How Merck’s CIO Looks at Technology and Startups

For the B2Bold Entrepreneur:

Selling to CIOs can be intimidating, just ask any B2B entrepreneur. But very often, it is the key to a company’s success. And the earlier you crack the code, the greater the chances of succeeding. At Sierra, given our enterprise focus, we have built an amazing advisory board of 70+ Fortune 1000 CIOs over the past decade. In this series of blog posts, we want to take an under-the-covers look at how the most tech-savvy CIOs think, the factors that drive their decisions, tips for selling to their organizations, and suggestions for entrepreneurs on how to build great companies by serving the needs of Fortune 1000 CIOs.

Our first deep dive was with Clark Golestani, the CIO of Merck, #58 on the 2012 Fortune 500 list. His IT organization is over 10,000 people and operates in over 140 countries. He was a co-founder of a technology company, spent 5 years at Oracle and the past nineteen at Merck in various roles, including Chief Enterprise Architect.  Merck is also coming off one of the largest ever mergers with Schering Plough in 2009, which created incredible complexity for the IT organization.

How to align yourself with a F100 CIO given the opportunity

Clark generously gave me an hour of his time a few weeks ago. I have known Clark for the past few years as he has grown through the ranks at Merck, so we had a very candid discussion. He started with an important lesson on how entrepreneurs should pitch their solutions to CIOs.  Listen to what the customer wants before you start selling what you have.  

In the first half of our conversation, Clark never mentioned anything about technology, which is not unusual for a F100 CIO.  He and his IT team are very business oriented and focused on Merck’s top 3 business priorities:

  1. Drive success and robustness of the drug pipeline
  2. Maximize product availability across the globe
  3. Operate an industry-leading cost structure

He wanted to explore how he can better leverage his existing private cloud and the public cloud infrastructure to lower his operating cost instead of talking about any specific technology solution. In fact, our whole discussion was anchored around Merck’s key business issues.

Merck’s framework for evaluating technology solutions

The second incredibly valuable lesson was the framework below that Clark uses to evaluate technologies (both new and existing) within his organization. He clearly segments them into top vs. bottom line drivers and business vs. technology enablers. His view is that entrepreneurs should clearly identify which segment they address and tailor their story and value proposition accordingly. The pitch that start-up companies should use for each of these quadrants is very different and he provided some thoughts below.

 MerckQuadrant

#1 IT-powered utility: Clark’s view here is that most large IT organizations have followed the same model; start with datacenter consolidation and then drive the highest level of virtualization. But then the utility runs out of gas and you need huge step functions to improve efficiency. There is also a level of comfort with existing vendors. His advice to entrepreneurs in this quadrant is to make sure that your offering is not just an incremental step up, which he expects from his existing vendors, but something “pretty revolutionary” since that’s what it takes to displace the incumbents. He cited an example of a startup that is helping him leverage cloud infrastructure for building new applications.

#2-3 IT-driven productivity/revenue: “If you need to focus on the business apps side, you have to verticalize” was Clark’s suggestion here. Entrepreneurs need to think about how to add value in each of the verticals they sell to. Clark says he sees way too many generic solutions that are just not suited for the pharmaceutical companies. While a few horizontal applications have worked well, solutions like analytics or CRM need to be tailored a bit to the needs of the specific industry. He highlighted a number of solutions that started in the pharmaceutical vertical and successfully expanded into other segments.

#4 IT-induced disruption: This quadrant is the most greenfield opportunity for start-ups but needs to very closely aligned with the business priorities. According to Clark, many entrepreneurs confuse “disruption” with “innovation”. Solutions here need to challenge the status quo and stimulate radical change in business processes and organizational culture.  In this segment, out-of-the-box thinking is strongly encouraged with an intense focus on the key company drivers. The next billion dollar products are usually powered by innovative thinking around this theme. Clark cited virtualization as an example from the prior decade and analytics on the massive amounts of data as a change agent for the next few years.

There are many nuggets in Clark’s comments that could benefit entrepreneurs. The keys for me were aligning solutions to the overall business needs of the company and knowing exactly what your solution addresses given the outline he provided. In our next post, we will discuss how Clark thinks about the opportunities within key technology areas given this framework, tips for entrepreneurs to sell to big IT organizations, and common mistakes made by start-ups.