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June 2006• $5.00• www.sellingpower.com
HOW A LEADER MASTERS CHANGE
How a
Leader
Masters
Change
JUNE 2006 • VOL. 26 NO. 5
Bill McDermott, CEO
of SAP Americas, shows
you how to create
a sales team of winners
How a
Leader
Bill McDermott, CEO of
SAP Americas, shows
you how to create a sales
team of winners
Masters
Change
BY KIM WRIGHT WILEY • PHOTOGRAPH BY JAMIE TANAKA
I
n 2002, SAP America was going nowhere.
The U.S. and Canadian subsidiary of the German software giant had gone through five
CEOs in six years and revenue was growing at
less than half the rate of the company’s European division. The market buzz was all about
dot-coms out of California, and SAP, whose software
focused largely on mainstream functions such as
accounting and manufacturing, seemed like a big yawn.
But that was before Leo Apotheker, president of
customer solutions and operations, and the Executive Board of SAP AG brought in Bill McDermott as
The Essay on SAP Is Counting on Organizational Change
1. Which of the forces for change are causing SAP to undertake major organizational change? Explain. There are various forces that are making SAP undertake the organizational changes, however the biggest one is the market change. The core business of SAP is business applications. SAP is threatened by the attack of their competitor-Oracle. According to the data in the text the market share of SAP ...
CEO of SAP America.
McDermott, then 41 years old, joined SAP America
in September 2002 and immediately set about creating
a sales machine that was second to none. During the
next four years, the stock price of SAP would rise from
$9.75 to $54. The market cap would increase 400 percent to $55 billion. Employee turnover (after an initial
bloodletting) would drop from 40 percent to 10 percent.
Now the dot-coms are foundering and SAP has become
the leading business brand in the field, racking up
record profits year after year.
It’s a stunning reversal of fortunes. But how did
McDermott and his team do it? What makes the SAP
Americas’ team one of the most successful teams in the
region – and how can you get what it’s got?
S ELLING POWER JUNE 2006
51
“With this technology, there’s no excuse for not knowing your
customer’s business and we have no patience with anyone
who appears in front of a customer without the facts.”
C
“
HANGE IS ONLY possible when it’s tied to a
very specific vision,” says McDermott. His
vision was to create a marketing plan that
would let his sales team tell the SAP story
from the customer’s point of view. “We intended to make every customer become a best-run
business,” he says, a goal reflected in SAP’s
global advertising slogan, ‘The best-run businesses run SAP.’”
In other words, the customer comes first – even in the slogan.
Reps don’t talk to their prospects about how great SAP is; instead
they talk about how great the prospect’s company can be once
they begin running SAP. “Customers don’t like tech talk,” says
McDermott. “They don’t care about all the capabilities of your
new system, they just want to get something done better, faster,
and cheaper. Our marketing focuses on what the customer is trying to accomplish.”
The vision is actually even more long-range than that: SAP
cares about the customer’s customer. “You have to take the time
to understand the customer’s markets and their competition,”
says McDermott. “It enables you to not only see what the customer wants now but to also see what the customer is likely to
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As my application shows, I am an above average student in most areas. I have particularly excelled in mathematics, earning good grades throughout high school. When pondering about my future, I thought that I might be able to use math to be successful in business. So after my sophomore year, I decided to take some business courses with the goal of attaining a solid background in the field. High ...
want in the future.” Managing the volume of information necessary to make this vision a reality is a daunting task, but it’s
largely what has enabled SAP to quadruple its market value
while other software companies have stood still.
M
cDERMOTT IS THE original turnaround
kid. During high school, he worked in a
deli and when the owner put it up for
sale, McDermott, although still a teenager, offered him a deal. McDermott would
borrow the $7,000 purchase price from
the owner and if he couldn’t pay the loan
off within a year, the owner would get the store back.
It was his first exercise in understanding customer needs.
Under McDermott’s management, the deli began offering everything that the competitive 7-11 down the street did not – delivery
service for senior citizens, weekly credit for blue-collar workers,
video games for neighborhood teens. He not only paid off the
loan, but used the proceeds from the deli to put himself through
college and buy his family a beach house.
After successful stints at Xerox, Gartner Group, and Siebel
Systems, McDermott was called in to resuscitate SAP’s North
American business and he had one question: Why isn’t this
thing working? “I spent the first three months figuring that
out,” he says. “It’s easy to automatically blame the sales people
for not selling, but I looked at the leadership team.” There were
13 direct reports and by the end of his first 100 days, McDermott
had replaced 12 of them. “They weren’t bad people,” he says,
“but our vision had outgrown their ability to get us there. They
were used to selling in terms of the product, but we were in the
process of changing from a product culture into a value-tocustomer culture. Now it was all about telling the story from
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JUNE 2006 S ELLING POWER
the customer’s point of view and if someone wasn’t comfortable with that shift, they weren’t the right person for the job.”
This customer-first vision became like a knife that separated
the wheat from the chaff. “At that time, our vision was nonoperational,” recalls McDermott. “If people didn’t have the skills
The Research paper on Leading People Through Change
“Change is inevitable and necessary to succeed” Quiros (2014). With this truth in mind we must enhance our skills to lead people through various aspects of change. The purpose of this literature review is to identify commonalities across several articles their assumptions on the importance of change inclusive of my personal views. We will review two elements and the hindrances they present in the ...
or the knowledge to make it real, a lot of them needed to go. I
honestly believe that if people don’t get it within a certain length
of time, they’re not likely to ever get it.”
The surviving employees, along with new people brought in to
augment the team, were then put through an aggressive crosstraining program. SAP was a tech company full of people
uncomfortable with tech, and McDermott was not amused by
the irony of employees who were selling software but reluctant
to use it themselves.
“We needed to make radical changes if we were going to get
closer to our customers,” McDermott says, “and all our executives
now use our own CRM technology to manage their business in
real time.” McDermott established a sales intelligence center
where reps could tap into a database and get up to speed on
their customers fast. Thus they don’t have to waste the customer’s time – or their own – asking endless questions just to get
the background info they need to make a sales pitch.
Use of this system isn’t just a nice idea; it’s mandatory. “Our sales
professionals go in armed with completely up-to-date intelligence,”
McDermott says. “With this technology, there’s no excuse for not
knowing your customer’s business and we have no patience with
anyone who appears in front of a customer without the facts.”
It wasn’t just about getting employees to embrace their own
technology; some of them had to embrace a U-Haul as well.
McDermott restructured the SAP Americas sales team to match
the firm’s 25+ target industries. This required some radical moves
of personnel. But if someone had experience with high-tech clients,
McDermott was willing to relocate them to California where their
expertise would be the most valuable. In order to implement so
many changes in such a short time, McDermott had to convince
his sales force that these changes were crucial to its success.
“Make no mistake,” he says. “Change is tough and people
instinctively fight against it. It’s unrealistic to think everybody is
going to get on board immediately, and I certainly wasn’t naïve
The Essay on Leadership People Ability Vision
What is leadership? Depending on who you ask, you will receive get replies as to what leadership is all about. Is a leader: o someone who gets the job done? o someone who get other people to follow them? o someone who has great management skills? o someone who inspires people? The list could be longer, and the responses, as we mentioned, even more diverse, depending on whom you ask. Someone once ...
enough to expect people to follow me from day one, especially in
a company that had been through so many changes in leadership. The best way to get around the doubters is to get a few faithful disciples in the boat with you and begin rowing. Don’t wait for
everyone to agree, just proceed with the work. Once you’ve had a
few successes, you start to gain momentum and eventually the
doubters will begin to follow you too.”
So how do you communicate your own vision and motivate
your team? McDermott suggests the following steps.
1. Communicate the reason you need to change. Over-communicate it. “To get people to follow your lead, you have to get
them to change their minds,” says McDermott. “They need to see
that this change isn’t just some random request you dreamed up,
it’s developed around a cause worth fighting for.”
2. Stretch the team. Once McDermott had cut the dead weight,
Recipe for SAP Americas’ “Secret Sauce”
As President and CEO of SAP Americas (which includes North America, Mexico, Central America, and South America), McDermott is the
chief storyteller of its vision, chief architect of its customer value system, and – most important – the chief motivator of its sales team.
He credits the amazing turnaround at SAP to the “Secret Sauce” that
results when everyone in an organization shares the same vision.
“Cultures make or break companies,” says McDermott. “Up to the
year 2000, everyone was going for wealth. If you were making money,
you were happy and if you weren’t, you were sad, but either way it was
all one big sugar high. After 9/11, people began asking different
questions, such as, ‘Is my work meaningful? Do I feel like a part of
something bigger?’ The time was right to change from a culture of
greed and fear into a culture based on shared values. The Secret
Sauce is really a collection of the positive juices that people bring into
a corporation that, when combined, make it run in a positive direction.”
According to McDermott, the Secret Sauce begins with a vision,
which is communicated to, and shared by, the entire work force.
Vision leads to mission, a collective sense that, “If we want to live
The Essay on Black People Sal Mookie Movie
The movie, Do the Right Thing, by Spike Lee is a hard hitting drama that deals with violence and racism in today " society. This film is set in a primarily black neighborhood inclose to the present time. Right in the center of this neighborhood stands a pizza parlor that is owned and operated by one of the most important characters in the movie, Sal. In the beginning of the movie, Sal is shown ...
out our vision, this is what we need to do.”
“Your mission can’t be a phony one,” McDermott insists. “It must
be reflected in how you think, feel, and treat others, because the way
in which you live out your mission leads to your corporate values. It’s
a consortium of people on all levels asking the question, ‘What do
we want to be like when we grow up?’ If everyone doesn’t share in
this process, all you have is somebody from the corner office walking around with a big paddle. But if everyone shares the values, then
every individual becomes accountable for themselves. Professionalism comes naturally because you’re all ladies and gentlemen
treating each other with dignity.”
Once everyone shares the vision, the mission, and the values, the
final ingredient to the Secret Sauce automatically falls into place:
Passion. “What separates great companies from the also-rans is
passion,” says McDermott. “When you create this kind of collective
adrenaline, your company becomes unstoppable.”
Bill McDermott’s Lessons for Mastering Change
BE ENTHUSIASTIC: Early on, enthusiasm came from wanting to win
and wanting to make a success of myself. I owe a lot of credit to my
parents who believed there was nothing I couldn’t accomplish. My
father had wisdom at the right times. A lot of enthusiasm comes from
knowing what you’re about and what you stand for and what you want.
SHARE YOUR VISION: I think anything worth communicating is
almost always undercommunicated. I have always believed that
the sequence is passion, vision, people. Passion comes from deep
within you, and it has to be authentic. If you are really passionate,
next you must tie that to a vision. In the case of SAP Americas, I
brought a focus on making every customer a ‘best-run business.’
That’s the vision. It’s simple; it’s clear; it’s endless in its boundaries.
Every day you role model that, you embody that, you live that, you
constantly reinforce that message. I think people will do more by
what they see you do than what they hear you say they should do.
What you stand for must be consistent.
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INTRODUCTION Innovative Widgets is a large firm of about four hundred staff, and is the largest producer of widgets in Australia. Established in 1952, its widgets are used as components in a broad range of televisions. At Innovative Widgets we are dedicated to providing all internal and external customers with the best possible level of customer service. To ensure this, we have created our own ...
USE TIME WELL: First of all you have to ask what is your time supposed to be doing for you? That goes back to vision. If making every
customer a ‘best-run business’ is the vision, and that is what you
believe in and that is what you have told everyone else to do, then
most of your time should be dedicated toward that vision. So, that
is primarily where I focus my agenda and therefore I focus my calendar and my time. I have been fortunate enough at SAP Americas
to build a great team. And the team is really respectful of what
needs to be done and when I need to be involved in helping them do
it. So, I trust a few people close to me to help me manage the time
wisely. It is basically focus on the customer, and it is also get the
best possible return on my invested time.
REALIZE THE AMERICAN DREAM: I think the American Dream today is
to be a person of high integrity, a leader of stature, whom people
respect. And to be someone who embraces the whole dream. The
thing is, this is no dress rehearsal. Many successful people have
pieces of the American Dream, and some of them are extraordinary at
those pieces, but not all of them have it all. In fact, most of them don’t
have it all. I think the American Dream is elusive for a lot of people
because they haven’t necessarily set their sights right. They haven’t set
their sights on the legacy they want to leave, on how they want to be
remembered or what they want to be remembered for. And, while I am
doing this, I want to make each day really count, not just in the
office, but when I walk into my home and reunite with my family.
EMBRACE THE FUTURE: What makes me hopeful about the future is
that I think, for the most part, there is so much potential out there.
When you think about business, and you think about the nature of
global markets, you think about the barriers to entry for innovation
falling all around us, you think about the leadership opportunities
that you have today, particularly when you look at people that
haven’t really lived real well. It’s a great opportunity for the new generation not to make the mistakes that some of the well-known
leaders have made.
I think global markets are unbelievable and really opportune. I
think the future is unbelievably bright due to American leadership,
globalization, innovative technology, and the next generation. I really think they are better educated. I think they are better prepared.
And, I think, they are going to learn a lot from what we did right and
what we did wrong. And they will take it to the next levels.
DEAL WITH DISAPPOINTMENT: Disappointment didn’t come your
way because the world is against you, so don’t take it personally.
Disappointment came your way because there was a set of circumstances that, perhaps, you could have managed differently,
you could have done things differently, and possibly even the circumstances themselves were not completely fair. I think people
who are really winners learn to stare disappointment down. They
learn from it. Don’t let it wound you; let it strengthen you. It is really a blessing that you were disappointed in the first place. It’s not a
life sentence. It’s a learning opportunity.
S ELLING POWER JUNE 2006
53
“If you want to go from a VP
of sales to a CEO, just practice in the
job you have now…Thinking
like a CEO is the first step in
ultimately becoming a CEO.”
he knew that the people who remained all had the right stuff
and were capable of responding to the challenge. “Good leaders
constantly stretch people,” he says. “I asked a lot of these people,
but they delivered.”
3. Empower each individual. “It’s important to speed up decision making,” says McDermott. “Many companies centralize all
power in the corner office and if management has to okay even
the most minor decision, it slows down the sales process. Our
people are told, ‘If it’s right for the customer, just do it.’”
4. Reward high performers. McDermott’s grandfather was a
professional basketball player and his father was a coach. Collectively they taught him that you get better results when you focus on
what people are doing right instead of constantly berating them for
their weaknesses. “I’m not afraid of paying out compensation,” says
McDermott. “Perhaps we even disproportionately reward high
performers … but you must create an intensity to win.”
T
HE FINAL COMPONENT to SAP Americas’
winning strategy may be the most unusual:
McDermott believes in a team approach to sales.
In fact, McDermott believes in it so strongly
that even in his position as CEO of SAP Americas, he estimates that he still spends about 70
percent of his time with SAP customers.
McDermott is well aware that not every company has such a
musketeer-like approach. In many companies, there’s almost
antipathy between the different officers. But McDermott believes
that a key ingredient for sales success is a respectful relationship
between the CEO, CIO, and CSO. “The CEO should realize that
the sales leader has a really tough job,” he says. “It’s easy to
turn your sales leaders into whipping posts but it takes a smart
CEO to realize how smart his CSO must be. Respect builds
integrity into the relationship.”
The CIO is equally important. “The CEO is all about growth,”
says McDermott. “but you can’t grow unless you have the technology to support it.” McDermott believes that “in the most successful companies, marketing and sales work as one. I think of
marketing as the air cover while the sales people are the ground
troops. Neither can do it without the other, so the effort must be
collaborative, with constant communication.”
Ideally, there’s also collaboration among members of the sales
team. “It’s unrealistic to think a sales professional, no matter how
well trained, can handle all the conversations necessary to close
all sales,” McDermott says. “Each account that’s worth going
after needs a relationship plan, one strategic format that involves
the whole team. The sales professional might be the quarterback,
but he needs other people to run plays.”
McDermott uses the analogy of an elevator and says that you
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JUNE 2006 S ELLING POWER
Three Things a Successful
Leader Must Understand
THE CUSTOMER: Know the customer cold – how else can you
make sure he or she is getting what they want? “It takes a
strategist to understand the complex series of steps it’ll take
to get the customer everything he needs now and everything
he’s likely to need in the future,” says McDermott. “But a
successful sales leader takes the time to understand every
step in the process.”
HIS OR HER PEOPLE: Continuously build your team. Hiring,
training, rewarding, and retaining are ongoing processes.
RESULTS: Analyze where the long-term numbers are coming
from. This isn’t about obsessing over the next quarter, it’s
about building a pipeline that takes into account everything
that is likely to happen during the next 12 months so that you
know where your attention is most needed.
have to know what floor your prospect is on so that you can send
a representative from your team who is on the same level. “Each
interaction is different. If you need to engage a company CEO to
get a sale, then that elevator has to go to the top floor and you need
to send your own CEO to meet with him. Figure out who needs to
be talking to whom, because it just makes no sense to assume that
any one sales professional is capable of having all the conversations necessary to close a large sale. It’s naïve of management to
assume he can do this or to blame him if he can’t.”
Besides, McDermott loves being in the field. “It’s my chance to
find out what people want. If one customer needs something, I
know that eventually a dozen more will need it too.”
B
Y NOW YOU MAY be thinking, “Sounds great,
but my CEO is nothing like McDermott. In fact, I
think I may be reporting to one of those guys he
fired back in 2002.” The good news is, no matter
what your actual title, McDermott believes you’re
already your own CEO. He believes that every
salesperson is actually running his or her own
business within the larger business of their corporation.
“Most sales organizations,” McDermott says, “are driven by a
single question: ‘Did you make the number?’ But that’s the
wrong question. These short-term, narrow kinds of focus are
why we see so much fluctuation – a sales team will have a good
quarter, then a bad quarter. It makes more sense to use a fourquarter rolling measurement because then you’re looking at the
whole pipeline. Your thinking becomes broader and more longterm. When I talk to a sales professional, I look at his business
plan for the next 12 months and ask, ‘Jim, do you have everything
you need in the pipeline to achieve this goal?’”
“If you want to go from a VP of sales to a CEO, just practice in the
job you have now,” says McDermott. “Think strategically: What
does this customer need? What is he or she likely to need in the
future and how can I develop it? Where within the company will I
find the necessary support? How can I reach goals not just for this
quarter, but for the whole year? In other words, what do I need to be
putting into the pipeline now to assure my success six months
from now … nine months from now … five years from now? Thinking like a CEO is the first step in ultimately becoming a CEO.” •
COURTESY OF SAP AMERICAS
SELLING POWER JUNE 2006
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