Charlene Li | How a Disruption Mindset Can Help Your Business Thrive

Charlene Li 2:54
One of my key catchphrases is that how I help organizations and leaders is I have help leaders thrive with disruption. And somebody came up to me say so how did you actually do that? And now it That’s a really good question. Because other than the role models that you talked about people like Uber and Facebook, Google, Amazon, all those people. Well, how do you do this? If you’re not one of these

John Corcoran 3:16
sort of Google,

Charlene Li 3:18
Silicon Valley Tech gods? And that was a really good question. And I had some ideas, but nothing really formulated. And and that’s usually when I start getting in trouble, so to speak, when I get curious about a question and say, How do I find out what the answer is? So did a lot of research and realized that a lot of people were facing the same issues? We’ve been told for decades that we have to disrupt or die, we have a lot of hanaway errs out there. But how do you actually do that? And what I found was that this was a really pressing question for many, many leaders and organizations. So I wanted to address that

John Corcoran 3:55
it’s a really interesting one, because, you know, just in the last 1520 years, you we’ve got these companies, you know, like the Kodak, Eastman Kodak, so the world, the cautionary tales, right? The block Blockbuster Video, these types of companies that, and many other lesser well known companies that failed to disrupt themselves and other companies came along and disrupted them. Was that a little bit of an inspiration, just seeing these stories?

Charlene Li 4:23
Yeah, but what’s great is those stories have been tossed around for a long time. We know all the failures, were the successes, who are the people who have actually been able to disrupt themselves? Because the conventional wisdom is that you can’t know you will commence, you’re just toast. So just just don’t even try. And I just refuse to accept that. That’s true. And I wanted to find some examples of companies who are actively trying to disrupt themselves. And what are the models? How do they go about doing it? And what was the secret sauce? companies who are doing this very successful? Yeah,

John Corcoran 4:58
it’s really interesting. You’re right about T Mobile, you’re right about Adobe, some of these larger companies that, you know, you can only imagine how hard those discussions were when you have multi billion dollar companies. And then you have a leader within the organization saying, guys, we need to completely tear things up completely changed things. And we’re going to, we might even lose in the short term, you write about that some of these companies there, they take big dips in their public companies that on a quarterly basis, have the report their earnings, and the CEOs get chastised, they get really raked over the coals in the short term if their company is not doing well. So talk a little bit about what types of characteristics it takes in a leader in order to be able to enact this kind of disruption.

Charlene Li 5:48
Yeah, be a story that you just talked about was it was very much exemplified by Adobe. So they knew that they wanted to go from packaged software to software as a service and subscription in the cloud. And they were doing this back in 2009, 2010, nobody was asking for this. But they could see the writing on the wall, as more and more creative processes were moving to the web moving to mobile, they couldn’t continue having two year release cycles, which is what podcasters software does. So they started preparing for this. And they knew that it would be a better customer experience. And that was the central thing. That was the thing that carried that. And what I found across all of these disruptive organizations, they focused on the future customer, they had a clear idea of who that customer was, what they needed, and then allow them to take on this extra level of pain in the short term for that future. Yeah, so Toby knew that they were going to take a bath on the revenues, because they recognize revenue is in a very different way, when you sell product, then you do a subscription service. So for 24 months, they knew the revenues and income are going to go down. And as a publicly traded company, that’s like say we’re failing massively. But they came, they went to Wall Street and said, You’ve got to look at business and new metrics. These are the new metrics and look at so quarter after quarter, they would go in and say, we’ve got great news, our business model is working. Or down, our income is down, Isn’t this great? in Wall Street, agreed with them, and their stock go up every single quarter. Well, it was astonishing. As an Alice watching this happen, it was astonishing, to see how well the executive team executed on our strategy. Interesting.

John Corcoran 7:34
You know, that the San Francisco is now dominated by the tallest tower, it’s the Salesforce tower, which is over everything else. How much does Salesforce deserve credit for it, you know, their, their motto is no software, they kind of famously move like led this movement towards cloud based software? And is there anything that we learn from its founder Marc Benioff, or the company itself?

Charlene Li 8:03
Yeah, I think there’s a lot to learn from a company like Salesforce routinely named as one of the most innovative companies, I intentionally didn’t not name a lot of companies as my focus, who had founders still there in the company, because it’s, it’s hard to be a salesperson and Marc Benioff can do things to with Salesforce, that a regular CEO was not a founder could do. But But regardless of that, I mean, that company has continues to innovate, they are constantly reinventing themselves. It’s as if, okay, two years ago, we would have said, This, ignore that we’re doing this now. Because the market has changed. And our customers need this. And the one thing that you find from companies like Salesforce, again, what I said they do this one thing really well, they focus on the future customer, and are constantly changing what they do, no matter how painful it is. And I can guarantee you is you know, with people who live in sales was, it is not an easy place to work. It is fast pace is not for everybody, any of these disruptive organizations, you’ve got to be cut from a certain cloth to be successful there,

John Corcoran 9:09
right? And so you say a disruptive company needs a really a beautiful customer focused strategy. And it’s easy for, you know, a company to say, well, we’re going to be customer focus, but what does that really look like? How does how does a company really, you know, I’m probably every company says their customer focus. So what’s the difference between a company that just a normal company says, We’re customer focused, and one where it’s really, really truly customer focused?

Charlene Li 9:35
Well, you go and talk to anybody inside of the company, and you ask them, How do you decide what to do every day. And they go, well got to do listen to everything versus a company that’s truly customer focused as well. We’re here because of our customer. And we do things, I decide based on what I understand my understanding, because we have this consistent, intentional view of who our customer is, and what they need. But even more, so you ask them who their customers ago, we have our customers here today, but we have a future customer that will also building towards, and you can go to the very front lines of an organization and asset. And that’s what the difference is. I’ll give an example. I one of my case studies is TMobile they went through this really interesting pivot to become the own carrier. And so they decided not to ever do things like a regular telecom carrier would be, and to be completely focused on being an advocate for their customers. So I said, Okay, how deep does this go? So I went into a random store in a strip mall down in San Diego. And I’m like, so tell me, how do you how do you guys get compensated? And the person says, Oh, yeah, everything’s about our customer, I show I have to drive my sales. But 50% is based on how crappy our customers as a store is. So I have an incentive to go and actually support and make every single customer happy, even if they’re not my customer. That’s a customer centric organization, where somebody just randomly out of frontline person and can tell me Yeah, my job is to make customer experience just fantastic.

John Corcoran 11:14
In the famous example, that, of course, is Amazon, people talk about Amazon, it’s kind of famous for Jeff Bezos is famous for leaving an empty chair around a conference room table whenever they have a meeting representing the customer that’s supposed to be there. And now Bezos, of course, was the founder of Amazon, not a leader that came in. But you talk about Eric companies need disruptive leaders as well, it’s so it’s one thing one pieces, beautiful customer focus strategy. And then disruptive company needs a disruptive leader, what are the qualities that make a disruptive leader?

Charlene Li 11:49
I’ll talk about the qualities in just a second. But I think one thing about how leadership is different inside of destructive organization is that you actually have to leave a movement. And most leaders don’t, I think their job is to create a movement, their jobs to get things done, make change happen. But in a disruptive strategy, because it is so hard, it is so disruptive, that you’ve got to have a clear vision again, of that future customer. But then treat it like a movement that it needs to be to inspire people and movements move when they only are successful when they can move without you said some something that the co authors of a book, great book called New Power talk about. And when you can create a movement that momentum carries itself forward. So that said, What great what characteristics of a leader and I did a survey of 1000 leaders globally, and found that the two characteristics one is an openness to change kind of makes sense, right? But it’s manifested in the fact that you think that things would always be done better. There was a bit of paranoia that what it would do me today, probably a lot more tomorrow, you share information, you’re very open. So these are ideas, ideas that people oftentimes have is an openness to change mindset. The other one is that you have really strong leadership behaviors, and leadership qualities that emphasize empowering and inspiring people to take action. So this is about leading through other people. And it’s not about us standing at the front saying we’re going to go in this direction, it’s much more about inspiring people to say this is the direction we want to go together. So those are two very different aspects. And what I found is people who had those types of mindsets and behaviors are much more likely to see themselves as being capable of driving disruptive change, exponential change in their organizations.

John Corcoran 13:40
So in these leaders, then it’s really about gathering a community of people and motivating them to enact the change as much as it is being an iron fisted ruler from the top.

Charlene Li 13:54
Yeah, in fact, if you’re an iron fisted ruler, you probably won’t get very far, because one of the characters basics of disruptive organizations and their culture is this ability to be able to swerve and, and, and be flexible, I call it living in a world of flux. So when a lot of things are changing, you can’t be calling all the shots because everything would depend on you to make the decisions. But if you empower people and inspire them to say, this is the path, we’re going to go, and you’ve given them this really strong sense of agency, ability to control the outcomes, a sense of ownership in the game, then they will actually make the right decisions more or less, most of the time, there’ll be mistakes, but there’ll be mistakes, even if you are controlling things. So this is why it’s a really interesting leadership behavior to be able to give up that sense of control, because they realized very early on that they’re actually not in control. You’ve never you never are, the only thing you can really control is yourself. And then therefore the everything else is about inspiring people.

John Corcoran 14:57
Right? You write about culture, also, that’s in a important component, and that these companies need to disrupt their own culture. explain what you mean by that?

Charlene Li 15:07
Yeah, again, I think there are cultures that are stuck, they just have a really hard time moving off of where they are today. And then there were cultures that I said before live in flux, they’re capable of a lot of change happening. And I found to be major characteristics of flux cultures, these disruptive organizations, they have openness and transparency in order to build trust. So they share information, and they make decisions in certain ways where it’s very open and transparent how things have been done. They also have the strong sense of agency that I talked about to create a sense of ownership. And the third is to have a strong bias for action. They can’t stand to stay still. So Okay, ready, let’s go, do we go A or B? We don’t know. This is choose a, and we’ll figure out what’s right. It’s not willing to do the they’re not gonna sit here. So I don’t know, I both don’t look very good. So how do I do choose, maybe I won’t choose at all because it’s safe to be back here. And these organizations just say, we’ve got to keep moving forward. Again, because of the strong strategy about the future customer, we gotta move, guy go after that customer as quickly as possible.

John Corcoran 16:15
I want to take a little departure here and ask about your own business, your altimeter, which you described as a disruptive analyst, firm, and talk a little bit about how that firm was disruptive.

Charlene Li 16:33
Well, when I started, I left another analyst firm, and most analysts firms charge a subscription basis. And the dirty little secret there is that it’s mostly vendors who are paying you. So hopefully, in they actually done but they hope to get a little bit more better coverage from the analysts. And I just went, you know, first of all, I didn’t have a Salesforce, I didn’t have a lot of analysts there are just for, you know, few of us. So how do you compete against billion dollar companies like Gartner, Forrester, IDC, say, just huge brands. So we said, let’s give away our research for free because our future customer, our customers, were people who wanted to deal with all these new technologies, and weren’t even in a position to even deal with a subscription basis. But we knew they needed help. So we wrote the research based on the problem sets that we’ve got capable of addressing, and we routinely get hundreds of thousands of people to read a single report versus about five, maybe 10,000 people for a regular reporter for sir. So that was highly disruptive, in the business model, because we wanted to reach a new audience that typically hadn’t been reading any of the analyst firms. Of course,

John Corcoran 17:45
the major difference there is right, you’re previously with the other firms there, you’re paying in for the ability to read that content. And if you’re giving away for free, then where’s the money come from coming from?

Charlene Li 17:56
Because we knew that what the problem set was people would deliver, call us 100% was inbound and say, Have you been sitting over my shoulder conference rooms, this is exactly the problem we’re dealing with, you need to come in and talk to us now. Got it. So it reduced all of our sales and marketing costs, we basically had a little bit of business development to do scaling and pricing, and then we would go So wait, wait and manage our time as analysts, we didn’t have to spend a lot of time doing marketing and sales, because it was there it was hundred percent inbound and really high close rates. So it was it works, because we would go and solve the exact same problem every single time at the speech with a workshop, same workshop over and over again, same assessments over and over again, highly scalable. So that it it was a completely different way of thinking about the market. And and really thinking long and hard about what were the problems that our customers who’d never bought Alice services before. But they had these problems. So how could we serve them and a new and different way? And we’re the traditional,

John Corcoran 19:05
you know, firms that that you were competing with where they threatened by this model? Um,

Charlene Li 19:11
yeah, but at the same def, definitely, because I know from my previous employer that they didn’t like it too much, because we would feel the air again, for my press and brand perspective, who were seen as people who are also alternatives to the traditional analyst firms. I think since then, I mean, that space has gotten so wonky, because you have analysts, you have influencers, you’ve got bloggers even have companies acting as analysts, firms, with their own thought leadership. It’s a much more complex landscape today, just even 10 short years later. So we continue to focus on buying the things that we do, I would be a direct competitor to enter the analyst firms. I don’t think we ever were because we weren’t really taking away the subscription revenues from them.

John Corcoran 19:56
Yeah. And looking back. Sorry. And looking back on the your time running that company? Do you feel that? You know, being transparent? Do you feel like you You were disruptive in all those ways? As a company? I mean, or do you feel like there any now now that you’ve like, really, literally written the book on it, and you reflect back, and it’s been a few years since you sold it? Do you feel like maybe I could have done a better job in this one particular area?

Charlene Li 20:23
Yeah, this the one thing that always is difficult, I think, for any CEO, we go back and look, and I wish I could have done something different. So the one thing I always go back to is like, could I have done the culture different, differently, better, right? Even though I write about it, it is, I am not the most natural CEO, I’m a much better analyst and author than I am a CEO. I’m okay, as a CEO, I’ll be the first one to admit, it was my first CEO job, it was the first time I’d ever done it made a ton of mistakes. I wish I could do a redo. But at the same time, it the level of disruption that we had the recognition, the fact that we were out there, if you looked at the influence maps, we did one thing really well, we we made a big splash with our brand and our presence. And that was me, but also the partners that I brought on, we were just really focused on that. So look at the influence map. So be Forrester, Gartner, IDC. It’ll Timothy it with our circle being as big as all the others. And we were four people at one point, you know, again, 12 analysts compared to 2000 Alice at Gartner. Well, but, but we tackle the topics that other analysts firms wouldn’t tackle me, analysts like to analyze the things that they know and feel comfortable with. And we would start with questions that we didn’t know anything about. We just take it on, because we knew was a problem that our, our target audience, our clients, the people we want to reach, were telling us, that’s problem. They had a problem, we had a saying, I’ll always be researching a VR. And so every interaction with ask them, so what’s on your mind? What are the questions you have what we should be researching for you? And what should we be writing about? You know, what, what are the topics? And it’s usually at this level, and then we do research and realized, oh, maybe it’s at this level. And then we’re going deeper and deeper and deeper into what’s really the problem that we’re trying to solve here. And if you’re an Alice at a traditional Alice firm, and you’re in one department focusing on one technology, or one particular role and industry, you’ll never get to that kind of answer. But altimeter we let each Alice go and say, What are the big questions out there that you think need to be answered? So it’s a very different type of analyst firm out there? Yeah. Yeah, it is.

John Corcoran 22:49
Did, did you have anyone to turn to when you were in this role? You said it was hard being CEO, were there any mentors were their old bosses that you turn to?

Charlene Li 22:59
Yeah, I join a group called why po would used to be the young presidents organization. And my goodness, what a lifesaver. on so many funds, my formed a small group, about eight or 10, other CEOs kept me sane. I mean, when you’re the CEO, there’s not a lot of other people, you can go and talk to you. So they were in many ways, my personal advisory board. So they would meet every month, and they would help me think about these things about how to be a better leader, how to create that culture, how to work with disruptive partners of my own partnership so hard, and I had a lot of partners. So just working through how to get along how to make things happen. How do we align our interests? All those things? My my, my fellow forum mates were extremely helpful. And

John Corcoran 23:50
we’re running low on time here. But the the last part of the book, you mentioned earlier flux, and you talk about the flux culture operating systems, I want you to give us some insight on into that one.

Charlene Li 24:04
Yeah, again, I think flux is great. But you It’s one thing to have the beliefs and the behaviors among flux. But you need to hardwire that into your organizational operating system, you know, your OS, so to speak your culture OS. And I think that there are three things three leavers, you can start pulling, because people say, Can I really change my culture, I’m like, absolutely, you can change your culture. But you have to have the beliefs first. And then think about these three things organizational structure, process. And the third most powerful areas lore, lol re, because those are the spoken words assembles the rituals that hold your culture together. So I took apart some of the organizational things that some organizations did, about organizing the way that they actually work, both in the physical space, but also in the digital space. disruptive organizations I saw was actually really process driven. They were highly ordered companies, you usually think disruption and chaos go together, it’s just the opposite. It was the most interesting thing these disruptive organizations will do this year after year after year, they just have it locked in. And the reason is, when you’re trying to do really crazy things, you need to know that everything else works like a machine. Because you can’t turn around. Okay, everybody’s going to go through this crazy thing. Well, how do we do that? Do you do that to somebody else do that? They actually have a process will figure out how to take on these new initiatives. How did he change really, really well,

John Corcoran 25:44
and have it locked up? I’m wondering, just to wrap things up here. I wanted to ask about a bay area company that’s that gets a lot of headlines. Tesla, SpaceX, Elon Musk is constantly grabbing headlines. What are your thoughts him? A lot of people love them or hate him? A lot of people say he’s one of the more disruptive leaders out there today, of course, a founder of both of those companies.

Charlene Li 26:09
Yes. And don’t forget Solar City to the heart of Tesla. I mean, one of the most brilliant things he did was to build a battery factory. You know, that’s where they’re making most of the money today. And it owns it is very successful. I think it was strategy point of view. So visionary, so thoughtful, from an execution point of view. And also, I mean, trust starting any company, but to create a car company with all its complexities. Yeah, to launch rockets. I mean, give the guy some credit. This is the hard stuff. And so yeah, he’s getting a lot of headlines today, because sort of his wonky behavior, which is not a good thing. And if you’ve noticed, it’s pretty much stopped over the past couple of weeks. So I I’ve had a chance to meet him a couple times. And yeah, he is he’s kind of in a completely different league in terms of his ability to this. Yeah. I personally would not want to work for him. And so but that’s, that’s me so many other people love working at SpaceX down in LA is like the hot ticket. So many people would love to work at Tesla. Right. So good.

John Corcoran 27:16
Yeah, I feel I feel the same way. I love both the companies, I don’t think I’d want to work at either of them to their their amazing companies, it would be really hard. But what were your impressions of I met him once as well to tell the story some other time. But what were your impressions when you met him face to face.

Charlene Li 27:32
He’s very intense. Um, I actually I worked with his very first startup called, I think was called zip to. He started with his, his cousin. And this is back in like 1997 or something. So I knew him even back then. But we met him like once in person, but he’s very, very focused, very intense. And is not easily impressed. I could easily say that. He doesn’t have a lot of time to just talk about things that just are kind of do him. inconsequential, right? Yeah.

John Corcoran 28:09
Yeah, that’s, that’s pretty much my impression as well, when I met him. Very serious, very no nonsense type of guy. All right, well, so last question. Just wrap things up. Let’s pretend we’re at an awards banquet, much like the Oscars of the Emmys. And you’re receiving an award for lifetime achievement for everything that you’ve done up until this point. And what I’d love to know we all like to know is who do you think we think, of course, you know, our family members. But beyond that, you mentioned your wife to form mate Sprott, perhaps then anyone, anyone else, any other mentors that you would,

Charlene Li 28:39
yeah, I’ll name one person in particular, her name is Kathy Yates. And I left Harvard business school and went to a newspaper. That’s not normal it but I went to the San Jose Mercury News in 1993. Because I wanted to be at a place where the internet was going to change something. I just didn’t know what but I figured newspapers would be one of the first ones to be impacted by it. And a big part of my decision to go there was because of Kathy, here was a Stanford Business grad, the president of the organization like running things and just such a fantastic mentor took me under her wing for two years. And I just learned so much and my first real job being a leader in an organization. And but more importantly, she also showed me how to be a woman how to be a mother how to do all of this really successful and do it well. So I’ve always been incredibly grateful to her for just giving me that extra bit of attention very early in my career because it made a huge difference.

John Corcoran 29:36
The disruption mindset is the name of the book Charlene Li, calm CH, AR, l, E, and E, sorry, c h, AR, l, e, and e. l. I calm right anywhere else that people should learn about you.

Charlene Li 29:54
You can find everything there.

John Corcoran 29:56
Trying to make it easy for everyone. Perfect. Perfect. Alright, thanks so much, darling.

Charlene Li 30:00
Thank you.

Dush Ramachandran 30:00
Thank you for listening to the smart business revolution podcast with John Corcoran. Find out more at smart business revolution calm. And while you’re there, sign up for our email list and join the Revolution Revolution, Revolution Revolution. And be listening for the next episode of the smart business revolution podcast.

Pages: 1 2