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September 19, 2005

My Enterprise, Right or Wrong

What's the difference between motivation and hype?

In both cases, the "supplier" could get the same showstopper response from the target audience: "Sorry pal,I'm not buyin' it!" -- so it's understandable that, as hopeful leaders, we might be willing to take whichever one we can get away with.

Telling the Oracle/Siebel story is a mini-industry all by itself. But what's more interesting, in comparison, is the Siebel/Siebel story -- the inner Siebel versus the outer Siebel; the issue of understanding Siebel's performance from the standpoint of what employees did and why. Wasn't Siebel run by some of the top managers in the industry? Wasn't it's performance rigorously "managed" in terms of both opportunity and execution? If so, then setting aside the profitability of what it made, what did Siebel actually "successfully make" with its strategy? Did the employees know that was what they were doing?

I.

You remember the story about the hen and the pig who got invited to breakfast by the farmer's wife? So starved for attention was the hen, that she overlooked the menu, exclaiming to the pig "this is wonderful! We're finally getting noticed around here!" But the pig knew that the house favorite was ham and eggs. Replied the pig, "Well for you, this is just going to take a contribution; but for me, it's going to take a commitment!"

And there you have it: you can always play along with the hype; but motivation takes something a bit more.

This all crossed my mind when the dinner conversations swirled around "industry leader" Siebel getting bought by "industry leader" Oracle. For one thing, it seemed too easy to say that it happened because of Siebel's "poor performance". So much for leadership. But on that count, what should we be thinking about Siebel? Did it have:
- a bad strategy?
- bad execution of a good strategy?
- good execution of a good strategy at a bad time?
- or what?
What do the Siebel employees think happened?

II.

For another thing, maybe Oracle and Siebel were not really "in the same business". How the heck can that be? And if so, what was the buyout for?

Well, in business, there are lucrative problems to solve, and there are less-lucrative ones. Our view of competition always casts players in the same game tackling the same problem. For example, some trade journalism immediately discussed the apparent folly of Oracle buying into "traditional CRM" when evidence exists that it's a losing proposition. But could this criticism be missing the point? Even new-look CRM users will have to crunch "CRM data" more and more, and guess where Oracle plans for them to manage that data... (Hint: not on DB2.)

Maybe the market is just speaking up. Maybe it's saying, "you know what? Vendor competition is not making things better for us! Implementations are so complicated, by the time we get through them we can't tell the difference between you guys anyway. Maybe our smartest move is to just be sure that a great alternative exists versus a great standard. Let's have kick-ass hunters, and kick-ass farmers, and not second-raters of either, you know? Let's have a great data-based player and a great process-based player, and we'll decide which one to use."

Does Oracle meanwhile have the capacity to carry legacy processes while pushing into the new? Uhh, yes. Does it have the expertise to create a single serious alternative to SAP and Salesforce.com? Uhh, yes. So maybe we're simply looking at a play for solving a longterm problem instead of a shortterm one.

III.

But as said at the start of this, the more interesting story is the one about understanding Siebel's performance from the standpoint of what employees did and why. Wasn't Siebel run by some of the top managers in the industry? Wasn't it's performance rigorously "managed" in terms of both opportunity and execution? If so, then what did Siebel actually "successfully make" with its strategy? Did the employees know that was what they were doing? Did Oracle? Did Siebel customers?

We're a lot more accustomed to hearing about "exit strategies" in connection with small startups. At one startup I was responsible for increasing the value of the existing customer base beyond the point where the technology architecture offered a chance to increase -- on time -- the competitive value of the product for new customer acquisitions. Down the stretch, we made great customers wanted by the company that acquired us. In such a case, having the executives on the same page across the board (sales, product, alliances, finance, etc.) has to happen, but what's in it for them?

Of course, in larger companies, a huge percentage of employees will have no more clues about an exit than they do about a layoff. During the lead-in period, with marketing still promoting the industry leader hype, what is happening to convert the hype into motivation, and does the motivation cause the organization to internally align around the "wrong" priorities? Or is it simply that we need to learn again to embrace the importance of being able to cut losses early enough to rebuild on time?

If you watch pro sports teams, you often get to see some team's management reach a point in the season when it actually becomes a lot more concerned about being viable next year than it is about winning more games this year. While each remaining game still requires a best effort in the game, the team that is sent in to play the game might not be the best currently possible team. The trade-off of now for later has already been determined by a strategy, and the resulting performance just is what it is from the remaining best effort. This really shines a light on the difference between the final responsibility of strategy versus what we should expect from performance management.

Posted by Malcolm Ryder at September 19, 2005 6:46 AM

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