Getting Salesman to Write Reports

26.01.2015 No comments

Will the real salesperson please stand up….Forecast

I have managed different types of professionals, but I can attest that no group is harder to influence than Salesperson.  A typical interraction might be:

  1. On Monday, “Joe, I need your forecast by Thursday End of Business”.  His response “Ok, I’ll do what I can” (Result: No report)
  2. On Friday, “Joe, you promised that forecast yesterday”.  His response “sorry Matt, I’ll get it by the end of today”  (Result: No report)
  3. On the next Monday 9am, “Joe, I have a board meeting at 2pm, I need that forecast by noon”.  His response “sorry Matt, I’ll get it right away” (Result: partial report by 12:45)

In fact, this chain of events is so predictable that I started to use this as an indication of future sales success.  Let’s look at each step in detail and I will try to explain this from the Salesperson’s perspective/nature and explain my insight.

Read more…

D-talk: What Engineers Must Unlearn to Sell

02.07.2014 No comments

With all the technology people who have ambitions of joining the startup world, I thought I might talk about why technical people struggle so hard at learning the critical sales roles. The interest in this D-Labs sponsored talk was far more than I expected.

Outsourcing Startup Sales

19.04.2014 No comments

Don’t do itbaby

Some years ago, I wrote about the challenges of finding others to do your sales for you (see https://www.telekta.com/blog/2009/10/practical-sales-outsourcing)This past year, I have found myself more involved with startups and identified an additional insight that all experienced startup professionals agree on, but most technology-based new startup founders miss.

Startups might be able to outsource engineering and operations (not without difficulty), but they should not even think of outsourcing initial sales for at least three reason:  Read more…

What is your Asset?

17.03.2014 No comments

A better way to value technology license product company value

In the famous book Rich Dad Poor Dad, Robert Kiyosaki redefined the accounting term “asset” to mean something you own that generates money. Using his definition, the house you live in may be an asset for accountants, but an expense according to him (and now me). I found this redefinition very useful in my personal life and then soon found myself trying to redefine asset as I looked at evaluating company value for purposes of company merger or payout.

Using a Kawasaki-esque, practical approach, we see that the the Intellectual Property (IP or source code) is only valuable if and when people buy licenses. Moreover, existing license sales are only valuable if the licenses can be sold at a profit and the number of customers is only valuable if they are receptive to buy more licenses or support.  Given this, how can we measure the value of the asset in a meaningful way?

I have never been impressed with any company evaluation equation in the technology sector nor have I found accounting standards good arbiters of success.  However, in the case of mature mode, enterprise class software, I believe there is a simple measurement of one single value that defines the value of the asset in the same intuitive and useful way as Kawasaki.  That single measurement:  Total value of list license price under an active maintenance contract (LLPUAC) is directly proportional to company value and that two different companies (in the same sector) could be directly compared by looking at the ratios of their LLPUAC values to determine the ratio of their relative company value.  I believe that this one single measurement encompass nearly everything likely to be important about a company (or product) value in this category.  This means that lines of code, annual revenue, human capital, brand equity, cost of sales, and other common measures are irrelevant once you have LLPUAC.  My reasoning: Read more…

Discovery Phase Interviews

05.02.2014 No comments

How-to Guide (suitable when your offering is big, complex, and expensive)

AskI love doing discovery phase interviews and have always been particularly good at them.  They reward those that think quick on their feet and have a broad education and business knowledge.  For me it is improvisational theater meets MBA case study review– great fun.  In a recent startup incubator program, I made an attempt to describe the process I use so that others could try on their own….

Step one of any product launch, business expansion initiative, or startup is best described by Steve Blank as “Discovery”.: “validating whether they are solving a meaningful problem and whether anybody would hypothetically be interested in their solution”  Technical people, especially, struggle with this phase (partially because they think they already know the answer and partially because they are often poor collaborative listeners) Read more…

Client Message And Your Message Collision

18.10.2011 No comments

When selling services to other companies, you need to re-consider your key website messages.

Recently I came across a »corner case« of web site design.  Two clients were providing services to other businesses (B2B), but in entirely different industries.  Both struggled to create websites and key clients gave negative indications.  The problem and the solution for both was the same….

Let’s imagine a simple outsourcing relationship to better understand the problem.  Outsourcing is likely to be promoted based on a critical knowledge, price, location, language, or other advantage that the supplier (“SmallCorp”) has over their client’s (“BigCorp”) internal resources.  However, BigCorp is selling to their customer’s with a message that they are uniquely qualified to solve a specific problem.  The SmallCorp’s message, if ever exposed, is completely incompatible with their cleint (BigCorp’s) message.  In an age where nearly anyone is potentially exposed to end customer-facing communications, it is high risk that an outsourced person could expose his name to an end client.  Once exposed, social networks (linkedin, facebook,etc) quickly expose SmallCorp – including  which company this person works for and what “priorities” his company has.  The result—client message collision.

The solution, is to… Read more…

Managing Salesmen

11.01.2011 Comments off

With salesmen, you pay for results through commission.  What is there to manage?

I made the transition to management while an engineer.  At that same time, my main outside activity, sailboat racing, also made a transition from racing crew with a small role to starting my boat and taking on captain responsibilities.  With both, I made lots of mistakes.  Later, I started to educate myself in less damaging ways through reading and classes.  One surprise, was that the problems I was facing on the job, were nearly the same that I was facing with my unpaid racing crew, and even more remarkable was that the management books would often describe the techniques that I discovered through painful trial and error.  Engineers and volunteer sailors are difficult groups of people to manage effectively, but far easier, in my experience, than managing salesmen.

We pay salesmen almost exclusively based on results (not effort), yet they do not control markets, don’t make the products they sell, and have few control points within the customer.   Read more…

Scaling down multi-company corproate structures

21.11.2010 No comments

Scaling Down Multi-Company Corporate Structures

I have noticed a relatively new trend within smaller companies in that they seem to be more willing to experiment with ever more complex ownership and legal structures.  I imagine that this is partly a fashion thing associated with the recent “Decade of the Banker”.  Another influence is the European tax optimization tradition that encourages more complex legal and cross boarder structures, and finally Silicon Valley stock options and shared ownership have been a model for how to motivate the latest generation technical talent.  The consequences of such complexity are often not felt until many years later.

Read more…

Transitioning Corporate Organizations

20.08.2010 No comments

Why good organizations don’t guarantee success, and sub optimal organizations can still deliver….

In a previous post, I discussed the three basic organization structures for most companies, but I did not discuss how to change to a more optimal structure.  The bad news, is that the change is almost always more damaging than the improvement of a more optimal organization.

Almost every study on reorganization suggests that there is an efficiency loss for at least six month, and often well more than a year.  While you can evaluate how the transition is progressing relatively quickly, you cannot determine if the overall new structure is indeed superior to the former for more than a year.   Another note is that the reduced efficiency starts the moment that rumors of the change emerge and that the 6 month period needed for stabilization only starts when the org changes stop.  In far too many companies, managers hope to minimize the transition by announcing the plan well in advance.  They also hope to improve the results by making a “mid course correction”.  Both are hugely damaging since they extend the inefficiency window. As a result, a reorganization is a major commitment for several years to come and managers need to take into consideration their ability to provide this critical settling period before they even open the discussion of change.

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The High Cost of Selling Software

04.07.2010 No comments

The cost of getting software into the hands of customers is typically 2 to 4 times more than the cost of developing the software…

During the current economic downturn, governments have looked to stimulate the economy, and have shown particular emphasis on the small businesses that are seen as the engine for creating jobs.  One common stimulus has been to promote new software and other technology R&D efforts that create Intellectual Property (IP).  From my way of thinking, they have it wrong in their stimulus target.  Many small businesses are able to create software IP through “sweat equity”, that is, labor that not directly compensated.  The cost of licenses and hardware need to create the software is usually very small and the typical small business entrepreneurs invest their time while remaining in their home offices close to family and friends.

Unfortunately, after making the sacrifice required to create the product, many of these entrepreneurs then face the very sad fact that this software development effort is usually only a quarter of the total cost of getting the product to the final consumer.  (Don’t believe me?  Look at annual reports of software companies and software divisions of publicly traded companies to see where their costs are: R&D is typically 15-35% of total revenue.)  Read more…