What Zoho Can Teach Us About the Power of Culture and Intangibles

What a recent Zoho event can teach IT and tech company leaders about the role of culture, the limits of data, and why your intangibles may be your most important investment.

👋 Hi and welcome to The DX Report — the research hub of The DX Institute all about Digital Transformation, the Digital Experience, and the Digital Enterprise. I’m industry analyst, author, and speaker Charles Araujo, and I’m all about providing insights and analysis for enterprise IT leaders as you make the big bets about your organization’s future!

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I'm not sure that I realized it until this moment, but I guess I have long traded in what you might call the intangibles.

I've been pondering a recent Zoho analyst event, reading what so many of the other analysts have written, and processing a strangely complex set of feelings from the event. It's strange mostly because your typical analyst event doesn't engender any emotions at all. And analysts are hardly known for their heartfelt reaction to a vendor's pronouncements and prognostications.

Yet, in post-after-post, analysts were gushing. Moreover, at the event itself, there was a consistent chorus of praise for both the event and the company it represented. Don't get me wrong, we're all still analysts and there were plenty of hard questions and productive criticism to go around. Still, the air is just a bit different at a Zoho event — and I couldn't help but contemplate why.

While the answer to that question is important in its own right, particularly as I analyze what it means for Zoho, it is its meaning to both IT and tech company leaders that may be more profound. For within the answer lies the secret to everything from a successful digital transformation program to why one tech company breaks through in a crowded and noisy market and others don't.

Exposing the Data Crutch that Hinders True Transformation

"You can't manage what you don't measure."

Often attributed to Peter Drucker, no business management mantra may have had a greater or more lasting impact on how we manage almost every organization.

Entire generations have marched into the worlds of IT, marketing, and management seeking to collect as much data as possible — all in the name of effective management. As a past adherent to countless management frameworks, I drank gallons of this particular Kool-Aid.

But I'm beginning to see that — at least in some ways — this axiom has led too many of us astray.

Don't get me wrong. There is much value in the premise that we must collect copious amounts of data to understand and decipher the complexities that underpin so much of the modern enterprise. When there are more moving parts than the human brain can process, the ability to collect data and leverage algorithms to make sense of what is happening is a distinct advantage.

In addition, there is a long enterprise history of poor by-the-gut decision-making. If you've ever seen the movie Moneyball (or read the book), you well understand that subjective biases, no-longer-relevant past experiences, and any number of other subjective factors can lead even the most well-informed and best-intentioned leader to make bad decisions.

Data is the tool that helps us break through our own limitations and make sense of a complex and otherwise impossible-to-understand world.

Still, my experience with Zoho laid bare another unassailable fact: data is not the foundation of any meaningful transformation.

While Zoho's executive team shared plenty of data, it was not the crux of the company's ethos. As I pondered what I had experienced, I thought back to the most impactful digital transformation efforts and most significant marketing efforts I had been a part of in my career. As I did, I found a common thread: while all of these deeply transformational efforts collected and reported data, their driving force of change was something altogether different and intangible.

The Undeniable Power of a Pervasive Culture

"Culture eats strategy for breakfast"

Another business axiom, also often attributed to Peter Drucker (he was a busy guy, apparently), gives voice to the idea that an organization's culture is more important than any strategy or tactic it may develop and employ.

But while this axiom is oft repeated, it is seldom manifest as viscerally as it is at these Zoho events. The company's culture is always front-and-center.

As I reflected on this fact, I realized that other companies that have had significant impact have a similar front-and-center culture. Think companies such as Salesforce, ServiceNow, among others. Still, what makes Zoho's particular brand of culture unique is its almost counter-culture approach to the tech industry.

While I've heard other companies described as "a rocket ship tied to a rocket ship," Zoho's culture comes across in "the Zoho way" — a slower, methodical approach that is little-worried about keeping pace and more concerned with marching to the beat of its own mission-driven and principles-first drum.

The result is an abundantly enthusiastic and loyal employee base. I suppose that should be expected given a culture that is less focused on hard-charging and more focused on employee well-being and work-life balance.

But what is perhaps more surprising is the impact this culture has on its customers. The company's annual customer events are called Zoholics for good reason. Its customers are almost always rabid fans of not only the company's products, but its ethos, how it sees itself in the world, and how it seeks to treat them as humans.

As I have thought back to other successful projects I've worked on, I realized something similar was beneath the surface. Whether on an organizational level or driven by a specific team leader, it is always the foundational culture of an organization or team that is the driving force of an authentic transformational effort.

And, perhaps, most importantly, those efforts have two inevitable factors: they result in a number of other intangible elements, and almost none of them are measurable.

Why It's the Intangibles that Make All the Difference

During questioning of the Zoho executive team, they acknowledged that their suite of products was often not great at measuring employee productivity. As the company likes to say, "Zoho runs on Zoho" — which is its way of saying that they often develop their products based on their own needs as an organization. And, one thing they don't do much of is measure employee productivity.

Instead, the company puts significantly more value on the intangible aspects of how it interact with its employees as humans and as individuals.

I believe its approach applies to a broad spectrum of things that add significant value, and yet are almost impossible to effectively measure. For instance, the company puts a tremendous amount of energy and focus into building authentic relationships with the analyst community — and in fostering relationships amongst the analysts. Has this significant investment paid off?

I recently had another analyst tell me that they became aware of Zoho and its approaches through my writing (much like this piece). I've had enterprise executives tell me that they've taken a fresh look at Zoho based on my analysis. Has it made a difference? Multiply my work across the hundreds of analysts within its community and the answer is obvious. But good luck measuring it.

Likewise, I've spoken to numerous enterprise executives who have told me that a report or book I've written has changed their perspective on things in significant ways. But did they put in their email address into some form themselves? Was some marketing executive able to directly attribute my piece to the sales pipeline? Probably not.

The reality is that much of what I do (and everyone like me) is to help educate, challenge assumptions, and shape opinions. It's incredibly valuable work that often has deep and lasting impact in the most important ways with the most important audiences. But good luck actually measuring its impact!

The same is true with your digital transformation efforts and almost anything truly of value in any organization.

When it comes to any transformational effort, you can — and should — measure as much as you can. Quantification is essential to demonstrating the value of your effort.

But never discount the intangibles in what we do. Those intangibles — the culture, the small gestures, the impassioned endorsement of someone doing the actual work — are the things that will be almost impossible to measure, but will always be what ultimately makes the difference between success and failure.