What is Digital Transformation? With Vala Afshar, Salesforce (CXOTalk #770)
In a hyperconnected knowledge-sharing economy, guess what, culture is your brand. It's great you have amazing technology and you're transforming really fast, but are you driving away from your core values? Because if you are, all that investment is not going to yield the return on investment that you're hoping to. Today, we're talking about the secret life of digital transformation: what works, what doesn't work, the patterns. I'm welcoming back Vala Afshar. He is the chief digital evangelist at Salesforce. Together, we started CXOTalk.
Vala, do I say, "Welcome to the CXOTalk?" Do I say, "Welcome back to CXOTalk?" How do I introduce you? Michael, it's awesome to be back on CXOTalk. Thank you for having me. Vala, you are an institution on social media. You do all kinds of different interesting things. Tell us about your work. I'm the chief digital evangelist at Salesforce. Part of today's work is, in the last seven years, continued to research, continued to collaborate with amazing trailblazers.
No matter how successful you are as a company and how you grow, there's always more smart people on the outside than on the inside. And so, I have the privilege, as an evangelist, to work with customers and partners and MVP trailblazers and learn about how they're transforming their businesses, how they're delighting their customers, and bring that knowledge back into Salesforce. Along the way, if there's an opportunity for me to share some of the good work that we're doing, I'm happy to do that as well. It's just
a bidirectional relationship with really smart people, folks like yourself that have been in the industry for decades, helping companies and business leaders grow. Along the way, you stay teachable, which is an amazing privilege that you and I have. Vala, it's been ten years since CXOTalk started, and now you have your own show. What have you seen that has changed over that period of time? The technology has definitely changed. When you and I started CXOTalk, it was like a simple Google Hangout. I don't even think
we have earpieces. Today, when I look at the CXOTalk studio that you have, this world-class professional studio with the best technology to enable this incredible digital remote engagement, certainly technology has evolved immensely. But what's constant, I would say, I have interviewed about 1,100 folks in that 10-year period, which is about 450-some shows, 1,100, and the generosity. People are eager to share life lessons, leadership lessons, business lessons. People are more comfortable interacting remotely today versus perhaps ten years ago. Remember, we helped our guests set up. [Laughter] I often found you doing tech support with like CXOs of Fortune 100 companies who were like, "Michael, does my camera look good?" or "How do I sound?" The amount of energy, the amount of calories that we would spend to ensure a smooth conversation was maybe an order of magnitude greater than what it is today. Folks are more digitally savvy, obviously, in the last three years. The pandemic
really was a force and function for all of us to be more comfortable communicating remotely. But I have to say, what hasn't changed is a great story can change the world. In fact, I think it was Steve Jobs who said the most powerful people in business are storytellers.
The privilege that you and I have had for the last ten years is we get to sit for an hour and listen to some great storytellers who are mission-driven, that are purposeful in what they do and, frankly, for you and me to spend Friday afternoons. [Laughter] This is a time where people typically decompress and get ready for the weekend. This is Super Bowl time for you and me (for the last decade) for us to commit our time this late in the week, perhaps the last thing to do to close the week, means how much we appreciate the generosity and the kindness of people who are willing to volunteer their time to learn and to also teach. It's been amazing. It's perhaps my favorite part of the week, and I think it's the same for you as well. Let's talk about digital transformation. You speak with many Salesforce customers about their transformations. These are senior execs
that you're spending time with. What does digital transformation actually mean? Give us some examples of the kinds of transformations that you see companies going through right now. Transformation is a dramatic change. It's not tweaking and slight modifications to whether it's a process or culture or business model. It's something of significance. Again, that is the definition of digital technology. Electronic tools, systems,
devices, resources to generate, store, analyze, and distribute data and information. Yesterday, for example, in higher education, understanding the student journey was top of mind for the administrators. Look, they have 100% attrition in 4 to 5 years with their customers/students. To be able to understand the student journey so that they can
graduate on time, on budget, and deliver value to these students in almost real-time was the major topic of conversation. The technologies talked about a community set of technologies, social technologies, machine learning technologies so that you can anticipate the needs of the students. Graduating from descriptive use of analytics to diagnostic use of analytics to predictive use of analytics and then, ultimately, prescriptive use of analytics. How can
the faculty, administration, staff – what actions can they take in real-time to better engage with students in a graceful, meaningful way? At a high level, regardless of industry, when I look at companies that are achieving growth: growth in revenue, growth in market share, growth in size (whether it's through acquisitions or organically). I joined Salesforce seven years ago, as you know, in 2015. At that time, our target was $5 billion in revenue. We're targeting $31 billion, so just growth in revenue.
During the pandemic, we hired 35,000 employees, so that's organic. But at the same time, 55 companies, I think about $62 billion in acquisitions with data visualization, API integration, social collaboration set of technologies that kind of drove the investment thesis. Regardless of size of company or geography, what I find that's what's common in terms of these companies that are achieving success is the ability – and I don't mean to simplify it – to deliver value at the speed of need.
What does that mean when you say deliver value at the speed of need? Elaborate on that for us, please. You have various stakeholders. You have your employees, your customers, your partners, your communities. How do you anticipate your customers', your employees', your partners' needs? This is why, for example, journey mapping is so important and being able to analyze information data as close to real-time as possible. We're working very hard at my company to make this
ability real-time, which is an incredible amount of energy and inventions and innovations. If you were at our annual conference in San Francisco, you heard about our partnerships with companies like Snowflake, partnerships with companies like Amazon, again leveraging hyper-scalers, leveraging incredible technology in our ecosystem to be able to deliver value at the speed of need. Processing information and using that information to improve decision velocity. Decision velocity, like for example,
yesterday, talking to the academics, colleges and universities, understanding the needs of the students every single moment that they're on campus, understanding their digital footprint, their digital exhaust, understanding the courses they're taking, how they're leveraging their resources that are available to them. It's an incredible amount of technology, a combination of technologies, that enable institutions to do that. The reason why delivering value at the speed of need is because what the pandemic taught all businesses and all business leaders is that, because it was a period of struggle, your stakeholders were looking for tangible benefits. It couldn't be a PowerPoint presentation or a promise that didn't
come to fruition years from the moment that you were exciting your stakeholders about the capabilities. They were folks that their businesses depended on technologies. Think about e-commerce adoption. Think about curbside and pickup at stores. Think about contactless payments. What we saw starting in March of 2020 when the
world flipped the switch and instantly we were decentralized. For many of us, digital only. For some of us, digital-first. Again, if you didn't have a physical dependency in terms of your work, you went through a period. I didn't leave my house for two years, Michael. Think about that. Someone who was traveling 50% of his time and, literally, that light switch, when our chief legal officer sends us a note March of 2020, "No more travel."
At that time, there were 55,000 employees at Salesforce. Instantly, we were not able to physically engage with our stakeholders. Now, we were able to make that transition over a weekend or so – a few days – because the speed for us to immediately go to a decentralized model was because we were designed for movement, our company. I run the business, and most of
my colleagues run their business, on mobile devices. That was in the DNA of our company. If you're familiar with the 4 by 100 relay race at the elite level, the first leg can be 1, 1.5 seconds slower than the second, third, and fourth leg of the face because the run is in static before you hear the shot when you start running. Whereas the second,
third, and fourth, the runner is motion when the baton is handed to you. To design for movement, again creating a tech stack that enables you to work from anywhere, access information everywhere, means you're able to achieve optimal speed. Part of digital transformation in terms of delivering value at the speed of need is recognizing the currencies that matter most today. This is as consumerization mentality and behavior that's now in B2B as well and large enterprise is that speed, personalization, and intelligence, those are the conversations that matter. Those are the conversations that matter to all of our stakeholders, starting with our employees. All
of these companies that I have the privilege of working with are trying to create an environment. Have you ever been to the Boston Ballet? Have you been to the Boston Ballet? You know I have not, but it sounds like you have. Okay. Or a musical. Or a musical. I've been to musicals, yes. Okay. [Laughter] Yeah, so I took my family recently to Harry Potter and then Hamilton. They were on Broadway in New York. When you sit there and you watch dancers on stage, there is an orchestra at the bottom of the stage, typically. So, there is orchestration. There is a person that's conducting the music.
But when you see the dancers on stage, that's choreography. There isn't a leader. It's not a command and control. The dancers know the next step, next sequence because they hear the music, and the music triggers where they need to be on stage and how they move.
There's a beauty and flow by just interpreting music. It's a combination of – whether it's ballet or a musical – its orchestration and choreography. When we talk about technologies that enable or process information in real-time (improving velocity, decision velocity, speed, and direction), in a way, you have businesses that are now not just in a command and control. I am the call center manager, and I monitor which cases are looked at first. I am sales ops, and I look at
the opportunities that exist and decide who to call and what appointments I need to make. I'm the marketing funnel manager, and I'm looking at the leads to figure out how to score it manually. That type of speed will no longer be adequate in this decentralized, hyper-connected knowledge-sharing economy. Mm-hmm. Digital transformation, for me, when I see companies that are growing and outpacing their competition, they are embracing use of technology for more choreographed processes within their ecosystem; highly automated, highly autonomous, and with incredible contextual intelligence that's available to the workers so they know exactly what to do to achieve best outcomes. Please hit the subscribe button at the top of our website so you can get our excellent newsletter and be notified of upcoming shows. Subscribe to our YouTube channel. We have some questions that are coming in,
so why don't we pop over first to Twitter? The first question is from Arsalan Khan, who is a regular listener, and he always asks these great questions. Thank you, Arsalan. He says this. He says, "How do you convince manual-intensive industries to understand that digital transformation is not just about technology; that it's a business issue? I remember Michael and me interviewing Kim Stevenson who, at the time, I think was CIO of— Intel.
Intel. Intel. Intel, yeah. Yeah, it was Intel and then Lenovo after. But when we interviewed her first at Intel, I remember Kim, and this is going back (CXOTalk) eight years ago. It was a long time ago, yeah. Kim said, "There are no IT projects. They're only business projects." That resonated with Michael and me because she was an extraordinary CIO. Still is. [Laughter]
It's important to understand the impact of your technology investment thesis. That means working backwards, so instead of excited about machine learning, Internet of Things, immersive technologies, blockchain, crypto, 3D printing, whatever the emerging tech that's consuming the news feed and you see it at every conference that you go. I recently interviewed the former chief of staff for Jeff Bezos. His name was Colin Bryar. I asked Colin, "What's the secret to Amazon?" one of only a handful of companies that have a trillion-dollar market cap. He said, "Working backwards." He said, "At Amazon,
we work backwards from what do our customers need. What is the value that they admire most. We then work backwards in terms of what does that translate to in terms of product, process adjustment, new business model." Look at AWS when they talk about new business models. Taking core IT capabilities of a company and now it's the most profitable part of the Amazon business. When we talk about digital transformation, in that case it was like domain transformation. They entered and created a whole new market
being the largest cloud computing provider. Working backwards, they realized that many of their customers didn't have the IT talent, processes, technologies to be able to bring new products and services to market. And so, the way to convince – and it's hard. Consensus building, this is why I think transformations fail is because they don't have the culture that has core values where you measure your success based on your customers' success.
You talk about trust being the number one core value. How do you earn trust? Michael, for ten years, has been consistently delivering CXOTalk, every Friday for ten years. There's a competence that's displayed because he's capable of bringing folks that can share hopefully meaningful stories to the audience, and he's reliable. Every Friday for ten years, so the competence piece. Then there's the character piece. There's the integrity and benevolence. This is Rachael Botsman's definition of trust. Trust is competence in character, competence in capability, reliability.
Character is integrity and benevolence. Benevolence is my favorite word because benevolence is what motivates Michael to spend ten years on CXOTalk. He's motivated by educating and inspiring his audience. That's it. He's not trying to manipulate. He's trying to inspire, so he's very clear about his intentions. To answer your question in a long about way, to
earn trust with your colleagues horizontally and certainly vertically with folks that have higher social, political capital that can hopefully be allies in your transformation journey—and it is a journey. It's not a destination. It's a journey—you have to earn trust. So, you have to demonstrate reliability, capability, integrity, and benevolence. If you do that consistently, it's easier to earn a sponsor.
Michael and I have interviewed Whitney Johnson, who is an incredible best-selling author, worked with Clay Christensen, Rosa Park Advisors, and she talks about, in your career, mentors are wonderful. Coaches are wonderful. But the best impact, the biggest impact you have in your career comes from your sponsors, people who are higher in the organization and they put their political and social capital on the line to advance your cause. Earn a sponsor as you're going through your digital transformation journey. Earn the sponsor with trust, meaning all the four components. And make sure that you tie your investment thesis to business outcomes. Generally speaking, in my 25 years of being in business, I would say there are probably four macro categories that drive technology investment: grow revenue, optimize and reduce expenses, delight the stakeholder experience, and then regulatory and compliance. I would say, those
four buckets, probably 90% of your investment is go into these four buckets. So, make sure you work backwards and you articulate why you think this new capability is going to grow your business, reduce costs, delight the stakeholders, and potentially meet compliance and regulatory needs that your business must adhere to. And you'll have hopefully less friction in terms of along your transformation journey. Vala, I think that this issue you've just raised about trust is so fundamentally important as I have (and just as you have) interviewed so many senior business leaders, the common thread is culture, as you were just describing, the importance of getting folks on the same page. How do you drive change? Well, the folks inside the organization, as well as through your ecosystem (your stakeholders not just inside the company, but your customers, your suppliers), they need to trust and have confidence that the change that you're talking about A) is going to be beneficial for the company and for them, and they need to have confidence that you're actually going to deliver it (and you're not going to stab them in the back). Those attributes, the trust, the confidence, the competence, the benevolence, take all of those ingredients and people will be willing to say, "Okay, you know I'm going to give this a shot."
To me, trust is a verb. It's your actions. When your thoughts, your language, and your actions are aligned, and you do that consistently, some people call it authenticity, which I think is a core element also of trust. At my company, trust is the number one core value. The beautiful process at my company is that we have long-spirited debates about our core values, and we do it every year. It's open to the entire company led by our founders. We typically have a three-day live event. A few hundred are in person. The entire company, so about 80,000 people now,
tune into this live event. Radical transparency because we're debating. I think it was Seth Godin who said, "People are not afraid of failure. They're afraid of blame." Imagine opening up a discussion about our culture and core values to 80,000 participants. The beauty of it is I think if you randomly collided with any of the 80,000 employees, and you asked them, "Name the five core values at Salesforce," I would be surprised not only if they knew all five (trust, customer success, innovation, equality, and sustainability), I would actually be surprised if they didn't say it in that order because, for three or four days, we debate the order. We debate the order. I've been with the company seven years. For the first time last year, we had sustainability to our fifth core value because we believe planet Earth is a stakeholder because, for many of our customers, sustainability is top of mind.
In fact, that's how they recruit talent. The company that demonstrates that transformation, digital transformation was enabling not only delivering our value at the speed of need but also making sure that all stakeholders, including the environment, is not adversely affected. The key thing here is that we have a process called V2MOM (vision, values, methods, obstacles, and measurements). The vision and the values, the second V,
are those five values I mentioned. Anyone at my company can take their mobile device and go to a company directory and find the V2MOM of any employee, including our founder, to a full-time, single contributor that may have just graduated from college and joined us 90 days ago. You have 90 days to create your V2MOM. Now imagine your vision, values, methods, obstacles, and measurements being available to the entire company. It's not just having core
values because it's not a signature in your email. It's not a poster in your hallway. It's not perks, like I got a Ping-Pong table in my office or I get gourmet food in my kitchen. Perks is a culture. Like you said, Michael; culture is key. It's living those values and making sure that everyone understands and communicating as much as possible because alignment is important. As I mentioned, design for movement is how you
achieve optimal speed. You can't achieve optimal speed if you're misaligned. Again, when I joined in 2015, we were about 15,000 employees. How does a company continue to outpace the market (for the seven years I've been here); grow from $5 billion to $31 billion, 15,000 to 80,000? That's alignment. Leaders listening to this, be very mindful, be very deliberate about how much you spend your time and energy articulating the why (Why is this new technology going to help our customers and employees and communities?), the how, and the what. But start with the why. The why is really important, I think, in part
of building culture. Culture to me, by the way, is what happens when the managers aren't in the room. Now think about it. The last two and a half years, the managers haven't been in the room because you've been most likely in your house just jumping back and forth on Zoom meetings.
In the absence of authority, are you doing the right thing for the right reason at the right time for the right person? If the answer is yes to all of that, you have a healthy culture. You have a healthy culture. I'm telling you it is the most important thing because the culture is just the aggregate behavior and mindset of all your employees. And in a hyperconnected, knowledge-sharing economy, guess what. Culture is your brand. It's great you have amazing technology and you're transforming really fast, but are you drifting away from your core values? Because if you are, all that investment is not going to yield the return on investment that you're hoping for. So, culture matters. Culture matters.
That radical transparency you were just talking about fits in that when you're transparent, trust can emerge. Sunlight exposes everything. It exposes the good and it exposes the bad. And if there's good to be exposed, it will get exposed. Absolutely, and part of that – before we go – is showing your vulnerabilities. In other words— Being honest.
Yeah, being honest. To be honest with you, when you do move fast, you make mistakes. Do worse, make mistakes. [Laughter] I think that's right. You know smart doers make original mistakes. The second time you make the exact same mistake, that's a choice. When you started the show ten years ago, I mean we had technical deficiencies, poor lighting, poor sound, poor video, perhaps even poor prep compared to what we do today in making sure our guests feel comfortable. There are no surprises. There's this continuity in the conversation. There's a lot of behind-the-scenes work, as you know,
to produce a live, one-hour segment. As you know. Yes. [Laughter] [Laughter] When we launched CXOTalk in 2013, we didn't claim it was going to be perfect. We made apologies. I remember apologizing on air for the difficulties we had, and we still bump into issues, I suppose. Hopefully, far much less than ten years ago. But still, we're humans.
Perfect people don't exist. Perfect guests don't exist. Perfect hosts don't exist. But it's a lesson learned when you go through a live podcast. There are a lot of lessons you can bring back to business. For folks that regularly watch CXOTalk, you appreciate that we do demonstrate that we're willing to show vulnerability so we can gain your trust because of benevolence, because we're motivated by simply educating and inspiring you.
For folks that tune in every week to listen to CXOTalk, I'm sure, Michael, the spark can come from you. But for sustained momentum – ten years of a successful podcast – the flame, the heat, the energy comes from the folks that watch the show live and share with their colleagues and family and friends. That's why we spend Friday afternoons with you. It's pretty awesome. It's pretty awesome. On that note, Deep Khandelwal on LinkedIn has been patiently waiting. He's got two really, really good questions. Let's jump over to LinkedIn. Deep Khandelwal says first off, "Research says that only 30% of digital transformation projects succeed. What do you think are the things we should avoid in order to make our digital transformation initiatives successful?" What are the obstacles, and how do we fix it? It is a journey, so you fall down. You get back up.
Most clients that I work with, they don't abandon projects because of setbacks. They've refined. They iterate and, ultimately, they continue to walk the path. Let's just be clear. Transformation, that word, I said radical change, significant change.
That's what it means. Yeah. Transformation. Adding new software to a legacy process isn't transformation. Doing the same thing faster isn't transformation (in my humble definition). An example of Amazon of AWS, to me, that to me is business model transformation. That's domain transformation. I think, culture, as Michael said, to me it was success factors of culture, talent. And I put culture and talent because you need to have a framework, your culture, so that you know who you want to invite into your business. You need to make sure there's
alignment when you recruit to your core values. A river without boundaries is a puddle. [Laughter] That's why I have culture first, and I have talent. Then process and, lastly, technology. Michael and I are technologists. Our entire careers have been around
technology. But to me, it's the last. Now, without it, you can't be successful. The answer to your question is why they fail. Digital transformation require, first of all, you need agile workflows. You need to have bias towards testing and learning,
so there has to be an experimental culture where you're not afraid of blame. And you have to have decentralized decision-making. I think most companies that are successful in this space in terms of maturity and digital transformation, they've applied design thinking principles based on flow optimization (which means removing friction deliberately) in order to achieve optimal flow. You need to have a decentralized decision-making model, and you need to have great resilience, and you need to have an ecosystem you can lean into. If you don't have the capability, you go to your partners. Salesforce has this thing called App Exchange. There are 10,000 companies on it. When we need something that's not out-of-box,
we partner with our partners in order to deliver value to our customers. Too many elements to cover in a tweetable answer, but great question. Great question. We have another question again from Deep Khandelwal. Very quickly, he says,
"What do you see are the digital transformation trends in 2023?" And he asks, "Do you see it as primarily more mature AI and machine learning solutions?" What are the trends for digital transformation coming up – very quickly? AI is electricity for the 21st Century. If you don't have it not just on your radar, if you don't have it in your R&D labs and part of your innovation roadmap – and there are 13 categories within AI: machine learning, natural language processing, small robotic, computer visioning, so on and so forth, the deep learning. If AI is not part of your innovation strategy, you can't compete. You can't compete. If I'm looking to invite vendors to my business, the first thing I'm looking for is to meet with their AI research team and look at their AI roadmap. If that doesn't exist, I'm not doing business
with you. So, electricity for the 21st Century. Having said that, more near term, about every week you see amazing AI innovation. The term was coined at a conference in 1957, so we've been talking about AI for more than my lifetime. But what's happened in the last ten years is mind-numbing. My founder, Mark Benioff, at the World Economic Forum, said, "AI is a human right." Mark has never, in 22 years of Salesforce, spoke to a technology as a human right. That's a whole other conversation. Please invest in that, in this space.
I would say a trend that's more near in terms of wide adoption is hyper-automation. Every company that I'm working with, they're looking to enhance autonomy and automation across all lines of business. Part of that and why AI is important is that there's a cognitive download from the workers to smart software. A lot of the decision-making is now in the software and the workers are being guided. When you backed up your car 20 years ago,
you heard a beep-beep-beep if you got close to something. Then they installed a video camera. Now, in some cars, you can auto-park. In line, email suggestions, autocorrect, and so when you think about stuff around you, there's a lot of cognitive download that's now powered by software. That's going to be an important trend next year and beyond. Another question just came in from Arsalan Khan on Twitter. Very, very quickly, like in one sentence,
"Digital transformation is filled with jargon. How do we make it understandable for people?" Smart people use simple language. Stop using the acronyms. Articulate and, if it needs to be more in depth, do so. We only hear what we understand. If you're in a room full of acronyms and you don't understand, you didn't communicate effectively, which means you don't have alignment, which means you don't have optimum speed.
You're like a major publishing organization in your own right. Can you tell us mere mortals, how do we do that? How do we get followers and get people to do what you do seemingly effortlessly? I'm an immigrant refugee, so I had a silo mentality for the first 40 years of my life. I would read. I would watch videos. And I would keep it to myself. Maybe share with my direct reports or my wife. My kids don't listen to me. Silo mentality: capture resources, protect those resources, and extract as much value as I could from those resources.
In my 40s, essentially at the same time the launch of CXOTalk, I adopted more of a flow of knowledge. The next time you read something and you find joy in it, put it on LinkedIn. Put it on Twitter. The only difference, the light switch that changed in my life was sharing. How often do you read something and you're inspired by it, or you watch something that inspires you? Take that extra few seconds. Often it's only a few seconds – it's not minutes – and just put it out on whatever social platform. It goes back to the benevolence piece. My goal was never to build a large network. My goal was to educate and inspire.
I've never deviated from that. The last thing I would also say is put in the reps. I have never missed a day on Twitter for the last ten years, not one day – not one day. And, for the last five or six years, I haven't missed a day without double-digit content distributed, going outbound. Imagine never missing a day and actively being on a platform from morning to night. For at least the last six years, I would say double.
Put in the reps. It's not just I'm going to do it once a week, once a month. But you have to be intrinsically motivated to do that. You have to love it. I love it. [Laughter] So, if you don't love it, you can't do it. If you don't love it, you can't do it.
When I said it was effortless, it appears effortless – let me emphasize appears – at the same time, I am very well aware of the amount of work, and you have been doing this for as long as I've known you. Thank you. Thank you. Well, people like you inspire me because you also have put in the reps. This is show 700 and change for you. That's every Friday for ten years. I'm getting tired thinking about it. [Laughter]
You look great. Show me anyone who has skin in the game as much as you do and I promise you they're also successful in their endeavors. You have to love it and you have to find joy in it and you have to create value. If you don't, people don't tune in and you
don't get the great guests that you do. Congratulations in all that you've done and I appreciate the opportunity to be back. I really do. I really do. Everybody, thank you so much for watching. Vala, thank you for just being here. It's my pleasure. Thank you so much, Michael. Everybody, thanks for watching, especially those people who ask such great questions. Now, before you go, please hit the subscribe button at the top of our website so you can get our excellent newsletter and be notified of upcoming shows. Subscribe to our YouTube channel. Take care,
everybody. Check out CXOTalk.com, and we will see you again next time. Have a nice day.