Tomicide Solutions, January 2011
How Do We Know If We're A Replaceable Vendor Or A Trusted Technology Advisor And A Respected Technology Authority? Part 1
By Tom "Bald Dog" Varjan
Podcast: MP3 Version
In 1984 - Big Brother is watching you! - Jane Williams survived a 2,000-foot fall when her parachute failed to open. She landed in three feet of water in a farmer's pond and waded to shore without a scratch. Now she works as a volunteer nurse's aid, helping people who weren't so lucky."
The interesting thing is that many IT companies start hiking the steep and treacherous trails of trying to reach the glorious heights of becoming trusted information technology advisors, but they often lose momentum, come to a screeching halt on their climbs and then start rolling down the hillside faster and faster.
Usually they can do it quietly, but sometimes they make complete arses of themselves under the watchful eyes of their target markets.
And while some are lucky enough to land in a proverbial farmer's pond and walk away unharmed, many of them end up with some pretty nasty bumps, bruises or even some broken bones.
The problem is that they fail to assess their own situations before they start climbing.
Imagine the continuum from replaceable vendor at one end and respected authority at the other end.
When you look at the 22 indicators we discuss this month and in February, then you can see how much progress you've made in transforming your company from vendor to authority.
One point though is that we can never reach the "100% respected authority" status. It's the goal, but since there is always a better way of doing everything, we can never reach it.
But even the progress can be pretty exciting.
So, let's see them...
1. Constant And Never-Ending Commission-Chasing To Find New Clients
This comes from the typical volume mentality of vendors...
"We need more clients."
"We need to close more prospects."
"We need to respond to more RFPs."
"We need to put in more effort."
The common denominator is "more". More of the same. And this obsession with quantity comes at the expense of the quality. Quality of clients. Quality of projects.
This situation is made even worse by quota-crazed sales managers who solely focus on the numbers while ignoring quality.
They motivate their salespeople with motivational gambits like, "Go and get 'em!", "Make your number!", "Go for the jugular", "Always be closing" or similar bullshit. Soon the whole sales department looks like a Glengarry Glen Ross type shyster shop.
By the way, any semi-decent soldier or butcher knows, and I've been both, that in order to create results, you don't go for the jugular but for the carotid. You don't go for a vein but for an artery. And if you want to be even more effective, you go for the aortic arch, the proverbial dam that pushes fresh blood to the arteries.
Severe a vein and you're in for a long wait until a "change of state" happens. But severe an artery and the "change of state" is almost instant. Both in combat and butchering, we call it humane, quick and clean kill.
Anyway, I've just mentioned this in case one day you decide to become a soldier or farm and slaughter your own animals.
2. No Perfect Client Profile
A sure-fire sign of being a fungible vendor is when you are not picky about your clients and anyone is a good client as long as his cheque clears the bank. When a business operates on an "any client with money is a good client" basis, that business is in deep shit because bad clients drive out good clients.
Sooner or later there will be clashes over project deadlines, payments or personalities.
What I suggest to start-up clients is that they do a Strengthsfinder profile on themselves to discover their own talents.
Based on 180 seemingly irrelevant questions, Strengthsfinder gives you your top five talents out of 34 themes of talent.
It becomes relatively easy to organise your business if you know your own strengths.
Also, hire employees based on specific talent themes.
3. High Attrition In The Business Development Department
Since these companies have high pressure to get the next deal, there is a permanent revolving door in the business development department. Yes, the "hire 'em => tire 'em => fire 'em" concept is alive and well.
My observation is that business development people love competitive challenges coming from the marketplace and they enjoy external competition but hate politics, unnecessary pressure and internal competition coming from the top dogs.
If you've seen movies like Glengarry Glen Ross, you can see that just because management maintains a stressful, high-pressure environment doesn't meant that people step up to the challenge.
Actually, challenge is something that activates people's sense of pride. And no matter how high the pressure goes in Glengarry Glen Ross, none of those sales guys has a single shred of pride in his profession.
Good people don't leave because they are lazy. They leave because management makes it hell for them to do their work. Peter Drucker was 100% right in writing many years ago...
"90% of what we call 'management' consists of making it difficult for people to get things done."
The sad truth is that most vendor-minded IT companies rather lose a great business development person than a moronic client. Clinging to arsehole clients seems to be more important than keeping quality people.
And with this mentality they can remain fungible vendors and never become respected authorities. Respected authorities don't employ demoralised people to serve belligerent arsehole clients.
4. Clients Are Always Right
This comes from the whore mentality of "we do anything for anyone for money." Many clients are looking for cheap, traditional, comfortable and convenient solutions. The smaller clients are, the more so. They're looking for silver bullets, quick fixes, tooth ferries and instant gratification.
But let's listen to Einstein for a moment...
"The significant problems we face cannot be solved at the same level of thinking we were at when we created them."
Some clients can expect you to try to create solutions at the same levels of thinking where they created their problems. So, they say they have always done it that way, and are not going to change.
And whatever solution you offer to them, they always fall back to their old habits and end up sustaining the problem.
A few weeks ago a client's techs installed Kaspersky Antivirus on one of their client's systems (104 computers). Within two weeks most users deleted Kaspersky and re-installed the free version of AVG.
Then Julie, my client's CIO told their client they couldn't protect their systems from disasters if their end users interfere with the system.
The client said, their employees had the right to use whatever they felt comfortable with, and their IT provider must be flexible enough to accommodate their wishes. On that note, Julie, without permission from her bosses, unceremoniously fired the client.
Well, there is no point in teaching cannibals how to use silverware.
Later on asked Julie, how her company had acquired that client. Well, through cold calling.
That's it. In most cases the clients we can get through cold-calling are bottom feeders and sources of massive troubles.
5. Internal Competition
This happens in companies that don't have the smarts to build cohesive teams and don't want to hire external experts to help them to do it, if they don't know how to do it.
So, they set up individual reward systems and set people at each other's throats on a "sink or swim" basis. And since collaboration is not a natural form of human interaction, people start competing with each other, and management erroneously believes this is the best way of squeezing peak performance out people.
So, people soon burn out in the competition, and start looking for greener pastures. Actually they burn out emotionally. They realise they can only succeed at the expense of their colleagues.
6. Haggling Clients
Fungible vendors are obsessed with growing very big very quickly. After all, if you can't offer quality, all you can offer is size and low price. They compete on price but hope that the "pile it high and sell it cheap" technique will save their arses. It sometimes does.
It works for Walmart, the world's largest retailer. Interestingly, it's also one of the world's least profitable retailers.
It's an expert at selling cheap crap at low prices. And now look at Walmart's customers.
What they have in common is that they're obsessed with price. They buy any crap as long as it's cheap enough.
Walmart doesn't cater for the frugal. Frugal people understand value and try to acquire it at the lowest cost.
Walmart caters for the cheap. Cheap people focus solely on the lowest price regardless of value. Those who are too ignorant or plain dumb to distinguish between price and value. See government purchasing agents when hiring subcontractors.
And if you want to see large groups of people returning merchandise, then look at Walmart.
Where else can you see people who buy some large pots to make Sunday lunch for the visiting relatives, and then return those pots on Monday, saying the pots have some manufacturing defects?
Ok, Walmart customers don't haggle per se but their behaviour is pretty close to the type of hagglers IT companies can get in some of their clients.
And on size, let's remember what the prostitute has said to the shy sailor...
"Son, it is not the size of your instrument that counts but how skilfully you actually use it."Many IT companies mistake business growth for business enlargement. So, they accept all Tom, Dick and Harry as clients, and offer deep discounts to bring them on board.
7. Costly Underperforming Employees
In vendor type companies there is so much pressure causing so much employee stress that people operate way under their potential. According to a 2005 Gallup Poll study, 59% of the workforce is disengaged, 14% of the workforce is actively disengaged, that is, actively sabotaging their employers' success, and that a mere 27% are engaged.
And watch this baby. In the book "Conversations on Customer Service and Sales", author Ken Edmundson informs us that...
"Mathematically we have a 52% chance of hiring the right person if we just flip a coin, and studies reveal that we only increase that by a whopping 8% by using our wonderful interviewing skills."
The reality is that traditional HR practices disallow talented people to enter the very workplaces where they could contribute the most. Traditional HR best practices are obsessed with hiring impressive resumes not top-notch performance capability. And the result is a disengaged workforce.
In his book, Topgrading, Dr. Brad Smart reports that, based on traditional HR best practices, some 85% of newly hired people are hiring mistakes.
They are not bad people per se, but they don't match the requirements of their positions.
Imagine a liberal arts major with a passion for painting and graphics artistry who is hired as a receptionist.
This is what HR best practices do.
For the sake of your company's success, get rid of your HR department.
8. Tremendous Price Pressure To Stay Competitive(ly Cheap)
Price pressure has nothing to do with how much buyers are willing to pay for IT solutions. It has everything to do with how your company is positioned in the market.
Some companies don't tolerate it from buyers and walk away at the first sign of haggling.
But here is a problem. Salespeople are paid commissions based on the sales they make. They don't care about selling solutions even under costs because the first item the company deducts from the sale is the salesperson's commission.
And just as one bird in the hand is better than two in the bush, getting paid X today is better than getting paid 2, 3 or even 4X tomorrow.
Every company has an inside reality and an outside perception.
Many IT companies suffer from the "Wizard of Oz" syndrome: Inside the company is the proverbial General Motors, but management tries to create the perception of Ferrari. It works for a while, but then the bubble bursts and the market finds out about the trick.
See Arthur Andersen or Enron. There was a huge misalignment between their inside reality and outside perception. The "Wizard of Oz" syndrome came back and kicked them in the arse all the way to the courtroom and then to prison.
9. You're Loaded With Idiotic Clients Who Ignore Your Expertise And Operate On A "My Way Or The Highway" Basis
Many companies like hiring IT professionals as "yes people" and force them to comply with the executives' expectations...
"After careful consideration, we've decided to run our computers on Windows 98, and it's your job to keep our system in perfect working order. If you slip, we'll sue the shit out of your company for breach of contract."
Of course, client executives discuss the second sentence only among themselves. However, the writing is on the wall way before the contract is signed.
So, why do so many IT companies go for this type of deals? Because they hope they can dazzle their clients with their technology.
But the client has already made up his mind to use the IT company as a scapegoat for the years of technical neglect.
Machiavelli was 100% right in writing it in the Prince...
"Only the Prince who himself is wise, can be wisely advised."
The interesting thing is that most idiotic clients start out as easy-going buyers, and so many sellers fall into their traps.
They nod at everything you say. But after the contract is signed, many of them start going from easy-going to downright dogmatic about their existing practices. And they start making unreasonable demands.
Once on night duty in the military, a captain ordered me to call a major in another city. The phone was ringing but no one picked it up. I told the captain that the phone was ringing but no one picked it up. The idiot yelled at me...
"Tell him to pick up the phone at once. If he's not on the line in 30 seconds, I'll have you locked up for insubordination."
But it's not only the military that is full of moronic officers. Companies have them by the bushel too.
10. Worrying About Competitors' Stealing Your Methodologies s And Approaches
Against this disease, Sun Tzu has a great remedy in The Art of War...
"All men can see these tactics whereby I conquer, but what none can see is the strategy out of which victory is evolved."
Yes, if your methods (tactics) are without a comprehensive strategy, then anyone can copy them. But if your tactics are parts of a strategy, a system and some great people, then there is no problem. No one can imitate that.
If it were, then any terrorist organisation could steal the military's methods to train elite soldiers like Rangers, SEALs or Delta Force.
But there is a bit more to training elite soldiers than shooting. But that's what most people do not see. But the cornerstone of their training is the "12 Whole Man" selection process. It evaluates candidates for 12 attributes that are important for all Special Forces soldiers.
They are: Intelligence, physical fitness, motivation, trustworthiness, accountability, maturity, stability, judgment, decisiveness, teamwork, influence, and communications.
Then, for the selected candidates, training continues to deepen these 12 attributes towards perfection.
Back to business...
Let's say competitors copy your brochure. No big deal. They can't see and understand the strategy that your brochure serves.
When I was living in the UK, as a new immigrant with very little English, for a short while, I worked for a company that made the exhaust systems for Rolls Royce.
Yet, would I open a car manufacturing company to compete with Rolls Royce? Not really.
Or would I go into the funeral home business because I've dug a few dozen graves and buried a few dozen folks? No. I don't know the strategy of becoming a successful funeral home.
I encourage my clients to design and implement somewhat complex systems because due to the inherently lazy nature of human beings, no one bothers to copy them.
11. An Underlying Sense Of Jealousy And Resentment For Highly Successful Companies In The Industry
This is plain psychology. For instance, listen to the comments that "defective" men make when their spouses look at truly great-looking guys on the street or in restaurants.
"Yeah, he's good-looking, but I bet he's stupid as mud." - says the morbidly obese university professor."
"Yeah, he's good-looking, but I bet I can drink him under the table in 5 minutes flat." - says the borderline alcoholic."
"Yeah, he's good-looking, but I bet in his home his wife rules the land." - says the repeatedly convicted wife-beater."
These guys are unable to get their problems sorted out, so they act out their resentment to others who look reasonably all right. These are the cowards who grovel at the feet of their abusive bosses, but when they go home, they kick the cat and beat the shit out of their kids and wives.
By the way, it's just my observation in life in general that obese women tend to become overly friendly whereas obese men tend to become bitter and aggressive. Of course, there are exceptions.
And the same happens in business...
"Yeah, they're successful but I bet they rip off their customers." - says the CEO of a company competing on low price.
"Yeah, they're successful but I bet for that success they grossly overpay their employees." - says the CEO of a company employing minimum-wage workforce.
"Yeah, they're successful but I bet they cheat on their taxes." - says the CEO of a company with serious tax problems, blaming his problems on high taxes.
And this is why it's vital that IT companies develop effective screening systems in their lead nurturing programmes, so these bitter and resentful companies never land as their clients.
In my bitter experience from long time ago, disgruntled prospects become disgruntled clients, and while working with us, they get even more disgruntled, and act out their dissatisfaction on us.
I know a personal trainer in the US who's been sued by client for not losing a specific amount of weight. It turned out that the moron "simply" hadn't followed the trainer's recommendations on diet. Luckily, the trainer's employer countersued the woman, and won.
She had to pay for all the court costs, damages to the trainer and became a laughing stock.
Let's face it. What some prospects need is psychiatric treatment, and most of us are not licensed to do that. Then let's stay away from these nutcases.
This is it for now, and next month we'll continue with the other 11 distinguishing factors between replaceable vendors and respected authorities.
In the meantime, look at your company and see in which area(s) you need to improve.
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.
