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[Music]
thank you just quickly to introduce
myself as you heard I've been in this
place for a long time really starting
the technology that's my background that
it's engineering at school and working
in agile transformation initially and
most recently concentrating really on
how we use agile and lean startup to
drive business transformation for a big
enterprise like Pearson of they'll be a
little bit about the company if you
don't know it doesn't work I can use the
master prefix easy
so Pearson is a biggest education
company in the world it's been around
for most 200 years eight operates in 80
countries grew by acquisition so quite
complex organization mostly portfolio of
companies and not products and something
they've been working really hard to
change in the recent years 40,000
employees you know matrix structures
everything you know about big
enterprises we have it and as we've
heard for many speakers so far today
there is a lot of disruption happening
and education is not different digital
is here to say although some of the
publishing executives appear soon I'm
sure still disagree with that and pace
of change is really high as we know
speed seems to be the only competitive
advantage our traditional competitors
have changed you know there is a reason
there is not a single publisher on this
slide because our competitors are
different they're big technology
companies they're Google's and apples of
this world but they are increasingly
more small startups that have you know
10 15 employees that can move at speed
that Pearson cannot compete with if you
just look at the attack investment or
the top 50 highest growth companies in
US alone with half a billion of revenue
last year but what's interesting the
revenue is not so high combined but the
average growth is three hundred percent
so you know in three four five years
from now and this is that Vermillion cut
prepared and she actually spoke about
this you know how do we know whether we
are experiencing the Kodak moment and
codec is not the only company the
average time on the top fortune 500 list
is 16 years at the moment so what
happened to call that can happen to you
any company and they didn't fail because
they didn't have good ideas or because
stammerer failure ninety percent of
projects products in and startups fail
so failure is the most likely outcome
it's not something to be feared it's
something that we need to work on to
avoid and summer mentioned the Death
Star and building that stars you know
person is not again the only company who
has attempted to build something big and
invest hugely and fell publicly and you
know be sued or whatever so big
companies do that they go up to big
things because they you know look sexy
they invest hugely they expect high
returns they just forget to tested
customers early enough so some of the
challenges internal challenges on top of
everything that's happening in the
market and again you know focus on
person but I'm sure you've heard all of
this hugely unbalanced portfolio we do
everything from still publishing books
through owning schools to trying to do
digital products do you know running
English language centers in China and
when you think about technology it's
outdated we have every single stack that
you can imagine we are struggling still
with transition from print to digital
print is still most of the revenue
although digital is speaking up but when
we do digital we'd still don't work
quite well and it's mostly protective
game you know you often hear from
executives we want to protect our
publishing business it plays big bats
again I already mentioned that and
there's very little innovation or
destruction which leads to you know
underlying growth in the last five years
and when I talk about generation I
really mean business model innovation I
don't mean you know we have an R&D
department I'm sure we have you we are
very slow when it comes to taking
products to market you know takes a
couple of years to build something it's
often a big thing that goes very slowly
complex and very bureaucratic
decision-making as you can imagine
customers involved too late there is
very little data when it comes to
product pml level data so all of that
obvious leads through a lot of
complexity no growth very little
innovation and a fear of you know are we
going to become irrelevant in few years
so we have set up this transformation
program that I've been leading for the
last three years that's part of the
chief product office and really the
primary goal was to enable person to
grow globally to invest in right
products to be able to innovate at scale
and rebalance our portfolio but also to
transform the culture and more
importantly so we are more attractive of
better talent and the five pillars as
we've seen it our adopt a portfolio
approach so really data-driven to ensure
we are testing our strategy and reacting
quickly to changes in the market and
introduce the product life cycle which
I'm going to talk a lot about which is
based on agile and lean starter
principles which is a frame of
introduced to be able to not only
develop by govern product in a different
way that's more iterative more database
more incremental and to support all of
that we have changed how we govern
though investment governance the
decision-making bodies again using
modern practices incremental investment
governance and then we've really focused
a lot on best practices and behaviors
and it changes in the culture that I
needed so how do we upskill how do we
build communities of practice how do we
incentivize our culture and our
behaviors so we are more prone to nor
fail fast and learn fast them and move
forward as organization so a portfolio
approach and Jessie talked a lot about
this they have killed couple slides I'm
not going to go into detail but it's
really important to have a clear
strategy and strategy that goes across
the G horizons as we've heard if you're
just focusing on core and protecting the
existing business and not thinking about
you know a jason or transformative
innovation at all then obviously you're
in trouble as a business so you need
different lenses you need different
assumptions you need to change how you
do annual planning so it's more
responsive more data-driven more
incremental so your strategy needs to be
measurable and its use clear KPI
you evaluate that strategy throughout
the year and you need to think about how
you're going to disrupt yourself so if
you don't have any products in that
third transform transformative horizon
then you're in trouble obviously this is
what kissin portfolio looks like so
we've used nygean tubs golden ratio
which is 70 2010 and looked at matting
our products against the g horizons and
as you can see most of our investment
not surprisingly was in a core part of
the business very little in adjacent or
transformative and so as I said it's
been a mostly protective game with very
little innovation or especially when it
comes to new business models and I'm a
huge believer that digital doesn't just
mean let's bring some technology it
means rethinking how we do business
because digital comes with different
business models and preferences we also
by introducing the product life cycle
which I'm going to talk in a minute
thinking about the journey that each
product goes through from inception and
ideas stage all the way to retirement we
also use that as one of the lenses to
think about what how does a portfolio
look like how many products we have that
are in early stages are in idea explore
stages huge accessport a point around
you really need to open the funnel and
if you don't have it anything that's in
early stages that's also sign that the
portfolio's is in trouble so we
introduced the product lifecycles
framework that's completely
revolutionized how we think about
product development and product
investment governance so it's a common
framework that you use for all products
in our portfolio some not just
innovation we use it for our core
business as well and it's a repeatable
scalable process that's incremental and
that allowing us to place incremental
bets and you really then use that to
scale across the business and you know
increase the likelihood of finding the
ten percent of projects or products that
are going to succeed it's also allowing
us to compare all products in our
portfolio using the same line
and using the same data and criteria so
on a like-for-like basis evaluating
everyone invest further or not it's
based on principles of you know more
ideas opening the funnel click validated
learning fast failure you know failure
but we started this program was a dirty
word at Pearson as you can imagine you
talk about failure and people think
they're going to be fired if the idea
succeeds you know executives get too
personal and to attach the idea as well
and sometimes that's the biggest problem
so we often talked about you know fast
learning instead of heart failure but
the concept is this thing open the
funnel small bats ensure this you using
the data and validated learning another
principle of the lights are close that
and Steve blanks talks a lot about this
searching for business model and
executing on existing business model are
two very different concepts and startups
are only in the third phase enterprises
need to deal with both and it's a
complex thing to do and you need
different management practices to do
both successfully so what works in a
search phase doesn't work in execution
phase you need different criteria
different data different often different
behaviors so what we have devised is
life cycle the girls or cause the six
stages first three stages of focusing on
searching for business model so and idea
explore invalidate where we are focusing
on you know jobs to be done the business
model design really validating the needs
of our customers ensuring that there is
a need that there is a market using
different dates and different criteria
to evaluate those ideas on the right
side to grow sustain and retire once you
get the product to market and that
product is growing or is in sustained
phase they obviously have different data
different management practices you can
talk about revenue and profit margins
and you know usual suspects but you need
to behave differently in your search
phase versus your execution phase
to support all of that we have created
the criteria that allows us to move idea
or product from one stage to another and
supporting that we have changed how we
finance our investments so we have
completely abandoned business case
because we felt that ups on business
case with revenue projections that are
unrealistic when you are still in ideas
binge and when you don't even know
whether that idea is going to succeed or
not was not useful and we didn't want to
kill a lot of great new ideas based on
unrealistic data projections so we have
introduced Josh hopes to help support
management of risk so when you're moving
in early stages you know we limit how
much money you can spend to avoid team
spending hundreds of millions of dollars
or pounds investigating a big idea and
instead we have limits like you know
50,000 pounds go run some experiments
come back to validated learning or fail
but fail quickly and cheaply not
spending millions when you move to
validate your building an MVP let's
focus on really the V in MVP you know to
validate that business model to validate
the product market fit you don't really
need to build a lot of Technology I know
that's not a message you guys want here
in this room but there is a lot you can
do with paper prototypes with quick
experiments with videos not built big
platforms you test and MEP of a small
product the whole point is let's reduce
the risk and let's get to those
validated learnings and to validated
business model as quickly as possible
we've also tried to apply a lot of Lean
Startup in an agile principles on the
right side so once you are growing a
product you know and you have your great
agile team and they're working really
well and they're good old machine how
many agile teams do we know that
delivering on time and on budget and not
forget to ask ourselves you know adding
your features are those features going
to introduce and anything new for a
customer are they gonna raise the
revenue levels or not
so there is a lot of hypothesis driven
development that happens on the right
side as well where we are asking teams
to think about what are the growth
hypothesis what is it they want to try
and prove in the next quarter and two
then really come back at the end of that
quarter and show the data and evidence
over the work they have done and to use
all of that to build trends over time so
that we can see how well this products
are performing one of the big challenges
we have faced the business is not
distinguishing between products that are
growing and product that is sustained
and we've done the first kind of
portfolio mapping to the life cycle
stages everyone wanted to be in a growth
stage because that was perceived as this
is very going to get the budgets and
money this is a sexy phase no wants to
be in sustained that means you're going
to be killed too my system is actually a
happy place to be this is your big cash
cows that you know producing a lot of
revenue a lot of profits for the company
but you need to distinguish how you
handle product in Braille where you're
still investing a lot and still have all
these potentially new market
opportunities vs product that's in
sustained where you know the game is how
do we maximize you know return and then
retired retire was a dirty word you know
do we have a portfolio that has the
disused long tail of things that are not
really profitable but no one's to kill
because we didn't have data in the past
we didn't think in terms of the
portfolio or their life cycle stages and
there is always you know one customer
that's still using a product though we
can't possibly retire and then we talk
about well we need ten percent of our
portfolio to be invested in
transformative innovation and we don't
have any money because everyone is
fixing bugs on this product that can
retire so obviously you can see that by
introducing the portfolio thinking and
this new framework you start to collect
the data and you start to think about
your portfolio in a very different way
getting financed from bored with it says
you can imagine was tricky you know
first time we had a conversation about
abandoning the business case process or
making changes to the annual planning
was in the conversation that might as
well and you know it took us a year to
get them around
and the main arguments he used is we are
really focusing here on reducing the
risk of our investment so instead of
placing a big back and hoping for the
best we are increasing our investment
and our funding based on validated
learning and as the risk is declining so
by the time you get to the end of
validate stage instead of you know the
fake business case you will have had at
the beginning you have actual validated
learning of that business model you have
a product market fit you have a sale you
have a customer who is committed your
early adopter so that worked really well
and this is now a process that we are
rolling out across the business on in
all parts all business units across the
whole portfolio to support all of that
we had to rethink how we make decisions
in the organization so from organization
that was as a self portfolio of
companies with multiple competing
processes and unclear decision-making
where you know a lot of decisions by
default to go to the executive team
because there was no one else to make
them we have introduced this concept of
other councils which is really our
concept of investment boards and they're
embedded deep in the organization
they're close to product team and they
make decisions on the parts of the
portfolio they are responsible for and
we have really used the concept of agile
and cross-functional working to assemble
those teams they're small five to six
people but they have all the skills they
need to make a decision so they have
representatives from product and
technology and strategy and finance and
they use this consistent process that
I've talked about to make decisions so
the same criteria for the product in the
company product teams present evidence
to the decision makers and they make
decisions using data is it ideal now do
we still see some old behaviors emerge
obviously and a lot or what we needed to
do and it's not just about the process
is just training right so moving away
from I'm executive and I've been doing
this for 20 years and I have a really
good gut instinct on what this is going
to work you we actually have some data
do we want to discuss the data and you
know I think data Trump's the highest
paid personal opinions but it's a
information and takes time for people to
come around obviously so what all of
this is allowing us is to start to build
the view of our entire portfolio using
this process so that we can look on
quarterly basis how well are we doing
according to the strategy we have set up
we are starting to build the data that's
giving us that information so that we
can react to changes that are happening
you know and I'm sure that happens to
everyone and assume you plan for
something and in digital world things
rarely go according to your three to
five year plans so a lot of changes
product failed in the market and your
opportunity emerges you lose a big
government contract and if you don't
have ability to react throughout the
year you're in trouble as a business so
to scale all of this we have introduced
a portfolio tool that we entrust
ourselves integrating with uldum
Oracle's and CRMs of this world so that
we can have that comprehensive data set
all in the same place that can enable us
to make more active portfolio decisions
run all sorts of portfolio reporting but
also it allows us to really support this
concept of decentralized decision making
because we have full transparency of
decisions that have been made it's
easier for executives to step back and
say okay I know that certain song has
made a decision I know that they use the
data and the criteria be agreed and all
so to support a lot of process changes
as i said we invested a lot of time in
building this ecosystem of cultural
changes of redefining how to do things
and investing in talent so a lot of
changes when it comes to practices and
behaviors so what the product lights on
come from for instance defines it's not
just the stage gate criteria it defines
all the things that you should think of
to do as a team as a cross-functional
team in each of the stages so again
using you know principles of lean
startup of experimentation of agile to
really deliver value to customer to
focus early
need to experiment to get to those
validated learnings as quickly as
possible so what we have in our
ecosystem is a core team that I have
been managing that's really driving the
transformation a lot of training and
coaching there I'm going to talk about a
lot of community building which is
really important and it really starts
with redefining how with you product
development you know when we talk about
cross-functional teams and I hope you
will agree we don't think just about you
know a bunch of developers with a
product manager and UX guy in a room
somewhere we really think all the
business people as well so and your
finance and your HR and your marketing
because otherwise sales you cannot bring
a product to market and you start to
build silos that you cannot break and
you know is because of lack of
communication or lack of access to
customer you don't get the data you need
when we started this sales were the only
people allowed to talk to customers and
by the time you get to you know product
manager developer it's you know six
degrees of separation and Chinese
whispers and you don't really have a
clue where the customer wants a feature
of a product right so building on that
we have heavily invested in training
starting with leadership training and
development going as I said into
re-educating our executives on how to
make decisions differently doing lots of
road shows in the first year you know
bringing all of this to you the whole
company talking about what this means in
terms of rates are working but more
importantly a lot of training for
product teams you know starting with
basic agile and lean startup training
you know we had courses recalled how to
speak to customers you know training
people on basic tools like business
model canvas or value proposition canvas
and then over time you realize that we
cannot drive you know change of this
scale with just a small team so we
really wanted to distribute the
knowledge as much as possible and build
capacity in all the business units so we
introduced the lifecycle coach program
and over the last year we have trained
150 people how to do this and they're
really you know extension of our team
our ambassadors and evangelists they're
sitting in business units they're
coaching product team and initially we
thought this is going to be a great not
just career development program and a
great way for for them to support this
transformation in the business unit
where they're working where they
understand the domain really well what
we realized as well over time that was a
great opportunity to match you know an
idea is emerging in a part of a business
or geography they don't really have the
skills or the team to pursue it and then
we have coaches or product team
somewhere else and we can do the
matching as well and people love that
they get exposed to different businesses
and as a career opportunity or you know
sacrament works really well as well I
can't emphasize enough how important
this was for us and we started by
building a really strong community of
agile and Liam practitioners in the
business but we also were very aware
that we are not the only companies with
the challenges I've described so over
time we've really built a strong
relationships with many other
enterprises going through transformation
like this we've been bringing speakers
from under industries to Pearson
building relationships getting experts
to come and you know either talk to a
board or give training to our product
teams we've supported and sponsored
pretty much every meetup group and you
know run sessions monthly in London New
York and other centres and it's been
great to share the learnings and also
expose our folks to how things are done
somewhere else and for them to realize
we are not the only one struggling with
this thing or we are not unique because
what you share a lot and i'm sure you
guys hear the same we are very special
you know you don't understand our
challenges our challenges your unique
and this is not for pearson you go
within individual business unit or
department and you're going to hear that
you know english business things that
they're more special than higher
education business or school business or
that their challenges are very very
different so bringing them together
through this community exposing them to
you you know GE having similar
challenges or approaching things in a
similar way using leave
was very very useful so as I said
culture is key you know really working
hard on changing the DNA of the company
otherwise you know if you're focusing
just on the processes or governance
things obviously don't work you need the
whole company you need the leadership
most importantly I can't agree more
everything starts with the CEO and the
executive team and if you're just
getting a little service of support and
you're never going to be successful they
need to be drive of the change but I'm a
huge believer that change happens at
every level in the organization you know
you can get a top-down command to go but
if your troops are not supporting this
or not believing in it then you're not
going to be successful equally important
you need to line your incentives right
so if you are still rewarding the sales
team in a old way and you're trying to
bring this new product market and you're
still in an MVP stage the sales team is
not going to be incentivized to show
this and repeat your customer right so
everything has to be changed if you are
talking about failing fast then you need
to encourage people to fail fast you
need to reward them for family files
because being there sailing company lots
of money right so there is a lot that
needs to happen we are working at the
moment on rethinking our performance
reviews and our incentive plans and
really thinking about you know Harvey
embedding this change throughout the
organization it's been a challenging
couple of years Hugh you know scale
something like this across the
organization it takes years it's not one
off it doesn't happen overnight we've
been very ambitious and try to tackle a
lot of work but it's been beyond
challenging as you can imagine and I
think I've covered some of the
challenges already and I think this is
something that we have now the whole
organization supporting and it's really
rewarding to see how much change it's
happening in the organization already
although everyone is aware that this is
just the beginning of the journey and
there there is still a lot to do so this
is all for me I'm very happy to answer
so why would take a few questions eight
if you don't mind sitting up behind us
so I'll stop with the first question so
how does that folio split between core
and you look today after you've gone I
talked to this new way of working well
it's still early days it's changing
slowly by you know making first some
decisions through the annual planning
process on how much we're going to
invest in a Jason and transformative and
this is something we have done in the
last 12 months so you're seeing more
investment in horizons to entry which is
great we are seeing a lot of more small
bath so we've used this process now in
six or seven big business units though
it's still not skilled completely across
the business but we are seeing you know
we have tested recently a question
shifted IBM using this process whereas
in the past we would go and sign the
contract immediately without thinking
how we're going to use it and you know
in six weeks we evaluated 50 ideas and
we spend more less than fifty thousand
dollars evaluating those videos we've
launched the social incubator six months
ago and encouraging more innovation in
the company and it's been working really
well pressive any questions from the
area computer if so just a quick
question what is your most important
learning from this transformational
journey if you like I think leadership
and getting leadership support is really
really important we had the support on
paper from the start you know they
formed a team they gave us a budget they
hired me and has a bunch of other folks
and I can't tell you how many meetings
event but I said we endorse go ahead do
it and then they leave a room and forget
to tell people that we just agreed to do
this and then you go to the next level
and they have no clue what you're
talking about so getting them to
understand why you're doing this you
can't talk about agile or link because
they don't really get that but then you
concentrate on what the business
benefits are
then they start to turn around so
investing a lot in that conversation in
training in explaining how things work
was really important another thing just
investing in talent people want to be
part of this they think that this is the
most exciting thing we have in the
business but you need to bring them on
the journey otherwise they feel like you
know I work in a publishing business my
days are numbered and actually they're
not you know that there is so much you
can learn from this and the way you can
change how you work and and you also
have to listen and you know bring some
of what they know about the business to
the to the table as well and the 13 for
me is diversity you know not only am I
the only female speaker here but I've
learned over here that they tend to hire
people who come from similar backgrounds
and in publishing and education
especially in our you see executives
girl from Pearson to other publishing
companies and this is why did you know
industries don't get disrupted this is
why he is a society don't move quickly
enough so you really need to disrupt how
you work who you hire you need to bring
different people different talent people
who are gonna challenge you know I heard
a couple people from the Lean Startup
movement and you know one of my folks in
New York he shows up to work in you know
shorts and flip-flops every single day
and he goes to meet him in executive and
it's great and he asks the hard
questions that people in a room wouldn't
necessarily ask and you need that
because if you only have people who are
asking the same old questions all the
time you're never gonna try to change
thank you
so that was actually it was a
conversation we had over dinner last
night as to how much can you actually
expect an existing organization to
change versus bringing in new talent I
mean I don't think there is any formula
for this but is that a conscious I mean
I you guys aware of how much new sort of
thinking styles and energy and new style
type people that you have to bring in to
make this work and I think you need
disruptors so in the first year I told
my team you have one thing to do this
year forget about everything else in all
our targets the roadmap everything we
have this drop the hell out and you need
to hire those disruptors at every level
you know just product in that's easier
but you know management the executive
team you have to have people who come
from outside I can't tell you what a
percentage looks like and it's going to
be different from company to company but
I am a believer that you know people can
change and industries change and we've
seen so much disruption I watching TV
industry before and then we talked about
we don't demand they were like that's
never going to happen right and we come
cannibalized are linear TV revenue by
giving you a digital rights to all this
program and look at it now what what
what netflix has done and this is
happening across the piece so you need
people who have experienced that
somewhere else and whatever the industry
was you need some of those people in the
organization how many of the audience
have actually implemented a Lean Startup
way of working our thinking anybody want
to share what was tough yeah
so in a couple of scenarios have seen it
provide real good kind of kick to the
kind of transformation initiatives when
people spotlight new way of working the
drill challenge is holding on to that
multidisciplinary team afterwards so
everybody gets passionate about the
experiment and we see an awful lot of
movement around the experiment and we
see a profound transformation on the
back of it but in the larger
organizations again it's difficult to
hold on to that team when before we've
transformed finance and everybody else
because be Buster fall back into the
regular patterns I think the hardest
thing is is holding on to that team
subsequent to the Lean Startup operation
and certainly replicating that again you
tend to put the stars in the first lien
start off experiment they do smash out
the ballpark well then that just really
that just reveals that's actually a very
rare group we've got together there and
to replicate that we do actually us to
replace lots of other team so yeah it's
the momentum think getting momentum
thing working I've struggle with and
it's much easier to do it in a small
scale you know if you implement lean
startup and you're building a product
it's one thing you focus on just that
product you don't have all the politics
or you know all the existing technology
need to deal with or existing processes
finance with annual planning and you
know shareholders through worry about so
it's a different ballgame we've started
with you know three or four pilots
initially worked like magic was great
right and then you try to test it in a
business unit and you start to run into
all these shoes of what we want to do
this and we want to follow this new
process it's great but finances are
asking are still for business case or
you know hey but here's the annual
planning process and it doesn't work so
if you want to transform the
organization you need to tackle all of
that and that's a hard game this is
where you run into the cultural issues
of this is not how we do the business
and yes I need to report to shareholders
so we can't run that risk and so a
changing like yourself are you reporting
directly into you know what level are
you reporting into what what's your
empowerment executive member
which helped are you feeling powered I
mean can you make the beaded decisions
and structure and in the organization is
that how it's set up I have been caught
early in my career to ask for
forgiveness and not for permission so
alright we have another question here so
as I'm listening to this and I'm
thinking about crossing the chasm and
such e i think the scarce ingredient in
this model is going to be the to your
point is the entrepreneur so in venture
capital the number one decision is like
investing in an entrepreneur and i think
if you just said that with the process
run without an entrepreneur i don't
think you would get to scale i think you
would get to the first three remember
when you had your dotted line that
dotted line is a tough line to cross and
i think it takes an entrepreneur who
will literally break at it can't be you
you're running the process there's gotta
be another an owner that's going to do
it and I think selecting for that one
individual talent may be the critical
success factor and empowering that one
person and giving him or her Lee right
you to go and do it is which is why said
rethink how incentivize people how do
you incentivize someone like that in a
big organization so they're not just
working for a salary device extra vent
thank you very much money will set