Realigning your organization for today's economic climate
Take a look at these two lists, first the one on What's OUT in terms of key vectors driving the goals and design of businesses throughout the naughty nineties, then the What's IN list now, describing the key parameters in place today:
WHAT'S OUT
WHAT'S IN
Sailing with the wind
Sailing into the wind
Time is the enemy
Waste is the enemy
First mover advantage
First prover advantage
Growth at all costs
Cash-flow positive at all costs
Early markets and tornadoes
Bowling alleys and main street
Catching the next wave
Fixing the leaky pipe
Horizontal markets (breadth)
Vertical markets (depth)
Vendor-centric messaging
Customer-centric messaging
Transaction-oriented selling
1:1 based selling
If your company, along with virtually every other funded startup and IPO graduate of the past seven years, was designed for the conditions on the left in the table above, you will probably have drawn some conclusions by now about the reasons why your organization is struggling to adapt to the new conditions on the right.
Furthermore, since we are all older and wiser after the 2007 recession, I think most people have finally convinced themselves that the new conditions are not about to go away, so we need to adapt our organizations to the new rules. Or go back to 2001. Remember that?
Well, if everyone in the software business was so convinced of this new reality, I would have expected to see more enterprise software and systems companies actually reinvent themselves, not just by surface shuffling of functions and new messaging statements, but by reexamining the most critical question of all - and one that businesses in more mature industries are accustomed to posing periodically, to keep themselves focused on the right activities and priorities - which is, "What business are we really in?" In the next few paragraphs, I would like to offer a simple and quick approach that any management team can use to jumpstart the process of re-energizing their business. This can be especially valuable to those high-tech companies in which management and employees may have lost the sense of what noble cause they are fighting for.
A word or two to describe what I mean by "Fixing the Leaky Pipe"
OK, if we agree that catching the next wave and its corollary, vendor-centric messaging, are on the hot list of what's Out, whereas fixing the leaky pipe and customer-centric messaging are on the list of What's In, let me first explain what 'leaky pipe' we are supposed to try to fix, and what this has to do with our products and services.
This folksy term is merely a down-to-earth way of calling your customer's attention to the holes in their operational processes that are leaking money, as - in the case of a manufacturer, for example - they move through design, manufacturing, distribution, service & warranty phases. For instance, there might be individual leaks in sub-optimal product designs, excess component inventory, scrapped work, engineering changes, order cancellations, returned products, repeat service calls, or customer attrition.
Our rationale for addressing this set of concerns is simple: whereas in an up-economy every company tends to focus more on increasing competitive advantage, market share, and revenues, thus often neglecting to see how wasteful their internal processes are; in a down-economy, companies start to look inside for ways to cut waste and thus costs, and they are less willing to invest in projects aimed at new market opportunities. Learn how to create more leads. Thus, our advice to virtually every tech company that is trying to establish its new business, or sustain continued growth, is to focus on finding the chronic leaks in enterprise customers' processes that their products and services (can) help to fix.
Answering the "What Business Are We Really In?" question
Taking this further, it makes logical sense, if you want to connect with your target customers, to align the goals of your business with their biggest concerns. Thus, my simple proposition is this: instead of continuing to describe your business in terms of the products you make or the services you deliver, you reframe it in terms of the '$50M' business problems that your offerings help corporations to solve.
Thus, if your business is currently defined in these terms, "we make a,b,c software products for large enterprises in x,y,z markets" (and statements like these generally make software companies sound completely undifferentiated), just do the following experiment: redefine your business in terms like these: "We are in the business of solving $50M+ operational problems in d,e,f business processes for mid-sized enterprises in these main markets." Of course, you need to get specific about the actual leaks that your technology is most suited to addressing, and about which companies have benefited. If you encourage discussions throughout your organization based on a close look at your existing base of customers, in most cases you will rapidly be able to construct a sentence or two that say more about the actual value you bring to the world, than is apparent in your current, more product-centric messaging.
Besides being able to use this new view of the essential purpose of your business to reassess (a) what your category really should be called (i.e., adopting more of a business application name than a technology-focused name), and (b) what your best market penetration strategy should be going forward, you will start to see your existing customer base and your current pipeline in a new light. And, for organizations that have come through three, six, or as many as ten RIFs during the past thirty months or so and may be in a somewhat dejected state, you will quickly see a positive effect, as people in every functional area, from developers to service consultants, start to feel a new energy about the company's mission.
What if you are not in a powerful position to drive this debate?
I believe that anyone in the organization can spark the necessary debate. If you are a front-line employee, just use every meeting opportunity to ask "what $50M+ corporate problems do our products and services help to solve?" If you are a middle manager, do the same. Better still, if you have frequent contact with customers and prospects, take every opportunity to ask them what major leaky pipe problems they are addressing, and even which of these they see your products addressing effectively. Then you can bring their testimonials into the discussion with your colleagues.
Alternatively, if you are currently between jobs and interviewing with new companies, one of the first due-diligence questions I suggest you should ask your interviewer might be "what major leaks in customer processes does your company's technology help to solve?" (by-the-way, depending on the answer you get, you may decide that this company is too unrealistic to know what business value it could be delivering, and thus has less chances of succeeding - or you may decide that this is an opportunity for you to show them how to look at their business in a new way).
What to do if you can't find any major leaks to fix?
Ah, then, if this is really true and you have turned up every possible rock without success, you may be forced to conclude that your business is not viable in today's unforgiving corporate climate. At least, you could console yourself that it's better to know this now than to keep on investing energy and resources in something that may only serve the purpose of being a feature in someone else's critical problem-solving offering.
Let me know what you think.
