Growth IQ

by Tiffani Bova

  VCE in 2012 reached a 57.4 percent market share, according to Gartner, largely because of its pioneering work. The press, initially skeptical, was starting to come around, too. By 2013, it was achieving 50 percent year-over-year growth. But the losses and the lack of coordination were beginning to take their toll. The unequal commitment the two big companies had exhibited toward the venture from the beginning now began to tell in their respective willingness to continue to throw money at it.

  Despite the venture’s visible success, Cisco allowed its ownership stake to fall to 35 percent, while EMC’s rose to 58 percent. It was a vicious spiral—from now on the two companies would be moving in opposite directions regarding this partnership.

  Within a year, Cisco dropped its stake to just 10 percent and EMC announced that it acquired majority control of VCE. Three months later, in January 2016, VCE disappeared into EMC as its new “Converged Platform Division.” Within the year, in September, EMC was acquired by Dell. Cisco’s John Chambers had been right: in IT, coalitions are much harder than acquisitions.

  VCE

  KEY TAKEAWAYS

  The disconnection out of the gate from both a positioning and a marketing perspective should have been an early warning sign that all three companies needed to ensure they were heading in the same direction with the same expectations.

  Each brand individually was a powerhouse at partnering. Cisco had close to 90 percent of its total revenue from its indirect channel, VMware was roughly fifty-fifty at the time, and EMC was similar to VMware. The point of those stats was that they knew how to partner. They understood what it took. Each of them have successfully partnered in huge alliances with telcos, cloud providers, and other technology companies in co-marketing efforts. This Co-opetition agreement had all the makings of a winner. Early returns, while bumpy, were positive. Navigating the execution across the complex go-to-market for each individual company—coupled with their own growth aspirations—got in the way.

  PUTTING IT ALL TOGETHER

  OF ALL OF THE GROWTH paths, the Co-opetition path may be the most fraught with peril. That’s why, in entering such an agreement, it is incumbent that you see the potential for great rewards in order to justify the risk taken. The good news is that identifying that reward becomes easier in the era of shared platforms, open systems, and interconnected IT. Still, if a company is not careful, it can find itself not with a mutually beneficial relationship with a “frenemy” but instead with a ferocious enemy inside its walls that has access to its proprietary knowledge. Potential failure lurks at every step of the Co-opetition life cycle. Proceed with caution.

  WHAT WORKS—AND POTENTIAL PITFALLS

  Under what conditions is Co-opetition a good idea? If “the partners’ strategic goals converge while their competitive goals diverge . . . the size and market power of both partners is modest compared with industry leaders . . . [and] each partner believes it can learn from the other and at the same time limit access to proprietary skills.”

  COMBINATION: PATH 9—

  Co-opetition + Path 8—Partnerships

  This is a bit obvious but worth noting. Maybe the way to first engage with a current competitor is via a partnership that is focused on leveraging both brands to sell and market in a new way. See how that goes and then push the relationship further.

  COMBINATION: PATH 9—

  Co-opetition + Path 6—Optimize Sales

  This particular growth path involves the top levels in the organization. It is highly strategic in nature; don’t underestimate the level of pushback you may get from your front lines. The various sales teams at a minimum have competed against each other, maybe even for the same accounts. And legal departments may have been embroiled in contentious, long court battles. You can’t expect, beyond the C-suite, the rank and file to understand why you would strike such a deal “with the enemy.” The communication needed, both internally and externally, to ensure that sales are not impacted for the worse is key.

  COMBINATION: PATH 9—

  Co-opetition + Path 5—Customer and Product Diversification

  Because this growth path focuses on the product development side of partnering, using strategic partnerships to help with R&D costs, manufacturing capabilities, and leveraged IP is the ideal combination for Customer and Product Diversification, especially if you are in an industry with high up-front costs.

  PATH 10

  UNCONVENTIONAL STRATEGIES

  UNCONVENTIONAL STRATEGIES

  Swim upstream. Go the other way. Ignore the conventional wisdom.

  —SAM WALTON, founder of Walmart

  WHY UNCONVENTIONAL MATTERS

  Seventy-nine percent of consumers prefer to purchase products from a company that operates with a social purpose.

  Eighty-one percent of business executives said purpose-driven firms deliver higher-quality products and services.

  Sixty-six percent of consumers are willing to spend more on a product if it comes from a sustainable brand.

  Social capital is achieving a newfound status next to financial and physical capital in value . . . 65 percent of CEOs rated “inclusive growth” as a top-three strategic concern, more than three times greater than the proportion citing “shareholder value.”

  More than any other generation, millennials see a company’s commitment to responsible business practices as a key factor in their employment decisions:

  Seventy-five percent say they would take a pay cut to work for a responsible company (vs. 55 percent U.S. average).

  Eighty-three percent would be more loyal to a company that helps them contribute to social and environmental issues (vs. 70 percent U.S. average).

  Eighty-eight percent say their job is more fulfilling when they are provided opportunities to make a positive impact on social and environmental issues (vs. 74 percent U.S. average).

  Seventy-six percent consider a company’s social and environmental commitments when deciding where to work (vs. 58 percent U.S. average).

  Sixty-four percent won’t take a job from a company that doesn’t have strong corporate social responsibility (CSR) practices (vs. 51 percent U.S. average).

  DO WELL BY DOING GOOD

  If you want to grow, find a good opportunity. Today, if you want to be a great company, think about what social problem you could solve.

  —JACK MA, founder and executive chairman of Alibaba Group

  I once posted on Twitter and LinkedIn about how the focus of my career has changed over the years. It received almost thirty thousand views, five hundred “likes,” and dozens of comments. I must say that I was a bit surprised by the reaction. While brief, even a bit simple, it was a profound lesson to reflect on. I tried to capture how I felt at each big-age milestone and realized how I had not only grown as an executive in business but as a human being. The reactions and comments I received were a testament to how each of us tries to balance it all. Make a living. Raise a family. Make a difference. Be successful. Be happy.

  However, what was most inspiring was how many of those who left a comment were way ahead of my four-decade journey. People were quick to say that even now, in their twenties and thirties, they were trying to pay it forward, engaging in social causes, and working at companies who share their values. While I was always personally engaged in social issues, mentoring, and donating time and money, that never factored much into my decision of where I wanted to work, that is, until my most recent job change.

  The most important questions for my career by age.

  20s > What do I really want to do?

  30s > How to make more money?

  40s > What does all this hard work mean?

  50s > How can I pay it forward and make a difference? #dreamjob

  Having spent twenty years in the technology space, I have been to hundreds of tech conferen
ces all over the world, but there was one that always stood out to me. Dreamforce is an annual conference hosted by Salesforce every year in San Francisco. I have attended Dreamforce twelve years in a row, first as an analyst at Gartner and now as an employee of Salesforce, and I can tell you, without question, that it is the only conference I have ever been to where I left feeling inspired to be a better human being. I was changed. I wanted to do more.

  When I was crafting the outline for Growth IQ, I originally intended the Unconventional Strategies path to be about how companies were using unique, unorthodox ways to stimulate growth. However, the past two years have exposed me to a different interpretation of what “unconventional” really means, as I’ve had the opportunity to meet executives who are passionate not only about growing their business but about leveraging their platform, voice, products, employees, partners, and even shareholders to bring about social change.

  So much of Growth IQ covered the big disruptions happening in business. But successful businesses are embracing their human side and reaching for something deeper; a new value system that has inspired a new Zeitgeist: “A desire for purpose and mission. An emphasis on positive impact over material gain. A preference for sharing and giving over owning and taking. A willingness to break down silos and connecting the dots in new ways. An urgent, enthusiastic desire to find new solutions to the world’s most pressing problems.”

  Zeitgeist is a powerful force embedded in the individuals of a society. The German word Zeitgeist, translated literally as “time mind” or “time spirit,” is often attributed to the philosopher Georg Hegel, but he never actually used the word.

  THE FINAL FRONTIER

  This final growth path—Unconventional Strategies—is, in terms of cost and labor, not particularly expensive to execute. It cost almost nothing for Steve Jobs to get onstage at the annual Apple convention and inspire thousands of people to want (and buy) his products. He was masterful at making his speeches and product launches about more than just the hardware and software it developed but rather what people can do with the technology. Reflect back on some of Apple’s most memorable ad campaigns—“Think Different,” “Here’s to the crazy ones”—all focused on people, not the technology. Whereas the costs may not be prohibitive, in terms of emotional fortitude and courage, this path can be the most demanding of all.

  What makes Unconventional Strategies so appealing as a growth path is that it has the potential to be a gigantic breakout, making an end run around the competition—and even to pioneer a vast new market. What makes it scary is the potential for catastrophe. Under conventional growth strategies, if your new product line or market entry goes awry, you can usually cut your losses and escape. But by definition, Unconventional Strategies represent an embarkation into the unknown. It is hard enough to know when you are successful; it’s even harder to recognize when you are in trouble. You are making new rules as you go, so predicting the future can be almost impossible.

  This becomes particularly difficult when the new path you take is different from your current business, even orthogonal to it. Choosing to rebrand your business around a charismatic leader or enlisting customers to help design your next generation of products is one thing; building your marketing campaign around an entire twin operation delivering shoes to poor children in the developing world—like TOMS Shoes did, while at the same time making money—is a whole different matter.

  Why even try it? If you’re a bootstrapped early-stage company with limited time and resources, it can be easy to dismiss corporate social responsibility as something you formalize when you’re more established. But giving back can (and should!) be done at every stage of your company’s growth. The key is to make sure that doing the right thing is part of your culture and business model from the beginning. Done right, it can create a spectacular breakout against well-established competition, creating a whole paradigm that could take competitors years to catch up. For a mature company in a mature industry, it can shake up the status quo, revitalizing the business, its employees, and its customers and resetting the game—with the innovator enjoying a head start and a second chance to capture a new wave of growth and an entirely new set of customers.

  That’s the big picture. Less obvious, but often just as important, is the impact an Unconventional Strategies approach can have on your most important constituents—employees and customers. Making both proud to be part of such a company—especially if it is work for social good—can improve morale, help with employee retention, and make customers excited to be part of the crusade. Who wanted to work for Apple in the 2000s when it was announcing entire market sector–creating products every couple of years, or Hewlett-Packard in the 1960s when it was considered the most enlightened company on the planet, or Amazon in 2010 when it was reinventing retailing? Or Tesla today? This pride is even greater when you know that your employer is involved in “conscience capitalism,” using some of resources and profits to help the world’s needy.

  As I’ve mentioned, when I made my latest change on my career journey, I decided where I wanted to go for very different reasons than I have historically. I wanted to work for a company that was committed to providing quality products and services, of course, but even more so, a company where doing good was part of its core DNA. I have been fortunate to have found both a company and a CEO that fit the bill. “There’s all this incredible energy in your company and you can unleash it for good,” Marc Benioff, CEO of Salesforce, told Fast Company. “All you have to do is open the door.”

  For Salesforce, that means creating a company with a purpose beyond profit. Says Benioff, “My goals for the company are to do well and do good. The most important thing to me is that we bring along all our stakeholders with us. We had a vision from the beginning that not only would we have a new technology model, which was the cloud, not only would we have a new business model, which was subscription, but we’d have a new philanthropic model, which is 1-1-1.”

  When a business like Salesforce gets to scale, with more than thirty thousand employees and customers all over the world, it has an opportunity to influence them in a positive way. There should be no question that it is having a huge positive impact. You can see it in the [widespread] “Pledge 1% campaign,” where the 1-1-1 idea has spread to thousands of companies around the globe. It’s amazing to think that Salesforce supports more than thirty-two thousand nonprofits and NGOs around the world that use Salesforce for free or at a discount—an extraordinary number matched by very few governments. Salesforce has given more than $170 million in grants and donated 2.3 million hours of Salesforce employee volunteer time. Employees are even given seven days a year to perform volunteer work.

  Toward the last, Salesforce commits 1 percent of its equity, employees’ time, and product to nonprofit work. “Not only are we building a great product, but we’re building a great company that is trying to create a great world.” Certainly, it’s a source of great talent. People come to the company and stay because of the incredible opportunity and impact that the collective Salesforce Ohana (“family” in Hawaiian) has on cities and causes around the world. In 2018, Salesforce was ranked #1 on Fortune’s “100 Best Companies to Work For” list.

  THE NEW SENTIMENTALISTS

  This attitude has spread to a number of business executives, most of whom are hardly sentimentalists. They recognize that it really is possible to do well by doing good. But many are also discovering that it is a lot more complicated than it looks, not least that you sometimes must endure the doubts of skeptics who still believe in the Harvard Business School rule of maximizing shareholder value at the expense of everything else.

  One figure who created considerable controversy for his stance regarding his company’s larger duty in society is Unilever’s CEO, Paul Polman. One of Polman’s first moves was to stop Unilever’s quarterly financial reporting—in order to free the company from short-term thinking. The market howled, and company stock fell 8 percent.
But Polman was unfazed:

  What we said was, in order to solve issues like food security or climate change, you need to have longer-term solutions. You cannot do that on a quarterly basis. They require longer-term investments. It’s the same for companies. A lot of companies are driven by the short-termism of the markets. [They] make short-term decisions that often go against the long-term viability of the company. . . . It’s very easy to show more profits, if that’s what you want, by cutting investments in training and development of your people or your IT systems. And you can do that for a few years but in the long term, you erode your company. So what I said when I came here is I need to create this environment for the company to make the right longer-term decisions.

  Needless to say, many stock traders were upset. Polman’s response? “I also made it very clear that certain shareholders were not welcome in this company. . . . I don’t have any space for many of these people who really, in the short term, try to basically speculate to make a lot of money. We want people who want to be long term with us and build this company over the long term.”

  Not many executives have the guts of Paul Polman. He has an Unconventional Strategies approach—changing the entire valuation model of corporations—at its most extreme. But any company, if it is careful and systematic, can try a fundamentally new growth path. As the following stories show, it is possible to take a different direction—one congruent to your beliefs and passions—and turn it into the ultimate competitive differentiator—and, in the process, make the world a better place.