Speaking to Jim Cramer on Mad Money, Salesforce CEO Marc Benioff argued that for technology companies, the key value is no longer the great idea, but trust:
In technology over the last two decades, the most important thing has been the idea. That is, the best idea wins. That has been what gets you funded, that’s how you grow your company, that’s been your highest value: the best idea wins. No longer true.
The current highest value is trust, and if trust is not your highest value, if the most important thing to you and your company is not trust, you need to look again, and that’s what’s happening with these companies today.Salesforce CEO Marc Benioff
Benioff observed that a lack of trust is eroding Silicon Valley companies such as Facebook. “Their executives are walking out, employees are walking out,and that happens with a lot of companies in tech right now. We’ve had a lot of walkouts this quarter. And the reason why is because it’s kind of amessage to the executives: it’s time to transform.”
“Every company has to hold themselves to a new level of trust, and if your brand is not about trust, you’re going to have customer issues, and you can see that in that brand,” observed Benioff.
And trust has long been part of Salesforce’s value proposition. The firm emphasizes it’s 1:1:1 philanthropy program (Donating 1% of technology, people, and resources) which has been adopted as a model by other companies. Salesforce also promotes local nonprofits at Salesforce events, emphasizes Trailhead and meetups for skills advancement, embraced a San Francisco tech company tax to address homelessness, called for a US GDPR to protect privacy, raised womens’ wages to address a pay equity gap following a self-audit, and spoke out against anti-gay legislation. Under a short-term profit-maximization model, these activities make little sense, but under a longer-term stakeholder’s approach, they make perfect sense.
Trust is based on a stakeholders approach to corporate governance. It recognizes that Milton Friedman’s stance against social responsibility (“there is one and only one social responsibility of business to use its resources and engage in activities designed to increase its profits so long as it stays in the rules of the game, which is to say, engages in open and free competition, without deception or fraud.”) is wrong. A stakeholders approach recognizes that employees, customers, partners, investors, and the general public all place value on companies that take a long-term view of their role in society. Simple profit maximization is a short-term approach which fails to recognize that you can’t attract the best employees or close multi-million dollar deals if you are not trusted.
And you can see this in the stock price growth of Facebook and Salesforce over the past five years. Facebook’s stock price outpaced Salesforce for the past five years, but once Facebook lost trust, its stock price declined.