Zafer Karaca

SUMMARY

What are the main differences between US business culture and that of the rest of the world, and how do you deal with them?

The US business culture is different from the rest of the world because it focuses on short-term value propositions and uniformity. However, localization and understanding regional differences can help navigate these differences.

How can sales leaders make sure that their salespeople understand the business problem the client is trying to solve and focus on the most important people in the client's business?

For long-term success, salespeople need to focus on the business outcome and have good business sense. They also need to be trained on both the product and the business, and they need to take care of their relationships with clients in specific industries.

What is IBM having trouble with when it comes to sales and customer engagement?

IBM is having trouble figuring out how to move investments away from traditional relationship-based engagements and toward garage-style experiential engagements and co-creation with customers. This requires different skills and a move away from relationship-based engagements.

TRANSCRIPT

[00:00:00]

Marcus Cauchi: Hello and welcome back once again to the Inquisitor Podcast with me, Marcus Cauchi. Today my guest is Zafer Karaca. He's the VP of Sales and Cloud and the Red Hat integration at b m for North America. Zafer, welcome.

Zafer Karaca: Thank you, Marcus. It's great to be on. He, yeah,

Marcus Cauchi: Excellent. Today we're gonna be talking about some really thorny stuff that's very much the top of mind for me.

The difference between salespeople who sell short-term versus long-term, the difference between transactional and sustainable sales relationships, uh, how you drive change in culture, looking at adaptation, uh, particularly in recent, the light of recent turn of events with covid and lockdown, and how salespeople have had to adapt.

So, Zafer, welcome.

Zafer Karaca: Thank you, Michael. It's great to be here.

60 to 90 seconds on your background

Marcus Cauchi: Zafer, would you mind giving us 60 to 90 seconds on your background and how you got to where you are?

Zafer Karaca: Of course, happy [00:01:00] to. And the accent is Turkish. I can start with that. I've been with IBM now for 10 years. Before that, I was an engineer. IBM was my first sales job.

Then I had that traditional path. I became a first time manager. I was working in Middle East Africa, out of Istanbul, responsible for that region. Then came to a global job, to New York City where I live now. I've been here five years. I did different roles at corporate level, more strategy, transformation, and got into America's US market, United States market.

And I've been leading different business development teams here recently. Is uh, as you mentioned, this more on the focus, focusing on the cloud and whether that synergy and how we drive that, uh, growth without big acquisition.

Why US or Anglo-Saxon business culture doesn't necessarily translate well

Marcus Cauchi: Excellent. Okay. Well let, let's, um, first of all have a quick chat, uh, around the difference between US business culture and the rest of the world. And I know that's a huge topic, but one of the things, and I've had a couple of interviews, uh, [00:02:00] specifically about why, uh, US or Anglo-Saxon business culture doesn't necessarily translate well. And I'd be really curious about your experience of coming from outside and having to adapt to US culture.

Zafer Karaca: A lot of things are different in this sense, not just for business culture, but you know, culture as a day-to-day, right? And we see the re reflection of that on the business side, you know, more the eastern cultures. It becomes even further. The topic of relationships is more of a discussion of that long-term trust, long-term engagements in US.

It becomes more effect, you know, true to the point value proposition that you have on the short run. What is the benefit that people actually realize? And it's a balance. That's one side of the coin. And the other side of the coin is, uh, within US, you have a different size of the business in one single country, people speaking only one language and relatively, you know, pretty homogenous culture.

So it's easier to engage with people, it's easier to adapt, it's easier to do business in that context. [00:03:00] But if you go to Southeast Asia, all these countries that you may consider as Southeast Asia have a different culture, different language, different way of doing business, different roles, different laws.

And also the, the third aspect of this is the partner ecosystem. If you're working with business partners, the level of engagement, the level of make sure that they have, the perspective they have to their business. There's a whole different story in Middle East Africa, in Angola or Kenya versus South Africa versus United Kingdom versus United States.

And you know, those are the things you always have to keep in mind if you wanna deliver growth, if you wanna succeed somehow.

Marcus Cauchi: It's interesting that you say that the US is a homogenous market because certainly in my experience, east coast versus west coast is and central. Is often very different and north and south is very different.

And one, one of the things that I've been looking for and I've found through, uh, one of my partners, a company called Gap in the Matrix, is specifically how you can localize [00:04:00] your communication, your content, your approach, your choreography, not only on an international and global basis, but also regionally.

Uh, where cuz you know, the US in effect, you've got three major time zones. You've got such a diversity of, uh, population because of the huge background in terms of immigration. And then you've got the legacy, north versus south. You've got the, you know, the more established old money and the pioneer spirit on the west coast, uh, and you've got all of this innovation.

How did you handle US?

Marcus Cauchi: So as a melting pot, it must have been a fascinating journey the first couple of years. Really trying to, uh, get to grips with all of that. How, how did, how did you handle it?

Zafer Karaca: Absolutely. I think one thing, you know, to clear out first US is a extremely complicated market in that context we have like, you know, but that's kind of common theme.

If you look at New York City, there's always a big vibrant startup community. [00:05:00] There's a established, you know, huge old money as you can call it that way, and you see this huge immigration coming in. But if you go to Austin, Texas, it's not that different. It's a huge tech hub now. You see all these startups investing there as well.

You see that immigration driven with that, you know, labor need in the market. And then you also see that old money versus the startup growth. So, uh, US is complicated. You need to think about all these dynamics, but those dynamics exist in maybe different scale, but different parts of the country. As a com country though all these parts, I'm sure it's complicated on its own, no doubt. to me, just to, that is, you know, couple things, right? One. Living and breathing here day in and day out. You just adjusted the life aspect of it. That's probably the starting point. The second piece is you need to find the right people to build those mentorship type relationships.

In my career, I've been always fortunate. It can be mentorship about career, it can be mentorship about. Being your sponsor, or it can be mentorship about getting you [00:06:00] acclimated to a different culture, different country, different continent. But you need to always have some people that you can trust that are gonna be direct, giving you that feedback, make you, you know, put you in your place if needed, show you the fact grow, you know?

And that helps a lot. And then the third piece is, of course, you need to have some patience. You need to listen. Just ask the right questions and let people talk to you. If you're talking to any client, the worst mistake a salesperson can make is just keep talking and talking and talking. And as long as you stop that and start asking the questions, culture can be different.

Culture is always different, but certain basics of sales is the same. You need to stick on those. If you do those right, then things work out.

Marcus Cauchi: This is one of my big bug bears, that there are two things that I see being sadly lacking virtually everywhere I've ever worked. And the first one is lack of business acumen.

Salespeople have a tendency [00:07:00] to, and certainly it's part of the culture of their business, that they get trained in product, but they never really get trained in business acumen. So they don't understand the moving parts. They don't understand the implications that if you make a change in one place in a system, then there is a knock on effect or a ripple effect in other parts of the business.

And whilst as a vendor, you might see the value of improving a particular process or pathway, if you don't understand the bigger picture and you're not speaking to various stakeholders within the business, and in an enterprise, you could today easily need to speak to between 7 and 11 decision makers who critically influence the decision.

And what we see is that most salespeople are only speaking to one or two points. And so then it becomes a lottery. And the second thing that you touched on is listening. And almost no company [00:08:00] trains their salespeople to listen. And that then translates into their management because management has a tendency to tell people, this is what you should do, or this is how I've done it.

And the net result of that is that you don't really transfer the learning.

How you are making sure that your salespeople are developing those two critical areas?

Marcus Cauchi: What you do is you fix the problem in the short term, but the behavior doesn't change in the long term. So I'm really curious as a sales leader, how you are making sure that your salespeople are developing those two critical areas?

Zafer Karaca: There are lots of, lots of important good things that you mentioned there. The, the starting point of this is we don't do good for our own profession as sellers with defining that stereotypical seller that goes and pushes things and makes that perfect pitch and the customer buys and well, that's not how real life works, especially on a B2B environment,

by this complex solutions, especially in my industry technology side. The discussion is, you know, if people wanna [00:09:00] buy products. It's year 2021. People can go online, get, subscribe on the platform, use the APIs there, use the related software there, and they don't need to sell it for that. The value that we have is, exactly to your point, one you need to listen and understand the business problem the client is trying to solve somehow puts value on the table rather than just pitching how good your product is, pitching, how that product is gonna help deliver that business value for your respective customer.

And respective customer will have a unique situation in certain ways that's never gonna be matching the others. So you need to focus on that one. And then you need to understand the key stakeholders on the client, right? Especially if you're discussing a complex sale here you mentioned 7 to 11 key decision makers.

The piece we always tend to miss, for example, in technologies, we have a, you know, heritage relationship with more the CIO organization, IT organization. But if you look today, more than 60% of decisions are being made for technology [00:10:00] on the business side. And we really have those relationships with marketing, with HR, with any of the business line line of business owners, and then are you driving that business acumen to show that your product or your solution, your technology can enable value? How do you do this? This has few steps, right? One. Direction is a company culture. What do you set? Because, uh, this is not only a seller issue,

it starts with offering management. How the position your product. Are you focusing on the specifications of your product? Are you focusing on the use cases that can deliver value to your client? Then does marketing adjustive verbiage accordingly? Is it more of a focus on, again, how I can push my product to the market, or it's how I can create awareness about certain needs that my customers have?

Then it translate into sales and even the technical sales aspect of it. What is my approach? Am I trying to solve architect the problem the client has. I take the solution that my client has or am I really, really just trying to push the product? Again, [00:11:00] it's year 2021. As a seller, as a sales profession, if you want this to be successful in the long run, there's no way for us to maintain, um, any kind of value unless we focus on that business outcome part of it.

The second piece becomes how do you train your sellers? What is the focus of your training? Are you training your sellers on product? Absolutely. Your sellers need to understand the technology. Your sellers need to understand underlying facts. But only after they have that business acumen only after they have that understanding of the basics of the business.

And the third aspect is what is the longevity of your territories? Like you align a seller to a client, how long do you let them nurture that relationship? Is it a specific industry that they cover? One thing we did in United States in I think 2016 as IBM, all of our company to go to market organizations, is now structured around industries.

Because, you know, practice makes perfection, right if it, as a seller, I only talk to energy and utility companies. I learn the [00:12:00] pain points, I learn the use cases. I train myself on specific enablements around that. I learn how to talk to them. I un, you know, know the objections. So that's the second big bucket.

And then the third bucket becomes, the incentives? Is the management systems the way we measure things? Are we focusing a lot on building that sustainable long-term business? Or are we really too much putting emphasis on the short-term, immediate return that we are gonna get with that one simple sale? So some of these discussions, understanding the client's business needs, building that business acumen, these are midterm investments, if not long term.

And sometimes, you know, we lack the patience and that, that, that becomes a key decision criteria as well.

Marcus Cauchi: So you, you've touched on so many important factors there Zafer. So I, I would like to explore a couple of really difficult, thorny questions, if I may. Fundamentally, I believe that what [00:13:00] has traditionally, certainly for the last 40, 50 years been seen as the ideal for salespeople is no longer fit for purpose traditionally.

New business has been the golden child. Account growth has been, you know, given to, uh, what people pejoratively call farmers. And what they really end up doing is they've become zookeepers. They just feed the animals enough so that they don't starve and there really isn't a lot of innovation and, uh, a lot of drive to partner and collaborate with the customer.

The other aspect that is seen as the ginger head bastard, ugly stepdaughter of direct sales is the channel. And I fundamentally believe that in this day and age, your ability to collaborate will define your success in the future. And the mathematics of strategic partnerships and alliances [00:14:00] is one plus one equals 11.

And it's difficult to grow in less than triple figures if you're doing a good job with your alliances. Whereas it's not impossible to grow triple figures or quadruple figures if you're trying to go direct and do it through brute force. So let's start with compensation. The compensation schemes seem to drive people towards that initial transaction and the orig, uh, the initiation of the new logo win.

And I realize that your level within IBM, you don't have, uh, control over compensation. But if you were to design the ideal compensation scheme, what would you suggest as a way of driving long-term sustainable relationships?

Zafer Karaca: I think. It's a bit of a different topic. Like I think there are two discussions that are important.

That one is how you build those [00:15:00] long-term relationships. In my mind, that's different than new client acquisition versus that long-term lifetime value based, focused on your existing base accounts. The, the reason I say this is practically, if you're a seller, if you're a smart seller, the fastest way you can deliver your budgets, the fastest way you can achieve your objectives is working with your existing customers.

Any kind of study that's out, uh, it can be HBI, it can be McKinsey, it doesn't matter. You're gonna see the cost of firing a client is, you know, on the 35% of the revenue, especially on the sales business these days. For the first year, it means you're gonna spend so much time and the revenue yield is gonna be so small, and on the other side you have these existing relationships.

Selling is much easier. So for us, at IBM by the compensation for an existing deal versus a new client is the same. A seller is by default motivated on sustaining that long-term value for their existing customers first. The second piece though, that's important there is the [00:16:00] mindset, the management system, the focus that you have on the business.

As a big public company, of course, we have that quarterly pressure on the sales side while we announce the results on the other side. You know, we have a reality with our customers. We are driving complex business solutions for them. We're not driving a simple product move or shift to the market. We're discussing services.

We're discussing the business outcomes, the business processes. We're talking about technologies as artificial intelligence, right? You need to really train the model so that there's some efficiency, there's some value. So this, all these things take time, and in many cases, the average sales cycle for us is more than that one quarter period of time.

Then as a sales manager, as a sales leader, how do you balance, how do you balance with your team in terms of how they spend their time from an inquiry execution perspective for progression and closing deals versus the programmatic business development? Because, you know, if you don't establish that structure, it so is to, to fall into the pitfall of this is the most [00:17:00] important quarter ever in your career.

You just need to sell, but the next one is still gonna be the most important, important quarter ever again. And then the discussion becomes, what do you have in the pipeline? Well, nothing, because you're always focused on that, closing that one deal. So driving at that scale is not that easy. So you need to also, as a big organization like IBM, you have to lean on your leadership teams.

On the field, on the ground, working with your team to balance that out. We are rolling out planning practices. We are rolling out account planning practices that are looking more like six to 12 months horizon rather than the three months horizon. You're looking at three years plan for our strategic accounts in terms of how we can deliver more business value.

You needs to deploy these practices. But again, it comes down to salespeople are smart enough. Whatever you're asking them day in, day out on your victim management system, on your cadencing, that's why they're gonna focus on, if only thing that matters to you is that in quite a product sale, then you're gonna miss the whole year [00:18:00] budget.

There's no other way you need to focus on that on a day in day out basis.

Marcus Cauchi: This is really very interesting though because I, I think it requires patient investors. It requires strategic leadership. But the way the commercial or the business model is set up, operating on quarterly reporting, if you're a publicly listed business, and even if you're a venture or private, uh, equity backed business, that quarterly reporting, whilst it's not necessary for running the business, is important for driving the valuation.

And so what it does is it encourages the wrong type of sales behavior. And I see this all the time. I've got friends who are in management roles where they're salespeople, they've inherited these salespeople, and they've gone on calls where the salesperson has actually [00:19:00] lied to the customer in order to try and get the deal over the line.

And this then comes back to what passes for great in sales. Historically, it's been people who are self-starters, self-motivated, results driven. Who are highly competitive with a will to win, and by very definition, a will to win means you have to be ready to let someone else lose. So they're always playing a finite game, particularly in technology.

You must be spending time in where you are co-selling with the likes of Amazon, with the likes of Microsoft, with the likes of Google, despite the fact they are your fiercest competitors

Marcus Cauchi: Now, unless you can play nicely with your competition, chances are you're only gonna pick up the crumbs. I mean, you guys must be spending time in where you are co-selling with the likes of Amazon, with the likes of Microsoft, with the likes of Google, despite the fact they are your fiercest competitors.

Zafer Karaca: Absolutely. I I think there was the second piece on your prior question as well, the partner ecosystem, right? So when your company, it's scale of ibm and you're in different parts of technology [00:20:00] business, it is by design part of your business will be competing with a company. Well, the other part is strongly partnering.

This applies to a lot of big names as you mentioned. It applies to others like Accentures of the world, Ernst and Youngs of the world. Where they're consulting I maybe in competition with our global business services, but on the technology side where we have our software and hardware, we may be one of the biggest providers, vendors for them, or you know, Salesforce is a great example.

We may have some products that may be competing on one side, but Salesforce is a great IBM partner. We have one of the biggest practitioners for Salesforce from a consulting perspective. We have a great deal of agreements to embed our software into their software so that they, there's more value for the customer.

There's no other way for you to scale, especially in this age, while the expectation is so fierce and you need to balance that short term and long term. The long term aspect especially comes from that value ecosystem that you built. [00:21:00] One of the big acquisitions we did a year and a half ago was around Reddit, and the whole model for Reddit is, open ecosystem.

So open source software that we are driving. There's no way for you to do everything yourself and expect that you're gonna have the maximized value for the client, and you're gonna win. So the discussion becomes again, what are the programs for those partners to work with you? You need to have clarity. I don't think the problem is you're competing with them on one side and you're like partnering with them on the other side.

As long as both parties know where those lanes fall, we are all adults. We know how to deal with that. We know how to deal with complexity and it works for everybody. The point that you're not clear about where you compete and where you partner is when things start shadowing down. You need to focus on the value of value. You can partner jointly and doesn't matter if it's a competition. AWS is a big IBM partner as well. Yes. We have a lot of IBM software on Amazon Cloud. Yes. Do we compete in certain deals? Absolutely. And that that's the [00:22:00] normal for us for the last two decades, probably. Different names, different brands, but this the same model.

We are now investing close to billion dollar on cloud engagement funds. Our big global system integrators driving IBM cloud's solutions around this hybrid multicloud platform we are investing heavily on. And that's about, again, by name driving that integration with multiple cloud providers to make sure that the customer has an integrated value, right?

They can move different workflows through different systems. There's no way you can do that on your own.

Marcus Cauchi: I'm so glad that you said that. And uh, again, what, what I'm really conscious of is that that requires a very, very different type of salesperson. It requires someone who operates on playing an infinite game, and the objective there is to make the pie bigger and keep the game going as opposed to a finite game, which is to take a bigger slice [00:23:00] of a shrinking pie.

And to win the game, which means that someone else loses. So aspects like cooperation, uh, cooperation, collaboration, being able to drive discretionary effort from people who do not make a direct gain from helping you. Someone who has a very strong customer-centric approach. It's all about making the customer successful.

And then this feeds back into the compensation conversation. One of the themes that I'm really, uh, trying to understand is how do we create compensation schemes where instead of making a lot of money for winning the logo, we make a lot of money when the customer achieves the outcome that they paid for. Where everybody who's contributed to the customer's success gets rewarded and recognized.

In order to drive that cohesion and alignment because, uh, I see [00:24:00] time and time again, marketing, sales, customer success, channel, account management, operations, professional services, they're all different stove pipes and different fiefdoms. And so the customer experiences a disconnect instead of a smooth transition.

Customer success isn't brought in early enough. Marketing doesn't spend anywhere near enough time, if any, actually speaking to customers. And this I think, is a huge seismic shift that Covid has accelerated because now, uh, and you pointed to it, you know, 60% of purchase decisions. In fact, in some industries, it's up to 80% of technology are being made by different lines of business outside of IT.

There's an awful lot of people who will be either outta pocket or outta work in the near future as they get disrupted out of the market by what their customers need

Marcus Cauchi: We're already seeing 75 to 80% and in some cases 90 to a hundred percent [00:25:00] of product sales being sold through a partner ecosystem. And unless organizations at their leadership level are ready to adapt and embrace these changes, they have a very short lifespan, which I don't think is a bad thing, but it does mean that there's an awful lot of people who, uh, will be either outta pocket or outta work in the near future as they get disrupted out of the market by what their customers need.

So I'm curious about your thoughts on that.

Zafer Karaca: Yeah. I think again, there's a lot of value in different things you mentioned there, starting with the partner ecosystem piece. It's a competition in this world, no doubt. Then the discussion becomes how do you drive it at an individual seller level, at a large scale organization in front of the customer, right?

Because now you know this is about personalities. This is about certain behaviors. You need to drive that cultural change, especially for the sellers that are not used to working with ecosystem [00:26:00] partners. Because one thing that it means is you need to let go part of that control that all the sellers wanna have 10 sales cycle, right?

We, we are not good with that. The second piece becomes the compensation. Am I gonna get a bigger pie or am I gonna get a bigger slice? There's always a debate, right? Like why do we focus? So the discussion becomes, as you mentioned, what is the outcome for the customer? If you can maximize that, it means you're gonna maximize your wallet share.

It means that there's more for you as a company to do, and then that's an easier partnership discussion. If there's a win-win situation, there's always a great partnership situation. That's the only partnership situation that works in the long run. There's no win and lose to be sustainable in any means.

The way you drive that one, for example, a big change we made, um, this year is for certain, except certain customers. Again, it's good to be direct with your partner costs saying, these are the accounts that I'm gonna play direct and these are the accounts that I'm gonna [00:27:00] work with you. Primarily. Once you declare that accounts that you're gonna be working with business partners first, which is the model for us, the discussion becomes easier.

The second piece we did a lot of changes is for certain product groups on our side, the seller compensation is tied to only that costal aspect. What we are saying is, you know, if there's a need, we can satisfy that being direct as a direct engagement, but as a seller, you're not gonna get compensated for.

Just imagine what that makes people start partnering immediately with the ecosystem. That's the second piece. Then the third discussion becomes what is the management system and the right metrics around it? Some of them are in quarter execution. Some of them are actually how many solutions are built by the ISVs based on your technology?

Those solutions may not be yielding dollars right now, but that's the only way for you to scale are looking at those long-term sustainable ecosystem metrics becomes the third aspect. Then you mentioned something very interesting, and I think it's a bit different. What is the value that you're [00:28:00] focusing on?

Are you focusing on the revenue as the value metric immediately as your sales return, or are you focusing on that client outcome? We all have issues, we all have significant room for improvement in this aspect. Couple things we do well that's happy to share with the broader audience here is one, uh, business services.

Um, we have a lot of outcome based contracts. So the contract with the customer is not that I'm gonna deliver you this solution and then you're gonna pay me this much. It's simply based on here's the business outcome we're gonna deliver for you, and as long as we deliver that outcome, here's the percentage of the yield that is gonna be immersed by our side out of that value.

So then, you're on the same boat with the customer driving for the same outcome, and at the end of the day, you may have a bit of a higher profit, maybe even, but the client is more than willing to pay that because you're literally delivering existing, you know, new business value for them on top of whatever is happening there.

That changes a lot. And the second thing is that's we have, [00:29:00] uh, many services business. We are spinning off Kyndryl as a new company recently, but as part of that we have a lot of outsourcing base, more heritage agreements, but it's there things we can learn in those agreements. The way those work is they have 5 to 10 years agreements for you to make any kind of long-term agreement as such, work for both parties successfully is you need to be on the same boat again. For each of these accounts, we have PEs, we call them, it's project executives. They own the P and L for the contracts, so from sales aspect as well as delivery aspect as a whole owner. And one of the most important metrics on their compensation is client satisfaction.

There's no other way that you're gonna motivate that person clearly with setting a direct goal, objective, saying your job primarily is to make the customer happy, which means you need to deliver continuous business value and then you're gonna get paid accordingly. Compensation drives behavior, no doubt. Sales 101.

Marcus Cauchi: Yes. Which is [00:30:00] the frequency, the cadence, the quality of ongoing communication. I often joke about it, but it's actually a depressingly serious, uh, issue, which is that if the compensation is driving that transactional behavior, then for the customer, it always feels like a drive by shooting. The salesperson only turns up when there's a renewal or a cross-sell and an upsell.

And uh, what you are describing is a partnership between the vendor and the customer. So you go beyond the level of being a trusted advisor, you're now an integral part of their business. And partners help each other to get better. Partnerships are difficult like marriages are. When you initially get married, you go through that honeymoon period where you kind of accept the other person's foibles, and then after a while, their underpants on the floor, their farting, their terrible table manners [00:31:00] start to grate on you.

Their snoring starts to bother you, and if you don't address these issues, then they can eventually lead to a divorce. So I think one of the most important things to do is have a really good prenup with your partners and with your customers, and have regular accountability. Where you hold yourself to account to your customer and to your partners, and where there is a regular cadence of accountability conversation where they are being held accountable for their part in the relationship as well.

And this is where you create equality or parity between the partner, the customer, and yourself. You all have different role functions, but you are equal in business stature, and all of you are working towards serving the customer's outcomes, making them successful. And as a vendor, our job is to make our partners wildly successful.

But [00:32:00] again, this is one of the big problems that if you are on this land grab for logos and when you put together your partner ecosystem. You go for volume rather than quality. It's very difficult to sustain the kind of attention and the quality of the relationship. If as a partner manager you're trying to manage a hundred partners or a, you know, 500 partners better to work with a dozen and really work very closely with them, helping them be massively successful and help them grow at a thousand percent, rather than working with a hundred, you're still only gonna make 10 of them successful anyway.

The square root of the number of people in your organization will, uh, determine at least 50% of your production.

Zafer Karaca: Absolutely. So one piece that is really important is client versus partnership. And as you mentioned, it needs to work for both parties, right? Nobody [00:33:00] will continue to deliver a good service on a contract.

That's money losing for years and years. That's not sustainable. It can be short term for companies, but that needs to be valued for both sides and that's clear. We are good at on sales side, it's may be a failed project afterwards. It may be something that we lose a deal. We are good at doing postmortems, we're good at looking backwards, saying what went wrong, but we are not that good at is like pre-mortems.

Yeah, in advance saying what can go go wrong here? It can be for a sales opportunity that's critical for you today with the target objective we have, it may be for an existing contract, it may be for a business partner type, longer term relationship. And you know, you need to think through as a brainstorming session, throw out all the ideas saying what can go wrong.

Then rank them in terms of the importance versus impact on a two by two metrics. And then address most critical things with a plan in advance, say, these are my mitigation actions. If these things happen, they don't [00:34:00] have to happen, but it's always good to have that plan. And the process itself is the value.

It's not the plan itself. And then the other aspect of this becomes, as you said, yeah, based on that, you may have a good prenup, right? Divorce is nothing wrong with it. It's just you need to make it easier for both companies in that context so that nobody gets pain and they can still sustain their services to their other customers, and they can still sustain the value they need to generate for their shareholders and their teams and the product market.

No, that then the discussion here is focus, right? If you wanna get into that premortem type conversations or something more deeper, then you cannot do this at scale. So the question becomes, what are the things you wanna do that are the basic minimum that you will drive at scale? And then where are you gonna actually put your real, real effort and emphasis, especially on the partner ecosystem side.

Again, this year, for example, in United States, we said these are roughly 85 to hundred partners there, our largest key [00:35:00] partners and the other ones that we are gonna invest in a different way. And then we have this huge, massive network of partners and we are gonna reach out to them in a different way.

It's not about doing one versus stutter. It's about building the right go to market model. Are you serving your partners more digitally? Are you serving more of your partners based on an inside sales function in front of the customers versus the face space function? Need, adjust those things. It needs to be something sustainable from more of a, for sure an expense perspective, but more also value perspective for the partner based on the level of engagement they're looking for.

Some of the partners gonna be strategic ones longer term, some of the partners are gonna be digest because you know they wanna use some part of your technology. On more tactical level, you need to adjust your go to market. You need to align your go to marketing to different priorities. You need leverage different routes, different tools, different technologies accordingly, and for sure it's a complex environment, but that complex environment is needed to [00:36:00] optimize your resources and your outcome.

Marcus Cauchi: Again, uh, I applaud everything that you said. And, um, what, what I'd like to do is then take the conversation a little bit deeper into the growth in terms of influence that procurement is having. Certainly since Covid has taken over our lives over the last, uh, 14 months or so, uh, what we are definitely seeing is a, an increase in the level of influence and impact procurement is having.

However, there are two very distinct groups within procurement. You have the tactical type of procurement, and my friend, uh, Mark Schenkius talks about these people sitting in a blue chair, and that therefore always means the table is blue. Now then you have the strategic type of procurement and they sit in a red chair.

And if either side is tactical, then the [00:37:00] table is always blue. Whereas if both sides are in a red chair, then the table is red also. And the problem is that I see far too many procurement operations operate, trying to be tactical, when in fact what they really need, particularly when we're talking about IT, the financial impact is often serious and the supplier impact.

There may be many suppliers, but what we need to understand, particularly at the level that you're operating at, at IBM, you don't do tactical, uh, you know, you, you're not just trying to flog the odd laptop or another firewall license. Um, the decisions people are making are literally life or death for the business.

And if they make the wrong decision, then the implications are significant. Not only in terms of share price, but even in terms of the survival of the [00:38:00] business. So I'm curious about what you are doing to train your salespeople to really engage early with procurement. Because one of the tactics that I've seen happen, uh, over the last 30 years is that a deal is announced and then you speak to procurement and that puts you in a terrible position.

Um, so I'm curious about what you're doing to make sure that your salespeople are engaging early in conversation with procurement in order to be strategic.

Procurement is key

Zafer Karaca: Absolutely. I think procurement is key and with Covid, as you mentioned, they have a much bigger role, much more important. The part that's also different in that picture is the CFOs, the finance side.

Marcus Cauchi: Yeah.

Zafer Karaca: Now, every single deal, it may be much smaller than it used to be. Goes through that finance chain and yeah given the market conditions, given the priorities, they have a huge emphasis on cashflow for their own company. They have a huge emphasis on the return and [00:39:00] investment for the short run, and that's the name of the game that's so normal given the market conditions we lived through in the last 12 to 15 months now, and the discussion becomes one.

Is that a true reason to act for the customer? In the sense that, do you have a solid value proposition? And it's not a solid value proposition in the sense that it's a high level, it's good for the client. It's literally from a finance perspective as a CFO, would they agree that this is gonna deliver them value in the three to six months, nine months, that short timeframe?

Cause there's still timeframe they're looking at on one side while building that feature for their business as you said, today's world, some of the architectural decisions companies make. Yeah, that's life and death. That's for the sustainability of that business. That's gonna define if they're gonna succeed or not, and somehow you need to help them balance.

But if you say, this is the right thing for my customer in the long run, I'm just gonna ignore everything else. [00:40:00] No, you're just gonna fail. Nobody can at this day say, I'm gonna be getting a lot of value out of this solution in 36 months. That's like for where. We, we don't know what's gonna happen to them.

So you need to have that value proposition value balance that short-term gain with the long-term gain, and you need to have a comprehensive value proposition. That's one piece. Then the second piece is, as IBM, of course, we are pretty lucky having long-term relationship with our key clients for many, many years, and this spans across different functions for sure.

IT is very, deal with a lot of technologies, but we've been working with procurement sides from both two ways. One, you know, again, we are a vendor for them, but the other piece is we have certain solutions that can make the processes easier, better, faster, more efficient. Then you build that side of the equation.

We are good at talking to CFOs in the context because that's always a discussion we have. We've been a big spanning item for them, and during Covid times, [00:41:00] of course, we have to get some of that weight out of some of our clients, especially in certain industries like, you know, airlines, retail that struggle with this. How can we actually help them from a cashflow perspective?

The moment you sit on the table saying, I'm here to help you with this on the picture we all are in, and here's the value we can create jointly to your earlier reference, if you can somehow make the pie bigger in the long run, and if you're helping fix their short-term problems in the meantime from a cash flow perspective, from pay, they, you know, imagine whatever, then that turns into partnership conversation.

Then the door opens. If you go there and try to knock the door and sell stuff, while they have all these challenges from a financial perspective that's doing for failure. There's like, there's no way to go with that.

Marcus Cauchi: And this then comes back to the business acumen conversation. I, I've done a series of interviews with CXOs, so CEOs, [00:42:00] CFOs, COOs, chief purchasing officers, chief marketing officers, uh, CROs.

And what what's come, uh, really clear as a pattern is that they are trying to execute the board's strategy. And because of the nature of how their businesses suck their time and the fires they're having to put out, the jobs they're trying to get done, they don't have time to talk to vendors unless that vendor brings massive value.

Now they all look forward to a good sales conversation because a great salesperson will leave the customer smarter by the time they finish that conversation. But without exception, I've done a dozen of these or more. And without exception, they say that that almost never happens. But when it does, those are the salespeople that they do business with on multiple occasions throughout their entire [00:43:00] career, regardless of which company they're at.

How do you go about making sure that when you turn up you are always timely, you are always contextually relevant, and you are always delivering value?

Marcus Cauchi: And these salespeople are generating tens or hundreds of millions or even billions of dollars worth of business for their employers, um, because they leave their customers smarter and because they turn up and deliver real value. So again, it's clear that this is something that you do, and I'd love your thoughts in terms so to wake the audience up in terms of how do you go about making sure that when you turn up you are always timely, you are always contextually relevant, and you are always delivering value.

Zafer Karaca: It's a great one. So as you said, right, COVID is an example which shifted client behavior at first, a lot of emphasis on expense and cash flow, but then radically shifted further towards more accelerating digital transformation in the sense that everybody had to serve their clients in a different way.[00:44:00]

Everyone had to become more efficient, more agile, and more flexible from a business model perspective. And that's became the discussion. And as a seller are delivering that value, making the clients accelerate their own journey wherever they are today. The discussion becomes what we mentioned earlier, what we did at IBM is we looked at our portfolio of offerings at the beginning of all this crisis.

We said, what are the things that matters the most right now for our clients? What are the values we can generate for them? They need to, again, work on simple basics 101 stuff, which is cash flow, which is expense. And does our existing deals in the pipeline have value in this context? Is CFO would rate them as yay or nay?

We, we made that tough decisions in terms of why we should put our emphasis by, we should put our folks. The second piece, as I mentioned, that offerings, the value proposition today resonates the same way it did in the past. It may have been a great offering, but what is the actual value from a [00:45:00] business perspective?

Am I helping with that customer's cloud journey with their digital transformation journey? Am I making their customer experience better? Am I making it much more efficient? One thing we had to realize is if a client was doing a 2% of their business online, suddenly it became 50, 60% overnight. The number of queries, that case that goes through their website for agents doing chats or number of queries, uh, airline receives just because everybody want to reschedule their flights.

It's been tremendously high. How do you deal with those requests? They cannot just hire more people. It's a time for, uh, managing expenses. It's a time where you cannot bring new people to the office. Then how do you leverage artificial intelligence to drive that productivity gain while improving your customer satisfaction?

Because nobody wants to wait on the phone, 25 minutes, talk to someone. So the discretion becomes what are those offerings in use cases that resonates? Then the third aspect becomes, [00:46:00] once you succeed on a couple where you see that value, how do you enable that at scale? How do you showcase those wind stories, those use cases to your sales team?

And by the way, I'm saying win stories, but this may be free things like we did a lot of, a lot of free work. I don't wanna call it free work, but investment with our customers to drive that discussion because nobody wants to get into that upfront investment in certain aspects. And maybe if you have the confidence and the business outcome that's gonna generate, you have to take that step.

We pride a lot of licenses around Watson, our artificial intelligence platform for our customers to build. Because especially in healthcare, the, again, the amount of careers, hospitals, call centers got is unbelievable. There was no way for them to manage. You need to be there as a partner and help them.

And once you see them adopting that and getting that business outcome, you need to let the word spread. You need to make all your sellers understand the value position for the customer. It is not the [00:47:00] product, it's the value proposition for the business. And then that requires enablements. Which you need to do it in a different way because you cannot pull people into a classroom or in a kind of office anymore.

It's more of a platform discussion, which we've been lucky because we've been in this for the last decade, at least, if not two, to drive that digital engagement. How do you enable those teams? And the third one is how we, how do you drive that discussion, right? We discussed this earlier. We have, as a sellers, we focus on the inquirer deals.

And you're telling your sales team, there's this solution that's gonna deliver a lot of value for the customer, but no revenue in the short run for you. But I still want you to take this to your client because it's great for your client. If you have the right individuals, train the right way with the right enablement, they will understand the value of this because they know that business acumen from your side as well.

And then that scales, that becomes that snowball effect. We've been very fortunate, uh, as IBM throughout this journey. And if you've seen the [00:48:00] results last quarter after four consecutive quarter of decline, we got back to growth. And that is the trajectory you need to continue to invest for the long run with your customers, with your sales teams.

And its the results.

Marcus Cauchi: And what you're talking about here is creating a long-term partnership with your customers and your partners working on deep collaboration, which requires deep listening as well as co-development of solutions, uh, in order to help the customer achieve the success and the outcomes that they want, and create incontrovertible value within their business that gives them potentially either survival in a tough time or a comp, a groundbreaking competitive advantage.

And that can only come if you listen, if you hold one another to account. I think another aspect which is really important is you [00:49:00] need to be ready to speak to the people who are unhappy. One of the most important bits of research that came out of Salesforce in the last 12 months is uh, a program called Experience to Shift.

What they identified was product development cycles was six times faster by speaking to unhappy customers. And you need to be vulnerable enough to admit that you've messed up and ask for their direction and critical feedback. And I think far too few salespeople have the courage to do that because they are fixated on being liked.

They are focused on wanting to hit their number. And sometimes you have to take it, take it on the gin and say to the customer, you know, we screwed up. It's our fault. We wanna remedy this. How do we fix it? And by doing that, it allows you to work with them and not only [00:50:00] rescue the relationship, but enhance it and improve it.

They're willing to go out there and be vulnerable enough and courageous enough to invite constructive criticism

Marcus Cauchi: What's that Japanese art form? Um, that really focuses on reveling in the repair. So, you know, they break a piece of, uh, pottery and then, and they mend it using gold. And, uh, often it's the scar issue that may get, ends up being stronger. And I think that's one of the really real qualities of the modern seller that I see the best having.

They're willing to go out there and be vulnerable enough and courageous enough to invite constructive criticism.

Zafer Karaca: Vulnerability is the only way to build relationships in any aspect of life, and that's key. The piece that's key also is it is not just the sales aspect. How, why do you put the customer and the customer feedback as an organization?

Because as you mentioned, this is about offering management and how you develop your products fast. We at IBM m net promoter score is a key metric that we made part of our management system [00:51:00] for several years now, and you have to be adamant about it from different sides of the business. As a seller, we keep all the sales teams accountable on the net promoter score of their customers.

Just like any other revenue metric, they are accountable for it. The discussion becomes then, do you actually capture those feedback? If there's a critical situation, do you have separate business process for it? Do you assign a case owner? Do you really capture that product feedback? How do you pass that back to offering management?

Are there quick fixes you can just do for the customers so that again, you show that you're there for them even though you're taking a small hit from an expense perspective. You need to build those business processes to drive that discussion. And one thing that's also important there is, you mentioned within procurement, that Blue chair, red chair, we can replicate the analogy in different parts of the client organization.

The discussion becomes are you getting the feedback at the right level? You need to get feedback from the customer, you need to [00:52:00] understand what's happening from a client perspective, from a business perspective, but more importantly, what do they think about this partnership at different levels and at difference levels is the developer doing the actual software development on the ground?

The IT management is the CFO, it's the procurement, it's the line of business and the CEO of the company, depending on the level of leadership you have with the existing customer.

Marcus Cauchi: And users.

Zafer Karaca: Yes, exactly. The the, there's two types of feedback, right? The start with the user is the developer in many cases, in I business and how are they using this? What's their feedback, what's their perspective? And you need to somehow still capture the feedback from procurement. What do they think about your licensing model? What do they think about your pricing? How they, they position you as competition? They need to look at the line of business.

Do they think that your solutions are delivered in a way that has that business value or you're just trying to push them product and they don't even wanna talk to you? There are different pilots in the companies that you deal with. The customer is not just one single person [00:53:00] anymore. There are different buyers.

There are different buyer personas, and you need to somehow capture feedback from these individuals and you need to somehow put them into parts that's, it's a melting pot, and take the right turning style of and execute accordingly.

Marcus Cauchi: One thing I would challenge, and this is based on the research that came out of Salesforce, is the net promoter score versus the time to value score. And again, in terms of the strategic conversations that you're having, uh, what the customer cares about is how quickly do we get the outcome and how quickly do we start benefiting from the investment we've made in that out, uh, achieving that outcome. And I think this is an area that we really need to focus on when we are developing our partnerships as well.

You know, how quickly does the partner start to realize the benefit of partnering with us? So I, I've found this [00:54:00] a really interesting conversation, uh, for so many reasons Zafer.

What are you struggling with at the moment? What are you wrestling with?

Marcus Cauchi: unfortunately we've come to time, which is depressing cuz I could talk to you for hours. Tell me this, what are you struggling with at the moment? What are you wrestling with?

Zafer Karaca: One of the biggest things we are wrestling with right now is, we made a significant go to market transformation beginning of this year in the sense that we are driving more deeper technical skills. The sales profile that we idolize to your point, is not as sufficient on its own anymore.

You need to have that support structure and that support structure is not about telling a client a great story anymore. It's about showing the actual value. The time to value discussion becomes part of every single sales engagement, and you need to make the sales engagement experiential. The developer should have access to your code in a matter of minutes, if not seconds.

They actually use [00:55:00] that On the sales side, we are very proud of the IBM garage investments we made, which is simply co-creating with our customers some of the MVP's solutions that they can actually see upfront. So the, one of the biggest struggles we have is how do shift investment to drive scaling, garage type experiential engagements, co-creation with your customers from that traditional relationship based engagements.

And again, this requires a different set of skills in the company. So we are hiring a lot of lot of engineers for our sales organization that are gonna co-create with the clients versus, you know, more than typical seller.

Marcus Cauchi: Can you clarify what you mean by garage?

Zafer Karaca: IBM Garage is a practice we built that has a design aspect that has a software development aspect.

And imagine this is a small group of individuals that are skilled in what they do, the use case, the the business value, [00:56:00] as well as the technology. They come, they run a design thinking type workshop, which you is a client, I understand the pain point and build ANP in the four to six weeks timeframe.

Marcus Cauchi: All right? So it's like a skunk works between technology and sales and the customer?

Zafer Karaca: Yes, and this is a joint perk and this can be something that they leverage at scale as a post sales function. That may be a billable discussion. This can be something upfront that you deliver to showcase the value of proposition that you have.

If you have the confidence in your technology in this age, you have to make the customer use that, see the value that, and then they will engage in a sales discussion. But clients do not wanna hear about things they wanna see things they wanna play with, things they wanna touch the solution that you have, even though you know we are talking about code here.

I get it.

What choice bit of advice would you give him that he would've probably ignored but would've benefited from?

Marcus Cauchi: Absolutely. Very, very interesting. Okay, so tell me this, you, you've got a golden ticket and you can fly back in time and whisper in the [00:57:00] ear of the idiot Zafer, age 23. What choice bit of advice would you give him that he would've probably ignored but would've benefited from?

Zafer Karaca: Just looking at the whole conversation we had.

I think one piece of advice that I received in my career that I would've loved to receive probably earlier is I keep reminding myself, this is a marathon. This is not a sprint. If you look at this from a sales perspective, your credit is important. Next one is still gonna be important. You need to build that sustainable approach to yours funnel.

As a sales leader, you need to build that sustainable approach with your sales team. Do you have the right skills? That may be a long-term discussion. You have the right partner ecosystem. As an organization, do you have that organizational capability for the long-term success? And as an individual from your career perspective, if you wanna get some, uh, you need to have that long-term sustainable plan to get there versus trying to go after things that are just shiny at that moment.

This is not a sprint. This is more of a marathon, will be the key that I would tell 22 years [00:58:00] old, 23 years old Zafer that's like probably would be so eager to go on the next shiny thing at that time.

What are you watching, reading, listening to that you would recommend other people pay attention to?

Marcus Cauchi: Slow down to speed up. Great. Okay, so tell me this, what are you watching, reading, listening to that you would recommend other people pay attention to?

Zafer Karaca: I'm a big fan of Pete Brothers, the books like Great In my Mind. Uh, Malcolm Gladwell has a book coming out tomorrow. I'm a big fan of his, all his books, Bomber Mafia, April 27th. So then I will strongly recommend I'm waiting for the new one. But you know, all of his books, I'm big at. Um, I try to watch a lot of TED Talks.

Honestly, it's more of intellectual curiosity for me. Not like one or the other. It's just when I get into that, I end up losing myself a bit clicking one, the next one, the next one. And so many different topics. And I think one piece of value we can bring to our customers, our job, our company. Life is, you need to have that broad set of understanding of [00:59:00] different issues about life, different issues about technology, different issues about society, and there's a better rounded up value proposition you can talk about.

Marcus Cauchi: Excellent. So, um, Zaffer, this has been really fascinating.

How can people get hold of you?

Marcus Cauchi: Thank you so much. Tell me this, how can people get hold of you?

Zafer Karaca: Um, LinkedIn will be the best way. Feel free to connect with me. Feel free to send a message. I'll be pretty responsive.

Marcus Cauchi: Excellent. Okay. So look, really appreciate you being on, uh, the show.

I'd love to have you back if you're up for it. So thank you.

Zafer Karaca: Thank you for having me, and absolutely anytime, Marc.

Marcus Cauchi: Wonderful. Well, if any of you have found this useful then please like, comment, share, and do subscribe. If you feel the urge, go to Apple or Google Podcast. Scroll down to where you can leave feedback and give an honest review of the podcast.

Now, if you are the owner or the CEO of a tech company, the 10 to 50 million mark, and [01:00:00] your goal is to grow your business and achieve real, sustainable, profitable, hyper growth with a highly engaged and highly productive team across all of your revenue operations. And you want to keep clients for year after year, decade after decade, then let's schedule some time for a conversation.

My email is marcus@laughs-last.com. That's marcus at laughs hyphen last dot com. Or you can direct me, uh, message me on LinkedIn. Now, we've recently launched a community called Sales of Force for Good, where it's sick and tired of the fact that Gartner, for example, in 2020, released a piece of research that said a third of business to business buyers want a 100% seller free buying experience. Salesforce released a piece of research on the state of sales in 2020 that said two thirds of buyers consider sales and salespeople to [01:01:00] be, and I quote, morally bankrupt. That's not the sales environment that I operate in or the people that I work with operate in, but we want to take back control of our profession.

We wanna make sure that we are offering buyer safety, that we are pro customer or about the customer's success before our own, and that we turn sales back into a service profession. If you are interested in being part of this global community, then please email me or direct message me, or, uh, check out the hashtags, hashtag pro customer and hashtag S A F F G.

In the meantime, stay safe and happy selling. Bye-bye.

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