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Episode 4 - What Startups and Large Companies Learn from Each Other About Digital Leadership w/ Pete Blackshaw of Nestle & Cintrifuse
I’m your host, Dave Knox, and this is Predicting the Turn. A show that helps business leaders meet their industries inevitable disruption head on.
Welcome to another edition of Predicting the Turn. Today I am joined by one of my favorite people in the world, Pete Blackshaw. Pete just took the new job as the CEO of Cintrifuse, which is an amazing organization here in Cincinnati he’s going to be talking about, but Pete was formally the global head of digital for Nestle where he lead a lot of there innovation and the efforts they’ve done over the last seven years to be one of the leading CPGs of where this digital innovation is really going.
So Pete, welcome to the show.
Pete Blackshaw: Thanks for inviting me Dave. Always good to connect.
Dave Knox: Awesome, it’s great to catch up. So, I want to dive right in and talk about where you’re going from a career standpoint. A few months ago you left your role at Nestle. You came back home to Cincinnati to take a new job as the CEO of Cintrifuse. For those that aren’t familiar maybe with Cintrifuse, what is the organization and what are you up to?
Pete Blackshaw: Cintrifuse is a very unique kind of combination of syndicate fund plus startup incubator and we have a singular ambition to be the, to establish greater Cincinnati as the number one startup hub in the Midwest and among the top innovation hubs in the nation. And we do this by inspiring great ideas, empowering founders, luring talent, high tech talent to the region and of course seducing investment and so more specifically we have the syndicate fund of funds that a lot of big companies and entities have put money into. We’ve had two funds of totaling about 100 million and that we’re putting money into some of the top VC funds across the globe, across the country that elevates visibility into Cincinnati and helps to forge a connection with a lot of the big co’s that are looking for relationships with startups in that portfolio and we see a lot of benefits kind of coming back to the region from that. We also have a big company innovation division where we are helping large companies think and act like a startup, similar to what I did with Nestle, which we can talk about in a little bit. And then we have a whole suite of services that we provide to any entrepreneur that walks through the door that might bring good odds of success and we want to do everything we can to increase those odds of success and that’s a big big focus area for me right now. But a fascinating model and all those parts synergize with one another.
Dave Knox: I love that. So, really briefly, why Cincinnati? Why does this region got the right to do everything you just said?
Pete Blackshaw: That’s a lay up question. This is a fantastic region. I loved it. I lived here 15 years before I went to Switzerland. It was the one geography I was really hoping a fantastic opportunity would emerge, as you can imagine. There are tempting things on the East Coast and the West Coast, Silicon Valley, but in my heart of hearts I wanted to come back and make a positive contribution and kind of pick up where I left off. I mean, like you, I’ve always been very very passionate about unlocking value in this innovation economy. I’ve done it both in big companies. I’ve done it with my own startup. I did it within Nielsen and now with this infrastructure that had been put in place, I’ve had two fantastic successors that really laid foundation for Cintrifuse as it is today. The potential is absolutely enormous and I was just talking the chair woman of the chamber of commerce and we were both joking to ourselves that we have so many great attributes in place. Shame on us if we can’t effectively sell it. We’ve got an outstanding innovation corridor. We’ve got some great success stories. We’ve got big companies that for the first time are really opening up their doors and I have a good reference point on that because when I did a startup it was near impossible to really grease the skids on those relationships and we’ve got a civic culture that is really committed. We’ve even got a city, both on the Northern Kentucky, but also in Cincinnati that are really pursuing very progressive agendas related to sustainability, smart cities, so all the ingredients are in place and I’m super super excited about taking advantage of that.
Dave Knox: So, you mentioned the jobs you’ve done in the past and kind of starting where you left off. So you’ve been a digital change agent within the Fortune 500. You’ve been a partner to big co’s with your time at Nielsen and you were a startup founder with Planet Feedback and everything else you’ve done. How is all of those, that kind of diverse experience, prepared you for this new job at Cintrifuse and all the things you’re going to be doing?
Pete Blackshaw: Yeah, that’s a great question. I mean I have this very unique blend of big company, small company and even public policy experience. I actually worked in the California legislature before I went to business school and all three of those areas are coming together in this particular role and I do think, especially the mix of the small and the big company is super important because Cintrifuse is kind of obviously the big co’s are our major investors, heavily represented on our board, but they don’t necessarily have the agility and the flexibility and to think like a startup that the small entrepreneurs bring. You know and it’s an interesting connection because both sides desperately need each other, especially today and if you really think about what’s happening with the big companies, whether it’s a P&G, Nestle, Unilever, it’s kind of the same movie with all of them. You’ve got these small ankle biters start ups that are very digital by design and go direct to Amazon. They’re operating structures are very flexible and digital and they’re grabbing a lot of share from the big players and so it’s a very unique time in history where the big companies can learn a tremendous amount from these startups both on the what and on the how, but of course the startups need that stimulation from the large companies, that first customer engagement to increase their odds of success. So, I love being the marriage counselor between the two. It’s not as easy as it sounds, it’s actually really hard. You and I know this, doing startups is really really difficult. It’s also incredibly satisfying, but that frame of reference really helps as we coach them to success.
Dave Knox: Love that. So talking about that coaching, a few weeks ago you did a really cool event with virtual CS, that I was …
Pete Blackshaw: Subversive.
Dave Knox: Yeah, it was amazing. And your idea was this whole thing of can we bring to Cincinnati and to a region that virtual experience of something like CES or South by Southwest or the Mobile World Congress. When you think about events like this, whether it’s doing it in person or virtual, why is that so important to a business leader to be immersed in those things?
Pete Blackshaw: Well, let me take a step back. I mean, I’ve always believed since the very beginning of my career, even in the California legislature that digital is very very empowering, even in the California legislature we opened up public files to access through the internet. We kind of changed everything, so I’ve always believed that new value can be created thinking about the better, faster, cheaper, more resourceful elements of digital and so we applied that to CES, 178,000 people go to CES every year. They drop quite a bit of money. They spend $500 per night in oversubscribed hotels and I’ve been to it like a dozen times and we thought to ourselves, okay not everybody can afford to go and we have a fantastic center in Union Hall, why don’t we take a crack at a virtual experience, so we created a panel. You were on it. We streamed some real time coverage. We curated a lot of the tweets. We looked at the social media, all of which is a really good proxy for the experience. We took some of the best products and put it on a wall and let people vote on it. We brought some mobile devices where people could do some real time ideation. We created a small, we did a little gamification where we listed in some idea and we created value. And again, that’s what digital entrepreneurs do, they create value out of events and they’re very good at building on the momentum and there’s absolutely no reason why we couldn’t create a meaningful conversation on top of CES. Now, in all candor, Dave, I thought maybe we’d get 50 people. I had no idea 250 people, we packed the hall and that gets me really really excited. It gets me excited that Cincinnati can become the center of conversations all over the globe. There’s no reason we cannot do that for Mobile World Congress. There’s no reason we cannot do that with the Web Summit in Portugal. There’s no reason we can’t do that around Con. Part of creating value with Cintrifuse is how do we create fields of energy that motivate, galvanize and bring the entrepreneurs to our town hall, if you will, so we can motivate action and I hope to do a lot more of that. It doesn't mean we’re not going to physically go to these events, but you know, we want to send a message to the rest of the world that we not only have an ambition to win in digital and technology, but we’re going to approach in completely new and novel, unique and own-able ways and I thought that was a good start. I don't want to make it sound like it was perfect. Next year will be even better, but we’re not afraid to test. We’re not afraid to test. You and I know that from our consumer experience, testing is everything. Trail balloons with the consumer and I think there’s a wealth of potential there.
Dave Knox: So, speaking about that concept of testing, because I love that. One of the things I’ve always respected so much is you’re a living breathing example of continuous beta. You are always looking at that thing that’s next, the experiment, the learning.
Pete Blackshaw: The ever improving ski videos on Facebook.
Dave Knox: Exactly. I love it. Cutting it and slicing it and live streaming everything. So, as a business professional, why do you think that being on that cutting edge, that experimentation, playing in the sandbox is so important to being that digital leader today?
Pete Blackshaw: Well, that method is the price of entry to compete in my view and going back to that example of the big companies and what they’re facing is these very very small nimble digital first companies that understand how minimally viable products work, both from a developing their product, but even how they think about optimizing, advertising, and reaching the consumer and managing consumer journeys and so, and again, the nice thing about today compared to when you and I were at Proctor and Gamble where there is actually quite a bit of cost involved in testing anything, you can do this stuff at a relatively low cost. It doesn’t mean there isn’t risk, because sometimes if you make a mistake things can go viral, but generally, it’s not nearly as bad, generally I’d say it’s mostly risk free, but yeah, it’s kind of test and learn and yeah I’ve done that a lot. I mean, I know social media has taken a pretty bad rap right now and people are down on Facebook, but I still find social media such a powerful learning platform, especially in terms of content and I used to always joke to the digital acceleration team members at Nestle that nothing motivates me more than the deafening sound of silence. We put out content, nobody pays attention and you start to ask yourself some really good questions. Was it good content? Did I put it out at the right time? Did I have an influencer strategy? Was I tooting my own horn or was I genuinely adding value to others? And so, there is a certain digital accountability that we see today, digital Darwinism, whatever you want to call it, where we’re constantly testing and learning. It’s another reason why I’m such a big believer in this notion of trust your inner consumer. I think sometimes we rely on other people’s research versus just looking at our own data streams to inform very very fast judgement.
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Dave Knox: So you talked briefly about the digital acceleration team that you had at Nestle, so you and I both have been in roles at P&G and even at Nestle that is about this digital capability. How do you teach this intuitive of what’s best practices, etc. What was your inspiration for why you did the digital acceleration model and what were some of the successes from it?
Pete Blackshaw: Well, the full answer goes all the way back to when I was at P&G and I introduced a program called FAST, Future of Advertising Summer Intern Program, which was outright subversive. We basically convinced the top management, the CEO, to let the summer interns have a seat at the table in designing strategies and they actually went for it because at that time, the only folks who really had first hand proximity to technology were the students in business school. They were testing the web for the first time and we got some fantastic results. In fact some of our best entrepreneurs in Cincinnati, Bob Gilberth, were graduates of that program and they kind of brought that almost digital intuitiveness to the table. So, with that experience I brought this program to Nestle called Digital Acceleration Team and it was kind of a similar principle, maybe a bit more ambitious, where it wasn’t about the interns. It was we created a, how shall I describe it? Kind of a different cultural ethos where we almost created a bit of a separate reality within the large somewhat conservative Swiss company by the beautiful lake in the Alps and we invited markets to apply to send their best talent to work for me for eight months at a time and we kind of gave them all the basics of digital and ecommerce and personalization and scale and data, but importantly, we really focused on the culture side and that is absolutely key. Anybody can read a book about how programatic media works, but to really embrace the cultural side is the more difficult one. So, for example, the, I’m a fanatic about internal social networks. How do you use Slack, Yammer? I’m really into Facebook workplace, Salesforce Chatter, but these are sharing mechanisms where companies are sharing without barriers to hierarchy. You’re blending formal versus informal power and that’s like a cultural evolution and the DAT members were very good at doing that and that’s partly because if you think about the Millennial generation, the Instagrammers, they do this very very instinctively. They’re very sharing by design and that’s what’s missing in larger organizations. The reason why the startups are five times faster than the big organizations, the big organizations don’t know how to share. They horde information, sometimes for good reasons, old school notions of proprietary data and the like, but how do you really soften those silos where you really drive more inner, multifunctional coordination. In a company like Nestle, which is radically decentralized, the secret sauce is making sure that the knowledge from India gets to the U.S. or to the Philippines really fast. And so, the leadership you need to bring is how do you ensure those knowledge flows are going. And I think moving forward that is one of the most important skills as I take this new job with Cintrifuse, I’m really thinking about how do we create and unleash network effects. So, if I think there are twelve Dave Knox’s out there that really bring mastery in how to bring a successful company, three of you may be in Cincinnati, but you may be distributed, how do I get that knowledge in real time to help those entrepreneurs, that’s a very very critical skill and we had a lot of success, a ton of success and again, a lot of fast learn.
Dave Knox: So one of the other ways you were doing fast learn, kind of use those words, you talked, you helped start the Silicon Valley Innovation Outpost and with that you saw a lot of innovation theater. People that were trying to immerse themselves in Silicon Valley, but maybe not doing it authentically. What do you think big companies are doing right and what are they doing wrong when it comes to this approach about learning how to share, how to move fast, how to think of it MVPs?
Pete Blackshaw: Well, with regard to Silicon Vally or Shanghai or any type of innovation hub, I think it’s all upside. So even if the model isn’t right, it still unleashes what I like to refer to as constructive paranoia. Half the game is just motivating the executive to get off their butt and to take action, because you go to the Silicon Valley, you look around and suddenly a lot of the stuff you’re doing back at home starts to feel very very insignificant. You realize you have this false sense of progress in Veve by the Lake, we would convince ourselves that we are making a lot of progress. You go to Silicon Valley and you’re like oh my gosh, we are not making any progress and so it motivates behavior, so I, yes sometimes people would say it’s window shopping, but window shopping can motivate when you bring people out to the Valley and you see how fast these operating models, now if you put a little bit of design on the model you can really start to get some results and my colleagues like Mark Broder and Goran Kusick and Filippo Catalano, they have done a really good job of building kind of experimental lab in the Silicon Valley that would work on very very important and strategic projects against specific business needs in key areas such as augmented reality and voice, use of sensors, real time data flows and the like and to my earlier point, how do you use the knowledge flows from internal social networks to get that knowledge back to others and so you know there are ways of really really making it work, but going back to our earlier point about virtual CES, you can couple the physical proximity with virtual experiences that can have an equal impact. So it’s kind of a blending strategy, but there’s no question that and if you want to move faster, you have to be externally focused. You have to experience some of that paranoia. You need to feel that competitive pull and that’s a lot of what we are doing with, I think, a reasonable amount of success.
Dave Knox: So clicking into that a little bit, you know CPGs, they’re under unprecedented change that’s taking place and you’ve got a company like Nestle that was actually an early adapter of direct to consumer. You had a company like Espresso that for a long long time was selling direct to consumers with retail and ecommerce and everything else, but you guys also started moving into a new path with stuff like blue bottle, acquiring them acquiring Sweet Earth, Chameleon Coffee and then doing some investments as well, strategic ones like tails.com and Freshly, when you think about that innovation portfolio mix, what was Nestle trying to do and what do you think big companies need to do when you think about M&A and acquisition and investment, what’s that mix and how do you get to it?
Pete Blackshaw: Wow, Dave, you threw a lot at me on that one. Well, let me just say…
Dave Knox: Well you guys did a lot, so.
Pete Blackshaw: Let me take a step back first off. I think even before you get into a lot of the new stuff, I would say the Nestle I work for is an incredibly innovative company and I think a lot of that is because of the way it’s organized. I think there is an intentional decision by management to decentralize the operating model. So even though I was a center based leader, the power was limited, as it should be because when you’re facing the future, the market innovation takes place, it place in the markets and you want to empower them and they’re close to the data. They’re close to their customer and the key is how you share and scale. Now, a couple things are going on that take innovation in different directions. One is just that the consumer preferences are changing and you’ve got to keep up and the millennial ankle biters did a very very good job of redefining what food is, what is beverage, what’s a healthy snack, what’s organic? Big companies often bring this notion that we deliver food at scale for all, often very scientific based, processed food when a lot of the millennials are not only producing healthy food, but very experiential, they kind of really get experiences. So there’s a part of the model, which is like how do we figure that out? How do you kind of take food experience to the next level? Is it a food recipe or is it food theater? Then there’s this whole area of service models which gets into direct to consumer and is an espresso a physical product or is it a service? Well, yes and yes. And the service part is really getting interesting, especially, we are doing experiments with augmented reality and voice activation and you’ll probably read a lot more about that from my colleagues coming around in the coming months, but that is really exciting. tails.com getting into the direct to consumer pet business. Pet is a very very interesting category. I’d love to say Nestle is the only company innovating, but it’s not. If you look at players like Mars, they’re even some of the smaller players, they’re introducing the notion that the physical food is the lost leader. The fundamental business model is the service. And so, if you buy into that across many different categories, you have to ask yourself, how do we innovate? How do we even define what the service space is? It’s a big reason why I’ve always been a fanatic about the boring basics like customer service, like if you can’t answer the phone or deliver service in scale or ensure that your bought is truly relevant, you’re probably not prepared to get into these other layers of service that provide such a massive competitive advantage for brands. In fact, it was funny, everytime one of my colleagues at Nestle would was poetic about the future or service models or even ecommerce, I would say, what are the top five questions that consumers ask you about your brand and I was always shocked at how few brand managers had any clue, top compliments, top complaints, that’s just not the way we’re trained to think. We’re kind of in that hard driving, buy advertising, get people to click, but now we need to reengineer the way we think about brands and I talk a lot about the future of branding is about thinking and acting like a concierge. All those technologies we saw at CES or P&G displayed, they’re all digital concierge of different stripes and varieties.
Dave Knox: So you said something really interesting there, how you’re trained to think and you and I probably have coffee once a week with somebody that is thinking about making a change. They’ve been at a company for 15 years. They want to go do something different and a lot of them have been trained to think a certain way, but that might not be what they need to think in the next job that they go after. So, as somebody that’s done a lot of different things and you’ve gone from being P&G to be a startup founder to go to Nielsen and then back to Nestle, what advice would you give to somebody about how they retrain how they think to approach new opportunities and new jobs?
Pete Blackshaw: Wow, I’d love to say I could deliver the answer in bow, but it’s really hard. I mean leaving my last job was really really hard. I mean, you just have to be brutally honest with yourself about where you’re going to get the best recurving, about whether you’ve kind of plateaued in the skills that you’re going to acquire. Eight years is a really long time to be in a large company and I felt like I innovate far longer than I ever expected, but I, what I saw in Cintrifuse, what clicked with me was okay, there’s this whole new business I’ve never managed a fund, you know that’s new territory for me, definitely not my comfort zone, let’s jump right in and see what happens. It might create a lot of option value down the line. And I also wanted to lead and there’s a point at which, like in a large company, you’re just, you may be the brand manager, the marketing director, but you’re not really the leader and that, and there’s going to be inflection points where you may even say, I may give up a little bit in one direction, maybe the comp takes a hit a little bit in order for me to be the real boss and to really kind of put that, those skills to use and I think that was kind of part of my calculus, but there’s no simply solution on those, but you just have to be very honest with yourself about growth. I’m obsessed with growth. You know, I’m one of those folks that just feels like I need oxygen, I need to, external focus I need, also for me, the other piece for me that I wasn’t feeling in Switzerland was the sense of community and I really missed Cincinnati. I love the civic culture. I love the difficult issues, even the racial tension I think is really important for people to understand and struggle with and I was so involved in civic organizations before I left and I just didn’t have a chance to do that. So, part of me kind of felt like my role as a leader wasn’t complete until I assumed more of almost like the servant leadership role where I was really involved in those other areas. It’s one of the things that I’ve really admired about a lot of the leaders here that I’ve kind of used as personal benchmarks from how you grow and how you lead.
Dave Knox: Yeah, that’s a really interesting one be it’s one, when I talk to a lot of people about why Cincinnati, why Chicago, why the Midwest, how you think about it? It’s actually that Renaissance factor of it’s an area where you can be involved in those different facets. You know, because you’re a startup guy doesn’t mean that’s all you get to do. Because you’re in politics it doesn’t mean that’s all you get to do. You can span the different things. You can be involved with nonprofits and with big business and with the arts and it’s almost encouraged from your point there.
Pete Blackshaw: Yeah and you can touch so many others. I say one of the most important things that I did when I was in Switzerland was actually helped you out with the brandry. I didn’t do nearly as much I would like, but …
Dave Knox: You were my first mentor.
Pete Blackshaw: But I got to tell you, it’s really satisfying. I was at a chamber meeting earlier today and we had an absolutely fantastic speaker and he talked about what is personal leadership and I talked a lot about what motivates me is seeing other people grow. It’s kind of why I loved DAT program. I did ten of them. I couldn’t stop doing it. I actually love the satisfaction of seeing leaders, kind of training change agents and you can do a lot of that in this type of environment. Think about it, you’re coaching entrepreneurs. Everything in entrepreneur is about rewriting rules, pushing boundaries, unlocking value in places that others haven’t found and if you can deliver the right advice at the right time and connect them with the right resources, that can be enormously empowering. And of course I think about that as a parent as well. It’s a little bit more difficult on that front, but of course there’s a massive prize if you get it right.
Dave Knox: On that note, you’ve seen people grow, you’ve been a mentor for me from everything from digital marketing to how you actually raise twins.
Pete Blackshaw: That’s right. I still want to still want to start a business with you dosbabies.com.
Dave Knox: Exactly, bring it back. So thank you for all the leadership and we couldn't be more excited to have you back here in Cincinnati. And you know on that note, a special thanks, today we’re actually here at the RoadID studios, one of our great startups here in Cincinnati.
Pete Blackshaw: Fantastic. I’m moving Cintrifuse, right now.
Dave Knox: Cintrifuse South, we’ll be all set.
Pete Blackshaw: Exactly.
Dave Knox: So, well, thank you again, Pete, it’s always a pleasure, and welcome home.
Pete Blackshaw: Great, thank you.
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