By: Betsy Burton
This week, Salesforce announced plans to cut 10% of its workforce (approximately 7,000 jobs) and close several offices.
This move has occurred after several dramatic changes in 2022, including:
- They stated increased headcount by approximately 30% from EOY 2021-2022.
- Brett Taylor stepped down as Co-CEO in November 2022.
- They acquired Slack in December 2020 for $27.7 billion.
- Slack’s former CEO Stewart Butterfield and Tableau’s former CEO Mark Nelson left in November 2022.
- They reduced their sales headcount by 2500 people in November 2022.
Their CEO Marc Benioff stated that the layoffs and cost cutting were due to the company having hired too quickly during the pandemic.
Is There a Bigger Issue?
It is sad to hear of any layoffs, as they are a huge disruption to employees and business.
And it is important to point out that Salesforce is not the only company in this position at the beginning of 2023.
Several other companies announced lay off plans due to rapid post pandemic hiring and economic issues, including HP, Intel, Microsoft and Twilio.
However, we are left questioning if Salesforce’s business transformation efforts are an issue and if the company has taken on too much too fast.
They have completed over 15 major acquisitions over the past several years. This includes several acquisitions of significant size: Tableau for $15 billion, MuleSoft 6.5 billion and Slack $27.7 billion.
Their focus for several years has been to transform its business from applications to becoming a major platform provider with Salesforce 360.
Its acquisition of MuleSoft was a significant step toward helping the company reach this vision.
However, the decision to run MuleSoft as an independent subsidiary shows a muted commitment to MuleSoft over other popular platforms such as Amazon AWS and Microsoft Azure.
This is an issue we pointed out in a SWAT analysis in 2020 (See “SalesForce.com Customer 360 Platform SWOT Analysis”).
Business Transformation Lessons Learned: Commit Fully
Salesforce has a very strong market position in salesforce automation applications and a good market position in marketing automation applications.
However, it has not made a full transition of its business to become one of the leading cloud-based platforms with Salesforce 360. And has not established itself as a workplace leader, even after its acquisition of Slack.
One of the biggest lessons learned from watching their business transformation efforts is that the company has shown a lack of full commitment to Salesforce 360.
As well as a lack of integration and knowledge as to what to do with Slack.
To quote Admiral Farragut (1801 –1870), “Damn the torpedoes, full speed ahead.” If you want to transform your business, you must strategize, plan, and commit to the transformation.
A half-hearted investment and commitment to transformation isn’t going to work.
This does not mean adjustments are not needed. But it does mean you must make a full commitment.
Bottom Line
Salesforce is a significant technology provider and will continue to be a major industry force with respect to business applications.
However, its efforts to transform its business into being a one of the leading platform providers, particularly given it significant investment in acquiring these technologies and skills, is lacking.
Organizations seeking to transform a part of or their entire business must consider some of the best practices and lessons learned from companies like Salesforce, as well as Twitter and Meta.
This blog is a part of the Business Transformation blog series by Aragon Research’s VP of Research, Betsy Burton.
