CMO Insights: Sal Patalano, Chief Revenue Officer, Lenovo Software

CMO Insights: Sal Patalano

November 21, 2018

 

CMO Insights: Sal Patalano, Chief Revenue Officer, Lenovo Software

This week’s guest on CMO Insights is Sal Patalano Chief Revenue Officer of Lenovo Software.

In this video, Sal talks about:

  • The definition and function of a Chief Revenue Officer and the role Sal plays 
  • Erasing the traditional line between Sales and Marketing
  • Why collaboration isn’t working anymore

Learn more about Sal from his LinkedIn profile and follow Lenovo Software on Twitter.

You may know: CMO Insights: John Kottcamp, Chief Marketing Technologist & CMO, Tahzoo

For more great CMO interviews like this one, please check out our other CMO Insights Videos or our YouTube channel.

Full Transcript

Jeff Pedowitz:

Hi, welcome to Revenue Marketing Television, the CMO Insights Series. I’m your host, Jeff Pedowitz, President and CEO of The Pedowitz Group. Today we have as our guest Sal Patalano, who is Chief Revenue Officer of Lenovo Software. Welcome to the show.

Sal Patalano:

Good afternoon, Jeff. Nice to be with you.

Jeff Pedowitz:

Fantastic having you, and such a great company. And for years, I think people would associate Lenovo with hardware, right? A machine’s not tops, but that’s not, that’s not the case necessarily anymore. Right. You’re, you’re doing a lot of interesting things with software. So tell us a little bit about that.

Sal Patalano:

Sure. Well, well we are, I mean, Lenovo was still, you know, the top PC manufacturer in the world with you know, about $46 billion in revenue. But I think as a, as with most organizations, you know, we, we see that the customer’s looking for more solution oriented discussions and we are beginning to focus more and more on what we look upon as outcomes. 

We think customers have become less interested in how they get somewhere and more interested in the outcome. And I won’t go as far as to say that a lot of folks will tell you that hardware has become a commodity. And I guess you can make that statement until you sit down with a large company and you talk about hard when all of a sudden you find out harder is really not a commodity that they really do have some preferences. Despite what, you know, you might hear from a macro, a macro perspective, but we are doing some great things with software and we like to refer to it as device plus cloud. And we’re focusing on how we can not only bring value to our hardware devices and increase our value proposition. But more importantly, what is the customer looking for? And if what the customer is looking for doesn’t necessarily bind itself to a piece of hardware.

We’re fully prepared to be platform agnostic, as long as we can go out there and meet the customer’s needs. And this is a big transition for Lenovo, Jeff, I will tell you, and that’s where I come in, come into play with my team. We were brought on board to really develop a commercial software business within Lenovo. And that’s essentially what we’re doing. And so far so good when I hear stories like this, I always think about that IBM book, right from that. What was the early nineties, how and how to make an elephant pivot or something I think is why elephants can dance about it. I’d be in for a number of years.

Jeff Pedowitz:

Okay, so then you could relate. You’ve seen the turnaround stories before. So you’re Chief Revenue Officer, which I think for a lot of CMOs or VPs and marketing, I aspire to cause you’re running both right. You’re running sales and marketing and channel too, I think.

Sal Patalano:

Yeah. So, so the way we’ve defined the CRO role, I have sales, marketing customer success, which I will tell you is, is a key component and of course channel. And this is a topic that’s near and dear to my heart. Jeff, I’ve spoken on this around the country. I do a fair amount of public speaking, as you likely know. And the role of the Chief Revenue Officer is a fascinating one. You know, folks joke that years ago, it was a title that we gave the SVP of sales, where there was no place left for, you know, him or her to go, right? 

We said, okay, we’ll give you this new C title we’ve come up with. And I think there was some truth to that. But then the Valley changed things. You had some really powerful books taking the title of chief revenue officer and really doing some amazing things. Silicon Valley things tend to trend from there and I’ve defined the CRO role very specifically. What I like to say is I like to say that the chief revenue officer needs to be an individual who can come to the table with expertise in all domains. They can talk finance, operations, development, tech, sales, marketing, you take your peer. This is usually an individual who really can’t get bamboozled in any one of those categories can read a P and L understands what finance is looking for, gets how operational policies are implemented and why and how they affect sales.

And in many instances, I now believe and this again is not biased based on my role. I will say that candidly, but I really believe the chief revenue officer has now become the most versatile, most important person in any organization. The most important role, I should say, you know, the CEO, when I was a CEO for many, many years at a number of companies, I owned some of which I sold, but the CEO really is the visionary, right? This is the person who’s out there, making things happen, the front person, so to speak. And, and you get that. The CFO is really looking at expenses. They’re looking at money going out. The chief revenue officer really is looking at the money coming in and he, or she’s gotta be able to play across the board. You can’t sit in a meeting and not really know exactly what’s going on.

So I think it’s the most versatile player. And I think one of the primary roles outside of the obvious that it’s about revenue is really erasing the lines of demarcation between sales and marketing. And this is another thing I’ve, I’ve spoken and written on. I feel very strongly about this and our organization we’ve erased the lines. My salespeople are capable of building marketing campaigns and understanding ROIs and drip campaigns and HubSpot and all those things for the most part, about 80% of them. And my marketing team can go out and make a sales call independently. And by erasing these lines and you’re seeing more and more folks do this. Now, what you’re effectively doing is creating a single organization. And that organization is chartered with one thing monetization, which leads to revenue. That’s it, I’m no longer interested in the marketing folks sitting over here and the sales folks here and the sales folks complaining about the leads and marketing saying these were SQLs. No, they were MQL, you know, and all the nonsense back and forth. I I’ve put an end to that and I will tell you so far, it’s set up, it’s had a profound impact on our ability to make things happen within, within our division.

Jeff Pedowitz:

Yeah. I love that, cause I, you know, I’ve interviewed several chief revenue officers and while they manage both functions, they’ve kept the departments underneath them relatively traditional. Although at least they do roll up to figurehead. So I’m really curious on how you’ve put this into practice. So are you spending most of the time recruiting salespeople and then training them how to be marketers or are you also recruiting marketers and teaching them how to sell? I mean, how’s it actually working in your, in your true structure?

Sal Patalano:

So that’s, so that’s the question I get a lot when I speak on this, right. Can you give me the blueprint? I think, I think the first key ingredient here is as a CRO, you really need to have your CMO reporting up to you. If you have a chief marketing officer and then a revenue officer for both reporting up to the CEO, you are by definition creating conflict. Now there may have been a time and a place where that made sense because it’s always good to have a little tension in the system. But I had to abolish that. I have someone who I believe is arguably one of the best young chief marketing marketing officers in the country. I think this is a rare talent. I’m not going to tell your names yet, but she’s actually your neighbor’s Sabra Willner. And she’s fantastic. And I brought sobber on board with Lenovo, and she has the CMO role and we work very closely together. 

But she is on my team. And by giving the chief revenue officer that ability, it really allows you to take a very direct and firm hand in things like hiring in training and how you’re spending money in different areas. For example, we worked with a company whose name I won’t mention that helped us create our messaging and and our go to go to market sales motion around a particular product we had. And when we brought them in to do that, marketing was in the room with the sales teams. Okay. They went through all the same training, the same exercises had the same input, we work towards reaching collective decisions and I’m not a big fan of collaboration. That’s another topic. I think that collaboration is, is grossly overdone. And I think it’s, it’s become a retrograde motion now more than it has a forward-thinking motion.

I’m happy to talk about that a little bit, but we just started erasing the lines that way. And also we had a number of folks in sales and marketing who were willing to embrace this. We had relatively aggressive, you know, young folks who were saying, look, all I care about is making this work. I really don’t care about any of the tried and true, you know, the old days or three martini lunch. And coming back to the office, we didn’t have any of that. So we were able to really adapt and mold the team to come together. And also my team’s not is not huge. You know, it was about 50 or 60 people I’m working with within our division. And it’s easy to sort of corral that number of people. But what I looked for was I looked for points at which we were traditionally training or working with one team versus the other, and starting to bring all of that together, forcing everyone to go through all the same processes.

Now the downside is you’re pulling your salespeople out of the field for awhile, but that’s okay because the productivity and the cooperation I got on the backend saved me countless hours of complaints and nonsense and infighting. Once that went away, I can afford to pull them out of the field for an extra couple of weeks in a fiscal year. And that’s exactly what I’ve done. So I think you’ve got to it. If you’re going to do something like this, first of all, you better have C you know, C suite support, including yourself and the rest of the people on your team. This scares a lot of people because it can be a bumpy road initially, but you monitored very carefully and you really have to look at this on the individual level, depending upon the layers of management, you have, you have to look at how this mesh is going on a daily basis, Jeff, you really do.

And a lot of the little things that you would let go in the past and not focus on them, that would sort of fester. You have to focus on them. So it really requires a CRO to get almost forensic in terms of how you are working with bringing these two teams together. And I won’t say it’s a full job, but I will tell you that it took a lot of effort. And then once everyone got in the motion of the pick up its own momentum and people are challenged by it now, and they love it. So I don’t think it’s as easy as I’m making it sound, but it was relatively easy for us based on the team we put together.

Jeff Pedowitz:

Well, I think it’s certainly an ideal that everyone’s shooting for. And I, and I love how you’ve really started to merge the groups together. So now you did bring it up. So I’m going to pull the thread. You talked about collaboration. It’s not being so good anymore. Why not?

Sal Patalano:

Yeah. I have this discussion with a couple of colleagues in the industry and we’re actually working on, we’re working on a whole presentation around this that I’ll probably take out a quote unquote on tour, on a mini tour and talk about this. You know, w we’ve gotten so far into the hole on collaboration that it’s, it’s the same common you hear from a lot of people, Jeff, people are not able to make decisions anymore. They’re terrified to make decisions, right? And I’ll give you the analogy I like to use. I’m a ballplayer baseball player. And you know, you get up to the plate. There’s two outs, you got a runner at second and you get up there and you’ve hit this guy before and you get up there and you know, you strike out, you swing it a couple of really bad pitches. 

Now it happens, right? But when you walk back in the dugout, let me tell you something, the team is not happy with you. And they’re going to tell you that, and they’re going to call you out. And you’re going to, you know, you basically in their mind, cost them the game, not the error someone made in the fourth, you know, not the date or somebody hit on your leaf pitcher. They’re gonna remember the last thing that happened. And you’re going to get slammed on that. And you know what, that’s okay, because that’s going to drive you to, hopefully not let it happen again. And the equivalent of this, and let’s say a marketing organization or a sales organization is we all get into a room and we know exactly who did what. We know that there was a fault somewhere. And people get into the room.

Executives may and variably saying, we’re not going to point any fingers. We’re just going to worry about moving forward too, which I call BS. Right? It’s okay. To point fingers doesn’t mean you’re going to fire anyone. You’re not going to embarrass anyone, but it’s okay to point fingers. You’re a team. You do it professionally. You do it in the right way. And then after that, you say, okay, now that that’s taken place, let’s all learn from that. Now let’s move on. I think ascribing blame is, is something that we’ve been able to get away from based on collaboration. The other thing that concerns me is that we’re so busy worrying that we haven’t socialized, or we haven’t run it. We haven’t run it up the flag pole, so to speak and things like that, that we’ve taken away from capitalizing on the brain power of the people we brought in.

For example, I bring you in as a VP of Marketing, right? If you feel the need to collaborate on everything you’re doing, or even a director of marketing, or even a senior marketing director, then why did I hire you as a, as a band leader to come in and collectively get everyone’s opinions? No, there’s a point in time where I pay you a lot of money because I want what’s between your ears. I want that gray matter. Okay. So inputs fine. Right? You want to take in as much as you can, but at the end of the day, right? You’re on the hook. I want to hear what you think. I want you making the decisions. And I try to encourage my leadership team to do just that, to step up to the plate, because there are times when you try to do things by committee, you’re going to get it wrong every time, right?

That’s why Baskin Robbins makes 31 flavors, because not everyone likes vanilla and chocolate. And if you try to sample every flavor, you’re not really going to be overweight. You’re probably going to get sick and you never going to get to what you started out doing. Okay. So, and I’ve got, I’ve got a lot more to speak to on this, but I really think we’ve gotten so deep into the collaboration that people are just losing sight of the fact that you need to possess the courage of your own convictions. You really do. And people are moving further and further away from that. And we’re diluting our decision making and we’re diluting our direction and it’s getting harder and harder to really figure out, well, what did I have that person for that one who, well, we all did it collectively.

Jeff Pedowitz:

And I’ve seen this at companies when, when there’s too much the collaboration and also trying to reach unanimous consensus. And it just really slows marketing down because marketing is, needs to be nimble and data driven, right? So it’s okay to make mistakes on campaigns because how else do you learn whether or not something’s gonna work or not. But if you debate it in a room, then the venue, but you never going to know until you actually put it out there. Right?

Sal Patalano:

I agree. I couldn’t agree with you more. That’s very well put. I like to say to people, you know, I get asked all the time as I’ve gotten a little older in my career people will say to me, what makes a good leader? And you know, there’s a lot of great answers to this. And there’s a lot of great books written on this. And there’s a lot of really smart people who have waxed philosophically on this, right? But at the end of the day, to me, you cannot lead until you have failed. If you’ve not failed multiple times, there’s no way you can lead. Because if you’re used to everything you’re doing, working perfectly and going right, the first time through, you have no idea what it is to try to lead a team. And you never going to know how to deal with the feeder failure when it happens.

So take a chance, take a risk. I tell my team all the time, and I know there’s a lot of folks listening to this. Hopefully a lot of folks listening to it who were saying, yeah, I’ve done that too, but you really have to mean it. And, and I had the pleasure of working with, with a very, very senior person at IBM who effectively ran a $51 billion piece of the IBM business. He ran half the business and would do things and work on things. And sometimes we’d spend a year and countless millions doing something and it didn’t go as planned effectively. It didn’t work. And what he used to say to me was the same thing. He said, Hey, this is IBM. We take experiments here. If we don’t take experiments, we’ll never find out what works. Now, the key there is you want to be in an environment where if you’re a part of the experiment and it doesn’t work, you don’t find yourself out on your Keester, right?

Couple months later. So you have to make sure you’ve got the right support to do it. But I agree with you, you know, enough with the collaboration, it’s fine to socialize, but I have people who are calling six, seven, eight, nine, 10 meetings before we can move ahead. And it’s all because while I didn’t socialize with this person, with that person, if I wanted that, I would have asked you to do that. You know, Jeff, what do you think you didn’t pay the bunch of money. You’re an expert. What do you think telling me, Oh, let’s go with that. Let’s give it a shot. It’s not out in left field. It’s not crazy. It’s got general support. It makes sense. And even if it doesn’t and you know, we also embrace something at Lenovo software called Boucher day, which is the opposite of deja VU which really allows people to take risks. But we can, we can talk about that when it’s, when it’s convenient for you

Jeff Pedowitz:

Such tremendous insight. So I’m, I’m just curious. I mean, you’ve been doing this for awhile. So if you had to go back though, now with all the lessons you’ve learned, what would you tell a younger version of you starting off in your career?

Sal Patalano:

Are they corporate or are they going to be startup or private?

Jeff Pedowitz:

It’s you, you have the chance to go visit yourself. As a young man starting off his career, now that you have all this wisdom. Now you’ve been doing this a long time. You have clearly successful, but you know, when you start it out, I’m sure you weren’t always this way. So if you had to kind of like, you know, shake yourself a little bit, what, what would you have said?

Sal Patalano:

I probably was, would tell them three things. One I wish someone had pointed out to me how important cashflow was. You know, I ran my own companies for 26 years. And cashflow was King. It didn’t matter how much money you were generating. It didn’t even matter what kind of profitability you were showing. It all came down to cash flow and operating capital. So I would say to those of your listeners who are running small companies or startups or thinking about it, it’s about cashflow. No one cares how big your offices are. No one cares what your top line revenue is focused on cash flow and your operating capital. That that’s number one. The second thing I would say is I would provide, I, I would, I would have changed my tact on hiring salespeople. The hardest thing I’ve had to do in my career has been to hire effective, competent salespeople, regardless of what the resume say and how many times they’ve made their numbers.

And how many references you speak with, I will tell you that seven out of 10 times, you know, salespeople just don’t meet the criteria that you were hoping or more meet the KPIs. Let’s put it at that where they basically, they don’t think their numbers, they turn out not to be, it’s a black box hiring a sales person is a real black box. And I think I’ve, I think I’ve come pretty darn close to the solution, that person. So I would, I would give myself that advice. Don’t be some go. So gung ho and look at other factors. Then I looked at when I was younger and then the last thing I would say, and again, I think this comes down more to the private sector than it does for folks work in corporate. I would say, think about valuation. Think about the value of your business. 

You know, we, we, we get into that mentality that we’re going to live forever and our business is gonna run forever. And gosh, we went from 10 to 40, from 40 to 80, from 80 to one 50, and then it’s never going to end well, it does end. And you’ve got to keep a close eye on your valuation for your shareholders or stockholders, whether you’re, you know, you’ve got a small board of directors or your public company clearly or even if you’re running a small outfit and you’re thinking as most of our young millennials are thinking these days about exited, you know, watch your valuation very carefully because we get away from you. And that can have an impact on, on not just yourself, but on all the people you’ve surrounded yourself with.

Jeff Pedowitz:

Sage advice, Sal. Wow. We’re gonna have to do part two. Right? Thank you so much for being on the program. Very easy to see why you’ve been so successful.

Sal Patalano:

Well, I appreciate that. I’m looking forward to chatting again, Jeff. Thanks.

Jeff Pedowitz:

You bet, Sal. Thank you.

 

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