Monday, May 14, 2018

The Energy for Transformation

My most recent book, The Startup Way, is all about the methods and tools big corporations, government, and non-profits can use to innovate: think of it as Lean Startup at scale. One of the things people asked me over and over when I was talking to companies about how to start doing this kind of work, which can feel so daunting, was what it takes to kick off a transformation of this size. What motivates a company to take on such a huge amount of work?

I’ve seen three distinct driving forces behind this kind of change:

1. CRISIS: Sometimes, a crisis forces change. One of the stories I tell in The Startup Way comes from the Federal Government. The very public meltdown of HealthCare.gov, the government’s website designed to implement the Affordable Care Act, was a crisis of the highest order. A huge policy achievement almost went up in smoke because the process of creating the site was so poorly managed it didn’t work on the day it was unveiled. Ultimately, the crisis was the catalyst for real change at numerous agencies across the federal government, beginning with an epic lesson in what can happen if you rely on the traditional “safe” management methods the government used to build the original site.

2. STRATEGY: Other times, a new organizational strategy clearly necessitates a new way of working. At companies like Intuit, change was driven from the very top by a recognition that new strategic imperatives required a dramatic overhaul. This can work only when the most senior leaders in the company have bought into the new approach and are determined to see it through. It is also not the kind of decision that can be made lightly, which is why it becomes critical, after the first stages, to demonstrate how the new methods function and to lay the groundwork for full mobilization across the entire organization.

3. HYPERGROWTH: Success can be its own form of crisis. When a startup achieves product/market fit, it can be forced to grow extremely rapidly. As legendary Silicon Valley investor Marc Andreessen, also founder of Netscape and general partner of the VC firm Andreessen Horowitz, put it (in one of the startup movement’s most famous pieces of writing):

“In a great market—a market with lots of real potential customers—the market pulls product out of the startup...And you can always feel product/market fit when it’s happening. The customers are buying the product just as fast as you can make it—or usage is growing just as fast as you can add more servers. Money from customers is piling up in your company checking account. You’re hiring sales and customer support staff as fast as you can. Reporters are calling because they’ve heard about your hot new thing and they want to talk to you about it. You start getting entrepreneur of the year awards from Harvard Business School. Investment bankers are staking out your house.”

Tuesday, May 1, 2018

An Interview with Steve Liguori, Serial Innovator



I first met Steve Liguori when we were both working at GE, where he was heading up a lot of their innovation efforts. But he’s been a change agent for much longer than that. We spoke recently about his path as a serial innovator, his beginnings in marketing, and what he’s been doing lately with his experience in teaching big companies how to transform themselves from the inside out. I’m a partner in his latest venture, the Corporate Entrepreneur Community (CEC), the newest addition to his long history of reinvention work that spans industries ranging from football to banking. I hope you’ll enjoy the conversation as much as I did.




Your first big innovation was also a huge cultural moment. What was it, and how did it come about?

When I was at PepsiCo, I started the Super Bowl halftime show with Michael Jackson. This was in 1993, and I was the chief marketing officer at Frito-Lay North America. The first Super Bowl halftime show was sponsored by Lay's Potato Chips, which we were re-launching. We were trying to do something dramatically new and innovative from a marketing standpoint, and being owned by Pepsi, which had done Michael Jackson, and was legendary for commercials and crazy marketing, we thought, "Why can't we do something crazy and innovative?" So we came up with the idea of disrupting the Super Bowl by doing, basically, what's now the Super Bowl halftime show--something crazy during halftime that we could own as a marketing vehicle. Before that--you can go back and look at old tape--half-time was the same thing from high school football to college football to NFL football. The marching band came out and did a marching thing and then at home everyone turned off the TV or went and got snacks because the announcers came on and talked football. We knew someone who knew Michael Jackson's agent and that's how it came together. I just always had that gene to make change. We called it “business not as usual.”


Where did that gene take you next?

I got lured away to run a small, private cookie company, and from there I went to Citibank. Going from potato chips and cookies to work at Citibank may seem kind of strange, but I got recruited there because they were looking to reinvent the consumer bank. I was president first of Citibank New York, then Citibank Federal Savings Bank, which is all the U.S. branches. I introduced brokerage services into the branches, which was a huge business innovation because for the first time you could go buy stocks and bonds in the bank branch. The other innovation I headed up there was basically putting Citibank online. I personally bought the citibank.com URL and introduced the first internet-based online banking.


Were people calling this kind of reinvention innovation at the time?

This was during the internet explosion, so I’d say it was called the digital revolution 1.0. In 2001, I moved from Citibank to become the CMO of Morgan Stanley’s brokerage business, where I was tasked with modernizing and reviving the brokerage business there. Everyone needed to get everything online right away and didn't know what the heck to do. I was there to help put Morgan Stanley online, but also to integrate the very broker-centric aspect of the business. Doing both was a really complicated endeavor and I helped reinvent it.  We didn't call it innovation, but it was, because it was about how to transform a purely human-based business into a combination of human and online and get the best of both. Because I’d made a name for myself as an innovative marketer in consumer financing, I was then recruited by GE, which still had a consumer finance brand at the time called GE Money.


Can you talk about how you went from finance marketing to the kinds of innovation projects GE started taking on eventually, which was when we first got acquainted? Clearly there’s a through-line of a willingness to take risks, right?


GE Money ended up being significantly scaled back during the recession in 2008, and as that was happening I met with Beth Comstock, who was the CMO at that time. She said to me, "We've got all these industrial divisions at GE: GE Medical, GE Aviation, GE Energy. Do you think that the basic principles of marketing are the same there as in the consumer world?" And I said, “Is that supposed to be a trick question?” Marketing is marketing, whatever you’re talking about. Two weeks later, I was named the executive director of global marketing for GE at the corporate level, working for Beth Comstock. My charge was to modernize all the marketing departments across the GE divisions. But it wasn’t long before GE realized they had to get moving on digitalization at the business level--that everything that was going on at the consumer level was becoming really important for business as well. They knew they needed to get into industrial software and data. My role migrated over to that, and I was put on a task force to figure out how GE could begin to digitize itself and the industrial internet.

What that means is that If you're running a utility company, an airline, or let's say, even a railroad, the data that comes off of your equipment is invaluable to running your operation more efficiently. In fact, there's a term now, it's called, "OT," as in operations technology. So as opposed to just having data on how well your accounting's doing, an airline wants to know what its fuel efficiency is. A hospital wants to know what percentage of up time it has on its CAT scan machines. A power company wants to know whether they should be burning natural gas or taking power off of the solar grid because it's sunny in Southern California. We started all these change projects--sensors in airliner engines, or in CAT scan machines, so we could tell management how valuable that data is for them to help run the business better. It innovation of the product lines in businesses, and I was put in charge of coming up with new ways to do things around digitizing GE and modernizing the company. It was another example of me being a serial change agent.


This was around the time when we met, because all that change was getting stuck and I came along to try to help move it forward.

Yes. The teams would be all fired up. They'd start their journey. We'd get back to them in, say 60 days or so, and they'd say, "We didn't make any progress." And we'd say, "What do you mean you didn't do any work?" And they'd say, "We didn't say we didn't do any work. We said we made no progress." Why did they make no progress? It was because of people saying, "That's not the way we do business." The change agents were getting eaten by the business-as-usual.

So we decided we needed to go and attack head on how to do innovation from a cultural perspective, which turned out to be the Lean Startup methodology. With you, we eventually created a whole new cultural methodology at GE to get this new way of working kicked off. That was FastWorks, which you wrote about in The Startup Way.


How did that experience carry over into new projects?

I was getting asked very frequently to go present GE’s story about how they were figuring out how to do innovation completely differently. People were realizing they needed to change but didn’t know how to get started doing it in a big company. So I became sort of a pied piper both within GE and external to GE. At some point the light bulb went off and I thought there was a really broad need for this kind of information. I decided I wanted to teach big companies how to implement their own reinvention, by using Lean Startup as the core for updating their culture and leadership. So I launched Liguori Innovation to do that.

About a year and a half into the new venture, I had another realization--which you’d also had--which was that people in every industry were calling me all the time with the same questions. It didn’t matter if it was a tech company, a finance company, or a manufacturing company. They were all struggling with figuring out how to make change in a large company. There are very few people doing it, just a core, small contingent of folks trying it. So I thought maybe the best way to help people figure out how to do it is to get those who are learning about it together with each other. The idea was to create a community of practitioners and let peers jump in and actually help each other as another part of the ecosystem they need to succeed at it.  That’s what the Corporate Entrepreneur Community (CEC) is for. It’s a very intimate setting where people can ask very specific questions of their counterparts at other companies that are similar to them in size and structure, but not in purpose, so there’s no competition. Things like, “What do you do when an executive comes in and says, 'Well, this seems great, but I'm still not buying into the process.” Or “We’re having a really hard time getting entrepreneurial people to stay in the company--how are you doing it?” It’s hard to have that conversation with anyone who hasn’t really lived inside a company of this size. There are several meetings a year, but it’s also a little bit of a matchmaker situation because people can call up and ask specifically to talk with someone we know has dealt with whatever their issue is.


Is the motivation behind your current work the same as it was when you started out at Frito-Lay or has it evolved in ways?

I really believe this is a huge need in society. These large companies have brought tremendous value to society from transportation, to electricity, to healthcare, to clean water.. And whether I love or hate Facebook, I don't think it's going to cure cancer, and I don't think it's going to get clean water to the billions of people that don't have clean water. These large, multi-national companies have global reach, and scale, but they are absolutely risking becoming dinosaurs because they're victims of the bureaucracy that they have created. That bureaucracy is necessary--they need regulations and controls on what they’re doing that affects people so much. But while you're making your quarterly numbers and doing all the things regulatory you need to do to pay the bills and stay out of jail, how do you at the same time completely reinvent yourself from the inside out? The specialty of what I do is to help answer the question: "How do you break all the rules safely?" That's an intentional oxymoron, and that's what these companies need to do.