On Reflexion - what we've been thinking...

The Jungle, the Winding Road, and the Highway...

An experienced VC once described the journey that he saw B2B companies going through as the jungle, the winding road, and the highway. 

During the initial “jungle” phase, whilst the company may have successfully sold their initial product offering or service to early adopter customers, every sale still feels hard-won.  Like an explorer deep in the jungle, progress involves energetically hacking away at the surrounding undergrowth, but the best way forward is not yet clear.  Inevitably, much effort is wasted.  Many start-ups – maybe a majority – never get beyond this stage, but those that do find themselves on the winding road...

On the “winding road”, patterns are starting to emerge and a way forward is becoming visible, even if the route is not always completely signposted and still requires widening and straightening. Whilst the general direction is clearer, work still has to be done to ensure that the company can move faster in its intended direction.  Companies often broaden their offerings and recruit significant sales forces and or partner channels in the hope that they will speed the organisation’s progress.  Many established companies find themselves bogged down by uneven or unpredictable conditions, but a few manage to make it to the final stage...

By the time these companies finally reach the “highway”, their direction is clear – to the point of being difficult to change.  Processes have become highly standardised and - in theory - very scalable and repeatable.  As long as conditions remain constant, rapid progress can be made.  But it’s hard for these organisations to divert from their route, even if the environment changes.  Companies that are optimised for the highway can find it challenging to explore the winding roads or jungles that could represent radically new opportunities.

I found his simple metaphor tremendously powerful.  As he pointed out, very few founders (with the probable exception of Gates, Dell and Ellison) have managed to successfully steer their companies through these transitions. But it’s not just CEOs that need to adapt – it’s the whole organisation, and I believe that this provides an explanation for why so many apparently promising companies get stuck in either the jungle or the winding road, and why companies who appear to be masters of the highway end up running out of road when markets or technologies move.

Managing to evolve...

The attitudes, skills and experience needed for employees to make the right contributions (and I’m not restricting my remarks to executive leadership here) can vary significantly from one stage to the next. Factors like the ability to work with or without structure or supervision, tolerance for ambiguity, willingness to change and openness to innovation all play their role. Successful companies manage to establish the appropriate culture and bring in the right people at each stage along the way, but one thing is clear – they manage to evolve.

For example, I’ve seen many “winding road” companies accelerate their progress as a result of bringing in a suitably experienced chief operating officer (COO) or equivalent who can complement an entrepreneurial founder by adding the appropriate degree of discipline, focus and alignment. But I’m sure that you’ve also seen many hiring disasters when jungle or winding road companies were tempted to bring in “heavy-hitter” sales leaders from a leading highway-style company who turn out to be completely incapable of delivering results without the support of the infrastructure and brand awareness they have become so accustomed to.

Getting the right people on board... 

Having the “right” people on board prior to each transition seems to be vital, as does finding ways of helping existing employees grow with the company. The experience that comes from coping with change often proves to be critical. When adding new talent, the evidence suggests that companies should strive to bring in key people who have successfully (and recently) experienced the transition from the current stage to the next.

The journey isn’t over when the company finds itself on the highway, because as we’ve observed, companies that are optimised for this mode can find it difficult to travel off the beaten track. As Clayton Christensen pointed out in the Innovator’s Dilemma, organisations at this level of maturity can find it hard to exploit radical new opportunities. Adaption - and ultimately, survival - may depend on creating autonomous business units populated by people with a jungle or winding road mindset.

Moving ahead... 

So – where is your organisation? Hacking through the jungle, jogging along the winding road, or driving down the highway? And – assuming that you have ambitions to accelerate your progress or move to the next stage, what steps are you taking to ensure that your team is fit for the journey?

5 Key Strategies for 2010...

The past year has proved challenging for some sales and marketing organisations, but others have seized the opportunity to rethink their plans, out-execute their competitors and win market share.  Our own observations, backed up by the latest research from the likes of McKinsey, Stanford, the HBR, CSO Insights and others, have identified 5 strategies that seem to be particularly relevant as we enter 2010. 

These strategies are already enabling top-performing teams to eliminate wasted effort, increase revenue predictability, and improve the return on their sales and marketing investments.  We're pleased to share them with you here, in the hope they might prove relevant to your own situation:

	IDENTIFY Your Most Valuable Prospects The most successful organisations have made a point of systematically identifying the common characteristics of their most promising prospects, and have focused their sales and marketing efforts on targeting them. Learn more about identifying your most promising prospects here...
	ADDRESS Their Most Important Issues Once you have identified your most valuable prospects, you can turn your attention to their most important issues - the ones that they cannot afford not to deal with - and show how your capabilities can address them. Learn more about understanding your prospects' most important issues here...
	FACILITATE Your Prospects’ Buying Process The top performers have been able to sell and market smarter.  They understand how and why their prospects choose to buy, and focus their sales and marketing activities on facilitating their prospects’ buying process. Learn more about facilitating your prospects' buying process here...
	INSIST On Evidence-Based Pipeline Management This past year, fewer than 50% of forecasted deals actually closed on time and at the expected value.  But organisations that implemented an evidence-based approach to pipeline management did significantly better than their peers. Learn more about evidence-based pipeline management here...
	MOTIVATE and Reward Appropriate Behaviour The top-performing organisations have been able to implement thoughtful incentive schemes that align all employees around common goals and motivate and reward appropriate behaviour throughout the workforce. Learn more about motivating and rewarding appropriate behaviour here...

 

How do these strategies align with your own priorities for 2010?  We'd love to hear from you.  By the way, we've captured some of the key implications in a 15-point checklist which you can download here.

Let me know how you get along...

McKinsey on Surviving the Downturn

One of my little luxuries is a McKinsey Quarterly subscription. I keep it up even during challenging times because it forces me to reflect on some of the key issues that face us today. 

They recently published an excellent series of articles on surviving the downturn.  They won't thank me (and I haven't got the room) to publish their advice in its entirety - and I recommend you take out your own subscription.

I found the following recommendations particularly profound, though, and I'd like to share them with you:

• In hard times, save the core at the expense of the periphery. When times improve, recapture the periphery if it is still worthwhile.
• Any stable source of good profits - any competitive advantage - attracts overhead, clutter, and cross-subsidies in good times.  You can survive this kind of waste in such times. In hard times, you can’t and must cut it.
• If hard times have a good side, it’s the pressure to cut expenses and find new efficiencies. Cuts and changes that raised interpersonal hackles in good times can be made in hard ones.
• Use hard times to concentrate on and strengthen your competitive advantage. If you are confused about this concept, hard times will clarify it. Competitive advantage has two branches, both growing from the same root. You have a competitive advantage when you can take business away from another company at a profit and when your cash costs of doing business are low enough that you can survive in hard times.
• Take advantage of hard times to buy the assets of distressed competitors at bargain basement prices. The best assets are competitive advantages unwisely encumbered with debt and clutter.
• In hard times, many suppliers are willing to renegotiate terms. Don’t be shy.
• In hard times, your buyers will want better terms. They might settle for rapid, reliable payments.
  

Last, but perhaps most significant, was the following:

• Focus on the employees and communities you will keep through the hard times. Good relations with people you have retained and helped will be repaid many times over when the good times return.

We all need to be prepared to make tough decisions and bear the consequences.  But we should never forget our friends.

Four Disruptors that are Changing the Software Business

For any of you who are not yet familiar with it, Selling Power is an outstanding online resource for B2B sales and marketing professionals.

In a recent article, Yvonne Genovese of Gartner Group is quoted a claiming that the entire software industry is on the brink of a major transformation, driven by four highly disruptive trends, which she identified as:

1. The Rise of New Technologies and Convergence of Existing Technologies, driven by a new class of mashup-driven applications
   
2. A Change in Software User and Support Demographics, driven by the need to understand how the individualisation of work will affect businesses, critical processes, innovation, and inter-enterprise collaboration
3. Revolutionary Changes in Software and How It Is Consumed, driven by application environments that will become more granular, inclusive, and fluid to enable rapid composition, integration, orchestration, and reuse
4. The Continuing Rise of Software Megavendors and Large Ecosystems, driven by a handful of vendors seeking to dominate enterprise architecture and a focus on integration within multivendor portfolios

Any player in the software space is going to have to take account of these dynamic forces.  We're convinced that the next few years are going to be a period in which major  changes in market share are going to be won or lost.

An increasing number of our transformation projects revolve around  helping clients prepare for the realities of this new world. Contact us here to start the dialogue.

Finally, to read the complete article, you'll need to register - but it's free and it's worth it!