Situation: Even with a better mousetrap, an early stage tech company can’t afford a large sales force to cold call enterprise prospects. How do you build an affordable, scalable sales model – one which lets you quickly identify potential customers, and sell to them with a predictable rate of success?
Advice from Scott Dietzen:
From our experience, there are three steps to the process:
Form and quickly test hypotheses about your early adopters, and be prepared to iterate. “Friends and family” customers typically provide this test bed;
Look for ways for candidate customers could self qualify, and then strive to make that easily repeatable; and
Once have honed your messaging, leverage PR, viral marketing, social media, and other inexpensive means get your value proposition in front of more customers.
The chain of events between hypothesis, private experimentation and public launch is crucial:
Before launch, you want to have many confidential conversations about your value proposition with early prospects, and hopefully get many customers to privately try out your product. What do they love about the product? What changes will make it even more valuable? Listen and learn. At Pure Storage, we spent a year and a half in customer testing before we came out of stealth.
Most companies work too hard on the product and too little on the go to market plan. It’s better to do these in tandem. At Pure Storage we thought our messaging would skew toward performance, but learned that the fact that we saved customers 10X on their power and space budgets was equally important to them.
By having referencable customers in place before launch, you are better able to declare and defend first mover status and their validation is crucial to a successful launch.
A great way to accelerate growth on a start-up budget is to let customers self qualify for free:
At WebLogic, we offered developers a free download evaluation version of our software. A developer could choose to use WebLogic for free, and then go to their manager only after they had a WebLogic solution up and running. This made it far easier for management to make a buy decision, and took off so fast that it was hard for our sales force to keep up with the inbound license key requests!
At Pure Storage, we give away a software tool that storage administrators can point at an existing storage workload. The tool allows them to evaluate the savings from our data reduction algorithms, and hence how much their companies could save in cost and power by converting from mechanical disk storage to Pure solid-state flash. Enabling the customer to generate their own ROI story is an easier, more economical path to winning a happy customer, and the end user insider becomes a hero for delivering value to his/her organization.
Key Words: Technology, Solution, Model, Sales, Marketing, Customer, Identification, Hypothesis, Early Adopter, Social Media, Scalability, Pre-launch, Stealth
Situation: A small company has a candidate who seems a great fit for their culture and comes with excellent references. However, this candidate has little experience in their industry. They are struggling to assess which is more important – the quality and character of the person or their experience and skill set? What is your opinion – do you hire for character or skills?
Advice from the CEOs:
Overall, personality, character and values consistent with the firm’s values outweigh skills. However, if the individual needs significant training to attain the skills required for their new role, you must assess the ability of your firm to provide that training. Either that or bring them in at a lower level and let them grow into their eventual role.
If the candidate will fill a business development role, put them across the table from you and others, one-on-one, in a sales role play. Can they sell you on hiring them for the position? If the candidate will have to develop their own leads, make selling you on their ability to do this part of the role-play exercise.
Open up the search to other possible candidates, and assess the current candidate vs. others who may want the position. See if this individual rises to the top in a competition for the position.
Large company experience may not be relevant to the needs of a small firm. Better to find an individual with experience in a firm more similar to your size than with only big company experience.
Key Words: Hire, Candidate, Character, Culture, Skills, Experience, Training, Business Development, Compete, Large, Small
Situation: A company is the leader in an expanding market. To sustain growth, they must transform how their people operate so that they better address and serve the needs of their target customers. How do you transform company culture?
Advice from Joe Payne:
We have a saying at Eloqua: Culture eats strategy for breakfast. More important than this year’s product strategy is the culture you build that let’s employees make decisions on the fly because they know “that’s how we do things at Eloqua.”
Look at how you pay and reward your people. We all receive bonuses on the same team metrics: company sales, profitability, and customer satisfaction. If the team wins, we all win.
We are not a democracy, but everyone has a voice. Although we make decisions as a business, we avoid top-down management. We push as much authority and accountability as far down the organization chart as we can. You can only do this well with a strong culture.
We adopted a mantra to guide our way, “Get it done – Do it right”, and a set of metrics to make it part of our culture.
We created a two-by-two grid, with “Get it Done” on the Y-axis and “Do it Right” on the X-axis on which all employees, including the Executive Team, are plotted. If rated in the top right quadrant, that employee is doing well. If someone finds himself or herself plotted in the Upper Left quadrant (getting it done, but not doing it right), that person has one quarter to improve. Lower Right people get two months. Lower lefters are out that day.
We can measure “getting it done” using standard quantitative metrics, but “doing it right” is more qualitative. We ask questions like, “Is the person a positive source of energy for the team? Does she go above and beyond for other staff and for customers?” We provide examples to help evaluators plot individual performance.
Once we instituted this matrix, one of our top selling sales reps was evaluated as being in the top left quadrant. When he only paid lip-service to changing and didn’t correct this behavior after a quarter, we let him go, numbers and all. This decision was both a major “wow” and a major win for the company.
Situation: A membership association’s revenue is largely tied to its annual conference. The primary sponsor of the conference has decided to host their own annual conference. This will disrupt the association’s access to both conference attendees and vendors. The sponsor has offered terms of collaboration; however, the conditions are unfavorable to the association. What are the best alternatives available to the association and how should they pursue them?
Advice from the CEOs:
Are the association’s mission and vision are tied to or independent of the sponsor? If there is an ongoing reason for the association to continue without the sponsor then it is reasonable to pursue alternatives.
There are at least two options available to the association:
Accept the partner’s offer of collaboration, provided that this can be done under conditions that will allow the association to survive short-term. If the partner stumbles hosting its own conference this may allow the association to recover ownership of the annual conference. The danger is that this may lead to a slow death if the sponsor further cuts revenue to the association or a fast death if the sponsor decides to abandon the association.
Shift the focus of the conference and ancillary services under a new branding scheme. A survey of the membership indicates that the majority favor a mixed-platform solution, and may welcome a mixed-platform approach. You may need to rethink and rework your model but this may offer the best chance for ongoing survival.
What steps should be taken to pursue the second option?
Conduct a second survey of the membership to evaluate their preferences on platform focus, what they want to see in a multi-platform conference, and what platforms should be included.
Shift focus of the association to multi-platform as a response to members’ priorities and desires. Court the majority of the membership that favor a mixed-platform focus and de-emphasize those who favor the single platform solution.
Develop an alternate roster of sponsors including all competitive platforms. If this model succeeds, your current primary sponsor may find participation imperative.
Interview with Norman Boone, CEO, Mosaic Financial Partners
Situation: Many entrepreneurs who started companies in financial services and other industries are now 55+. They may be ready to move on, but not necessarily ready to move out. What questions should they be asking as they plan their exit strategies?
Advice from Norman Boone:
The most critical question is what you want to do with the rest of your life. Most people don’t give this enough thought. It all starts with what is most important to you.
Start with a self-inventory assessment – what are your resources, options, and what do you want to do or accomplish?
Discuss with your significant other or partner what will work for both of you.
Answering these questions helps to lay out the alternatives. Now, thinking about your company, what is important to you? Is it legacy, the future of your employees and business partners, the future of your clients? Does your business continue, or to you see a sunset?
If your business will continue, do you see an internal succession, or sale or merger of the company? If internal succession, here are the issues.
Who will be the new leadership? Do you have good candidates on staff, or do you need to hire someone who will take over?
Be careful not to expect your successor to be a mini-you. They need to be able to bring their own talents and perspectives to the leadership role, not try to duplicate you.
Do you need to beef up the training of current staff to increase their managerial capacities?
Is an employee buy-out an option? There is a variety of choices to investigate.
What will be your role during and after the transition? Will you accept that new leadership may take the company in new directions?
To be most effective, this needs to be a 5 or 10 year process. Ideally you will have two to four successor candidates to evaluate.
Do you sell to the highest bidder? Many of the questions here are like those above.
Will you sell to the highest bidder, or to the bidder who seems the best fit for your stakeholders and clients?
How much voice, if any, will you offer your employees and / or clients in the selection process?
What due diligence will you do on potential buyers?
Do you merge with a similar company?
If you can find a compatible merger partner the combination may be the best of two worlds.
What is the culture? If different, what will be the impact?
A merger of like companies may assume that the other party has a commitment to ongoing operation: but this is not guaranteed.
What will your role be, and what is the transition plan? How will you involve your key people in the transition?
The other option is to sunset the company. Here you must have enough in savings so that you can forgo future income from the business.
What about the other stakeholders and clients who’ve invested their careers and business in you?
Try to time your exit with the expiration of leases and other obligations to minimize exit cost.
How will you assist the transition of stakeholders and clients to new opportunities and providers?
Situation: A company has been seeking additional engineers. Unexpectedly, three excellent candidates independently approached the company seeking employment. This opens the door to expand the department and also to create an additional layer of management consistent with the company’s growth objectives. Currently, in this small company all engineers report directly to the CEO. What are best practices adding a layer of management to the company?
Advice from the CEOs:
Remember that aspiration does not equal talent. There is a big difference between good individual contributors and good managers. The best predictor of managerial success is past successful experience.
You have a number of senior engineers who have been with you for a long time. Have any expressed an interest in management responsibility? Do any of them have a track record successfully managing teams? Similarly, evaluate your new candidates both in terms of both their ability to contribute as engineers and their prior management experience.
If you hire one or more of the candidates, start them at the senior engineer level. Let the company and the rest of your engineering team get used to them and observe the quality of their contribution.
Once you are ready to create a new level of management, make this an open process. Announce your plans to the engineering team, and ask them to approach you individually if they are interested. See who steps up.
When the time comes to make the promotion, how do you communicate this to the group?
If you’ve used an open process to evaluate one or more candidates for management, the group will already be prepared when you announce the new structure and promotion.
An important part of the message is that the company is growing and that there will be ongoing opportunities for talented engineers to earn promotions to management.
For those interested, start with small steps as leads in team projects. Who if effective at guiding their team? Who is a positive source of energy for the team? Who is helpful and goes above and beyond for other team members and for customers? How do they respond to team obstacles? Observe and coach them along the way.
Interview with Peter Koeppel, President, Koeppel Direct
Situation: The media industry is increasingly challenged trying to reach its audience. Media choices are fragmented, and the proliferation of new devices makes reaching purchasing audiences difficult. How do you best reach your target audience in this environment?
Historically placement of advertising and pricing of media ad buys were driven by calculations of audience impressions – how many eyeballs a particular ad would reach. With the media market now highly fragmented this measure is no longer as effective. Sophisticated marketers now seek ROI driven media buy models to justify their advertising purchases.
Two companies, Facebook and TiVo, are in the lead in terms of potential to assist marketers in targeting distinct audiences, because they collect rich data on individual consumers, but this information must be balanced with privacy concerns.
Non-conventional channels like TiVo or Google TV and other research services can selectively present marketing messages to specific customer demographics.
The mobile search market represented approximately $2 billion in revenue in 2010. As more people consume media through mobile devices, this market will grow. The leader in this market is Google.
A growing format is longer length spots. These include short-form infomercials which are typically seen for insurance, legal services, and spots that drive consumers to web sites or an 800 number. Long-form infomercials are typically 30 minutes in length, composed of three to four 7 or 8 minute segments separated by commercials, which serve as calls to action. Infomercial marketing is not for every product, but is most applicable to higher priced products where specific demographic information is worth the investment and where the consumer needs more education about the product,in order to make a purchase decision.
Cable TV, print and radio, remain an effective way to target niche audiences. Television, among the traditional media, still drives the largest number of consumers to online purchases.
For the future, we predict a convergence between TV and online marketing and purchases. Many HDMI TVs and current Blu-Ray sets are already configured for both cable and either WiFi or Ethernet connections. Google and Apple sell devices that combine TV and online access. Netflix and Hulu serve content through either TV or online devices.
We see the future of TV as a device which will consume all media. As access to rich databases of consumer preferences and purchasing proliferates we see growth in content which will be increasingly tailored to personal preferences and desires of highly fragmented consumer demographics.
Situation: A company has a long relationship with its initial client, which provides the company with key intellectual property. This client handles all marketing, sales and distribution for the company’s principal products, but only accesses 20% of the market. The client is concerned about having its image associated with expansion into markets that the company wishes to pursue. How do you structure a deal that enables you to access the broader market without offending the client?
Advice from the CEOs:
The issues for the client are public relations and liability. They don’t want to be associated with certain segments of the larger market as it may compromise customer perceptions of their core business. Further, they want to be indemnified should they face damages from your forays into the larger market. It is important that you address their concerns.
Sit down with the key client. Pose a problem that will generate the solution that you seek and let them solve it on their own. Then seek an agreement with the client on carve-outs within the larger target market with which they are agreeable.
Build an external company with different branding to approach the larger market, without jeopardizing the relationship with the key client. If ownership and management of the two entities are the same be aware that this is a thin veil.
You may increase opportunity for success if you build your own successor product – one tailored for the larger market – while your key client is paying you for current business. Once the product is built, ask the client whether they want to be involved and if so, on what terms. This enhances your bargaining position and reduces your downside risk.
Expand your offering, where current products are part of a larger offering. You have two alternatives: go there anyway, or go there with the client. If the client decides that they don’t like what’s happening and opens the market this could be ideal for you.
Situation: Leaders who are successful in the long-term have figured out how to build high performance environments. This enables them to continually produce breakthroughs by stimulating the performance of others, and to rise above their competition. What are the factors involved in building a high performance environment?
Advice from Paul Limbrey:
Our work is based on 20 years of research into high performance in individuals and organizations. First one needs to understand the dynamics that stimulate high performance in people.
Our research indicates there are several elements that combine to form a system that stimulate improved performance in populations. These elements include concepts addressing Direction – Achievement, Failure and Strategy, providing Status of current performance, and Motivation – reason/purpose plus reward/consequence. The final unifying element is the culture or guiding philosophy in an environment.
On a company level, the first task is to understand these dynamics as you have created them today. This enables you to see where you need to tweak your environment to better stimulate high performance.
How consistent is high performance across difference fields of human endeavor?
We find that all elements that encourage high performance exist in all environments. However the potency of each element varies with the particular environment.
For example in some environments the Goals are more potent (Sales groups or athletes). In others culture is potent (the Military or companies like Southwest Airlines). In others the reward systems are most potent (Investment Banking) or the potential for failure (airline pilots or first responders).
Any of the elements can stimulate performance improvement.
How does one go about matching the right system and solution for a particular company?
Start by focusing on the potency of each subsystem – Directional, Status and Motivation – in your particular environment. How critical is each in shaping decisions and action taken?
Take the example of a CEO who has no vision for the future of the company. The result is inconsistent decisions day to day or week to week. The organization can’t focus on effective execution. The solution is to focus on Direction.
What about the CEO who is concerned with complacency. This is best addressed by looking to define what represents sub-standard more clearly for the organization.
If you have an “excuse rich” environment or desire greater accountability, look to your status or “exposure” systems to provide more accurate performance status first before looking toward your consequence systems.