Over the years I have helped both successful companies and start-ups improve and strengthen their Channel and Strategic Alliances programs. Those companies do a great job closing deals but have concerns about not generating or receiving enough new business leads, or they develop strong relationships with one or two vendors, only to find later that the vendor is now sending work to a competitor. You may not have experienced this yourself, but if you have please read on.
Most traditional channel models support Distributors, Resellers, OEMs, and ISVs. Business mainly flows upwards to the main vendor. If that vendor has popular and widely used products then business can be good because there is sufficient demand. But when that is not the case your sales pipeline usually suffers.
Doing something the same way as everyone else may not be a bad approach when there is enough business for everyone and your growth goals and aspirations are aligned with your competition.
Sales Channel business is usually not the main source of revenue for most companies, but it does have the potential to become the largest and most scalable revenue source for nearly any business. Just think about the money that is being left on the table by not adopting a growth mindset and executing a new and better strategy.
In the summer of 2016 I attended the “Sage Summit” in Chicago. It was impressive to see the Sage Group’s efforts to build, strengthen, and protect their community of Customers and Channel Partners. They made the effort to foster higher levels of collaboration between the various types of partners – implementation services, consulting and staff augmentation services, complementary product vendors, etc. They had created their own highly successful Business Ecosystem, which is an excellent proof point.
When designing a channel partner program my personal focus has always been on finding the balance between promoting and protecting the business of partners with helping ensure that the end customers have the best experience possible (and have some recourse when things do not work out as expected). There are a variety of methods I have used to accomplish those goals, but the missing component has always been the inclusion of a systematic approach to seed relationships between those partners and facilitate an even greater amount of business activity.
Nearly a year ago I began working with a management consultancy run by Robert Kim Wilson, which has a business vision based on his book, “They Will Be Giants.” I will provide links at the bottom of the post for this book and other relevant resources. Kim asserts that Entrepreneurs with a Purpose-Driven Business Ecosystem (PDBE) are more successful than those without one and provides examples to prove his point. Having experienced Kim’s own PDBE I see how purpose fosters trust and collaboration.
As I did more research I have found that, especially over the past two years, there has been a lot of focus placed on Business Ecosystems and Business Ecosystem Organizers (such as Sage in the earlier example). Those findings reinforced the PDBE approach, and external validation is always a good thing.
Just as important from my perspective is that this concept applies to businesses of any size, and it is especially helpful to small to midsize businesses. The fun part for me is exploring a specific business, analyzing what they do today, and quantifying the benefits of adopting this new strategy.
So, how does this new type of Business Ecosystem work?
- The Business Ecosystem Organizer expands the overall network, vets new “Business Ecopartners,” and provides a framework or infrastructure for the various Business Ecopartners to get to know one another, exchange ideas, and discuss opportunities.
- This can become an incredible source of sustainable revenue for companies willing to invest in the necessary components to grow and support their own Business Ecosystem.
- Business Ecopartners will have access to trusted resources that can augment existing business and take-on new, bigger projects by leveraging the available expertise.
- Suppose that you have products or services that work with commercial CRM (Customer Relationship Management), ERP (Enterprise Resource Planning), or SCM (Supply Chain Management).
- You have seen a growing demand for functionality that relies on highly specialized technologies like:
- Cryptocurrency support.
- Blockchain for both financial transactions and things like traceability in your supply chain or IoT data.
- AI (artificial intelligence), ML (machine learning) to detect patterns and anomalies – such as with fraud detection, Deep Learning/Neural Networks for image recognition or other complex pattern recognition.
- Graph databases to better understand a business and infer new ways to improve it.
- Knowledge Graph/Semantic databases to assist with Transfer Learning and deeper understanding.
- It would not be practical or cost-effective for most businesses to build these practices in-house so partnering becomes very attractive to your company.
- This type of business can also be very attractive to a Business Ecopartner because someone else is handling sales, billings, account management, etc.
- Other Business Ecopartners could leverage your products or services for their projects and engagements, thus becoming another source of revenue.
- By leveraging this network your business can essentially compete on imagination and innovation – something that could become a huge source of differentiation from your competition.
Value realized from this New Business Ecosystem model:
- These new sources of business and talent can become a real competitive advantages for your business.
- This becomes the source for Sales Amplification because your business is extending its reach and expanding its growth potential – directly and indirectly.
- The weighted (based on capabilities, capacity, responsiveness, and Ecopartner feedback) Business Ecopartner network model could lead to exponential business growth over time – and that is a winning strategy for any business.
I was researching an idea last weekend and stumbled across something unexpected. My personal view on IoT has been that it provides a framework to support a rich ecosystem of hardware and software products. That flexibility and extensibility foster innovation, which in turn fosters greater use and ultimately adoption of the best products. It was quite a surprise to discover that IoT was being used to do just the opposite.
My initial finding was a YouTube video about “Tractor Hacking” to allow farmers to make their own repairs. That seemed like an odd video to appear in my search results, but midway or so through the video it made sense. There is a discussion about not having access to software, replacement components not working because they are not registered with that tractor’s serial number and that the only alternative is costly transportation of the equipment to a Dealership to have a costly component installed.
My initial thoughts were that there had to be more to the story, as I found it hard to believe that a major vendor in any industry would intentionally do something like this. That led me to an article from nearly two years earlier that contained the following:
“IoT to completely transform their business model” and
“John Deere was looking for ways to change their business model and extend their products and service offering, allowing for a more constant flow of revenue from a single customer. The IoT allows them to do just that.”
That article closed with the assertion:
“Moreover, only allowing John Deere products access to the ecosystem creates a buyer lock-in for the farmers. Once they own John Deere equipment and make use of their services, it will be very expensive to switch to another supplier, thus strengthening John Deere’s strategic position.”
While any technology – especially platforms, has the potential for vendor lock-in, the majority of vendors offer some form of openness, such as:
- Supporting open standards, APIs and processes that support portability and third-party product access.
- Providing simple ways to unload your own data in at least one of several commonly used non-proprietary formats.
Some buyers may deliberately make the decision to implement systems that support non-standard technology and extensions because they believe the long-term benefits of a tightly coupled system outweigh the risks of being locked-into a vendor’s proprietary stack. But, there are almost always several competitive options available so it is a fully informed decision.
Less technology-savvy buyers may never even consider asking questions like this when making a purchasing decision. Even technologically savvy people may not consider IoT as a key component of some everyday items, failing to recognize the implications of a closed system for their purchase. It will be interesting to see if this type of deliberate business strategy changes due to competitive pressure, social pressure, or legislation over the coming few years.
In the meantime, the principle of caveat emptor may be truer than ever in this age of connected everything and the Internet of Things.
Today I ran across this article that was very good as it focused on lessons learned, which potentially helps everyone interested in these topics. It contained a good mix of problems at a non-technical level.
Below is the link to the article, as well as commentary on the Top 3 items listed from my perspective.
The article starts by discussing how the “problem” being evaluated was misstated using technical terms. It led me to believe that at least some of these efforts are conducted “in a vacuum.” That was a surprise given the cost and strategic importance of getting these early-adopter AI projects right.
In Sales and Marketing you start the question, “What problem are we trying to solve?” and evolve that to, “How would customers or prospects describe this problem in their own words?” Without that understanding, you can neither initially vet the solution nor quickly qualify the need for your solution when speaking with those customers or prospects. That leaves a lot of room for error when transitioning from strategy to execution.
Increased collaboration with Business would likely have helped. This was touched on at the end of the article under “Cultural challenges,” but the importance seemed to be downplayed. Lessons learned are valuable – especially when you are able to learn from the mistakes of others. To me, this should have been called out early as a major lesson learned.
This second area had to do with the perspective of the data, whether that was the angle of the subject in photographs (overhead from a drone vs horizontal from the shoreline) or the type of customer data evaluated (such as from a single source) used to train the ML algorithm.
That was interesting because it appears that assumptions may have played a part in overlooking other aspects of the problem, or that the teams may have been overly confident about obtaining the correct results using the data available. In the examples cited those teams did figure those problems out and took corrective action. A follow-on article describing the process used to make their root cause determination in each case would be very interesting.
As an aside, from my perspective, this is why Explainable AI is so important. There are times that you just don’t know what you don’t know (the unknown unknowns). Being able to understand why and on what the AI is basing its decisions should help with providing better quality curated data up-front, as well as being able to identify potential drifts in the wrong direction while it is still early enough to make corrections without impacting deadlines or deliverables.
This didn’t surprise me but should be a cause for concern as advances are made at faster rates and potentially less validation is made as organizations race to be first to market with some AI-based competitive advantage. The last paragraph under ‘Training data bias’ stated that based on a PWC survey, “only 25 percent of respondents said they would prioritize the ethical implications of an AI solution before implementing it.”
The discussion about the value of unstructured data was very interesting, especially when you consider:
- The potential for NLU (natural language understanding) products in conjunction with ML and AI.
- This is a great NLU-pipeline diagram from North Side Inc. in Canada, one of the pioneers in this space.
- The importance of semantic data analysis relative to any ML effort.
- The incredible value that products like MarkLogic’s database or Franz’s AllegroGraph provide over standard Analytics Database products.
- I personally believe that the biggest exception to assertion this will be from GPU databases (like OmniSci) that easily handle streaming data, can accomplish extreme computational feats well beyond those of traditional CPU based products, and have geospatial capabilities that provide an additional dimension of insight to the problem being solved.
Update: This is a link to a related article that discusses trends in areas of implementation, important considerations, and the potential ROI of AI projects: https://www.fastcompany.com/90387050/reduce-the-hype-and-find-a-plan-how-to-adopt-an-ai-strategy
This is definitely an exciting space that will experience significant growth over the next 3-5 years. The more information, experiences, and lessons learned shared the better it will be for everyone.
I still remember my parents allowing me to stay up late to watch the first moonwalk. It was 9:30 pm, I was 5 years old, and we were huddled around an old “black and white” television that had a circular viewing area. My parents tried to convey how important and monumental that moment was – telling me that I would be telling this story to my children someday.
What I remember most was being amazed seeing the astronauts hop around with ease and not understating how that could be. We had watched the launch on TV and were getting updates nightly from Walter Cronkite on the evening news. Normally my dad would sit at a TV table to eat dinner and watch the news as my mom sat with my sister and me at our kitchen table, but this week was different.
With all of the news this past week on the 50th Anniversary of the first moonwalk it triggered a couple of memories. One of them was that I had a collectible item that I purchased in 2005 at the annual Children’s Circle of Care leadership conference in San Diego, CA. There was a luncheon held on the deck of the USS Midway Museum and afterward, I took a tour. It is an incredible place to visit if you are ever near San Diego.
Before leaving that day I went to the gift shop to get a few trinkets for my wife and children. What I found was a beautiful display, which I immediately purchased and had shipped home. This display was taken to school a couple of times for “show and tell.” It hung on my office wall for 3 years or so and then went into storage with other artwork. It then sat for the past decade and I almost forgot that I had it.
To me, this display is both beautiful to see and very inspirational as well. Human creativity is an incredible thing! As an aside, I have never seen anything like this display so I thought I would share it with you.
Today I also ran across a good article regarding this event that provided information that I had not seen before. It is very interesting and can be found here: https://go.usa.gov/xyVGh
Edit: This was another good article that discusses the advanced flight control computer used at the time – https://www.linkedin.com/pulse/apollo-11-moon-landings-fourth-crew-member-computer-far-fishman/
This anniversary is a great reminder of the power of individuals, teams, and partnerships when they are mission-focused. I find people like the men and women of NASA to be extremely motivational, and the few that I have met have all been very friendly people as well. They are the Humble Heros!
A friend posted this article on LinkedIn.com. Due to character limitations for comments, I decided to post my response here. Below is a link to the article referenced: https://hbr.org/2019/07/building-a-startup-that-will-last
The article is interesting, but the emphasis on “second and third acts” assumes that the start-up will successfully navigate the first act. Even with addressing what the author views as key points this is still a very big assumption. The reasons for Longevity and Success are far more complex and multi-dimensional, but it does place a spotlight on some of the more important areas of focus.
Long-term success requires several things: The right combination of having a unique goal that has the potential to make a big impact (think “No software” from Salesforce.com); Innovative ideas to achieve that goal; A diverse team to build the product (a mix of visionaries, insightful “translators,” technical experts, designers, planners, adept doers, etc.); Very good sales / business development / marketing to describe a better way of doing things and converting that to new business; and ultimately a management team focused on sustainable and scalable growth.
The point made about the need to, “Articulate a value framework oriented toward societal impact, not just financial achievement” seems a bit superficial and too tactical in nature.
First, there are unintended consequences to most new technologies. Social Media is a recent example, but Genetic Editing and AI are two areas that are likely to provide more examples over the next decade. Not every societal impact will be positive, and having a negative impact could very well lead to the untimely demise of that company.
Second, the two ideas (societal impact and financial achievement) are not mutually exclusive. When I owned my consulting company we had a goal of funding $1M worth of medical research that would find a cure for Arthritis. We allocated half of our net profits for this goal. Every employee was on-board with this because there was a tangible example of why it mattered (my daughter). We invested $500K, helped launch a few careers for some brilliant MD/Ph.Ds and at least one national protocol came out of their research.
Mission and Vision are so important to a company, yet so many companies fail to view this as anything more than a marketing effort. Those companies fail to realize that this is as much to motivate and inspire their employees, as it is to grab the attention of a prospective customer. These should be both inspirational and aspirational, such as the “BHAG” (Big Hairy Audacious Goals) that Collins and Porras wrote about 25 years ago.
Regarding Endurance and the assertion that “…the best businesses are intrinsically aligned with the long-term interests of society,” my take is slightly different. The best businesses are always looking for trends and opportunities in an ever-changing global competitive landscape – as opposed to looking to their competitors and trying to ride on their coattails. Companies with a culture of fostering innovation as a way to learn and grow (Amazon and Google are two great examples) are able to find that intersection of “good business” and “positive societal impact.” It is much more complex than a simple one-dimensional outlook.
But, it was a good article to help reframe ideas and assumptions around growth.
When I owned a consulting company we viewed innovation as an imperative. It was the main thing that created differentiation, credibility, and opportunity. We had an innovation budget, solicited ideas from the team, and evaluated those ideas quarterly.
Almost as important to me was that this was fun. It gave everyone on the team the chance to suggest ideas and participate in the process. That was meaningful and supported the collaborative, high-performance culture that had developed. The team was inspired and empowered to make a difference, and that led to an ever-increasing sense of ownership for each employee.
The team also had a vested interest in having the process work, as quarterly bonuses were paid based on their contributions to the company’s profitability. There was a direct cause and effect correlation with tangible benefits for every member of the team.
We developed the following 10 questions qualify & quantify the potential of new ideas:
- What will this new thing do?
- It is important to be very detailed as this was used to create a common vision of success based on the idea being presented.
- What problem(s) does this solve and how so?
- This seems obvious, but if you are not solving a problem (which could be something like “lack of organic expansion”) or addressing a pain point then selling this new product will be an uphill challenge.
- What type of organizations have those problems and why?
- This was fundamental to understanding if a fix was possible from a practical perspective, what the value of that fix might be for the target buyer, and how much market potential existed to scale this new offering.
- What other companies have created solutions or are working on solutions to this problem?
- The lack of competition today does not mean that you are the first one to attack this problem. Due diligence can help avoid repeating the failure of others, and potentially provide lessons learned by others and help you avoid similar pitfalls.
- Will this expand our existing business, or does it have the potential to open up a new market for us?
- There are upsides and downsides to each answer, but breaking into a new market can take more time and be more difficult, time-consuming, and expensive to achieve.
- Is this Strategic, Tactical, or Opportunistic?
- An idea may fall into multiple categories. When Sarbanes-Oxley (SOX) Act became law we viewed a new service offering as both a tactical means to protect our managed services business as well as an opportunistic means to acquire new customers and grow the business.
- What are the Cost, Time, and Skill estimates for developing a Minimally Viable Product (MVP) or Service?
- What are the Financial Projections for the first year?
- Cost to develop and go-to-market.
- Target selling price, factoring-in early adopter discounts.
- Estimated Contribution Margin Ratio (for comparison with other ideas being considered).
- Break-even point.
- Would we be able to get an existing customer to pre-purchase this?
- A company that is willing to provide a PO that commits to making a purchase of that MVP within a specific timeframe increased our confidence in the viability of the idea.
- What are the specific Critical Success Factors to be used for evaluation purposes?
- This was an important lesson learned over time that helped minimize emotional attachment to the idea or project, as well as providing objective milestones for critical go / no-go decision making.
This process was purposeful, agile, lean, and somewhat aggressive. We believed it gave our company a competitive advantage over larger companies that tended to respond slower to new opportunities and smaller competitors that did not want to venture outside their wheelhouse.
With each project, we learned and became more efficient and effective, and made better investment decisions that positively impacted our success. We monitored progress on an ongoing basis relative to our defined success criteria, and adjusted or sunset an offering if it stopped providing the required value.
The process was not perfect…
For example, we passed on a couple of leading-edge ideas such as a “Support Robot” in 2003 that was essentially an interactive program that used a machine-learning algorithm. It was to be trained using historical log files, could quickly and safely be tested in a production environment, refined as needed and ultimately validated.
This automation could have been used with our existing managed services and Remote DBA customers to further mitigate the risk of unplanned outages. Most importantly, it would have provided leverage to take-on new business without jeopardizing quality or adding staff – thereby increasing revenue and profit margin.
At the time we believed this would be too difficult to sell to prospective customers (“pipe dream” and “snake oil” were some of the adjectives we envisioned), so it appeared to lack a few items required by the process. Live and learn.
In summary, having a defined approach for something as important as business needs innovation to grow and prosper, as best demonstrated by market leaders like Amazon and Google (read the 10-K Annual Reports to gain a better understanding of their competitive growth strategies that are largely based on innovation).
Implementing this type of approach within a larger organization requires additional steps, such as getting the buy-in from a variety of stakeholders and aligning with existing product roadmaps, but is still the key to scalable growth for most businesses.