Tomicide Solutions, May 2010

The Three Sides Of High Leverage Information Technology Business Development

By Tom "Bald Dog" Varjan

Podcast version: MP3 Version. Right click the link and click "Save As".

Do you know that blond people have the most hair? While the average human head has 100,000 hair follicles, blondes average 146,000 follicles. With about 86,000 follicles, nature is the stingiest to readheads, although, based on various psychological research studies, they make up for their follical shortcomings in temper.

While this is a bombastically splendiferous fact, especially considering that I'm a blond. Physically I used to be, in spirit I still am. Does that count? But the comforting part is that when it comes to business development, we have only three major aspects of business development to deal with, not thousands.

Yet, sometimes even these three aspects are too much to work on, and many IT companies choose to simply increase their raw efforts and leave the other factors alone. It's like the fertility clinic encouraging the eunuch to gobble down more Viagra in order to start a family.

And while the clinic makes good money on the Viagra, the poor bastard's resilient Viagra-munching keeps producing pretty soft results. And the soft results remain, even if he decides to attend a few personal development seminars with some of the best motivational speakers.

Similarly, when IT companies' main strategy to beef up their business development is merely doing more of the same in a more resilient fashion, the end result can be pretty nasty.

Yet, when the numbers don't add up, most of them hire more salespeople, more cold callers or increase the number of cold calls callers have to make. More of the same.

So, what are the three aspects to consider when building a high-performance, high-expectation business development team?

  1. Leadership

  2. People

  3. Systems

Since as the saying goes...

"Fish rots from the head"

...let's start with leadership because everything stands or falls on this baby. I think Peter Drucker was right when he said that most companies were over-managed and under-led.

That is, business development people are micromanaged on a second by second basis, but no one knows what exactly the company's business development strategy is all about.

So, let's take a closer look at...

The Leadership Side of Business Development

The leadership side of business development is about building a holographic business development team.

Why holographic?

Briefly, when two laser beams intercept, the interference creates a pattern of light waves and dark ripples. If one of the lasers reflects off of an object before interception, and it's reflected to a photographic surface, you capture a three-dimensional image of the object.

The interesting part of the hologram is that if you break it into little pieces, each piece contains the whole object.

In holographic teams every team member has the full organisational code in her behaviour and operation. That is, you can replace team members with each other, and they carry on as if nothing had happened. This is why I like calling this team a business development commando.

In a commando, every team member has his core expertise, but if someone dies or gets injured, any other team member can jump in and pick up the fallen colleague's work.

In the military, cross-trained Special Forces soldiers earn more than normal solders trained as narrow specialists. Similarly, in business development, folks who are suitable for holographic team work demand higher pay than the typical business development specialists.

The unemployment lines may be full of IT specialists with Master's Degrees and above, but people who have up-to-date technical skills coupled with business savvy and social intelligence, receive enough offers to last for six lifetimes.

Technical skills can take you as far as the hallway to talk to purchasing agents but only business skills and social intelligence can get you into the boardroom to talk to the top dogs.

The holographic nature of the team is important because it works on client acquisition and retention in an integrated, holistic, manner. Yes, we can split business development into marketing, sales and client fulfilment, but realistically it must be a seamlessly integrated process.

Look at medicine...

There are specialist doctors like cardiologists, podiatrists, gynaecologists, etc. The problem is that they look at medicine from their own perspectives and ignore the rest.

When a podiatrist looks at a cardiac arrest victim, he shakes his head incredulously...

"I have no idea why he died. He has perfect feet."

By contrast, when a cardiologist puts the stethoscope to the chest of a car accident victim with broken legs, he may say to this person in a reprimanding way...

"Your heart is in perfect health. What are you wasting the taxpayers' money lying in hospital? Get back to work right now, you bloody slacker!"

And unless you have private medical, even the doctor's tone of voice is pretty close to what you get.

Compare this approach to how holistic healers and naturopathic doctors examine their patients. They check the flow of energy, "chi", in the body. They know that everything stands or falls on the flow or lack of flow of energy. Not the heart, not the foot or other bits and bobs individually, but the overall energy flow.

Business development as a process and a business development team must be looked at the same manner. It is foolish to split it up by functions, which ultimately creates silos within the department. You have to work on creating energy flow both in your people and your systems.

With your people you also have to focus on the soft stuff, like passion, drive, ambition, enthusiasm, devotion to excellence, etc.

Your systems' success lies in how labour-light, predictable, repeatable and quantifiable they are.

And there must be seamless energy flow at three levels:

  1. People to people - How people interact with each other

  2. System to system - How processes join together to make up the whole system

  3. People to systems - How people and systems interact with each other

Make sure your business development is done in a holistic way, so you will never have to revert to heavy-duty and highly invasive manual labour business development which can leave you with some pretty nasty scars.

Let's just think. What do rats do when they are cornered? Well, they go berserk and attack.

And what do buyers do when they are cornered? Well, they build sophisticated peddler fodders, hide behind them and then yell at peddlers...

FX 1. FX 1. Alice in wonderland - Off with his head Part 2: 28:20: Off with her head Part 3: 2:43: Off with her head 14:10: Off with her head 18:00 21:25

Well, that's the message, die peddler die. The sooner the better.

The "High Expectation" Team?

As humans, we are interesting creatures. The more we are expected of, the better we perform. People who work out with personal trainers the first time notice they can run faster and lift heavier weights.

How come?

Well, expectations. What happens is that someone expects more of you than you expect of yourself. So, you "merely" live up to the trainer's expectations.

I'm a "hobby" personal fitness trainer and lifestyle coach, working with women entrepreneurs and executives, and I've observed over the years that my clients can perform as much as 15-30% better when they're working out under my guidance, as opposed to working out on their own.

Everything is the same except my expectations. And since they've invested in my help, they expect more of themselves. And that means there is someone who always expects more than their "I'm doing my best" delusion.

We acknowledge achievements and then we raise the bar. In fitness this is called the S.A.I.D. principle: Specific Adaptation to Imposed Demand.

There are four ingredients we require in high-expectation team members...

Oh, and this "high-expectation" approach applies not only for team members but to prospects too. That is, you must do business development on your own terms, guided by your own values and sense of autonomy.

Paraphrasing Peter Block's comments in his book, Flawless Consulting: The problem with bending over backwards for prospects and clients is that they assume that this is your normal working position. They keep dumping more and more work on you, demanding more and more from you (for the same fee of course), and you will never be able to walk and work straight up ever again.

So, what is autonomy? It is doing your work to the beat of your own drum, and when prospects ask you to bend over backwards for them, you have the spine, guts and balls to tell them "No", and walk away if necessary.

Not because they are bad people. No. They are great people, and they will be masterfully served by another company that can accommodate their excessive demands. There are lots of companies out there that happily accept the crappiest assignments.

For instance, one point of autonomy I suggest my clients is to set first appointments in their own offices and not to travel. No, it is not about the advantage of the home turf. It is simple time management. Many prospects are flakes and chronically late from appointments. Many simply forget about appointments, even the ones with fancy electronic organisers. And some intentionally stand you up. You show up at their places and they are nowhere to be found.

So, Let's Discuss Some Team Issues Here

The Leadership Side of Business Development

People who actually operate the systems on a daily basis.

Systems which are operated by the people.

Leadership to set the vision and strategy of the company, so people always know what is happening and they have a sense of what they are contributing to.

  1. People are working hard to execute the strategy but are re-inventing the wheel daily, wasting precious time and piles of money on manual labour grunt work, including cold calling, pavement pounding and door knocking.

  2. Lack of direction. People are operating the systems very effectively, but they don't know where the company is going. It is like a rocking chair in motion: Lots of activity but no progress.

  3. There is a problem. There is great leadership and amazing systems, but there is nobody to actually do the work.

  4. All elements are in place. Under the guidance and direction of proper leadership inspired people operate effective systems, producing fairly consistent and predictable results with minimum effort and maximum success rate.

The People Side of Business Development

So, what does it take to create a business development commando? You can have the best equipment, the nicest offices, the world's best CRM system, but without committed, accountable and disciplined people all that stuff is roughly as useful as a fart in a windstorm.

So, when you advertise for new hires for your business development department, you may want to forget the typical $10 an hour deal most companies offer. As the British say, if you pay peanuts, you'll get only monkeys.

And this is the interesting part of the deal. Since birds of the feather flock together, only monkeys, operating monkey businesses, are looking for other monkeys, so they offer peanuts as reward. And by a staggering coincidence, and the laws of fishing, your bait defines the type of fish you catch.

So, for $10-15 an hour you get people whose shoe sizes exceed their IQ. Who, just like ostriches, have larger eyes than brains. All in all, you end up hiring the local potheads, no-hopers and some chartered members of the local association of village idiots.

Just think about Formula 1 car racing. The cars are basically the same. Whether a car comes in first or last is up to the people who design, drive and service them.

After winning two consecutive championships with Benetton in 1994 and 1995, in 1996, Michael Schumacher moved to Ferrari and won five more consecutive titles between 2000 and 2004. By contrast, Nigel Mansell didn't win even a sausage while at Ferrari. He managed to win one championship in 1992 while at Williams.

Organisations are the same. People are the only differentiating factor companies have these days. Everything else comes from the same few suppliers and they are available to anyone in any industry.

You need people to operate the system under great leadership. People must be in harmony with the company's leaders as to where the company is going and growing. And just as every soldier is entitled to have great commanders, every team member is entitled to have a great team leader.

At the end of the day, it is the leader who makes sure the team is progressing in the right direction.

You have three considerations with your people.

So, Let's Discuss Your People Here...

The People Side of Business Development

Technology skills: The necessary technology skills that qualify you to do what you do.

Business skills: A solid level of business savvy in order to understand how your technical solutions manifest themselves as business improvement and measured in the boardroom.

People skills: The skills required to collaborate with a broad range of professionals.

  1. These people have technical and people skills, so they understand the technical work and can interact with others. But they don't have business savvy, so they can't have boardroom credibility. They don't have the skills to interact with boardroom calibre people. This company is likely to remain a fungible vendor.

  2. These people have business savvy and people skills, but are short on technical skills. They can land sweet deals but don't have the capacity to do the work. The problem is that since there are multiple buyers on the client's side, this technical shortcoming is likely to surface and the seller is likely to lose the deal.

  3. These people have technical skills and business savvy but are missing people skills. They may be geniuses but don't have the skills to communicate that brilliance, so it doesn't get recognised. They could do great work but can't land business.

  4. These people have all three skills. They have people skills to interact with buyers, business skills to diagnose buyers' situations from the business (vs. technology) standpoint and technical skills to do the work.

The way I see it is that in order to rise above the commoditised world of the fungible vendor, the same people who sell the work must do the work. This is why doctors and lawyers charge a fortune but don't have objections from their patients and clients. In their worlds sellers are doers too. And that alone significantly increases perceived value.

Well, hell, I call it a pretty good model.

The System Side of Business Development

In order to develop a consistent, predictable and fairly duplicable service delivery, IT businesses have to develop processes and systems.

So, Let's Discuss Systems Here

You have to see your business development activities as a system with specific processes. Some processes can be automated, some are manual and there is not a sausage you can do about it.

I often tell clients to motorise the interest and humanise the commitment. You can keep in touch with interested buyers using 100% automation and zero human effort. When the buyer's interest becomes commitment, then we can add human touch to the equation.

Of course, the aim is to automate as much as possible in your business development, but certain things just have to remain manual. Nevertheless, your operation must be autonomous enough to dictate your own "Rules of the Game". You must be able to do business on your own terms, and you must not let certain prospects spit into your soup saying...

"We expect you to halve that price and we pay 90 days net."

That's retarded.

In the movie Excalibur, the Sword (named Excalibur) was the symbol of everything the knights of Camelot stood for. Every decision was based on the values represented by Excalibur.

You must be able to express your Rules of the Game without worrying how prospects will feel and whether or not they get pissed off with you. As Roy Williams, the Wizard of Ads says...

"This is who we are and what we stand for. You can like it, you can lump it, or you can take it down the road and dump it, but we will forever remain who we truly are."

And many aspects of this can be automated. For instance, you don't need to tell every prospect what you stand for. You just create an "Ideal Client" profile, and prospects can de/select themselves. You see, no manual labour is required.

The System Side of Business Development

Prospect Development: This is the process of generating sales leads and nurturing those prospects to the point of conversion.

Prospect Conversion: The process of converting prospects into paying clients based on your Prefect Client Profile.

Value Delivery: The process of delivering the kind of value to which the client says, "This was a bargain" and you say, "We've made a sweet margin on this project."

  1. This is the typical Internet marketing company. It has huge traffic to the website (lots of low quality leads) and great valuable services, but the website fails to convert visitors to paying clients. Of course, you can't convert low quality leads. Therefore most Internet marketing companies employ legions of sales people pounding pavements peddling door to door and cold calling.

  2. This is a scumbag company with dubious services. It can generate leads attract and convert them into paying clients, but what they offer is of no value. Many search engine optimisation firms suffer from this. They say clients need search engine optimised websites, but what they fail to recognise is that search engine optimisation done in isolation doesn't necessarily translate into ROI. Thus they have huge client attrition.

  3. This is the typical professional service firm, like accountants and lawyers. They can convert prospects to clients for their valuable services, but they often don't have enough qualified leads to be converted. They have lead generation problems.

  4. There are plenty of quality leads generated, they are converted at a good rate and the company has a products or services which represent distinctive value for the target market.

Organisation expert, David Allen (The "Getting Things Done - GTD" guy) is fond of saying...

"The definition of work is anything that has to be done and is not done yet."

And...

"GTD is a systematic approach to getting things done with the least amount of physical and psychic effort."

Now some people may accuse David of being lazy, and he openly admits he is, and this is why he's invented his GTD system. But in spite of his laziness, he's achieved great things in business and I'm sure, based on his reputation, his clients are very delighted with the improvements David has brought into their lives.

And it's all about systems.

On Summary

So, we've seen the three sides of High Leverage Business Development.

I've decided to call the model "High Leverage" because it's not based on doing more of the same by hiring more people as so many IT company are fond of doing, but on doing less of something completely different. And keeping headcount as small as possible.

Some people may see it as a flaw because they think it limits revenue potential. And it may in a way.

But I don't want to maximise gross revenue. I want to optimise the company's performance for a few indicators, including but not limited to net profit per employee.

So, let's touch on maximisation vs. optimisation.

Maximisation looks at one single absolute performance indicator, like sales, profit, etc.

Optimisation looks at multiple relative performance indicators, like revenue per employee (total value captured divided by the number of brains that captured it), profit per client, etc.

But unlike maximisation, optimisation looks at the whole system. This is like the laundry line effect. You pull on a bra strap at one end, and some socks and knickers start dancing at the other end of the line. Garments are tied to the line independently but move together.

This is why optimising several factors is a lot harder than maximising one.

In 2008 Hewlett Packard made the highest amount of gross revenue at $118.36 billion. Google was ranked at 9th place at $21.8 billion.

And here comes the twist...

In terms of net profit per employee, Google was ranked first at $209,624 and HP was ranked at 14th at $25,947.

Google has a 5.15 revenue to profit ratio, that is, 19% of the top line goes to the bottom line. HP has a 14.2 revenue to profit ratio, that is, 7% of the top line goes to the bottom line.

Now which company do you think performs better? And besides the money, Google has created such a great culture that people from all over the world are lining up wanting to work at Google.

What we've just discussed here focuses on creating high net profit per employee, while it also focuses on creating a conducive culture in which people want to do their best and brightest, so they can achieve a high level of professional fulfilment. And they don't need managing in the traditional "carrot and stick" manner.

This culture thing makes me think of vacations. Some of my friends quickly get to their destinations, and stay there for a few weeks. Some others take their time to get there and enjoy every moment of the journey and the scenery.

Some people run their companies in a "get to the money quickly" fashion. Some run their companies in an "enjoy the journey" fashion.

When you align your company around the three sides of business development, you end up with an "enjoy the journey" type company. You make great profits and all the people who are involved with your company in any shape or form enjoy working with you because they enjoy the wealth-creation process.

And while the company is producing great profits, all the people involved enjoy great professional fulfilment, or even, using Maslow's words, self-actualisation.

And this is a lot better than working in a Gulag-style shithole that makes a pisspot of money for the shareholders while keeping everyone as poor as the church mouse.

Or am I just delusional?

Come and let's discuss this newsletter issue on my blog...

Attribution: "This article was written by Tom "Bald Dog" Varjan who helps privately held information technology companies to develop high leverage client acquisition systems and business development teams in order to sell their products and services to premium clients at premium fees and prices. Visit Tom's website at http://www.varjan.com.