Fred Luddy: “We’d rather listen than talk”

A conversation with ServiceNow’s founder on lightbulb moments, technology challenges and lessons learned

ServiceNow founder Fred Luddy and president CEO John Donahoe

At the Knowledge 2019 conference in Las Vegas, customer stories are again taking center stage, just as they have since Fred Luddy founded ServiceNow in 2004. From ServiceNow’s earliest days, listening to customers was far more than a bullet point in a mission statement. As ServiceNow founder Fred Luddy says, “we look to customers for inspiration—it’s the foundation of the company.”

In an interview on stage with ServiceNow CEO and president John Donahoe, Luddy highlighted light-bulb moments that drove ServiceNow’s growth, the new technology challenges facing businesses today, and the lesson he learned that started it all—having empathy for people and their jobs before you build technology for them.

Donahoe: We know that founder and origin stories are an important part of every company. Can you share the story of how you founded ServiceNow?

Luddy: I was 17 and working at American Standard. I’d created an order entry system for them at a time when clerks would carry around these big piles of paper for data entry. One morning a woman named Phyllis, a data entry clerk, said to me, “Watch what I’m doing.” I did and said, “Yeah, the system seems to be working as designed.” Which is what a 17-year-would say—you think you’re the repository of all human knowledge at that age.

She said, “Watch carefully. I’m typing the same stuff over and over again. If I could recall the prior data, and I could change the variances, I could get through this stack of papers 10 times faster.” So I showed her another technique for doing the data entry and she tried it. Then she did something quite unexpected: She cried. The burden had been lifted.

I would never again approach a user with the notion that I knew more about what they were doing than they did. That was the most important lesson of my career—the idea of developing empathy for people and their jobs before you develop technology for them.

Donahoe: There’s that notion of being willing to listen to customers, which is so important to us at ServiceNow. What was it like at the first Knowledge event?

Luddy: Around the time that my brother and I were getting our first few sales, someone said we needed to have a user group. I thought it might be a little premature, but it sounded like fun. We rented a room, and all of the sudden registrations started to come in. It was really fun to have people come and share their time and tell us how they were using the technology.

Donahoe: You said this was when the notion of customers teaching customers came to you. And we see this at Knowledge—90 percent of our sessions are customers talking to other customers.

Luddy: That’s been part and parcel of Knowledge since the first one. We’d rather listen than talk. Software companies don’t really experience challenges firsthand. We only see them through our customers’ eyes. But when customers talk to each other, more ideas come out. It becomes much more organic.

We give a lot of credit to customers for the features and functionality that have been put into our product. We look to customers for inspiration—it’s the foundation of the company.

Donahoe: In my own keynote, I talked about how we’re at a tipping point with the changing work experience. Talk about where we are at work today, and where things are going.

Luddy: There’s still far too much complexity baked into processes. People are reluctant to deal with it. The inflection point will be forced by workers. If you have teenage kids, you can’t imagine throwing them into the work experience of even just last year. Not only is that generation not going to accept it, they’re going to go to another company that provides that delightful experience. So unless your experience at work surpasses the experience at home, it will be very hard to attract talent.

We need to mask the complexity that’s below the line with simplicity above the line. When you do that, everyone benefits. People are more productive, and they’re happier.

Donahoe: Another place where there’s change is the role of IT. What do you see as IT’s next phase?

Luddy: As we become dependent on more and more services, I think IT becomes more important. Every time we’ve had one of these culture shifts, like PCs and BlackBerries and iPhones, people said IT would no longer be important. But every time the IT death knell has been sounded, it’s always been premature.

We always fall back on IT. I think of their role as the nexus for all of the technology in an organization. They have an intimate understanding of every facet of the business.

Donahoe: What is your advice to today’s IT leaders?

Luddy: For the longest time, it was hard for me to admit I didn’t know something. What changed my life was realizing it was OK to ask. It was about developing that user empathy, about listening to people and their challenges.

My advice would be to develop humility and ask questions. Don’t be afraid to show your lack of knowledge.