Why Intentional Processes Drive More Revenue

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When many people think of process, they think of something mandatory. Usually something unpleasant. The idea of the “process police” comes up, a mysterious group who stifles any innovation in employees. We take a different view. We look at processes – intentional processes, those with purpose – as a potential competitive differentiator and revenue driver. In this case the meaning of “intentional” stresses the awareness and desire for an end to be achieved. You can intend something without necessarily being intentional!

We recently met with a senior executive from a notable FinTech company. Our discussion turned towards the need for process improvement, without also being “process for process sake.” We talked about the flow-on effects caused by poor processes. It’s a subject near and dear to my heart, having designed and implemented various processes  for technology companies for over 20 years.

The Sales Process

The most obvious process that’s tied to revenue is the sales process. How to turn an interest into a prospect and into a deal. There are many sales methodologies and processes out there, and we’ve used several of them.

Where things often fall down are in other areas. Renewal business. Product development. Implementation services. Support and customer success. Each one may in itself seem complete, but they frequently don’t connect with others. They are developed at the departmental level in silos. Intentional processes go beyond silos.

So why would a great, intentional process lead to more revenue? This diagram explains the logic:

intentional process

Processes without Intent

This all makes sense, but to illustrate the problem further let’s assume processes are “not intentional” in a number of areas:
– Sales processes are unclear or convoluted, leading customers to go elsewhere
– Renewal processes are vague, and customers are contacted too late, often risking the deal (or requiring a larger discount)
– Product road maps are inconsistent, confusing salespeople as well as customers
– Product commitments are difficult to keep
– Product development is late, buggy and/or canceled, frustrating customers and creating doubt in the company’s commitment to them
– Services processes are ambiguous leading to unclear deliverables and less value provided
– Support processes reward ticket closure rather than problem resolution
– Finance and Legal processes are onerous, delaying and risking product and services deals

The end result is wasted time and frustrated customers. Too much time is spent getting things done that could be better spent driving more business. Deals, renewals and additional business are at risk. And getting a recommendation from frustrated customers is also at risk.

Every Company Can Improve

Consider these three points:
1. Every company needs to improve in one or more areas.
2. If you’re only as good as everyone else you’re not better. You need to be better.
3. If you don’t have intentional processes you are leaving money on the table.

Process and Pragmatism

We take a pragmatic approach when working with clients. If they’re a smaller 50-person firm, a process might be simpler and carried out by a few people (or a single person) with minimum hassle. You don’t need many steps in the process, yet at the same time some level of definition and clarity is desired.

By creating an intentional process you are able to track the results of the process quantitatively as well as qualitatively and will get a consistent result. Without a process you’re dependent on “tribal knowledge” and the experience of the person performing the task.

If the customer is larger, there may be more required stakeholders and also more complexity. In a large public company, a product approval process is more than one person saying “yes”. It may involve multiple approval levels and signoffs as well as other inputs and outputs. At the same time, you don’t want to make it too complex.

There is a temptation to overengineer processes, especially by people who are too close to the problem but not close enough to the solution. I’ve found that’s where engaging a third party can be helpful to look objectively and unemotionally at the issue at hand.

Disruptive by Design

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Why is Dr. Clayton Christensen’s Disruptive Innovation Theory Important for Your Business?

Disruption Innovation Theory is about growth and creation of shareholder value. It generates viral growth, often 20 times typical growth index averages. It causes a dramatic change in the market’s competitive playing field. Disruptive innovation challenges incumbents with inferior products, competes against non-consumption, and thereby creates a new dimension of value to the consumer. Disruptive innovation is not just about technology, but more importantly about the successful execution of the Business Model.

Disruption Innovation opportunities are predictable and have distinct signals or “disruption fingerprints”:

  • Often an Inferior product/service to the incumbent alternatives
  • Addresses an unserved or under-served market,
  • Competes against consumer non-consumption
  • Often targets small niche markets
  • Customers are often unattractive to current market incumbents
  • Designed for moderate to low growth markets
  • Often disintermediates with traditional distribution channels
  • Enjoys a sustainable cost of production advantage
  • Product focuses on consumer advantages such as: ease of use, flexibility, simplicity and convenience

Disruption can be for low-end or high-end products. Low-end disruption targets micro market segments where consumers have opted out (non-consumers) with existing market products. Disruption is possible because in many mature markets, incumbent products exceed the true performance needs of customers. New market disruption focuses on the notion of inferiority based on the customers “job to be done”. New market disruption is superior to incumbent alternatives because it is based on a different set of customer values. It enables customers where previously impracticable before.

Key takeaways for your business:

  • One of the best ways to find disruption is to focus on non-consumption.
  • Disruption is predictable and should be integral part of your product planning and strategy development.
  • You can engineer disruption; “market disruption by design” is your best strategy.
  • Incumbents routinely dismiss disruptive upstarts as not good enough, until they are
  • Signs of future coming market disruption are present and obvious for years.
  • Alternative value chains are crucial for disruption
  • The customers who will not buy your product, understand why they do not!

Disruptive innovation creates abundance out of scarcity and is one of the most powerful engines of growth for your business.  If you would like to review how to make your business model disruptive, contact TechCXO.

Ken Goins is a Finance & Operations partner in TechCXO’s Atlanta office. Ken uses his c-suite leadership skills to develop and execute strategies to maximize revenue growth and operational efficiencies through innovation and process improvements in domestic and international business settings. See his full bio here.

8 Guidelines for International Expansion

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You have a pretty good business and things are growing nicely. If you have a Board or some advisors or even a relative living abroad, then someone has said to you that your business will absolutely work in another country. You recall that you noted international expansion in your original strategic plan, and you continue to bring that forward as a line item for the future.

What you may have failed to realize is that your business is already international.

The United States represents 4.4% of the world population. Your business has an Internet presence, which was developed with only a certain segment of the US population in mind. What you may have forgotten to factor in is that your website, and therefore your business, is accessible by 2.4 billion Internet users around the world, of which only 245 million live in the United States.

Just monitor the IP addresses visiting your website on Google Analytics and you will see how international you already are. Every now and then you receive an order or a request from someone in another country to join your service. Should you act on it?

The decision to expand physically into another country in not for the feint of heart. If you choose to follow this path, you will automatically increase your stat- ure and possibly your market capitaliza- tion in the eyes of others as they realize that your product is sought after by a wider audience.

If you are a smaller business, sub $25 million in revenues, then expanding internationally will put a significant amount of stress on both you personally and your organization.  A checklist as outlined below will give you something to think about.

1. PEOPLE

This is the key to the success of any international business. Parachuting one of your current executives into a foreign locale and saying go get it will not get you far.

Network for Trusted Resources. You need to search your current network including LinkedIn, Facebook or other professional networks such as an industry trade group or through your accounting and legal firms for local contacts in your chosen country of expansion. Then you need to network through them and find someone who you believe can be the point person to run an operation locally for you. Even once you find someone, you need to investigate him or her thoroughly as you are going to have to trust them with the crown jewels. Due to local ordinances, these individuals may have complete control over your foreign bank account and often will be able to sign and bind agreements on your company’s behalf. Your first fact-finding mission to that country should be to meet as many candidates or people as possible that may be of help.

2. CHOOSING A TARGET COUNTRY
Everything is relevant when choosing your location from pure market opportunity to infrastructure to whether or not English is spoken all the way down to intangibles such as, Do you enjoy traveling there? Sometimes opportunity dictates the location but everything is in play. Here are key variables:

Piggyback off Another’s Infrastructure. Be opportunistic by finding a partner or a supplier in a particular location that has a similar or complimentary business, and you can piggyback off their infra- structure, advisors, suppliers, etc.

Language is huge. If possible, find an English-speaking country or choose a country that is bordered by many other countries. The best known example is Switzerland because it borders France, Italy, Germany, Austria and, yes Lich- tenstein. Countries bordering many others are more accommodating to other languages and cultures.

A Good (not great) Locale. Finally, as you will be travelling there more times then you or your family want to recognize. You should make sure it is not a place that you absolutely detest visiting, although it should not be your favorite vacation spot either, but rather a sizable city.

3. CULTURE

Just as this plays a more then sizeable role in your US operations, so it will in your new operation. If your company culture is important to the success of your business, and more often then not it is, then you need to work on that from the get go.

Values Matter Everywhere. Hire leaders that as much as possible share your values and that of your company. That is not to say they wont have their own personal and country culture they bring to the table, but certain leadership styles cut across boundaries to some degree including morals and ethics, vision, empathy and servitude.

In Germany, a formal business tone will exist between people that have worked together for many years with them con- tinuing to address each other by their last name.

In China, you will always need to greet employees at a gathering by seniority and in England, politeness and restrain is admired and should not be taken to be rude when you are working in a group situation. Cultural clichés abound and are important to understand. This will impact how your worldwide teams interact with one another and more im- portantly how they speak to customers that may deviate from your home country playbook. Most importantly, do not think people from a foreign country that do not have the best command of the English language are somehow less intelligent, and just as important, because they have mastered the English language they are not necessary superstars either. You need to do your homework.

4. ADVISORS

Picking the right law firm is key.  Forming a company, opening a bank account and hiring people could not be more different from what you are used to. Paperwork takes an inordinate amount of time, often you need one approval before the other. If you do not have a company registration number stamped in triplicate, then that means no bank account, which means you cannot hire employees. Getting funds into certain countries is also difficult and can take time. Not surprisingly getting money back out is just as difficult until you are really established. In many cases you need various approvals and licenses to start actually running the business from a whole host of alphabet soup ministries and government departments. Intellectual property protection may be non- existent and trying to implement patents across multiple countries gets really expensive and may not be worthwhile. You may have to sit idly by as local com- petitors copy your website and cease and desist threat letters have little effect.

5. LOCALIZATION

Your website was not built for SEO in multiple organizations. You may show up on the first page of a Google search in the US but what about Google.com.au or Google.co.uk?  You will need a qualified translation house to help with your website translation and then it will need to be proofed and proofed again.

Many will perceive the company as culturally illiterate and therefore having inferior products if you spell color with- out a “u” as in colour. In some countries, the color scheme on your home page will be important. In China the color black is considered to bring bad luck while in Japan it is the color white. You will invariably need a content manage- ment system to manage your website so that local marketing teams can display information relevant to their home mar- kets.

Showing the next US trade show you plan to attend to someone resident in Paris is completely of no value and may make you seem parochial. Choos- ing the language of your website is also important as you continue to go global. Portuguese and Spanish in Europe is significantly different from that of South America. Making your website country specific rather then language specific is a decision you will face.

6. HR POLICIES

You need to pay particular attention to internal policies with respect to Human Resources as well as local laws. Employees can absolutely not be hired and fired at will. If you do not hire and fire in accordance with local regulations you will expose your company and possibly yourself to a significant amount of liability. Use it or lose it vacation policies or 15 days PTO in the US have not bearing internationally such as in Europe where six weeks vacation is the norm. Your US teams will need to be briefed beforehand as to why these exist in certain countries most notably those with punitive tax rates before bitterness arises on why their global counterpart has gone silent for a full month.  Paid leave after the birth of a child in the US is 3 months of unpaid leave, in Sweden it is as high as 22 months of paid leave.

7. INTERNATIONAL INCIDENTS

While the intent is to avoid these at all costs, invariably many things will not work as planned and will be a learning opportunity. The trick is to minimize these as much as possible. These include things like whether your name translates into the chosen foreign country language. Coca-Cola for example when written in mandarin reads like ko-ka- ko-la but this translates to “bite the wax tadpole”. Getting to know your employees and customers and eating at local establishments which they fre- quent rather then always choosing the American chain restaurant that is always up the street is important. If you need to feign dietary restrictions then do so but still find something neutral to eat while you are there. Also, unlike here, eating at your desk is generally not done. You also should not get upset when a waiter seems to be taking an inordinate amount of time to get to your table, meals in many countries are considered part of the overall experience and it is consid-ered rude to rush through these.

8. CULTURAL TO-DO’S

Some best practices include ensuring it is not just US based C-level executives that travel to the new country of operations. Have staff at all levels do this and do it both ways. Use Skype to break down communication barriers and have worldwide personnel join each other on LinkedIn, Facebook and other social media. Hold English speaking classes in your non-English speaking offices. Possibly hold foreign language classes in your US operating company. Encour- age sharing of ideas. Some of the best ideas will come from your international operations. Make sure you are culturally sensitive to their holidays whether public holidays or religious holidays and understand their sports and read the local newspaper when you are there and when you are back in the US.

You need to understand the pressures and opportunities your business and people including both employees and customers constantly face just the way you understand what happens at home. Most importantly enjoy the ride and the experience and you and your teams will be richer for it.

______

Sherwin Krug is a TechCXO Finance & Operations Partner (read his full bio here).  Sherwin was the Founder/CEO of AppointmentCity.com a funded internet start-up that enabled prospec- tive patients to book appointments with physicians in a real time setting. He was also the COO of MFG.com, where he led European acquisitions and the set-up of operations in China. Prior to that Sherwin was the CFO for Tectonic Network.

Sherwin spent the first 10 years of his career with Ernst & Young in both its Johannesburg, South Africa, and Atlanta offices, where he focused on entrepre- neurial growth companies including positioning them for successful IPO’s.

4 Ps Ripe for Fractional Engagments

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4 “Ps” Ripe for Fractional Engagements

TechCXO specializes in providing fractional executives for a variety of positions. Our on-demand executive model is typically 50-75% more cost and time-effective than a full-time, in-house function. But not every company needs a fractional or interim CEO, COO, CTO or CFO.

In addition to the C-Suite, there are 4 other areas that would benefit greatly from expert assistance but not necessarily require a full-time employee. I mentioned in my last blog about the need for intentional processes.

As it happens, these 4 areas also start with the letter “P”:

• Project
• Program
• Product
• Portfolio

Project Work

The logical first opportunity is with project work. According to the PMBOK® Guide from the Project Management Institute the definition of a project is “a temporary endeavor undertaken to create a unique project service or result.” Projects are temporary and close down on the completion of the work they were chartered to deliver.

When your company hires a project manager, you are banking on the fact that the role will be needed indefinitely. What if the project is short term? What if you don’t need to hire a full time PM? TechCXO provides qualified, experienced partners and project managers to scale your efforts up and down as needed. We can help you with all phases of a project, from definition through implementation.

Program Work

A program is more extensive than a project in that it is more concerned with benefits rather than tasks. Programs can span multiple business units or disciplines. They can be comprised of multiple projects. Even if you have project managers on staff, often they do not have the level of experience necessary to juggle a more complex program. Even if experienced they may not have the available bandwidth to dedicate. This risks program success. TechCXO provides partners and staff with the level of expertise needed to design, implement and manage more involved programs.

Product Work

The third area is product. You already have product managers on staff. Are they delivering according to best practices? Are your products late, buggy or worse, canceled? An experienced third party can help you look objectively at any product problems and recommend a solution. TechCXO provides both technical and business-level product assistance via its skilled partners.

Portfolio Work

Lastly, an often-overlooked area is portfolio. As program is to project, portfolio is to product. As your company grows and you build or acquire multiple products things get more complex. You need to balance spend, manage renewals and run the portfolio as a business. Are you growing your portfolio as you should? You need to be better than your competitors. TechCXO provides a seasoned and independent voice to help you turn on, turn up and turn around any portfolio issues.

The final benefit – TechCXO can do this all on a fractional or project basis. We can get started immediately, without the risk and complexity of hiring a full time employee or independent contractor. All at a considerable cost savings.

Ready to learn more? I’d love to talk with you about your potential needs. I can tailor a project to fit your project, program, product or portfolio requirements.

What Got Your Business Here Won’t Get You There – Part 2

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Last time we explored how companies at different stages have differing needs. As a reminder, here are some sample challenges across several functions:

[table id=10 /]

It’s relatively simple to know which trajectory your company is on by looking at its financials. What becomes more difficult is in knowing if you are ready to meet functional challenges. How do you know if something is missing?

One of the benefits of working with sharp people at TechCXO is the knowledge and information sharing that we do. A while back Mike Allred and I were discussing ideas on a call and a comment he made reminded me of something I had built years ago – a maturity model for enterprise software. I immediately thought of its applications towards Intentional Revenue™.

What is a maturity model? It’s a process or tool that helps companies assess how effective they are and also provides a guide as to what to do next.

If you don’t know where you are, how do you know where you’re going? And how do you get there?

In IT, one of the grandfathers of maturity models is Software CMM, dating back to the 1980’s and created by Carnegie Mellon University. It’s now called CMMI and is owned by ISACA. It’s extremely thorough and comprehensive.

But there’s a challenge in implementing maturity models. Often, it’s a laborious process and I’ve found that the effort to adhere to it often doesn’t fit smaller companies. Why should a startup waste valuable resources in this way?

The answer is by having a guide as to what to do next. A simple start is often “just enough” to set up a good framework to build on later. Without this framework companies may not know where they have gaps as they grow, which can lead to problems. It also helps smaller companies know what skills and experience they need to acquire as they add new team members.

Since that call I’ve created an Intentional Revenue™ Maturity Model, the basics of which I will share with you here.

Like many models, this one has five levels:

Technically, there is also a Level 0 which corresponds to “unknown”, so consider that for a moment. The initial step for any company – startup to mature – is to know where they stand by first getting assessed. Then you can determine what areas need to be addressed.

If you’re a startup, you’d probably want to ensure you have the basics down pat across the board.

If you’re heading into a growth stage, you probably want to scale up your maturity along with your revenue.

As you become mature, you want to optimize what you have. But these are general rules.

One difference between the Intentional Revenue™ Maturity Model and many others is that you can achieve a high maturity level at ANY stage of growth. The scoring questions use process and qualitative criteria as opposed to specific tasks to perform or quantitative targets.

As an example, defining sales success could start with “hit your target (pass/fail)” which indicates low maturity. A single booking or revenue number defines if a salesperson or territory is successful or not. Obviously, it’s better than not knowing anything at all, but it’s very basic.

This progresses through “consistent measurement aligned with customer success” which indicates a high level of maturity. There is no longer a single metric used but more detailed criteria, measurement, performance management and alignment with how successful a customer is.

The actual measurement process isn’t critical here. The fact that it is consistent and aligned is. So, for a startup, this task could be done in a spreadsheet by a single person. In a mature organization it might require a dedicated team with a more detailed process and reporting requirements.

The outcome and the level of consistency is what determines maturity, not the work to do it.

This is important, and why many maturity models fail to gain traction in smaller companies. They are often too time-consuming and difficult.

No matter what you implement, you need to right-size it to the current stage of the company.

One final thing to consider: capabilities are assessed across multiple domains. In the case of Intentional Revenue™ this is across Sales & Marketing, Product Development, Implementation Services and Customer Support and Success.

A company can score well in several areas and lower in others, which yields a final maturity score that is the lowest common denominator. It’s perfectly fine to not achieve the highest level of maturity in all areas. Effort expended needs to align with expected returns.

Part of any report would also provide recommendations on next steps to proceed to the next level. A reassessment should be done in 12-18 months to show improvement.

I’ll finish off this blog series about the concept of maturity models and Intentional Revenue™ in the next blog entry. Stay tuned for Part 3 in the coming weeks. I can be reached at mark.lukianchuk@techcxo.com or at (404) 777-4774.

Mark Lukianchuk is a transformational global technology executive with a proven record of innovation and execution in the Software, Payments and FinTech spaces. He can be reached at (404) 777-4774 and mark.lukianchuk@techcxo.com

What Got Your Business Here Won’t Get You There – Part 1

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Recently I’ve had some very interesting conversations about business growth and transformation. In my own personal transformation as a business leader I leveraged the standard on the subject by Marshall Goldsmith, “What Got You Here Won’t Get You There.” Here’s my take on the business equivalent.

Startups have it tough. At the same time, they also have it easy. How can this be?

A CEO I worked for once said that the most important aspect of a startup was to have a differentiated product. That “two guys and a dog in a garage” could be extremely disruptive to mature technology firms. This is true.

But the startup has the luxury of being singularly focused on this new offering. To get revenue. To make their first customers successful and happy. This level of focus makes it easier to guide what they need to do.

In the vein of Intentional Revenue™, consider the challenges of a startup:

[table id=9 /]

Pretty straightforward, right?

When you’re 2 people and a dog in a garage, you wear multiple hats. You do whatever is required in order to ensure these challenges are met. I’m not sure exactly what role the dog has, but I’m sure it’s important.

Compare and contrast this with the challenges of growth and mature companies:

[table id=10 /]

You’ll note some key differences here. There’s a revenue curve which accelerates and then flattens. Mature companies have a much greater focus on “farming” or “harvesting” than “hunting”. What skills and talent that got you started may not work later.

Product Development starts with a great idea and an MVP. But the people who were there at the beginning might get bored when it’s time to optimize the portfolio. Great features aren’t the sole driver of product investment decisions anymore.

Implementation Services transform from “do whatever it takes” to get a customer up and running to “let’s make sure we don’t lose money”. The focus has changed.

Customer Success and Support is a bit more controversial. A startup wants to keep their anchor customer happy. This often means access to the CEO or whomever is necessary. Growth companies want to maintain that level of satisfaction. At mature companies, however, it becomes understood that you can’t make every customer happy. And that’s OK, but you want to keep the customers that matter most satisfied.

So, it’s clear that what got a startup off the ground and through its initial funding stage(s) won’t get you deep into the growth stage and into maturity. How do you meet the challenge? How do you know if something is missing?

I’ll discuss more about the concept of maturity models and Intentional Revenue™ in the next blog entry. Stay tuned for Part 2.