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Before the recession slapped SAP hard, our performance in 2008 had been strong. The company was on its way to achieving its best annual performance in history. In August our share price on the New York Stock Exchange hit $58, just shy of a fifty-two-week high. The Great Recession, however, changed it all.
"This is the most challenging environment that SAP has ever faced," Leo told Wall Street during 2008's year-end earnings call. "I don't think it is prudent to expect that the macroeconomic environment will improve in 2009."
In response, SAP spent 2009 trying to drive sales volume for our existing products. But each quarter, year-over-year revenue from software licenses continued to slip. To preserve our profit margins, SAP cut costs. Some expenses needed to be shed, and when SAP made the painful decision to cut jobs for the first time in its almost forty-year history, already sagging morale deflated further. In May 2009 Henning stepped down, and Leo became sole CEO. That September, an employee survey revealed that SAP's workforce was losing trust in its senior management, of which I was one. Because I was never one to walk by a problem, I felt compelled to step up.
Whatever it takes: Rally in the fourth quarter
The last three months of every year, October through December, were historically SAP's most lucrative, when we closed the most contracts, and some of the largest. But given cautionary spending in the marketplace, many people inside SAP felt it would take a miracle to bring home 2009's fourth quarter with our usual gusto. As an optimist and an underdog, however, I saw opportunity. I was not alone in believing that, as long as there was time on the clock, a crisis could be overpowered by the right strategy and disciplined execution.
Jim Hagemann Snabe was head of SAP's product development, and another recent appointee to the executive board. Jim's intelligence and generosity were widely respected. Until now, Jim and I had been more social than collaborative colleagues. When we did get together, we always had easy conversations, and we genuinely enjoyed each other's company. Jim was born in Denmark and spent his youth in Greenland. His father was a fighter- and rescue-helicopter pilot. Jim was a schooled mathematician and spoke several languages. Despite our different histories, Jim and I soon realised that we were similar where it counted most. One night in the restaurant of the Villa Kennedy hotel in Frankfurt, Jim told me a story from his youth.
"Jim," a coach had once said to him, "the game is not about you, it's about the kind of team that you create around you. That's what makes a strong leader." Jim went on to explain the significance to me.
"Bill," he said, "I once thought that my math background could make me the smartest guy in the room, but I figured out a long time ago that my coach was right." I told Jim that my dad had taught me the same thing about teamwork when we coached together. "You can't make this stuff up," I kept saying as we compared more life stories over dinner. We were laughing so loud and for so long that someone in the restaurant approached our table to ask us to please keep our voices down.
Among the other traits that Jim and I shared was a customer-centric focus when it came to our respective areas of expertise, as well as the belief that SAP had to seize the crisis in the fourth quarter of 2009, as the company barreled toward the end of a very tough year.
Each of us had meetings scheduled with our respective leadership teams in October. We decided to combine the two and meet in Newtown Square. Rick Knowles, my chief of staff - a meticulous executor and strategist who had been loyal to me since my earliest days at SAP America - quickly orchestrated a two-day gathering of the company's top sales and product development decision makers. Our goal: prepare SAP to close ^ 1 billion in revenue before December 31, 2009. It was another chance to create un milagro.
The two-day emergency session began in a crowded conference room. The size of the gathering, about seventy-five people, seemed small for our ambition, but because execution, versus inspiration, was our agenda, I believed that a tighter group would get more done than a sprawling mass.
Sales took the floor and talked about the state of the markets, explaining the challenges it was hearing from customers, which included lingering uncertainty about the economy as well as companies' industry-specific software needs. When Jim's top product developers took the floor, they described various SAP software solutions that were either in development or ready to be deployed - including existing products that, many of our salespeople knew little or nothing about. Amazingly, SAP had technology that we were not actively selling, and customers had requested products that we were not actively building.
This disconnect was unacceptable yet understandable. SAP had more than a thousand industry-specific software solutions. It was all too easy for newer, smaller solutions to get lost on their way to market. Vice-versa, our customers' needs were not being consistently communicated back to our development teams. Throughout that day, Jim and I would look at each other and shake our heads as we realized how our value chain had broken down. But that's why we were here: to build it back up, and not just for the fourth quarter.
Next, everyone divided into miniteams to come up with go-to-market plans. The collaboration elevated the mood. Sales leaders learned about products that their reps could start pitching tomorrow. Developers got their innovations out and started tackling new ones. Another directive I issued was to the sales force: every rep, I said, had to get in front of his manager and pitch his own plan to achieve his individual goals. I called these sessions "pit stops." Like changing a race car's tires on a track, the intent of the pit stop was to engage managers, and to ensure that every sales professional was equipped to race and win. Selling, I reminded everyone, was a team sport.
The cooperation did not end in Newtown Square. In the following weeks, as December 31 loomed, product developers joined our reps in the field, visiting customers, talking about their solutions. Pit stops were taking place around the world. Everyone hustled, including Jim and me, both of us going on sales calls, too. Day by day, SAP sold more to its existing customers and brought on new ones, cutting deals large and small, realizing incremental revenue from software sales that, had seventy-five people not rallied and done whatever it took, would have gone untapped.
Ultimately, we exceeded our own expectations and brought in more than euro 1 billion in software sales during that fateful last quarter. It was the first time SAP had broken through euro 1 billion in a single quarter since 2001. This achievement was incredible considering that the global economy was still recovering.
Meet the Authors
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Bill McDermott is chief executive officer and a member of the executive board of SAP, the world's business software market leader with more than 263,000 customers in 188 countries
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A personal champion of customer centricity, McDermott and former co-CEO Jim Hagemann Snabe are credited with leading the reinvention of SAP in the era of mobility, cloud computing, advanced analytics, next-generation business applications and in-memory technology
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Since 2010, his innovation-led strategy has resulted in expansive increases in customers, total revenue, market value and profitable growth. With a 99 per cent approval rating from employees, McDermott and Snabe were ranked No.2 on Glassdoor.com's listing of the world's top 50 CEOs in 2013
- Joanne Gordon works with business leaders and creative thinkers to capture their voices, sharing their experiences and insights with the world. Prior to becoming an author, she was a reporter and contributing editor at the New York office of Forbes magazine
AUTHORS: Bill Mcdermott with Joanne Gordon
PUBLISHER: Simon & Schuster
PRICE: Rs 699
ISBN: 9781471139406
Reprinted by permission of Simon & Schuster. Excerpted from 'Winners Dream: A Journey from Corner Store to Corner Office' by Bill McDermott and Joanne Gordon. Copyright@2014 by Winning Dream, LLC.
