Last week, I not only revealed my bias and how I deal with it when doing the Watchlist (or anything I do as an analyst in fact), but I also covered one of our two winners with distinction this year: Adobe. This week, it is Salesforce's turn, and as you can see, its for very different reasons that they are one of the two Winners with Distinction in this tough year to win the CRM Watchlist at all.
As you all know, I'm a diehard Yankees fan. When the Yankees win at Yankee Stadium, they play Frank Sinatra singing New York, New York over the loudspeakers. So awesome. What makes this germane to this particular discussion -- Salesforce's Winner with Distinction award for the CRM Watchlist 2019 is two lines in New York, New York.
"King of the hill,
Top of the heap."
This has been the Salesforce position in the business technology universe for about a decade -- the clear alpha among alphas. No disrespect to any other company (they all deserve respect for what they've done to date, too), but Salesforce's impact has been well beyond the tech landscape and bleeds heavily into the world at large.
Why do they differ from other vendors? What is about Salesforce? While they are the fastest-growing enterprise software company in the world -- fastest to $10 billion, fastest to $13 billion -- they are still smaller in revenues by a substantial margin than SAP, Microsoft, and Oracle. And yet, they are the ones that everyone competes with; they are the ones that their competitors have the strongest and strangest reactions to -- again, what is it about Salesforce?
It's the culture, silly
It's the culture. But even more so, their ability to externalize, institutionalize, and even humanize their culture to reach a broader population that goes beyond their customer base. It's also their willingness to go beyond their customer base and generally take socially conscious and political stances that are aligned with their culture and to even do it at the expense of possibly losing a customer or two. Plus, invest in the efforts to make sure that they are internally aligned with the public postures that they do take.
Also: Impressions #1 (2019): Random thoughts on the customer-facing world in the new year
For example, at a Cloudforce event in Washington DC a couple of years ago, the speeches and discussions revolved around gender equality in pay. Salesforce CEO Marc Benioff announced to the crowd that they had found the women who worked at Salesforce were being paid 19% less than the men. So, in November 2017 (if my memory serves me), they upped the salaries to equal the what the guys were paid. Then, acquisitions lowered the female pay scale 19% again, so they upped it again. They put their money where their mouth is.
But what makes them a corporate (note: I didn't limit it to strictly business) leader for the foreseeable future is that they managed to externalize their culture and then name it - which then helps institutionalize it. First, they call their culture, Ohana, primarily due to a residence of Marc Benioff, and they draw on Hawaiian traditional morays to explain their efforts at inclusion.Then, with the culture and its foundation clarified, they have, and this is particularly interesting, extended it via a semi-activist approach. The effort around the extension to the larger body politic is what they now call Trailhead.
Trailhead actually began as their training program and methodology, and it was seen in the earliest days as where Salesforce admin MVPs were created. This was arguably the best technology training methodology I've ever encountered. Leading enterprise analyst and mega-influencer Josh Greenbaum agreed, and in 2016, he wrote a piece about the Trailhead DX conference. It has a very well encapsulated discussion about Trailhead as a good training methodology. That post has historical significance, because since then, Salesforce has made Trailhead its methodology for establishing not just training -- but a cultural beachhead in the tech world and the engagement universe. Its where Salesforce finds its "Trailblazers" successful customers, who are also not just technology-competent, but cultural leads at their companies in multiple different roles.
What Salesforce has been able to do -- unlike any other company except perhaps Zoho (and while Zoho isn't doing it at the scale of Salesforce, they are magnificent in their own way, too) -- is to create an environment that envelops employees, customers, prospects, and even those who are not in their sales orbit to want to participate in something greater than just a transaction. They want to participate in a culture, an environment, not a company, per se, which goes beyond just another business relationship. Salesforce says you can work here, you can buy here, and you can do good here. And the people believe. I'm not being facetious. They do truly believe.
This has created an organic ecosystem around Salesforce that shows itself in the way that their partner network operates and the way that a significantly large group of Salesforce devotees. For example, every, Saturday in multiple locations around the globe, there are Salesforce Saturdays -- where Salesforce developers, MVPs admins, et.al., get together, hang out, code, talk through best practices, etc. (See the description in the center of this post on Ohana by SalesforceBen for a good brief idea of what they are). Informal, organic, independent of (but supported by) the company. They do it because they feel part of something "Salesforce-y."
But the reason that they win the Watchlist year after year, goes beyond even this -- though getting to this level alone is something that shows the tip of the impact-iceberg.
Products and market reach
What I'm not going to do here is cover the vast range of products, solutions, and tools that Salesforce offers. Most of the bigger companies have a range beyond the comprehension of mere mortals like me. But what I want to cover is what underlays the product portfolio.
Two things have characterized the Salesforce product portfolio. First, since 2002, they have been clear that they are a platform play, not an applications suite. Although they have applications/solutions aka "clouds," including the core basics of CRM such as Sales Cloud, Marketing Cloud, and Service Cloud, as well as a dominant position in the market, they have been, are, and always will be a platform, first and foremost. You saw that with force.com, Heroku, ad infinitum up to the (very well named incarnation) Customer Success Platform. Einstein, their AI product, is a layer in their platform, not a stand alone add-on solution.
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To that end, as a layer in the platform, it gives them infinite capabilities to produce specific outcomes using Einstein, and they have dozens of use cases -- hundreds even -- and have built the various, at this stage, horizontal applications of Einstein. The most recent, prominent and important one being Einstein Voice. They have just begun to venture into the vertical world with Einstein, with their very recent announcement of Einstein Analytics for Financial Services. But the potential possibilities remain endless (though my favorite one -- using Einstein to create a Storytelling proficiency for Marketing Cloud -- still hasn't happened).
But the other immutable part of Salesforce's product strategy is that all their products are directed to customer-facing applications. CRM was their basic one, and now they are beginning via mobile and other media, to move into the customer engagement world. Unlike Oracle, SAP, and Microsoft, which are both front and back end, beyond a brief flirtation with Infor several years ago, they haven't ventured to the back end at all really -- leaving that up to partners who build on their platform like FinancialForce. Their commitments remain customer facing.
But one place they have both backtracked and progressed simultaneously is in their understanding that the world is not going to be run only by Salesforce technology, nor is on premise(s) going away all that soon. So, they acquired integration platform Mulesoft (No. 2 after Informatica) for a cool $6.5 billion last year. No matter what you think of the price, it was a really good acquisition by Salesforce -- and is a lynchpin in their product strategy and platform strategy going forward, and will just increase their reach.
But Mulesoft will help them do a lot better than just extend their reach by deepening their ability to gain access to data and also in the knitting of disparate systems -- as long as Salesforce doesn't treat it as an "Integration Cloud," but is treated as, in old school terms, middleware and part of the Customer Success Platform. Salesforce benefits from the horizontal application of Mulesoft.
Their Mulesoft acquisition was, I think, the second-most significant acquisition of 2018 in terms of impact on the direction of the acquiring company. And it is also something that most likely will significantly increase Salesforce's impact in the coming years. It provides what Salesforce hadn't been able to: Integration with other systems including on-premise(s) systems. It's also a tacit admission or at least acceptance on Salesforce's part that on premise(s) systems are going to be around for a while longer despite their decline. It is also a recognition there are a lot of other systems that aren't Salesforce -- on the back and the front end 00 that they are going to have to play nice with. Mulesoft gives them a deep proficiency in doing just that. Plus, access to a lot more potential customers because of that. Thus increasing their impact.
And they already have a more than just significant business impact in both the CRM(ish) markets. Take a look at these IDC figures for 2018 (this is from the Salesforce Watchlist submission, though I changed the order, despite the quotes around it):
"According to IDC, Salesforce held the No. 1 position in sales for the six year in a row in 2018, with market share of 38.5%.
According to IDC, Salesforce held the No. 1 position in customer services for the fifth year in a row in 2018, with market share of 40.4%
According to IDC, Salesforce held the No. 1 position in digital commerce for the first time in 2018, with market share of 12.8%
Salesforce held the No. 1 position in CRM for the fifth year in a row in 2018, with market share increasing from 18.7% to 20.3%.
* No. 1 in CRM in U.S.(22.2% share, up from 21.5% last year)
* No. 1 in CRM in Canada (13.5% share, up from 9.9% last year)
* No. 1 in CRM in UK (16.7% share, up from 15.4% last year)
* No. 1 in CRM in France (18.8% share, up from 17.1% last year)
* No. 2 in CRM in Germany (7.3% share, up from 6.5% last year)
* No. 1 (up from No. 2) in CRM in Netherlands (12.6% share, up from 11.2% last year)
* No. 1 in CRM in Japan (19.5% share, up from 18.4% last year)
* No. 1 in CRM in Australia (14.9% share, up from 14.6% last year)"
That's real impact. Can't do a whole lot better.
Vision, Mission, Realization
But the impact goes much deeper than merely product breadth and depth with Salesforce. They are very much driven by their vision and their mission. What makes it as powerful as it is, isn't just that Marc Benioff is arguably the greatest marketing maven in the world (and I'm not trying to be overly effusive or hyperbolic here, he is that good), but also that Salesforce -- through its efforts to externalize culture and its efforts to effect some kind of 'social good' -- is also making an attempt to make the company more approachable and more human. What I call "a company like me." By succeeding at that, they make their vision and mission more realizable by the listener -- not just the presenter, so to speak They make the listener want to be part of the effort.
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This was best reflected in the 2018 Dreamforce keynote. The classic mainstage big keynote follows this pattern: 1. CEO speaks about the world; 2. Brings on customers; 3. Shows demos. Salesforce added in the spirit of their corporate philanthropy a non-profit that they had chosen to support that year. This year was very different. First, Marc spoke to the power of business as an agent of change. There was no chosen non-profit this year -- the idea of doing good was on the table at the level of the world stage. The only product announcements was Philanthropy Cloud, which was the joint effort with United Way and played directly to the theme of doing good in the world.
The CEO of United Way Brian Gallagher moved many to tears (including me) talking (on a video) about why he joined United Way. You should watch it here. All other cloud product demos, usually part of the opening keynote, were relegated to their respective sessions. The backdrop to this very different keynote was that it humanized Salesforce. Salesforce became a company made up of people who had real lives and partners who were led by human beings. This wasn't a world of personas, but of persons. This was the beginning of the humanization of Salesforce.
This is where the other big piece of Salesforce's impact comes in -- the drive to make changes in the world for the benefit of the many. I'm not trying to ennoble Salesforce. But they are a company with a purpose. Marc Benioff is conscious of Salesforce's mission and actively propagates for it. The outlook is best reflected in an interview with Jim Kramer (mentioned in the San Francisco Business Times), right after he and Lynne Benioff acquired Time Magazine:
"Lynne and I so strongly believe that business is the greatest platform for change," Benioff told the 'Mad Money' host. "When I went to business school, they said, 'Focus on your shareholder, Marc. The business of business is business.' That no longer applies. We have to erase that from our history books. The business of business is improving the state of the world."
Their social impact as a company on issues, ranging from diversity and equality to sustainability and homelessness, has been enormous due to the leverage of the company as a major employer in many areas and to their willingness to stand for something and take the actions to accomplish it. Are they perfect? Nope, they are not. But this post is meant to be about why they won the Watchlist. Its not a deep dive into their strengths and weaknesses. This can mean anything from investing in future leaders to leading drives to eliminate homelessness in San Francisco to large scale global volunteerism. If you'd like to see more of what they are doing, go here and download their 2018 Social Impact report.
But please, keep in mind that's impact in the past and the present. What also concerns me when I am scoring the companies is their future impact, which is more along the lines of: How are you organized and what have you done to provide the kind of sustainable impact over ensuing years that I'm looking for? Also, what are the signals that you can provide me to show me that it's not just B.S.?
They are masters at creating motion and pipelines that accelerate that motion. People are attracted to motion -- and that unto itself, can be good or bad, depending on what is associated with it. Its motion as a blank slate at first. But motion and action without organization and program, dissipates. Witness Occupy Wall Street who made a point of no leaders, no programs. But Salesforce manages, through its good works, to apply an actual (and visceral) purpose, direction and programs to its motion -- and thus can focus and direct the motion and thus increase the impact it has on the world and on individuals. From that stems its powerful message and the effect of its vision.
But there are two more things necessary to remember. Salesforce is a business, not a political or social movement, no matter how much social good it does. Its still selling stuff to people in a for-profit way. Second, to sustain impact requires a strong institutional framework.
So, how does this business continue to grow the business and also maintain and accelerate its impact as a force for change? How do they win the Watchlist to put it in self-serving terms?
The Whole Thang
Salesforce puts a lot of time into thinking through the execution of its vision and mission. Keep in mind its vision and to a lesser extent its mission is what Marc said to Kramer: "The business of business is to change the world." But its also to sell things if you are for-profit. As actively as they are propagating social change and doing good works, they are equally as proud as to be the fastest company to $13 billion in history.
Also: Impressions on SAP CX Live, SAP during a walk on Calle de Vendedor
Salesforce's execution, though, is to make sure that they are effective doing all the things they have to do. On the propagation of social good they:
- Recently merged (though technically it is in the form of an acquisition) Salesforce.org and Salesforce's commercial business. Though, I still don't quite get this one, it was presented to me in the form of efficiencies and effectiveness. It does do justice to the "business as a force for change" purpose of the company.
- Have a Chief Equality Officer. Tte absolutely amazing Tony Prophet, who oversees not just all diversity efforts, but also the Ethical and Humane Use of Technology efforts, led to the creation of a separate unit inside Salesforce for its propagation.
- Created what might be their most important cloud: The Philanthropy Cloud in partnership with United Way. This creates the framework for employees at any large company or in fact among large companies (it could be smaller, but realistically, it's for enterprises) to participate in not just donating, but the life of the companies that they are donating to and with the others who are as interested in the cause as they are. The alliance with United Way gives the employees access to a staggering 1.3 million non-profits. Yeah, you got that right.
- Were named the No. 1 company in giving back in 2018 as well as the No. 1 company to work for in 2018 (No. 2 in 2019) by Fortune magazine.
But they are a highly organized force for business impact -- meaning direct impact on influencing customers to buy from them -- too.
Outreach: Their outreach program, under the aegis and guidance of the long-time thought leader and industry influencer, SVP of Market Strategy John Taschek, is bar none the best in the industry. Their analyst relations program is comprehensive, is effective, and has some of the nicest and most qualified professionals in the industry.
What makes it unique is its mission, which really sees itself as an influencer relations program, one that extends well beyond just analysts. The other outstanding characteristic is that there is no charter to prevent the staff from becoming personal friends with the influencers. They are trusted to know their jobs, and it is recognized that human beings are human beings and that relationships and bonds form because they are human beings. No one is told to keep their distance. That trust allows the team to do their jobs exceptionally well, with high levels of engagement with influencers on a global scale. Additionally, their social media strategies are well designed and effective. They take advantage of their business visibility (aka fame...and their willing audience of advocates to broadcast a larger than life presence far and wide. Smart.
Marketing/events: A strength of the company getting better. They have a slightly unusual organizational setup -- each of their entities has its own CMO for the most part -- and there is also a corporate CMO. So, each cloud has its own marketing strategy, and, I would imagine, budget. They have, at the corporate level, the world's greatest marketer: Marc Benioff. And I say that without an ounce of exaggeration. However, where they truly shine is events. Dreamforce is no longer an event. It has literally become the tech industry's Coachella. Or if you prefer to keep the analogies a little purer; it can be argued that it has replaced SXSW (a.k.a. South By) as the destination for tech. Okay, a lot of you will disagree, but take the point at its metaphorical intent.
But as interesting or even more so is the Cloudforce conferences that Salesforce runs by locale. What makes them unique, besides their significant attendance (in the many thousands at each, most of the time), is their highly explicit regional focus. For example, I attended one in DC, my backyard, a few years back -- where there were more than 1,000 non-profits in attendance (more than any I had ever seen even at a non-profit specific event).
More recently, again in DC, the focus was on public sector and gender pay equality. In Boston, they trot out Tom Brady (ugh). Sad, but smart. Regardless, they are laser-focused on the regions that they are in. There is nothing cookie cutter about any of their Cloudforce conferences. In the past, they hadn't been participating in outside events all that much. Over the last four or so years, they have been -- recognizing the value of propagating the Salesforce culture outside of Salesforce itself. So, they attend, sponsor, or even co-host Sales Hacker, CRM Evolution, and many others.
Awards: Without going into details, aside from the myriad of Gartner and Forrester MQs and Waves respectively that they participate in and end up in whoever's leader quadrant or wave, they have extended well beyond that to many others including the aforementioned Best Place to Work and Best Place for Giving Back. And, of course, the Watchlist. They get a lot of visibility by their participation, and it impacts what the customers think, because it creates an impression "they won for that, and that, and that, and that" -- volume and depth. That make customers very interested in checking them out initially and later on, more comfortable in their selection of Salesforce as a vendor. They become a high caliber, trusted, familiar organization
I haven't even addressed PR or Marketing Strategies, etc. There is just too much. Suffice to say, what makes Salesforce as effective in gaining the visibility, creating the impact, and sustaining that impact over years is their willingness to invest in it, their deep commitment to social good/philanthropy, as well as the ordinary requirements of doing business, and their brilliant efforts to externalize their culture as an extension of their vision to change things in the world for the better. People see the company as a place that they not only can do business but participate in a culture that is driven by a greater good. That is impact.
Also: Microsoft-Adobe's amazing partnership: Creating a new category?
But there are somethings they will have to do to sustain their impact over the next several years -- at least according to the standards of the CRM Watchlist. Here are the three I'm willing to share with you all.
Three Things to Consider
- Significant Extension of Thought Leadership Work: This might sound ridiculous, given what you think you know about Salesforce. But while they are among the most advanced thinkers when it comes to technology, and they are battling toward being the trusted adviser to companies via programs like Ignite and other customer success possibilities, where they fall off is in a highly directed, focused, and campaign-driven thought leadership effort.
Unlike Adobe or SAP, they have no centralized place for thought leadership. They need to have a single source -- a portal for customers, seekers of knowledge, influencers, and the human family in general to find what they need to understand the concepts, ideas, intellectual frameworks, best practices, etc. Here, they need more centralization, not decentralization. Plus, they need to show their expertise in the verticals. I see a lot coming from their competitors when it comes to public sector, for example. But none from Salesforce. I'm not saying it doesn't exist; I'm saying its not evident. If it exists, make it evident. If not, make it exist.
- Stop and Talk about the Smell of the Roses: Salesforce's release feature, solution, etc. Release schedule and breadth of their offering is breathtaking for its size, ambition, and speed to release. But it is coming out in the form of one press release after another, actually on top of each other. Einstein Analytics for Financial Services (May 7); Pardot Business Units for enterprise Marketing Teams (May 6); and the acquisition of Bonobos (May 6) were all right on top of each other. That's great and exciting, but almost too much, given that the velocity and volume of announcements is almost too much to take in. What is needed too is a reaffirmation of product strategy and direction to the market. It also needs to be in the context of a cohesive ecosystem.
Otherwise, this is looking like zillions of random things being released -- each of which has a purpose, but very hard to ascertain where the pieces fit overall in where Salesforce thinks its going. The mission (not the vision) is getting cloudy. A big picture view of the mission would be welcome at the various Cloudforce conferences and Dreamforce I think. This means explicitly fleshing out the corporate narrative and making it known to the public. When you are as many faceted as Salesforce is the bigger story can get lost in the details. Time for the bigger story to emerge. That is not just the "business as a force for change" story, but the explicit Salesforce story beyond Trailblazers and their chatter about being a "movement." It is also time to reaffirm their product strategies in terms of the needs of the customer ecosystem it serves.
- Continue to expand the Go to Market (GTM) Partnerships: This is an area that, in the past, Salesforce didn't do too well at. There are some very promising signs recently that they've realized this isn't a go it alone world anymore. Customers/constituents get engaged and stay engaged when you are able to meet their needs with an ecosystem -- not just products and services or even the prior two and consumable experiences. You need the extended ecosystem to make what the customers get from you increasingly broad (but within the scope of possibility) and increasingly convenient to attain. Salesforce's partnership with United Way; their first-ever (to my knowledge) OEM (Interaction Studio built on an OEM of Thunderhead), the customer engagement/journey orchestration platform; the extension of their strategic alliance with Google around some highly practical capabilities -- not just for show; all bode well for the future. Salesforce's next step is to take their bewildering, extensive, and massive array of capabilities, map out their customer ecosystem requirements, do what Adobe is doing around the Open Ecosystem initiative, and figure out the key strategic partnerships they need to make them "whole"
That's it. Done. On to the rest of the winners.
Next up: CRM Watchlist 2019 Winners: The remaining enterprise players strut their stuff
If you are interested in participating in the CRM Watchlist 2020, send me an email at firstname.lastname@example.org requesting a registration form. Registration has been open since February 2019.
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