21 March 2008

Taking software downmarket

If any one of you have run software companies, you probably have faced this problem at least once in your life. You have a software product that is very successful with the large customers (higher end of the market). But taking it down market – while sounding reasonably simple (after all, it solved more complex problems – right?), was never successful.

And you probably have heard the same “reasons/excuses” – mid-market customers have the same problems as the large customers… the software is too complex / costly for smaller customers, implementation takes too much time etc etc.

And you have wondered why can we not “package” the software up and sell it at a reasonable price point for the lower end market with very quick implementations. Well, you have company, at least – in me. Not once, not twice – but quite a few times, we failed in taking a software product down market. The definition of “failure” is not being able to sell quite a few copies of the “tightly packaged” products – obviously with far shorter sales cycle and implementation cycles than the larger customers. With one exception – only once in my experience, it actually worked. And it is important to understand why.

Here are my learnings:

First, technology is the easiest part. Shrink-wrapping a software – using templates, smaller set of APIs, limit setting – whichever path you take is usually simple and given a little time and money, can be easily accomplished. I need to add here that sometimes if the total cost of ownership dictates that the software be ported to a different platform (third party components, database, OS, J2EE vs .Net), that might take quite some time and money. Still not a difficult task.

Of course, naming your new product “Your Original Product LITE” or “Your Original Product EXPRESS” is the next logical step 🙂

The real challenge comes during the sales process. Your sales organization is acutely aware of the strength of the product (having sold it before to large customers or the internal reputation of the product). And that is where the difficulty starts. Invariably, the sales process goes to a point of feature-functionality war (feedback from the sales person’s contacts that the competitor’s product demo-ed very well or the prospect asked questions about certain features). It is infinitely difficult to stay within the “boundaries” if you know the product can do more and you feel pressure (real or imaginary) that the product needs to come off as the better one. Ask any sales person if you do not believe this. The sales person’s single focus at this point of time is to close the deal.

Even if the sales happened “within the boundaries”, the next challenge comes at the implementation level – maybe not that acute though. When a customer asks for another report or implement a unique business situation/case for them, the service consultant’s first, second and third instinct is to go ahead and implement it. First he/she knows it can be done. Second he/she, as a consultant, wants to come across as “knowledgeable” and “helpful” to somebody who helps pay his paycheck. At that point of time time, most are thinking of the “boundaries”. And thus the project is no more a “quick and simple” one.

So, is this winnable at all?

The only time it worked for me was in a small country in Central Europe where we we able to sell a high-end product that we had packaged down in really short sales cycles and definitely short implementation cycles. It was not about the country or the market – their problems were exactly the problems we had seen in the smaller prospects in US. The big difference was – this was done thru a different channel. We had trained this company on the product (the dumbed down version, of course) for two weeks. After that, they were free to sell and implement the product in the market. We got a cut of the license and maintenance. And it worked great!! Till this day, I am convinced, that the only reason it worked is because the sales persons and the implementors did not know any better. They had very little idea about the true power of the product or what it had done for large customers.

So, faced with requests for more features, they figured out how to work harder to downplay the importance of those features, find alternate ways to getting the value to the customer or possibly sometimes lose deals. (I never got visibility to the deals they lost).

So, my clear learning is, taking a high end software down market is a very difficult proposition (unless you use different channels altogether). On the contrary taking a software up market is far easier (it takes time and money though). If you need to play both the markets, it is my suggestion (somewhat unintuitive to many people) that you might want to think hard about having two different products if you insist on using the same channel to sell and serve.


9 February 2008

Giant leap for mankind

This is my friend Debjyoti from Atlanta. He is one of the most fun guys I have ever come across. The true epitome of “bindas”, as Bengalis will say. You are guaranteed never to have a dull moment with him around. If you ever meet him, ask him about his experience about being a DJ and I will rest my case. Also, if you do meet him, call him “DJ” or his preferred way – “Raja”.

A die-hard Giants fan, his antics during the Super Bowl kept all of us entertained. He certainly had the last laugh as Giants stunned the Patriots.

3 February 2008

Courage in Leadership

What does it take to be a courageous leader? Courageous leaders differentiate themselves by how they take on new challenges. It does not take a lot of courage to run day to day operations. No doubt, running day to day operations is pretty challenging too. But leaders exhibit their true courage on how they deal with adverse and contentious situations. Here are the top 10 traits that I have observed in the leaders that I have considered to be truly courageous:
1. Exhibit Optimism: Courageous leaders are calm and have a “can do and will do” attitude that permeates a steely resolve in the teams.
2. Inspire and Influence: Courageous leaders focus on inspiring and influencing people by showing them the higher goals and giving them the resources to reach them instead of falling back on the command and control model. Command and control often gives quick results but the results have a short life.
3. Avoid Saying “Both”: Courageous leaders are not afraid of prioritizing. Faced with a myriad of choices, they adroitly focus the organization on a few goals.
4. Seek to Understand: Courageous leaders cut across teams and tie them together to a greater goal. The most valuable trait in building cross-organization teams is the ability to seek to understand before seeking to be understood. They understand that opposing views are necessary to make any forward progress.
5. Guts to get into the details: Courageous leaders do not consider themselves “above” certain operational details. While they do not unempower their teams, they have no difficulty into diving in whenever they need to. This rule is possibly the one that I have seen most managers fail on as they climb up the corporate ladder.
6. Willing to admit there might be a better way: Courageous leaders are willing to take risks, fail early (and cheap) and learn from them quickly. It is this openness to the idea that they might be wrong that makes them far more capable of adopting change. This trait also tends to make better listeners out of them.
7. Avoid going for the “perfect decision”: Courageous leaders understand that the trick to making the “right” decision is to make a decision quickly and then executing on it like crazy to make that the “right” decision. Nobody runs a control experiment side by side with the alternates. Get enough data and use gut rather than wait for all the data – is their usual motto.
8. Being “Right” versus being “Successful”: Faced with contentious situations, courageous leaders focus individuals and teams on what will make all of them “successful” rather than how they can be “right”. In today’s intelligence-based industries, where individuals are valued for their personal intelligence, it is often difficult for one to give up on what one believes is “right” for the greater good of being successful as a company.
9. Personal Ego: Courageous leaders focus on not aligning personal ego with a particular viewpoint. At the end of the debate, the leader thus, does not believe that he or she fell in grace by “losing” a point. This prevents him or her from arguing beyond a logical point (where making forward progress becomes more important than going more threadbare on the arguments). Conversely, they are careful to criticize viewpoints and not people.
10. Org charts: Finally, courageous leaders have scant respect for positions, roles, business cards and org charts. They realize that the right people – regardless of their position – need to be brought in to craft solutions. They understand that most problems cannot be solved by “re-drawing” boxes. So, they focus on getting teams across organizations to come together, get aligned on a common goal and give them the support and air cover to make mistakes to achieve those goals.

What have you learnt in your career as true courage in leadership?


5 January 2008

Exit Interviews

I had some interesting inputs from one of the earlier blogs about reference calls. Most of them – including people from HR department – seem to think that the standard process of checking references (asking the candidate for referees) is probably not very effective. Emboldened by that, I thought I would like to put forward one more question I had. This time it is around when an employee leaves. There is this thing called exit interview that happens. I myself had to give a couple in my life.

This has made even less sense to me than reference calls. For one thing, I doubt that an employee is very unbiased in giving opinions before leaving. Either he/she left under duress – in which case, all inputs are going to be overly negative. Or he/she found a great opportunity in which case, most likely, responses are going to be – by and large positive so as not to burn any bridges.

In any case, even if the opinions are on the mark, I would rather get inputs from people who have decided to duke it out in the company than somebody who has decided to part ways. There is nothing wrong in parting ways (you have to look after quite a few things in your life including your career, family etc) but seeking organizational inputs from such a person is less interesting to me.

There was an article I read about a month back in the Wall Street journal. I forgot the name of the company – or what they even called the process they had adopted. But the essence of the process was instead of interviewing candidates “why are you leaving?”, they regularly interview existing employees “why are you staying”. Jarring at first as a concept – it gets to the heart of what we as organizational leaders need to understand. What are the careabouts of an employee and where do stand on them?

I say jarring because I think it is easy for us to say why we are leaving (we have gone thru a thorough process in our minds and with our families before we made the decision – and also chose what will be the public explanation of the decision 🙂 ) but if somebody walked up and asked “why do you stay” – answering it would be interesting, to say the least. I am sure the usual ones “great work” “great team” will roll out of our tongues almost immediately. In reality, we do not regularly sit back and debate with ourselves “why do we stay”. Most of the days in my career, I stayed because I was too busy to even think about not staying. And it was comfortable not to keep questioning why am I doing what I am doing 🙂

But I think regular introspection lets us understand who we are and what really gets us going. Then we can really help ourselves and our managers and our organization to see how to create opportunities where we will be self-actualized. It forces us to realize that keeping ourselves motivated and challenged is more of our individual responsibility than the manager’s or the company’s.

In any case, anybody care to throw some light on what could be some upside of doing exit interview? As always, looking to learn from your experiences.


20 December 2007

80-20 rules. Intriguing thoughts

I am not going to bore you by explaining what the 80-20 rule is. Rather I was going to point out some intriguing implications of it which makes it somewhat not believable.

If you have an organization of 100 people, 20 of them are doing 80% of the work and the rest 80 are doing the rest of the work. If you do the math, on an average, any individual from the former group is 16X more productive than any individual (on an average) in the second group. (4X units done by an individual group compared to 1/4X units done by an individual in the second group).

16 times more productive???? That seems a little extreme to me. I can understand one or two individuals being very very productive compared to a couple of “bottomers” but 20 people each (on an average) being 16X more productive that 80 other people (on an average)? Sounds a little far fetched.

Carrying on with that example, let’s say you had 200 people in your organization. 40 of them are doing 80%of the work. Apply 80-20 on that 40 people (it is large enough a size). Now you have 8 people doing 64% of the work and the rest 192 doing 36% of the work. This makes your top 8 people – on an individual basis – 43X more productive than the average individual in the rest 192!! That seems even more far fetched to me.

And if you want to play with it a little more, apply 80-20 to the bottom 80% of your 200 people. Now you have 64% of your people doing only 4% of the work. So top 8 people in your 200 people organization is 256X more productive – on an individual basis – than the bottom two-thirds (64%) of your organization. Wow!! That is something.

I think the philosophy still remains the same – people contribute dissimilarly to a goal. And a larger portion of the work is done by a smaller portion of the people. But 80-20 may be extreme when it comes to people and what they produce in a team.

If you say the rule is 60-40, now you have your top players about 2.25X more productive than the rest.

And if I have my math correct, in the last two examples above, your top 16% is 2.95X more productive than the rest and the same group is about 3.375X more productive than the bottom one-third of your organization.

Honestly, intuitively, this seems to be more in line with what I have experienced. Being 4X more productive is a big number. You will do in weeks what the others are taking months to do.

So what is it? 80-20 or 60-40?


2 December 2007

Reference Calls

If you are like me, you probably get about three or four requests to take reference calls every month for somebody you know who is looking to switch jobs. Like me, you probably agree to take the call.
By and large, I have not been able to convince myself yet regarding the big value of the reference calls. A few observations before I get to that, though.
There are different kinds of reference calls that I have seen. Most of them are very perfunctory – either done by recruiting firms or sometimes personnel from the HR department. Usually, they want to ensure that you indeed worked during the time in the stated company as advertised in the resume. More over, this is also more of a “negative check”, I feel. In other words, they have made up their mind to go forward with the candidate – now they are checking if there are any “gotchas” that they should be aware of.
There are occasionally a few reference calls that I really enjoy. First, they ask some very thought provoking questions. One smart person once asked me “If you are so high on the person, how come you have not tried hiring her into your company”. I was impressed 🙂 And then there are some who at the end of the call push to find out more about me and ask if I am interested in looking. I get impressed by them to (not because of their instinct for talent 🙂 ) but by the fact they are always trying to sell their company.
A few questions I find uncomfortable answering are like “Would you think the person will be a good fit in the company” or (recent example) “Would you recommend this person for the position of a Program Manager”? These questions require far more knowledge on my part about the target company (and their definitions) to answer the question. On the last example, I remember asking the lady to explain what does the Program Manager role entail in the company and she struggled to explain that to me. Imagine my struggle to answer that question then.
In any case, if any of you are HR specialists, maybe you can help me understand one point. What do reference calls really achieve? Don’t the candidates anyways pre-select the calls by making sure only those people who give the best reference about them actually get to talk? Does that not give a very much skewed view, anyways?
The only value I see is in finding out what kind of person they have been able to agree to take a reference call on their behalf. If a candidate comes saying the CEO of a large company is one of his references, that probably tells something compared to somebody who puts up a co-worker at a low level as a reference. Beyond that, it beats me.
I would think, by now, with all the professional networking (LinkedIn, Xing etc) and personal networking (Facebook, Orkut etc), we should be able to quickly find out common contacts and make some discreet calls to get a better idea about the candidate.
Anybody has any insights?

24 November 2007

Partnership Myths – part 2

Partnership Myths – Part 2

6. Partners usually embark on a simplistic Go To Market: This is probably what I am most passionate about. Great business plans are almost never worth anything once the partnership has been announced. The go-to-markets vary from the banal “I will take you to my account and vice versa” to more lofty “we will integrate our products/services”. Simple integration usually does not lead to too many gains. Part of that comes from the fact that now you have two companies fighting for the same (or nearly the same) budget that the customer has. And inherently, each will try to maximize their share.

7. Making a partnership work takes a lot of hard work: If anything, this is the single most reason why partnerships do not pan out. It is not easy to keep so many divisions of two different companies in constant touch points and ensure are working [part of their time] on common goals. It takes a lot of commitment and trust from each partner. Setting up a Partners division usually does not do anything other than the fact that you at least have somebody who will try to follow up on action items and try to keep the “relationships” live. However, this organization usually has absolutely no authority to get anything executed thru the line managers. Successful partnerships have commitments right from the top who is willing to demonstrate it too.

8. Success from partnership requires patience: This goes with the previous point. My experience has been that C-level executives expect results – in terms of sales dollars – too quickly from partnerships. It takes a few years to get a coherent story to the market that customers find appealing. And this assumes all the backend from sales commission to product integration has been worked out. However, usually, executives start questioning or second guessing within 6 months of announcing a partnership.

9. Successful partnerships take very deep skins in the game: The only kind of “deep skin in the game” I know of is hard money. There are two cases where I have seen partnerships have the rare success. The first is where a company not only announces a partnership but at least one of them takes a stake in the other (sometimes both take stake in each other). This is commitment at the highest level. There is a tangible way of benefiting from each other’s success. In case of vertical partnerships (e.g. one is a software company and the other is a services company), it gives the much sought after “exclusivity”. The second model – which I have seen lesser number of successful cases – is when the sales organization is commissioned on selling the partner’s offerings. The reason it is less successful is pretty obvious – at the end of the day, a company will pay more to a sales person for bringing green dollars to the company.

10. Two and Two has to add to Five: Finally, a partnership, from a customer’s point of view is something interesting (and the whole partnership will eventually come unstuck if customers do not buy) if the sum of the two is truly more than the parts individually. Other than the marketing slides, the customer needs to be convinced that this truly solves their business problems more and at an advantageous rate. Most importantly, the two teams together can do a better job than if the customer has to buy them separately and put them together.

I do want to point out that there are partnerships in software world that have succeeded. I consider the Big-5 partnership with SAP as a big success. From what I saw, I think Accenture with Retek was a good success too. I am told IBM and Dassault had a very successful partnership too. But they are few and far between. If you or your company are thinking of getting into a partnership that is to bring in any meaningful money, think about it carefully and convince yourself that you are willing to put in the money and the effort. For the fun truly starts after the initial euphoria of PRs and handshakes are over…