435 | Leading a Turnaround With Steve Lucas

Leading a turnaround will challenge even the best leaders. The momentum is going the wrong way, and there is never just one thing off. In my decades of leadership, leading a turnaround for a company is hard. Today I’m talking with Steve Lucas, former CEO of Marketo. Adobe acquired Marketo in late 2018. Steve is now SVP, Business Development, Digital Experience at Adobe. Steve led the turnaround of Marketo when retention was soaring, and the people had lost the desire to contribute meaningful work to company growth. Steve gives you new ways to think about leadership. Discover the keys to leading a turnaround in this interview.

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LITT 435 Featuring Steve Lucas

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Target Audience: As Marketo’s CEO, Steve led the company through a period of major transformation and spearheaded organization-wide growth, making Marketo the leading marketing automation software provider. Steve is a seasoned executive with more than 25 years of experience in enterprise software. Prior to joining Marketo, he served as the president of SAP’s Enterprise Platform Solutions, where he led the company’s multi-billion-dollar growth and expansion into a range of technology markets.

 

Steve Lucas: The Transcript

Disclaimer: This transcript was created using YouTube’s translator tool and that may mean that some of the words, grammar, and typos come from a misinterpretation of the video.

Listen, leaders in the trenches and your host today is Steve Lucas.

Gene Hammett: [00:04]
Hey Steve, how are you?

Steve Lucas: [00:06] I am Fantastic.

Gene Hammett: [00:08]
Well, I’m excited to have you on the show and to talk about leadership and culture at a company like Marketo, which I’ve admired for many years. So tell us a little bit about you and who you serve.

Steve Lucas: [00:18]
Well, so a little bit about Marketo or me? oh my goodness me. So I’ve been the CEO of Marketo for two and a half years, recently acquired, acquired by Adobe, which has been amazing. Sure. We’ll talk about that. And 25 years in enterprise software, SAP, salesforce.com business objects. And Microsoft got my start on the technical side of the business. So I was a demo rep, was my official title at Microsoft for compelling technologies like Microsoft dogs, which was an actual product. It was an encyclopedia about dogs when I first started. So yeah, I was a really glamorous job, but I have a technical background. There you go. And then, uh, just having a fantastic time you know, over the course of my career taking on bigger and bigger roles. And I have always found myself in the seat of either an entrepreneur or doing something really interesting inside of a company like launching SAP Hana for a SAP wanting force.com for a sales force. And then, of course, it’s either been that or leaning in heavily to take a business that you might be struggling a little bit and taking it to the next level. And I did that with Marketo.

Gene Hammett: [01:35]
So you mentioned being an entrepreneur. Do you value that with your workforce now?

Steve Lucas: [01:40]
Oh, unequivocally. I say it. I mean the best ideas are always somewhere in your company. It’s just finding them and taking the time to find that person that has the will to execute on.

Gene Hammett: [01:53]
When you think about entrepreneurship, why is it important inside of an organization that’s growing fast and you know, meaning technology changes evolving to the mark?

Steve Lucas: [02:06]
I mean at the end of the day value creation, I believe the act of creating value comes from the perfect combination of a brilliant idea well executed. And when you’re serving, you know, the size of a customer base that we have, the balance therein is finding ideas and marrying it up with execution that serves a broader population, right? It can’t just be something that two people will love and no one else will adopt. Unfortunately. That’s the way it is. And we are in the business of making money so that is part of it. But one thing that’s been helpful kind of in time, you know, entrepreneurship or entrepreneurship together has been, we’ve always been really, really super clear on who we serve. And so one thing I’ve noticed is that once people inside of a company get really dialed into that mindset of who do we serve and the why then the ideas are constantly flowing and sometimes the CEO and he’s just got to get out.

Gene Hammett: [03:05]
Well that’s the best, right? When you trust them enough to get out of the way, the roadblock.

Steve Lucas: [03:10]
Yeah. Well, and it is also startling sometimes when you realize you were the road.

Gene Hammett: [03:15]
That’s a big moment in leadership.

Steve Lucas: [03:17]
Humbling one. Yes.

Gene Hammett: [03:19]
When you think about entrepreneurship inside the organization, a lot of people resist that because they’re afraid that if they give them too much autonomy or they give them too much rope or too much empowerment, that they’re going to take all this knowledge with them and to create. So what would you say to other companies think like?

Steve Lucas: [03:38]
Yeah. Well, I think, first of all, I think a lot of executives shy away from, you know, allowing or encouraging entrepreneurs or entrepreneurship because it implies at least mentally that things are unstructured, right? And I think people, you know, the fear that and then I and my perspective is there’s only so much of your life and that includes work that you should structure the most beautiful things come from unstructured efforts many times. And that’s a good thing. And I, you know, I think for, you know, for anybody out there considering, like, how do I just grow my company on the right hand, encourage that kind of creativity. But at the same time, I want to retain these great people. I can assure you that if your job is to put structure around creative and motivated people, they’re going to lead with or without you.

Steve Lucas: [04:33]
That’s going to happen. And I had found nine times out of 10 and I never regret this approach, is that if you give people tools and latitude than what they achieve will pay dividends for years. And I recall an amazing mentor of mine, Bernard Vito who was the CEO and founder of business objects. I went to him in 2005 and said, Hey, I’ve got this great idea. We have this product called Crista reports. It takes pictures of data and at the time slicker was a thing, right? And people take pictures with their cameras and they published it on flicker. I want to do that online because we’d only considered the client-server model and hence was born crystal reports.com and he funded it had me go through a whole, you know, VC type process, bring the model, bring the panel. But that belief in me, it unlocked so much creativity, but also at the same time, it created a deep sense of loyalty to him. I stayed for years after that, so you know, I would tell anyone out there like if you’re worried about it, you know, don’t.

Gene Hammett: [05:38]
Yeah, I appreciate you sharing that story with me. It really does embody the whole aspect of having an idea. Some, a leader that’s strong enough to hear this idea and then give you the empowerment. Just to make this happen. And you know, within structure and boundaries, like it wasn’t just a free for all. It wasn’t going to spend my money. It was, I would imagine it was spending my money wisely. Here are some parameters. When you think about growing the company now I shared with you at the workout in the gym this morning, someone, my research on fast-growing companies. Before we get into the big question, let’s talk about the aspect of leaders that can inspire people to feel like owners inside the organization, which is very related to this entrepreneurship inside the company. How do you inspire people to take real ownership?

Steve Lucas: [06:28]
Well, I so first of all, I think that everyone inside the company has to be tethered to a core purpose and have like a passion for that purpose, a purpose for being. If you don’t know why you’re coming into work on Monday morning, if you don’t, if you don’t have a clear dial into what that purpose is, you’re already off base. The companies off base. That to me is first and foremost the way, the way I like to think about it is providing some kind of structure for people to think about, you know, what they’re doing and how they’re doing it. So we have a kind of a mental model that we drive in and around Marketo, actually learned quite a bit from Marc Benioff at salesforce.com his is called V2mom vision, values, methods, obstacles, metrics, and it’s a construct which I borrowed shamelessly, I might add, but I have modified it and I value it because it gives people the ability to kind of structure what they’re doing around a central theme and purpose. And then we can have a dialogue. But structured around it. So I don’t just walk up and say, Hey, what are you working? You know, and then you know, the struggle to derive something out of that conversation. So we do have a structured kind of vary a construct for how people.

Gene Hammett: [07:47]
I shared with you this morning one of the core purposes of my business, but I love Monday.

Steve Lucas: [07:53]
Yes.

Gene Hammett: [07:53]
And you said you love Mondays.

Steve Lucas: [07:55]
I do love Mondays.

Gene Hammett: [07:55]
So here are some stickers.

Steve Lucas: [07:57]
I’m going to take all those. Thank you.

Gene Hammett: [07:58]
You could share them with anyone else who may love Mondays. I have plenty. But when you think about your employees, you were sharing with me an idea about kind of a story of an employee who sent you some ideas on a Sunday

Steve Lucas: [08:12]
Ideas on Sunday.

Gene Hammett: [08:13]
Yes. So tell us about ideas on Sunday. Why that’s important?

Steve Lucas: [08:17]
Yeah. Well, ideas on Sunday to me are kind of a really strong indicator of the health of your business. And I’m not proposing seven day work weeks were work weeks, anything like that. What I’m saying. When I arrived at Marketo, the business was in a state of flux, shall we say, between a struggling a little bit in the public markets than being taken private by this a than a new CEO coming in. And so that’s a lot for a company to go through. And some pronounced turnover. There were challenges and me, you know, always ready to take those head-ons. But associated with these challenges, you get huge disruption and culture. People were not happy on Mondays, frankly, Tuesdays, Wednesdays, Thursdays, and Fridays. And so I had to think about, you know, how do we start turning this cultural ship around? And that was not overnight.

Steve Lucas: [09:05]
There’s a lot of trusts that get built. There’s empowerment that you have to create. Heck, I can remember, I mean it was like pulling teeth to get people to give me ideas. It was, I would ask them, well, what do you think? And the culture that was in place prior to me was much more kind of top-down prescriptive. And that’s just not what I believe in. I believe that you know, the best and the most brilliant things come from, you know, anywhere inside the company. And so that, that took time. It took consistency and leaning in on the culture front. But a turning point happened and that was on a Sunday. I got on my first of what would be many ideas on Sunday. Someone said, Hey Steve, you know what I’m thinking about this engagement platform thing that you’re thinking about and if we can just put some structure around and have kind of a planning component and a measurement component with the engagement in the middle.

Steve Lucas: [09:54]
And it, I mean for me it was like, you know, someone put heat and light in the room. It was brilliant. It was an idea on Sunday. And instead of just replying and saying, thanks, that’s a great, you know, great idea. Let’s think about that. Which most leaders do. They say, great, terrific and do nothing. We picked it up, we made it the central theme for our product message and that embrace the embracing of that idea. And I didn’t need to say anything. It just spread like wildfire. People’s, oh my gosh, this is great, these ideas are listened to because we did listen and so I started to get a lot of ideas on Sunday. Not all of them are great, but some of them had to do with you know, bring you back free food trucks and other things. But it was that moment and I knew, I knew right then that we had turned the corner.

Gene Hammett: [10:45]
I really relate to that story because if you are engaged with your work, it’s hard to shut it off. Right?

Steve Lucas: [10:52]
Oh yeah.

Gene Hammett: [10:52]
I get ideas in the shower on a run in a card much like everyone else because our brain kind of tunes out of it, but works on it in the background. Do you find the same thing with your mind?

Steve Lucas: [11:04]
Unequivocally? If you look at in my, I’m not, I don’t have like one path that I use as like my, my note thing. But if you were to open up my Gmail account, you’d find a thousand emails to myself. When I’m on a job, you would literally watch me and it was running down the road. I’ll stop, I’ll open up Gmail and I’ll send myself just four or five words, like, you know, here’s an idea. And I am constantly in that state where I, and I don’t let it escape my mind.

Steve Lucas: [11:32]
Like I’ll come back to it later and make sure that I’m mentally capturing that as I go on. And I probably, I will get a bunch of suggestions after people hear this on a better note taking system. But for me, it’s more about capturing it in a moment because you never know when that, that epiphanic moment will come or that brilliance will strike or whatever or where it will come from. And so, yeah, and most often believe, for me, it is actually most of the time it’s when I’m exercising, but I’ve also woken up at two in the morning. Oh my gosh. You know, and I’ve got to get it out of my head or I can’t.

Gene Hammett: [12:04]
You mentioned the culture transformation around a core purpose and getting people back in powered around to share ideas. What else would you say was a part of that transformation?

Steve Lucas: [12:15]
Well, you know, two things. I think one is, you know when you transform a company, it’s not, at the end of the day, you very quickly realize a CEO how little of that and you’ll actually accomplish on your own. It’s a finite thing of 24 hours a day, right? That’s not that much time really to do it. So bringing in a scalable leadership team that see the other side of the fence where you’re going, what’s around the corner, that’s incredibly critical and Marketo was missing a lot of that. But at the same time, it’s also finding people that are so passionate about your purpose and have some cultural background or water carriers. You have to bring them into the fold too. So one very careful thing I did was to ensure that we found people that just have that they loved Mondays, they were there, you know, buckets of water, you know, cultural water in hand.

Steve Lucas: [13:11]
And I promoted them, you know, not this is going to sound wrong or unfair, it’s not meant to be this way. But I promoted him. We had you know what they were ready for because they were ready for the next chapter of Marketo and I wanted them to be part of that cultural transformation. And the greatest teams are made up of people that you don’t have incredibly low egos, high passion for purpose and deeply believe in the value of culture. And so we, we created this beautiful mix, this amalgam of people, and it wasn’t just leaving the old Marketo behind this incredible battle in there. So we had to find that perfect balance, which is much more art than science.

Gene Hammett: [13:53]
Give me just a taste of what kind of success you had after those things aligned together. That prepared view or maybe got the notice of Adobe.

Steve Lucas: [14:03]
Yeah. Well, oh my goodness. There were a few things I think, you know, for us the big things that we knew coming in is we have really great product-market fit and that’s a good place to start. Customers love your product. But we were not ready for a consistent enterprise. Great experience. Or up time was, you know, kind of 96-97% you’ve got to be four nines and a minimum or you’re not selling to the enterprise. So we had about 200 enterprise customers when I came in the door. The day Adobe acquired us, we had over a thousand. So that was part of the, you know, certain and there are a thousand things that went into those thousand customers. We needed to build an enterprise selling force that we did not have. We needed to build competence within our engineering organization that could get us to the fore and now where we are five nines of reliability, we had to do those things.

Steve Lucas: [14:55]
We had to make sure that we had the kind of freedom to innovate within our engineering organization, give them the ability to do that, to just unlock and go. And it took a while for them to believe that they had the permission to do that. And so, so there, there was some of that. So we set about kind of thinking through the four or five strategic unlocks from enterprise to the, you know the talent aspect. There were other big things though, and Marketo was running a very, very expensive cost model and you can be the most innovative company on the planet if you’re burning cash, it doesn’t matter. And that was one of the challenges, you know, Marketo, before I arrived even had, was, you know, well growth is good and let’s not worry about the cost and you can’t do that forever. It’s not sustainable.

Steve Lucas: [15:41]
So as we thought through all those things, we put innovation as number one on the pedestal. Growth is number two. And then enterprise great experience in everything that goes along with that is number three in terms of the things we needed to drive outwardly underneath that was we have to have the people that can make this happen. We had us, I mean our an attrition rate was very, very high when I walked in the door.

Gene Hammett: [16:04]
Do you remember what it was?

Steve Lucas: [16:05]
Yeah, it was 59% the day I walked in the door annualized. It was staggering.

Gene Hammett: [16:10]
Wow!

Steve Lucas: [16:10]
Yes, there was ahead in hand, the moment, and a lot of that, you know, to be fair was challenges. The company had had, you know, way prior to my arrival or they take private, created a lot of concern and mix. And the third and most obvious thing is when the company’s based in the bay area, you know, you’re going to get that. But what was interesting is within months the attrition plummeted to single digits because we had real leadership again and people felt like there was a solid core that we can build on. So it was fascinating to turn that around. And now I’m really proud of the fact that we are a much more well-balanced organization. We opened sites like our Denver site for example, where our attrition is in the, you know, kind of upper, upper single, the lower double-digit revenue is just really low. And we have probably almost 400 people in Denver Hell along. So we opened up additional sites, we became a little less concentrated in the bay, which is no knock against the mayor, but we needed that balance. The company’s grown, we’ve almost doubled the number of employees and…

Gene Hammett: [17:19]
Well, I’m going to wrap this up, but I want to give you a chance to share with us about what are you most excited about this merger with Adobe? That’s one thing?

Steve Lucas: [17:29]
Wow. One thing I’m excited about changing how people create value for their customers. And what I mean by that is today like we, we think about, you know there are all these enterprise systems. I know we will work for big enterprise software companies, all this, there are all these systems that claim to say, well if you do it this one way, then your customers will be happier. That’s so inward facing. It’s inside out and we need to think outside in. It truly is about how the customer experiences your brand, your product, your company experience. And this is where I think shot too is when you really hit something, experiences the great differentiator. And here’s what I mean. Why do you use Uber? We use Uber because it’s a great experience. It’s always available. I can choose what I want, it knows where I want to go, where I’ve been, where my home is.

Steve Lucas: [18:25]
It’s like a utility. But have you ever seen an ad? Okay, admittedly invited by no means do I ever vote. You know, some of the behavior that went on here, I don’t remember other than the ads for, we’re getting better ever seen an ad for Uber to see experience. And my argument is always is that if you focus on experience, that is the great differentiator because what is Uber without experience? It’s just getting in a stranger’s car and they’ve made getting in a stranger’s car the most amazing experience ever.

Gene Hammett: [18:56]
Yeah. Which is something you wouldn’t have done?

Steve Lucas: [18:58]
And that’s where Sean’s son who’s headed is, it’s about driving experience in everything. So I think we’re, I think we’re tip of the iceberg with this experience thing and focused on helping customers change how people experience what they offer.

Gene Hammett: [19:12]
You know, I forgot that I teach you this morning at the gym about one question in my research. I guess I’m going to ask.

Steve Lucas: [19:18]
Oh, I’m still cycling on this one.

Gene Hammett: [19:22]
So to bring everyone into our conversation at [6:30] this morning at the gym, I asked you as a leader, what’s more, important employees are customers.

Steve Lucas: [19:32]
Well and I’ll complete transparency. My immediate response and I’ve really been thinking about this all day was obviously customer first and the reason is I think because it’s burned in your head that it is always customer first. And the more I thought about it, you know the reality is, and if you think about the story I just shared with you, we clearly our customers matter and they are, you know, top of the pedestal for us. But if you aren’t, you don’t have engaged employees. Does it matter?

Gene Hammett: [20:03]
You know, going back to what you were saying, if you have a 59% attrition rate and you didn’t write the ship on, leaders are not going to have customers for long and they’re not going to have the experience that you want. And even if the drive was served them and add value if the people aren’t there to continue to do that over time cause you wouldn’t, you wouldn’t be where you are right now. If you could correct that 15 quickly

Steve Lucas: [20:26]
And all credit for the growth and performance and Marketo jump. Want me to turn, I was grateful as I am to are unbelievably amazing customers. It’s our people.

Gene Hammett: [20:37]
Here’s the funny thing about this and I cause I work with a lot of great places to work and I really studied growth but I’ve never as a consumer than turned off by a who says employee because I know what they take care of their employees. Those employees will want to take care of.

Steve Lucas: [20:53]
That is so true.

Gene Hammett: [20:54]
But if it’s customer first, the employees can feel like, oh there are decisions that are made that don’t make us and that it doesn’t give the employee experience matters. Employee experience that makes a company like yours continue to evolve and grow. You did.

Steve Lucas: [21:10]
Yeah. I’ve got some t-shirts to change too. We’re going to work on this one.

Gene Hammett: [21:16]
Well, Steve. Thanks for being here and leaders in the trenches, and thanks for everything that you do.

Steve Lucas: [21:21]
Oh, thank you.

Disclaimer: This transcript was created using YouTube’s translator tool and that may mean that some of the words, grammar, and typos come from a misinterpretation of the video.

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