Wednesday, June 22, 2016

The Eco-System Effect

There aren’t many companies that aren’t obsessively focused on strategies for growth.  Regardless of the industry, even the most wildly successful businesses need to feed the monster by delivering consistent and high levels of top-line expansion.

One manager early in my career told me, “Growth solves all problems, and hides most sins.”  I didn’t fully appreciate the substance of that wisdom when I first heard it, but I see it applied in practice today.

I’ve observed an interesting common recipe for identifying and acting upon new ways to expand services revenues.  I call it the Services Eco-System Effect.

I spend a good percentage of my time on this topic – helping companies of various sorts figure out ways to expand faster than they might on their own.  It’s a privilege for me to work on such a sensitive and urgent topic, with some really great companies.

When I enter into a situation where senior leadership has elected to call an intervention by having an outsider review the growth strategy, it’s often because the tried-and-true techniques of the past aren’t yielding the expected results.  A new play is required, and positions on the playing field need to be realigned.

It is most common for companies to be looking inward for ways to drive improvement in their sales effectiveness.  Some of the more common points of emphasis include:

·         Challenging demand generation models, often focusing on digital marketing, brand promotion, and progressive techniques for getting noticed by the prospective customers in their target markets.
·         Enhancing the influencer community, with promotions of rankings or assessments by analysts serving as the credentials for new opportunities.
·         Refinement of the channel network, looking to align incentives for representatives to carry the proposition more prominently.
·         Modifying the sales coverage, compensation, rewards, and recognition programs, with hopes that the sales force needs some refreshed incentive to work harder.
·         More purposeful application of market development funding to enhance positioning.
·         Investing in sales techniques and training to help the feet on the street to engage more effectively.
·         Refining the account management practices to allow for greater cross-sell and up-sell within existing customers.

Most sales leaders know how to assess and enhance their organizations in these ways.  So, while modest improvements are possible through an internal intervention, I’ve found the greatest improvement opportunities by helping to think externally.

While this might sound trite, the most common missing dimension that I encounter is near-sightedness in terms of service application.  Most companies that describe their business models as being “B-to-B” are short-changing their proposition. 

I like to provoke new ways of thinking about the business by asserting that all businesses are “B-to-B-to-B” or “B-to-B-to-C”.  Every business has customers.  And, they have suppliers, partners, and a network of business partners.  That’s the Eco-System to which I refer.

My operating thesis is that growth in B-to-B services is accelerated by a refreshed positioning of relevance within the Eco-Systems that exist within every industry segment.  Often, this entails converting a product offering into a services offering – selling the hole, not the drill bit.

Just about every situation I’ve seen over the past several years has been constrained by thinking of B-to-B in isolation.  Conversely, if a salesforce positions its offerings as central to the economic network of its targeted customers, an entirely new universe of opportunity emerges.

The idea is that each business in the "ecosystem" affects and is affected by the others, creating a constantly evolving relationship in which each business must be flexible and adaptable in order to survive, as in a biological ecosystem.

Too often, businesses tend to constrict the value proposition of their offerings to the domain of the buyer, and ignore the benefits of a network effect within an Eco-System that exists around shared objectives, dependencies, and relationships.  Do your buyers really need to own your product, or might they capture greater value through the beneficial effect of your product delivered as a service?

The answer to the question around future sources of material growth may not come from tweaks to the internal protocols for selling discrete products.  The answer may come from a repositioning into new propositions for relevancy to the Eco-Systems of your customers, often through services. 

Peter Allen has many years of operating experience as a top executive and strategic advisor for companies of all shapes and sizes, with focus on technology-enabled business services. He is now Senior Advisor for Alvarez & Marsal, and Chief Evangelist at Peter Allen & Partners.

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