How They Launched It: Adobe's Cloud Transformation

"How they launched it" is a recurring series of deep dives exploring how the world’s best teams launch new products and features.

Company: Adobe
Launch: Cloud-only
Launch date:
Monday, May 6, 2013

Adobe is one of those companies that feels like it’s always been here. And always will be. It’s hard to imagine a world without Photoshop.

But the 2008 recession hit Adobe hard. Revenue dropped more than 20%. In December 2008, the San Jose-based company announced it would be laying off ~600 employees, or roughly 8% of its workforce. It was painful. 

CFO Mark Garrett and CEO Shantanu Narayen had a tough conversation: “It was awful,” Garret said in an interview with Zuora. “Shantanu and I looked at each other and said: you know what, we should never have across the board layoffs again. This is just bad management. It’s on us.”

Something had to change. Garrett and Narayen knew that laying a new and more durable foundation for the company — one that would be impervious to any future economic downturns — would not be an easy task. Especially for an organization as large and entrenched as Adobe. But they knew it was the only way forward.

Four and a half years later, Narayen was stepping on stage at Adobe's annual user conference to announce to the world that they had just completed one of the largest cloud transformations in history, and would be a cloud-only company going forward.

A cloud transformation of this magnitude had never been accomplished by a company of Adobe's size and scale before, but they'd pulled it off.

Here’s how they launched it.


Dive deeper into a specific area of Adobe’s cloud transformation:

The launch

To call Adobe’s cloud transformation a “product launch” almost undervalues the gravity of what the company was taking to market. Yes, there was a vitally important marketing moment when all this was unveiled. But, unlike many product launches, this was a full-blown strategic pivot for the company. 

All teams who plan and execute great product launches should understand the strategy guiding the development of the product they’re launching, and we think examining the strategy guiding Adobe’s cloud decision is key to understanding the magnitude of what they pulled off.

When Adobe’s leadership first began hatching their plans for a new cloud future, the company was publicly traded, had a $11B+ market cap, dozens of products, and 7,000 employees. And yet here they were preparing to make a 5-year bet on brand new technology, distribution channels, products, GTM motions, and more. All in preparation for a massive unveiling on the biggest possible stage they had.

If the plan sounds bold, and a little crazy, that's because it was. But it's also what makes this a great story.

Once Adobe leadership had committed to making a significant strategic shift in the business, the first thing they did was look around for inspiration. What other companies had weathered the 2008 recession better than they had? Who could they learn from?

They didn’t have to look far. About 50 miles north, in San Francisco, a young software company with a unique distribution model was showing enormous promise. Salesforce revenue hadn’t shrunk in the recession. In fact, they’d continued beating Wall Street estimates. On the Salesforce balance sheet, it was like the downturn had never happened.

The secret? Recurring revenue. Salesforce pioneered the software as a service (SaaS) model, where products are delivered over the internet instead of requiring the up-front purchase of physical software and associated perpetual licenses to support it. In a SaaS world customers paid on a recurring basis, usually monthly or annually, rather than all at once. This business model wasn’t only innovative, it was incredibly durable. The team at Adobe took notice.

Adobe had always built great products that customers loved. But their business model at the time — by the leadership team’s own admission — was anything but innovative. And, as a result, they’d suffered the consequences.

“Back then the company was profitable but we were only growing in the single digits. We just weren’t that exciting as a business,” CFO Mark Garret said.

Salesforce had proven cloud was possible, but cloud was in the company’s DNA from day one. For Adobe, this was an entirely new landscape that would require a 180 degree shift from the "box software model" of distribution that had grown and sustained the company for 30+ years. Besides the swath of internal changes it would require to their organizational structure, operational processes, workforce, core culture and technology across the board, Adobe had thousands of customers across the world. Companies with workflows, contracts, budgets, and IT departments all built around the way their products were currently delivered. Furthermore, there were partners, investors, and employees whose entire understanding of Adobe's business was built around this more traditional, perpetual license sales and distribution model.

Could a company as entrenched as Adobe successfully make the transition to cloud? There was only one way to find out.

In early 2009 Adobe's leadership rolled up their sleeves and began planning what would become one of the most critical business transformations in the modern software industry: transforming a large, established company from one that delivers products in a box to one that delivers products over the internet.

Act 1: Launching Creative Cloud

In 2003, Adobe had strategically bundled their flagship product, Photoshop, with a number of their other key products in their portfolio to create an entire professional toolkit. The bundle, branded Creative Suite, became a major hit for the company.

Then in 2011, Adobe made the first public reveal of its new cloud strategy with the release of a cloud-version of Creative Suite, aptly named Creative Cloud. After two years of feverishly rebuilding a new cloud suite behind the scenes, it was the company's first public foray into the world of cloud software. The only question was how it would be received.

To the company's delight, following the initial release — which rolled out with minimal fanfare and in the face of an extremely skeptical press (CNET: Adobe's new pricing plan: Ouch, users say) — Creative Cloud quickly amassed a staggering 2.5 million users. What Adobe had expected to be one of a bevy of announcements at their Adobe Max 2011 user conference ended up stealing the show. Numbers don’t lie, and the message Adobe’s users was sending to the company was clear: a great many were not only open to making the cloud transition, but were hungry for it.

However, the issue was that cloud vs. on-premise wasn't just a matter of how customers purchased and accessed the software. It also fundamentally changed the nature of what Adobe’s teams were building, how and how often they delivered it, what they charged for it, how they took the products and features to market, and even how they successfully supported customers. The impacts rippled all the way down to the company’s core strategy and mission.

As such, Creative Cloud’s explosive growth created a fork in the road for Adobe, as they now had a situation in which both their on-premise and cloud suites were being actively used by millions around the globe. Leadership knew they couldn’t continue to juggle building and supporting two different deployment options, and doubling down on their investment in cloud would mean de-investment in their traditional offerings — the very offerings that had sustained the company for 30+ years.

But if their cloud transformation was going to be successful, they knew it was now or never. Creative Cloud's incredible early momentum provided the perfect window of opportunity to accelerate their plans, and the team at Adobe seized it.

In June of 2013, just over a year and a half after the initial release of Creative Cloud, CEO Shantanu Narayen was about to step on stage at the Adobe MAX Conference and, in front of more than 5,000 customers and fans at the Los Angeles Convention Center, announce that development of Adobe’s existing "box software" offerings would cease. From that point forward, all future products and updates would be delivered only as cloud offerings.

In other words, Narayen was about to announce that Adobe — a software giant that was founded before the public internet even existed — had completed one of the world’s first cloud transformations in a mere four and a half years.

Act 2: Announcing cloud-only

During the initial presentations at the conference that year, Adobe leaders planted the seed that things may be changing by directly addressing the tension they faced with juggling multiple deployment options:

“It’s clear that Creative Cloud offers a huge opportunity for all of us,” SVP & GM of Digital Media David Wadhwani told the crowd. “But in order to really make it happen, we need to focus.”

Even if they didn’t realize it, the audience — some of Adobe’s biggest superfans — was being primed for something big. Throughout the 90 minutes leading up to the announcement Wadhwani and Narayen drilled home two points:

  • The world was changing
  • Adobe had a history of embracing change

There was the story of Narayen’s teenage son, a budding photographer (“Most dinner conversations with him revolve around how our tools need to move faster, to keep up with his ideas.”) There were stories about Adobe’s track record of speedy deployment and innovation (“We’ve literally added hundreds of features across all of the major apps since CS6.”) There were product demos and new features and functionality only made possible by the cloud. And of course, stories of the rapid explosion of creativity and data that had been unleashed thanks to the internet.

Put all these ingredients together, and you get a perfect setup for a big announcement. Wadhwani dropped the big news:

“All of the Creative Cloud apps we just showed, and future updates to those apps,” he said, “are only going to be available as part of Creative Cloud.”

Our take: Bold changes deserve bold launches

No one likes change. Especially for Adobe customers, who spend years mastering Adobe’s powerful products like Photoshop and InDesign and build careers and professional identities around them, change was likely going to be met with some resistance.

In particular, going cloud-only can be incredibly disruptive to customers. While there have been a lot of advancements in cloud-acceptability recently, certain companies and industries still limit their teams’ use of cloud software. Some worry about security and reliability, some operate in a highly-regulated technology environment. And some just prefer the “all at once” pricing.

When companies have news they know could be hard for some customers to hear, many will try to pull off what we might call a “minimum viable announcement.” This is when teams announce something with the lightest possible touch — maybe a blog post and an email — and hope too many feathers aren’t ruffled when they do.

From what we’ve seen, this is usually a mistake. The only thing worse than receiving bad news is feeling like someone’s trying to hide something from you. In our view there is enormous upside in providing customers with a full and transparent explanation of what your company is doing, why, and how it will impact them. Customers not only see right through attempts to “launch small,” but this kind of approach sends the signal you’re afraid. And any attempts to position it as a positive, even if you know it’s not, come across as incredibly inauthentic. By going big and being bold with their plan and vision, Adobe backed up its lofty messaging and built confidence with customers for the journey ahead.

It was also quite strategic that this news was delivered in person and at their own conference. By going big at their Adobe MAX conference, the company took advantage of an opportunity to ignite and delight 5,000 of their most important fans. The company had millions of customers around the world, but they knew those in attendance would represent their strongest advocates and the most influential voices in the market.

The remainder of the keynote address on launch day was an all-star lineup of product demos, new feature announcements, and even brand new products. And each of these smaller announcements tied back to one central theme: cloud is the future, and embracing it will unleash Adobe’s (and your) full potential.

Here’s a sample of what else was talked about from the keynote stage on launch day:

  • Project Mighty: A new connected stylus that “combines the physicality of the pen with the power of the cloud”
  • Project Napoleon: A web-connected digital ruler to compliment the Project Mighty pen
  • Project Context: A “creative-cloud enabled room,” via a partnership with Wired magazine
  • Integrations with Behance, an online creative community and recent Adobe acquisition
  • New compute-heavy editing features in Photoshop made possible by the cloud

Our take: When you’re presenting a vision for the future, actions speak twice as loud as words

It would be easy for people to have come away from this launch focused on what’s being deprecated. By pulling out all the stops and showing the real power of the cloud, Adobe helped shape the narrative and get customers excited for the future more broadly - with Creative Cloud being just one part of that compelling vision.

Adobe, of course, had great messaging on why the cloud was an exciting opportunity for customers. But seeing is believing. The proof is in the pudding (or in this case, the demo). All the best marketing copy in the world would have been powerless without also showing customers something concrete to get excited about.

During the keynote on launch day, the Adobe team shared a URL for a new webpage dedicated to helping customers learn more about the change, including FAQs, customer forums and support, special offers for existing customers, and special information for customers in cloud-sensitive sectors like government.

Over on Twitter, Adobe’s social team responded rapidly to questions and feedback, and delivered the news alongside links to Customer Advocate FAQs and forum discussions with product experts.

And on the PR front, Adobe’s announcement came off about as well as one could hope with a pivot announcement like this. As we’d expect, many headlines emphasized the end of Creative Suite (Fast Company: There Will Be No Creative Suite 7), but others were surprisingly on-message with Adobe’s positioning (Forbes: Adobe's Creative Cloud And The Expansive Future Of The Digital Workplace).

We were also impressed by the agility of Adobe’s PR team. Clearly disappointed with the first Fast Company headline, the team quickly offered up an interview with director of product marketing, Heidi Voltmer, resulting in this follow-up piece which offers a lot more explanation and gets Adobe’s preferred message out there.

It was all part of a strategy to “over-communicate like crazy,” as CFO Mark Garrett put it:

“There were a lot of customer protests at first. We could have easily slid back to perpetual sales. We had to show all five of our core constituencies — investors, customers, employees, partners and the board — why this was a better way to go. And we had to push them a little bit. And in order to do that, we had to over-communicate like crazy.”

Our take: Prepare for and embrace uncomfortable conversations

PR and customer care is one of the most critical pieces of a launch like this. No matter how carefully you craft your message, news like this is just going to be tough for some people. And some will naturally focus on the negatives. You can’t prevent it, but you can prepare for it.

Setting up FAQs with product experts, getting the right people responding promptly on social and support channels is a smart move. And when the press narrative veers from your message, don’t get angry. Instead, “over-communicate like crazy” and politely offer to go on record with your point of view.

Big lessons

Sell the vision, not the news

What’s the big story Adobe was trying to tell? It wasn’t about taking Creative Suite off the shelves or adding cool new features to Creative Cloud. The headline of the launch day press release sums it up nicely in just six words: “Adobe Accelerates Shift to the Cloud.”

While the “news” might have been about the new deployment options and details like pricing and features, the story was about the shift to cloud and the vision powering it. Everything Adobe announced and talked about that day laddered up to the central vision that cloud would unlock new opportunities for creative teams. It became a consistent throughline for a big volume of announcements, news, and activity.

It’s an impressive way to tie a big launch together and a great way to roll out changes they knew certain customers would flinch at. Instead of: here’s some change that will be hard. It becomes: here’s our bold vision for the future, we know it will take some adjustment at first, but look at all the amazing potential in store for us. 

Make it obvious with great messaging and positioning

We’ve seen a lot of great launches. In terms of messaging and positioning, this is one of the best we’ve ever seen. Every messaging lesson we’ve ever learned is flawlessly on display in this launch. By the time Adobe actually rolls out the news, it not only feels exciting and impactful, it feels obvious.

Everything leading up it — from recent acquisitions and features, to context on Adobe’s history, even stories of amateur photographers — all build to a powerful announcement moment. When the moment arrives, it doesn’t just feel obvious that Adobe’s focusing on cloud, it feels like they would be absolutely crazy not to.

Never let a good crisis go to waste

For years leading up to the 2008 recession, Adobe’s stock price hovered around $40 per share. At its low point in 2008, it dropped to $20. In 2020, it topped $500 for the first time.

Adobe’s transformation is one of the iconic cloud success stories. The company that once envied modern cloud companies like Salesforce is now regularly mentioned in the same breath. It all started with realizing that bad times could create an opportunity. The 2008 recession gave a bruised-but-not-broken Adobe the opportunity to think big and do something really bold.

Reflecting on the launch years later, nearly a decade after those painful layoff conversations, former CFO Mark Garret describes a different kind of company:

“The company has a more predictable revenue stream. We have a bigger business that can address a larger market opportunity, because we can bring tens of millions of users to this platform and develop additional services for them over time. The stock price and recurring revenue have surged over the past five years, and there is still a lot of upside left.”

Additional resources
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