Noise always happens.
Since Brian Millham stepped into the role of Chief Operating Officer at Salesforce last year, the company has had its fair share of noise to contend with, much of it generated by activist investors.
While this period of turbulence appears to have calmed, the knock-on effect of that, plus a number of other strategic adjustments internally, can be seen in the form of an ongoing organizational transformation.
Last week, as Salesforce reported solid Q1 numbers with an increased emphasis on profitability, Millham alluded to some of the changes that are underway and hinted at some that might yet be to come. That left me to comment that:
It's clear that a rather different Salesforce operating model is taking shape.
So what is that likely to look like? In practical terms, it’ll become clearer over time - the short term gains of some initial actions, including a headcount reduction, have already been seen. But ‘phase two’ is a longer term process.
By happenstance, the day after the results announcement, Millham took part in the Jefferies Software Conference 2023, during which he provided some more insight, beginning with the focus on “operationalizing some of the efforts that we needed to go execute”. He explained:
One, we want to continue to grow this business and continue to be a fast-growing enterprise software company, but also how do we deliver the efficiencies that we need to deliver? [It’s] pretty well-documented that we took an employee action in the first quarter. We recognize that our hiring got a bit ahead of where the economy was and we had to take those actions.
It's a big deal for us to take that sort of number of people out of our business, a 10% reduction in our sales teams, and sort of broadly across the organization, was pretty material for us. And so, it did create some noise for us. You're sort of delivering the numbers, while trying to manage the culture and the business.
A key question for Millham in his current role is how to get the company more efficient in the way it shows up in front of customers. There are a lot more products available from Salesforce in 2023 than there were when he first started in 1999, when it was all about an SMB offering called Salesforce Automation, later to become Sales Cloud.
Since then, the company has added more and more clouds to its portfolio, via both organic development and acquisition, as well as expanding operationally around the world. Acquisitions have brought their particular challenges, Millham noted:
You could argue we've been in our own way in our execution, because we've added so much complexity in the way we're going to market with these various teams. When we acquire companies, we had a rationale that said, ‘Hey, do not disrupt their sales teams. Let's continue to grow them’. But when you've done multiple acquisitions, and you have your organic growth and you're dedicating resources [and] you’re looking at every product and you're dedicating teams to it, it's a very inefficient way to go to market.
This was being noted by customers, he admitted:
You've got all these disparate sales teams, and listening to our customers, the feedback we got from them was, ‘Hey, you're kind of showing up with a lot of people’. It's very inefficient the way we are operating.
So Millham pitches his task as the COO, running the sales organization, as being to get more efficient in the way that the firm supports customers, sells products, and drives productivity among account execs:
Growth oftentimes has been driven by, 'Let's put more salespeople in and keep productivity flat'. Given the broad [Salesforce product] portfolio, I think we can do things differently going forward, which is, 'Let's get our AE's, our Account Executives, selling more and let's drive that productivity number up'. So for me, this [growth] incrementalism, how do we think differently about it, bringing these teams together to sell the full portfolio is really what we're trying to operate right now.
This is a work in progress, he noted:
Some of it was general clean-up that we need to do in the organization. The integration on the way that we're going to bring these teams together we’re in-process of right now. It is not done.
There’s also a big role for the product teams in all this transformation. Millham has given them a challenge:
I want them to start to bring our products together more naturally. Instead of having dedicated sales teams for all these various products, how do we put together and bundle technology together in a very logical way, [such] that one sales person can go sell all of that product to a particular customer versus having four or five of our account executives show-up to try to sell those products?
All of this has to be done while not disrupting the business or impacting on Salesforce customers. As former head of the firm’s Customer Success Unit, this is something that’s clearly front-and-center with Millham:
Something that I'm very focused on which is how do we ensure that all the work we're doing around efficiency doesn't land with our customers in unnatural ways.
We want to make sure they feel supported, and their use of the technology is driving great value from the products that we're selling…we don't want to go too fast, to create that disruption for our customers.
For all the ‘noise’ that has surrounded the firm in recent months, Millham insisted that the spirit internally is strong. He cited a gathering of the company’s top 500 managers in San Francisco recently where CEO Marc Benioff told his audience about bringing the engineering and product teams together to commit to going all in on AI:
Within a period of two weeks, every single leader in that organization had come up with five or six or seven different ways that they could transform their products to be AI-first.
You then bring everybody into the meetings in San Francisco and you tell the story of where we're going as a company, the opportunities that are ahead of us, not just in sort of the new world. Everyone sort of talks about AI as this incredible new opportunity that it is. [But] there also is an incredible opportunity and a lot of runway to go on our core technologies as well.
The spirit of the company is very strong right now. The energy inside the company is very strong. The trajectory of the company is very strong right now. Obviously, we're in some tough economic times right now, and so we have to be a bit measured in sort of how fast we can go. But we've got incredible technology, a very happy customer base, a culture that's definitely rebounding right now and recognizing the need to do the work that we did. And so we're very excited about where we're going.
Keep calm and carry on! While cutting the headcount earlier in the year was a painful, if necessary, process and attracted a lot of unfortunate 'noise', the longer term organizational changes that are unfolding here are logical and bode well for the future. By the time we get to Dreamforce in September, it will be interesting to see how the sort of changes Millham talked about last week are being perceived and received among the customer base.