Sales Strategy - driven by data or opinion?

In order to be successful in sales, the generally accepted wisdom is that you have to you have to build strong relationships with your potential customers. This becomes even more pronounced in the services world,  where 'people buy from people' (or so the saying goes.) Which is true, but unfortunately, not many companies have the patience to wait for their sales folks to build strong relationships - this takes time, and meanwhile payroll has to be met.

What to do? Fire the sales guy who has not produced anything in the last 3 months? While the pace of relationship building can only be accelerated so much, I think there are some steps that business managers can take in order to ensure that their sales people get the full support of the company. Many of these points are common sense, but it is surprising how many companies do not always get it right.

1. Get some basic analytics in place - What questions should we answer that will help you sell more, and sell faster? There are plenty, and a few are listed below.

Answers to these questions should ideally (in my opinion) define your sales strategy. Staying within the realm of data is hard, particularly when it comes to decisions around sales strategy, but allowing the data to guide your decision making will pay dividends in the long run.

• Do you know how much you want to grow by, quarter over quarter, or YoY? Why?
• Do you know where you are growing today - geographically/product wise? 
• Likewise, do you know where you are losing sales? Do you know why?
• How big is the market opportunity/ potential customer base in these territories?
• Does the data show that you have concentration in a few accounts?
• Does the data show that your sales resources are spread too thin or vice-versa?
• And really, have you defined benchmarks for the last two questions? If not, can you expect to answer them correctly?

Drill even deeper..answer these questions for each territory if possible

• Look for the 80/20 rule - is it true that 80% of your business comes from 20% of your customers in these territories?
• Can you identify how much share of wallet you have with these customers? How much are you not getting?
• How many customers fit the profile of your existing customers, but you are not going after them?
• How many people do you have there to sell to these potential customers?
• What is the ratio of opportunity to sales-people? Does it pass the sanity test?
• How many sales people are selling to multiple accounts? Are they all locally situated?
• Which business unit/ product line is growing the most? How are the profit margins here? Are you/Should you be focusing on this?

2. Structure - I am a strong believer that even the greatest strategy without a supporting organizational structure and associated incentives will not work.

To answer the structure problem, ask some of the following questions:

• Is it just your sales force that is tasked with selling? Or do you have your product managers and team leaders selling and evangelizing as well? 
• Do you have a solid pre-sales organization that is both technical and sales oriented?
• How well is your engineering sales force working for you? Are they trained to have the right conversations when needed? 

3. Go to market as one company - Too many times, I have seen that there are multiple sales people from the same company contacting the same potential customer, pitching different products. This obviously results from a lack of coordination and information-sharing across the company.  The sad part is that the customer does not care whether you are from business unit A or business unit B. They see the company as one entity, and this lack of internal coordination amongst the sales folks can cost the company dearly. This is more difficult to solve than it seems, and I think deserves a separate post.

Please let me know if there are other points that you have seen that work well. Best of luck selling!

Part 2: Are you buildng Products or Solutions?

This is the second of a two-part article

In part one of this article, I made the case that incentives hold back companies from creating products that work together. But, is it really that simple? Let us look at some issues and potential solutions.

Previously erected silos will prevent BU leaders from working together. Selling a solution is a lot harder than selling a product, so sales leaders won’t buy in. And unless there is strong leadership in product management, roadmaps will never be coordinated. Even if all of this happens, engineering managers may have to make the decision of putting in more time and effort to coordinate deliveries across products, which means they may not be able to meet previously committed dates.

This is where strong leadership and company culture matters a great deal. The ability to work across groups, communicate points of view, and obtain commitments from other teams to work together is critical to adopting a solution-first approach.

 Assuming the leadership commits to the solution-first approach, how would a company actually institutionalize this?

Here are a few steps:

1. Product management leadership defines the cross-product strategy and articulates why the solution(s) approach will be more valuable to customers. Key pieces of the strategy include the following:

·      An agreement to an approach for creating solutions as there are many ways to do this. For e.g. Will BigCo create a platform which must be the foundation for the different products?

·      What’s the there a budget and how is it implemented across the different BUs?

·      What is the joint sales and marketing strategy? How will these be sold and delivered?

·      What is the cross-department R&D plan? How will resources be shared?

·      How will the products be supported post roll-out?

2. Create a business case that shows the benefits of going to market as one solution instead of individual products – if the pie is bigger, there will be more appetite for BU leaders to adopt the solution-first approach

3. Create roadmaps that explicitly show the dependencies on other related products

4. Joint pricing, messaging, etc. are all worked on across the different marketing teams

5. Sales teams are educated to sell a solution vs a product, and the incentives are well understood

6. R&D managers understand the impact of other product’s delivery timelines and the roll-out of individual products is well coordinated. Future releases are planned and EOL discussions are determined taking into account the impact on all teams

7. A clear support plan is outlined and is in place prior to the release of the solution(s). This is not a trivial process – how will support route calls if there are multiple development teams and overlapping functionality?

In summary, going to market with a solution-first approach requires a clear understanding of the overall strategy across product lines, benefits for the customer, explicit commitment from leadership to making this a reality, and a clear understanding of the incentives for the various internal teams. 

Although we haven't solved every problem here, we can make great strides in ensuring our solutions' success. Without all of this in place, a solution-first culture will be very hard to implement. 

Do you see these issues as well? Do you agree with the solutions presented or do you have other feedback? Please feel free to leave a comment.

Part 1: Are you buildng Products or Solutions?

This is the first of a two-part article

How many times have we all heard the phrase ‘Go to market as one company, instead of multiple individual silos’? What does this phrase really mean, and why is it important?

In today’s application economy, many traditional ‘brick and mortar’ companies have application development departments bigger than even large software companies. Over time, many of these departments, including traditional software vendors, end up with multiple and even redundant software products in their portfolios. Now, this by itself is pretty normal, except typically these products may not be designed to work together, nor designed to solve a larger set of different but overlapping and related problems. This situation is particularly acute when the products span business-units.

The problem is both the company and their customers lose in these situations. The company misses out on potential cross-selling opportunities, while the customer does not get the best possible solution.

Here is a simple example that illustrates the problem and is applicable across all industries. Imagine a large retail bank, BigCo, which relies on its software products to track interactions with its customer base. Each channel that the customer uses to interact with the bank (think mobile banking, branches, ATMs etc.) may use a separate application or product, that manages a particular area. None of the applications share information with the other banking products, although they track the same customer. As a result, the bank never gets a full-picture of the customer’s needs. The bank misses out on cross-selling opportunities, and the customer loses out on potential services and benefits that the bank may be willing to share otherwise.

Further, from the customer’s perspective, the usability features of the individual products or applications may all be very different, leading to a poor user experience. The marketing collateral for the customer may be disjointed and limited in its ability to communicate the true value of the solution(s).

In many cases, particularly when customers are corporations themselves, they may receive multiple calls from a software vendor’s sales teams, from different BUs, all pitching their individual products, effectively competing with each other. In these situations, one cannot blame the customer for assuming that the software company/department simply doesn’t have its act together.

While almost comical in the absurdity of this situation, in reality this is a hard problem to solve for BigCo, and it spans UX, engineering, marketing, and sales departments among others.

If we were to headline this problem, and generalize it across all kinds of industries and companies, it would likely read something like this:

How should an application development group / a software company coordinate the efforts of its various teams to ensure all of its products and services have a similar look and feel, interoperate with one another and share data, while having a coherent pricing model and a coordinated go-to-market approach? Can a company have a solution-first approach to releasing products?

Root Causes

Let us look at some reasons why companies may not be able to solve this issue easily.

1.     Is this a structural issue? Are there lines drawn between teams which prevent coordination?

2.     Lack of knowledge? Is it because the various teams do not know they need to coordinate with one another before releasing a product and have joint roadmaps?

3.     Could it be an incentive issue? No incentives for BU leaders to work together?

4.     Timelines and deadlines preventing effective collaboration?

5.     Is it a leadership issue?

In my experience, it is all of the above, but the most significant obstacle to a coordinated product release cycle, where the products are all designed to work together, is a lack of incentive. BU leaders are evaluated on the basis of their individual P&Ls. Sales teams are commissioned on their individual quotas. UX and engineering teams are driven by deadlines for their own products. Who has the time to worry about other products when the incentives don’t line up?

The obvious solution to this conundrum seems to be to fix the incentive problem, which is to tie a team’s success to the success of the overall solution. But, this is not as easy as it sounds. The next part of this article will focus on some solutions.

Have you encountered these issues? Please feel free to leave a comment.

My Chicago Booth experience

I get a quite a few calls about my MBA experience at Chicago Booth from prospective students, and even current students about my campus recruiting experience etc, and thought this might be a good post to any one interested in this. I was in the weekend MBA program, and got done with classes in Dec 2011. As a weekend student, I flew to Chicago every Friday evening from Birmingham, Al where I was initially living and working. The program is geared for working professionals, and most of my classmates flew in as well, flying in from all over the US - many flying for over 4 hours each way, every weekend to attend class.

Even with all the flying, I would start by stating unequivocally that my experience has been great.  The quality of students and professors at Booth is very high and I have been fortunate to make some lifelong friends. In my opinion, there is a much bigger focus on academics in the weekend program, and the depth of classroom discussions is also excellent, probably much better than that in the full time program. I am probably biased, but am also stating my opinion here. There are plenty of excellent courses, and some of them were better than others like any other school. Although Chicago Booth is known as a finance school, the Marketing and Entrepreneurship programs are top notch. I also have to say that the program was not easy - part of the reason for this was that I had no experience in Finance, Economics etc, and these subjects pushed me out of my comfort zone, but the other part of this was the students were simply very talented and hardworking, and lifted the classroom experience to a different level. There was hardly a week where I didn't have a conference call with my classmates who were all distributed throughout the US, working on some homework assignment into the wee hours of the night. Looking back, I am amazed that I put in the effort, although at the time, the pleasure of working with my friends and learning something new was greater than the exhaustion of working a full time job, juggling a family life and then flying to school. You have to have a supportive spouse if you are married, and that makes all the difference.

As a weekend student, the curriculum is the almost exactly the same as that in the full time program, and the professors are also the same.  Having said that, there are a few areas where I think weekend students do not get the same experience as others in the full time program, and this is simply due to the nature of the program, given the classes are on Saturdays. First, there are a few courses which are not offered on the weekends. This is less of a concern these days, but the exceptions are still present. Second, there are lesser opportunities to network with other students if you come in on Saturday morning and leave the same evening. As I was living in Birmingham,AL and later in Houston, Tx during the time, I would fly in on Friday evenings, and leave on Saturday evenings or even on Sundays. This allowed me to meet a lot of other students, and made my experience a lot richer.

Let me talk a little about the on-campus recruiting (OCR) process for those interested. The recruiting cycle when I went through it, started sometime in September and continued through early December. You get to meet with a ton of companies, and the level of interest in Booth students, weekend or full-time, is high. Most students who are well prepared, get jobs - again this is my opinion. There are exceptions, and the unlucky ones do manage to find something pretty soon later anyway. There are couple of things to note though. Networking and establishing relationships with alums and others in the companies you are interested in joining is an absolute must, and part-time students in general are not very focused on this - at least to the extent that full time students are. Some points I would recommend if you are thinking about OCR - First, start networking a year before you are thinking of going through OCR. Second, prepare cases with other students if you are focusing on consulting jobs. You need to do a ton, in my opinion - around 50 at least. Third, prepare for your 'fit' interview'. These three steps are crucial to being successful in OCR. And, if you are really serious, try to move to Chicago for a couple of months - I did that along with a bunch of my classmates (and we were all successful)

Feel free to email me if you want more info. Happy to help or chat about my experiences!

New product implementations - Communication issues, ROI calculations etc

One common activity in enterprises that are trying to implement a new software application internally or upgrade an existing one is to try and do some kind of ROI analysis to validate the effort. (Here, I am primarily talking about products required for the company to conduct their business). The argument typically goes like this: The application will make us faster, cheaper, allow us to produce better quality widgets etc.

However, most often, the data and analysis behind this assertion varies from a very high level guesstimate, to pure opinion.  In order to do this ROI analysis well, in my opinion, you have to start with a very simple question, yet one which could be fraught with political disasters.

What is it exactly that will make the company faster, better etc? In other words, what has changed to make the enterprise more efficient?

In most cases, one would hope that the efficiencies come from changes to the underlying business processes. However, the challenge lies in capturing the business processes and efficiencies at that level across the company, and determining the ROI. For e.g. If a sales manager is spending 5 hours entering data into a home grown CRM system, and if upgrading this system or replacing it will allow her to reduce this time to 3 hours, there is a efficiency gain of 2 hours. So what? Can we take these 2 hours and translate it to revenue gains? Can the sales manager sell more with the 2 hours she has gained? If not, what do we do with those 2 hours? Cost savings? How much and where are these savings?

Which brings me to the next issue. How do we communicate the expected changes to the affected stakeholders? Many projects fail because employees fail to adopt the new application - and a big reason for this is, they don't buy into th expected benefits. A process level analysis, showing the activities and time spent pre-implementation and post-implementation will go a long way in eliminating these issues.
Unfortunately, there are few projects that actually spend time doing this kind of analysis. The benefits  are outsized in relation to the effort needed.

Software development for hardware devices

I have worked on bringing numerous software products to market while in CTS, and in HP, had the opportunity to play a leadership role in the development of an Enterprise Server which is obviously a hardware product. While the similarities between software product development and hardware product development processes are striking, it is much more interesting to talk about the challenges when you have a software team working on a hardware product, particularly when it comes to QA..

In a typical software product development process, the QA cycle would involve writing test cases, opening up the web/windows application and running the tests, logging the results and tracking the bugs. This is a straightforward process if planned well. Now, this process is similar when it comes to hardware products,  but there is one big obstacle..You need the actual physical hardware to do the tests properly and there are large dependencies on the hardware teams. Coming from a pure software product management background, this was a big change for me :)

If you have a bunch of software teams working on various hardware components - in my case I had 7 different teams writing software for the enterprise server that we were building, and they were distributed geographically - well, then you need a huge QA cycle, and the interplay between monitoring requirements, schedules, costs and maximizing productivity becomes particularly challenging. Some unique questions to ponder while designing the software testing processes for hardware devices:

1. Dependencies between the software and hardware development teams - this is important in hardware devices as the physical development might not proceed linearly, and will thus affect the software testing.
2. How many physical devices should you order for each test? Does the hardware development timeline align with this? Have you allocated enough budget for the build and shipping of the different physical devices?
3.Communication processes between the different teams - this is always difficult, but gets exponentially complicated when you have teams in China, India, the US etc. and some are hardware folks, and some are software and thus speak different languages, both literally and figuratively.
4. What are dependencies on external vendors? Many hardware devices align to release schedules of chips and processors that companies like Intel develop, and this may or may not align with your schedule

There are more issues one should consider, but these are the big ones.

Consulting Company - Revenue and Cost Drivers

Revenue and Cost Drivers in a typical software services firm

Click on the link above to see the full image. This is a mind-map of the revenue and cost drivers of a typical consulting firm

IT Strategy

I just wrapped up an IT Strategy assessment for a local company here. The interesting thing for me with these kinds of engagements is the ability to learn about a new division, a new business etc. The typical process for completing an IT Strategy is simple on paper.
1. Understand the goals and objectives of the company - why are they interested in an IT Strategy now, what do they want to achieve?
2. Understand the current processes of the department(s)
3. Understand how they use technology today
4. Figure out how they can apply technology to improve their processes so that it fits in with #1 above

At a high level, that is it..However,the trick is to be able to:
1. Interview the stakeholders effectively in order to capture their processes. This is not necessarily easy
2. Have a broad, but deep understanding of current technologies, and how they can be leveraged. This means you will have to be comfortable talking about off the shelf products, custom solutions, CRM, ERP, hardware and infrastructure etc. Industry experience really comes in handy here..
3. Being able to tie the output of step 1 and the knowledge about step 2, in order to help the company with an actionable plan to realize the suggestions. How much to spend and when to spend it, and why are the key points here.
4. Get buy-in!! Understand the players, their motivations and influence and get their buy-in. Most important step.

Fatherhood

I am writing after a long break. In the meantime, Vedaant Karthik Mahadevan made his way into the world and gave me the title of 'Father'. While it feels different, it has also been a pretty awesome journey so far. Vedaant has been a very good baby. Added to that both sets of parents have been a huge help.

Problems with implementing change

As a consultant, I am frequently asked to implement change in large organizations. However, the challenges in implementing change within my current client are huge. Political issues abound. There are way too many other projects that are impacted by our proposed changes, and upwards of 100 stakeholders. All the stakeholders want to know, before anyone else, about what we plan to propose and the impact to them. Tip toeing around all of these stakeholders and keeping them happy is pretty challenging. Also, add to the fact that these stakeholders are all 19 - 20 year veterans of this company, and most of them started work when I was born..
Add also to the mix the amount of push back and need for gaining feedback and soliciting their input.
With M&A accounting and Marketing Strategy, this was one project I didn't need on my plate..

Competitive Strategy

Marc Knez's competitive strategy class did nothing for me. Haphazard and lack of any proper framework made me feel like this was not a class worth taking. At the end of the day, I am not convinced that I got out of this class everything that it promised..

Accounting

Ryan Ball's class on M&A accounting has to be one of the more tougher classes I have taken in Booth. There are way too many 50 page 10K statements to analyze..accounting for goodwill and all the intangible and tangible assets is like looking for a needle in a haystack. I am easily spending upwards of 10 hours per week and feel like I need to spend more..

Overall though, I think it gives a good picture of what goes on in M&A..from a company's strategic point of view, very insightful. Plus, Ryan Ball provides the information in a very step by step framework based manner, which is easy to follow.

Good class, I recommend taking it..

What is the strategy behind Bothner's strategy class??

University professors are dull, boring, droning, nagging Ph.D types hunched over a desk working on some abstract problems that no one cared about anyway..right?? go on, no shame in admitting it, most of us have (or had) a chronic case of clock-watching in class..




BUT, that impression ( in my head )has been gradually diminishing in the past few months or so since I joined Booth, and guys like Prof. Bothner are the reason. To illustrate, he came to the first Strategy & Structure class of this quarter, bright and early Saturday morning, took around 5 minutes to memorize everyone's (65) names by reading the name tags, and then asked all of us to keep our name tags aside!..I was sitting there wondering what he was upto, and then Bothner proceeded to name *everyone*, all 65 students by their names starting from the 1st row, without any help.. Many of them weird sounding Indian, Chinese and European names (no offense meant!), totally foreign sounding for the average American..but obviously Bothner is not the average American - or a dull, droning prof..
Towards the 30th name or thereabouts, there was pin-drop silence, everyone was noticably sitting up straighter, and (maybe) waiting for him to screw up..but he didn't..
Pulling such a gimmick in the middle of the class requires tons of brain power and a LOT of confidence..Which is awesome as it makes us want to concentrate in class and not go yaaaawn!!

So, if this was Bothner's strategy to let people know that he might cold call on people by their names, it worked pretty well..

Risk Analysis - Software projects

All of us in the technology industry know at least one "expert" on projects, who has the tremendous ability to come in after the fact and analyze why that particular project failed..these people are omnipresent, omniscient,all knowing people, and are almost always missing during the onset of the project and during crunch time..

I have met a few omnipresent, omniscient software gurus (OOSGs) in my lifetime, and have been scarred by a few of them. There used to be a time when I was in awe of these OOSGs, and have had conversations such as these :)

Me: Sir, why do s/w projects fail?
OOSG: We don't do a good job of analyzing what could go wrong
Me: But Sir, we did do a "decent" job of analyzing what could go wrong. and we even communicated to the stakeholders.
OOSG: HA! and what did they do?
Me(close to tears): They said that I was complaining and being negative and not a team player!
OOSG: You need a RISK MANAGEMENT PROCESS! Don't you already have one??
Me: Yea, but we don't have time to spend on Risk Management when the project is failing and is in crunch mode!
OOSG: True, True! Oh well, nothing you can do then..you want to buy me a beer and complain a little more??

So, recently I decided to try to put together a simple risk analysis and management process. I came up with something, presented it to management and got their feedback. Funnily enough, it was very well received ..I have tried to reproduce a HIGHLY condensed version of it here..

RISK ANALYSIS and MANAGEMENT

Step 1: Don't think about RISKS!!
Just analyze if any of the classic mistakes apply to your project. Put a check mark against all of them that apply. (Thanks to Steve McConnell's website)

Step 2: Now, think about what might happen to the project as a result of these classic mistakes??
Ha! Now you have your risks.

Step 3: Classify these "risks" as "Highly probable" -> "Not probable" with appropriate classifications along the way.
Do this based on the occurance of the origin of the risk, in other words, the classic mistake. If the mistake has already occurred, there is a high probability of the risk and so on..

Step 4: Analyse what it will take to "FIX" the risk. Throw more people, push the schedule out, get drunk and bitch about it, whatever.

Step 5: How much will step 4 COST?? and plug in the probability of occurrence.

Step 6: Now, Stop!! Take a step back and determine the relative cost of this risk to the overall project cost. Based on this percentage, classify the impact to the project as HIGH, MEDIUM, LOW whatever.

Step 7. Communicate the risks to anyone involved, starting with the causes. If this doesn't get management's attention, get a new job.

Step 8: After a successful project deployment, celebrate with the OOSG and have him buy you the beer!

New Venture Competition in Chicago Booth

Boy, VCs (Venture Capitalists) are a mean, tough bunch of people to please. I had a taste of the days to come in the New Venture Challenge in Chicago Booth this week, and witnessed a total massacre of the first 4 teams (BTW, whom I personally thought were brilliant) by the 6 VC judges in the audience. My team presents in the next couple of weeks..I think that I now understand how a goat getting ready to be slaughtered feels..

Ok, so these guys know to ask insightful questions, that no one else had thought of and without pause or mercy. At the same time, it seems like there are some common themes that unite all of them. As part of a team that made its way into the 2nd phase of the New Venture Challenge, I sat in the first round of presentations. 4 teams comprising some extremely talented people presented their ideas for a venture and were promptly ripped into shreds by the 6 or so VCs present in the audience. Although everything was in good taste and the teams understood the points that the VC made, it was still an enlightening experience..

Some sample questions raised by the judges..


W - LOUD! What does the company do? (after the presentation that lasted about 20 minutes..!!) J - Can you raise more money and do it faster?
D - You are requiring 48 M in input money and will take 8 years to return 2M. This is too long.
L - What are the pain points that this service is addressing?
A - You need a lot of people running the show, call centers etc. But the cost you estimate is quite low. Are you confident about this?
W - You are showing EBITDA of 50% or more - is this realistic? You are not estimating the costs correctly.
S T - Talk about the networks you have, you need specific information on who these contacts are and what is the market size
S K - Your salaries are very low ! No one will want to work for you at those salaries..
S K: Specifics, specifics, specifics. Get down into the weeds and tell us how things are going to work.
B: This is a magical company as there is no cost associated with having an office, advertising, marketing etc.
W: LOUD. Technology is not present and "imaginary" proprietary software. Changing behavior is going to be very hard. You are just "Waving your hand on the technology"!!
J: What is the lifetime value to the customer?
B: What is your unique selling proposition?
A: How many suppliers are you talking about?

hmm..this is going to be an interesting quarter..

Chicago Booth

The First Quarter is officially over now! YAY!!! Where did the time go! Anyhow, Financial Accounting and Business Statistics were both interesting and were taught by competent professors. Alan Bester is by far the best professor I have had and I feel privileged to have learnt Stats from him.

On the whole, Chicago Booth has been fun. Even with all my flying into Chicago every weekend, the friends I have made and the calibre of professors in the school have helped me get rid of any misgivings I might have had at the beginning of the course. Overall, it is an excellent school!

The New Venture Competition kicks off in Jan 2009 and I am looking forward to taking part - lets see what happens :)

Technology Consulting

As a consultant working for a technology company, I deal with interesting business problems all the time. Most of the time, the solution is not out of the box. Let me give you a few examples; What do you do to determine the technology needs of a company that is growing at 30% annually, how should they prioritize their spend?

How do we attack the problem of information consumers not being able to make sense of vast sense of data being fed to them? What solution do you implement, and how is it going to be better?

What can we do to deal with an errant software vendor? Can we manage them differently and if so, what processes do we need to put in place to ensure they don't miss more deadlines, or atleast predict their actual delivery timelines with some reasonable degree of accuracy ?

Our clients range from the pharma industry to the insurance industry, banks to manufacturers of automobiles. In this blog, I will try to talk about some of the business problems and their solutions without mentioning specific names or exact problems.