Marc Benioff: How to Pursue Innovation

innovationFor all of you entrepreneurs out there, here is an excerpt from CEO Marc Benioff's book "Behind the Cloud." Here, Marc encourages anyone with a great idea to pursue it immediately, before the market catches up to it. In August 2013, salesforce.com was ranked by Forbes Magazine as the World’s Most Innovative Company. This is the third consecutive year that salesforce.com has received this recognition. 

I came up with the idea about how to build salesforce.com in my sleep. Literally. I had a weird dream in which I envisioned Amazon.com, but instead of the tabs with Books, CDs, or DVDs, they said Accounts, Contact, Opportunities, Forecasts, and Reports. After this dream, I had an almost crystal-clear picture of where we were going. The words of Walt Disney rang in my mind: “If you can dream it, you can do it.” That said, I had no idea how we were going to get there.

Everything rested on inventing the technology to enable an Internet-based service that could be used simultaneously by masses of people. Salesforce.com creates a lot of noise with its guerilla marketing stunts, but the engine that really drives our company—the one effort that our success wholly relies on—is producing a service that customers love. The extravagant parties wouldn’t be enthusiastically attended; the gonzo tactics wouldn’t be receiving their commissions if we were not offering a service that delivered everything we promised.

Historically, companies such as Oracle approached development by thinking of designing for the biggest companies in the world. Systems were built on individual stacks of software and hardware capable of scaling to manage information for the entire staff of General Motors or all of General Electric. That was a tall order, but we were doing much more. We were designing a single service to manage information for all the companies in the world to use at the same time.

To design a limitless system, we had to think differently about software design. As Parker Harris liked to say, “We had to build it from the ground up for the Internet.” The service would be one logical system 100% hosted by salesforce.com, which would scale dynamically as subscribers and new customers adopted the service. That presented benefits for customers, such as sharing common capabilities (IT assets like database engines, disk space, and security), which would reduce risks and costs. At the same time each customer received a securely partitioned, highly personalized experience with their own data, logic, and end-user experience.

We call this technology model “multitenancy,” and it’s easy to think of it as an apartment building where the tenants of the building share common costs, such as building security or the laundry facilities, but they still have locks on their doors and the freedom to decorate their apartments as they wish. Consumer services like Yahoo! Mail or Microsoft’s Hotmail use this kind of model—it’s how their consumers access their individual mail accounts cheaply (or even for free) through a browser without the need to install any software and how millions of users share the same back-end systems. These companies don’t set up a new e-mail server for each consumer. Similarly, we thought business application providers didn’t need to set up a new server for each customer when there was the possibility for everyone to share it.

Although we believe that this technology model was a way to reduce the operational burdens for customers, our SaaS concept, by which a customer handed over his or her proprietary data to be housed on our server—and then “rented” access to our software—sounded like lunacy to most people.

We heard the same concern over and over again: a panic over giving up control. I believed that the trepidation was more emotional than rational, but it led to pressure to offer another option. Venture capitalists argued that we should build a technology model that accommodated a choice: a hosted model to lure in smaller businesses, and an “in house” packaged software option similar to what was being offered by the traditional companies for larger companies.

No way, we decided. Although hedging a bet might be prudent in some cases, our idea simply couldn’t work if we offered a choice. Doing so would ruin everything. To truly benefit from the on-demand model, our customers all had to be using one version so that when we did maintenance and upgrades—benefits that the technology model allowed us to do continuously—everyone would receive the same features automatically. (In the in-house model, users are never on the most current version. It’s such a nuisance to upgrade, in fact, that ever SAP, which has teams of people to coerce customers to install its latest software, reportedly doesn’t always run on its own most recent technology!)

There was also a philosophical reason that we couldn’t offer a hosted choice. We believed in the End of Software—that all companies would eventually use the Internet to replace all the software they once installed on PCs. This was our religion. How could we promote the very software option we were trying to destroy? As we went against conventional wisdom, we found the secret to being successful in the technology industry. Companies must not only see innovation before it is obvious to the market but also have the courage to pursue that innovation years before it’s accepted, or even understood.

This is an excerpt from Marc Benioff's book "Behind the Cloud."

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