As the co-founder and president of Adobe, Shantanu Narayen has overseen one of the world’s most diversified software companies. Adobe has adapted from the old pay-once, use-always model to the cloud and expanded into digital marketing and other emerging categories.
Narayen joined WSJ Tech Editor Scott Austin to discuss his company’s shift to the cloud and its generative AI strategy. He also discussed the changing business landscape as the pandemic prompts many to work remotely.
1. Customer-centricity
Adobe’s leadership team understood the need to shift their business model from selling software that was shrink-wrapped and sold for a one-time fee to a cloud-based subscription service. The move was a risk and they knew that they would lose revenue in the short term, but they also understood that it would pay off in the long run. The company rolled out a series of tools, resources and assessment templates for customers to help them make the transition as smoothly as possible.
The most successful brands understand that the customer is at the center of everything they do. The best way to do this is to embrace a customer-centric approach that goes beyond just thinking of the customer some of the time, like using customer feedback in marketing campaigns or implementing better customer service processes. It means truly believing that the customer must come first, all of the time.
This includes focusing on delivering experiences that are personalized, innovative and meaningful for the customer. The best way to do this is through a strong CMO-CIO partnership that enables the business to deliver cutting-edge digital experiences, as well as the technology required to support them. It’s also important to remember that it is five to 25 times more expensive to acquire a new customer than it is to retain an existing one.
2. Data-driven decision-making
For over two decades, Adobe had thrived as a business that sold powerful professional and consumer design software with hefty upfront price tags. While this model allowed Adobe to keep their customers happy, it lacked long-term sustainability. Something had to change.
Enter Shantanu Narayen in 2007. As the company’s CEO, he oversaw one of the biggest transformations in software history, leading the transition from a boxed product with perpetual license sales to a subscription-based cloud service. This massive shift meant rethinking the entire organization’s business model, operational processes, employees, and core culture. It also involved changing thousands of customer relationships built around the old model.
The transition was not easy. The company faced challenges from competitors that offered similar products, as well as the internet’s ability to make it possible for anyone with a laptop or desktop computer to download and use software for free. But they kept moving forward. They expanded their business by making acquisitions and absorbing point solutions. They moved their product line into the cloud and embraced digital marketing services to broaden their reach.
Today, Adobe has a clear vision of their future as a CX leader and has created a comprehensive playbook to help other companies succeed. This includes a focus on data insights, scalable content, optimised personalisation and pervasive commerce. They are also embracing the concept of customer-led design and are empowering their workforce to make decisions that put the customer first.
3. Innovation
Adobe is one of the world’s largest and most diversified software companies. Its products range from creative software to the business of creating and delivering digital experiences. It has a massive global customer base, from students to business communicators and the world’s largest enterprises.
Adobe’s embracing of innovation has allowed it to stay relevant, even as the industry has become increasingly competitive. Adobe has shifted to an ongoing subscription model, which has given it a more predictable revenue stream while also ensuring that its creative suite remains cutting-edge. Adobe has expanded its product offerings through acquisitions, including Macromedia in 2005 and Marketo in 2018, bolstering its position as an innovator of cloud-based digital experience management solutions.
As a leader, Shantanu believes that adversity can reveal true team players and has a strong belief in the value of coaching leaders. He has encouraged employees to spend time on projects where they feel most passionate and to take risks to pursue their goals, which has resulted in a culture of innovation and growth.
He is proud that Adobe, with its $196 billion market capitalization, has not laid off any of its employees during the recession, as many other technology firms did. Adobe’s commitment to creativity and digital literacy goes beyond its software products, with the company collaborating with the music industry and providing tools for schools to create their own projects.
4. Automation
Adobe’s leadership team knows that preserving the status quo is not a winning strategy. They’ve guided the company through a major shift from a provider of pricey, shrink-wrapped software to one that charges users a monthly subscription fee to access their programs online. In addition, they’ve pioneered the digital marketing category with a move to bring content creation and data insights together in one end-to-end solution.
In a recent event, Adobe’s executives were clear that the company is going all in on generative AI. The company announced a suite of new tools, including Firefly, that will allow customers to create image effects from text or to generate video clips. The first iteration of the product will use Adobe Stock images with openly licensed or public domain content where copyright has expired.
The company is pledging to only implement generative AI that will empower human creativity, rather than replace it. Adobe’s goal is to provide the intelligent “assistant” that allows humans to flourish, while eliminating tedious or time-consuming tasks.
This forward-thinking approach has made Adobe one of the world’s largest and most diversified software companies. Its innovation and vision have earned it record revenue and industry recognition, including being named a Great Place to Work by Fortune and being listed as a leading business brand in Interbrand’s Best Global Brands study. Shantanu Narayen is a noted Indian-American business executive whose leadership, technology insight and operational expertise have strengthened the company’s culture of innovation and extended its portfolio and global reach. He holds five patents and has served as chairman, president and CEO of Adobe since 2007.
5. Scalability
Think big—it’s a guiding principle in business, and one that should also be embraced by technology systems architects and C-suite directors overseeing the development of their IT stacks. Scalability is a process of making sure that applications, data repositories, IT services and all manner of internal system mechanics are able to handle increasing workloads.
Adobe had all of the assets that could have enabled it to be a leader in the digital content market—a massive user base; robust product suites for creative and document services; high-value products, including Photoshop, Illustrator, InDesign, Lightroom, Acrobat and more; the potential to leverage the cloud; a well-established brand name; and an industry-leading technology leadership team. But the company had two stumbling blocks:
First, its creative business was stagnating. Creativity was exploding around the world, and people were telling their stories in new ways and using new mediums and formats. Adobe’s solutions weren’t keeping pace with the way people were creating, storing and managing their media content. That’s when Narayen decided to make a big change. He embraced scalability—the ability of a system to function effectively as its workload increases. This includes computing resources, memory usage, storage capacity and the maximum number of transactions that can be handled. It is important to consider scalability when choosing a solution for your company. It will be more cost effective to choose a scalable solution that will work well as your company grows than to go with a non-scalable solution that is likely to become unmanageable as your business expands.
6. Security
While many companies are still reluctant to embrace security, Adobe is embracing it with open arms. The company is investing in new technologies to protect data and prevent hacks. It also encourages employees to take cybersecurity training to stay up-to-date on the latest threats.
Narayen is a successful business leader who has transformed Adobe into an industry innovator and cloud powerhouse. He has led the company through several major milestones, including the acquisition of Macromedia and Omniture at 3.4 billion dollars and 1.8 billion dollars respectively. He has also spearheaded the move to a subscription-based business model.
Under his leadership, Adobe has achieved record revenue and received industry recognition for being an inclusive and innovative workplace. He has also been named one of Barron’s World’s Best CEOs and a top CEO by Glassdoor based on employee feedback.
The Indian-origin CEO has a strong belief that success comes from hard work, dedication, and sharp intelligence. He has a deep passion for golf and once said that if he wasn’t a businessman, he would have been a professional golfer. He has also been a director at Dell and Pfizer and serves as the vice chairman of the US-India Strategic Partnership Forum. In 2019, he was awarded India’s Padma Shri award. Shantanu Narayen is a true inspiration for the next generation of leaders. He is an example of what can be accomplished with the right combination of hard work, determination, and smarts.
