Innovation and how to think like a start-up

Innovation is the lifeblood of any business and, even in Professional Services (PS), it’s at the core of next generation services. But it’s not easy and the right way to build something from scratch is not always obvious. So what are the tips and traps that can be taken from the start-up world?

A story needs authenticity and resonance

How often have I had an idea and gotten lost in the ‘why it’s even worth it’? Plenty of times. As an idea progresses, the core of it can get blurred and the real reason for its existence forgotten. Every story needs an elevator pitch. It’s the high level value proposition that makes people want to hear more. This is the cornerstone of the whole reason for starting an innovation. It means I need to write it, develop it and use it to build a pitch deck.

It should cover: why we started this innovation, why it’s working and why it could be a hundred times bigger.

It needs an authentic yet unique point of view that gives you goose bumps – answering the emotional qualities and deep unmet need. Yes that sounds a bit far fetched for PS, but we all know when we see something good. We feel envious that we didn’t invent it. We see it skyrocket.

The ‘what’ is not as important as the ‘why’. The ‘why’ needs a soul and a real connection to its reason for being. But don’t make it up. Research it, debate it, build it, sleep on it, keep going. Never stop thinking about your purpose from the client perspective. It needs a beating heart for it to matter.

Any VC is looking for authenticity and a direct passionate connection with the problem(s). It’s about being more insightful and more believable. Insights, from the client perspective, however small, matter. Organisations with a purpose bigger than money have a growth rate triple that of their competitors. Wow!

The ‘why’ isn’t just for your clients or business plan, it’s for your people. If we teach our people to run process and procedure (and consider their health and well-being), we have a good PS firm. Now imagine we do do exactly the same things, but in addition, we focus on belief. Without shared belief, an organisation is just a functioning pack of individuals easily overtaken by a group whose members have a bigger believable purpose and care more.

There’s two ways to build your story…

Even Apple can get this wrong.

Type 1: Is it a narrow problem with real value for a specific client type – but is there enough scale to grow? Eg the fitness GPS smart watch sector has been an absolute hit in the market.

Type 2: If it’s a broad problem with a wide customer relevance – but is there enough relevance and value to clients to be able to sell it? Eg the Apple Watch has been less successful than anticipated.

To be successful you really need both – a type 1 mandate with a type 2 vision. While it might be easier to keep things small and in your control, the real path to success is where:

    The innovation solution has a specific problem relevance.
    It creates a gateway to clients using further services that are relevant and easily cross-sold from.

No VC will ever invest in a cool piece of technology or gadget. They invest in the founder(s) authenticity, product market fit and the potential to disrupt a market or create an entirely new category. They invest in why the innovation will be successful and the story of where it is heading.

This is where innovations in PS create a platform for a different conversation with clients, a conversation that goes to the heart of digital disruption, solving the hidden problems and uncovering untapped value creation – while also pulling in the more traditional services alongside the innovation, in a bespoke wrapper.

Nail your problem statement

How often do I go straight to a solution, before properly considering the problems? All the time. I really need to work on this and be disciplined. I’ve also come to realise that problem statements need regular revisiting to ensure they are still current.

Considering design thinking for innovations, here’s a good problem statement structure to follow:

1. State the problems and symptoms, structure the problems by identifying the potential causes that contribute.

2. Who owns the problems day to day, who are the key stakeholders and how are they all affected.

3. Generate solutions and consider what would success look like. Include the cost and time frame for creating them and how you wow clients with benchmark evidence that you are meeting or exceeding their expectations.

4. Test and evaluate. Rinse and repeat. The most valuable perspective is the one you don’t have. Forester calls this your customer obsession.

Life’s a pitch

Everybody has a someone internal to influence and seek investment from, the VC equivalent. This is such a hard thing to get right and is about flexing your style and your content. Its really hard to satisfy the data geeks and try not to lose people with a short attention span.

So your pitch deck for this purpose, along with a slightly different version for prospective clients, is really important. To pitch like a start-up, know how the best have done so already: https://piktochart.com/blog/startup-pitch-decks-what-you-can-learn/

Any start-up that hasn’t pitched their proposition 30 or 40 times to the VC community, refining the slides as they go, hasn’t pitched it enough. Your leadership pitch deck (and story value proposition) is not mature until you no longer need to make edits – with those difficult yet poignant questions or perspectives you hadn’t envisaged – after each pitch.

I know, it’s exhausting just writing this, but it’s so true. Practice makes perfect, yet what is ever perfect? I guess it’s more about talking to people and getting feedback – internally and externally.

Here’s a decent innovation pitch deck structure to consider

Intro – product market fit:

  • The problem – client focused and covering EQ/IQ aspects.
  • The solution – people don’t buy what you do, they buy why you do it.
  • Market – size, location, attractiveness and accessibility. Your market validation and opportunity size, growth over the next 10 years and likely future disruptors. Why now?
  • Competitors – landscape, go-to-market and your differentiation. Push-backs understood and mitigated. Your competitive moat should be quantified and an honest assessment of how well protected it is.

Clients – attractiveness and accessibility:

  • Ideal client – profile with specific understanding of needs and value creation.
  • Client acquisition – channels highlighting what’s most successful and where needs improvement. Route to market and adoption model. Milestones to achieve full potential. Marketing that gets to the heart of the buyer journey and buyer personas to establish a solid connection with client feedback and value creation stories.
  • Current clients – including your best example in more detail. Understand your ‘network-effect’ where clients attract other clients and adjacent clients.
  • Client insight analytics – honest and robust. Vale creation – volume/ value curve. Know/ build knowledge of the COGS (cost of goods sold) and churn/ LTV (lifetime value) metrics.

If you missed it, check out my article on scaling and COGS.

Revenue and commercials – growth and sustainability:

  • Revenue model – projections over the next 5 years, KPIs and their track YTD
  • Repeat revenue – cross sell and up sell strategies – sticky happy customers return, the rest wont. Know your position with the % of returning customers.
  • Commercials -models scoped and tested. Ramp determined for margin, pricing by market segment (top tier versus mid cap). Have creative pricing models, but be consistent in their application and know the margin.
  • Demonstrate fertilisation – across sectors and products/ services.
  • Pipeline – position, including live, won and lost. Score pipeline on light versus full scope opportunities, ability to access untapped value and the anticipated LTV. Be careful to select targets that you have the expertise to advise (eg market knowledge) and consider adjacent targets to recently converted clients.

Its also important to not over inflate your story or the revenue prize. Some start-ups even slightly downplay the current and forecast numbers in certain forums, in order to remain relatively humble, certainly in the early days. There’s nothing worse than selling an over inflated vision and people shooting holes in your numbers. Once that kind of reputation is established it pretty hard to overcome.

Operations – robustness and scalability:

  • Product road map that quickly irons out the core issues – Scope what you deliver described full (where clients need substantial help), medium and light (for the more advanced client where we just need to plug a few gaps), including what is and is not included. Upgrade the tech stack sooner rather than later. If a rebuild is needed, the people that built the first version might not be suitable to build the second version. If there are issues with the tech stack and reluctance to rebuild, there will be lots of problems later on.
  • Investment capital position and projected needs – linked to technology and people.
  • Marketing – your route to market will determine the need for approach and budget. Be aware that the typical PS ‘people led’ sales route might not be appropriate for your innovation. Engage with marketing experts on how to access your target audience and be sure to not base it purely on paid-for customer acquisition, or you will run out of money pretty quickly and have an unsustainable business model.
  • Team and growth plans – a rigorous approach to not settling for second best in recruitment, on-boarding and training them to get quickly become self sufficient and be on successful). Ensuring your team expansion is supported by a x3 relationship to margin.

You can dial up or down any of these sections, but they are really important. You will need trackers behind a lot of what’s listed here, and the sooner you have them set up the better. Information is knowledge and at some point, you will need to connect the dots. Leading indicators in your pipeline win rate, COGS and LTV will need to be dynamically connected to your revenue forecast, but are essentially historical. Your pipeline size, its qualification accuracy and rigor, along with client facing schedule will give you future indicators.

Most start-up founders are kept awake at night by their ability to SCALE their business, but after initial accelerated growth, most fail to SUSTAIN the growth. BCG absolutely nailed this with their summary of forward looking strategies:

  • Do we have a sufficient pipeline of “future bets” with high growth potential?
  • Does our strategy balance short-term exploitation with long-term exploration?
  • Are we developing sufficient capabilities in the technologies that are transforming how businesses work?
  • Do we have a culture that promotes cognitive diversity and a competition of ideas?
  • Are we willing and able to challenge our incumbent approaches and beliefs?

Your promotion might depend on getting short-term approval to keep developing your innovation, but your long-term position depends on an ability to achieve what you’d planned.

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Sales books – winter fireside reading

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If you are like me, interested in what’s emerging in the sales world, then there’s some really inspiring books to get your hands on for a spot of fireside reading.

My top 3 sales books

I loved these three books and for many different reasons, but my #1 is The Challenger Sale…

The Challenger Sale, how to take control of the customer conversation – by Matthew Dixon and Brent Adamson of CEB. I love the whole book and carry it around with me, still. It’s so on the customer agenda of today, it’s scary. The biggest takeaway for me is the way sellers need to link to what people normally do and then reshape what’s possible to deliver greater and unexpected returns and learnings. I’m next going to read their Challenger Customer book (see below).

Sales EQ, how ultra high performers leverage sales-specific emotional intelligence to close the complex deal – by Jeb Blount. This flows really nicely from The Challenger Sale and the first quarter pages are especially rich with buyer insight and the psychology of selling really well laid out.

The sales acceleration formula, using data, technology and inbound selling to go from $0 to $100m – by Mark Roberge. Really inspiring to see how Hubspot was grown into the success it is today. In particular their bespoke buyer persona/buyer’s journey matrix (which illustrates the different personas and stages of the buyer’s journey) and shows when marketing leads are originated and scored, and when its the right time to hand them over to sales. An excellent read to show that firms need to invent their own systems and make them work in their unique environment.

Other recommended books I have on my reading list for the coming months

The Challenger Customer, selling to the hidden influencer who can multiply results – by Matthew Dixo, Brent Adamson, Pat Spenner and Nick Toman at CEB.

The way we’re working isn’t working, the forgotten needs that energise great performance – by Tony Schwartz (with Jean Gomes and Catherine McCarthy. Looks at how to re-energise your life to be more satisfied and productive.

Sales management simplified, looks at how to get the best out of sales teams as a leader – by Mike Weinberg.

Happy reading!

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How to keep your top sales people

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Lately I’ve been fascinated about how to keep top sales performers in any business, but especially in a start-up. This is a make or break activity that can really demonstrate to the wider sales team how much you value them and that you want to embed them in your business for the longer term.

I’ve seen some pretty dishonourable activities towards salespeople in the past. One of note was a ‘big game’ sales person who smashed his annual sales target three times over with a single deal. He was applauded by the Board and then swiftly sacked before they had to pay his commission. Let’s just say the mood music went significantly downhill from that point on and other good sales people started job hunting.

I’m sure everybody has a horror story they’ve either witnessed or had the unfortunate experience personally, but I’ve been really interested in what works in today’s sales world?

Here’s what I’ve learnt:

Look at the maturity stage of what you’re selling and hire for specific skills and experience

If it’s an early stage initiative you will need a really inquisitive, go-getting sales people who know how to hunt for and open up cold relationships, to qualify and close new new business from scratch. They can do this without a clearly defined value proposition, sales process, support or management (if they are still in production).

If you’re selling more established and complex solutions you can probably hire a consultative sales person who’s worked in big organisations. This person needs a professional sales process and environment with all the trimmings to farm warm relationships and convert deals as part of a team.

Get it wrong at the hiring stage and you’ll likely have a sales vacancy inside 12 months when it didn’t work out for the person concerned.

Look at the personality of the salesperson when hiring

A successful salesperson is inquisitive and always learning. They will have a top sales book and their recommended reading list (that is current and not from 20 years ago).

They will have numerous interests outside of work which are multidisciplinary. They will find things interesting with lots of different people.

They will have a relatable personality on many different levels. This could include humility, inquisitiveness, a sense of urgency and coach-ability.

You are looking for a good fit – between your business culture, sales team, sales manager and the individual sales person. That doesn’t mean everyone has to be the same, but at least know you have and are adding.

In asking questions and explore the logical and emotional aspects of everything – the right people should more often get hired and they will hopefully remain interested and motivated to make a difference to your sales function.

Provide a fair and well calculated volume of qualified leads

This means regular analysis of segment and people performance. Then form agreement on which areas need a boost, versus those that are doing well.

The data and analytics team will need to prioritise providing quality targets where they are most in need AND the lead generation function will need to prioritise their efforts as well.

You need to ensure that all elements of the team are not just focusing on achieving their own targets, but are creating value through the sales chain to intimately deliver qualified leads that close.

Fail to do this at any stage and your sales function will lose motivation (possibly blaming others for not doing their roles properly) and your team environment will be in tatters.

Measure performance simply and consistently

Any employee needs a fair and transparent performance measurement system, but for a salesperson this is central to their world.

Successful sales functions measure the best sales people with quantitative and qualitative data points around what specifically works for them. Even if the CEO is the first salesperson, measure what works and use the information for any new sales hires.

This can then be used to benchmark the rest of the sales team. Many sales managers find the difference between great and mediocre salespeople, is actually how well they plan and how well they are able to think from the customer perspective.

This means both logically and emotionally, to really understand their unique situation and reshape the vision for success collaboratively – to transform complexity and ambiguity into something that creates enduring value.

If you don’t know what performance gap you’ve got, you can’t inspire and challenge a salesperson to do better. Give them the tools and mentoring to effect change and help them be more successful, otherwise you could just end up ruthlessly cutting the bottom 20% of sales performers and spending a fortune on recruitment.

Sales management isn’t the only form of promotion

Give them all an even playing field in order to be successful. Recognise their performance, show they’ve had impact and are important to you.

Many sales functions use management or operational roles as promotion, but we already know that not all rockstar salespeople are great sales managers. You could say this is relevant for any discipline, including marketing.

Instead you might get some real benefit in having your best performer coach and mentor some of the other sales team members as a side project, while still doing what they do best.

Or constant change and new challenge might instead keep them motivated. At key stages move them onto a different area of refocus and slightly adjust their responsibilities. Do it at a rate at which they feel works for them.

For example, I’m attracted to transitional or green fields opportunities to develop something from scratch. I love the strategic and creative process in consultative selling and hate doing transactional sales. I hate the feeling of stagnating as I get to the phase when managing established initiatives that need a steady, and equally important, pair of hands.

I’d like to say that in every role, I’ve been asked ‘what motivates me?‘ when I joined and 12 months later ‘what will keep me happy and engaged?‘. But I’d be lying.

Conversely, your medium performing sales person might be a brilliant team player and superstar sales manager, so giving them the opportunity to develop their career with you as well is equally important.

This way no one is left out and it creates a duel approach for the different kind of sales people you need in your team.

Don’t split sales roles into vertical specialisms too soon

The easiest way to scale sales by transformation is to keep the team working TOGETHER (think co-creation and collaboration). Trying to do too much with too small a team, is the death knell in really smashing the overall sales target.

If you’ve split your sales team out too soon, it’s also really hard to understand if a lack of performance is the salesperson or something else, like the product, market, targeting or value proposition that’s not working.

Keep it simple and focussed.

Even if you have a rainmaking new business sales person that is happy forging ahead with 100% conviction that what they are doing is right, they will still need a team to help them achieve their goals.

They need to EQ and IQ to bring a team together, the vision to set the course and the strength to keep people on the bus.

If your rainmaker sales person upsets the whole team ecosystem and rides roughshod over relationships, you’re going to have a hard time keeping the whole sales team motivated and achieving sales growth.

Compensate honestly and easily

Be honerable with the commission they’re due. Don’t constantly change the commission structure and fold in complex kickers or commission caps. Use a really simple commission formula, one which people can easily work out in their heads what they will get. If they sell, reward them for their efforts.

It will cost you more in the long run if your top sales performers leave, due to unpaid commission, than it is to pay them what they are due and keep them in your business.

You want an environment of healthy envy that the top performers are valued and allowed to progress.

Many high performing sales leaders also talk of never capping sales commission.

If people work hard and exceed their sales targets (selling products that can be delivered), they should be rewarded.

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