Three books I find useful in launching into new markets
3 Great Books
I am not a big reader of sales, marketing and business books. However, whenever I am working with someone who is interested in further developing their ability to sell and market, I find myself recommending the same three books.
The first is Rob Jolles book, Customer Centered Selling. Rob is a veteran salesman and sales trainer from Xerox. For me, there were two world class Silicon Valley companies in the Eighties: the great engineers came from HP and the great salesmen came from Xerox. While both have lost their shine in recent years, they were in their time factories for their respective talents. Rob concisely communicates sales as a science and a process for large complex consultative sales. Rob also does a great job of explaining why salesmen (real salesmen, not order takers) are a good thing for society.
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The Chinese Market fallacy in business planning….
Most every guide to a business planning process includes a section that describes the need for identifying the potential market size, sometimes called the total addressable market. The exercise usually starts with some governmental or Gartner-like information source to identify a global or regional segment. The planner is then instructed to make some assumptions that better restricts the addressable market, but typically the remaining market is still huge. Based on this information, inexperienced (or deceiving) business champions will compare their first few years cost against some percentage of this huge market as justification for proceeding with the business plan which I believe results in the common market penetration mistake I call “Chinese Marketing”. This is a term that I intend to push into the business vocabulary: “Chinese Marketing” is the fallacy that you can create a successful business based on getting a very small percentage of a huge market. Read more…
When you have a great idea, but the world will not come to you…
I was recently invited as a guest speaker and panelists for an entrepreneur development group. My fellow panelist, Charles Leadbeater (a recognized proponent of innovation and Web2.0 thinking) started with a call for more collaboration and cited amazing successes and fantastic creativity. While I agreed with his thesis, I could not help but recount the many initial business (tech initiatives) failures caused by an improper reliance on collaborators for their sales channel. Charles was right to highlight a new paradigm of collaboration as a significant opportunity for small entrepreneurs, but for the sake of the technical entrepreneurs in the audience, I found myself taking a contrary position and highlighting the limitations of collaboration.
- Author Charles Leadbeater
Engineers have a serious defect– they cannot resist solving a problem. The reason I call this a defect is that it keeps getting in the way of sensible business. For the most naive, they normally worry about things like manufacturing, on-line order taking systems, and future developments, but dismiss the challenges of path to market by either assuming customers will come on their own (once they recognize the brilliance) or they assume that they will outsource sales through resellers. The truth is that many people have very successful businesses using resellers and OEM relationships, but this will not be possible at the same time as you are just entering the market. (See earlier, related blog post “Production vs Prototype Sales“). I wish it were possible to simply outsource initial sales the same way you can outsource initial manufacturing– in truth, I am a “recovering engineer” (an addictive and life long disease) and would likely have stayed a happy engineer if it were not for this unfortunate truth.
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September 29th, 2009
Matt
Definition of Experience: A rich history of the many horrible mistakes one never wants to repeat
I touched on this subject in “Lawyer Rant No. 1” — Get paid for the risks you know you are better able to manage or at least are perceived to be better able to manage. Let’s break this down a bit more and see what insights it brings.
In a market-based economy we sell products and services to willing buyers. These could be as simple as an apple by a street vendor or as complex as an enterprise-wide information system. But in its elemental form, I suggest that you can only sell a combination of five basic things:
- Raw materials such as iron and oil mineral rights
- Labor
- Expertise as in intellectual property and knowledge transfer
- Economies of scale
- Management of risk.
The first three are obvious and the fourth, as it applies to the first three, is also obvious. Let’s consider the last two in their pure forms. Read more…
Services vs Product Business Models
It always struck me that there are very few companies that are equally as strong in products as they are in services. This is in sharp contrast to the number of companies that have moved from their core to embrace the other side. Companies like Cap Gemini quickly abandoned the idea of becoming a product company and we see HP struggle with services by now trying to jump start it through the acquisition of EDS. IBM might be held as a contra-example with both products and services, but I would submit that they have switched from being a product company to the current service company that they are today (e.g., selling the laptop division to Lenovo and printer division to Lexmark)
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A few steps before you write your next business plan
The other day a friend asked me if I had any business plan templates. Of course I have many plans that could be used as a template and there some good websites with information on how to build a business plan. Instead, however, I invited him for a coffee to learn more about why he wanted to make a plan. It turns out that my friend was entertaining the idea of starting a business. Like many good entrepreneurs, he had several good ideas, he was not sure how they fit together, he was excited, and he was scared. He had a potential partner, also good, and most of his business ideas could be done without external investment– perfect.
I then outlined a template to help form his ideas that looked like this for each idea:
- What is the business need in the market that needs solving?
- How are you (and your company) uniquely qualified to solve this?
- How will you identify such customers and how will you make contact with them? Read more…
It is a tragedy when smart people create nothing more than smart data.
Years ago I worked for Honeywell making sensors used in steel production. Our premium systems were the market leader in high speed, precise measurements. My role at the time was manager of the “cost effective” product line. One day, while visiting a customer using our equipment, I made a discovery: Our worst sensor was already five times faster than they needed! Their control systems connected to the sensors were so slow that any increase in data acquisition was just a waste. Yes, at the same time, our ‘most educated’ customers were pushing us to build faster sensors, our competitors were trying to build sensors as fast as ours, and we were proudly announcing our latest speed triumphs each year. How could this be? Read more…
Barry Schwarz at TED talks
“Not just is it profitable, but is it right?” -Obama
I just listened to Psychologist Barry Schwartz give a lecture on “virtue” at TED Talks. If you have not heard of TEDTalks, they are Technology, Education, and Design talks, a free-form gathering and speaking by some truly intelligent people. I highly recommend it. In this season’s speakers, Barry was a standout. I also found his talk on moral intelligence and virtue particularly relevant to sales.
First off, we need to eliminate the “pusher” and “manipulator” salesmen as not “real” salesmen because the value of a true salesmen is that they connect need with ability to supply. A true salesman knows that discovery is key: “You probably did know we exist (or could do this) but….” While this is a necessary part of selling, it is only the first, smallest, step. The real bulk of the work begins when the salesman has identified a customer with a need his company can fulfill. After discovery, the salesman identifies an entire list of reasons why the customer will not make the obvious business engagement; They can’t decide; the order process is too complex; already committed to another (likely less good) supplier: we don’t trust your company; we are scared and can’t decide… There are also supplier side barriers that come into play: We don’t know that they will pay; they want special treatment; we sold to them before and had a bad experience…. Read more…
Numbered because I suspect there will be more….
When we enter into negotiations with our customer, we are distributing risk based on who perceives the lowest risk and who can best manage, absorb, or assess the risk. If your company is unable to manage any type of risk better than your customer, then you are in trouble. If you are doing complex selling, then you are trying to get paid for risks that you can handle more efficiently than your customer– that is the essence of large, complex, services (and often product) business. Unfortunately, there are a number of techniques corporate lawyers use to sabotage good, healthy risk taking: Read more…
“What doesn’t kill us makes us stronger.” -Friedrich Nietzsche
My corollary, similar to that famous quote is, “Risk of being killed can have positive consequences”.
Years ago when I was Director of Engineering for a division of Honeywell, I was curiously following a long-standing problem facing my colleague, Tom Armfield. Tom was a seasoned manager who had just been promoted from field service manager to Director of Manufacturing. (See “Production vs Prototype Sales” for more on Tom.) The problem was with the work quality of the team that manufactured the electrical control cabinets was terrible and it was affecting the entire company. Read more…