Talking strategy, partnerships, innovation, culture and generative AI with Zoho

Vijay Sundaram is the Chief Strategy Officer of Zoho. Enterprise Times spoke to him a few weeks ago about the company, his role, strategy, innovation and culture. I first asked Vijay to describe Zoho in a thirty-second pitch for the company.

“We see ourselves as a company with a very fundamental purpose of making business software available to the largest number of people across the globe. Embedded in that, it’s a lot of stuff, global as well as available across the world. To do that, we do two things. Our vision is to build this out of India. We’ve done that by investing a lot in people and ideas over time.

“Our mission is to do this as a private company with a long-term view, with a strong position on financial independence, which gives us the ability to be in the running for the long term and make highly affordable products for our customers. “

What is your role as Chief Strategy Officer?

“We’re not particularly fast and furious about our titles. I have a number of roles that are typical of a strategy officer, which mine is in many cases. I also have a deep operational role within the company. The best way to describe what I do is across two dimensions, what I do regionally, and what I do globally.

“On the regional side, I work in North America and share responsibilities for the entire region with another executive. That includes everything we do here, sales, marketing, business, development, and customer support. On the global level, I’m in charge of the channel and  partner programme globally and various types of projects that don’t fall into anybody’s wheelhouse.”

On partners

What is your approach to partnerships, and are any strategic?

“Most of our strategic partners are now go-to-market partners. We put partnerships into buckets. You have technology partners who enhance your product. You have infrastructure partners like AWS, who are responsible for your infrastructure. Then you have go to market partners and implementation partners.

“We are a very vertically integrated company. We run our own data centres. We tend to have fewer partnerships on the technology side simply because we’re vertically integrated. We are very broad in the scope of technologies we ourselves produce.

“A lot of our partnerships are the go-to-market partnerships, largely resellers. There are two or three major types. We have those partners who resell Zoho products into various markets. Since we are in more than 150 countries, we can’t be in all of them directly. A lot of those markets are run through these partnerships. There are variations within, but largely what they do is they resell, and they implement the solutions that we have for our customers.

“The second set of partners is people who distribute our products. In some countries, we’ve got distribution partnerships. Then we also have partnerships with the big consulting firms, like Deloitte, TCS, and so on, who take large projects, implement technologies for larger projects, and work very closely with vendors like us. “

Hybrid cloud and future technology partnerships

There’s a strong move by organisations towards hybrid cloud. What’s the Zoho approach to that?

“In business, you never say never. You have a strategy and a set of convictions that underlie that strategy, but then you always have to remain open and flexible. At this point in time, we don’t intend to do this, but we do know that we will, at some point, have to use some hyper scalars and some other technology, maybe because of customer requests, so we remain open to that.

“Our strategy is to build out our global data centre infrastructure. Every year, we open up in multiple geographies. It has some strategic purpose for us. First, it allows us to be masters of our destiny because we’re not beholden to somebody else. You’ve seen examples of this in the past. Netflix used to run on AWS, and Amazon became one of its largest competitors.

“The other part is there’s a common thinking in business speak, I’ve seen this for decades, that people should focus on their core competencies and outsource everything else, sometimes to people who are better at it. Now we’re seeing the pains of that.

“A lot of manufacturing, especially in the Western world, was outsourced to other countries. However, this taught us that we were not qualified when we started to build our data centres. But by doing that, we learned a whole bunch of skills. We developed a lot of capabilities in areas like security, redundancy, throughput and efficiency, which translates into other parts of the software and hardware stack.

“That’s the kind of knowledge that you can’t put money on. Suppose you had outsourced that you would never have got that knowledge. In that case, you will never have learned some of the trickiest problems and handling cybersecurity today when you’re running a large operation because you would have delegated that to someone else. That’s one of the reasons we invest in our infrastructure, and we’re so vertically integrated.”

On innovation

What is your strategy towards innovation?

“I’ll give you three critical things that drive that. The first one sounds trite, but it isn’t. We invest a lot in R&D, compared to most companies whose public reports we can see.

“The second piece is to do with a certain set of convictions and cultural behaviour. For us, innovation starts at the bottom of the organisation; it’s not top-down. There’s a lot of distributed responsibility and distributed problem-solving in the company, which allows people to make decisions very low down in the organisation. That is the reason we can innovate faster because it starts low in the organisation and close to the customer.

“The third piece that I would call out for us is that we invest in things. We are not a public company. We don’t have they’re not answerable for the next quarter or even the next few quarters. We can invest in something that we will see may not produce any revenue five years out. We will continue to do that. We have done that several times; the data centres were a good example.

“Finally, as I mentioned, we build our technology, and that becomes a source of innovation.“

Is there anything you would have done differently?

“One wave we didn’t ride as well as we could would have been the mobile wave. We built a lot of mobile capabilities on all of our products; they all have mobile apps. But mobile was a wave on its own. That’s an example of something we could have invested in more, but it didn’t get in the way of us learning about mobile technology. We did put teams onto that. We (now) have deep expertise in mobile technologies. We just didn’t translate that into a business opportunity that might have taken us in a different direction. “

On Culture

How would you define the culture strategy at Zoho?

“Culture is not something that’s coded down; it’s intrinsic, it’s not extrinsic. It’s like the British Constitution. It’s not written down. It’s a collection of things. Your parliament, court rulings, and so on. all of them constitute a body of knowledge that represents your constitution. It’s not pulled together in one place. However, it has endured. It’s even a model for others.

“I would say our culture is similar to that. It’s not codified or explained, but people know it when they see it. I will take some elements of that so it doesn’t sound so intangible. Moving decision-making to lower levels of the company is an example of a culture; it’s also a business practice. The thing that goes with that is your ability to relinquish control, which is hard for most organisations to do.

“Your ability to admit that you might not be the best person to solve a problem and someone junior to you can solve it better.

“The ability to allow people to contest your position.

“Distributed decision-making does that, but it also creates the culture I just described. The ability to grow people in a certain way and for people to see that rank doesn’t necessarily mean attainment. It’s what you do, and contributions can happen in any part of the company.

“Another one is the people-first mentality that Zoho has. We don’t shy away from that. It’s exemplified in many ways. Most recently, when our CEO Sridhar said that we wouldn’t lay people off in the spate of all these layoffs, that’s a bold thing to say because a couple of months ago, we didn’t even know where the economy would go. It comes from a certain conviction of running a company.

“This is why we hired people, this is why we built the company, and this is what we owed to them. That’s an example of a cultural trait that’s highly uncommon, certainly in the Western world. People get that, and the notion of putting employees first it’s not written anywhere. Nobody’s told how they should do that. But people watch other people do it. People have internalised this, and then they start doing it themselves. They start to build things the same way. “

On Generative AI

Is Generative AI a dream or a nightmare?

“I would say it’s an opportunity, maybe more on the dream side. There’s an immediate reaction to things that often border on the shocking because it is the case that this whole generative AI caught most of the population by surprise. What we’ve seen in the last six months or less has been absolutely staggering.

“Probably nothing that I’ve seen in my career has happened so fast. People on the inside may have known a little better. It has a huge impact. We’ll see how it all falls out. There’s that immediate reaction; some of it might be an overreaction.

“It will take some time for technology to resolve. People are rapidly aligning themselves, trying to figure out what to do with this technology. It’s not just vendors. It’s all kinds of companies. I think we’ll see in the next few months, next year, people figure out how to turn this into opportunities, turn this into better outcomes for people, for organisations and so on.

“At the same time, we will be dealing with some of the nightmare issues. Many of those will get resolved, and I have had fundamental faith that people will come together to figure out how to solve some of the other issues, AI, maligning people and things like that. There’s a lot that will come out of people using this technology.

“It has the very huge promise of driving amazing productivity in a number of ways. It can help people use skills in areas where they’re more leverageable. Use technology to use things that can be more mundane. It helps people to upskill more quickly because they can learn faster. There’s definitely fear, and there’s definitely people who feel what they do won’t have sufficient value add any more, and that is probably going to be true as well.”

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