Siebel: Don't foul up the opportunity.

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From: Rohit Khare (
Date: Fri Dec 29 2000 - 02:13:51 PST

THERE IS NO SUBSTITUTE FOR being in the right place at the right
time. Many of Silicon Valley's so-called entrepreneurial geniuses
tend to forget this. I am continually amazed by the self-perpetuating
myths that Highway 101 is afloat with geniuses, makers of insanely
great technology; that the area is dense with great entrepreneurs,
great technologists, and gifted visionaries.

The story of Siebel Systems is quite different. We got lucky. We
found ourselves in the right place at the right time. In 1993, when
we started Siebel Systems, existing information technology had
already revolutionized the way businesses were operating back-office
functions such as accounting, manufacturing, and human resources. Yet
the processes of establishing and maintaining customer relationships
had not really adopted this technology. We saw a tremendous

At the time, 400 vendors were grappling for market share in the
emerging sales force automation space, but none offered much beyond
electronic contact managers. We thought that if we could build robust
software systems that enabled large organizations to apply
information technology and communication technology to establish and
manage customer relationships across the range of interactive
channels-field sales, telesales, telemarketing, the Web, resellers,
and customer service-we might create a viable business.

The timing was right because of the emergence of enabling technology.
Replication technology, high-performance relational databases,
Windows, 32-bit processing, object-oriented programming, multimedia
capabilities, high-bandwidth communications-all of these were just
becoming broadly available in the mid-1990s. For the first time, we
had the technological capacity to solve the complex problems facing
customers for even the largest global enterprises, and we had it at a
time when the market potential was virtually unlimited.

When we started, we aimed at becoming the global leader in sales
force automation software. Over the years, we expanded into marketing
and customer service applications. Today we are maintaining a
leadership position in all segments of the global e-business
applications market. But we don't do hardware, databases, or ERP. We
aim to be the best at a very closely defined solution set.

This brings us to Siebel's fundamental law of business management:
When you find yourself in the right place at the right time, don't
foul up the opportunity. Maintain focus. Create real products, real
profits, and real value.

And adhere to the following rules religiously.

Make certain that customers are satisfied. This has been the call to
action at Siebel Systems since the beginning in 1993, when everybody
on the management team worked to involve our first customers-they
were really product development partners-in the research and
development of our initial release. This focus on satisfaction has
meant that we have always played a market share game, not a volume
game. We wanted to own at least 50% of every market we entered, and
to secure that, we turned down new customers until we were absolutely
certain that our initial customers were going to be successful. But
it ensured that every customer would become a reference for the next
customer. This paradoxical strategy worked; today we own two-thirds
of every market we're in, and half of our revenues derive from repeat

Measure customer satisfaction. Twice a year we hire an independent
auditor to survey our customers, and we find that on average, after
installing our products, our customers achieve a 15% revenue
increase, a 21% increase in their own customers' satisfaction, a 20%
increase in productivity, and a 10-month ROI.

Hire people who are better than you are at what they do. We sought
people who we knew personally were unusually experienced and
unusually reliable-Type A personalities with consistent track records
of overachievement. Once you've achieved this level of potential,
give people the opportunity to perform at a level commensurate with
their talents. It's expecting too little, not too much, that
demotivates employees.

Inspire teamwork. Instead of developing internal competition and
fostering a Darwinian atmosphere, insist on a companywide focus on
customer satisfaction. Teamwork is the natural outcome of everyone
being focused on the same agenda. If you've hired people of
exceptional talent and if you've clearly outlined your mission, this
happens as a matter of course.

Be decisive. When you're setting the agenda, make clean decisions. By
"clean" I mean fast and firm. At Siebel Systems we never defer a
decision from one meeting to the next. Whatever is on the agenda gets
discussed thoroughly, all opinions are aired, and the senior person
present makes the decision before the meeting adjourns.

"Clean" also means supported. Good or bad, popular or unpopular, once
a decision is made, the entire strength of the company musters behind
it, and we do our best to get it implemented within 90 days. Until
that point, there's no second-guessing and no grumbling. At the
90-day mark, we reset the agenda, and sometimes we discover that a
decision has been wrong-we're not infallible. But we've found that if
you commit forcefully and unanimously to even a mediocre decision, in
the long run you're going to accomplish more than if you postpone it.

Make a profit. It's not hard. Figure out for any given quarter how
much revenue you are going to have. Then spend less. We did that from
the beginning, when we financed our company with $50,000 and brought
our product to market having spent a total of $1.8 million. Even now,
with an annual revenue run exceeding $1.2 billion and a growth rate
of 120%, we insist on frugality. In a largely employee-owned company,
this isn't a hard message to get across.

One other point about profit: Think "secondary effects." Job 1 in any
world-class company ought to be keeping customers happy and
successful. Everything else is conditional upon doing that well, and
therefore everything else should be considered secondary. This
includes market cap, revenue, and stock price-all of the financial
stuff that the digital economy lives for. My point isn't that the
financials are unimportant. It's that, if you do job 1 well, they
will follow, naturally, as secondary effects.

Show respect for the process. Instill professionalism as a core
value. This encompasses a whole range of attitudes and behaviors,
from showing up for appointments on time to practicing civility in
negotiations to the seemingly "cosmetic" items of office attire. We
see traditional business attire as an outward sign of the
professional respect that we extend to, and expect from, everyone we
deal with. Professionalism instills confidence, and we think that if
you were about to make a multimillion-dollar business partnering
decision, you'd probably prefer to make it with someone dressed

We've been extraordinarily successful over the past seven years, but
these are still the early days. Good timing and the growth economy
have worked in our favor. But it is our ability to stay firm to our
principles and values that will continue to determine our success. We
want to be the kind of company where the people who were here in the
early days-employees, partners, and customers alike-can look back
with pride and say, "I helped build that."

I'm convinced that if we can continue to make that work, pretty much
everything else will take care of itself. Still, it would be
difficult to find a company that has benefited from the energy of the
New Economy more than Siebel Systems. As we enter the new millennium,
Siebel Systems has become the world's leading provider of e-business
application software. We are the fastest-growing technology company
in the United States, the fastest-growing global software company in
history. We operate today as a company employing more than 6,000
professionals in 30 countries. We have achieved the highest levels of
customer satisfaction in the information technology industry. We are
perceived globally as a great place to work. We are a $1.5 billion
enterprise growing at greater than a 100% compound annual growth rate.

Is this about luck? You bet it is. Perhaps, at times, we made our
luck. But make no mistake, we have flipped a coin every day for the
past seven years, and it has come up heads. Statistically impossible
but true. I believe that our focus on sound core values-work ethic,
customer satisfaction, and professionalism-has contributed to a
luck-rich environment, but it remains good luck nevertheless.

We are living in the midst of the greatest economic expansion in
history. The energy fueling this expansion is nothing less than an
economic revolution into a postindustrial society. This is a very
special moment in history. We are very privileged to be able to

Thomas M. Siebel is chairman and CEO of Siebel Systems and coauthor
of Cyber Rules, a business best-seller. He is currently writing a
book based on the management insights described above. Forbes ASAP
Editor Michael S. Malone is a founding shareholder of Siebel Systems.


>Book Description
>THE OFFICIAL BOOK ON SIEBEL SALES. Siebel Sales is taking the world
>by storm! One of the first enterprise applications aimed at sales
>professionals, Siebel Sales automates such tasks as boosting close
>ratios, shortening sales cycles, and increasing the value of every
>transaction. This Starter Kit, heavily illustrated with 4-color
>screen shots, gets the reader up and running in a hurry!

> The Official Siebel Sales Starter Kit, March 2, 2000
>Reviewer: from Cambridge, Massachusetts USA
>The Official Siebel Sales Starter Kit gives a thorough introduction
>to the most recent release of Siebel Sales - "The ultimate software
>tool for sales professionals." The Starter Kit comes complete with a
>fully functional version of Siebel Sales 99 - a $199 value, and,
>like most IDG books, you will find it to be an informative,
>colorful, easy-to-read and -use desk reference. Whether you are a
>beginner or advanced computer user, the Siebel Sales Starter Kit
>includes everything you need to get up and running to make the most
>of your time and resources while streamlining administrative tasks
>in a sales environment.


>Cyber Rules : Strategies for Excelling at E-Business
>by Thomas M. Siebel, Pat House, Tom Siebel, Charles R. Schwab
>Our Price: $22.00

>From Booklist June 1, 1999
>The Web is all about new visions, propagated by new language: such
>words as portals, search engines, and rich media. And the Web is
>also all about shameless promotion by self-proclaimed cyber-pundits.
>Siebel and House are, most likely, among the better examples.
>Interwoven into this three-part--where we've been, where we're
>going, and how we get there--business strategy are innumerable
>examples of the authors' software system; along the way, they
>interview clients and Web business owners who add some value and
>insight into the commercial. Covered, first, are the 10 lessons
>learned, from "zapping is the way of the Web" to a "yes, you can"
>cheerleading statement. Part 2 deals with rules, most of which lead
>to Peppers and Rogers' one-to-one marketing philosophy--the ultimate
>customization of all business. After that? A pretty simplistic
>strategy, including defining the vision and measuring effectiveness.
>Barbara Jacobs
>Scott McNealy, Chairman, President, and CEO, Sun Microsystems
>The Internet revolution is literally changing the dynamics of
>business. Cyber Rules shows business professionals not only how to
>survive, but how to capitalize on truly historic opportunities.
>George Shaheen, Managing Partner, and CEO, Andersen Consulting
>Demonstrates how leading companies have exploited the Internet,
>dramatically transforming their business and frequently reshaping
>entire industries . . . A must read for any organization doing
>business in the 21st century.
>Eric Schmidt, CEO, Novell, Inc.
>Cyber Rules is a wake-up call for survival. Thomas Siebel and Pat
>House define a clear market dichotomy . . . organizations that fully
>embrace the Internet and thrive, and those that don't.
>Michael Spence, Dean, Graduate School of Business, Stanford University
>Clearly explains the ground rules for competitive survival in the
>new market space of electronic commerce. An admirably nontechnical
>explanation of a technological watershed.
>Eckhard Pfeiffer, President & CEO, Compaq Computer Corporation
>In Cyber Rules, Thomas Siebel and Pat House define the new rules of
>E-Business, blueprinting how organizations will market to, sell and
>service their customers.
>Dr. Friedrich Froeschl, President & CEO, Siemens Business Services
>GmbH & Co. OHG
>Charts the opportunities and the pitfalls of the rapidly digitizing
>economy. Web veteran or Web novice, if you're concerned about online
>channels, you need this book.

>Disappointing at best, January 4, 2000
>Reviewer: Rick Freedman (see more about me) from Kansas City KS.
>With Tom Siebel's reputation as a visionary of One-to-One marketing
>and a software innovator, this book was obvious, fundamental, and
>predictable, with very little that hasn't been said better and more
>astutely by other writers i.e. Evans and Wurstler, Shapiro and
>Varian. This is a collection of the same old success stories culled
>from the same old interviews and the same old articles. If you're
>really interested in the underlying changes in the business world
>that the Internet brings, read "Information Rules' by Shapiro and
>Varian or "Blown to Bits" by Evans and Wurstler. Heck, even Bill
>Gates' book "Business @ the Speed of Thought" had more insight and
>better stories than this.

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