Tomicide Solutions March 2008: Five Sure-Fire Signs Of A Smart Business Development Strategy For Information Technology Companies

By Tom "Bald Dog" Varjan

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Do you know that a cockroach can survive for nine days without a head, before finally dying of starvation? The reason why I mention this is because, by a staggering coincidence, this is roughly how long technology companies can survive without a good business development strategy before sinking into the dreaded feast and famine disease. Good business development is the company's engine room.

And this usually happens because of, what Jim Rohn calls, the law of Diminishing Intent. It means that many technology companies do their fancy off site strategy retreats and motivational dog-and-pony shows, and then the strategy binder goes straight into the bottom drawer of the filing cabinet. After the fancy meeting, people go back to their real lives and real busy-ness, and implementation is as good as dead and forgotten.

These companies have great intentions when it comes to the planning of the strategy, but when it's time for implementation, well... the picture is a tad overshadowed by organisational sloth, chronic busy-ness and general paralysis.

Here we discuss five sure-fire signs of a smart business development strategy. Don't let them get to your tits by trying to do all of them right away. You probably don't even need all of them.

I also suggest that if you like any of them, then select an easy one because if you do that, an early victory will give you satisfaction an inspiration to carry on. And then the momentum will take you to the next level. Well, you still have to work on it, sometimes even to temporarily work your arse off, but a little momentum always helps. Just think about how frustrating it is to ride a bicycle in oncoming wind, and how inspiring it is to ride it in following wind. This is the same idea. So, enjoy...

1. A Smart Business Development Strategy Is Actually Client-Centred Not Self-Centred

The more technology companies give in to hiring separate salespeople to sell their services, the more they turn themselves into commodities. Salespeople who were selling pots and pans yesterday, and today they're selling complex technology solutions. Something's wrong with this picture.

From their business development strategies, it's apparent that many technology companies are not interested in building high-level relationships with their potential or existing clients, so they abdicate this role to the least trusted, least respected, least reliable, most fickle, most troublesome segment of their companies: A commissioned sales force.

Tom Stevenson and Sam Barcus wrote in their book The Relationship Advantage: Become a Trusted Advisor and Create Clients for Life...

"Few companies make building relationships with customers a top priority for the whole organization. Rather, most delegate it to the area in their organization that experiences the highest level of employee turnover - their sales force."

Besides their compensation, the other problems is how these salespeople are integrated into their organisations. Well, they're not integrated at all. Using military language, they are not a significant part of the company. They are some kind of mercenaries, and since they are regarded as such, they operate as such. And they can't even be blamed for this behaviour.

How do salespeople get hired? Imagine, you hire salespeople on Monday, on Tuesday morning you give them a stack of brochures and the Yellow Pages with a message, "Get dialling. I expect you to sell something by this afternoon."

Not in one of my sales positions have the sales manager or anyone else bothered to educate me about the company's culture, values, mission and vision. My job was to roam the streets and try to convince some folks to buy my stuff.

So, sales folks get hired on a 100% commission basis, so they have to produce almost instant results if they want to live and feed their families. And this is the problem. The typical B2B sales cycle is somewhere between nine months and three years. What that means is that these salespeople are expected to spend all that time pursuing new business totally and utterly on their own dimes. What also happens is that when companies don't have a "skin" in business development, then it becomes unimportant.

It happened to me many years ago that I generated sales leads from a magazine and one company was ready to buy. Sadly, my boss was so busy that he totally forgot to write and send out a proposal to a qualified buyer. And since he was an insecure control freak, he didn't allow anyone to write proposals and negotiate sales. He did this because this way he was involved in the sale, and salespeople had to split their commissions with him. Basically, he had to pay only 5% commission.

So, because of my boss' incompetence (what else?) I lost my commission, while he got paid as if nothing had happened. The fact that he negligently lost a nice six-figure project opportunity wasn't mentioned. Not even at his annual review where he scored a perfect ten for his outstanding work and exemplary leadership.

Salespeople are one of the first human contacts in any company, so they are setting the company's first impression and the perceived value of its solution. It's also known that commissioned salespeople's annual turnover rate is 43%. So, when prospects are facing the possibility of meeting sales reps or account executives, they know a few things right away...

Are prospects right? Well, at least partially.

Technology companies can brag all day long that their mandates are to help their clients, but this mandate goes right down the toilet when these companies are represented by salespeople with one single mandate coming from their sales managers: "Go and get 'em!", "Hit your numbers!" or "Exceed your quota!"

I know this sounds a tad harsh, but think about how you deal with salespeople who cold-call on you.

What amazes me is that the same people who expect their salespeople to do cold prospecting grunt work, dialling for dollars, pounding pavements, wrestling with gatekeepers, dodging no solicitors signs, sneaking through toilet windows to see decisions-makers, ruthlessly screen their own incoming calls, set up barbed wire fences and armed guards to protect them from the unwanted onslaught of overzealous salespeople who don't take no for an answer.

Selling complex technology solutions is different from selling commodities, which are more transaction based, while selling complex stuff, which involves several people both on the buyer's and the seller's sides, is more relationship-based. And it's not just the price tag. Buying a $40,000 SUV is still transaction-based. But hiring an IT consultant to review and critique a network plan for 500 workstations for a $35,000 fee is much more than a transaction. It requires trust on both sides.

Client's side: To make sure the client discloses all the information the consultant needs to make a valuable evaluation of the plan.

Consultant's side: To make sure that the consultant is not merely knowledgeable on the topic but is also unbiased and is not offered financial or other incentives to make shortcuts. This is vital if we consider that in healthcare millions of doctors are...

...Losing Their Objectivity Through Financial Incentives

The problem is that many of these salespeople are on partial or full commission, so their objectivity and long-term vision are gone, and their focus is on selling as much and as quickly as humanly possible to maximise their own commissions.

"I know all you have is a conked-out router, but what I propose is this: We'll come in, rip out all the cabling, get rid of all the workstations and your server. We build a brand new bullet-proof server room and install new workstations. And we'll do that in a brand new building. The work will take about five 10 years and about $50 million of your money. What do you think?"

Of course, salespeople sell their most expensive solutions since they make the most amount of money on those solutions. The fact that they undermine their firms' reputation in the process is irrelevant because by the time the shit hits the fan and clients start smelling it, these salespeople, due to the 43% annual turnover, have left the firm and they are beyond ditch and bush, making them impossible to track them down and question them about the project.

Of course, the company enjoys the quick buck, but, as Stephen Covey says in the 8th Habit...

"When you choose and action, you also choose the consequences of that action."
Or, as in the movie Men of Honor, Navy Diver Master Chief Leslie "Billy" Sunday said to his divers before going on their R & R leaves...

"The one-night stand lasts for one night only, but the resulting syphilis lasts for a lifetime."

Flooding a technology company with commissioned salespeople is a short-sighted strategy of going for many one-night stands, and enjoying the resulting instant gratification of the quick buck. It may be sweet in the short-run, but it also brings these companies the proverbial syphilis of the dreaded feast and famine disease and the market position of a dreaded peddler.

Instant gratification plagues many industries. Let's just take a quick look at healthcare...

We know this is a huge problem in healthcare, where large drug companies have been building lucrative relationships with doctors based on short-sighted, often unethical kickbacks. According to a recent study, published in The New England Journal of Medicine[1]...

Contacts between doctors and sales reps have jumped from an average of 4.4 visits per month in 2000, to an average of:

The only group appearing to be meeting drug company representatives less often than before is anaesthesiologists, who now see reps twice a month, which is interesting because anaesthesiologists are the proverbial implementers. They are there to "implement the project," but clients don't go to them to discuss their problems.

And just as this issue plays out in medicine, it plays out in consulting too...

The U.S. Department of Justice[2] is now suing Accenture for accepting large sums of money from large companies like IBM, Hewlett-Packard, Sun Microsystems to help them to secure government contracts. And while Accenture calls this arrangement a strategic alliance, according to the U.S. Department of Justice, the sole purpose of this "Alliance" is to leverage Accenture's existing relationships and influence to help the other companies to "infiltrate" lucrative government opportunities.

The problem is that in this scenario, whether or not the company is qualified to do the work is not even questioned. Now I know that IBM and HP are companies with great products and services but I find it hard to believe that they qualify for every type of technical work they apply for in this fiendish arrangement. It's their money that instantly qualifies them.

What Happens To Trust?

If we want to have our client acquisition system to be client-centred than we have to let trust guide the process.

Here is one more section from Tom Stevenson's book...

"The word trust is derived from the German word trost, which means comfort. It implies instinctive, unquestioning belief in, and reliance on, something."
"The American Heritage Dictionary (New College ed.) provides a simple definition: Trust: A firm reliance on the integrity, ability, or character of a person or thing; a confident belief; a faith."

But how can we achieve trust with our market if we rely on salespeople whose incentive is to advance their own financial situations outweighs their incentives to actually help clients?

We can't. And the market knows that.

Prospects are sceptical enough even when they talk to salaried experts. Let's not make the situation worse by forcing them to talk to commission-hungry salespeople. I see two options here.

  1. If you insist on having a sales force, then integrate your sales force into your company. Put them on the same pay structure as everyone else. Also, when you hire them, accept the fact that they spend at least six (more likely 12) months learning about your company, your people and your company's unique offers. They need to know the full picture of what they're selling not merely a canned sales pitch.

  2. The other option is that you forego the sales force and create a systemised client acquisition programme. Quite appropriately, Alan Weiss of the Summit Consulting Group calls it "Marketing gravity." Basically you build a system that creates ongoing demand for your company's services. And as the demand grows, you don't increase headcount but increase your fees and become more selective of new clients. Have you noticed that smaller firms are more profitable (net profit per person) than larger ones?

To avoid misunderstanding, I want to emphasise that I have nothing against commissioned salespeople. They are not bad people. They are forced into a bad payment system that forces them to put their own interest before their clients'. They lose their objectivity and go for the quick buck. That's just normal human nature, and most of us would fall for it.

When I look at some of my mentors and role models, like Alan Weiss, David Maister or Robert Middleton, they are all "one-man bands," but their performance (net profit per person) far outweighs the performance of some of the most prestigious companies.

And the message I've learnt from all three of them is that trust-based relationships and good marketing come first, and money follows, which instantly invalidates many technology companies' approach when they send out newly hired salespeople with a message, "Go and sell them something! Right away!"

So, technology companies must become prospect- or client-focused, and distance themselves from incentives that focus on short-term instant gratification type results.

2. A Smart Business Development Strategy Is Profitable

Now back to the basic scenario. Technology companies want to increase their sales by hiring more salespeople. What happens is that short-term revenue goes up? Great! It's time to celebrate...

But what also happens is that the cost of sales goes up too. Now, hold back on that celebration, man! Yes, we can expect the cost of sales go up a bit but not as much as it usually does. By the same token we could even expect the Spanish inquisition.

When you hire new salespeople, it takes 8-12 months to get them up to speed on your organisational strategy, long-term vision, etc., that is, to fully integrate them into your company, so they can operate at their full potential.

And what you're likely to find is that the cost of having new salespeople on board goes up a lot more quickly than the value they can contribute. But this is a good investment because once they're up to speed, they can produce really well.

The sales force loses its profitability when salespeople spend their precious time doing cold-prospecting. An activity that could be easily automated, so salespeople could deal with the incoming enquiries from qualified prospects with genuine needs, budgets and requirements.

According to the Dartnell 28th Sales Force Compensation Survey, average salespeople spend 71% of their time prospecting because their marketing departments fail to provide them with qualified sales leads. In many technology companies, marketing departments are too busy manufacturing fancy slogans and retarded images that don't contribute a dickybird to sales but are great ego trips for some award-chasing creative people.

The remaining 29% of time is split between actual selling, attending company meetings, handling paperwork and travelling to and from appointments. I don't even mention professional development, because in most cases it is an unknown entity due to lack of time.

Furthermore, according to McGraw Hill, one face-to-face sales meeting costs some $350. An out-of-town meeting costs over $1,000. Have you ever calculated how many in-person meetings have you had lately?

So, can you see that by hiring more salespeople with the intention of boosting gross sales can actually bust your net profits?

The sad fact though is that most technology companies are obsessed with gross sales but blissfully ignore net profits. It's like a general who manages battle by body count but blissfully ignores recon intel.

Alan Weiss often mentions the timely wisdom in his books...

"It's not what we make but what we actually keep that counts."

And most technology companies are obsessed with gross revenue. They have two great wishes: 1) Higher gross sales and 2) more clients. They operate like cattle ranchers who are obsessed with headcount. Once the company had 10 salespeople chasing prospects and spreading fear (of being cornered for appointments and phoney closing techniques) among them. Now there are 20 sales folks. "Let's spread fear among our target market more quickly and more efficiently."

But let's look at this problem through the eyes of the cattle rancher. All right, you go for headcount and keep acquiring more cattle increasing the total weight of your livestock. But if the new cattle you acquire were farmed incorrectly and have astronomically high body fat content, then you're in trouble because the quality of beef you produce is really rubbish. The total weight is there but what smart ranchers need is well fed cattle that will provide top-notch low-fat beef. If your beasts are grossly overweight, their value goes down.

Years ago I funded my way through university by working at - among others - a slaughterhouse, and I killed and processed hundreds of cattle. They were traditionally farmed "volume-produced" cattle. They were high in fat and not exactly top notch in meat quality. After a while I ended up on a small ranch slaughtering organically grown cattle for the highest calibre meat money can buy. A totally different ballgame. And a totally different meat structure. Actually these beasts had untreated, non-manipulated lean meat. Do you know that for truly organically farmed animals even artificial insemination is forbidden? There must be a real mummy and a real daddy. The meat wasn't enveloped in layers of fat, the result of endless sessions of hormone treatment and biomedical manipulations.

So, paraphrasing Alan Weiss, the idea was not how many beasts we slaughtered but how much lean, high-calibre meat we got out of them. The large slaughterhouse had a gross weight mentality. The small ranch had a lean meat mentality.

And I believe running a successful technology company requires the lean meat mentality of a small ranch owner. Keeping waste, that is, organisational fat, to the minimum, and keep improving the methodologies of trimming it away more efficiently. And this is why the key is to increase sales without increasing the cost of sales.

I think this is why small technology companies can be more profitable than large ones. Large companies have "gross weight" (gross sales) mentality, whereas small companies have "lean meat" (net profit) mentality.

You can make a fortune in gross sales but if your cost of landing new clients is too high, high gross sales are just useful as a chiropractor clinic on the steps of the gallows. Of course, at this point enters the accountant and announces that the company has to cut operating costs. And the firm annihilates a Google AdWords campaign that costs $50,000 a year and lands high quality sales leads that turn into additional annual revenue of $1 million a year like clockwork. A mere 1,900% ROI. Maybe 1 in a million accountants, with some kind of positive brain damage, says, "We have to increase profits." But that's not typical.

So, the key is not about increasing sales but increasing margins. And that's a touch more complicated, hence many technology companies don't even try to do it. They mislead themselves by hiring more salespeople because that brings in instant revenue. And in their blind determination to boost gross sales, the end up busting their net profits.

So, what is the solution here? Coming from engineering I may be biased here, but I believe the solution is automation. Look, sooner or later you have to cough up the dough to generate new sales leads and escorting them through your sales funnel.

Either you make an upfront investment and design a client acquisition system that serves you for the rest of your life or fall into the never-ending vicious cycle of "hiring -> training -> motivating -> firing -> replacing" of salespeople. The former takes a bit of upfront time, money and effort but works forever. The latter is comfortable, convenient and traditional, and is cheap and easy to start but it will sap your money and energy day in day out for the rest of your life.

The way I see it if a one-time upfront investment can help me to avoid a lifetime money drain, I do it. Edwards once said that 97% of business problems are system-related not people-related. Then why would I waste the majority of my time and money on an issue that is only 3% of my problem; the human stuff? Also, when those humans are given a good system, at least half of them can be pretty damn good. Or even more. Asking salespeople to produce sales miracles without a good system is like asking a master chef to make a top-notch gourmet meal over the heat of a cigarette lighter.

So, what to do here? Calculate the lifetime value of the typical client and calculate what it is worth to you to land this client. Then monitor your client acquisition and properly write down all the costs that go into both 1) client acquisition in general and 2) the acquisition of specific clients. For instance, if you're on the 10th in-person meeting with a prospect and he's still evaluating competitive bids from 10 other firms then you'd better move on. Using the McGraw Hill study, the 10 meetings already cost you $3,500. Cut your losses and move on.

I may look at it the wrong way when I compare client acquisition to dating, but I wouldn't want my date, after the 10th dinner, still to be pursuing nine other relationships with nine others guys. And if so, then I may be chasing the wrong girl.

And if this happens to you, then some of your prospects may be thinking that you're of great value for free brain-picking, and they know they can carry on dragging you on and on without running the risk of being asked to ever make up their minds and decide whether or not they are willing to buy. And this dragging on process is fine as long as it's automated.

3. A Smart Business Development Strategy Is Optimally Automated

In the information age we can observe a few interesting developments, including the better and more effective use of our brains. Nevertheless, many technology companies are still evaluating the effectiveness of their business development strategies based on how many hours their salespeople are out there roaming the land. And the sad reality is that a mediocre system that takes a long time and lots of effort to operate is valued higher than a good system that takes less time and effort to operate. Sales folks who are doggedly chasing prospects using manual labour are deemed to be more productive than the folks who manage their sales processes from a computer and a cup of fresh hot tea. I believe technology companies should seriously consider the R.O.W.E. system (Results Only Work Environment).

Many sales managers still believe in what Karl Marx's wrote about in his Communist Manifesto...

"We arrive, therefore, at this conclusion. A commodity has a value, because it is a crystallisation of social labour. The greatness of its value, or its relative value, depends upon the greater or less amount of that social substance contained in it; that is to say, on the relative mass of labour necessary for its production. The relative values of commodities are, therefore, determined by the respective quantities or amounts of labour, worked up, realised, fixed in them. The correlative quantities of commodities which can be produced in the same time of labour are equal. Or the value of one commodity is to the value of another commodity as the quantity of labour fixed in the one is to the quantity of labour fixed in the other ~ Karl Marx, Value, Price and Profit, 1865

Essentially, the longer it takes to make a contribution, the more valuable it becomes because it consumed more manual labour.

I think this is the point where large technology companies with sales armies have to start modelling small technology companies where the technology experts are expected to sell as well. These companies, where the same folks land clients, nurture the relationships and do the work, seem to be able to sell their stuff at a higher price and they seem to be more profitable than large behemoths with top-heavy structures and astronomical overhead costs.

The problem happens later when many technology companies want to increase sales and start hiring more salespeople, hoping that the more salespeople are out there chasing after the market, the more money the company makes. And they often do. But then when it comes to net profits, then it's a different picture.

Look at Ford in 2006. Gross revenue $160,123,000,000. Revenue per person is $565,806. So far so good. But now let's look at net profits. It was a deficit of $16,950,000,000, that is a neat $59,894 deficit per employee.

Measuring a business' success by gross revenue is as retarded as measuring a hospital's success rate by the number of funerals in the neighbouring cemetery.

And the other problem is that when new people are hired, there is no time to integrate them into the company. Instead, they are expected to hit the road running, and perform miracles right away. And it hardly ever happens.

But here is the sad reality. Doubling your sales force doesn't mean doubling your sales. Besides, what's the logic in doubling my sales if my cost of sales triples? But the conventional (classroom) wisdom says that the success of a company is measured by its size and total gross sales. I'm not sure why, but to me this is ridiculous. Just see the Ford example above.

And I believe low sales performance happens because many technology companies fail to use the right amount of automation in their own client acquisition processes, one of the very few functions that can be automated. This is why this automation stuff is important: The average B2B sales cycle is between nine months and three years. The idea is to guide prospects through your sales funnel with as little manual labour as possible. There is some in-person time to be invested towards the end, when prospects are close to making buying decisions, but no in-person time should be wasted on tyre-kickers, plate-lickers and bargain-hunters. We have to let the system take care of them.

Your lead generation and lead qualification systems should qualify prospects just as precisely as the size of the eye on the fisherman's net "qualify" fish. Some fish are to stay and some are to go to grow bigger. The better the net qualifies the fish, the less work the fishermen have to do to check the size of the fish.

4. A Smart Business Development Strategy Must Be Supported By The Top Dogs

One of the biggest reasons why initiatives fail in technology companies is the lack of buy-in from top executives. Don't get me wrong. They expect, furthermore demand, incredible sales results, but show no interest in supporting business development initiatives. In the shadow of the real professionals, the programmers, the analysts and the IT architecture designers, the business development folks often are a sort of barely tolerated bunch of lowlife whose sole purpose is to make the professionals' lives as miserable as humanly possible. And top executives are usually on the side of the professionals, and are reluctant to get involved in such a "subhuman" activity as selling the company's stuff.

That's why we can see ads like...

"World-class software company is looking for top-notch salespeople to sell our industry leader, robust, cutting-edge, state-of-the-art software, which is destined to end Google's monopoly once and for all, and push it out of business. Compensation: $11 per hour plus commission."

Out of curiosity I contacted the company and we even set up an interview. I was curious about this gig and the company. And when the interview's location was set at the local McDonald's, I turned down this "world-class" opportunity of a lifetime. A world-class company meets people at McDonald's. Well...

So, what is this lack of executive buy-in?

When the business development folks develop a direct mail campaign with some rough ROI projections, executives nod in apathetic agreement. "Nice, nice!" - They all say.

But when these folks want to implement the programme and need money for envelopes and stamps to send out the letters, executives often kick up a fuss about money to be wasted. But at the end of the fiscal quarter the business development folks get beaten up (again) for lacklustre performance. And the executives who have actually caused the low performance get their bonuses and promotions. Well, they are the very people who beat up the business development folks. Nice!

According to a 1997 survey, conducted by KPMG Canada, projects fail for the following reasons. And while in the traditional sense projects are initiatives for clients, client acquisition is an internal project, and must be treated with the same dedication as a client project. And it's even more than a project because it's ongoing with many many different kinds of campaigns.

  1. Poor project planning - Specifically, inadequate risk management and a weak project plan. Risk management becomes more important as the organisation gets bigger, so larger organisations need to pay more attention to this area. What often happens though is that in pursuit the quick buck, management wants to skip or shorten the planning process and start implementing new campaigns. But without a plan there is nothing to implement. Also, as a rule of thumb, every one hour of planning can save three hours of implementation time.

  2. Weak business case - There must be a solid business case to initiate the engagement. The initiative must 1) increase revenue, 2) reduce costs and/or 3) avoid new expenses. And these ROI categories must be quantified. Hence the pretty detailed diagnosis.

  3. Lack of management's commitment, involvement and support - After starting the initiative, many executives say, "Do it, but leave me out of it; I'm too busy to get involved. And don't ask for money! There is none!" (The company has just bough brand new fleet of Mercedes for the top executives.) This passive couldn't-care-less attitude usually kills initiatives even before they start. Securing buy-in from the top, initiated by a strong business case and backed up with a realistic project plan, is an essential step to get started.

The 1995 Chaos Report by the Standish Group established the following reasons for project failures. Although this is for information technology projects, I believe we can safely use it as a guideline for any kind of project.

What Kills Consulting Projects
Kill Factors % of the Responses
Incomplete Requirements 13.1%
Lack of User (Top management in our case) Involvement 12.4%
Lack of Resources 10.6%
Unrealistic Expectations 9.9%
Lack of Executive Support 9.3%
Changing Requirements and Specifications 8.7%
Lack of Planning 8.1%
No Longer Needed 7.5%

As you can see, most problems come from the executive level either in the form of unclear expectations or lack of support. A friend of mine works at an IT consulting firm, and towards the middle of 2006, after sending out direct mail packages, the firm wanted to do telephone follow-ups. But no one knew how to do it without sounding pushy. I suggested that they got a copy of Ari Galper's Unlock The Game programme on telephone follow-ups. The result: The partners choked on the $950US price tag, and decided to do it the way they've always done it and it has never worked. 1,500 letters, fancy brochures and hours and hours of telephone work resulted in... nothing.

When the initiative of using direct mail to acquire new clients came up, the partners were excited to make more money. When it came to investing in the initiative to make it successful, the same partners decided to save money. To me this sounds like standing under the shower and desperately towelling yourself to get dry.

And by now, the competition has scooped up many of those clients this direct mail initiative targeted. So, the whole initiative, tens of thousands of dollars calculating personal time, went down the drain because the partners refused to invest in a $950 programme to learn how to do telephone follow-up the proper way.

Time Commitments For Managing Initiatives

Every initiative takes time to properly manage. Managers must allocate sufficient time for their folks to manage client acquisition initiatives. So what are these time frames?

Here are some numbers from project management, and from this we can guesstimate how much time each member of the team working on client acquisition must be allotted to do the work properly.

Note that times are cumulative, meaning if a person is both the project manager and a team member, that person needs to commit 75% of the person's total working time to the project.

Time Commitments
Role % of time Weekly FT Equivalent
Executive Sponsor: Top executives in the company. 10% 4 hours
Project Manager: The person who coordinates the specific business development initiative 50% 20 hours
Team Leader 50% 20 hours
Team Member 25% 10 hours

These numbers are given by the Project Management Institute for various levels of project involvement.

So, executives must not expect initiative (I use the word "initiatives" as internal projects) leaders and team members to fully participate in many other initiatives. For instance, it's retarded to have one person to be initiative leader for two initiatives, since being initiative leader takes up 50% FTE of the person. If you max out the person to 100% FTE, then when the shit hits the fan, as it always does, there is no safety margin to deal with, no one has time to fix the fan and soon the whole place get stunk up pretty badly, often beyond repair except total evacuation, that is, abandoning the initiative altogether.

5. A Smart Business Development Strategy Supports People's Lifestyles

I believe, regardless of what sort of work we do, it must support our personal lives, not enslave them. It's not enough to be merely profitable. There are many technology companies out there that are extremely profitable... on the surface at least. You dig a tad deeper and you'll find chronically stressed out, morbidly overweight folks past their second or even third divorces, gobbling up boxes of doughnuts and buckets of Coke at their desks. And all because they are pushed to produce more and more billable time. Maybe one more reason why the billable hour model should be abolished in any technology companies.

This may sound as a very simple approach, but you may like it.

If I work 20 hours a week and make an annual revenue of $200,000 and want to grow, I have two options...

  1. I can work an extra 20 hours and hopefully double my revenue (It hardly ever happens)

  2. I can keep working 20 hours a week plus spend an additional five hours a week to figure out how to increase the perceived value of my services, thus increasing my fees

So, the key is not about hiring more salespeople, but having the current salespeople work smarter, meaning, helping them with smart systems.

Deming discovered many years ago that 97% of the problems are related to bad systems not to bad people. To me systems include the overall atmosphere, culture and environment in which people work. Systems can either empower or oppress people. Empowered ordinary folks almost always outperform geniuses, oppressed by arsehole bosses, duplicitous cultures and excessive bureaucracy.

And what about the 3% people's problems. That's easy. People-related business problems are the escalations of personal problems. Managers should build 1-to-1 relationships with their folks, so, they can detect when their personal lives are out of kilter, and they can help before it becomes a business problem.

So, in business development, becoming more productive is not about hiring more feet on the streets, but using smart systems to support the current sales force. Helping the sales folks with better sales leads (generated on autopilot), better sales processes (most of which are not face-to-face) and paying your sales folks correctly.

The salary+bonus structure attracts drastically different people from the commissions structure. The best people in any industry have higher causes for doing their work than money. So, by emphasising money, you keep the best folks out of your company. Here is how employees value certain factors and how misinformed managers are about them.

What Do Employees Want From Their Jobs?
Factors Managers believe it's important for employees Important for employees
Full appreciation for work done 8 1
Good wages 1 5
Good working conditions 4 9
Interesting work 5 6
Job security 2 4
Promotion and growth opportunities 3 7
Personal loyalty to employees 6 8
Feeling "In" on Things 10 2
Sympathetic help on personal problems 9 3
Tactful disciplining 7 10

Sources: Foreman Facts, Labor Relations Institute of NY (1946); Lawrence Lindahl, Personnel Magazine (1949); Repeated with similar results: Ken Kovach (1980); Valerie Wilson, Achievers International (1988); Bob Nelson, Blanchard Training & Development (1991); Sheryl & Don Grimme, GHR Training Solutions (1997-2001). Note the huge gap between manager opinion and employee fact.

I think one of the reasons for this discrepancy is that far too many managers don't give a shit about their own people, and treat them as replacable cogs in the large organisational machinery. And in return for this treatment, many employees do the bare minimum not to get fired and justify their paycheques. And this happens in many companies that pontificate about excellence and being world-class in their mission statements.

I've heard this message from professional service firm expert, David Maister. The wording may have been different but the message was this...

"I've seen many firms with missions statements but only a very few with true missions."

And to best support our lives, we have to make our work as effective and fulfilling as possible. I believe effective work leads to fulfilment. After all, how fulfilling busy work can be when we know deep down that although the day is gone, but in terms of value, we've produced precisely dick. In his book, The Effective Executive, Peter Drucker wrote...

"To be effective, every knowledge worker, and especially every executive, therefore needs to be able to dispose of time in fairly large chunks. To have dribs and drabs of time at his disposal will not be sufficient even if the total is an impressive number of hours."

This is why it's short-sighted to compensate business development folks with hourly wages or commissions. They will accumulate the total hours, but, as knowledge workers, they manage what they pack into those hours. And with that packing, even if you try to control the number of total hours, they control the real value of those time chunks.

And the commission thing focuses on the quick buck very often at the expense of long-term success. Using farmer's language, the commissions folks are there at harvest time and put in lots of overtime to get paid. But when it comes to planting the seeds and nurturing the small plants, they are gone to harvest on someone else's field. After all, planting and nurturing don't pay.

So, what's important is telling people what we expect them to accomplish and let them do it. Yes, we are there to help, but we don't need to micromanage them.

Also, modelling successful people is great, but it's also important that we look at their personal lives. We may want to model their professional accomplishments but maybe not their divorces, the stomach ulcers and the exorbitant child support payments.

And remember the slogan on Eddie Bauer's shopping bags...

"Never confuse having a career with having a life."

Or as the late Thomas Leonard said...

"Have a fulfilling life, not merely an impressive lifestyle."

So, make sure that everything your do in your company supports both your own life and the lives of all the stakeholders. Your people, your external advisors, your suppliers, etc. Otherwise the whole venture is useless.

[1] A National Survey of Physician-Industry Relationships (Vol. 356:1742-1750, April 26, 2007) http://content.nejm.org/cgi/content/full/356/17/1742. Continue where you've left off

[2] U.S. DOJ Joins Lawsuit Against HP, Sun, Accenture http://www.infoworld.com/article/07/04/19/HNdojjoinshpsunlawsuit_1.html. Continue where you've left off

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.