Salesforce is kicking off its new year with an event on Tuesday at New York’s fabled Waldorf Astoria in which CEO Marc Benioff will introduce a refinement of an idea he’s been talking about for many months.
For a long time the company has been using messaging about the idea of transforming the enterprise from a late twentieth century, post-manufacturing model to one more focused on the customer. The new messaging will define what it means to be a “customer organization” and while I have no details, I expect that will mean a strong dose of not only the company’s trademark social media infused CRM but most importantly, a focus on a new model. The model should have much to do with applying social technologies in novel ways to existing business processes and to inventing new applications.
Salesforce has behaved much differently from its competition from its inception more than a decade ago. With social technology, it appears to be focused on what I have been calling its “Blue Ocean Strategy” for a long time. But where I have been applying the term to what Salesforce has been doing, I think Salesforce will now be telling its peers and much larger companies, that they can and should do the same thing. Naturally, it will position itself as the leader that can companies with this important transition.
It makes sense. If you look at the companies that Salesforce has enlisted in pilot projects — Toyota, Coca-Cola, General Electric, Burberry’s, and many others — you see a smattering of some very large, sophisticated technology users that take a certain amount of pride in being first adopters. In this case, while customers will certainly benefit from new approaches to customer outreach, the companies themselves will also benefit from improved interactions and the invention of new business approaches mediated by Salesforce’s advanced technology.
The way Salesforce usually introduces a theme is to announce direction and technology at Dreamforce, its annual user conference held in San Francisco in the fall. I am not sure if this is a departure or more of a continuation of the themes announced at last year’s Dreamforce. Regardless, the company is meticulous about hitting the market with multiple iterations of messaging — usually stating direction and then delivering technology on time as promised and finally reminding the market of the advance.
Salesforce has been using a winter event in New York for many years as a way to set direction and this continues its pattern though this may be the most important announcement the company has made in a while.
I have not been briefed yet on the announcements but I have been invited to the event in New York and will report from there and include my analysis of it all on Wednesday and Thursday.
Salesforce announced it was holding off on the grand corporate office park it had been envisioning at Mission Bay in San Francisco. It was a wise move by a company that should be focused on growth.
In reading the Steve Jobs biography I was amused to see that he loved design so much that when he was given unfettered control he built some really, really nice corporate offices. Sometimes it all worked out fine, as it did at Pixar, and sometimes it simply burned through cash as it did at NExT.
Salesforce might have been wise to hold off on the massive building project for at least a couple of reasons. Cash leads the list of course. The company already spent over $100 million purchasing the 14 acre plot and not a shovelful of earth was moved. Building the place was only going to turn the land into a money pit, so I applaud the decision.
But the other reason is more dog food related. Salesforce is pioneering the social enterprise, a strategy driven by its software that unites people in a company regardless of location, to improve corporate performance and customer delight. So, you could easily say that Salesforce is its own test tube. It is innovating on itself and expecting to share its findings with its social enterprise brethren. How better to do this than by making do linking multiple floors and locations around San Francisco?
It might not be ideal and it might not be fun (building things is great fun) but the company ought to be focused on cracking the Fortune 500 at this point—they’re so close—and a major building project might be defocusing.
Back to the skunk works.
It’s worthwhile to consider the economic consequences of Dreamforce — the products announced as well as the cultural issues it raised. Now, I am not an economist and I encourage you to think about that and maybe not read this if that matters.
Many people might look at the news coming out of San Francisco and try to calculate the ROI on one or another introduction or announcement but I think that’s like looking through the wrong end of the telescope. ROI is a financial measure and when I think about economics, especially marco economics, I am trying to figure out how the changes affect the ways we work and make money now and especially in the future. Let’s take a look a just a few ideas.
Salesforce announced a data residency option (Database Rights Option or DRO) aimed at letting companies store their data on their own devices rather than in the cloud. I’ve already written that this approach will be welcomed by companies and government entities that can’t for regulatory or policy reasons, let their data reside on a cloud infrastructure. There are many organizations in that position and this should be a boon to their approaches to IT but also a boon to Salesforce’s business.
About the only folks who might be adversely affected will be other vendors. Companies like Microsoft and Oracle have made a big deal of offering architectures that run in any mode including on-line, on-prem and hybrid implementations. They’ve taken this to market and used it as a differentiator with Salesforce but that’s rapidly fading in importance, in part I believe, because these solutions preserve single tenancy for applications.
True enough, the other vendors can claim that companies can still own their source code and to be able to manipulate it at their whim while Salesforce still holds the code and is totally responsible for managing it. Of course customer developed code might be stored in the cloud but Salesforce will not be editing it. Just backing it up and acting as a custodian.
Which is better? I like the idea that Salesforce will continually upgrade its code and make sure that its updates do nothing to corrupt my code. In my humble opinion VRO is a net positive. Sure it goes against the Salesforce religion but it gives customers what they want and does not compromise the applications.
The Social Enterprise
Salesforce did a good job of defining what is most important — the social enterprise. This is not a new buzz word or a new shiny object. In incremental steps over the last three years the company has been defining social business, building products to support it and training the early adopters.
There is a lot of heavy lifting left to do here and the world outside of Dreamforce is not always welcoming. At a press conference on Thursday, Marc told an interesting story about this reality. He said that he speaks with CIOs and other C-suite people all the time and on one occasion recently — a conference, I think —he showed a CIO Chatter. When the CIO saw the stream his first question was, “So now the person receiving all this has to answer it?” The answer was not, shall we say, appreciated and with that the CIO said this isn’t for me. Net/net there’s still a lot of proselytizing to be done and a lot of reticence to be over come. Last week I mentioned some research just out of Cornell that examines why we like creative ideas but shy away from creativity, check it out here xxx.
The Social Customer
There are many manifestations of the social customer. It can be someone who renders an opinion on a product or service, someone who lends a hand to help out someone with a question or an issue and it’s someone who values privacy. I was struck in watching Marc’s conversation with Eric Schmidt of Google, of how many times Schmidt in describing a social interaction, used words like, “With the user’s permission”.
One question from a British reporter at the same press conference had to do with not wanting a socialized customer service person to see everything a customer might have recently posted on social media. Some things while social are still reserved for the intimates of the poster. That’s a fair point and one that right now gets the very unsatisfactory answer of, well if you don’t want the world to see it, don’t post it. That’s hardly comforting to many people but I think the issue won’t be solved with more technology. I think it will be an issue of professionalism. We forget that in addition to building out a new technology infrastructure that we’re also building the rules of the road and this might be an example of where smart use of the technology trumps more technology.
This will likely be a touchy topic for some time and the sensitivity will be different from culture to culture and country to country. As an economic issue privacy might be the biggest roadblock to mass adoption and my advice to anyone listening would be to never take it for granted and to continue being as explicit as Schmidt.
Heroku, Ruby and developers
One of the areas that gets almost no coverage is what all this means for developers and as it turns out there was a lot at Dreamforce for them. Salesforce is on a path that delivers tools for three major kinds of development — business applications, websites and I don’t know what to call it, web resident apps. Schmidt was emphatic about the need for the modern company to be able to develop quickly and iterate toward perfection while enabling users to get at products quickly.
For business applications there’s the Force.com platform with a choice of Java and Apex, the company’s proprietary language that basically fills in declaratively where point, click, drag and drop don’t do enough. Then there’s the company’s website builder. You can build a website integrated with your Salesforce instance using your data. This capability is most useful for building customer facing apps that capture customer data and interact directly with them. So a registration page is the obvious example.
Finally, Salesforce spent a lot of cash buying Heroku which is a development environment that uses Ruby on Rails and several other languages like Java, to build applications that are intended to live on the web perhaps at other sites. A great example of this is Facebook integrated applications. Some people are referring to F-commerce meaning commerce apps on Facebook and that’s very exciting. Heroku is a go to choice for building applications that run well and scale massively for the Web. In a demo we saw an application built by NBC to promote Warner Borothers’ new Harry Potter movie.
Obviously, this illustrates the idea that Heroku might be a good choice for this kind of app but even more importantly, it shows us that we probably don’t know how all of this technology and infrastructure will be adopted and consumed in the years ahead. That’s what makes Dreamforce so interesting and the ideas unveiled there so powerful.
I am glad I dodged a hurricane to get to Dreamforce. I lost my voice but recovered and saw a lot of cool people. It’s going to give me something to write about for a while.
Last week Marc Benioff was in Boston with another regional Cloudforce tour event and Stephen Denning has written a good book. There is a connection between them.
The day after the Boston Bruins clinched the Stanley Cup, Benioff was in Boston and thank goodness the company decided on a noon start time or more than one thousand bleary-eyed Bruins fans might have had second thoughts about attending. Not to worry, there was an overflow crowd for what looked to me like a preview of Dreamforce — coming up at the end of the summer.
Benioff was ebullient, though it probably had nothing to do with being a Bruins fan and having waited 39 years for THE CUP to return to Boston. Amidst all the talk about clouds and forces Benioff let out a quip that was revealing, signaling a shift in at least the company and most likely the industry. I will have to paraphrase here, but it went like this: We started out as a hosted service company but we’re now all about social. If you’re not in the cloud, we can’t wait for you.
Now, in print that might seem harsh but it was done with humor and the crowd of converts certainly understood it. Translation: the next big move in the front office is social — we’ve been preparing for it for the last couple of years and now it’s time to roll.
To back up his point, Benioff unveiled new messaging that I expect will be with us for a while — the social customer and the social enterprise. Now, neither one of these terms is new or original to Salesforce but true to form, Salesforce is adopting them and giving them specific meaning. One new idea they are crisply communicating is the manifold relationships one can have with a vendor, all of which need to be arbitrated in some way by social technology.
There’s the obvious customer-company relationship, but also the customer-to-brand relationship and customer-customer relationships all mediated by some form of social media. The social enterprise must have strategies for each.
While we‘re on the subject let me nominate some shorthand for this brave new world. The customer-to-company relationship is now C2C — note I am not designating this as customer-to-vendor because vendor has been split into company and brand for good reasons. Customer-to-brand is now therefore C2B. Now what does that do for the customer-to-customer relationship since C2C is taken? I recommend CC since customers effectively cc others whenever they use social media anyway.
Ok, back to the social enterprise. The Salesforce vision is important because the CC social revolution is moving the C2C and C2B relationships from hierarchical to relational and social tools are the things companies need to get the job done. Got it? C2C and C2B might become the business end of VRM (vendor relationship management), I think.
In his recent book, “The Leader’s Guide to Radical Management,” Stephen Denning explores the new world that will need these social tools. In Denning’s well written and informative book, a company’s mission is to delight its customers by making and delivering products and services, not simply provide adequacy in one direction and profits in the other.
Denning gives several pages to Salesforce connecting his vision and Benioff’s. In this view is that should operate pretty much the way Salesforce’s cloud offerings do, especially Chatter, the Salesforce collaboration tool that enables ad hoc teams of people inside a company to spot problems and opportunities and take action to help customers and hopefully delight them.
One of the only criticisms I have of all this is the way Salesforce describes the effort it enables. When executives engage in this behavior according to various speakers in Boston, they are said to “swarm” like a hive of bees but when regular employees engage in the same activity it’s referred to as “dog-piling”. Why this double standard? I think it would do the executive class some good to develop a mindset of rolling up its sleeves and working to delight its customers as in dog-piling. I don’t really care which animal metaphor is used but one only, please.
Back to Denning and his wonderful book. Denning spends some time analyzing the effectiveness of Fred Reichheld’s net promoter score of which he is a fan and which is at least one source for the idea of customer delight. Denning did some interesting qualitative research that applies to this discussion. He checked out the mission statements of the twenty biggest companies in the Fortune 500 to understand their customer outlooks. Guess how many are in business to delight their customers? None, zero, nada. Sheesh!
Four of the top twenty, which includes names like Verizon, Exxon-Mobile, Walmart, HP, GM, GE and others actually say they’re in business to make money, period. Others have PR or similar safe sounding goals but none exist to delight you and me. It’s all about maximizing shareholder value — an idea that has been around for a while and gave us the swashbuckling attitude that nearly melted the di-lithium crystals in the world’s economic engine room. Time for a change? The tools are now available.
Denning is pointing out that it might be time to think again about corporate responsibilities and duties, Benioff is providing at least some of the how-to, and energy. Both men have a lot of work to do but at least the journey has started. That’s why social is inevitable and why the Enterprise 2.0 conference in Boston this week is bigger and more important than ever. I will be looking for even more at Dreamforce.