Cardinal Initiatives Newsletter June 3, 2023 10 min read

This week I share a story about positioning and sales strategy.

“We Call That Selling” - The Pennzoil Story

The technology supplier was Intersolv.

The customer was Pennzoil, now a brand of motor oil products of Royal Dutch Shell.

The characters:

Debra - Pennzoil Data Modeling Director

Baiju - Intersolv pre-sales consultant for Analysis and Design

Carol - Intersolv Regional Sales Manager

Sig - Intersolv Alliance Manager for IBM AD/Cycle

Bob - Intersolv EVP of Sales

Pennzoil was a maker and distributor of motor oil products until its acquisition by Shell in 2002. Headquartered in Houston, Pennzoil had recently won a famous lawsuit against Texaco for interfering with the attempted purchase of Getty Oil. After an appeal process swung the verdict back and forth, Pennzoil emerged victorious and was awarded $10.5 billion in damages. Texaco filed for bankruptcy, and Pennzoil received only $3 billion.

This is relevant to our story because Pennzoil had a long history of corporate gamesmanship, much of it due to its long-time Chairman, J. Hugh Liedtke. Fittingly, Pennzoil had been formed through a merger. Liedtke, his brother William, John Overby, and George H.W. Bush founded Zapata Petroleum.

The four founders raised $1m to take a gamble at exploring for oil in Texas territory not known to be an oil field (wildcatting.) Zapata merged with South Penn Oil to form Pennzoil. The subsequent takeover of the much larger United Gas Corporation established a playbook for Pennzoil as a corporate raider. It was a smaller, more nimble predator for larger, underperforming entities.

Fun Fact: With the $1m they raised, they leased several thousand acres in Texas’s West Jameson field and proceeded to drill 127 wells without once coming up dry. The famous founders were talented and lucky.

The Landscape

Our story begins in 1991 and finds Pennzoil’s IT faced with supporting disparate systems and being asked to provide insightful data for future M&A activity. The technology industry had discovered that identifying every data element in a company was useful, but more so if the data elements were organized into an enterprise data model.

Data model creation had moved to the top of the application development life cycle.

In those days, IBM was still the dominant IT partner of the Fortune 500. Every enterprise had a mainframe and ran its business systems there. Pennzoil was the same.

The IBM PC was beginning to find use cases in enterprise computing. Offloading application development from the mainframe to the PC was one such use case that had emerged. As one would expect, IBM took a leadership role when they saw this as a threat to their mainframe market.

They created AD/Cycle (Application Development Cycle), a marketing program that “certified” software vendors in the tools space for “membership” in the program and compatibility with IBM hardware and operating systems (mainframe and PC.) Potential customers still saw anything “IBM” as the safe choice.

CASE (Computer-Aided Software Engineering) was reaching its peak in hype. Over 100 companies offered over 200 CASE tools to perform functions like analysis and design, code generation, testing, and debugging. Some were part of the IBM AD/Cycle program, but many were not.

Intersolv

Intersolv was a systems software company formed by the merger of Index Technologies of Cambridge, MA, and Sage Software, headquartered in Rockville, MD. Index had been a pioneer in tools for analysis and design and was famous for having the first graphical data flow diagram tool: Excelerator.

Sage brought code generation to this marriage with its APS application generation workbench. Sage had recently integrated MicroFocus’s advances in generating IBM mainframe-compatible COBOL on the PC. This gave Intersolv a full suite of CASE tools capable of performing application generation on the PC for execution on the IBM mainframe. In 1989, Sage had acquired Polytron and its PVCS version control software of source code files for the PC.

With PVCS, Intersolv had thousands of PC-centric customers, not necessarily tethered to a mainframe.

IBM and Microsoft

Your software had to run on IBM’s hardware and operating systems to be a member of AD/Cycle. For PC development, this meant IBM’s OS/2 operating system for the IBM PC.

APS ran on OS/2, but Excelerator and PVCS did not. Index had a Microsoft Windows 3.0 version of Excelerator but no plans for OS/2. Intersolv was planning to support OS/2, so Intersolv received an AD/Cycle membership with an asterisk.

Compared with OS/2, Windows 3.0 / 3.1 was not seen as a “real” operating system. This may have been IBM’s positioning, but OS/2 was the real deal, developed for the second generation of IBM PCs by IBM and Microsoft in a collaboration partnership. OS/2 supported multi-tasking and took advantage of the new Intel 80286 chip. Windows was merely a UI on top of DOS (PC/DOS, MS/DOS - the original PC OS.)

Yet Windows was a huge success. It was bundled with every PC. When Microsoft released Windows 3.1, a feud developed with IBM, and their partnership ended. Microsoft took what was supposed to be OS/2 v3.0 and made it Windows NT, and IBM took over OS/2.

The advances in technology were driving unprecedented change in enterprise computing. With all of the new entrants and shifting standards, it made making technology decisions a very complex and stressful process.

Positioning and Strategy

Debra had a background in data modeling and was leading the project to develop an enterprise data model. Pennzoil needed an Upper Case tool, and Debra was tasked with selecting one.

(There were so many CASE tools that there were two segments. Upper CASE was used to classify tools that performed planning, systems analysis, data modeling, entity relationship modeling, and design. Lower CASE was used for code generators, debugging, and testing.)

Baiju was the pre-sales consultant for Analysis and Design mapped to my sales territory (Houston, Louisiana, and Arkansas.) I scheduled time with Baiju to discuss how we’d handle a first meeting with Debra.

In our internal meeting, we discussed the landscape and the possible scenarios that might unfold when we got time with Debra. We role-played our answers and chose which topics I would take and which Baiju should take. We also decided to refrain from assuming anything and to ask and listen much more than we spoke.

We had our introduction with Debra and several follow-ups. With the information we obtained, we established our opportunity strategy and the positioning we would use.

Debra

Debra was a dedicated and serious professional.

She was good at her job and took pride in that.

Debra was also very anxious about deciding on a CASE tool.

She had not led an evaluation before, so this was new.

Pennzoil had given her this responsibility, and she had instantly taken full responsibility. She owned this project. Her expertise was data modeling, and that is where she had focused her time up to now.

She had heard of some of the product names in the CASE industry and had begun her due diligence to learn as much as possible.

We sensed she was also a no-nonsense type from piecing together bits of a few conversations that Baiju and I had with her. For example, we didn’t think she was keen on “playing” the seller-buyer “game.” Also, she had little patience for playing politics and for those who did, especially vendors.

Strategy

Since Intersolv was relatively new, it did not have the identity that Knowledgeware had. Knowledgeware was co-founded by James Martin, known for his work on Information Engineering, and former NFL quarterback Fran Tarkenton. Fran is a College Football and Pro Football Hall of Fame member. Knowledgeware did not need much help with awareness.

Our strength was the data modeling pedigree that Excelerator had via Index Technologies. We emphasized data modeling as a critical requirement for Pennzoil’s success. This was Debra’s professional focus, and it was also our strength.

One weakness was the lack of an OS/2 version to show Pennzoil. We had a Windows 3.1 version.

We created positioning highlighting that Windows was shipped on every PC, bundled at no extra cost. OS/2 had to be licensed separately, contributing to its slow user adoption. IBM was attempting to control the narrative of the movement to offload work from expensive and proprietary mainframes they sold. This control was evidenced with AD/Cycle.

The PC was rebelling, an upstart, a computer for each person. Allowing IBM to control it may not be in Pennzoil’s best interest. Besides, the graphical interface of Windows was innovative, and Microsoft was behind that. We made Excelerator running on the Windows platform a strength, not a weakness.

Our most significant advantage was us, but we had yet to learn this. We chose to focus our efforts on Debra. We did this by helping her in multiple ways.

We began by educating her on Excelerator. This is where Baiju was astonishing. She knew the tool well. She knew how to use the tool to do what Debra needed to do to build an enterprise data model. (Does anyone remember “third normal form?” Be honest now.) Baiju also had the most pleasant demeanor of any person I can recall. It was so easy to like her. If she did not know an answer, she would promise to find it and get back to Debra. She always did what she promised. It did not take long for Debra to like and trust Baiju.

What about me?

Debra got there, but it took a little longer.

I took the lead in helping Debra with her due diligence in the CASE market. I chose to be extremely thorough and without bias. Credibility would win the day with Debra, and if I had decided to color everything in Intersolv’s favor, she would surely notice at some point, and that is something from which I doubted I could recover.

So I went to work digging up everything I thought she would need in a due diligence effort. In the end, I delivered information on Knowledgeware, Bachman Information Systems, LBMS, Texas Instruments’ IEF, and Andersen Consulting’s Foundation to her.

At some point in this process, Debra told me that this effort was helpful for her as she prepared a report for the CIO to review. Once she said those words, I detected an instant fear that I might choose to leapfrog her and make a call on the CIO.

This may have happened to Debra before, but especially after seeing her pause, she had nothing to worry about with me. She told us this project was her responsibility, and my gut told me this was true. I planned to have Debra take me to whomever I needed to meet to get a deal done when it was time.

LTF

Laying The Foundation (LTF) is one of my favorite terms. It is also one of my favorite tactics. I huddled with Baiju and told her that we should prep Debra for some of the sales tactics of our competitors, primarily since it might involve them going directly to the CIO.

I shared that Knowledgeware might play the Fran Tarkenton card - who wouldn’t want to meet a Hall-of-Famer in any sport? I also opined that Knowledgeware might use IBM to influence Pennzoil C-levels and gave examples of how that might happen.

Baiju thought this was a great idea and offered to give Debra a slight “nudge” that Jeff had something important to share with her but wasn’t pushing hard to get time with her. This was perfect and professional from Baiju. We were a good team.

When I spoke with Debra, I downplayed the chances of any of these scenarios happening but shared them all. I also asked her to do whatever she wanted with this information. Doing nothing was fine with me, as the goal was to bring it to her attention.

But if she wanted to do something, giving her CIO a heads up was an approach taken by someone in her shoes that I’d seen work elsewhere.

Back at the Ranch

The Pennzoil sales cycle would be nine months in length. As it was winding down, our original Regional Manager and a strong supporter of our efforts with Pennzoil (Carol lived in Houston) decided to step down. Before she did, she had recommended that I get Bob, our EVP, involved.

Sig, a former IBMer and our Alliance Manager for AD/Cycle was asked to assume Carol’s responsibilities in the interim. Sig was brilliant and knew as much about technology as anyone I had met in the business. Sig was also likable. I enjoyed his company, so the timing was the only unfortunate thing about this change, apart from losing Carol.

I had already put Bob in motion when Sig asked for a briefing on Pennzoil. As Sig listened, he could not understand why Pennzoil would buy a Windows version from us. He thought the Windows 3.1 strategy could be easily defeated by our competitors by arguing the technical superiority of OS/2. I could absolutely see why Sig could reach that opinion. It was logical and based on the technical capabilities of the operating systems.

Bob was on his way from Rockville. As I had planned (and hoped), Debra opened the door with the CIO, asking him to meet with us. We were her choice.

Sig, Bob, Baiju, and I met in Dallas to prep for the Pennzoil meeting. Sig professionally made his case to Bob in case the CIO blindsided him. Bob was a veteran sales leader and alum of enterprise software legend UCC. He knew his way around a sale call and had done more than his fair share of deals with Texas oil companies.

He thanked Sig, and we left for Houston.

The Close

The meeting was one of the best when your manager’s boss was with you.

The CIO shared that Bob’s Pennzoil team had earned Debra’s trust, which was no small feat in his eyes. He said we resisted doing what the sales methodology du jour would have us do - call on him. He and Pennzoil viewed our behavior favorably and consistent with those with which Pennzoil partners.

He told Bob how Knowledgeware had played the Fran Tarkenton card. Bob was a huge Dallas Cowboys fan, and as luck would have it, so was the Pennzoil CIO.

They shared a laugh. (Tarkenton had played for the Vikings.)

If you believe in karma, check this one out. The CIO said that Microsoft had stopped by and shared that they were investing significantly in the oil and gas sector and wanted to gauge his interest. They shared details of the upcoming release of Windows NT and let him know they were doing whatever it took to win oil and gas customers.

Bob jumped on this with our Excelerator on Windows strategy and told the CIO that we would work with them to accelerate its release for NT. Our Windows strategy proved to be the right one. Bob doubled the deal size and threw in PVCS to sweeten the pot for Pennzoil. We had not discussed this, but I had just witnessed a veteran in action.

Upon arriving in Dallas, we went straight to our office in the Xerox Tower in Las Colinas. Bob, ever the executive, took a been there, done that attitude but showered Baiju and me with praise. Sig said, “I still don’t get why they would buy our Windows version when the market leader can deliver an OS/2 version today.” How did we do that?

Bob winked at me and replied: “Sig, we call that sellin’.”

Summary & Lessons Learned:

1) Find the “fox” in your account. It’s not always the “title.”

2) People buy for their reasons, not yours, and not always obvious.

3) Remember: “LTF Baby.”

4) Enterprise sales is a contact sport. There is no substitute for establishing relationships.

Thank you for reading,

Jeff

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