One of the hardest problems a business leader faces is picking the right problem to solve. There are plenty of ways to get this wrong. You can work on a problem that:
- Is not causing intense customer pain;
- Causes intense customer pain--but you lack world-class skills to relieve it
- Causes intense customer pain, you have great skills, but the market opportunity is too small; and/or
- There's a huge market with lots of competitors, and your product lacks a compelling customer value proposition
One great way to solve this problem is for you to create the future. With the right mindset, a CEO can keep doing that--think about how Jeff Bezos created online bookselling, online everything else, cloud services, and much more.
As I wrote in Goliath Strikes Back, a CEO with a "Create the Future" mindset can doom that company's future by choosing a successor with their head in the sand. One of the best examples of this is A&P, which was the Amazon of its day--constantly trying new things and dominating the grocery business.
But its co-CEOs put the company in a trust and told their loyal successor to milk it for dividends. After that, the company stopped innovating and went bankrupt twice--the final time in 2015.
This comes to mind in considering San Francisco-based Okta, a computer security services provider founded in 2009 that went public in 2017. After enjoying 82 percent average stock price growth since, by April 16 it sported a stock market capitalization of $35 billion.
How Okta backcasted its way to success
Okta--which helps 10,000 organizations "securely connect the right people to the right technologies at the right time"--got started with help from its CEO's adoption of a technique called backcasting.
It's the opposite of forecasting. Instead of extrapolating the future from the past, backcasting is about standing in "the future and [pulling] the present from the current reality to the future of their design," according to Floodgate co-founder and partner Mike Maples Jr.--whose firm invested in Okta in 2010.
Maples wrote that Okta built its business on a plausible future--one "that you would not anticipate, but makes sense once you hear [it]."
Maples said that co-founder and CEO Todd McKinnon--who in 2008 was a VP of engineering at Salesforce--"knew the early adopters of cloud computing. He imagined lots of technology would run in the cloud and customers would struggle to make it all work together. Once you heard Todd explain the future need for unified identity across cloud products, it seemed totally plausible that his intuition was right and he was in the best position to build what was missing in that future."
This was a risky move. As McKinnon told me in an April 13 interview, "In 2008/9, the preponderance of IT was done in-house. Salesforce had shown that business could be done in the cloud. But that was before Microsoft, Oracle, and IBM had entered the cloud services market."
His unique contribution was to recognize "when [the cloud would be adopted] and that it would create a need for identity management from the cloud."
To create such a future, business leaders must attract and motivate top talent, fight complacency, and keep backcasting to sustain their growth.
How Okta attracts and motivates talent
Okta sees hiring and motivating the best talent as essential to its ongoing success. To do that, the company hires people who are emotionally and intellectually engaged with its vision and mission while feeling that each person owns a piece of the company's future success. "We want them to feel empowerment, that they are builders and owners, and that process enables their freedom," McKinnon told me.
How Okta keeps from resting on its laurels
Okta fights complacency by empowering its people and treating mistakes as learning opportunities, rather than reasons for punishment.
The key is to "build a strong leadership team and trust your employees. If there is a problem, you'll resist the urge to lock it all down. Instead, you will respond to a problem by telling them 'We trust you. You'll try harder next time.'"
Can Okta keep backcasting?
Once you've created a new market, it inevitably matures. So business leaders must create a new future with significant growth potential--as Bezos did when Amazon created Amazon Web Services and others.
In April, Okta announced it was adding two new products that McKinnon says could increase its customer count to 100,000. To do so, Okta will be competing with the market leaders. If customers find its products more compelling, Okta can keep growing fast.
The lessons? Backcast, hire and motivate great talent, trust your employees, and learn from mistakes. Then backcast again to keep your company from becoming too dependent on a shrinking market.