Cascades: How To Create A Movement That Drives Transformational Change with Greg Satell | Partnering Leadership Global Thought Leader

Mahan Tavakoli: 

Welcome to Partnering Leadership. I am really excited this week to be welcoming Greg Satell. He's a writer, speaker, innovation advisor, and one of the most recognized experts on transformational change. Greg's most recent book Cascades: How to Create a Movement that Drives Transformational Change is absolutely magnificent. We spent most of our time in this conversation talking about it. 

And as I mentioned in the conversation with Greg, I've spent a lot of time thinking about the concepts that he talks about in the book, both with respect to organizational transformation and change, and also movements in the community and beyond that can really help transform the community for the better. So I can't wait to share this conversation with all of you. 

Love also hearing from you, so keep your feedback coming, mahan@mahantavakoli.com. There's a microphone icon on PartneringLeadership.com, you can leave voice messages for me there. Don't forget to follow the podcast. That way you will be first to be notified of these episodes. And for those of you enjoying these on Apple, a rating and review will help more people find these conversations and benefit from them, and become more impactful leaders. 

Now here is my conversation with Greg Satell.

Mahan Tavakoli: 

Greg Satell, welcome to Partnering Leadership. I am thrilled to have you with me. 

Greg Satell: 

Thanks so much for having me here, Mahan.

Mahan Tavakoli: 

You know, I have been living with Cascades and studying it, and it is an absolutely wonderful book teaching leaders how they can transform their organizations. And I truly believe that the crisis that we have faced provides an opportunity for leaders to lead their organizations through transformation. 

But before we get to your book and your insights, would love to know whereabouts you grew up and how your upbringing impacted the kind of person you have become, Greg?

Greg Satell: 

Well, I grew up in Philadelphia and many would say that growing up in a place like Philadelphia, you end up leaving to go somewhere else. Although Philadelphia is a perfectly, actually a wonderfully pleasant place to live, it doesn't have that. It can be a rough place and it doesn't have that reputation. So for some reason or other, I ended up spending 15 years of my adult life, roughly half of my adult life, I'm 51 now, in the post communist countries of Eastern Europe. 

And that more than anything, really shaped my experience or my outlook, because nothing challenges you than this experience of having to go and revisit almost every assumption you ever had about everything, and do it in an environment that is objectively a difficult business environment, but at the same time, something that you'll have this abrupt need to adapt to in terms of learning language, learning culture, learning how to get basic things done such as buying milk. And then not only learning how to do that, but how to eat within that environment, stand up a business, manage employees, and lead them into something worthwhile that actually makes a difference for people. 

Mahan Tavakoli: 

How did it change your perspective on change? 

Greg Satell: 

Well, I think everything I experienced there, because when I got to Poland in the late nineties, it was like change as like time lapse photography. I mean, it seemed like every month it was a different place. You took something where a startup was, I mean, Coca-Cola was a startup, McDonald's was a startup, Caterpillar was a startup. And here was this huge country of 40 million people and every multinational company in the world had to be there. 

So they'd send, and there was no like hotels really. There was only work class A office spaces. So everybody sent their people to the Marriott for like six months, it was like the one really Western hotel. And they would sleep at the Marriott, obviously. They would eat at the restaurants, they would get office space in the Regis center there, they would work out in the gym, and they would go to the nightclub at night.

And then pretty much everybody they wanted to do business with was doing the same thing. So the entire country was basically being transformed out of the lobby of the Marriott in the early days. So it was an amazing, amazing thing, but I would say that what really changed my entire perspective about change, and I talk about this in the book, was when I woke up on a Saturday morning in the fall of 2004, and I'll never forget it.

I was in Kiev and my fiancée, who's not an early riser, I woke up to see that she was not only awake and out of bed, but fully dressed and about to head out the door. So I asked her, "Where are you going?" She said, "Oh, I'm going out to a demonstration." And I said, but I thought she didn't care about politics. And she said, "Well, well, you know, I didn't, but it's enough already. And we have to do something." 

And with that, she put this orange bandana around her neck and she walked out. And it was like somebody somewhere flipped a switch and the entire country had changed. And before you knew it, everybody we knew were going out to political demonstrations on a regular basis. This was unheard of behavior. 

And that's what led just a few months later to the events we now know as the Orange Revolution. And I experienced these events in a fairly unusual, almost unique perspective of as a foreigner being considered maybe not so much an 'insider', right? Being somewhat 'outside' the happenings. But in my role, managing the country's leading news organization, I was certainly something more than an innocent bystander. 

And what I remember most from those days is this incredible feeling of profound confusion. I mean, nobody seemed to know what was going on or what would happen next, least of all me. I mean, I would talk to the journalists in the newsroom every day. I would talk to other business leaders. I would talk to political leaders. Nobody who would typically be considered to have any power, had any ability to shape events at all. 

There was just this mysterious force that nobody could describe, but nobody could deny that was moving things along. And what amazed me is how all of a sudden people who were doing, thousands and thousands of people who would normally be doing very different things would all of a sudden stop what they were doing and start doing the same thing in almost perfect unison, and it was an incredible thing. And I couldn't help thinking, you know, I'd like to bottle that. 

Mahan Tavakoli: 

We all would. 

Greg Satell: 

Yeah, it shows you how selfish I am. Here, you have history being made and I'm thinking, how can I make money off of this? Right. But actually, I've got thousands upon thousands of potential customers, all buying different things. What if I could get them to stop what they were buying and start buying the same thing, whatever it is I was selling them, all at once? 

And I had hundreds of employees, all very smart, very ambitious people, all with their own ideas, but how could I, how could I get them to embrace the one or two initiatives that I thought needed to be priorities? And I had no idea what the answer was, but that's what set me off on my 15-year-long journey that led to my book Cascades and the transformation and change practice we have today working with organizations to use these principles to drive transformation in their organizations and in their industries. 

Mahan Tavakoli: 

What a wonderful insight, Greg, from looking at a movement that was happening around you and learning lessons that organizations and leaders can take in making change happen and transformation happen in their organizations, which is also what you go more in depth into in your book. Now, you came up with the name "Cascades", what is a cascade? And why does this transformation to you represent a cascade? 

Greg Satell: 

So I just want to make one point of clarification, if I may. I didn't have that insight. I just, and I think this is really important and I hope I conveyed this in the book. I was as confused as anybody. I didn't have any great insight, there wasn't a [inaudible], I just, I guess what I did differently than pretty much anybody else with that same experience is I said, "Gee, this is something I'm really confused about. I'd really like to figure it out." 

And I think, and this, I would say I'm really proud about that I spent 15 years working that problem out, but I had no epiphany, no insight. But two years later, the Orange Revolution started in 2004, in 2006, I found myself in Silicon Valley taking a summer publishing course at Stanford University. Our business was a publishing business. 

And everybody at this time was talking about social networks. This was when Facebook was just coming on and so on and so forth. And when we had a big digital business, we had about 40-50% of the digital ad revenues in the entire country. And I said, wow, that seems like it should be something important for me to know if I'm supposed to lead this business. 

And so I started researching network science and what I found was, and I that's what led me to the work of people like Duncan Watts and Steven Strogatz and Albert-László Barabási. And Duncan was kind enough to endorse the book as well, which is very nice of him. But what I found was an almost perfect mathematical representation for almost everything that happened during the Orange Revolution. 

Even that incident with my fiancée, of course, now my wife,  where all of the sudden it seemed like somebody flipped a switch or snapped their fingers and the world changed—there's a mathematical term for that. They call it a "Instantaneous Phase Transition" and network scientists had known about it all the way back at least since the 50s and 60s, when there was something called a "Erdős–Rényi model of networks." 

But through some breakthroughs that happened in the late nineties, we learned exactly how these, what are called network cascades or viral cascades, work. And so that was sort of the first part of my epiphany that this strange thing that happened to me is actually a repeatable scientific phenomenon that we can understand. 

And back then it was only theoretic. I said, well, if we know what this thing is, maybe we can channel it in the right way and make it work for us in much the same way that an electro- hydroelectric dam takes the force of the water to make electricity. Maybe we could take this viral force and make it our own electricity to drive transformation and change. 

Mahan Tavakoli: 

So as you looked at that, and as you think about these instantaneous phase transitions, is that possible within organizations for leaders to generate that transition in their organization?

Greg Satell: 

Yeah, it is, but everybody experiences it differently. I'll just give a very basic example of, and I gave it in the book, but I think most people know this, the Lolcats, the L-O-L cats, where this was all of a sudden, it seemed like everybody was sending around these Lolcats which were funny and everything like this. But it had been incubating for actually 18 months on 4chan, but you just get to this point where the connections have been building up over time and the system flips and you'll have this instantaneous phase transition.

So I think there's two things that leaders can glean from this. A) when you talk about viral activity, you need to be building towards that. It's all about network strategy and the connectivity in your organizations. And we do do some work on how leaders can better network their organizations through a portfolio of strategies. 

And when I say "network organization", I don't mean a reorganization. I mean, an informal overlay over your formal organization that helps insert connectivity and adaptability. So that's the first thing is that building out that connectivity within your organization, peer to peer, without abandoning hierarchy, by the way, but having this extra layer where people are able to reach out and collaborate and exchange information with themselves. That's sort of the first part.

And the second part in the book, I say: it all starts with small groups loosely connected united by a shared purpose. So as leaders, our role is, when we want to drive transformation, is not to take on the entire organization at once by ourselves, no matter how much power we think we have, because as we all know, the inmates always run the asylum, right?

Our power it's, if you're familiar with the Hobbesian paradox, you can only enforce rules that most people would agree to anyway, right? So understanding that our power to enforce our will is limited, we want to find people who already are enthusiastic with this idea and empower those small groups, help them connect to others who are of like-mind, empower them to succeed, and of course, imbue that effort with a shared purpose. 

Mahan Tavakoli: 

And you mentioned it's small groups loosely connected with shared purpose. I highlighted it. I put it up in my office. I look at it because I think understanding that unleashes the power within organizations and for leadership and a big part of what our conversation will be also about.

Now, you do emphasize shared purpose and shared values. How is the shared purpose that you talk about and the shared values different that what almost every organization, every couple of years goes through a process of coming up with their purpose statement and values? 

Greg Satell: 

That's a really, really big question. So I think there's two things. There's a shared purpose, which is the mission of the enterprise, and that can change every couple of years. And I think you need to be very clear. And there's been lots and lots of work actually over the past 10 years or so towards changing how we see that. 

There's the Business Roundtable's announcement of shareholder value, of course. And just generally, there's been great work by Rebecca Henderson out of Harvard and she's got a great book out, like Rethinking Capitalism in a World on Fire (Reimagining Capitalism in a World on Fire), I think it's called. Colin Mayer has a great book called Prosperity, but there's a growing feeling that capitalism has been too narrowly misconstrued as pertaining only to financial capital where there's other types of capital. There's social capital, there's natural capital, there's all sorts of different types of capital.

And I think the challenge is for a leader's to make that shared purpose or that shared mission clear. And that's sort of the first hurdle. If you can't do that, you're not a leader, you're a manager, right? I mean, the purpose of a leader is no longer to plan and execute action, but to inspire and instill belief, right? To empower and inspire belief. 

So that's the first thing. When you talk about, you say, okay, why are customers going to come? Why are people going to come work for us? Why are partners look at your ecosystem that you're trying to build, your technology partners, your capability partners, your employees, your customers, your communities, all of these stakeholders, and say, "Why you?" 

How can you share purpose with those people, with those stakeholders? Because if there's not shared purpose, it only comes down to money, right? And that means you're going to overpay for inputs, and it means you're going to have to discount outputs. And your margins are going to be squeezed. And that's no way to win the game, right? 

So that's the first thing you'll have to ask yourself. And when I say shared purpose, ask yourself, why should people be with me? Why should people come work for me? And if the only answer is "'cause I pay 'em", somebody else can pay him just as easy as you can. And the same, "Why should a customer buy my product? Just because I'm cheaper? Or I'm giving them more features or whatever it is, unless you can state a purpose.

And we can all think of brands that, you know, apple is top on everybody's list. But others, Southwestern Airlines, or even something like McDonald's, which for years, if you look at how they've done their supply chain for the past 50, 60 years, it's so clear that... I mean, even something like McDonald's, which is this brand that people like to kick around a lot because it's,  people say it's not nutritious and there's a lot of truth to that.

But when it comes to really treating their suppliers as copilots and building a sense of shared values among that supply ecosystem. I mean, they are one of the top of the tops. So that's shared purpose. And the operative question there is "Why with us? Why with me?" 

Shared values, and I'm going to speak this in two aspects. First of all, you need to define what is a value. And I think a great definition of a value is something that costs you something, but you're willing to take it on anyway. So in workshops, we ask people all the time, what are your values? And they say, "Oh, we value the customer. We value excellence. We value all this stuff." 

Okay, now what do those values cost you? Because if you can't tell me what costs you're willing to incur, then it's not a value, it's a platitude. One of the transformations I cover, and one of my favorites that I cover in my book is the Gerstner's transformation at IBM in the nineties.

And I must have interviewed over a dozen people who were involved with that transformation. And the big part, the so-called keystone change of that transformation was what he called a shift from the IBM's proprietary technology to the-, IBM stack of proprietary technology to the customer's stack of business processes.

And that's how he voiced the change. That was the shared purpose. The shared value, this idea of the customer being first, it was only credible because he made clear to everybody he was willing to forego money on every sale, which was a complete paradigm shift. It was like apostasy at IBM at the time. They would drop a customer if they had even one competing product in an entire data center. 

But because he was willing to incur that cost, that's what it made it real, not only to customers, but to employees, to partners, to analysts. And I've asked people over the years and I've been researching in depth IBM for over a decade. I've asked people over the years, do you think IBM would be in business today without that? Not one that I asked, said that they thought without that credibility, and you remember the company was on death's door. 

So that idea of a value, if you think you have a value, ask what you're willing for it to cost. How does that value constrain you in any way? That's core because if you're not willing to be constrained in any way, what you're trying to achieve is not meaningful. People won't take you seriously. You won't have credibility. Also, one thing that we do a lot in our work with organizations looking to drive transformation is we talk about shared values and that's how you bring people in.

You want to start with your most fierce advocates and you want to empower them when we talk about keystone changes to be successful, because until you can do that, nobody's going to take this change seriously. But in order to bring people in, you need to identify shared values. And so here's the Jedi mind trick that we do in, and it's amazing how effective this technique is, is we ask people to tell us what does their opposition say?

So any change, and this is something we, I feel very strongly about and we repeat pretty much every session we're working with executives on this. That any change, if it's an important change, if this change is going to impact people, there's going to be certain people who aren't going to like it. And they're going to work to undermine this change in ways that are dishonest and underhanded and deceptive. And that needs to be your primary design constraint. 

As soon as you internalize that and accept that, you're ready to move forward. And the second thing about those fierce opponents, you don't want to engage with them. One of the biggest mistakes we see people make is they want to win over the critics before they can move over, or they say, "Oh, you know, Bobby and Susie, they're not going to let-" leave Bobby and Susie alone. Don't tell them anything. 

Just focus on people who want this change. Don't try and win them over. And very often, and by very often I mean almost always, if left to their own devices, once they see the change gaining traction, they will lash out and they will overreach and they will end up sending people your way and they will describe it [inaudible]. We see that in the political revolutions. I talked specifically about in Ukraine, but it seems whenever the sort of dictator regime, the authoritarian regime sends the troops in to beat the protestors, that's sort of the beginning of the end. 

I think we've all seen it in our own work where you're sitting in a conference room somewhere and the meeting starts slowly moving towards a consensus and about three quarters of the way through, somebody who've been very quiet up till then, all of a sudden has a hissy fit in the middle of the conference room. And you're thinking, where did that come from? So if you just leave them alone, they will do your work for you. 

But, and here's the really challenging thing, you don't want to engage with your fierce opponents, but you do want to listen to them because they will help you identify the shared value. And one of the examples I love, although it's not a business example, is the LGBTQ movement which for decades was sort of spun their wheels around, "We're here, we're queer, we're different, and respect our difference." 

Which is all fine and well, but when they really started making progress is when they started listening and for decades, every time they won something, every time they would win legislation, especially the famous one with composition 6 in, 6 or 8, I think Proposition 8 in California, where they, whenever they would win a battle, it would always come back with family values, defensive marriage, and they'd get clobbered until they started listening.

And they started saying, "Hey, we want the same things you want. We want to live in committed relationships. We want to raise happy families." So a great  shared value is something, if you voice it to the fierce opposition, it will like make their heads explode. Like, I'm sorry, what's your problem with committed relationships? What's your problem with happy families?. 

And we see the same things in the organizational transformations that we do. Digital transformations, right? It's never about digital. It's always about shared values, right? That's why one of the things we do with digital transformations is we tell the executives, the leaders that we work with, focus on a, if you're gonna work with automation, focus on automating the most mundane, painful tasks first, right?

It's much easier to sell aspirin than it is to sell vitamins. But what we constantly say is what does your fierce opposition say? What do the people who hate this idea, what do they say? And if you really listen, you can identify a shared value, which won't convince them, but it'll flip everybody they're trying to convince.

Mahan Tavakoli: 

Beautiful. So what I'm hearing from you is you don't necessarily need to focus on the fierce opposition to convert them to your way of thinking in leading change through the organization. But you do need to listen to them for the shared values that will make your movement more powerful within the organization.

Greg Satell: 

Right. I mean, there's certain people you're never going to convince. Look, there's some people in this country who still want to fight the civil war. Why? I don't know. I don't need to know. I just need to know that it's true, I'm not going to convince them. If I can convince some of them, great, but that's not where I'm going to focus my efforts.

What I'm going to focus my efforts on is making people who like this idea, how can I make them successful? How can I bring those people in under a context of shared values? And you can identify those shared values by listening to that fierce opposition. 

Mahan Tavakoli: 

Those shared values are important and they keep coming out throughout your book and you keep emphasizing: it's only a value if it costs you something. And I think that statement by itself differentiates it from a lot of value statements and list of values that I've seen organizations put up. You also mentioned that the idea of change has changed, which is why there is a greater need for focus on the people rather than the organization, the structure, and the assets of the organization. 

Greg Satell: 

Yeah, it's a great point. And I think we need to go back to, there's a great research that has come out. I only became aware of it over the past year, but it's funny, once I saw it once, I'm seeing it more and more. But back in 1975, more than 80% of corporate assets were tangible assets, so things like factories and real estate and equipment. 

So when we talked about change 45 years ago, if we talk about change 40 or 45 years ago, we meant a change that was decided upon way up on high in the organization, about some strategic asset, a new product line, a factory equipment, whatever. And when the practice of change management arose in the early eighties, that's the kind of change it was designed to address.

So it was basically a communication strategy to help bring the rest of the organization along with this decision that had been made. Now the truth is nobody could really do anything about that change. Nobody could resist that change. Sort of chaining themselves to the bulldozer or vandalizing the forklift that would bring this new equipment and whatever it was, there wasn't much they could do. 

There was certainly a value of helping them to understand it. I think the problem is, is that today, we still live with that assumption that people, once they understand that change is a communication exercise, and you only need to get people to understand the change and they'll embrace it. In a political or social movement it's quite clear. 

I mean, when I was standing on the Maidan worrying if I was going to get shot, this whole idea that people that might understand the change would not accept it was quite clear, the people that might fiercely oppose this change, which was nothing we needed to be convinced of. But in an organizational context, it's often not as obvious. 

But here's how the whole practice of change has changed. Back in 1975, more than 80% of corporate assets were tangible assets. Today, that situation has flipped and more than 80% of assets are intangible assets. So things like licenses and patents and know-how and processes. So usually, when we talk about change today, we're usually talking about a change in people's mental models, in their behavior, in the actions they take every day and the way they talk about things. 

And people are perfectly capable and extremely adept at resisting that. So unless we change our model of change, we're not going to be able to move forward. And if you look at the statistics on this, three quarters of organizational transformations do not succeed. And that's obviously something we need to improve. 

Mahan Tavakoli: 

Which is why your book is critical in this case, Greg. A lot of the HPAs case studies that are still being studied in business schools, and a lot of leaders are using as step 1 through 12 of how to roll out change initiatives in their organizations, were meant for a different era than what we are facing now.

Greg Satell: 

Right. And the first step is always to create a sense of urgency around change and to have a mass communication. Which if you think about it, those people who hate change, and want to undermine it in ways that are dishonest, underhanded, and deceptive, that big, massive rollout that start with a bang approach that create a burning platform, that just alerts those people that they better get a head start on undermining you or else the change might already happen.

So often, that particular approach, not only doesn't get you forward, it actually backfires. And I can't tell you how many projects we've done, where somebody reaches out to us, and this is somebody who has been anointed by someone in the C-suite to roll out this change initiative, and this person has been tapped and it's a signal that this is a young man or a young woman who's going somewhere, right? They've been tapped to lead this change initiative. 

What they don't see is half a dozen or a dozen others sort of turn on that back, on their back and say, "Ah, poor bastard." And six months later where they're told, "You have budget, you have executive sponsorship, we back you fully on this change, go forth and we've got your back." And then six months later, when things are starting not to go so well and things start to sort of run down and run them up. 

And that those people who were actively undermining have been sabotaging this person for six months, which they didn't see coming because they thought that everybody, that the powers, the B have their back. All the sudden they see that support starting to dwindle where they say, "We thought, we thought Mahan, we kinda liked the, you know, we kinda kinda liked the cut of his jib, but I don't know. We gave him this big shot, maybe he's not quite ready." and this career making appointment that they had, now seems to be a,  something that's going to run their career off the rails. 

Mahan Tavakoli: 

Because going back to your point, which I have put up on my wall, small groups, loosely connected with shared purpose takes a lot. It is a brilliant statement. It takes a lot. It does take a certain level of willingness to let go of control by leaders also. And we all have a fear of letting go of control. 

Even one of the reasons people are afraid of flying in airplanes or having someone else drive the car is we are not in control. So leaders need to give up some of that desire for control. Now, one of the things I've been hearing in some conversation- 

Greg Satell: 

Can I just step in there? So, I'm going to push back just a little bit. By the way, I love that you love that because it took me 10 years to come up with that. To come up with this idea 'cause that encapsulates a lot. 'Cause you know, there's two chapters on the science of networks and it took me 10 years to encapsulate the science of cascades into that one sentence "small groups, loosely connected united by a shared purpose" in such a way it didn't make the, you know, someone like Duncan Watts who actually invented all this, pull his hair out.

So it's a, you know, I'm very, very proud of that. It took me a long, long time, but I don't think it's such a, I don't think it's an issue of control. I think it's how you see your role as a leader. And one of the things that I always saw, I always thought this way, I guess I was a philosophy major in college, but Immanuel Kant had this notion of dignity as treating people, not as means to an end but as ends in themselves. 

And if you see your job as a leader to treat people as ends in themselves, then it's not, it's not that big of a leap. You're not giving up anything. You're empowering people to succeed on their own terms. Sometimes that means that they have to leave your organization. And sometimes it's willingly and sometimes it's not willingly. 

But I think in the past, management has been too much about getting people to do what you want where I always felt that you're much better off finding people or identifying people who want what you want. If they want what you want, you don't need to control them. They will do what you want, because that's what they want. 

Mahan Tavakoli: 

And I love that, Greg. So let me ask you about the conversation we had a couple of weeks ago around the same topic, and a couple of leaders were mentioning everything from reputational risk to other risks to the organization in thinking more as a cascade with respect to small groups, with respect to individuals having more autonomy. How do you handle that? 

Greg Satell: 

Okay, so I'm going to shamelessly steal something here. I'd like to say it's my own thought, but I think Stan McChrystal, General McChrystal, I think he's got the best take on this. And I definitely recommend his book Team of Teams, which he wrote with Chris Fussell. Chris Fussell's book One Mission is a much more implementational version. I recommend both, especially since Chris Fussell recommended Cascades. 

Mahan Tavakoli: 

And his stories are all throughout the book too, which is great. 

Greg Satell: 

Yeah and he was kind enough to sit down for interviews and to fact check and to make sure I got all of that stuff right. But I thought Stan McChrystal is, you know, 'cause he had this issue when it was life and death with soldiers in the field. And he said, you can't push decision-making down. You can't have distributed decision-making until you achieve what he called shared values and shared consciousness, or what I call "people that want what you want."

If you're confident they want the same things you want, if you're confident you're aligned, if you're confident you have the same shared mission and shared purpose and shared values, you're not going to feel the need to control. 

Mahan Tavakoli: 

Now the other thing you go into, which I really loved, is you mentioned executives of disrupted companies aren't idiots, and you use Blockbuster's example. The fact that we can look back and say, well, they were pretty simple decisions, they just missed the technology that Netflix had, but that's not the case. 

Greg Satell: 

Right. We do this, we do this exercise. We said, what would you do if you were Blockbuster? If you were CEO of Blockbuster in 2004? We say people go down a list of things, and then we show them the list of things that they actually did. So everything that you say with perfect hindsight they should have done, they actually did. 

The problem wasn't that they didn't understand the change. And the problem was that they didn't have the right strategy or executed it well. They actually had the right strategy, executed it well, but they weren't able to align their internal and external stakeholder networks behind that change. And that's what killed them. 

Not that they didn't have the right strategy or execute it well, but because they were forced to abandon the strategy or leadership was. And it was actually interesting, by the way, I just, and this gets to another, 'cause I feel very passionate about this idea that it's not that stupid people fail and smart people succeed.

Smart people fail all the time and stupid people succeed all the time. The issue is you need to learn from failures. What I found most interesting talking to John Antioco, the former CEO of Blockbuster who is certainly not a dummy at all, and somebody who's been continually successful both before and after Blockbuster, and in many ways was successful at Blockbuster as well. 

And I asked him why he missed those signals that he did miss. And he said, "You know what," he said, "I've learned throughout my career, that whenever you're doing something difficult or hard or different, that there's going to be naysayers. And what I learned is you just have to press on and push through." And that's what he did at Blockbuster. 

And the thing was, he was right. He had the right strategy, he executed it well, but because he had been successful pushing through in the past, he tried to push through in this instance, when the array of forces were aligned against him. And he ended up leaving the company, and then the strategy was reversed, and then it ended how we know it ended. But the way he said it, and he said it in such a thoughtful way that I thought it was very meaningful.

Mahan Tavakoli: 

Now, I wonder with respect to Blockbuster, Greg, having been part of a franchise network and understanding that part of Blockbuster's challenge was that the interests of the people that owned those little Blockbuster stores was very different from the interests of Blockbuster corporate and the streaming revenues and how those would be divided up. 

Are there times when the structure of an organization, like a Blockbuster, does not allow for transformation, regardless of how much you try to align the product group, using some of the great practices that you share in your book? 

Greg Satell: 

Yeah, well they, eventually, they were able to align the franchisees, but way too late. And the franchisees were only 20% of the stores. So they didn't really need to listen to the franchisees to go forward. What I think they underestimated is how much noise and pain that those franchisees could create along with the investment community and the analyst community. 

And the franchisees contributed to that, which led to the crash of the stock price and the incoming of Carl Icahn. And that's where things started to really go downhill. But it also brings me to another point because one of the things, and this sort of relates to my earlier book Mapping Innovation, where I wanted to find what was the one thing that makes an innovator successful. 

You know, because I've researched every great innovator I could find from top executives at multinational firms to scientists, to entrepreneurs. And with innovation, I found the key thing, two key things actually. One was that they were constantly looking for new problems to solve. 

That all of them had different ways of solving problems, but that activity of constantly looking for new problems to solve, because when they identify the problem, if they worked at once of meaningful problems identified, your chances of solving it were fairly decent, right? And that they were also very collaborative.

So that was for innovators, but for people driving transformation and change, and I looked, as you know, over a century. I mean, you name it, I looked in the civil rights movement, Gandhi, solidarity, turnarounds at places like Wyeth Pharmaceuticals, and IBM, and education movements, and suffrage movements, and on and on and on. What I found was this, by the way, I also looked at lots of negative examples that didn't work, Occupy and others. 

And what I found, what was the main difference between the ones that succeeded and the ones that failed was the ones that succeeded, almost everyone, the one exception being civil rights, they, all of them had some kind of terrible failure early on and learned from it. It was what they learned, it's not that they didn't fail or not that the smart ones,  they saw what nobody else saw.

No, the smart ones were just as dumb as the dumb ones, but they learned from their failure. One of the examples I talked about in the book was Gandhi, which we see him as a genius and he was, but his most famous triumph, the Salt March, was born out of his worst failure, which was, he would later call his Himalayan miscalculation which happened 10 years before and spun out of control and ended up in a horrible, horrible massacre in Amritsar. 

So when he was asked to do it again, 10 years later, it was what he had learned from that failure that enabled him to succeed. And that was true almo-, ,of pretty...the only one was civil rights 'cause they, civil rights was the one they did quite a bit of homework and they never had that catastrophic failure, but they did constantly learn and adapt along the way. So they, for instance, they started off with boycotts and the boycotts didn't work. They didn't stick with the boycotts, they moved to sit-ins. 

Every even small failure they had or I wouldn't even say some of them were such failures, but lack of success, they were able to pivot and learn and grow and move to something else. So if I could give any advice, don't worry about failure. Just limit the damage. I can break the suspense for you now, you will have failures. It's learning from those failures that will enable you to lead forward and adapt and succeed.

Mahan Tavakoli: 

And that is what we all need to do with our organizations. Most especially now with your 10 principles of transformational change, the last one is, transformation is always a journey, never a particular destination. Which is why we need to lead our organizations for constant transformation. And your book Cascades, serves as a great blueprint for how to lead organizations in transformation. 

Now, I would love to know from you, Greg, in addition to your book, are there any other leadership resources, books, talks that you find yourself recommending for leaders as they are thinking about leading their organizations through ongoing disruption and transformation? 

Greg Satell: 

You know how much I think of Bob Burg. I'm sure a lot of people have read The Go-Giver. I actually like his later one, from Adversaries Into Allies even better. There is one book, and I've read so many good books that I like so so much, but there's one book that I never hear anybody talk about, which I think is one of the most brilliant business books I've read. 

It's called The Halo Effect. And it's all about when you're successful, you see a company successful, everybody loves everything they do—everything, "Oh, I used to go..." You know, when Steve jobs was successful, anything he did, that was the great thing to do. But the second they become unsuccessful, people talk about those same traits and, "Oh, of course he was going to fail. Didn't you see? He was doing this all the time." 

But a lot of the research that we see and what the book is really about is really how to ingest and how to look at advice and look at much of the business advice we get. For instance, every, what's it? Every week we get something from Deloitte or Accenture or something that predicts the future by a survey of 500 marketing leaders. But that's not, that's the average opinion. That's not a good guide, right? I mean, you don't want to hear from 500 marketing leaders. You want to hear it from the 10 that know what they're talking about. You're almost, you're almost by definition, averaging it out. 

Another great one that's often, and he points to a lot of these, but survivorship bias is a huge one. How many books have you seen that say, oh, well, we analyzed companies that took this strategy and we found that they were 300% more, you know, more successful. You'll say, "Wow, that's really impressive." But if you think about it, usually there's a survivorship bias that people would say, "Oh, there's, but we see people who take bigger risks. They're much more successful." 

Right, because you're not counting the other 90% who went out of business because they followed the stupid strategy and the 10%, yeah, they were really successful. But on average, it's a pretty crappy strategy. But this book, The Halo Effect takes so many of those things that we see typically, and we're told to accept as truth and tells you why you better think twice.

Mahan Tavakoli: 

Those are great recommendations and I appreciated, I've, I'm familiar with the term 'halo effect', I've not read the book. Look forward to reading it. Now, in addition to the links we will put in the show notes, how would you suggest for the audience to find out more about your book, your resources, and you Greg?

Greg Satell: 

Well, I have two websites, gregsatell.com and digitaltonto.com, but I would also encourage you to connect with me on LinkedIn. And now, as I know you are, I'm on Clubhouse and I'm hosting rooms there. So you can, anybody who's on Clubhouse, and if you're not, hopefully you soon will be, you can connect to me there. And I'm hosting rooms every week and you can join me for the discussion. Just raise your hand and we'll bring you up on stage. 

Mahan Tavakoli: 

I know I will join you at Clubhouse. I've listened to many of your conversations and episodes, Greg. Have really enjoyed the book. It's very thought-provoking, very well-researched. You have put 15 years of your life into it, but I truly believe that leaders that read it, try to understand it will be able to lead their organizations through transformation. And I truly appreciate the time you spent with me and our audience in this conversation, Greg. Thank you very much, Greg Satell.  

Greg Satell: 

Thanks so much for having me, Mahan.

Narrator: 

You've been listening to Partnering Leadership with your host, Mahan Tavakoli. For additional leadership insights and bonus content, visit us at PartneringLeadership.com.