, everyone's doing it. It's great. Then you peel it back, and you look at those two examples of kind of those firms that are leading where it's really part of their DNA, it's a very small percentage. And you look at the companies that are testing individual use cases, and not really there. The difference is, I've seen reports that say upwards of 60% difference in profitability. I've seen reports that say two to 6x difference in total shareholder return. You're looking at improved customer engagement. You can disagree with those. Divide them by half. Say the reports are wrong, divided by half, those numbers are material. And I I have a part of the passion project I've had is I've been looking at data independently, technical data on companies, where you're seeing what they're doing, and you're weighing it up, these trends are real. So I think, you know, you ask about AI, i it's imperative not just that you start doing AI, but you figure out how to operationalize around it at scale, to drive material economic value, critical to make it integrated in your strategy, not separate from like. I'll even say it from time to time. Ai strategy. You don't need an AI strategy other than the foundational elements so that you could scale and reuse. You need a business strategy that is rife and laced with AI, just as you do now, I mean, it's just another tool, right? We have our Lean Six Sigma. We have our automation so we can improve process where we can't do that, we can automate and where we can't do that now, historically, we've had a push, a burden, to a customer or to an associate to make judgment decisions. That's the area that now we have a tool to be able to impact it, and just as those prior transitions, the companies that didn't do it, got hurt. I think the same thing's hap gonna happen here, and we're seeing it. I mean, the data is showing that that's only going to accelerate,
Marcus Daniels 37:44
yeah, and, I mean, you're just making the case of why having these adjacent venture studios can be so powerful. Because you can really take that those data goal levels 100% I want
Todd James 37:54
to be it's funny, you bring up the studios. Let's go there like, I want to be clear, it's got to start with leadership. If you don't have leadership, it doesn't matter you have an adjacent studio. And everyone's going to wonder in a few years why they didn't get the value out of it. But the adjacent studio concept, when you have that buy in, is solves another problem we haven't talked about right outside and inside innovation. How do you translate innovation, not from neat ideas that you quote in earnings reports, they get quoted, but that can actually be taken out of the lab and innovated? How and in and you see different approaches, right? You see innovation inside the company. Beauty there. They know the industry. But the challenge with this rate of change, how do you structure and operationalize the benefits of outside innovation? And Ben you and I have talked about this at length and wax philosophical, but if you're, I should say we've gone beyond that. But I mean, if you, if you look at that, the venture studios are something that I think will actually become even more important to companies. And that type of concept, you can call it a venture Studio, you say more structured engagement with innovators outside of my company, yeah, that in or adjacent to my my ecosystem? I think it would be more important, just based on the rate of change that we have, you can innovate that that fast inside your company. You can but
Ben Yoskovitz 39:36
it's less likely, yeah, for sure, 100% do you think, on the on the AI side, that people don't realize. I like your I like your framing. You need a business strategy with AI. It's not like aI strategy. We're already past that stage. But do you think the companies that aren't doing that are scared of workforce impact, or are they just not aware that. They need to speed up what they're thinking versus just like testing little things, which everybody is doing. Why aren't more companies doing real strategy with AI integrated into it and making it core to what they do?
Todd James 40:12
First thing I'll say, I have not worked at a company where they were able to advance their AI capabilities in a meaningful and material way without the top executive support and bringing in his or her leadership team and bringing that if that dedicated focus isn't happening with that top support, I just haven't seen it work. Maybe it did somewhere. Maybe when you post this, we'll see it in the comments, and we did the whole thing, and seeing the leadership team didn't even know we did it. They're so lucky. But, uh, be kind of interesting to see, right? I don't think it's going to happen. But, you know, we'll encourage people to post that. I, I, I think, you know, I, I do think that is you, you kind of peel it back and and go below that a bit though you've got that, that senior support, I think, you know, I'm anchored on two problems that I see out there, and you touched on one. One is, I don't know what AI is. I don't know how to get started. And maybe even sometimes on a visceral level, like I'll tell you over this cup of coffee or over this glass of wine. I don't only want to figure out that I don't know how to use it to change my business. Can you help me? That's one set of problems, right? Zero to scale problem. The other problem is, hey, we've been doing these use cases. I'm AI. I did. I've heard that term, AI did? You know, go out and AI it, um. The other challenge is, you know, we've got these bespoke, discrete use cases, sometimes redundant, not fully integrated into a strategy. And the best case, they're adding some some some marginal value, which is good paying for themselves. In the worst case, they are creating disjoint customer and associate experiences with different sciences and different data along the value stream. And I've seen that a chat bot built one way for a phone associate, and a chat bot built another way for a call center employee. So you imagine you're the customer, you get two answers, depending on on the support. So I do think that that the second problem that we have is, I have these use cases. I'm AI ing it, but I'm not seeing that kind of material value that I expect to be transformative. How do I how do I drive material, economic value through these? How do I transform my business? How do I get to a point where I can actually scale? And that's the second class of problems that I'm seeing. And to be quite honest, that's a problem set I, you know, that's, you know, I left. I think that problem is pretty per se, pervasive across the global 1000 and that's why I made that bet, to leave a very good role at a very good company. After talking to my wife, getting her support for anyone aspiring to do that, I have lots of data points. You got to do that, get your spouse on board. But yeah, that that, that's the problems that I want to solve, and why I see we're going out there, and I think you're hinting at them. That's why companies are getting stuck. The companies that aren't dealing with those problems are the companies that have 60% higher profitability, and they're seeing that benefit.
Marcus Daniels 43:31
So what have you seen with leaders that any small things they can do to help kind of push it forward into the execution phase?
Todd James 43:39
You know, it's interesting. I think the first thing, I think, what I would tell you, got to give yourself some grace. This is new. I mean, you these leaders are in roles because, one, they're very intelligent. Two, they're emotionally aware. Three, they have worked days, nights, weekends, learning the ins and outs of their industry, learning the ins and outs of their function to get them to the positions they're in. So I think it starts a little bit of grace, right? You know, it's new. Don't have you're not supposed to know it. But knowing that you don't know it, start to lean in. And I do think, you know, working as a leadership team in concert with each other, and then bringing in your next tier and next year. I mean, I've seen some great examples of, you know, I and I'll give, I'll give these leaders credit, like when, two examples when we were working at Kroger, to shift from what Rodney, who was CEO at the time, said, is, Todd, I want you to stop pushing. I want them to pull right. When they pull, they get it. And he was right. You know, he had a leadership team up in, you know, won't say where, but up in New England, at a pretty good Tech College. I. Um, to reinforce it, and I was up there for the first part of it, working with them and giving them exposure. That's education, that's comfort, both on a knowledge and on an emotional level, to get you there. It's those kind of events and signals that's not that's not like magic. You do that, but I think you need moments like that, or I'll never forget. We had a session around AI with a group of top leaders at fidelity, and then quietly in the first or second row, I look over and there's, you know, the chairman, Abby, sitting there taking notes. Did she need to be there? No, but what a powerful message. So I do think you know one thing the leadership teams need to learn, and they need to model as a start. And then there's education, you know, it's educate, engage and create awareness. And we could talk about the programs for doing that. There's a structured way, a playbook that I think helps. But I also think, as you look at it. You know, the other thing everyone says is, once you get that lineup, you work with leaders to get one or two projects to reinforce that, what they learned is something that can actually impact their business, and that becomes pretty contagious. As that becomes contagious, two things need to happen, and they need to be orchestrated so we get there, we're contagious. We're bought on we're doing use cases. Yeah, but you still need to say, Okay, I'm gonna start to scale this and accelerate this. How am I gonna increase the velocity, both through in house teams and through vendors, and how you manage them? That's very important. The other the other moment that I think is really important, and I've told anyone this, but you know, my last role, you go to the board right, and you talk to them about AI. And there was always, like the January meeting, where I'd go in and talk about AI. 24 was beautiful, because I went to second chair, each of the officers stood up and talked about their strategy, and AI was in it. And then I would say a few things, and then at the end, I said, here's how we're pulling it together, and here's what we want to do with vendors. Just say there's a there's a process to manage this and accelerate it across the board. But I thought it was so critical that I was not in first chair. I thought it was, if you're successful at this within your AI, leader should not be leading the AI discussion. If you're there, they should be supporting it. They should be enabling it. You know, using the lawyer. They should not be first chair. They should be second chair, an important second chair, but needs to be business owned. And it's moments like that where you start to see and say, leadership team is is moving this ahead, and the technical teams are enabling it, as opposed to the technical teams are pushing it ahead, because technical teams aren't the business that doesn't work.
Ben Yoskovitz 47:52
Yeah, it makes sense. Todd this. This was great. We're already at time move moving fast. Where can people if they want to find you. Learn more about the stuff you're doing today. Where can people find you? Connect with you?
Todd James 48:06
Yeah, I'd love to active on LinkedIn so you can connect with me there. Also check out Aurora insights llc.com, one little business note, I realized I could get the Aurora name, but it's $2 million dollars. So for now, we are going to stick with Aurora insights llc.com, a little bit of a learning there, but got a lot of information, lot of articles, and you can read about what I'm doing. So thank you for asking. When
Ben Yoskovitz 48:33
you switch over the domain to Aurora, we'll know you've made it. You've crushed it, right?
Todd James 48:38
I'm a better businessman than paying $2 million for a domain name
Ben Yoskovitz 48:43
Todd. We appreciate your time. Thank you so much for being with us. Really appreciate it. Thanks
Todd James 48:47
for having me. It's great talking to you.
We always enjoy conversations about innovation and startup building so please get in touch.
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