An aggressive sales-first mantra has made billions for Oracle. This approach may be backfiring, though, as competitors and former partners line up to take Oracle down and customers start to call the company’s tactics hostile. Will this hurt the firm’s future?
Most IT companies are led by engineers. Oracle stands out as the one large-scale IT firm run by a sales executive, and it has historically been very successful. The upside to this approach really comes down to being very aggressive and willing to engage in battle, not to mention being good at these fights.
The downside, which is becoming more obvious of late, is that sales-driven organisations tend to be overly focused on compensation—good salespeople know to focus on what pays the highest commission, after all—and not that focused on customer satisfaction or product results. In short, they want your money.
They also tend to be a bit loose with financial reporting—numbers aren’t as inflexible to salespeople as they are to engineers or accountants—and also a bit loose with the facts, since closing the deal can have priority over telling the truth.
In short, the very things that make for a great salesperson, in terms of placing financial success over customer loyalty, can make them a dangerous CEO. That’s why we don’t see many CEOs like Larry Ellison.
Advertising may get Oracle in trouble
Truth in advertising is one problem area for the company. Oracle has been chastised not once, but twice, for misleading or false advertising. The first time the company was caught claiming its systems were twice as fast as IBM’s, and the second time for claiming they were 20 times as fast.
It isn’t what Oracle claimed that showcases the problem but, rather, how the situation escalated. Most companies would have either held off for an extended period before making the claim or made sure that future claims could be properly supported. Oracle actually went in the other direction and found a creative way to increase the claim.
Rather than change its bad behavior, the company pushed harder. This is the combative sales nature taking hold. Unfortunately, Oracle doesn’t seem to realize that it’s not really being combative with IBM but, instead, with the National Advertising Division. Behaviour like that can lead to government sanctions for false advertising.
Even if it doesn’t face sanctions, it is increasingly unlikely that IT buyers would believe the first claim, and certainly not the second, given Sun’s recent history against IBM. While these efforts may seem to Oracle to be in IBMs face, they simply obliterate any appearance of honesty. Buyers typically don’t like to do business with companies they don’t trust, and Oracle—at least in the years when Ray Lane wasnt running the company—has traditionally had a trust problem with customers.
Competitive partnerships
One reaction to Oracle’s combative approach has been driving unique partnerships. The most recent is the EMC, Cisco and SAP HANA appliance solution, which has a distinct displace Oracle flavour.
The partnership might not even exist had Oracle not acquired Sun and turned long time partners EMC and Cisco into competitors, significantly and indirectly improving SAP’s relationship with them as a result. The SAP HANA in-memory database appliance they have created together is impressive, both in eliminating complexity and reducing cost and in how well it matches up against the weaknesses (particularly pricing) that surround Oracle’s competing offering.
In short, Oracle’s aggressive approach is both creating new competitors and driving those competitors into partnerships focused on displacing Oracle.
Today’s Oracle looks like yesterday’s IBM
Every once in a while, a powerful vendor behaves in a way that polarises the rest of the market against it. That appears to be happening with Oracle—which, perhaps not coincidentally, seems to be becoming more and more desperate. The company can’t seem to keep a CFO on staff. On top of that, Oracle is polarising both existing competitors and past partners against it while moving to lock in its customers.
This showcases the downside of a company run by sales. While sales are certainly critical to any company’s success, without balance it can create tactical situations that can destroy the firm’s strategic value and future.
