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August 2013

B2B Social – I finally get it

I have been struggling to see the clear and strongly compelling value for social technologies in a B2B environment for the last two years.  Though having spent time looking at - and personally working with - social technologies including Twitter, Facebook and LinkedIn, I haven’t found it very compelling for B2B (sure LinkedIn is not bad for marketing yourself).  They are very compelling social technologies worth lots of money to folks marketing to consumers – B2C.  But for B2B, it’s been unfulfilling.  Am I too old or just a Luddite?

SocialI am a firm believer that new technology has to be a LOT better than the old way to get people to change behavior.  The consumer social technologies are clearly delivering that – a LOT better way for us to keep up with friends, reconnect with old friends we lost touch of, helping families with members spread across the country and globe, making new new friends, arranging social events and much much more. The “old way” of telephone, and linear email and text just wasn’t getting the job done.

Now I have seen the light 

It’s the B2B focused social “SHARING” technologies that include web services like Chatter, Yammer – and more recently at my company, Autodesk 360 Pro.  Increasingly these B2B sharing sites are becoming Facebook for us business types.  Why settle for sending an email to my team (38 people located around the world) that would lead to several “side threads” with various team members – when I can just post it for everyone to see, comment, like/dislike, and post related information?  Why limit my team from sharing through limited linear email and text – or struggle with the ugliness of a conference call meeting with team members in 10 different time zones?  Why limit the ability to for my team members to deliver content on a subject in whatever format they so choose - photos, spreadsheets, Word and GoogleDocs, links, videos and more – that can be shared from their device of convenience?  Why just share information with a limited number of my staff because of my limited bandwidth to field email responses – when questions can be shared and answered by the team?  Why not use the new social technologies to quickly create teams “on the fly”, get the job done and then disband the team a few months later?  Why not quickly build teams that span organizations and talent outside Autodesk tying them together in a flexible real time “stream” of communication, sharing and innovating?  Why not let team members and partners share information in the way best for them – whether sitting at their desktop, using a phone or tablet, through a browser on a friend’s device – wherever and whenever?  Why do I struggle getting my team to go beyond my personal limitations – when I can empower all of them to run in front of me?

I finely get it.  It’s been near two months now since I made the leap to flexible powerful B2B social, and as I was looking for from the beginning, the clear and strongly compelling value is there. 

Its NOT about marketing.  

Its about efficient and powerful sharing, collaboration and teamwork.

And I am never going back.

As my kids told me a few years back, “email is lame”.  Yes it is.  Just took me a few years to really and deeply get it for the B2B environment I live in.

So…

If you dance with an elephant, what is their social strategy and technology – and how are you planning to leverage it?  Because if you don’t have a social answer your current and future customers are going to leave you for someone who does.  If your favorite elephant doesn’t have a clear strategy for how they are going to help their and your joint customers collaborate freely and easily, it’s time to find another elephant.


Breaking through a Growth Stall

Thought I would give you a brief summary of recommendations for getting your business growing again after sales have plateaued and you aren’t sure how to kick start another high growth phase.  I work with a number of partners that, with the first year or two of starting their business, they quickly grew to near $1 million dollars per year and 10 or so people – and then stopped growing.  I also frequently see partners reach a plateau when they reach 50-60 people and sales of $6-8 million. 

Where ru goingNot IMO coincidentally, these “growth stalls” are when a business needs to add another layer of management.  At 10-12 people, further growth requires the founder to hire managers and cede responsibility for many day to day activities.  At 50-60 people the founder now needs to start developing a second level of management and ceding some long term business development decisions to them.

Much of the following, which I have seen in action while working with partners, comes from an interview of Frank V. Cespedes, a senior lecturer in the Entrepreneurial Management unit at Harvard Business School.

Failing to become the market leader

Failing to become a leader in your market – a leader in a niche industry on a global basis or a leader in a specific geographic region within a large industry, is a common reason for a growth stall.  You have had good success selling your product or service “locally” but have struggled to expand your geographic reach and/or expand sales of “new” products or services to existing customers.  First – why does it matter whether you become a market leader in your industry?  It’s pretty simple.  Market leaders have lower cost of sales and marketing then non-market leaders.  This is driven by customer behavior – market leaders have been vetted by the industry so I don’t need to invest as much time and effort qualifying a supplier the market has already agreed delivers good value and is reliable.  The lower cost of sales and marketing creates higher profits and increased ability to invest in expanding sales, invest in expanding your product line, and the ability to “as needed” discount your product and services to win key accounts.

Ineffective triage

This is very much related to failing to become a market leader – in that one tries to do too much, tries to be too many things to too many people.  If you are pursuing too many different types of customers, becoming a market leader in one industry segment is hard to do – never mind trying to become a leader in several industry segments at the same time. 

Likewise, trying to grow software sales (whether an app or a web service) while also aggressively pursuing growing a services business is fraught with pitfalls.  The way you manage a software company is way different then the way you manage a consulting services business – management structure, KPIs, financial structure, people management and more.  This is the most common trap I see – companies that started with a software strategy, found growth and profitability slow to develop – so grew their consulting services business.  The trouble is their vision and business structure stayed one of a software company which creates a number of conflicts with the consulting services ide of the business that is paying the bills.  Consulting services companies love complexity and high touch – while software companies are trying to eliminate complexity and high touch through infinitely scalable code.  Consulting services companies are selling bodies and hours – where headcount grows linearly with business growth – very different then a software business with a more fixed headcount that grows much slower than sales.  Are you a services business or a software business (again web services is in the software bucket)?

Another triage trap is geographic.  Are you focused on developing your business regionally, in one or a few countries or in several countries?  As with focusing on a narrow set of customer or choosing to grow a software or consulting business, you cannot grow your business in more than a few companies at one time.  And yes this means turning some business that “walks in the door” away – because of the long term support costs it will inevitably lead to.  If you have a strong business in your home country or region (say Central Europe), sure you can pursue growing the business in 1, 2 or 3 additional countries – but more than that is asking for trouble as “hidden” costs and inefficiencies sneak into your company trying to support customers in faraway lands.  If you are pursuing breaking into a “big market”, such as the US, Japan, Germany or China, where there is lots of local competition, you’ll need to be more focused yet.  Think you can tackle developing your business in a few new countries and one or two of these “competitive shark tanks”?  Think again.

See Frank Cespedes answers to these questions…

Q: Why is it important for companies to select the right customers? Along these lines, what's the difference between what your article terms as partitioning and segmenting a market?

Q: In the article's step-by-step process, you emphasize the "ideal customer profile." Can you talk a little about that?

Some additional late breaking wisdom on a related topic - from "Morettini on Management" - "Growing from a Startup to a Mid-Market Software or Hardware Company".