The bigger a company gets, the harder it is to innovate and move quickly. But don't tell that to Marc Benioff and the team at
By size, Salesforce barely resembles the company that went public a decade ago, swelling from 500 people to 13,000 and from $50 million in annual revenue to $5 billion. But its approach to innovation under Benioff has held firm. Here are three ways the company stays on top in San Francisco, the city Benioff calls "the most innovative city in the world."
The product line
Salesforce's bread and butter is customer relationship management, and its CRM product remains the backbone of the business. But talk to key executives at the company, and you'll hear a consistent theme: they don't join the company because they love CRM--well maybe they do, too--but they join because of the broader vision of Benioff, the company's cofounder and CEO.
A key to Salesforce's success has been its ability to move into bigger companies, selling to enterprise-class large customers who require more modifications and attention than a small or medium business, analysts say. Today, the company's enterprise business is run by David Rudnitsky, a serial entrepreneur who took Benioff three meetings to hire 12 years ago. "We were having dinner at the Four Seasons and I mentioned the word CRM and how Siebel Systems [a competitor acquired by Oracle] had been over-sold and under-delivered. And Marc said to stop saying 'CRM,' that I wasn't getting it," Rudnitsky recalls. "He said look at the room, at the lights and the chandeliers. He said we were building a utility, a power plant like for those lights, or how I'd disrupted the browser at Netscape. Right then in 2002, I thought, 'That's a visionary.'"
Salesforce keeps customers happy with its products through constant tinkering and brainstorming for little tools that can make a customer's life a little bit easier--but can then grow to big projects. Take the 'Today' app, a scheduler and virtual assistant for salespeople first released a year and a half ago. That app came out of an offsite in Carmel-by-the-Sea hosted by sales cloud chief Linda Crawford, a veteran of Salesforce for eight-plus years. Crawford gathered her product managers and marketers for a day and a half without phones or computers to think up one great idea for helping the sales rep on the move. The informal setting led to a eureka moment inspired by Benioff's omnipresent executive assistant, Joe Poch.
"Joe is always whispering in Marc's ear and keeping him a step ahead. A sales rep could use someone to follow up on loose ends and get them to meetings. So we did 'Project Joe.'"
Back at Salesforce's San Francisco headquarters, Crawford was able to quickly pull in a project manager, marketer and designer. A first version of Today shipped in Salesforce's next release and Crawford says is now a polished product.
The World’s Most Innovative Companies is the definitive ranking of the 100 firms investors think are most likely to generate big, new growth ideas.
Free-agent employees
Every product at Salesforce is mapped out for employees by a management tool developed by Benioff called a V2MOM, standing for "vision, values, methods, obstacles and measures." Pronounced "Vee-two-moms," the tools are a mix of philosophy and products. Benioff puts "trust" at the top of his methods, since as he puts it, "That's the product that we sell, trust. Customers work with us because they trust us, and employees work for us because they trust us." But if a product isn't on a V2MOM somewhere as well, Benioff says it may as well not be in the company.
Higher priority projects on the corporate V2MOM personally written by Benioff and all the way down to the every-day employee get extra juice compared to those lower on the list. Employees check their own twice each quarter to measure their progress. The top project of each year gets an internal "CEO" to call in whatever resources he or she needs to meet its goal. Last year that was Salesforce1; in the upcoming fiscal year the platform, Force.com, and new analytics efforts will move up.
Executives love the resources they get when they take over one of those projects. Alex Dayon, a senior executive as president of products, joined Salesforce through acquisition in 2008, tasked with creating and building a service cloud unit. "I was CEO, and it was amazing," Dayon says. "Everybody works for you. You're sales and marketing? Listen to Alex! I had thousands of salespeople, millions in a market budget. I had thousands of people watching when I went onstage at Dreamforce [Salesforce’s annual conference]. And your product, it’s yours to lose."
Once you succeed with a product, you're not tied to it forever. Dayon took a six-month sabbatical after his second initiative before returning to a bigger title and more responsibility. To keep executives energized and not looking to make a move outside the company, Salesforce encourages its managers to move around every several years. The service cloud got taken over by Alex Bard, acquired when Salesforce bought his company Assistly in 2011. The longtime manager of Salesforce's App Exchange, Leyla Seka, has long outstayed the year she expected to spend at Salesforce when she joined in 2008--she now runs Desk.com, the beefed up reincarnation of Assistly.
“Any job you do long enough, it starts to get a bit boring, and I was told to explore,” Seka says. “And we then give you room to make a success. Salesforce is good at having a bunch of giant trees growing, but also little saplings around it that it protects.”
The same is true for employees in the rank and file. Engineers and managers can jump to projects they find more interesting at annual internal job fairs the company holds, where each unit chief is tasked with pitching and communicating the vision of their particular group.
"If you look at companies like HP and
Of course, some executives do leave, such as Heroku's CEO Byron Sebastian and cofounder Adam Wiggins and more recently ExactTarget cofounder and CEO Scott Dorsey. Salesforce cofounder Parker Harris can rattle off a few others. "A lot of people do reach that point where they want to try something themselves," Harris says, including Salesforce's own third and fourth cofounders, who've long since left. "Usually Salesforce might invest, or Marc will invest, so we keep them close to the family. The most important thing is we want to keep people as long as we can and find them different roles."
That's a tactic that's proven successful for others in the sector, says Neil Sims, a partner at executive search firm Boyden. "Human resources today has to think in terms of retention strategies," Sims says. Supporting entrepreneurs within and then once they leave is a move that's not only popular with Salesforce, but with other large tech companies like Cisco Systems as well. "It insulates against absolute loss of mind share."
Benioff lets you "figure it out"
It all starts and ends with Benioff, executives tell Forbes. And Benioff is famous within the company for telling his executives a broad vision, then asking them to map out exactly what they'll make of it for themselves.
When Dayon launched service cloud, he asked what the product was and Benioff told him "I don't know, you'll figure it out!" Salesforce Japan CTO Yoshi Oikawa tells a similar story. "I was in California, and one day Marc called me into his office and asked me, "What do you think about becoming the CTO of [Salesforce] Japan? And I said, 'There is no team in Japan, so what do you want me to do there?' And Marc simply replied, 'You'll figure it out.'"
A key criteria for acquisitions, executives tell Forbes, is a company's fit with the cultural tone Benioff sets with not just his broader cloud philosophy, but also with philanthropic giving. The Salesforce Foundation employs 150 people and works with every team in the company on projects as part of Benioff's 1-1-1 approach of giving back 1% of your time, equity and product. And even in the Foundation, employees build. Executive director Suzanne DiBianca's got her own apps the team developed for volunteer management and put in the company app marketplace.
Salesforce has also benefitted from one factor that has little to do with the culture Benioff has created, analysts say: its historically rising stock price. "They are perceived as being innovative and they have that relationship with their customers. But look back at the stock over the last 10 years, and it's had a significant rise," says Gartner analyst Rob Desisto. "A lot of times you'll get brought into a company and the upside of the equity isn't as pronounced. We shouldn't belittle that factor above and beyond the culture."
One challenge facing Salesforce will be Salesforce's own size catching up to it in the future, Desisto says. "They are definitely perceived as being innovative, and they quickly turn around what they hear from customers into products. But as we move forward, it will be more challenging. The bigger you get, the tougher it is to navigate the ship."
Innovation can only get you so far anyway, says Forrester analyst Duncan Jones, who says Salesforce's comparative edge in innovation to companies like IBM and SAP is difficult to measure. "It's more than inventiveness--you also need to apply your ideas to solve real business problems, and then bring those to market as solutions that customers can use," he says.
But if customers are unhappy, they wouldn't keep renewing their subscriptions at the steady clip that Salesforce has long enjoyed. Whatever is in the water at Salesforce, it's working so far. The company is on top the Most Innovative rankings in large part because of the premium that Wall Street has valued the stock at beyond its financials today (you can read more on the methodology here). And few are betting against Salesforce's ability to keep growing to stay there for 2015 and beyond.
If staying ahead doesn't depend solely on Benioff himself, well that suits the face of the company just fine.
"They can’t look to me for all the answers. I don’t have them, and that’s not our culture," Benioff says. "They are coming to me with their ideas and their visions. It’s not my role to be the only visionary in town."
