“Innovation is synonymous with growth.”
This week on Radically Agile, we’re sharing an exclusive presentation given at the recent Reimagining Work Summit.
Catalant’s co-CEO and co-founder Pat Petitti talks about today’s rapidly evolving market demands, and explains why companies must be nimble and even consider disrupting themselves in order to adapt and stay competitive.
Tune in to hear more!
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[Full transcript below]
Excited to have you. I’ll tell you, if you know me, you know that I get fired up pretty easily, and I actually had five different Catalant employees come up to me before I came up and say, “Hey Pat, just make sure you don’t get too excited.” And so, trying to calm down a little bit. But the reason I’m so excited is because it is conversations like this that really help inform what our business is. And what I want to talk to you about is how over the past five and a half years, we’ve really used the conversations like the ones we’re having today to think about even disrupting ourselves. And you might say, “a 160-person company, maybe disrupting yourselves is in some ways easier,” but when you’re a venture-backed company, actually putting at risk core parts of your business, and fundamentally changing what you do is actually incredibly difficult. It’s incredibly difficult. And I’ll share with you some of what we went through as we did that.
But first, I want to start with why do we think companies are actually going about doing this? Why is disruptive innovation important? It’s because companies are recognizing that the ability for them to be successful is critically tied to their ability to innovate. When Brian asked a question earlier, why do companies need to innovate? Or Joe earlier asked the question about, Why is innovation important? Innovation is synonymous with growth. Innovation is synonymous with success for large companies. Innovation is what lets you get into new markets. It’s what lets you create new products. And being able to do that quickly is incredibly important to what you do.
Most of you probably recognize Clay Christensen. We’ve had the good fortune of spending a little bit of time with him, he wrote a book called “The Innovator’s Dilemma” and he talks about disruptive innovation. When Clay talks about innovation and how disruptive innovation happens, Clay talks about the job to be done. It’s about customer centricity and it’s about understanding what is the job that your customer needs to be done. And so when you think about the ways that many of the industries that we’ve been talking about today have innovated over the past 5 to 10 years — when I step back and if I could go back in time and tell myself some of the things that I’d be doing today — I would think that I was totally crazy. It’d be hard to believe, but I think when you take the lens of the job to be done, it’s actually pretty easy, and it feels a lot more realistic to understand how these industries have evolved.
So, you take retail, think about retail, what’s the job to be done for retail? It’s to help consumers get the product that they need at a price that feels fair when they need it. Digital transformation has enabled consumers to purchase in a fundamentally different way. And you think about all of the disruption that’s happened in retail, and I won’t go into all the details of it because Brian actually spoke a lot about this earlier.
Think about financial services. I think this one is actually pretty amazing. Many people at our company are young enough that they would not believe that the way that you used to go and get money, or deposit a check, or manage your assets with you walked into a bank, and you did that on a regular basis. And you said hi to the teller because you knew him, because you were there that often, and you maybe sat down with somebody in a cozy office to talk about your assets. Today I can take out my cell phone, I can see how much money I have in my bank account. I can manage my assets. I could buy a stock at no fee on my phone right now. I could buy crypto currencies, whatever that really is. Think about how much the financial services industry has innovated, how much it’s changed.
You take mobility. What’s the job to be done for mobility? It’s to get me from point A to point B as efficiently as possible. Now, imagine 10 years ago, cars were really synonymous, that was a status symbol. The car that you drove said something about who you are. And today millennials don’t think about what type of car they have, what color car they have, or how cool it is. They think about how do I most efficiently get from point A to point B? That’s the job to be done.
And so you have companies like Uber, you have companies like Google, but you even have companies like Bird, the scooter company, that are fundamentally changing the way that people get from point A to point B, because they focused on the job to be done. And think about all the implications of that as well. We have a world that where the infrastructure is designed around cars. Think about how fundamental of a disruption that is, but the focus in the job to be done is what makes it realistic.
Energy. So, we’ve talked a lot about energy as well. Many, many companies, worth billions of dollars, focused on very specific types of energies, but what’s the job to be done for a consumer? I actually think this one is particularly interesting. The job to be done is to make sure my lights are on, make sure my car moves, make sure when I get on the airplane, it’s got enough fuel on it. But it isn’t just about making sure of that that’s the case.
Consumers of energy want to think about, “Well, is this energy company doing good for the world?” They also care about, “Will there be a world for my children to live in.” Look at the folks at DuPont, this was actually a topic that came up at a leadership session that I was at about a month ago. Even for the energy industry, the job to be done is not just about keeping the lights on. It’s about, “Is this a responsible company that I can trust?” And you see the innovation that’s happening around this industry based on that.
And so what’s Catalant’s job to be done? Catalant’s job to be done is to help companies get mission-critical work done as efficiently as they can. And I’ll get into some of the details about how we really disrupted ourselves to come to a real understanding of what that job to be done is, but first I’ll talk about why we actually do this and how we do this.
Strategic initiatives really are slowed down by the inability to access the right skills at the right time, and particularly over the past 10 years or so, CEOs are reporting one of their biggest concerns is the inability to find the skills that they need when they need it, to do the work that they have to do.
And you see the trends around, “How long does it take to actually fill a full-time role?” You see this notion that, “Most of the best ideas must lie outside of the walls of my companies.” And I think a lot of that’s driven by the fact that the types of skills needed are changing faster and faster than ever before — which we certainly see at many of your companies and we know that companies that can operate with agility actually are substantially more successful. Companies that operate with agility get work done faster, of course. They develop products and get them to market that much faster. They have higher revenues; they have substantially higher customer satisfaction because they are in fact customer centric. Companies that have figured out how to be more agile are more successful. We know that, but adapting with agility is incredibly difficult to do.
And so the questions that we always hear our customers asking about is, “How do we find the right people?” And those right people increasingly are probably not on my team. Those right people might be somewhere else inside of my organization, or those right people might be outside of my company. But what we’re really seeing happening is challenging the notion of what does it even mean to be an employee? What does it mean to be a person who works at our company? And the lines between internal talent and external talent are absolutely blending.
Second is, “How do I access the right skills?” So, traditionally the way that people think about bringing people into their organization is they write a job description, and then they say, “Great, we’ve got a job description, now we got to go find somebody and we’ve got to get a butt into the seat.”
And the fact is that increasingly it is not about talent acquisition. Talent acquisition is an important thing of course, but if you just think about talent acquisition, you are missing out on a massive opportunity. If you think about talent access, you can find the right skills you need, and it may not be a full-time hire. It may be somebody who’s already inside the organization; it might be somebody who’s outside of the organization. It might be a consulting firm that you have a relationship with. It could be somebody who used to work at your company, but making that shift from talent acquisition to really saying, “It is about talent access. How can we be exceptional at talent access?” is the absolutely key to doing this well.
And then last is deploying the right teams at the right time. So, you think about now in a world where the best skills may be inside and outside of your organization, and accessing those right skills means that you may be building up teams of people who have never worked together before, may never work together again. And in fact, we’ve seen cases where there are people who will work together for many months on a project, but will never actually meet in person. How do you deploy those teams in an effective way? How do you challenge many of the processes in the cultural protocols that exist inside of your business that make it very, very difficult for you to go about deploying those teams effectively?
We know one key part of this is really rethinking this idea of what your organizational structure is. So actually, I think this came up in the conversation with Megan from Uber and Kate, and the folks from General Assembly. Companies, if you think about the way that they get work done today, the most important work that you’re doing is typically, it’s a cross-functional initiative. It requires people from across the organization. It requires a complex set of skills and capabilities and experience. That is not the way your organization is actually structured. If you were to structure your organization based on the way that you’re actually working today, it certainly wouldn’t look like the thing on the left. And in fact it looks like the thing on the left because that’s the way that the company needed to be structured 50, 60, 126 years ago.
And I’ll tell you a story. I was talking to Sue about this after her talk, I was at GE Life Sciences, and the CMO of the business grabbed me and he said, “You’ve got to see this thing that I found.” And he drags me back to his office, and he pulls out this big billboard, and it’s a billboard from like 1950 something. And it shows an organizational structure. And, then he pulls up his computer, and he clicks around, and he’s like, “Look, it’s the exact same organizational structure!” 60 something or other years later, and it’s the same org structure. And that’s not because it should be the same org structure. That’s because it’s hard to change your org structure, and it’s hard to challenge it.
But when you actually think about some of the most important work happening in your company, this thing in the right might look crazy and it might look futuristic. But in fact, I would bet you that most of the most important work that’s happening inside of your company today looks a lot more like this than it does like the thing on the left. Now getting there is not easy. Getting there requires you to actually think differently about how you create teams on projects. Getting there requires you to make changes to what the expectations are of a manager. And it requires you to think differently about how governance works inside of your company. But that is the way that companies are working today. And that is the way that agile companies are increasingly thinking about how they really view their workforce.
To do that well also requires you to think in a really different way about who your workforce is, and how you take the skills needed to identify who the right people are as part of that workforce. And so, I’ve spent a lot of time talking with many of you about how you use consulting firms. And consulting firms, I think everybody here would say that consulting firms are critical to your ability to get your work done as effectively as you can. The challenge is that most companies would tell you that when they use consulting firms, they do it in a very reactive way, and that’s in large part because they aren’t thinking really strategically about what their true workforce looks like.
If you asked most people who’s your workforce, they talk about people who have a company badge, but the fact is to be able to work with agility, to be able to find the skills and expertise you need when you need it, you have to think really strategically about who your workforce is, and it isn’t just people with a company badge. Your workforce is certainly people with a company badge, but it’s also people who used to work at your company. It’s people who work at consulting firms that you’re partnering with, your workforce are people who you’ve never met before who are freelancers who are around the world. You really need to think more holistically about who your workforce is. And if you can do that effectively, you can think about, “Well, now how do I find the right skills across our true workforce, and how can I deploy the right teams, knowing that those teams are increasingly going to be a combination of people from a variety of places?”
And we really root what we do in helping companies get work done faster. So, there are a lot of benefits to engaging your employees in a more dynamic way. And we actually think if you do that really effectively, it does help you get work done faster. But this is all in the purpose of helping you effectively execute as efficiently as you possibly can. And it’s helping you execute against the most important work that you need to execute against, as Brian was alluding to.
And so that really means, you’ve got the supply on one side. You’ve got the talent on one side, but on the other side, you really have to think about, “What are our business priorities? What are the initiatives that we have to get done? How do we systematically break that down into the work streams and the projects that we need to do that work, so that we can actually say, ‘These are the skills that we need to do our most important work, and these are the people available to us to help us do that effectively’?
And so what, what Catalant does is we have a technology platform and we partner with large organizations to help them organize their most important initiatives, identify what their most important projects are, break those projects down into their most discreet forms of work, understand the skills needed, and connect them into the talent that they have available to them to help them do that work at the right time.
And I’ll tell you, that was not always our business. I’ll get to that in a moment, but, in doing that, we’ve really learned some important things about what a company that’s truly going to operate with agility needs to do from a mindset standpoint and from an approach standpoint, if they’re going to be successful. And we don’t know this because we were a bunch of smart people sitting in a conference room. We know this because of events like this, because of conversations that we’ve had with many of you in the room here. But I’ll tick through a couple of these quickly because I do think these are compelling and important. First is, and I referenced this, competitive companies really need to have a more agile operating model to work on mission-based initiatives and projects. They really need to organize themselves around, “What’s the most important initiatives that we have to do, and how do we break that down into the projects that we have to get done?” and certainly related to that is understanding, “What are our key projects?” and not thinking about our job description, and not thinking about having a bunch of people who sit in a room, and each day figure out what they do. But instead saying, “What are the most important projects that we have to get done, and how can we break those projects into the skills needed to do that work?”
And if you can do that effectively, you can really focus on talent access instead of talent acquisition which I’ve mentioned before. The other big implications of doing all of this, of course, one of the biggest ones that we see is that the role of a manager in a world that operates in this way is actually fundamentally different than the role of a manager of the past. And so imagine a manager where the people who were doing work for you aren’t actually on your team all the time, or where people who are on your team are doing work for other people across the organization, or imagine a world where the people who are doing some of your most important work don’t have a company badge, they don’t have the same incentives that your full-time employees have, and you may never meet them in person.
That is a fundamentally different type of manager. It’s a fundamentally different set of responsibilities for a manager. And so, we see that leading companies are really, really challenging, “What does it mean to be a manager in a world that works in a very different way, in a world driven by technology?” And so I’ll jump into a little bit how we think about disrupting ourselves because it’s not very fair to have everybody else come up here and share their stories about how they are disrupting themselves if we don’t do a little bit of it, too.
Why do we have to think about disrupting ourselves constantly? It’s because the world is changing very, very quickly. The world is changing incredibly quickly, faster than ever before, and it will only speed up, as Sue mentioned before. 162 million people in the US and Europe engage in some form of independent work. Now that’s a stat that if you went back 10 years ago, you wouldn’t have believed. We know that the growing number of coworking spaces means that the way that people actually work, the place from which they work is fundamentally changing as well. And companies are adapting to that fact. In fact, the vast majority, we know the WeWork team pretty well, and the vast majority of WeWork’s growth has actually come from large organizations that are recognizing that they have to think in a fundamentally different way about where they set up, and where they allow people to work from, if they’re going to be able to access the right talent.
And so for us, the way that our business really started — was anybody here at an HourlyNerd customer before Catalant? Lisa was from Staples — so the way that our business really started was we were a marketplace. We had a marketplace of external talent that we wanted to be able to connect our customers to, to help them get work done when they didn’t have the talent that they needed, or they couldn’t find it. And we thought we were really back in the day building an alternative to the consulting industry. And we thought we were consulting for the rest of us, or a bunch of taglines we used to throw around, or we were an unbundled version of consulting, and that was our business.
But about two and a half years ago, we surveyed our customers and we asked them, “When you use Catalant, what are you using it instead of?” And we were actually doing it as part of a fundraising process, to be honest. And we expected that they would say that, “We use Catalant instead of consulting firms,” and we would have had a really great slide in our pitch deck that would’ve said, “Consulting industry 10X the size of Uber. Biggest companies in the world using us instead of consulting firms.” And so, we’d go to our pitch, wipe the VC drool off the table, sign the term sheet, and we’d be running.
But the funny thing was what our customers told us was that only the 30–40% of the time were they using us instead of consulting firms. The other times they were using us instead of some combination of reengaging former employees, whether they were alumni or retirees. They were using us instead of hiring full-time employees. And the really interesting thing that we saw is they were using us instead of engaging people and continuing to search for people who already worked inside of their organization, but who they just couldn’t find on their own.
And so we had a hard decision to make. The marketplace business was, and still is a core part of what we do, and was exceptional and growing very quickly at the time. We had investors who want to see a return, and want to see a business that’s really successful. But we said, “If we focus on the job to be done for our customers, the job to be done is not to find an alternative to consulting. The job to be done is to access the talent they need when they need it. And if we’re going to listen to our customers, and we’re going to really try and solve the job that they need done, we’re going to have to actually disrupt ourselves in some ways.”
And so we made a shift where, and this was not an easy thing to do, not as easy as clicking a button on a slide advancer, I’ll tell you that. But we made a shift where we said, “You know what? Our marketplace is incredibly core to what we do. And we have been able to really delight customers by giving them access to external high-end talent. But we actually have to say, you know what? Sometimes you already have the right person inside of your organization, and we’re going to help you find that person, even if that means that instead of using our marketplace, we’re just going to help you go find somebody who already exists. And I remember the conversations that we went through where we said, we might see that we really hurt our marketplace when we roll this out, but the fact is, if we’re going to focus on customer value, we have to be willing to disrupt what our business for two and a half years really was.
And today we even think about this. We think about our Catalant expert marketplace is really important, but we’ve talked with actually many of you in the room, and some of you are actually testing some of this out with “How can we connect you to other marketplaces?” The talent doesn’t have to be in Catalant’s marketplace if it’s external. The talent could be in the consulting firms you work with — and we work with companies to help them organize the consulting firms they already have relationships with so they can use them in the right ways. The talent could be in other marketplaces — Fiver, Toptal — marketplaces that have talent that doesn’t exist in Catalant’s marketplace.
It’s really about, for us, listening to our customers — something where this is directly from a handful of customers that we’re working on with this, and making sure that we stay customer-centered, and we’re focused on what the job to be done is for our customers. And I’ll finish up quickly here, because I could go on all day if you could imagine, but as we think about the fourth industrial revolution, as sue was talking about, you think about all of the changes that are still to come, and you think about the advancements in data, and AI, and analytics, and in cloud. And really we start to think about, “Well, how can artificial intelligence increasingly push the boundaries around what we do, and increasingly force us to continue to disrupt ourselves?”
And so we even think about things like, “If our job is to make managers exceptional at getting the work done that they have to get done, how can we use AI to do that? If our job is to help companies organize their most important work, can we use AI to actually help them organize that work?” And what I’ll close on is that to do this well, and all of the disruption that we’ve done to ourselves, and all of the innovations that we do ourselves, come from working very, very, very closely with people like you. And it comes from the conversations that we have today. It comes from many of the conversations that we’ve already had together. It comes from true partnership.
And so, that’s why we are so excited to have you all here today. That’s why we’re so excited for you to all get to meet each other as well, because there are a lot of amazing people in the room who we’ve been dying to get to talk to each other. Because the only way that we’re going to do this is collectively, with people who want to be on the cutting edge of innovation, who want to be constantly thinking about how they push their businesses to be better, to be more successful, to get work done more efficiently, to grow, to succeed, to innovate fast. And so it’s all about partnering together with you, with us, with each other so that we can do this well.
So, thank you for being here and thank you for being exceptional partners to us.