CMO Insights: Investing in Culture Before Strategy

an interview with
Phil Granof CMO , Black Duck Software

A marketing strategy is only as successful as the company behind it. From the product to the placement to the people, every part of your company has to back up your marketing claims or its all just a house of cards. For Phil Granof, CMO of Black Duck Software, this meant creating a new company culture before launching any new campaigns. As he put it, “culture eats strategy.”

As a result, when Black Duck Software released its new campaign there were already brand evangelists eager to spread the word. This kind of big picture thinking is part of the reason why Phil was awarded a Leadership Award via this year’s CMO Awards, presented by The CMO Club. In the interview below, Phil’s covers how to build that internal culture while providing an overview of Black Duck’s 2014 marketing initiatives.

Drew: Congratulations on winning the Leadership award.  Some people are dubbed “born leaders” while the rest of us have to learn these skills.  What are some of the lessons (about leading) you can share with aspiring leaders especially of the marketing variety?
I’m not sure anyone is actually a born leader. I think there are those that are born thinking they can or should lead, but that only gives them one advantage, which is the confidence to seek a leadership position, and it most certainly does not guarantee success. What it does guarantee is continuous demand for books that contain the “secrets” to leadership. I’ve read many of them, to be honest, but boiling it down, I think successful leadership requires a simple and easily overlooked aspect: quality people must want to work for you. Talent is free to move where it will, and technology fuels this mobility. So as a leader, my goal has always been to win the hearts and minds of the most talented team I could find. That means trading value for value. Leaders must provide as much value back to their people as they provide the organization, or the best talent will sense an imbalance and move on. The value equation for everyone can be quite different, but it tends to fall across three dimensions: intrinsic return, extrinsic return, and collective return.

Intrinsic return is the value a person receives cognitively and emotionally. Are they growing as a person? Are they feeling a sense of accomplishment? Are they developing and learning? If the position you create for an employee lacks this return for effort, you can say goodbye to holding on to good people. The remaining will be grumpy, disenfranchised, and resentful toward even the idea of hard work.

Extrinsic return is the value a person receives materially, and so is the most important and least important of the three dimensions; however, it is more than whether they are compensated fairly for their effort. It also means they are given the tools they need to succeed in their job, and the cost and complexity of these tools tends to rise with a person’s talent. Have you ever seen someone begging for a better computer? The best people know exactly what they need to do their job. Get it to them, if you value them.

Collective return is achieved when a person sees its organization providing value to the people around them. These can be co-workers, family, colleagues, customers, or community. This is the most undervalued dimension by leaders, and separates not only great leaders from average leaders, but great companies from average companies. When a person “believes” in a company, I surmise it really is an assessment of whether or not she observes a benefit to her social ecosystem.

Drew: One oft-stated trick of being a good leader is just hiring great people and then getting out of their way. As a CMO, however, you often have to lead (or at least influence) other parts of the organization for which you don’t have hiring / firing responsibility.  What are some of the techniques you’ve used to lead beyond your direct reports?
My approach to successfully influencing people across divisions is to learn where to begin my conversation. I divide companies into two types with respect to Marketing: those in which conversations about marketing begin with “Why is marketing important?” and those more enlightened companies that ask, “What is the best marketing approach?” This split is true of departments, their leaders, and their teams. You are never going to be effective convincing someone of the right marketing approach if his or her going-in premise is that marketing is worthless. Similarly, don’t waste your time justifying marketing to those that already get it. They’ll think you don’t. Underlying this approach rests a belief that effective lateral influence requires education.

Framing the task of leading beyond your direct reports as educational is really instructive. Think back to your own education. You’ll undoubtedly remember teachers that made you proficient in a subject, and those that inspired you to change your life with a passion for their topic. Be the latter. Marketing needs to inspire in order to change behavior.

Drew: As CMO, what have been your two biggest challenges and how have you addressed these?
My two biggest challenges were both cultural. The reason I joined Black Duck Software was that I saw huge potential for the brand. To elevate the meaning of Black Duck, I had to begin internally. Culture eats strategy, and as with many successful software companies, Black Duck has a thriving engineering-driven culture. The challenge was to inject a new perspective into that paradigm rather than overturn it. My message was simple: products, patents, and people come and go, but the brand can outlast them all. My evangelism, however, didn’t begin in engineering. It began in HR. I worked closely with the VP of HR to underscore the connection between corporate values and brand. My second beachhead was product management and engineering, where I aimed to help them understand how future value could be created within engineering through a shared vision of the company. I slowly introduced the word “brand” as the idea took root that we needed a shared heuristic for product development. Brand became that basis for judgment. Finally, I ended every single presentation with the same three slides: The first was a slide that read “Think Like Apple.” The second read: “Act Like Disney.” The final slide was a mantra: “Make Everything the Customer Touches a Reason to Love Black Duck.”

The second challenge surfaced unexpectedly with a CEO change five months into my tenure. We had just begun to rally around a new big idea created by marketing, and were days away from launch. More than anything, the brand embodies a CEO’s vision for what he believes is the future of the organization. A new CEO either takes the mantle as steward of a strong brand, or sees an opportunity to take it in a new direction. The new CEO, Lou Shipley, quickly evaluated the previous CEO’s vision, which had more to do with the social aspects of coding with open source software (OSS), and saw a different future. Lou’s vision was to see Black Duck as an integral part of how every modern enterprise develops software. Marketing not only had to start over from scratch, but also there was the not-so-surprising senior management turnover that often comes with the arrival of new leadership. My only advantage was that the organization had already taken the first steps toward integrating a brand-driven mindset, and so we were much further along culturally than when I first arrived.

Drew: Did you launch any new programs in 2014 that you are particularly proud of? If so, please provide a brief overview including goals, tactics & results.
The arrival of Lou Shipley as CEO was a turning point. He asked me to think differently about how to approach the market, more in alignment with his view that Black Duck should be as integral as SAP, Salesforce, or Oracle. While he shared my intention of elevating the brand, he was seeking a way to make Black Duck a necessity, not a choice.

The first step was where I had begun all assignments in my past life as a brand consultant. (All CMOs need to be their own brand consultants, at some level. If you totally outsource this, it is hard to embody a brand vision.) I took a deeper look at the language we were using that was successful in driving subscription revenue. Having some background in the science of metaphor analysis, I uncovered a surprising aspect to the Black Duck brand. If one stripped away the Black Duck name from all of our spoken and written communications, what remained was a company story that sounded more like UPS and Amazon than HP and IBM. We were using the language of logistics: selection, scanning, approving, cataloging, automating, securing, and delivering. We even produce a Bill of Materials. It seemed there might be an entirely new way to reposition not just Black Duck, but also the whole industry. As trial balloon for the concept, I wrote an article that appeared in Wired called: “Think Like Linux, Act Like UPS, and Smile Like Amazon.” In the article, I offered up a concept, for companies to successfully incorporate open source software (OSS) into their applications, what they really needed was an OSS Logistics solution, and not another application development solution. With this novel combination of recognizable terms, we instantly elevated ourselves from a mere software scanning solution to a business process solution that allows companies to build software faster, better, and cheaper. To borrow the UPS slogan, “We love logistics, too.”

Once the article drew positive attention, we tested the OSS Logistics concept among analysts, customers, employees, supply chain experts, and even Jim Zemlin, who runs the Linux Foundation. He saw OSS Logistics as a way to manage a company’s “external R&D,” a concept he has been promoting for a while now.

With validation under our belt, internally and externally, the marketing team developed programs around launching OSS Logistics, from an easy to comprehend video that we integrated into our nurturing campaigns to a sweep of every word of content from the past three years. Finally, we undertook training with sales and channel partners, and surprisingly the universal reaction was “Yes! Finally, we’ve captured what Black Duck does!”

Since the launch of OSS Logistics in the beginning of this year, marketing has produced a 30 percent increase in qualified leads over 2013, a 44 percent increase in unique web visitors, an across-the-board increase in social media stats, and more importantly, it has completely changed the internal discussion around product improvement and new product development.

One interesting note: We decided explicitly not to trademark the term OSS Logistics. As the market leader, we have the greatest interest in seeing broad comprehension of the value our industry produces. We would like everyone to use it, from analysts to competitors. A longstanding frustration with past leaders at Black Duck has been poor market comprehension of exactly what is meant by open source governance, compliance, and risk mitigation. “OSS Logistics” has swept that away.

Drew: What tool, product, or service (if any) has provided the greatest improvement to your digital marketing efforts over the last year? Please explain a bit about why you chose it and how it has worked out.
One great improvement we’ve seen has been a result of a tool called Demandbase. Demandbase is a real-time targeting and personalization platform offering marketers company-targeted display advertising, website engagement, and conversion modules for a consistent view of accounts from spend to revenue. We not only have a view into exactly who visits our website, a huge source of leads, but we have been able to reduce our form fields by nearly 50 percent and still collect all the data we need for targeting. Also, we send beautifully clean data into Salesforce, which our sales team appreciates. Our next step is to tailor the web experience based on a prospect’s company and role. Demandbase will allow us to do this.

Drew: Handling organizational change can be tricky particularly if it involves reorganizing / replacing long-time staffers.  What advice do you have for fellow CMOs when it comes to handling reorgs?
I believe it is critical to understand if the long-time staffer is a “tipping point” in the organization, or simply an overlooked issue. If they are a tipping point, and have a great deal of influence on the culture, then you have to be extremely careful – assuming you want that element of the culture to remain. My other advice would be to view a re-org as a treasure hunt. I personally found three hidden gems in the organization that had been overshadowed and overlooked for various reasons, and now they are thriving. Had we blindly seen quiet people as underperforming, it would have been a big loss. Outside of the business world, my favorite example is Big Papi on the Red Sox. On the Twins, Ortiz battled inconsistency in field and at the plate. However, in a new context with the Red Sox? Well…the rest is baseball history.


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