Monday, April 28, 2014

The $3 Billion Dollar (Wo)Men

It is rare to see a company above the $500 Million revenue mark fail to give a nod to the importance of employees, or "human capital".  The recurring theme that I see, if it is possible to paraphrase goes something like this - "Our people are our most important assets."

If you are an employee, hearing your company say something like that should give you encouragement.  As the company's most important component, that should mean it will do whatever it reasonably can to make sure that it retains, motivates, and engages you.  But let's say that your company also owns 30,000 patents, four million acres of land, 15 sky scrapers, and five corporate jets.  All of these I've just mentioned have a definite, discreet value.  In fact, all of them are very valuable indeed.  So if you are the most important asset your company has, just how much are you worth?

A close friend and colleague first made me aware several months ago of a situation that had been brewing in Silicon Valley since 2011 and finally found its resolution last week.  In short, that year five software developers filed a lawsuit against Apple, Adobe, Google, and Intel, and several other companies "...over an alleged "overarching conspiracy" to suppress pay by agreeing not to recruit or hire each other's employees."  Another way of saying this is the five believed that the tech giants were collaborating to (a) squelch the movement of employees from one company to another and (b) hold wages down artificially.  Needless to say, these claims were exceedingly bold and not something to casually allege against some of the biggest and most powerful corporations on Earth.  The companies being sued seemed to agree with this sentiment and tried to get the case thrown out by the 9th Circuit Court of Appeals, only to be rebuffed.  At that point it was game on between plaintiffs and defendants.

(For the record, Facebook has never been part of this case.  They pursue whomever they want, whenever they want, and don't seem to have much internal turnover.)

Over the ensuing three years from 2011 until this month (April 2014), the case evolved into a class action lawsuit encompassing about 64,000 employees in total.  Before the case was granted this status, there had been several other cases that had been filed and settled, all dealing with alleged employer collusion to control the free flow of employment for workers.  This article shows a timeline of almost everything and includes information about those cases against eBay, Pixar, Inuit, and LucasFilm. 

It appears that the reason why the workers were given class action status is that the presiding judges believed that the evidence pointed to a possible case of anti-trust actions.  I'm not schooled in law, but I know that when "anti-trust" comes into the picture, the situation gets a whole lot more serious.  So serious, in fact, that the lawyers for the 64,000 plaintiffs were seeking $3 Billion in damages.  Due to U.S. Anti-Trust Law, if the case in this situation goes to trial the total damages could be triple up to $9 Billion!  

For the reasons outlined in this piece by eWeek, the four companies (Apple, Adobe, Google, Intel) agreed to settle for $3 Billion rather than allow it to go to trial.  Besides the embarrassment of essentially being caught "red handed", I am assuming that they anticipated losing (badly) in front of a jury.  A $3 Billion settlement is always better than a $9 Billion loss.  Now, after the law firm takes its 20% cut, or a measly $600 MILLION, each of the plaintiffs will receive a gross amount of about $35,000 if the money is divided equally. (That's not always the case)

So, after writing all of this I come to my point.  The first is that $3 Billion for these companies is just pocket change.  In their place, I would have done the same thing.  But second, as bad as this may sound, I think that even though what the firms did was illegal and, as Google might put it, "evil", I have to agree with their actions.  At least to a point.  

The articles I have linked will paint the leaders of all these companies in a bad light.  However, I think that each one of them truly gets just how important each of their employees is or could be.  There has been and always will be a MONUMENTAL difference between "good" employees and the "great" ones.  

If your employees are truly your greatest assets, how far would you go to protect (and keep) them?  I would guess most of you would go to great lengths.  The situation with this lawsuit shows that the companies in Silicon Valley, even if they used the wrong methods, truly get the importance and value of high performing employees.  How many other companies say the same thing but can't or don't do anything to keep the "A players" who come through their organizations?

As a leader you are always in a war - every day - for the best people.  Be prepared to fight tooth and nail to keep them once (if) you are fortunate to get them.  The greatest are not a dime a dozen and are rarely replaceable.

Friday, April 25, 2014

How Salesforce.com Tends Its Garden

In the role of CIO I am very careful to promote (or seem to promote) any products.  At the same time, when I see a company doing something innovative or just plain cool, I feel compelled to point it out.  Therefore, as always, remember that this blog is not to be used for references, advice on trading, etc. etc.

There is a conventional wisdom that talks about how to get great talent in your organization.  Essentially, the advice is that the best people come from years of careful grooming, training, and mentoring from within a company's talent pool.  I tend to agree with this sentiment as long as the people being groomed were truly "good clay" from the start.  It's hard to argue with this kind of wisdom because it just seems to make sense.

So what about customers?  Wouldn't it be great if you (or your company) could manufacture the customers that you want to serve?  That would a great way to ensure profitability and future success.  Several companies, over the years, have had strategies to do just that.  I can think of two mega-corporations that have successfully created loyal life-long customers by targeting younger demographics.  One used cute Polar Bears and has been lauded for being clever and "hip".  Another used Cool Camels and has been demonized.

I recently saw a different strategy by Salesforce.com that did not involve any animals or fancy slogans.  They did something different; something so basic but yet so effective that I was stunned.  I was left thinking, how could a $3 billion+ company be so intuitive?  Maybe after spending decades buying from vendors who could care less about me after a sale, maybe I'm just jaded.  I'll tell you what I observed and maybe you, the reader, can tell me your thoughts.

This week I had a relative sign up for a one-user license of Salesforce.com - the cloud version.  I believe the cost for the subscription is $26/month.  She has a business that requires her to track customers and potential customers through the whole sales lifecycle of prospect-to-closure.  The relative went online, signed it up, and started to go through the online help materials.  That's when the phone rang.

When she picked up the phone there was an analyst from Salesforce.com on the other end.  He was following up after her registration.  Of course, I thought to myself, "Here comes the cross-sale."  Imagine my surprise when I heard that the analyst was calling to find out more about my relative's business.  He wanted her to walk him through every part of how the business operated, what the products were and how they worked, and her business goals.  The call between the two of them lasted about half an hour before it was finished.

The question begs, "Why would a multi-billion dollar software company spend so much time and resources on a customer that will only net them a maximum of $300/year?"  Although I can only guess, I would say that Salesforce is taking the long view of things.  I'm fairly certain that they must believe that some sizable portion of their business is going to come from the little customers of today.  In other words, when a person/entity comes to Salesforce.com and takes the time to subscribe, the software company is going to invest the time and effort to help make them as successful as possible.  You just cannot predict which business will have explosive growth, but statistically you know that some of them will.

Much like planting seeds and tending them to the point where they bear fruit, Salesforce.com is making an effort to grow their own future success.  I think that approach is extremely novel, well reasoned, and likely to work.  Based on the extreme customer satisfaction that my relative had after Salesforce took the time to really understand her needs, she is likely going to be a customer for life.  And if you think about it, if her business really takes off and grows, Salesforce.com already has a customer who is locked in and unlikely to switch to a competitor.

When you look at the cost these days of acquiring new customers, just in sales and marketing expenditures, I think we all have a lot to learn from Salesforce.com.

Monday, April 21, 2014

The Two Sides of Gratitude

There are countless sources of advice in the world on how to manage most every part of your life and career.  You need only pick a topic and then do one of many things to learn more - go to the bookstore; Google; read magazines; talk with friends, etc.  You get the point.  To illustrate what I'm saying, let's explore a list of areas where you can get input:
  • How to find a job
  • How to negotiate a salary
  • How to get promoted
  • How to handle vendors
  • How to manage projects
  • How to interact with difficult people
  • How to hire top performers
  • How to retain top performers
  • How to budget
  • How to coach and be coached
  • How to speak publicly
  • How to handle the politics of leadership
  • How to give performance reviews
  • Six Sigma
While I've listed 14 topics, I know for certain that I could find advice on hundreds and hundreds more.  In fact, it is more difficult by far to find a subject that is not readily referenced.  That is, until you start looking for information on the topic of gratitude.

Imagine that you search for a job and get an interview.  Today, only the grossly uninformed or the lazy fail to follow up with 'Thank You' notes.  But what happens after that?

Once inside of a company, like most people you are likely to receive raises, merit increases, performance bonuses, and other nice perks.  When is the last time you said, "Thanks"?  I mean, when did you actually take time out of your day to express gratitude?  It is surprising how non-intuitive it is for people, especially me, to take the explicit act of expressing gratitude.

Let's think about it for a second.  Most people work very hard for the things that they get.  When you personally receive a performance bonus or merit increase, don't you think you've earned it?  The truth is that you probably have but some other person still had to initiate and approve that payment or change to your status.  Like I tell people about employment, "You may work for a company but it is a person that pays you."  If you don't believe that, know that I've looked at every paystub I ever received and never once was it signed by "The Company"...

So what should you do to show gratitude?  In the end, how you do it is an individual choice.  I personally keep some stationery at my desk that I use to send hand written notes to express my thanks.  Just remember that the form is much less important than the action.

Now that we've discussed the importance of expressing gratitude, let's talk about something even more difficult.  This topic is about how to be on the receiving end!  If people are uncomfortable or unused to showing gratitude, they are much more so that way when someone expresses thanks to them.  Stop to think about this for a moment.  What did you do the last time someone thanked you for something that you did for them?  If you're like most people, you probably said something like, "Oh, it was nothing."  Even more likely, you felt embarrassed and didn't quite know what to say.

This behavior is even more deeply rooted in some cultures, to the point where it is imbedded in language.  People who speak Spanish know that "Thank You" equals "Gracias" and "You are Welcome" loosely equates to "De Nada".  Did you know that "De Nada", when translated to English in a literal way, means "Of (it's) Nothing"? 

When somebody expresses their gratitude or thanks to you, learn to accept it gracefully.  Rather than acting like what you did was nothing, acknowledge that you did something for another person and that your actions had value.  When you reciprocate an expression of thanks with a graceful acceptance, you forge a circle of trust, respect, and symbiosis.

Remember that the good things that happen in your life and career are not to be taken for granted.  Being thankful conveys many positive things including respect, appreciation, and admiration.  It also reinforces that positive things that happen to you have positive results for the people that graced you in the first place. 

Bear in mind that you, as a leader, are having a positive and beneficial impact on the people who support your continued success.  Learn to appreciate the experience when people "give back" to you.  It's part of the never-ending feedback loop that takes you and those around to higher and higher achievement.

Friday, April 11, 2014

Go Looking For Trouble

Yes, I mean it.  If you are a leader within IT, especially a CIO, you need to go looking for trouble.

In the modern model for business, there is a structure that defines roles that people fill in order to do work.  There are many variations on the structure but in general, this is what you'll see:

  • Executive - the "flag" level officers including the CEO who set company strategy
  • Legal - handles all matters related to law
  • Accounting/Finance - balances the books, keeps money flowing, handles investments
  • Operations - in charge of making things, supply chain, quality
  • HR - takes care of the people-centric issues, manages talent, recruits
  • Sales - makes sure that customers actually buy products
  • Marketing - makes people want to buy the products
There are many other functions: Safety, Environmental, Security, Facilities, R&D.  Almost without exception, you'll see the same model in one variation or another in any organization you choose to look.

Obviously I left IT out of the list above.   Unlike all the rest, depending on where you look, IT could be under any of the other functions or as a "flag" level role reporting to the CEO.  Some might argue that Marketing should not be one of the possible homes for IT but with the emergence of the "Chief Marketing Officer", sometimes the CIO is combined with the CMO.

The point is easily made that all the line functions have very specific duties.  You would never see Supply Chain called in to fix a problem with the monthly accounting close.  Nor would you see Legal brought in to fix an issue with manufacturing on the shop floor.  It would just be ridiculous to see HR managers going out on a sales call to close a major deal with an international customer. 

HOWEVER, with all of the situations above it would not only be possible but highly likely that IT would be called to assist.  I've said it before and I will say it again.  The Information Technology function of a company is the only discipline that supports every other part of the firm.  Ask yourself this question.  "How many business processes within my company can function optimally without some type of IT product or service?"  If you're being honest (and no, cleaning the bathroom isn't a "business process"), it will be hard to name a single one.

So, if you're a CIO or a leader of IT personnel and resources, you should not only expect to participate in every part of the corporation's business processes, you must understand that this is your job.  But if you want to be "great", not just good, one of your primary goals should be to constantly be out looking for trouble.

Why should you go looking for trouble?  Shouldn't the work that is brought to you be enough to keep you and your staff busy?  The answer is that the more trouble you find, the less will show up on your doorstep.  I once heard a CIO say to me, "If my phone isn't ringing that's a sign that I'm doing a good job."  WRONG.  In the world of technology, something is always broken or in need of improvement.  Being proactive in finding issues grants the flexibility to deal with them on your terms and in your time frame.  As a side benefit, people will appreciate you that much more because you're not just proactive - you are demonstrating that you care about your colleagues and customers.

How much benefit can you get in terms of good will if you have company standard of deploying 24" monitors and you find someone suffering with a 17" dinosaur and you have it swapped out?  How much money could you save the company by going to the shop floor and discovering that three out of four bar code readers are broken and you can have that fixed in a day?

In the world of IT, if you really want to be both effective AND appreciated, go out looking for trouble.  Rest assured that it is always there and always will be.  Meeting it head-on rather than waiting for it will set you far apart from a desk jockey cycling through help desk tickets.

Friday, April 4, 2014

Face...Down?

Since the end of 2013 I have been hearing quite a bit of buzz about the possible imminent demise of Facebook.  In fact, a group of Princeton students made a rather bold prediction that Facebook would lose 80% of its peak user base by 2017.  In fairness to Facebook, they came back with a clever rebuttal by using "statistical analysis" to predict the imminent demise of Princeton University in about the same time frame.  (That rebuttal was soon taken down by Facebook).

In order to make sense of where the truth may lay, let's examine a few things germane to the whole concept of Facebook.

  1. Facebook is only viable if people voluntarily sign up for its service.
  2. Facebook's success is tied not only to the number of users but their quality as well.  If people don't participate in the "click through" advertising, Facebook doesn't make money.
  3. Younger users seemed to be less and less inclined to use Facebook, preferring other social media sites instead.  Here's a cute take on this trend.
  4. Facebook doesn't make any hard physical product.  This isn't necessarily a bad thing but it is hardly a robust diversification strategy.
  5. As the recent events with Tumblr suggest, the barrier to entry into competition with Facebook is not that onerous.
 I hardly believe that Facebook is due for the scrapheap anytime soon.  However, I think there are some signs that the top executives of the company may be losing personal faith in its long term viability. 

My observations are hardly scientific so don't (ever) use my blogs as stock trading advice.  But I'm going to point out two recent happenings that I believe bear some close scrutiny.

Number One:  Since Facebook's IPO in 2012, Mark Zuckerberg has liquidated almost US$6 billion worth of his own stock.  He may just be trying to get some money to allow both him and his wife a higher standard of living.  Zuckerberg barely takes a salary and I think he just asked it to be reduced to $1.  That's hardly a sign of a greedy man who still owns about $30 billion worth of stock.  Yet, six billion dollars worth of stock liquidation is hardly a trivial matter. 

Number Two:  The COO of Facebook is Sheryl Sandberg.  During the same two year period that Zuckerberg was liquidating stock, Sandberg has sold just over half her stake in Facebook.  She is a political operative who was active in the Clinton administration.  Some are speculating that Sandberg is building up a "war chest" that will help her run for some form of political office.  There's nothing surprising or unusual about that.  During the 2010 gubernatorial election in California, Meg Whitman used $140 million of her own money to try and win the race (she lost).  Elections cost real money these days if a person hopes to win.

Nobody knows for certain what the future of Facebook may hold.  There are certainly some clues out there that can lead to dark conclusions if read in a certain way.  Typically, the smart people get out when the gettin's good.  Is that what's happening at Facebook?