Transformation Movements

Hello and welcome to Leading Digital Transformation with Rob Llewellyn and the Digital Transformation People. In this podcast series, Rob interviews experienced practitioners, authors and thought leaders whose stories and experiences provide valuable insights for digital transformation success.

Hi and welcome back. Today I'm joined by Greg Satellite. Greg's journey has been quite an interesting one. He spent 15 years living and working in Poland, Ukraine, Russia and Turkey before returning to the states in around 2011. He's gone from being a corporate executive and entrepreneur to being an innovation advisor, speaker and a best selling author. His books include Mapping Innovation and most recently Cascades how to Create a Movement that Drives Transformational Change. So let's learn more about all that and jump into the interview with Greg. Greg, welcome.

Thanks for having me, Rob.

Greg, before we get into the questions, your most recent book, Cascades, which I just mentioned, tell us a little bit about what brought you to writing that kind of book.

That's kind of a funny story. Back in 2004, I found myself running a major news organization during the Orange Revolution in Ukraine. And I just found it was amazing how all these thousands upon thousands of people who'd ordinarily be doing thousands upon thousands of different things would all of a sudden stop what they were doing and start doing the same thing all at once. And I thought to myself, I said, gee, I'd really like to do that. You know, here I'm running this big company and there's all these thousands upon thousands, thousands of potential customers buying all sorts of different things. I wanted them to unify on the one thing I wanted to sell them. And I had hundreds of employees all with their own ideas. I wanted them to embrace the initiative that I thought was important. And there were advertisers and investors and I wanted them to embrace where we wanted to take the company. But of course, I had no idea how to do that. So that's what set me out on this 15 year long journey that led to Cascades, which explains how you can drive transformation, truly transformational change using the principles of successful social and political movements.

That's really interesting, Greg. And tell us about some of those fascinating experiences in Ukraine's Orange Revolution and how it led to the book.

Well, what was amazing is how everybody was confused. Nobody seemed to know what was going on. Not the journalists I would speak to every day in the newsroom, not the other business leaders I would meet with regularly, not the political leaders I would run into from time to time. Nobody who had any conventional form of power had any ability to shape events. All there was was this mysterious force that nobody could describe and nobody could deny that was driving things forward. And what I found later on is that this force has a name. It's called a network cascade. And in the late 90s, there were some breakthroughs in network science. And now we know a whole lot about how these things work. And one of the most interesting things is I found that whenever you see one of these mass movements where people are flooding the streets of a place like Kiev or istanbul or Washington, D.C. what it really is is not just a mass of people, but actually small groups, loosely connected, that have become united by a shared purpose. And that's what really drives any kind of transformation. Small groups, loosely connected, united by a shared purpose. And what I found was fascinating is these same principles, they're not just, you know, social or psychological, they're actually physical. We can see the same types of things happen in a computer network or in a. Or with, you know, physical particles. So that's what I found. Really amazing is that there's almost a physics to how a cascade propagates and spreads information or whatever it is.

Greg, we've. Well, most of the people listening to this podcast will have heard about the Blockbuster story. Blockbuster Video I'm talking about there in the book. You give a slightly different take on this to what we typically hear about. Tell us about that.

Yeah, this is also another funny one. You know, the idea everybody has about Blockbuster is that, you know, somehow they just ignored the Netflix threat and then didn't wake up until it was too late, when actually the exact opposite was true. They understood the Netflix threat very, very early. They had a bit of a problem because they couldn't really do anything about it until the spinoff from Viacom was complete. But once they were spun off as an independent company, they moved immediately to start an online rental business. And then very quickly as well, they cut late fees. And then they came up with a new business model that Netflix couldn't really compete with. It was called Total Access, which basically allowed consumers to use the brick and mortar stores and the Internet interchangeably so they could rent online and return at the store, rent from the store, return online. And as soon as they implemented that, the new editions of subscribers flipped from 7030 in Netflix's favor to 7030 in Blockbuster's favor. This was like, end of 2006. So Blockbuster was actually starting to beat Netflix. What happened was that the CEO, John Enioko, he had lost control of internal stakeholders. So the franchisees didn't like these policies, and they felt that the online Business was putting their business at risk. So they started making a lot of noise, and the analysts and investors didn't like how much it was costing. So things came to a head when Carl Icahn, who had gotten control of the board, demanded that the CEO give up his bones for that year. And the CEO left. And then the new CEO, he came in and reversed all of the policies. There was some, I don't know, personal animosity or whatever it was. So it wasn't that they didn't have a strategy. What they couldn't do, what they failed to do was align all the stakeholders behind the strategy. So when the new CEO came in, that strategy was very quickly reversed. And then three years later, after that, Blockbuster went bankrupt.

Is there anything in that story, Greg, which gives clues towards something the Blockbuster could have done to save themselves? Really?

Well, in the book, I point out that in Iraq, General Stanley McChrystal had a very similar type of situation where there was a disruptive threat. There was problems of coordination internally, and there was a number of steps he took to manage his internal networks and to build connections within his organization, which was the US army, and to build connections to outside stakeholders. And even in talking with John Anioko, the CEO, he acknowledges there's some things that they could have done differently. One of the things, they probably put too much stock on the market too quickly, so that depressed the share price. But certain things that they did, like Blockbuster Online, was in a separate office from the Blockbuster, the main Blockbuster, so that made it hard to integrate. There were some other things that they could have done. They could have worked to pacify the franchisees earlier, work to explain what they were doing to the shareholders and analysts better, basically build connections to those stakeholders who ended up causing problems for them. The really interesting thing about the Blockbuster story from an innovation perspective is when I was talking to John Anioko, who's certainly no dummy, I mean, he's had a wonderful career and has gone from success to success to success. He said that throughout my career, I learned that whenever you're going to do something different, somebody isn't going to like it, you know, And I just learned to push through it. And he'd been successful doing that his entire career. It's just this time, the opposition sort of got him, or he just lost the will to fight. He told me that, you know, when they had the compensation dispute, he said, listen, I was just in a place, you know, personally and professionally and financially, you know, I didn't need to put up with this anymore. So he left in, and now he's doing quite well with. He invests in retail food chains. But that's the thing. I would say that the main lesson is that anytime you're going to have change, there's going to be some people who aren't going to like it, and they're going to work to actively undermine what you're trying to do. There's tools in the book, and we spend a lot of time on this subject in the workshops of identifying that opposition and coming up with a strategy for either nullifying them or overcoming them. But already in our workshops, we found that people are for some reason really reluctant to do that, really reluctant to say, hey, these people are really going to hate it. What are we going to do about that? But it's super important that you do because there's no reason to be blindsided.

I think probably there's a lot of people listening to this can resonate with that challenge of people not opening up. How do you get around that, Greg? How do you help these teams, these organizations, open up in a way that they wouldn't necessarily do without you there?

Well, first of all, you need to kill this burning platform strategy, this whole start with a big bang, create this sense of urgency around change and all this stuff, because, yeah, you rally some troops, but at the same time, you're signaling to your opposition that they better start working to undermine you or this change will actually happen. So you want to start off with people who are already enthusiastic about the idea, and then you empower them so that they can bring in others who are maybe slightly less enthusiastic, and they bring in others still. And that's how you start building momentum. People talk about change being top down or bottom up. The truth is that it's neither. True transformation is always from side to side. You're never trying to convince people. You're empowering people to convince each other. That's where you get the whole small groups loosely connected, united by a shared purpose. And then you want to work up to. Well, there's a couple of things. First, every change effort starts off with a grievance. That's why people want things to change in the first place. But grievances don't get you very far. You know, just saying our sales are down or we're behind in technology or competitors are killing us or whatever it is that doesn't get you very far. You need to come up with affirmative vision for tomorrow. You know, what is that future state you're looking for? Unfortunately, it's very, very rare. That you can achieve that future state in one step. So I talk a lot about in the book about how you need to come up with the keystone change, which is a clear, intangible goal that involves multiple stakeholders and paves the way for future change. One of the most interesting things I found was that every single successful transformation I studied, it didn't matter whether it was Gandhi and the Indian independence movement or the civil rights movement, or turnarounds at idm, Alcoa, Digital transformation at Experian, they all had a keystone change. And so that is the first place to start. I'll give you an example, a more specific example about this. So with Experian, when they started their transformation to the cloud, it started because the cio, their chief Information officer, when he first came to the company, he started talking to customers and they were telling him how much they wanted access to real time data. And when he went back to the company, he saw how much fear that inspired within the company. A lot of people were dead set against it because of obvious security concerns. Remember last year we had the Equifax breach, so that's a very real danger, but also concerns about losing control of the business model. So the keystone change he came up with was to build a network of internal APIs, because that was a clear, tangible goal. It involved many of the same stakeholders you would need to make a full shift to the cloud. And it paved the way for future change because people could see how much value the internal APIs delivered, making a full shift to the cloud became that much more plausible.

Greg, I just want to take a couple of steps back because when you were talking about Blockbuster, you mentioned John Atioko. I think I pronounced it correctly, hopefully. And you mentioned that he came up against opposition, as a lot of organizations are doing these days. Explain to us the role of the opposition and breaking through higher levels of resistance.

Yeah, so there's a tool called the Spectrum of Allies. And this is one of these tools that's been battle tested for decades. You want to set out who's your most active supporters, who your passive supporters, who's neutral, who are passive resistance and who are your most active opposition. And you want to target your efforts as far to the right so into the passive opposition as you can. But you don't want to engage your most active opposition. What you want to do is by empowering people that are already support your idea, you're shifting passive opposition into neutral, neutral into passive support, and passive support into active support. And often when your most active opposition, when they feel that they're losing support, they will overreach and send people your way. And I think we've all seen this just in our, you know, in our daily business life, when somebody starts losing an argument at the meeting, they start, you know, they start lashing out. It hurts their case even more. But you always want to be connecting out, bringing people in. That's what drives a transformation.

So we're talking about a number of different aspects of transformation, Greg, and of course there are many. I want to go on to one which is really fundamental to any organization out there. And of course it manifests in many different ways and that's values. What role do values in your view play in driving transformation?

Well, values represent constraints. So one of the things we ask people in our workshops, we say, what are your values? And then the follow up question is, what do those values cost you? Because if you're not willing to incur costs, then it's not much of a value. And by making those values explicit and showing that you're willing to incur costs, that's how you build trust. So a great example of this was when Paul O' Neill took over Alcoa in the late 80s and it was in really bad shape. So at his first press conference, they asked him what he's going to do with the company, how is he going to return it to profitability? And he said, I intend to make Alcoa the safest company in America. We're going to go for zero injuries. And they said, okay, but what about the strategies? He said, no, I don't think you heard me. If you want to see how I'm doing, look at our workplace safety records. And it was a really smart strategy because he understood that in many ways workplace safety was a proxy for operational excellence. But because he was able to show very, very quickly that he was serious and that he was willing to incur costs for that value, he built trust with the employees, the unions, and also outside regulators. And because he was able to build that trust by holding to those values and incurring costs for those values, that made a lot of the stuff he wanted to do down the line much easier. When they were talking about, let's say, changing work rules or having labor negotiations or changing ways of doing things, he could bring people to the table who trusted him and they could work out a solution instead of just negotiating his adversaries.

Greg, you talk about transformational efforts. Surviving victory. Now, can you just clarify what you mean by that and then give us a little bit of insight as to how that's achieved.

Yeah. So this is another instance where it's so much more clear in a social or political movement. So if you think of, like, the Arab Spring, where they got rid of Mubarak and ended up with El Sisi, we had the same problem in Ukraine. We took to the streets in 2004 to keep a man named Viktor Yanukovych out of power. And then five years later, he's elected. He rose to the presidency and election that everybody pretty much agreed to be legitimate. If you look at Blockbuster is a great example. If you'd say, what is our objective? If you were in a meeting at Blockbuster, what is our objective? Well, to surpass Netflix in new subscriber editions. And they achieved that victory. They failed to survive that victory. And just in ways large and small. I mean, I think we've all seen transformational efforts, whether it's a startup company or a transformational plan within an organization that achieves some initial objectives and looks like it's going really well and then just seems to putter out. And the reason that happens is that every revolution inspires its own counter revolution. Whenever change is successful, there's people who don't like it, and they're still going to work to undermine it. Even though you think that you've already won, the way you get over that is you make your transformation about values. Back to the Blockbuster example, they had the right strategy and tactics, they executed them well, but they never really changed how they saw themselves as a company. You compare that to Stanley McChrystal in Iraq, where he realized that they needed to change the culture and the values within the special forces. His famous line is, if we want to beat a network, we need to become a network. So that's how you survive victory. You don't make it about a particular Persona or policy or strategy. You make it about values. One of the most interesting parts in the book is when a guy named Irving Vladovsky Berger, who was one of Gerstner's key lieutenants in the IBM turnaround in the 90s. He made the point, he said, because the Gerstner revolution was always about values and not any particular strategy or technology. We were able to evolve long after the marketplace and the technology changed. If you look here, it is almost 20 years after Gerstner left IBM. They've had their ups and downs, but they're still a very, very profitable company and still on the cutting edge of technologies like blockchain and neuromorphic computing and quantum computing and lots of other stuff. Long after you know, most of their former competitors no longer exist. So that's why it's so important to start planning how you're going to survive victory from the start. How are you going to not only achieve this change, but the next one and the next one after that?

Greg, we could go on and I'm afraid we're going to have to wrap it up there. I know that of course people can go and pick up a date latest copy of your book Cascades to get more on these kind of insights you've been sharing with us and in your previous book, Mapping Innovation. But if people want to find you, aside from your two books, where can they go?

My website, gregsatel.com, and my blog is digitaltanto.com terrific.

And we'll put a link to those in the show notes. Greg, thank you so much for your time today.

Thanks for having me.

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