Category Archives: Innovation

EPM, Project Orion, and the Beginner’s Mind

I’ll always be thankful for my time at Salesforce both because I met so many amazing people and because I learned so much.  I learned about the importance of Trust in a SaaS company (and was drilled in the mantra, “nothing is more important than the Trust of our customers.”)  And I learned about shoshin, the Zen concept of the Beginner’s Mind.

The Beginner’s Mind
It’s not unusual when working at Salesforce to hear about Zen concepts or get an email reply from Marc containing only a Zen proverb.  But of all the concepts I learned about, the most powerful and elusive was shoshin, a concept that Benioff says he adopted from Steve Jobs.  Per Wikipedia:

Shoshin (初心) is a word from Zen Buddhism meaning “Beginner’s Mind.” It refers to having an attitude of openness, eagerness, and lack of preconceptions when studying a subject, even when studying at an advanced level, just as a beginner would.

Shoshin is powerful because it enables you to take a fresh look at an old problem.  Shoshin is elusive, however, because it requires you to step outside your paradigm — the filters through which you see the world — which perhaps sounds easy, but can be incredibly difficult.  In fact, in what I all the paradox of knowledge, the more you know about something the more difficult it is to break out of your paradigm, to get outside the metaphorical box.

As an example of this, our head of products, Sanjay Vyas, recently went to a silent, ten-day vipassana meditation retreat.  Vipassana means “to see things as they really are”  and is a technique that has been passed down from the Buddha by an unbroken chain of teachers to the present day.  At the retreat, the first phase is three days spent simply trying to calm the noise in your mind.  Only then, after three days of silent meditation, are you ready to start to attempt to see things as they really are.  Such is the difficulty in breaking free from a paradigm.

The Problem We Approached With a Beginner’s Mind
What problem did we try to see with a Beginner’s Mind at Host Analytics?  End-user planning, budgeting, and forecasting (three key pieces of enterprise performance management, also known as EPM).  Why did we do it?  Because despite decades of great success within finance organizations, we believe that EPM has under-penetrated the overall market.

Far too many people rely solely on Excel for planning/budgeting and far too many EPM end-users build budgets in Excel and mail them to finance as opposed to using the EPM system.  The same is true for reporting, where far too often users drop out of the EPM system and into Excel to make reports and charts.  (This is less true of Host users due to our strong reporting, but the trend remains true at an industry level.)

While as EPMers, we take great pride in our category and, at Host, in our ability to move enterprise-class EPM to the cloud, we must recognize that at some level EPM has failed to deliver against its broad vision of accountability and empowerment.  To get to the bottom of this, as Clayton Christensen has often observed, you can’t just talk to your customers to understand your market, you need to understand non-consumers as well.  All those Excel-only or primarily-Excel users are Christensen’s non-consumers, so we decided to talk to them.  Here’s an example of what we heard.

“I hate budgeting.  They made me attend the meeting to look at these tools.  I don’t want to use any of them.”  — Chief Legal Officer

We heard this over and over.  The average business user would seemingly prefer a root canal to working on the budget.  Yet we knew these same business users were passionate about metrics, empowerment, accountability, and performance.  So where had the whole category gone wrong?  Thus was born Project Orion.

By Finance For Finance
We realized that for forty years EPM has been designed by finance for finance (or even more specifically, by FP&A for FP&A).  EPM vendors did a great job of listening to EPM customers.  And EPM customers, particularly EPM buyers, often had job titles like Vice President of Financial Planning & Analysis (FP&A).  These were the people who selected the tools.  These were the people who bought the tools.  But, these weren’t always the people who used the tools.  An important part of EPM is to roll it out broadly across an organization, meaning to put the tool into the hands of business end-users, budget owners, in all the various departments.

The Perils of “Configuration” to Dumb Down the Interface
The universal answer to the end-user question was dumb it down.  Configure it.  Take the product that was built for a heavily analytical, highly skilled, finance professional — and FP&A people are whip smart — and dumb down the interface for a business end-user.  Hide some menu items.  Remove some toolbar buttons.  Take away some tabs.

That was the conventional wisdom.  Take a product built for one person and configure it for use by another.  Now some EPM vendors were better than others at this bluff, some had slicker interfaces that would be relatively more appealing than others.  But amazingly, nobody ever said,  “wait a minute, what if we designed the product for people who actually used it?

Thank to shoshin, that’s exactly what we did with Project Orion at Host Analytics.

Task-Oriented Design
Instead of starting with what we had, a template-oriented product built for finance people, and a desire to twist/configure into something else, we started with a blank sheet.  We asked business end-users what they wanted to do with an EPM product.  Those end-users gave us a three-part answer:

  • We want to be able to quickly figure out where we stand relative to the plan.
  • We want help in determining where we are going to land on the current quarter — and to optimize that result.  (Not an easy problem, mind you.)
  • We want to get the next period planned in line with objectives and targets.

And we want to do all of the above quickly and easily because, much as we love this stuff (and we don’t), we’ve got a business to run.  This idea, what we came to call the stand / land / planned message, became the center of Orion design.

How We Knew We Were Onto Something
We noticed quickly that people had strong reactions to Orion, which typically fell into one of two types:

  • Reaction 1:  “Holy Cow, why didn’t I think of that?  It’s kind of obvious in 20/20 hindsight.”
  • Reaction 2:  “That’s not needed.  You just need to configure your way out of the problem.”

In the early days, we got a lot of reaction 2 — particularly from our internal EPM experts, who were somewhat blinded by the paradox of knowledge.  The internal resistance was, at times, intense.  But that resistance told me that we were onto something.  We were challenging the conventional wisdom in a way that could lead to a major breakthrough.  And the more we asked people outside Host, and the more we showed Orion to business end-users, the more convinced we were that we had made such a breakthrough.

The same chief legal officer who said “I hate budgeting” above, said this:

“When I look at Project Orion, it’s clear that you are the only folks thinking about me.  I could and would use this tool.” — Chief Legal Officer after seeing Orion.

Tips on Adopting a Beginner’s Mind
We’re launching Project Orion today and proud both of the software we built and how we came to build it.  We believe Orion is a breakthrough product that is going to change the EPM market.  All because we looked at an age-old problem in EPM with a Beginner’s Mind.

I’ll finish the post with some tips on how to take a shoshin approach that we learned along our journey — and which happily don’t involve 10 days of silent meditation.

  • Put a mix of veterans and neophytes on the project.  This will reduce the paradox of knowledge and naturally bring in some fresh eyes.
  • Confront tough facts.  The data says lots of people still use only or primarily Excel despite 40 years of EPM.  That’s a fact.  The question is why?
  • Challenge the team to document hidden assumptions.  Configuration as the solution to the end-user problem was one such huge assumption.  You can only go outside the box when you know its edges.
  •  Talk to non-consumers.  Talking to customers is great, but it can create an echo chamber.  Talk to non-consumers, too, particularly when fishing for breakthroughs, and ask them why they have not purchased in the product category.
  • Embrace resistance.  View resistance as a good sign, as a sign that you’re changing something big, and not just as a yellow flag.
  • Test early and often.  Go back to the non-consumers you interviewed and ask if your prototype would change their mind.  Iterate in response.



Joining the Granular Board of Directors

I’m very happy to say that I’ve joined the Board of Directors of Granular.  In this post, I’ll provide some commentary that goes beyond the formal announcement.

I think all CEOs should sit on boards because it makes you a better CEO.  You get take remove the blinders that come from your own (generally all-consuming) company, you build the network of people you can rely upon for answering typical CEO questions, and most importantly, you get to turn the tables and better understand how things might look when seen from the board perspective of your own company.

Let’s share a bit about Granular.

  • Granular is a cloud computing company, specifically a vertical SaaS company, aimed at improving the efficiency of farms.
  • They have a world-class team with the usual assortment of highly intelligent overachievers and with an unusual number of physicists on the executive team, which is always a good thing in a big data company.  (While you might think data scientists are computer science or stats majors, a large number of them seem to come from physics.)

To get a sense of the team’s DNA, here’s a word cloud of the leadership page.

wordle 2

Finally, let’s share a bit about why I decided to join the board.

  • As mentioned, they have a world-class team and I love working with supersmart people.
  • I like vertical strategies.  At MarkLogic, we built the company using a highly vertical strategy.  At Versant, a decade earlier, we turned the company around with a vertical strategy.  At BusinessObjects, while we grew to $1B largely horizontally, as we began to hit scale we used verticals as “+1” kickers to sustain growth.  As a marketeer by trade, I love getting into the mind of and focusing on the needs of the customer, and verticals are a great way to do that.
  • I love the transformational power of the cloud. (Wait, do I sound like too much like @Benioff?)  While cloud computing has many benefits, one of my favorites is that the cloud can bring software to markets and businesses where the technology was previously inaccessible.  This is particularly true with farming, which is a remote, fragmented, and “non-sexy” industry by Silicon Valley standards.
  • I like their angle.  While a lot of farming technology thus far has been focused on precision ag, Granular is taking more of financial and operations platform approach that is a layer up the stack.  Granular helps farmers make better operational decisions (e.g., which field to harvest when), tracks those decisions, and then as a by-product produces a bevy of data that can be used for big data analysis.
  • I love their opportunity.  Not only is this a huge, untapped market, but there is a two-fer opportunity:  [1] a software service that helps automate operations and [2] an information service opportunity derived from the collected big data.
  • Social good.  The best part is that all these amazing people and great technology comes packaged with a built-in social good.  Helping farmers be more productive not only helps feed the world but helps us maximize planetary resource efficiency in so doing.

I thank the Granular team for taking me on the board, and look forward to a bright, transformational future.

Ten Classic Business Books for Entrepreneurs / Startup Founders

I often get asked by technical founders what business / marketing / strategy books they should read.  While there are many excellent relatively new books (e.g., The Lean Startup), the primary purpose of this post is to list a set of classic business books that most (older) business people have read — and that I think every budding entrepreneur should read as part of their basic business education.

  • Ogilvy on Advertising by David Ogilvy.  It’s getting a bit dated at this point, but still well worth the read.  The media have changed, but the core ideas remain the same.
  • Positioning by Al Ries and Jack Trout.  They, well, wrote the book on positioning.  Very focused on the mind of the customer.
  • Public Relations by Edward Bernays.  Another classic which studies PR in both history and application.  (I’m told Autonomy’s Mike Lynch swore by Bernays and Propoganda.)
  • The Innovator’s Dilemma by Clayton Christensen.  A newer book than many of the above, but an instant classic on the theory of disruptive innovation.
  • Guerrilla Marketing by Jay Conrad Levinson.  Oldie but goodie reinforcing the important idea that marketing doesn’t have to be expensive.
  • Blue Ocean Strategy by Renee Mauborgne and W. Chan Kim.  Again, a newer book than many of those on the list, but still an instant classic in my mind.  I particularly like their strategic levers analysis as shown in, e.g., the Cirque du Soleil case study.
  • Solution Selling by Michael Bosworth.  There as almost as many books on sales as there are salespeople.  I’ve read dozens and this, while superseded by Bosworth himself, remains the classic in my mind.
  • The Art of War by Sun Tzu.  The oldest book on the list by a few thousand years, so you want to find a version that is adapted to business.  While I like military-business analogies, On War remains on my to-read list.

Note that I have deliberately omitted Good to Great for three reasons:  (1) the case studies have largely under-performed undermining the book’s core thesis, (2) the book has generally been discredited, and (3) in my experience it is the most abused business book I have seen in terms of misapplication.  Despite reasons 1 and 2,  it nevertheless remains a top-seller; so much for rationality in business.

As a supplement, here are some newer books of which I’m a big fan:

  • The Halo Effect by Phil Rosenzweig.  A must read for anyone who wants to understand the weaknesses of business books and the business press.
  • Trust Me, I’m Lying by Ryan Holiday.  A simply amazing book by a self-confessed media manipulator and how he worked the top blogs.
  • The Lean Startup by Eric Ries.  Quickly becoming a new classic, on the art of iterative innovative (and frugal) strategy.
  • Thinking, Fast and Slow by Daniel Kahneman.  Amazing book by a psychologist who won the  Nobel prize in economics on human rationality and irrationality.

And finally, here are some near classics that didn’t quite make my top ten list.

  • The Wisdom of Crowds by James Surowiecki.  A great book on groups and their functions and dysfunctions.
  • Permission Marketing by Seth Godin.  Godin is an amazing speaker and thinker, but I have trouble identifying his one classic; he’s written too many books so it’s hard to find one to recommend.  This is my best shot.
  • The Five Dysfunctions of a Team by Patrick Lencioni.  Lencioni has also written numerous strong books on leadership, teamwork, and organizational dynamics, but I think this was his best.

Is Salesforce / Siebel a Classic Disruption Case?

Like many others, I have often used Salesforce / Siebel as a classic example of Innovator’s Dilemma style disruption.  Several months ago, in response to this article about Host Analytics, I received a friendly note from former Siebel exec and now venture capitalist Bruce Cleveland saying roughly:  “nice PR piece, but the Salesforce / Siebel disruption story is a misconception.”

So I was happy the other day to see that Bruce wrote up his thoughts in a Fortune article, Lessons from the Death of a Tech Giant.  In addition, he posted some supplemental thoughts in a blog post Siebel vs. Salesforce:  Lessons from the Death of  a Tech Giant.

Since the premise for the article was Bruce gathering his thoughts for a guest-lecture at INSEAD, I thought — rather than weighing in with my own commentary — I’d ask a series of study guide style questions that MBA students pondering this example should consider:

  • What is disruption?  Given Bruce’s statement of the case, do you view Siebel as a victim or disruptive innovation or a weakening macro environment?
  • Are the effects of disruptive innovation on the disruptee always felt directly or are they indirect?  (e.g., directly might mean losing specific deals as opposed to indirect where a general stall occurs)
  • What does it feel like to be an executive at a disruptee?  Do you necessarily know you are being disrupted?  How could you separate out what whether you are stalling due to the macro environment or a disruptive innovator?
  • What should you do when you are being disrupted?  (Remember the definition of “dilemma” — two options and both are bad.)
  • While not in the article, according to friends I have who worked at Siebel, management could be quoted in this timeframe as saying “Now is the time to be more Siebel than we’ve ever been” (as opposed to emulating Salesforce).  Comment.
  • What should Siebel have done differently?  Was the over-reliance on call center revenue making them highly exposed to a downturn in a few verticals?  How could they have diversified using either SFA or analytics as the backbone?
  • What should Siebel have done about the low-end disruption from Salesforce?  Recall that in 2003 Siebel launched Siebel CRM On Demand as an attempted blocking strategy in the mid-market and acquired UpShot as a blocker for SMB.  How could Siebel have leveraged these assets to achieve a better outcome?
  • To what extent should external environment variables be factored in or out when analyzing disruption?  Are they truly external or an integral part of the situation?
  • To what extent do you believe that Oracle’s acquisition of Siebel left Salesforce unopposed for 8 years?  To what extent was that true in the other categories in which Oracle made large acquisitions (e.g., HCM, middleware)?
  • After hearing both sides of the argument, to what extent do you believe the reality of the case is “Salesforce David slaying Siebel Goliath” versus “Siebel getting caught over-exposed to a macro downturn, selling to Oracle and giving the CRM market to Salesforce?”   In effect, “they didn’t kill us; we killed ourselves.”

I deliberately will offer no answers here.  As an old friend of mine says, “there are three sides to every story:  yours, mine, and what really happened.”  Real learning happens when you try understand all three.

Megavendors, Cloud Judo, and The Innovator’s Dilemma

It’s an interesting time in cloud evolution.

  • Oracle missed their fourth quarter targets, for the third time in seven quarters, with many observers worried that cloud missteps were a root cause.  Buying Sun when the world was going cloud was a rare Oracle zig when the market zagged. To take Wall Street’s eyes off the 4Q miss, Ellison promised some startling announcements in the coming week, a great diversion if there ever was one.
  • Oracle then announced a nine-year strategic partnership whereby Salesforce will continue to run its technical operations on Oracle’s database, purchase Financial/ERP and HCM software from Oracle (presumably dropping its existing Workday implementation), and the two companies will better integrate their respective back- and front-office cloud offerings.  Frankly, this deal looks like more a like big purchase from Salesforce — perhaps given at a great price to accommodate quick timing — than anything else.

PR obfuscation aside, the cloud — which Ellison once described as complete gibberish — appears to be rusting out the core of Oracle’s business.

I have two observations that I’d like to explore in this post.

  • There is a total disconnect between Oracle corporate and the Oracle field when it comes to cloud messaging.  While this is inevitable when corporate does a sudden about-face, I’ll take a moment to show how far apart corporate and field are on the cloud issue.
  • The enterprise software megavendors are faced with an Innovator’s Dilemma problem and that these such problems are extremely difficult to solve.  Christensen got famous for pointing out the structure advantages of the innovator.  His Innovator’s Solution was a sort of Lethal Weapon 4 seemingly written to say “well there must be something companies can do about this,” but the book doesn’t offer much, and frankly I’m not sure there is.    

The Corporate / Field Disconnect

Just two days ago, a friend shared with me some standard playbook messaging that the Oracle field uses when selling against real cloud computing vendors.

  • Data location.  “So you’re seriously going to choose a solution where you don’t even know where your data is going to live?”
  • Migration.  “These systems have a limited lifespan.  What happens when you want to move?  Your cloud vendor can hold the data hostage.”
  • Upgrade control.  “So your cloud vendor is going to upgrade you whenever they want to?  You don’t have any control over when and how your application is updated?”

Really?  Is that all you’ve got?  “You gotta be careful with those horseless carriages:  they’ve got a round wheel instead of reins and they go too fast.”

Some quick responses before continuing:

  • Why again does it matter where you data is?  Do you actually know where your data is with your on-premises system?  What matters is the security of your data and the availability of your data.  Cloud vendors typically do better than on-premises solutions in those departments thanks to security standards, auditing, and SLAs for availability and uptime.
  • For on-premises vendors to talk to cloud vendors about migration and lifespan is a deep case of the pot calling the kettle black.  First, it is purely theoretical argument.  In reality, I know of precisely zero major cloud vendors who have had a major discontinuity in their system.  Second, on-premises software has a lifespan too and I know of plenty of on-premises migrations that nearly killed the company (e.g., Siebel 7, Sybase 10).
  • Upgrade control.  This is straight marketing judo — take your biggest weakness and assert it against your competitor.  Again, it’s a great tactic — see Ronald Reagan using it masterfully here — but it’s simply too far from reality to be believed, except perhaps by on-premises vendors.  Upgrades are transparent, even in the case of Salesforce who has the most advanced and powerful customization framework and the oldest major codebase out there.

While the megavendors are teaching us an A+ lesson in rhetorical devices, there is clearly something deeper going on here.

The Megavendors and the Innovator’s Dilemma

The trouble with treating cancer is that, simply put, it’s you.  It’s not an infection, a foreign invader that your immune system can track down and kill.  It’s you, so how is your immune system supposed to separate the good you from the bad you?  That’s why it’s hard.

That’s how I feel about the Innovator’s Dilemma.  The problem isn’t your competition.  The problem is you.  Everything you have ever done to create the enormous advantages that propelled your company success reverses on you.

Our CMO, Lance Walter, tells some great Siebel stories in this regard.  Siebel ruled CRM in the on-premises world and Lance worked there when the Salesforce invasion was in full force.   One meeting went like this:

Boss:  “Tom (Siebel) says we need a plan to put Salesforce out of business in 90 days.”

Product Manager:  “But Salesforce has a recurring revenue model; even if we stopped all of their sales for 90 days it wouldn’t put them out of business.”

Boss:  “Don’t be naysayer, we need to do this.”

Lance’s resigned the day after he heard a VP say the following:  “in defeating Salesforce, we need to be more Siebel than we’ve ever been over the next 6 months.”   This, of course, was the dead wrong answer.  When they needed to be less Siebel than they’d ever been, the leadership was focusing on becoming more.

The Innovator’s Dilemma is a hard problem.  Maybe an impossible one.

  • You are torn between disrupting yourself and milking your core business model while others disrupt you.
  • Your customers, because they are rooted in the past, give you bad information about the future.  You listen, quite naturally, to the people who bought your product when you should be listening to those who didn’t.  Not easy, especially when you’re signing $100M contracts with those who did.
  • Wall Street wants to see you keep up your oligopolistic operating margins when the disruptors are burning through seemingly free venture capital to build up their business.  Unless you can tell the Street one heck of a story, responding properly to the threat might actually cost you your job.
  • The innovators at your company leave to pursue opportunities at the disruptors, so you are left with stewards — often highly competent stewards, but steward nonetheless — leading your company.   You start to lack the ability to innovate even if you wanted to.  You have lost the requisite DNA.
  • Your team is demoralized and losing faith in your company because the same leadership who confidently dismissed the disruptors for years reverses themselves overnight.  Think:   Ken Olsen and the “snake oil” quote.  Think:  Larry Ellison and the “complete gibberish” quote.

Even if you try to acquire your way out of the dilemma, you often kill off the DNA and/or wreck the strategy of the acquired company.  Acquired founders and their teams rarely stick around — SuccessFactors’ Lars Dalgaard  would be a recent example.

Even when you retain acquired CEOs, you can still fumble an acquisition by synergy-seeking.  While most people think of Salesforce as a disruptor, bear in mind they are about 14 years old and are now themselves being disrupted at the low-end by cheap, viral, freemium products like Zendesk.  In my opinion, Salesforce had the right idea in acquiring Assistly as one response, but sub-optimized the acquisition because of synergy-seeking.

Whereas Assistly should have been left standalone, funded like Zendesk, and aimed at Zendesk in order to protect the flanks of the customer service business, the company couldn’t seem to resist synergy-seeking, rebranding (to, one of the least SEO-able terms I can imagine), and integration.   See below for the Google Trends view of the result:


Even great companies get confused sometimes.  And, by the way, props to Salesforce for worrying about themselves being disrupted while they are still an active disruptor.

On M&A, another interesting trend is that the disruptors aren’t always for-sale anymore.  When a billionaire founds a company and says it’s not for sale, it isn’t. Particularly if they’ve put in 10x voting rights on the pre-IPO shares, as you see in some of the hotter tech IPOs.  So even if a megavendor could actually successfully pull-off the acquisition of a hot disruptor, in many cases those companies are “going long” and are simply not for sale.  Workday would be single best example of such a company.

When you try to think of technology companies that have come and gone it’s easy:  DEC, Wang, Sybase, Siebel, Sun, Baan, NCR, BEA, Documentum, Vignette, ASK, Veritas, Informix, SGI, Computer Associates, and zillions of others. It turns out that it can be relatively easy to ride one wave.

Riding across multiple waves, on the other hand, seems a lot tougher.  In fact, there’s only one high-tech company I can think of who was a leader 50 years ago and who is a leader today:  IBM.

Perhaps there’s a reason that The Innovator’s Dilemma is #646 in Amazon’s books ranking and The Innovator’s Solution is #14,555.

[Post revised at 1149 PDT due to accidental publication of an incomplete draft form.]