11 November 2007

Partnership Myths – part 1

Most of my commentary here is based on my experience in the software sector. It perhaps can be extended to other sub-sectors in the IT world but probably not any further. However, in the software sector, I have seen the patterns repeat often enough to convince myself these are not accidents.

If you have ever led a software company or even worked in one, you definitely are aware of your Partner/Alliance organization. I have not come across too many companies where this department has been a very effective department. When I was a senior manager, most of the time, these were huge drains of time in attending meetings, making presentations and all that – and very rarely a lot of bottomline revenue to show for it.

Having said that, there are a handful of small companies I am told have made this succeed and I had the pleasure of setting of one very successful partnership myself (but that’s all 😉 )

Here are my Top 10 observations (in 2 parts):

1. Most partnerships are between “unequals” : The basic reason why software/service companies partner is to get access to each other’s customers or technology. Usually, the higher priority need is access to market. Therefore, the smaller partner is more interested in getting the partnership going. The bigger guy has little interest unless access to this technology opens up a large market for them. (which is rarely the case). When the bigger partner is a service company, they have even lesser interest to tie themselves to only one technology vendor. It is in their revenue interest to partner with any number of technology competitors – hoping they can win in either situation. More often than not, the smaller company keeps trying hard and eventually loses interest (not totally though – they need the big partner’s logo on their website J )

2. All partnerships start with a “feel good” factor: Regardless of past experience, all new partnerships start with a lot of expectations and self-deluding visions of conquering the world. For the larger company, the deal maker senses that a great line item has been added to the portfolio for the sales people to sell to everybody. The smaller company, of course is highly elated that finally the doors to the entire world has been opened up with them. While a few do work out that way (in a very restrictive model though), after a few of those “Steering Committee” meetings, reality starts setting in reasonably quickly.

3. In a large number of cases, partnerships start because of a personal relationship at a high level: Big or small, most of the partnerships are put together because somebody high up knew somebody high up in the other company. In general, business runs that way – through networking and personal relationships. In cases of partnerships, this is even more important since the trust and faith factor is taken care of from the word get go. In my experience, some of the more successful relationships have that one common thread. There is a deep personal relationship between the two persons who put it together in the first place.

4. There are enough second guessers on any partnerships: The above point has some unintended consequences. Since two partners often are brought together because of some existing relationships at high level and some truism behind Murphy’s law about “there are as many deeply rooted beliefs as there are possibilities”, there are always other people with different opinions on the partner. Unfortunately, partnerships take a unified line of execution across multiple divisions of a company – marketing has to support with marketing materials, sales has to support by educating sales/presales and pushing the partner, development has to work on integration etc. Unless this is driven right from the top, usually there is enough passive opposition that these get slowed down. Usually a few quick wins at account level helps speed things up

5. Most partnerships are opportunistic: At the end of the day, everybody wants a free ride. An ideal scenario for the companies is “I do not have to spend too much time on you but your sales will bring me to a lot of accounts”. And if that is not happening in the next 2-3 quarters, we need to think about it. I once worked for a reasonably large size company which was known to be a very opportunistic partner. This used to be held against the company. Contrary to what most people think, I do not see why this is a great problem. My view is business is business. Companies partner for a good reason – not because they feel good about each other. As long as there is no unethical or illegal behavior, I personally do not see any problem with partnerships bring put together driven by market opportunism

(to be continued)

21 October 2007

The Internal Customer

I am sure you have encountered the concept of the “internal customer” in your organizations (especially if you are in delivery organizations). This happens when one group or team in an organization believes that they essentially serve to another group/team internally which in its turn, exist to serve to another team and so on till the last team actually serves up the real customer.

This happens when Development thinks Product Management is their customer or when Product Management thinks Sales is the customer and so on. A few weeks back I overheard a variation of the same concept in a meeting “we will completely outsource this to you – let’s agree on the budget and SLAs”.

The theory is if each team performs to its best level in delivering to the next team and the chain continues in that fashion, the real customer will get the best performance.

In reality, this is a very simplistic view at best and delinquency to the real customer at worst. The fallacy of the thought process are many. To name a couple,

• This gives rise to “buffer bloat”. Each team, in its desire to meet the agreed upon SLAs and metrics, will build in its own “safety” buffer. (also known as sandbagging). By the time these buffers are compounded across the chain, it can be scary.
• This also loses the straight line of sight to success. Which means you will find situations where the customer and organizations closer to the customer are not meeting success critieria but other organizations (usually further away from the customer) meeting their numbers and declaring success.
The best culture to grow is recognition that there is only one customer. And that is the person who pays up the money.
Nobody else is the customer. Everbody else is part of a team that delivers to that one customer. To compare with a football (soccer) team, no one player passes the ball to the player ahead of team and declare his/her job is done. Everybody has a position to play – even when they do not have the ball. But they have only one common goal to meet – no interim internal goals.
To mix the metaphor a little, to compare with the American football team, everybody plays on the same game plan. No doubt there is going to be one quarterback (I like to think of that as the sales organization). But there are running backs, tight ends, punters, wide receivers each playing their own position in tandem with each other to meet exactly one goal. But nobody in the team is trying to “satisfy” some other player in the team. Nobody is measured on any other term than the one score that everybody else is measured on.
In summary, dissuade people from thinking they serve some internal teams.
Establish a clear line of sight for each team to the one real customer – one goal.
Align metrics such that no one of the teams can be successful if they whole chain is not successful.
Would like to hear about your experiences…

16 September 2007

Not all functions are equally difficult

It has been almost a year and half since I jotted down my learnings. Clearly, my learnings have not stopped. What had stopped was my discipline of putting it to pen and paper after reflecting on them. I also realized that in the meanwhile, Google had changed some of the setups of Blogger – due to which I was not getting notifications for any of the comments. I cleared and published all of them today.

In the last 15 years, I was fortunate enough to have run all the 4 critical functions of a software company – Global Engineering (R&D), Global Consulting (Professional Services), Global Marketing and Global Sales. As you can imagine, there are lots of learnings that I had to go thru. I am sure some of you have gone thru this too. It would be great to hear from you about what you have learnt. I also want to point out that I did not have the pleasure (yet) of running any of the other organizations like HR, Finance, Legal etc. (I sure hope to run HR someday)

Some of my observations:

1. Everybody thinks they have the short end of the stick: R&D always felt that sales sold without understanding what is there in the product and what is not. And now they have to slog it out to meet completely unfair deadlines. In fact R&D’s opinion about sales personnel has not been too different in any of the software organizations that I have seen (worked or was on the board or just had good visibility into).

Consulting, on their part, always thought that they were stuck between the fire and the frying pan. Sales set them up with all sorts of expectations and R&D takes their own sweet time to deliver anything – needless to say it is going to be buggy. And now they have to face the music in front of their customers.

For sales, it was they never got a good healthy qualified lead list and in any case, they never figured out what they heck R&D really does for a living. Sure enough the competitors seem to be developing much better products than us.

Marketing groups were a little more interesting. Most of the complaints I heard revolved around budgets than anything else.

2. I do believe some things are more difficult than others: I am sure you realize that nobody has a cake walk – everybody has a tough job to do given that the market dynamics and customer expectations keep getting tougher and tougher. But allow me not to shy away from speaking my mind – based purely on my experience.

Of all the jobs, I think the sales person has the toughest one. There are two metrics I use to judge the toughness of a job – how measurable is the success of a job and how much can a person control the variables to make the job a success. I absolutely am convinced that sales has the tightest measure – pure dollar numbers – it is totally in black and white. Sure R&D has to deliver to deadlines, Consulting has to deliver to customer sat, marketing has to deliver to pipeline, branding etc but if you think a little more carefully – and I mean this without any disrespect to any profession – it is possible to cut some corners to meet a deadline, it is possible to smooth out some satisfaction issues with personal relationships, it is difficult to nail down exact pipeline quality / branding ROI etc. Not to say there are not established measure for this – but nothing compares to the exactness of the green dollars either being there or not.
As a double bind, sales has the least control over the variables. A salesperson has to do with parameters which are mostly external – prospect’s budget, prospect’s political alignment, prospect’s timeline, sense of urgency etc. etc. The best sales person of course tries to influence these but, at the end of the day, these are external variables. Marketing has a similar issue too (see below).

3. Marketing is something else: Of all the jobs, marketing is the most amorphous. It is very difficult to nail down a straight line of sight from what you do in marketing today and what you actually get. The lead time of doing something in marketing (by the way – this is not true in the consumer side of the world – I am talking about enterprise software only) – be it branding, be it a new message, be it a new segmentation strategy – and actually getting the results from such is so high (typically a year and a half) that most people (notably CEOs) lose patience on it. This makes the marketing job somewhat easy (difficult to pin down what is wrong with one is doing) as well as difficult (you always have to fight your point without results).

BTW, somebody once threw me this data that an average CMO lasts for a year and a half. I am not sure how true it is – but if it is, I completely understand why.

In short, my respect for sales people is the highest. So much so, that I always return all telemarketing calls and email marketing (not the spams :-)). I tell them that there is no chance of doing business. Having been on the other side, I understand the value of being at least told a polite “No”.

Would love to hear from you…