A number of Salesforce AppExchange partners including Apttus, Kenandy and ServiceMax formed an alliance called the Force United Consortium back in April but I hadn’t had the chance to talk to anyone about it. It’s a cool idea and a way to differentiate a partner that makes good use of the Salesforce1 Platform. I got more information at Dreamforce and discovered that this is not some marketing idea with little substance but a way to demonstrate value to customers that emanates from the platform and the applications built natively on it.
To be sure there are many good applications on the AppExchange and many are 100 percent native, but not all are. Being 100 percent gives a vendor an easier time of ramping up a customer so that adoption is easier and customers have a better time solving complex business challenges.
But there’s more. Being native like this gives members an easier time of building integrated business process support so there’s little worry about data or process hand-offs — things just work. That would be all there is to say about it if it wasn’t also for the fact that apps don’t live in a vacuum, their purpose is to enable end to end business processes. That enablement has always been something of a dream because few, if any, vendors could string together all the software support needed. Somewhere along the way the highway turns into a dirt road and, if you are lucky, it reverts, but not always.
But with the platform approach disparate vendors can do what they are good at and leave the process integration to almost no one, and I say this with tongue in cheek because no body is just about what’s needed. The integration becomes more one of process than of applications and data.
A small aside here. As I recall, for many years this has been one of those things I’ve written about from time to time usually under the moniker of best of breed or process integration, or something else. But now it looks like the vendor community is catching on. Joy!
To be honest, I don’t know what Apttus (CPQ), Kenandy (ERP), and ServiceMax (field service automation) have to do in a unified process, seems like they’re pretty far apart but that’s not the point. All three products already integrate well with Salesforce CRM to extend the functionality and processing of that tool in predictable ways. Nevertheless, this is an important start. With Salesforce, Kenandy, and maybe IntAcct or FinancialForce you have the makings of a complete front and back office suite. Add Apttus and selling becomes more robust. And if you have a product company that rolls trucks daily for deliveries or service then ServiceMax might become integral as well. This kind of reminds me of the Kevin Bacon Game back at the dawn of social networking. Look what that did.
Dreamforce has always been about many things happening at once — a three-ring circus in a good way. There are announcements about applications, platforms, philanthropy, entertainment and, importantly, parties. This year there was all of that and then some I was a guest with a ringside seat.
Since most of the product announcements came out over the last few weeks some of us were wondering what there would be to talk about but in retrospect that worry wasn’t worth the effort, there was plenty. Beginning in Indianapolis a few weeks ago with the ExactTarget Marketing Cloud event and continuing with the announcements of Sales Cloud1 and Service Cloud1last week we had a good sense that Salesforce was doubling down on core products to make them more at home in the mobile and social environment of modern business.
Perhaps the worst kept secret of the event was the company’s announcement of Wave, its analytics cloud and it was a minor controversy among the chattering class. Wave tries to leapfrog ahead of conventional analytics and business intelligence for the obvious reasons that those other technologies are based on old, legacy, set piece paradigms for the most part and therefore less suitable for handheld business.
Salesforce wanted to deliver analytics to the hands of people on the front lines who need information to make good decisions in the moment of truth and I think the company’s first offering does that. Wave is not only graphical to an extreme but also somewhat animated if by animation you mean being able to change presentation styles on the fly. Two things I like about the UI — first, it enables the user to switch from a bar graph to a pie or donut chart with a finger point. Second, it’s zippy, the graphics are live meaning, for instance, that you can turn a donut chart like a dial to get to the segment you want to drill into. It’s also intuitive and I think any reasonably smart person (i.e. someone who can draw a breath and a paycheck) can easily think up questions to ask of the data and get a usable answer.
The snarking class is asking if the product is ready for prime time but this is stuff I’ve heard for 15 years. Salesforce has developed a reputation for not talking about things they can’t deliver so I am a believer when they tell me they have some very large companies involved with the product.
With Wave Salesforce appears to have built out its platform, which now includes clouds for sales, marketing, service, app development, social, mobile, and analytics. So with all of that you can in theory build an application that will run everywhere from the desktop to the handheld, in multiple operating systems and browsers.
Of course there will be new versions and improvements but to me this now signals the closing of the frontier and the opening of the market to settlement and expansion. In practical terms, I hope this speeds up the adoption of more process oriented business — as opposed to a more conventional transaction orientation. In other words, I think the biggest changes are ahead of us. Vendors want transactions but customers expect process and the newest technology at last enables vendors to meet customers half way.
It was one thing when the company could point to standard CRM plus a mobile browser capability but quite another now that a vendor can capture its customers’ data, analyze it, and offer up next best actions in a wide variety of situations. With this capability, we turn a corner from ad hoc business designed to capture a single transaction to a kind of customer science that operates inside of customer moments of truth. When I say science I mean it literally, not as a metaphor. Customer science will someday be seen as a specialty part of sociology, I am sure.
The difference between the old order and science is not only striking but the science is so much more efficient and adept at developing and maintaining the customer relationship that I doubt we’ll see very much of the old approach to business in a few years. This is a tipping point enabled by big data, analytics, and a lot of technology and it is amazing to me that so few software vendors have understood the moment they inhabit.
I can accept that the above might sound confusing or perhaps even tantalizing. In either case I write about it in more detail in my new book. My buddy and former CMO at Salesforce, Cary Fulbright, tells me I am not making a shameless plug for the book if I don’t reveal the title so let’s leave it there. But watch this space.
Finally, it has to be said that Dreamforce might someday be referenced as the show that ate San Francisco if this year’s numbers are any indication. There were 145,000 registrations and I am told 5 million online viewers. Having all those people in the Moscone neighborhood presented challenges such as when using the sidewalks. But the crush also brought into close proximity an abundance of like-minded people who at times seemed to think as one. I liked the mind meld but can do with fewer humans — however, for a few days it was tolerable especially when considering the upside.
Just as we were trying to digest the HP announcement that it would cleave amoeba-like into two distinct entities, Symantec has announced the same intent. This also follows eBay’s announcement that it would spin off PayPal, so says the New York Times. And what do eBay and HP have in common? Meg Whitman. What’s going on here? Healthy capitalism I say.
Look, lots of companies acquire other businesses as they seek faster growth and greater synergies in their markets. Often times the acquisitions don’t work out exactly as the acquirers had hoped. The worst-case scenario is when the acquired company fizzles either because it could not be assimilated or because it was a dud to begin with and of course, there are numerous permutations on the theme. But often enough to be interesting the merged entity continues along two separate paths with both companies continuing to be successful but in their own ways.
So every now an again it makes sense to take inventory and ask if all of the acquisitions or self-generated businesses provide the kind of overall synergy needed. If not, it’s time for spinoffs and we’re beginning to see several as the foregoing paras indicate.
Yesterday I wrote that Oracle might be another candidate for splitting up and old friend Josh Greenbaum heartily agrees so I’ve got that going on. If you read that article from the Times, you might get the idea that spinoffs might be the next big thing in Silicon Valley and beyond. If so, and if the idea gains enough steam, this trend might depress the regular IPO market. What would you rather buy, a start up doing an IPO or a division of a seasoned company with a track record and a culture accustomed to hitting its marks? There are good reasons for both.
I don’t think we’ve ever seen anything like this in the tech sector. Last time there was an opportunity was the end of the mini-computer era and instead of spinning off units, those companies imploded. There was wreckage everywhere and truth be told, the networked PC and server world envisioned to replace it was a little late in coming — recall the year of the network that only took a decade to reach fruition. That resulted in a nuclear winter where no one wanted to buy much because it was all either obsolete or not up to snuff.
That’s not happening this time in part because the legacy products are so embedded in our businesses today and because much of it is paid for already so what’s the cost of keeping it?
Spinning off non-core businesses to concentrate on the knitting is smart for both parties and should result in significant new innovation and entrepreneurship as newly liberated companies take off their blinkers and design and build products for new opportunities in the whole market, even for companies that were once competitors.
Companies as big as Oracle and even Microsoft might benefit from a spinoff strategy and I suspect there are new business models to be tried too. Although the flavor right now is to spinoff an entity to be completely free-standing, I can see situations where more interlocking arrangements can be developed. The Japanese might call these keiretsus though we might think of them as monopolies or trusts as in the Sherman Anti-trust Act.
In the long history of capitalism, this seems to be a phase that recurs when conditions are right — it happened with Oil and Steel and automobiles though it was sometimes called vertical integration. Whatever it turns into I think this week might have seen an inflection point.
Kudos to all HubSpotters for their IPO. If there was ever a company to root for this is it, not because they’re from Boston and their IPO shows a certain resilience in the place where the tech sector got started and not because I’m a hometown boy or because I have an investment. Buy high, sell low is my investment philosophy according to my wife and I know all of the jokes.
“How do you make a small fortune in stocks? Start with a bigger one.”
No, this is because founders Brian Halligan (CEO) and Dharmesh Shah (CTO) started from day one to build a company that other people could love.
I suppose lovability is in the eye of the beholder — it’s easier to love a kitten than a porcupine — but HubSpot not only made it their mission but they also made a hard science of it and were phenomenally successful. The secret? The way they treat their people. Treating employees well translates into treating customers well and adds much to the likability quotient.
You might ask how one can make a hard science out of a mission as squishy as wanting to be loved. After all, isn’t literature full of stories about unrequited love and unreciprocated friendships? Yes and yes. But HubSpot’s tailwind has been that it wasn’t trying to be personally loved, only loved in the narrow range of being a company people want to work at and to do business with and at that they’ve succeeded well.
HubSpot’s secret sauce, and ultimately its science of being liked was summarized by Mr. Shah in a slide show that I urge everyone to review here. “Culture Code: Creating A Lovable Company: An inside peek at how we work and what we believe at HubSpot,” goes through the 7 big ideas that undergird the company.
- We are as maniacal about our metrics as our mission.
- We Solve For The Customer (SFTC).
- We are radically transparent.
- We give ourselves the autonomy to be awesome.
- We are unreasonably picky about our peers.
- We invest in individual mastery and market value.
- We constantly question the status quo.
The prime directive that everything else trees up to, to make a Star Trek analogy, is “Use good judgment.” That might sound either incredibly naïve or subversive in many of today’s more buttoned down corporate cultures but it works remarkably well. There’s no huge employee manual and the whole culture has an emphasis on getting things done — using good judgment of course. Shah once told me, “Customers are more easily attracted with a great product and amazing people are more easily attracted with a great culture,” hence the emphasis on both.
Shah also told me he didn’t see a need for a lot of rules filling up the employee manual because, as he put it, “Just because someone made a mistake years ago doesn’t mean we need a policy. We don’t penalize the many for the mistakes of the few.”
Not surprisingly, though, the company has a succinct definition of what good judgment is in this context. It comes in three parts.
- Favor your team over yourself;
- Favor the company over the team; and
- Favor the customer over the company.
What? Favor the customer over the company?
Acting in the customer’s interest is acting in the long-term self-interest of the company so there’s no disconnect. In fact, the long-term interest of the company is to delight customers, which includes a raft of corollary ideas that keep everyone focused. All this inevitably leads to hiring (see point 5).
Use good judgment also means adjusting your schedule to optimize your life and your contribution to the company. HubSpotters, like people in many emerging companies, work whenever, wherever but they also understand the importance of interacting. Part of the culture code is the belief that creative magic happens when quirky humans randomly connect — so much so that from the beginning people have been required to change desks every ninety days, just to mix things up.
And so it goes as Vonnegut once said. HubSpot is a public company today but they’ve always acted in a way that public companies ought. So it’s not surprising to me that they’ve reached this pinnacle — just another milestone in a progression that builds a company people love.
A little while ago I got a nice comment from buddy and guru Mark Tamis. He wrote, “I was thinking, it may be a good thing for Oracle to use its cash and buy up Salesforce, and then stick Benioff at the helm. What do you think?”
I have to say it was and is an interesting idea because Larry is 70 and just stepped up to Executive Chairman, leaving the CEO duties to Mark Hurd and Safra Catz. This idea has been surfaced before too. About a year ago it came up and died a gentle death when few outlets picked up on it.
Also, it might be human nature to think like this — to look for a single strong leader to take us to the promised land (whatever that is) — but real life experience seems to run in the opposite direction. Rather than seeking the uber boss, societies, at least the successful ones, instead split the organization whenever it gets too big.
There is a lot of historical precedence for the split over the big boss approach and it has changed over time in a predictable way. To understand the predictability you need a little math in the form of the Dunbar Number.
The Dunbar Number is actually a very elastic thing and could more easily be described as a concept or even a law of sociology (I dunno, I ain’t a sociologist). It says that the average human can keep track of about 150 or maybe 220 people and after that not so good results. This seems like a big number to me but I am an introvert, not shy, just not into maintaining lots of relationships and I am quite comfortable with ideas.
If you look at human organizations, pre-social media, the Dunbar concept applies remarkably well. Of course, CEOs are always trying to limit their direct reports but go up or down a level and you see interesting things. For example, in the Middle Ages, monasteries were working communities of about the Dunbar number. When one got too big, the abbot split off a unit and told one of the members to go elsewhere, build a new monastery, and keep up the tradition. That’s actually how the monastic tradition spread and if you read “How the Irish Saved Civilization” by Thomas Cahill you’ll see the story played out.
Now, social media has turned the Dunbar Number on its head but even with that assist there is a practical limit to the number of friends you can have even online. Perhaps that number varies by individual but the point is that it’s finite and probably not as big as the number of followers many of us have.
There are other examples too such as the military company, the atomic unit of military effectiveness. Corps, divisions, regiments, and battalions are all different aggregations of companies. But what’s this have to do with Oracle? Well it’s indirect. A story in today’s New York Times announces that HP’s CEO, Meg Whitman, wants to split the company into a PC unit and an Enterprise one.
My analysis is that HP is too big to be effective at pursuing a strategy even with all of the computers and communication infrastructure the company has so it’s a natural to seek a way to group similar products and skills into separate companies. Refer to the monastery idea and consider Dunbar and ask yourself if this makes sense.
So, all this is to say that my response to Mark Tamis and his idea is to think small-er. Rather than trying to find the uber boss, if that person even exists, it might be time for Oracle to consider cleaving itself into logical units that have more autonomy than they currently do but that still tree up to a single entity. This might be a worthwhile trend for a lot of first generation Silicon Valley companies.
Oracle is currently made up of a Byzantine assortment of in-house developed technologies and bought companies. It is also a player in almost every part of the tech sector from hardware to apps. The company’s current tag line, “hardware and software engineered to work together” is well chosen to give an impression that is no longer needed. The goods might be engineered together but that’s not the same as being designed and built for the purpose from whole cloth. In fact, Oracle reflects the marketplace it tries to serve which is sophisticated, complex, and aggressively heterogeneous, whatever the marketing lingo says.
Certainly Meg Whitman is rolling the dice with this split but from my perspective it is a logical and appropriate thing to do, and one that has historically delivered results. Would Oracle ever consider splitting into a hardware enterprise, a legacy software company, and a third dedicated to more modern web/social/mobile technologies? Never say never out in the valley, except maybe to the idea of Benioff taking over Oracle.