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Innovation, Optimization, and Business Continuity
Originally posted on LinkedIn.com/in/chipn
Recently I read that the U.S. is experiencing a significant jump in unemployment claims. Much of that is understandable given the recent decline in many businesses, concerns about how long this crisis may last, and the need to protect ongoing viability by business owners and executives. But, in the near future business activity will resume and it will very important that businesses have maintained a pipeline of business and retained the qualified staff to deliver its products and services.
Now could be the ideal time to challenge your team to focus on improving your business. Look at business processes and identify:
- What works well today? Are you able to identify what makes it work so well? Simplicity, automation, and lack of friction are typical attributes of effective and efficient systems and processes that have a positive impact on any business.
- What could be improved and why? Specific examples and real data will help quantify the impact and support the prioritization of follow-on activities.
- What is missing today?
- Good ideas have likely been raised in the past so why not revisit them?
- What are competitors or businesses in other segments doing that could be helpful?
- Brainstorm and consider something completely new that could help your business.
- Start a list, describe the need and benefits, provide specific examples, and then estimate the potential impact and time to value for each idea.
- Take the ideas having the greatest promise and estimate the cost, people/skills needed, other dependencies for each to see how they stack up.
Something else to consider is the creation or updating of Business Continuity Plans. Now is a perfect time – while everything is fresh in the minds of your team. Not only will this help for the future, but there could also be several useful ideas for the coming weeks.
For example, do you have documentation that is sufficient for someone who is not an expert in your business to be able to take over with a relatively small ramp-up time? How will you maintain quality and control of those processes? Are your plans stored in a repository that is accessible yet secure outside of your organization? Do you have the processes and tools in place to collect documentation and feedback on things that did not work as documented or could be improved? Are your Risk Management plans and mitigation procedures up-to-date and adequate?
Investing in your business during this time of slowdown could have many benefits, including maintaining good employee morale, enhancing employee and customer loyalty, retaining employees and the expertise and skills they have, and increasing sustainability and long-term growth potential.
Could this Pandemic Create New Business Opportunities?
Originally posted on LinkedIn.com/in/chipn
For most businesses now is a time of caution and uncertainty. Mitigation and emergency planning is likely underway. The CDC has provided solid guidance and new information is forthcoming daily. Communication Plans are being rolled-out and revised as needed. Travel and meetings are being curtailed. Disruption may become the new normal for the next few months.
Alexander Fleming, the Nobel Prize winner who invented Penicillin, is quoted as saying:
“The unprepared mind cannot see the outstretched hand of opportunity.”
More people will be working from home, face to face meetings will be limited, and large gatherings will be avoided as well as travel to those meetings or gatherings. Working from home can be challenging for people who are not accustomed to it so helping them make the transition may be very important to your financial bottom line.
Collaboration tools such as Slack, Basecamp, and Asana can help maintain productivity and foster necessary interaction. Some tools include video conferencing, but even so, having tools like Zoom or Webex can help both internally and externally. Seeing the person you are speaking with helps increase engagement and lead to more effective communication by spotting nuances such as facial expressions that could otherwise be missed.
Tools that are secure, are easy to implement (cloud-based solutions have an advantage here), and are easy to learn and use can be a cost-effective way to keep your business on-track. An additional benefit could be the creation of an effective distributed workforce.
But wait, there is more!
There may be important projects that you could pull in and start now. That is another means of keeping your teams engaged and focused. This could also be an opportunity to enhance skills with online training or to conduct research on new technologies or business models.
This could also be a great time to buy and sell products and services. Business demands could temporarily decrease in many market segments.
- Sales organizations could leverage that as an opportunity to provide appealing offers to your customers and prospects.
- Buyers could leverage their ability to quickly purchase products and services to secure better deals during this lull in business.
Reasonable concessions are mutually beneficial and could be a boon for both parties.
Negative events like a pandemic are not ideal and should not be taken lightly, but they can provide opportunities to advance your business and be positioned for even greater success once this situation is under control. It is like that wise old saying, “When life gives you lemons, make lemonade.”
Continuous Improvement, Growth Mindset, and the “Attitude of Better”
This was originally posted on LinkedIn.com/in/chipn
When I had my own company our focus was on providing the absolute best services in a few niche areas. Our goal was to succeed in the spaces that were important yet underserved. We identified those areas, validated the need, evaluated the competition and our competitive positioning, determined the market potential, and then made an informed decision based on that data.
But, this was not a plan for winning. It was a roadmap to places that we could win, but nothing more.What would our strategy be? What specific problems would we solve? How would we create awareness around the potential impact of those problems? And, how would we position ourselves as being the best candidates to address those business needs? In short, what was our real purpose or raison d’etre?
Recognizing that void led to a couple of powerful revelations –
1. It is great to have a goal of being the best at something, but don’t use that as an excuse to procrastinate. Learning and improving is an iterative process, so that goal by itself was not good enough.
2. Adopting an “Attitude of Better” turned out to be a game-changer. We set our focus on continuous improvement and winning. We became customer-obsessed, driven to provide a better service and better results for each and every customer. We gauged our success by customer satisfaction, repeat engagements, and referrals.
3. But, it wasn’t until we adopted an intentional Growth Mindset that our business really started to evolve and improve.
· We leveraged each and every win to help us find and create the next win.
· Our team was constantly pushing each other to raise the bar of knowledge, expertise, and performance.
· Just as important was what occurred next. They became a safety net for each other. Failure for one meant failure for all and nobody wanted that. They became a high-performance team.
· We created standard processes and procedures to ensure consistency and maintain the highest levels of quality. This applied to everything we did – from working on a task to writing trip reports, status reports, and proposals. It also reduced our risks when we chose an outsourcing partner to help us take on more concurrent projects.
· Whenever possible we automated processes to maintain consistency while increasing efficiency, repeatability, scalability, and profitability.
· We measured and tracked everything, analyzed that data, captured lessons learned, and continuously worked on improving (and documenting) every aspect of the business.
· A byproduct of this approach was that we could offer leaner pricing based on accurate estimates having very small margins of error. Our pricing was competitive, we could fix price much of what we did, and our profit margins were very good. This allowed us to invest in further growth.
Our “attitude of better” also came across as confidence when selling to and working with new customers. Not only could we tell them stories of our success that included tangible metrics, most of our customers became references willing to talk about the value we added. Their stories included discussions about how much better things became as a result of our work.
Better became the foundation of what we did as well as the basis of those customer success stories.
Could a New Channel Model Lead to Sales Amplification?
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.
References:
- https://kimwilson5.wixsite.com/theywillbegiants/the-book
- https://www.bcg.com/publications/2019/emerging-art-ecosystem-management.aspx
- https://www.gartner.com/smarterwithgartner/8-dimensions-of-business-ecosystems/
- https://sloanreview.mit.edu/article/the-myths-and-realities-of-business-ecosystems/
- https://www2.deloitte.com/us/en/pages/operations/articles/business-ecosystems.html
- https://www.accenture.com/_acnmedia/pdf-56/accenture-strategy-your-role-in-the-ecosystem.pdf
- https://www.bain.com/insights/shifting-from-assets-to-ecosystems-video/
- https://hbr.org/2019/09/in-the-ecosystem-economy-whats-your-strategy
What are you Really Selling? (prospecting tips included)
It is interesting to see people in Sales and Marketing still focusing on features, performance, cost, and even value without creating linkage to what that means to a company from a business perspective. Once you understand what you are really selling it is possible to connect with prospects in a meaningful way that can help you both determine the potential fit.
Sales Qualification is essential for both efficiency and effectiveness. Effectiveness is all about results, and efficiency is all about achieving those results with the least amount of time and effort. This doesn’t mean that we are looking for a lazy approach to find a win. Rather, it is about identifying repeatable patterns of doing something that circumvents unnecessary activities, time spent, and associated costs. Being good at qualification doesn’t mean that you will be good at closing, but it is tough to become a good closer without having the number of “at-bats” that good qualification leads to.
The way to help yourself understand what you are selling is to view things from your prospect’s perspective. What struggles are they likely facing? Where are the greatest opportunities for their type of business? What is the difference between your prospect company and its main competition? This analysis requires a general understanding of the vertical and more specific understanding of the prospect company and 2-3 of their main competitors.
Now that you have identified an area where you believe there is a good fit the next step is to develop your target list for that profile. Much of the information you need can be found in Corporate filings (10-K and 10-Q filings for public companies, and Form 5500 filings for companies with a 401(k) plan – especially useful for private companies), websites like Owler.com and SimilarSiteSearch.com, and from social media sites like LinkedIn.com and Facebook.com). Then search for people in areas that are most likely affected and look for titles that are likely Stakeholders or Decision Makers.
The next item to focus on is messaging. Below are a few examples from my career –
- Analytics & Big Data – The focus here is often on data volume, the currency of the data, speed of queries, cost, maintenance, and downtime. Those things become important later in the sales discussion, but initially, companies want to know what problems your product or solution will solve.
- Some of my fastest deals sold because I demonstrated ways to make better decisions faster and/or identify problems before they were had the chance to become major problems. Avoiding problems and unplanned outages were key parts of the messaging.
- In one case I was able to close a significant deal in less than three months by focusing on how a company could provide five years of transactional data for their customers to use to make purchasing decisions in less time than it took the current system to analyze six months of data. Their sales increased after implementing the revised system. Helping their customers make better buying decisions faster was the winning message.
- Embedded Products – While many companies focus on APIs, features, or cost per unit, I would focus on how the product I was selling made things better and easier for Customer Support and Customer Satisfaction. Things like stability, lack of maintenance required, data integrity, performance over time, messaging when something abnormal or concerning was observed, etc.
- I sold a $1.1 million deal in less than two months to a medical device company by focusing on the life of those devices often being 10-15 years and how their customers need to be assured that the results will be the same from machine-to-machine, even if one of those machines is much newer than the rest of the machines. Consistency over time was the winning message here.
- After being approached by a Defense Contractor for a relational database product for a new Flight Simulator system I changed the discussion to the complexity of flight control systems, the need to correlate 30+ operational systems in real-time, and the importance of taking a verbal command and translating it to specific commands for each system. That led to the sale of a NoSQL product that was ideally suited for this complex environment. The idea of letting our software handle the really complex work helped win this deal.
- Consulting Services – This is not contracting or body shop services (commodities), but true Business and Technical Consulting services that were high visibility and high impact. In these cases expertise, experience, and having a track record of success in different but demanding scenarios provided confidence. Often these were multi-phase engagements to first prove our value before making a large commitment.
- In a bid against two well-established competitors, we won a deal with a large Petroleum company that was nearly $500K. The proposal included information that we uncovered about the system and use case and later verified with the prospect, a section on our people and some past projects, and then a high-level project plan with firm-fixed pricing. We won the bid and I later found out that our cost was $50K higher than the largest competitor and more than $100K more than the other competitor. The customer told me that, “Your proposal demonstrated the understanding of who we are and what we need, and that confidence provided the justification to select your company and pay a premium to have the job done right the first time.”
- My first million-dollar deal was in the 1990s and was with a company that we demonstrated our ability to solve problems. They knew they needed assistance but were not exactly sure where. I created a “Pool of Days” concept that provided flexibility in the work performed (task, deliverables, and scheduling) but had minimum monthly burn rates and an expiration date to protect my company. This led to many other deals of this nature with other companies. Flexibility and the ability to accommodate changing needs without introducing significant risk or additional cost was the winning messaging here.
As you see from these examples the common theme is helping companies solve their specific business problems. Even in cases where technology was central to that message the focus was always on better results for that prospect and their customers. Value is important but the results matter even more for most purchasing decisions.
Nobody wants to be responsible for taking a chance on a new vendor and be responsible for a high-profile failure. Helping instill confidence early on makes a huge difference and following-through to successful implementation results in happy customers who become great customers and provide important referrals.
It all starts by selling what you know you can do from a business perspective for your Prospects to make their lives easier and business better, rather than selling what you know you have from a technical perspective.
Shouldn’t Sales Forecasting be Easy? What about Accuracy?
I’m sure that everyone has read articles that state some “facts” for managing your “sales pipeline” or “sales funnel.” Things like needing 10x-30x of your goal at the start of the process, down to needing 2x-3x coverage at the start of a quarter to help increase your odds of achieving your goal. Now, if it was only that easy…
First, what are you measuring? The answer to this question is something that anyone with a sales quota should be able to succinctly answer. For example, are you measuring?
- Bookings – Finalized Sales Orders
- What happens when Sales Operations, Finance or Legal pushback on a deal? You have a PO, but has the deal really been closed?
- Billings – Invoicing Completed
- This includes dependencies that have the potential to introduce delays that may be unexpected and/or outside of your control.
- Revenue – In-depth understanding of Revenue Recognition rules is key.
- How much revenue is recognized and when it is recognized varies based on a variety of factors, such as:
- Is revenue Accrued or Deferred? This is especially key for multi-year prepaid deals.
- Is revenue recognized all at once – such as for the sale of Perpetual Software Licenses? (even this is not always black and white)
- Is revenue recognized over time – such as with annual subscriptions that are ratable on a monthly basis?
- Is revenue based on work completed / percentage of completion? This is more common with Services and Construction. Combining contracts, such as selling custom consulting services with a new product license, can complicate this.
- Are there clauses in a non-standard agreement that will negatively affect revenue recognition? This is an area where your Legal team becomes an invaluable contributor to your success.
- Cash Flow – Is this really Sales forecasting?
- The answer is ‘no’ in terms of Accounting rules and guidance.
- But, if you have a start-up or small business this can be key to “keeping the lights on,” in which case the types of deals and their structure will be biased towards cash flow enhancement and/or goals.
- How much revenue is recognized and when it is recognized varies based on a variety of factors, such as:
My advice is to work closely with your CFO, Finance Team, Sales Operations Team, and Legal team to understand the goals and guidelines, and then take that one step further to create policies that are approved by those stakeholders and are then shared with the Sales team to avoid any ambiguity around process and expectations.
So, now the hard part is over, right?
It could be that easy if you only have one product that is well established, has a stable install base, has no real competitive threats, where the rate of growth or decline is on a steady and predictable path, and where pricing and average deal size is consistent. I have not seen a business like that yet but would have to believe that at least a few of them exist.
Next, what are you building into your model to maximize accuracy? Every product or service offered may be driven by independent factors, so a flat model that evenly distributes sales over time (monthly or quarterly) is just begging to be inaccurate. For example:
- One product line that sells perpetual licenses may be dependent on release cycles ever 18-36 months.
- A second product line may be driven mainly by renewals and expansion on fairly stable timelines and billings.
- A third product line may be new with no track record and in a competitive space – meaning that even the best projections will be speculative.
- And finally, there could be Services associated with each of those product lines and driven by an even greater number of dependent and independent factors (new implementations, upgrades, implementing new features, platform changes and modernization, routine engagements, training, etc.)
Historical trends are one important factor to consider, especially because they tend to be the thing that you have the greatest control over. This starts with high-level sales conversion rates and goes down to average sales cycle, seasonal trends, organic growth rates, churn rates, and more. Having accurate data over time that can be accurately correlated is extremely helpful. But, factors such as Product SKU changes, licensing model changes, new product bundles, etc. increase the complexity of that effort and potentially decrease the accuracy of your results.
Correlating those trends to external factors, such as overall growth of the market, relative growth of competitors, economic indicators, corporate indicators (profits, earns per share, distributions, various ratios, ratings, etc.), commodity and futures prices (especially if you install base tends to skew towards something like the Petroleum Industry), specific events, and so forth can be a great sanity check.
The best case is that those correlations increase your forecasting accuracy for the entire year. In all likelihood what they really do is provide valuable inputs that allow you to dynamically adjust sales plans as needed to ensure overall success. But, making those changes should not be done in a vacuum, and communicating the potential need for changes like that should be done at the earliest point where you have a fair degree of confidence that change is needed.
There will always be unexpected events that negatively impact your plans. Changes to staffing or the competitive landscape, reputational changes, economic changes, etc. can all occur quickly and with “little notice.” That is especially true if you are not actively looking for those subtle indicators (leading and trailing) and nuances that place a spotlight potential problems and give you time to do as much as possible to proactively address them. Be prepared and have a contingency plan!
Forecasting accuracy drives confidence, and that confidence leads to having the ability to do things like getting funding for new campaigns or initiatives. Surprises, even positive ones, are generally disliked simply because the results were different than the expectations and that begins to fuel other doubts and concerns.
Confidence comes from understanding, good planning, helping everyone with a quota and the teams supporting them to do what is needed when it is needed to optimize the process, and then to have an effective approach to determine whether deals really are on-track or not so that you can provide guidance and assistance before it is too late.
It may not be easy, but it is the thing that helps drive companies to that next level on a sustainable growth trajectory. In the end, that is what matters the most to the stakeholders of any business.
As an aside, there are myriad of rules, regulations, and guidance statements provided by a variety of sources that apply to each business scenario. I am neither an Accountant nor an Attorney, so be sure to consult with the appropriate people within your organization or industry as part of your routine due diligence.
IoT and Vendor Lock-in
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.
