Last month, the Philadelphia Inquirer reported:
Like many business executives, Oracle CEO Larry Ellison has famously read The Art of War, the sixth-century B.C. Chinese military treatise, for application in modern times. The book, by Sun Tzu, encourages the judicious use of strategy and outsmarting, rather than overpowering, one's opponent. Has [Bill McDermott, CEO of SAP Americas] read it? "I have." But Oracle, he said, "is the JV team of The Art of War. To beat SAP, you gotta bring the varsity."
While the battle of words goes on between the two software companies' chief executives on who is best at implementing Sun Tzu's Art of War, Marc Benioff, Chairman and CEO of salesforce.com (NYSE symbol: CRM) continues to take action to fulfill his vision and mantra: "The end of software."
As the world leader in on-demand customer relationship management services, salesforce.com has fully embraced the software as a service (SaaS) model. How can SaaS help your company? Instead of investing in hardware and updating and maintaining enterprise software at your facility, salesforce.com takes care of that for you; all you need to do is access the Web and log in. This is much like how you receive electricity from the power company: you pay only for what you use, and not have to invest in the power plant or worry about maintaining the power plant. By 2011, market analysts at Gartner Inc. project 25 percent of all new business software will be delivered by means of SaaS.
Arguably no one is more capable and experienced in SaaS than Mr. Benioff's salesforce.com. Although large and formidable, traditional software companies like Oracle, SAP, and Microsoft should be concerned as their progress in SaaS has been slow and unfocused. SaaS may even perhaps be contradictory to their core business models. With over 500,000 active subscribers now using salesforce.com's services -- grown from 100,000 subscribers when it went public in 2004 -- Marc Benioff is well on his way to ending software as most businesses know it today. Mr. Benioff doesn't just "believe in the Art of War," he effectively applies it.
Therefore, the part we found most remarkable about Marc Benioff and salesforce.com is the seemingly effortless way they apply the heart of Sun Tzu in the midst of the most embattled and dangerous of corporate settings, and with such great success. What he has done and continues to do, and what he describes below in our interview, is what Sun Tzu refers to as 'employing shih' at a very high level, and with wonderful examples of the extraordinary and orthodox as well as forming and transforming. It's effective yet at the same time natural, not contrived. And Mr. Benioff's insistence on the uniting the 'army' and the commander's vision as well as the conviction that bigger objectives -- universal access to software on-demand and the 'end of philanthropy' -- can both be served in business success and be values that can help fulfill business objectives. This is taking whole.
Another observation is the connections between what Marc Benioff does and the text are not explicitly stated in this interview, yet informed readers of Sonshi.com will clearly see them. In our opinion, this understatement makes the example so much stronger, i.e., "the truth is stronger when communicated by implication." Mr. Benioff is understated and gentle in person, yet clearly immovable and resolved like a mountain.
We are honored to have interviewed Marc Benioff and thank him for taking time from his busy schedule to share his business wisdom with Sonshi.com readers. You can learn more about him and his numerous recognitions and accomplishments at salesforce.com. Below is our interview with Mr. Benioff. Enjoy!
Sonshi.com: What concept in Sun Tzu’s Art of War do you like the most and why?
Benioff: The concept that I like the most, and the one that I’ve taken most to heart, is the belief that people can’t be united or focused unless they share a common philosophy—a philosophy that gives their effort a greater meaning.
I’ve seen how important this concept is in business. To be truly successful, companies need to have a corporate mission that is bigger than making a profit. We try to follow that at salesforce.com, where we give 1% of our equity, 1% of our profits, and 1% of our employees’ time to the community. By integrating philanthropy into our business model our employees feel that they do much more than just work at our company. By sharing a common and important mission, we are united and focused, and have found a secret weapon that ensures we always win.
Sonshi.com:Would you mind sharing with our readers a time when the book helped you to compete in business and/or helped you in your life?
Benioff: One of the most important tenants of the book focuses on strategic thinking rather than combative thinking. That advice has helped us decide to position ourselves in a way that makes people want to join our mission—rather than attack us. A perfect example of this is exemplified by our decision to open up our platform. If we had been thinking combatively, we would have been afraid about competitors learning too much about us, or we would have had concerns about them duplicating our moves. Instead, we opened up the platform, first with API, then with something called Customforce, a suite of tools behind salesforce.com that allows regular business people to easily extend their current salesforce.com applications, and then with Apex, a breakthrough development platform that lets customers create and run any type of application on demand. By inspiring people to join us and work with us creatively, we gathered an army of innovators who are dedicated to making us better.
Sonshi.com: What is your philosophy on managing people? In other words, how do you motivate your employees to achieve their potential and thus achieve the company’s goals?
Benioff: One of the things we touched upon was the "1% Solution," where 1% of our equity, profits, and employees paid work hours are donated to philanthropy. We’ve found that giving employees paid time off to get involved in the community has motivated them tremendously. They feel a greater sense of personal pride and satisfaction—and they have become happier and more productive at work. What some people don’t consider is that this outside work doesn’t just give their lives deeper meaning (which is certainly important), but it provides an excellent training ground as well. I’ve seen how allowing employees to go off and work with nonprofits they have polished their leadership and management skills, built networking opportunities, and sparked their creativity—all of which have made them not only more passionate, but more valuable employees.
Sonshi.com: From your experience, what are a few attributes you usually see in a successful salesperson and/or marketer?
Benioff: The one thing all successful salespeople and marketers have in common is a relentless focus on the customer and a real commitment to his or her success. That requires careful listening skills and then collaborating with the customer to visualize success. It also requires steadfast determination in order to make that vision a reality. These attributes are not exclusive to the sales team; to be successful, the entire organization must pursue this course.
Sonshi.com: In 2004, you wrote a book called "Compassionate Capitalism" and just a few months ago your new book "The Business of Changing the World" was published. Why does philanthropy integrated into a company -- e.g., devoting one percent of revenues, one percent of employees' time, and one percent of the company's stock to the community -- make sense?
Benioff:We have integrated philanthropy into our corporate culture from the inception of our company, and we have seen the difference that can be made with that model. The 1-1-1 model—equity, profits (in the form of product donation), and employee time—was designed to ensure that as our business grew so would our contribution to the communities in which we operate.
By leveraging the energy of our entire ecosystem—employees, partners, and customers—we have been able to make contributions that have even exceeded my expectations. In July 2000 the Foundation opened its first after-school technology center at a neighboring YMCA, providing free access to underserved youth. Since then, we have created more than 60 technology centers and media programs with schools and non-government organizations in 12 countries including Kenya, Israel, Japan, Ireland, and Singapore. Our 2,000+ employees have embraced the effort with fervor and donated over 30,000 hours to the communities that we serve. Corporations including Time Warner, Dell, and Cisco have joined our effort, donating services, time, and people. Together we’ve been able to reach more than 100,000 people worldwide with access to the Internet and state of the art technology programs.
In the summer of 2004, we witnessed the true financial power of our integrated model. The salesforce.com initial public offering raised more than $12 million for the foundation—and proved the capability of pre-IPO companies to make a positive difference, if only they make an early financial commitment of equity. In addition to funds raised from salesforce.com equity, about half of our employees make annual stock or cash contributions through the matching gifts program; we also receive donations from outside individuals. Today the foundation is worth more than $18 million.
I’m amazed by the potential of more companies employing integrated philanthropic initiatives at earlier stages in their life cycle. What if this were done on an even more massive scale? Consider what would happen if a top-tier venture-capital firm required the companies in which it invested to place 1% of their equity into a foundation serving the communities in which they do business. If embraced, this new model could dramatically increase the percentage of overall corporate donations and even lead to what Fortune magazine writer David Kirkpatrick has called "the end of philanthropy" and prove the true power of the integrated community service model.
Sonshi.com: The mantra at salesforce.com is the "End of Software." How would a company looking for CRM benefit from choosing salesforce.com over more traditional software companies like Oracle or SAP?
Benioff: Every company wants to focus on what they do best, and please their customers. And while the technology models of the past have promised to help them do this, the result was too often cost and complexity. We offer an alternative that allows our customers to focus on what’s important.
We think that there has been something fundamentally wrong with the technology industry—particularly for buyers—for a long time. There’s been an unnecessary burden placed on customers to ensure that enterprise software delivers on the vendors’ promised results. The customer has been required to piece together an overall solution (traditionally of application software, middleware software, database software, networking & telecommunication infrastructure, hardware servers, and client devices). These pieces are assembled after purchase and require continuous fine-tuning and support.
Maybe if these software applications worked, it would be okay. The problem is, they don’t. Over the past number of years, enterprise software customers have made large investments—usually more than they had anticipated—and received little in return. In fact, more than half of all new enterprise systems have failed completely!
As an alternative to the current system, salesforce.com offers Web-based applications. It’s now been proven that on-demand solutions can deliver immediate benefits at reduced risks and costs. Our application utility model, which we promote as "The End of Software," focuses on eliminating conventional software in favor of a software-as-service model. What we mean by this is that users pay a reasonable monthly fee as opposed to tens of thousands (to millions) of dollars to install and upkeep the CRM solution. Since the solution requires no software or hardware to buy, install, maintain, or upgrade, customers typically realize savings of greater than 90 percent versus similar client/server solutions. The best part is that it works: salesforce.com is designed to be as simple to use as sites like Amazon or Yahoo, while at the same time it’s capable of handling a company’s complex CRM needs.
Sonshi.com: What are your thoughts on balancing work and personal life?
Benioff: I believe a balanced life is essential, and I try to make sure that all of our employees know that and live that way. It’s crucial to me as a manager that I help ensure that our employees are as successful as our customers and partners.
I also think that employees these days expect less of a separation of work and personal life. That doesn’t mean that work tasks should encroach upon our personal time, but it does mean that employees today expect more from the companies for whom they work. Why shouldn’t your workplace reflect your values? Why is "giving back" not a part of our jobs? The answer for us is to integrate philanthropy with work.
When I explain our company values and the foundation to prospective employees, they realize that they have an opportunity to do much more than change the way businesses manage and share information. When you take a workforce of smart, creative, dedicated people and say "take this company time to serve your community, and bring along your coworkers, customers, and partners" great things happen.
[End of interview]
Can your company implement Marc Benioff's 1% model? Yes. Here's how: