Episode 206 – Charlene Li – The Disruption Mindset
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Steve Shallenberger: Welcome to all of our Becoming Your Best podcast listeners, wherever you may be in the world today! This is your host, Steve Shallenberger, and we have a very interesting guest with us today. She is the founder and CEO of the Altimeter Group – a disruptive industry analyst firm that was acquired by Prophet in 2015. So, welcome Charlene Li!
Charlene Li: Thank you so much for having me, Steve!
Steve Shallenberger: Oh, you bet! I’m excited to have our discussion, I’ve been looking forward to it! And before we get started, I’d like to tell you a little bit more about Charlene. Not only is she the founder and CEO of the Altimeter Group, but she also has over 20 years of experience in tech and business and has been a respected advisor to Fortune 500 companies, especially on digital transformation and leadership. And for the past two decades, Charlene has been helping people see the future. Okay, I can’t wait to see the future together today, Charlene!
Charlene Li: It’s going to be fun!
Steve Shallenberger: It is! And she is the New York Times bestseller author of six books, including, “Groundswell: Winning in a World Transformed by Social Technologies”, and the new book, “The Disruption Mindset: Why Some Organizations Transform While Others Fail.” Charlene was named one of the Top 50 Leadership Innovators by Inc., and one of the most creative people in business by Fast Company. Congratulations! That’s awesome!
Charlene Li: Yeah, thank you so much!
Steve Shallenberger: Okay, well, Charlene, before we get going, tell us a little bit about your background, including any turning points that have impacted your life to where you’re at today and where were you raised and help our listeners get to know you a little bit better.
Charlene Li: Yeah. I was born in Detroit and I grew up in Detroit area with two wonderful parents who immigrated to the United States, and I had a great childhood and everything in Detroit. I went to school, back east at Harvard for undergrad and then went back to Harvard Business School after a bit of consulting. And I did something a little bit unusual coming out of Harvard Business School – while most of my peers were going into consulting or investment banking, I went into newspapers because it was 1993, the internet was just beginning to come out and I figured that being in Silicon Valley, working for a company that was going to be at the very front line of moving into the digital space – newspapers – with all its content, would be a really interesting place to be. So that was probably the most significant pivot that I made, again, going into newspapers was just not seen as something you would do, and I did it and made a bet, and that has really paid off because it gave me a front-row seat to the internet being born.
Steve Shallenberger: Wow! Yeah. And talk about change, what an industry of change, right?
Charlene Li: Yeah. And again, when I went there, there was no World Wide Web. Just to give you an idea, I was working with the San Jose Mercury News and we were one of the first newspapers to go online and I was helping our advertising department figure out what does a banner ad looks like? How do you sell it? What’s the value prop? What size is it going to be? How much do we charge for it? What’s the value behind that? And so, being able to understand what is it that people really valued in advertising and creating a business around it, was really fascinating.
Steve Shallenberger: Oh, that’s great! Well, thanks for that background. That’s wonderful! Harvard’s a great place, I enjoyed being there, and it’s so fun to be able to have that experience and then go out in the world and see if we can try to make a difference, right?
Charlene Li: And I think one of the things I learned from there is that your career is something you have to actually manage, you’ve got to spend time on it. Just thinking strategically about what I was doing in newspapers and what I wanted to do next, was a really important value that Harvard implanted in my brain, because that’s not something you would take away as necessary, you’re worried about spreadsheets or strategies and all these other things that you learn at an MBA, but probably the best course I did was how do you think about to manage yourself – the biggest asset you ever manage, which is yourself and your career. That was really instrumental.
Steve Shallenberger: I’m so glad you mentioned that! That’s a big deal, isn’t it?
Charlene Li: Yeah. I like to say that people spend more time managing their music playlist than they do managing their careers which is, if you think about it, not a good indication of what our priorities are. That’s one of the things that I continually did, and a key point in [00:05:58.29] newspaper and becoming an [00:06:00.21] since I started my company, and continuing to pivot and to grow has been something that’s really helped me to just continually think about where I am.
Steve Shallenberger: That’s a great way to put it – more time in their playlist and managing their playlist than managing their careers. And I might add managing their lives, where it’s a whole package, and they’re very much interrelated. Now, let’s jump right into your new book, “The Disruption Mindset”. I’m excited to talk about it! I had the opportunity to get a copy of Charlene’s book in advance and had the chance to read it. I love it! Really fun ideas – we’ll talk about it today. And I think that this will be interesting for leaders anywhere that are managing change, managing disruption – and they are a bit different, you know, change is ever-present. I think disruption it’s either going to happen to you or it’s something you do by design. One of the things that Charlene talks about in her book is disruption doesn’t take days off. Well put!
Charlene Li: Yes, I like to say that disruption isn’t something you turn on and off at your convenience, it isn’t something that’s relegated to one department in your organization, and it’s very uneven so you never quite know when it’s going to hit, so you always have to be on the lookout for it. But when it does come in and when you go looking for it, some amazing growth opportunities come your way.
Steve Shallenberger: Okay, well, let’s just talk about this because when you talk about this, you talk about approaching disruption backward, and then, how to turn the tables for future breakthrough growth. How does that work?
Charlene Li: Well, I think, in many ways, we keep looking for some disruptive technology or disruptive innovation to drive growth, and that’s backward because it’s actually growth that creates disruption. I talk to a lot of companies and ask them, “What’s keeping you from growing?” And they talk about all these different things, and it’s usually not because they don’t know what they could be doing with the technology that’s there; it’s the fact that if they were to grow exponentially more than they are today, it would cause so many problems for organizations, it would be hard, it would be very disruptive to their sense of order, so they don’t step into it. And disruptive organizations do just the opposite. They have the mindset of, “Yeah, it’s going to be difficult but it’s worth going after because we’re going to grow exponentially.”
Steve Shallenberger: Okay. I love that perspective of it and how to think about it. Good job! So, how do you create a strategy – you talk in your book about really being focused on future customers – so how do you create a strategy that’s inspired by future customers? And then, you also talk about how to make a big gulp decision. Tell us what those are and then how do you move in that direction?
Charlene Li: Yeah, again, I kept getting asked by people, “So what’s the right strategy? What’s the best strategy to create disruptive growth?” And when it came down to it, all of these organizations did one thing, or one thing particularly well, and that is they focused on their future customers, and they aligned the entire organization on the future customer. And the reason why that is so important, is if you know who you’re trying to serve, then today, you’re going to make the investment, dedicate the resources, make the sacrifices you need to, in the present day, to ensure that you’re going to be able to do this in the future. And most organizations, when I ask them if I could see their strategy plans, they pull out a plan for the next year. And that’s not a strategic plan, that’s a budget of how you are going to meet short-term objectives. Where is your plan looking out three, five years? What do you think the future looks like? Who do you think your future customers are? And it’s so important to be able to take care of your customers of today, but I can almost guarantee you your customers of today are probably not the customers of the future. So, that’s the key difference, disruptive organizations are really focused and aligned around that future customer and allows them to think into the future and not just for today and the status quo.
Steve Shallenberger: So I think for me, and maybe for some of our listeners, the idea, the challenge of identifying and trying to understand what a future customer may look like could be a daunting challenge. And so, what are the best ways to get the answer to “What do my future customers look like?” What are your best practices? How do you zero in on this Charlene?
Charlene Li: There’s a shortcut way, which is, take a guess – do your best guess of who your future customer is. And the reality is, everybody in the organization will probably have a different idea, but you start to center around some ideas, you spend some time on it. I think it’s here, it’s probably there, but start with a hypothesis, then go and do research, go and create what I call an “Empathy Map”. Because it’s not really identifying them completely, like, what jobs they have or titles or the psychographic, the demographics. An empathy map says, “This future customer, what are they thinking? What are they feeling? What are they saying? What are they doing?” And so, I may not know all those specifics, but if I can put myself into their shoes, understand their needs, where they are, and how we could potentially solve those needs – and that actually is a great way to align people around who that future customer is. And it’s so much more powerful than some organizations using, for example, persona, or the customer journey. Those are really powerful tools, but they almost never make it out of their strategy planning and the design phase of a product or a service. We’re talking about having a model of the future customer that everybody in the organization can see and understand. And when you see that future customer or just an inkling of it, then you can send out the fly, put out the announcement, “I got one here! Come in everybody, go look at this”, because you could study them, really understand who they are, but you can’t do that unless you know what you’re looking for.
Steve Shallenberger: Okay. Well, thanks for that guidance! Tell us what a big gulp decision is.
Charlene Li: Yeah. The big gulp is a mission that once you figure out who that future customer is, you figure what the strategy is, and you’re looking at what it’s going to take, the big change you’re going to have to do, this big, huge pivot, a big investment decision – man, it’s awfully scary! I think one of the hardest things is you are not going to be 100% sure that it’s the right thing to do; you’re pretty sure, but there is no guarantee. And oftentimes in business, we want things to work out, but we won’t make that decision until we’re absolutely sure it’s going to be right, perfect – and by then, by the time you actually have figured that out, it’s too late. The big gulp decisions are needed because given all the information we have right now, all the choices that you have, you can have a standstill or you can go forward – and it requires taking a big gulp in making that jump. And that’s what disruptive organizations do, they kind of take a deep breath, their palms are sweating, their stomach is churning, it’s absolutely awful – you close your eyes and you jump. And it may not work out, and that’s okay because you’re going to get yourself up, dust yourself up, figure it out again and jump again. Every time you fail you learn something and hopefully you do the next jump even better.
Steve Shallenberger: Okay, well, one thing is for sure, and you’ve identified this in your book, you use several examples, and we see it all over in industry, we see it all over in our lives, is change is happening every day and disruption is happening every day. And I like this focus on growth, on breakthrough growth and maintaining real growth and this mindset really helps you move through that pathway of saying, “Well, how do we do it?” Now, from your experience, Charlene, why do some companies make this transformation, and they’re successful in it, moving through the change, through disruption, being the ones doing the disrupting, versus being the ones getting disrupted, and those that don’t, those that struggle through the transformation?
Charlene Li: Well, again, we talked a little bit about it, that the strategy is focused on that future customer. Then, they also have a leadership team that’s really focused on driving everybody toward that objective and creating a movement, understanding that they have to show up as leaders in a very different way. But they also have a third component – their culture is aligned and it’s intentionally created to go after that future customer and to thrive with what I call, “Flux”, the flux of change. The disruptive organizations have a lot of flux and they’re able to deal with it, and organizations that don’t survive the disruption are what I call “Duck”, they’re duck and it’s very hard for them to be able to take on new changes, and especially to take on big changes.
Charlene Li: I worked with one organization and I talk about it in the book, they said, “Oh, yeah, we did this! We did this huge move, and it was really successful, but it took a lot out of us and we’re still recovering from it.” And I asked the Chief Strategy Officer, “That’s fantastic! How long ago was this?” He said, “Oh, it was two years ago.” And I’m shaking my head going, “Man, if your cycle time for making a change is two years, this is not good news. Guaranteed, your customers and the market are moving much faster than you are.” So, when you think about how well you can create disruptive changes, the disruptive organizations don’t necessarily make bigger changes; they make a lot of small changes constantly, and they’re constantly feeling paranoid that what they’re doing today isn’t good enough, so they’re constantly looking for ways to do things better. And that’s a complete mindset. That’s different than these duck organizations.
Steve Shallenberger: Okay, so I’m really trying to zero in on these. By the way, how did you come up with flux? The flux organization.
Charlene Li: I was thinking of, I guess, the flux capacitor from “Back to the Future” or something, but, more than anything else, is the flux between highs and lows. And what I found is that disruptive organizations actually do go through a cycle of change, and then they stop, creating new status quo; they’re really checking around, “We just ran really fast for 100 meters. Okay, everybody here? Everybody here. Okay, great. Now, we’ll run again another 100 meters.” They stop, make sure, “Are we all around here?” through these cycles of flux of constant change and coming back. And so, that’s what flux looks like. So, you look at their paces of change, they have these areas of recovery built-in, but they also, don’t stay there for very long, they walk and go in again.
Steve Shallenberger: Okay, good. Oh, that’s fun! And nothing like a good flux capacitor, right?
Charlene Li: Yeah.
Steve Shallenberger: Okay. Repetition is wonderful. So, you said there are three things that are really central to being successful in a transformation. One is really zeroing in on the future customers, so you have a target – where you’re going – and you’re thinking about growth; the second is it has got to become a movement so people can really engage around it. And the third, I’m not sure I got that. Did you say there’s a leader component, a leadership component there?
Charlene Li: Yeah. The second is the leadership, the movement, and the third is the culture – a culture that thrives with flux. So, strategy, leadership, and culture look really different in disruptive organizations because they approach those three things in a very different way than a non-disruptive organization. Peter Drucker had a great saying, “Culture eats strategy for breakfast every day.” And, first of all, that assumes that there is a strategy for culture to eat. A lot of times people are trying to change a culture without that foundation of a strategy, of what you are trying to accomplish with your culture. And the hard part about culture is changing it and making sure that you’re being very intentional to go after the right activities, the right beliefs and behaviors because that is what culture is made up of – just beliefs and behaviors. If you have a culture that you don’t think is right and geared towards thriving with flux and chase after your future customers, then you need to systematically change your beliefs and behaviors so they are oriented in the right direction.
Steve Shallenberger: So, as we think about a flux culture, what are some of the characteristics that you’ve seen that allow a flux culture to thrive?
Charlene Li: I saw three beliefs, in particular, that were common across disruptive organizations. The first one is the belief of openness, that information sharing, and more open and transparent decision-making processes really help develop trust and accountability in an organization. And you have better trust, it’s clear who’s accountable for what, then you can move a lot faster. The second one is agency, that people feel like they are owners in the business, and therefore they are able to take action because of the openness that’s there. And agency is different than being empowered. Empowered says that somebody gives you power, so you’re waiting for somebody to give you permission; agency says you have all the power already vested in you. You have everything that’s there and you can claim ownership and take accountability for the actions you take. And the third belief is a bias for action. As soon as you get enough data to make a decision, you’re willing to go; you can’t stand to standstill because your customers are moving faster and further away from you, so you have to constantly chase after them. So, as soon as you get minimally viable data, that’s what I call it, you’re going to be going through openness, agency and a bias for action – three key characteristics and beliefs of disruptive organizations.
Steve Shallenberger: Oh, that’s powerful! When those things are developed within a culture, they really make a difference, don’t they?
Charlene Li: Yeah, they do. And I really was struggling with this for a while, trying to find what are these characteristics? And at one point, somebody said, “Oh, it’s definitely agile processes.” And that’s true for some, but agile is just one business method, it’s a process that you use – and I can point to a lot of organizations who are “agile”, who are not disruptive. So it’s just one way to manifest some of these ideas, but if you don’t have a belief of openness and agency, the bias for action, which is where agile processes work, is very, very different. So again, I think agile is good in practice, but it’s not the secret sauce, it’s not the magic easy button that everyone keeps looking for.
Steve Shallenberger: Okay, so, Charlene, how do you hardwire a flux culture into your organization?
Charlene Li: Yeah, it’s a little hard to say. The thing here is you need an operating system – and I call it, “The Culture Operating System” – and it’s one thing that you can build and hardwire those beliefs and those behaviors into three areas: your organization, your structure, how you organize people, where you put them, and how they relate to each other. And you can do that with your process. And I think the most fascinating area is with your lore – and these are the symbols and the stories that you tell each other. And I find that disruptive organizations are very systematic, very intentional in building these beliefs into these three areas.
Steve Shallenberger: All right! Lean into the openness, and the fact that you have agency, and then you have a bias for action.
Charlene Li: That’s right!
Steve Shallenberger: Oh, well, that’s really terrific. So, as we think about this, how can leaders master a new way of developing digital and social relationships for their businesses through customers and clients?
Charlene Li: Well, I think in many ways, the relationships that leaders have are really built on their ability to see a change, communicate that change and inspire people to follow them to make that change happen. And the way that we develop relationships today aren’t just face-to-face, they’re also through these digital and social channels. And what I find so often is that leaders are very, very reluctant to move into using these digital sources as a way to communicate and then to develop relationships. One person asked me, “Who would be interested in seeing my lunch? Who cares what I had for lunch?” because their perception is people are just sharing lunches on Instagram and other social channels. And I go, “I totally hear you on this, I have no interest in what you have for lunch. What I really care about is what you talked about over lunch.” And that’s the difference between using social and digital for personal communications in your network versus leading with them. And when you show up as a leader, you’re thinking and putting first and foremost, what kind of relationship do I want to build with my followers? What do they need to hear from me today? The customers or my employees, what do they need to hear from me today, as a leader, in order to be more focused and to know that they’re doing the right thing or how they need to be changing what they’re doing. So, being able to use these tools just elevates you and takes your leadership to a completely different level. To be a successful leader today, you really have to learn how to manage and to master these tools, to be the most effective leader you can.
Steve Shallenberger: This is such a jump for so many people because it’s so hard to develop a relationship, to feel close to somebody through the Internet, through an email or something else. Have you had a struggle with that at all? The difference between kind of a one-on-one, seeing somebody, their personality, seeing their face versus digital?
Charlene Li: Well, I think it’s always a lot easier, once you have that face-to-face connection, to continue it in the digital space.
Steve Shallenberger: Okay.
Charlene Li: So, if you think about our friends that we’ve made long time ago, but they live an ocean away, a continent away – we maintain connections with them through phone calls, through emails, through posts on Facebook, through Instagram pictures; this is the way that we connect with them now, and that’s how we will continue to connect on a professional level. But one of the things I really think about is, it’s a different type of relationship, it doesn’t replace it, but it can be still really, really effective, for one simple thing: if you’re in a large organization, if you’re a leader of more than 20 people, it’s hard to see every single one of them, individually. But they still all need to hear from you, as their leader. So, how do you do that? And digital is one of the most effective ways because they hear from you every single day, “This is why we’re here. This is our purpose and what we’re being focused on.”
Charlene Li: One of my favorite examples of that is the LinkedIn CEO – Jeff Weiner. He has this habit of every time you see him, the first thing he says, “Hi, I’m Jeff Weiner, the CEO of LinkedIn! Our mission at LinkedIn is connecting the world’s professionals, and one of our top values is members first.” And he says this all the time, internally, externally; and one day, an employee asked him, “Jeff, we know this. Why do you keep saying this? When are you going to stop saying this?” And he says, “I will stop saying it when people stop looking surprised.” And I think that’s so true that we, as leaders, think that we say something once and everyone’s heard it, and it’s not true. We forget, we get distracted; we focus on the things that are in front of us instead of the things that need to be future thinking, strategically. So, we need to be reminded why we’re here, how we’re working together. And frankly, we want to hear from our leaders, how are we doing along our path? How am I doing? And the only way to scale our leadership in this very complex world now – because business is so much more complex – is to use these digital tools. This is the thing, we all do this as leaders – I can’t think of a single leader who doesn’t use social media in their personal life, but when it comes to being a leader, they shut it off. If you could stand next to somebody and say something to them, what would you say? Okay, now, say those same things, in this digital channel. It’s a different channel, but you’re still saying something to them.
Steve Shallenberger: It’s really the whole package and life has changed and we want to get our message out to as many people as possible and it’s really hard to do that one-on-one.
Charlene Li: Yeah. I had one CEO that insisted, “I look people in the eye and I shake their hands!” and I’m like, “That’s fantastic! You have 10,000 employees – you can’t do that with 10,000 employees. How are you going to, literally, digitally, shake their hand, look them in the eye and give them that same sense of feeling that you are there for them?”
Steve Shallenberger: Yeah, that’s a wonderful perspective! I am stunned at how fast time goes. We’re done with our show today. Can you believe that? Man, that just flew right through!
Charlene Li: I know! We need more time! This is so much fun talking to you!
Steve Shallenberger: I know, same here. Any final tips that you would like to leave with our listeners today about disruption or about being successful in business or how to really have breakthrough growth? What are your thoughts? Any final tips?
Charlene Li: Yeah, one final thing is, it’s hard and lonely being a disrupter. You oftentimes feel like you’re the only person in the organization that can see this future, see this opportunity – and you’re thinking, “Do I see something that no one else does? I’m crazy!” And so, my tip here is to go find other disruptors in your organization, find people outside of it. I am starting a new community to help people find other disruptors locally, and hopefully, in online communities as well. And that is called Quantum Networks. The URL is quantum-networks.com. It’s free to join, we have content and hopefully you can find other like-minded souls and people because my mission here is to create as many disruptive leaders as possible, support them in their quest to create that exponential growth that they see is possible in their organizations, but also in their communities and society because, frankly, we have a lot of change that needs to be done, a lot of problems that need to be solved, and we need more disruptive leaders to be able to make that change happen.
Steve Shallenberger: Terrific idea! So fun! Oh, great! So, how can people find out about what you’re doing and about your quantum groups together? You’ve just talked about it a second ago, but tell us about that.
Charlene Li: Yeah, you can follow me and find me on my website – it’s charleneli.com. And you can find more about quantum at quantum-networks.com.
Steve Shallenberger: Okay. Well, thank you, Charlene, for being a part of this show today. It has been fun!
Charlene Li: Thank you so much again for having me on the show!
Steve Shallenberger: You bet! Well, what a great and productive visit this has been today! I don’t think I’ve ever had one that’s gone faster. We certainly wish you all the best as you’re making a difference in the world today and helping people change in disruption and leaving the world a better place. Great going!
Charlene Li: Thank you!
Steve Shallenberger: And to all of our listeners, never forget: you too, can make such a difference every single day of your life. As Charlene and I were just preparing for this podcast show today we were talking about Becoming Your Best and how becoming your best, the spirit, is at the very heart of disruption, it’s the very heart of growth, it’s this way of thinking, “What does my best look like?” And as we think that way it helps us start thinking about all of these issues we’ve been talking about today. This is what you’re doing, you wonderful listeners, as you think this way, you’re changing lives – changing yours for good, but also every single person that you meet. Well, we wish each one of you a great day! This is Steve Shallenberger with Becoming Your Best Global Leadership, signing off.