Freative Friday - Episode 94 Video Podcast - Why Organizations Get Lost on Growth

Sam. Foreign. Welcome to Creative Friday. Mark Dinolo here, art school MBA and CEO of Sales Globe. And it's that day of the week. We take a fresh look at creative problem solving for your business and for your life. And this episode we're going to look at a dilemma I see in quality organizations, which is why good companies get lost on growth and how they're trying to find their revenue roadmap. Here's what it looks like. There are some companies that have good offers, they've got good strategy, they've got a strong organization. And these are companies with hardworking, smart, talented people. But they're running around lost in terms of how to leverage their capabilities and turn them into more growth. One company who worked at, for example, started with this statement. I'll paraphrase it. We have a major presence in the market, but we're not leveraging our collective strength to, to differentiate ourselves and grow our revenue at a double digit pace. The revenue just doesn't come in like it used to. Some companies I work with, from Global 1000 companies to mid caps, they've got multiple regions around the world, they've got numerous markets, they're led by strong teams. Some of them have various groups of sales, leadership and revenue operations groups distributed throughout the company and throughout the globe. And what they all have in common is they lack two things. They lack a way of thinking and strategizing about how growth comes together from a discipline perspective. Basically, how do we understand what it takes for us to grow and how the parts come together in a coordinated plan or their revenue roadmap. And second, a way of leading and organizing around this in a coordinated way as a team. Basically, when you have the map, the revenue roadmap, how do you lead the organization in a coordinated way to execute your battle plan and get results? This is in terms of the different areas of the roadmap and the different business units or the markets of the company. So it takes a discipline angle and also takes an angle around markets. So why does this happen? Well, one of the problems is organizations often work in disparate parts of the roadmap. So they're siloed. They don't connect them together and they don't leverage their total strength as an organization. And they don't lead the organization in a coordinated way around how they're going to grow. And so instead they create broad visions and themes and they build campaigns with great branding and great messaging and they introduce them and they train people. And what happens, not much people and their teams, they go back to the status quo. They don't lead or manage change effectively because they rolled out the program and they expect the organization is going to pick it up and they're going to coordinate and they're going to work together and they're going to want to change, which they may not. So in the markets, they work the way they've always worked in their markets because of course, our market's unique. We need an approach that's right for us. And corporate doesn't understand our needs and they try to force cookie cutter programs on us, which is code for leave us alone. Because we want to continue to do things the way they've always done them. And in the disciplines, they work the way they've always worked within their disciplines. So we sell the products and services that we have to work with. Corporate wants us to focus on selling services with the hardware, but it's a tough sale because we're not always selling what customers want. We hear the voice of the customer because we're out in the field and we work with them every day. But senior leadership, product development, I don't think they hear the voice of the customer. So we just keep pushing to sell what we're supposed to sell, or we design and manage the territories. We, we work with what we have for the segmentation or the staffing levels, but we don't have the sales capacity or the talent to cover the territories. So we do what we can and manage the territories or we set the quotas. The territories aren't well defined, which means we don't have a good foundation for quota setting. And the quotas aren't great and quota performance is erratic, but we set the quotas. So I want to share with you a way of thinking about revenue growth and, and a platform for leading the organization to revenue growth. And it's called Revenue Roadmap. And it was built on years of experiences with organizations and in understanding what companies do that grow predictably. So let me give you a quick overview. As we work with organizations over the years, we found the ones that grow well tend to do the same things well, and they tend to work well in four major competency areas. Insight, strategy, coverage, and enablement. So the starting point for any growth initiative or strategy is understanding how it works within this broader context of the revenue roadmap. So it gives you an integrated view of the four major competencies of successful sales organizations. So let's take a quick look at each one. Insight is on the customers. It's understanding the market, it's understanding our internal performance. It looks at the voice of the customer and it looks at our macro market environment, what's happening with competitors and what's happening with our own business. And if we don't have good insight, we can't develop our strategies with any degree of precision, then the insight informs the sales strategy. And so sales strategy is just a couple of fancy words that describe the organization's action plan to achieve a sales goal. The strategy includes the types of services and products we're going to offer on our segmentation and targeting, our value proposition and messaging and our overall approach to market. And the sales strategy charts an actionable growth plan. And then that's put into action by the customer coverage model. So the customer coverage level looks at your channels, your routes to market, your sales organization design and your roles, your sales process, your rules of engagement and and your deployment or your territories and account assignments, as well as your sales capacity and coverage matches roles and resources and process to customer needs. And finally the enablement layer, once you've answered all the upstream questions around insight and sales strategy and customer coverage, we finally get to the level of enablement. And enablement includes sales compensation quotas and people in technology programs and it aligns execution with the growth strategy. So the revenue roadmap methodology encompasses sales, sales support and non sales roles based on their involvement with the revenue growth. And it can pull the organization together in terms of how we think about growth and how we lead for growth across the organization. So we have the concept of upstream and downstream disciplines and how they connect. For example, sales compensation is an enablement discipline that responds to the decisions we made in the upstream disciplines like customer coverage and sales strategy and sales organization and sales process decisions respond to the upstream disciplines of sales strategy and insight. So they're all connected. So with challenges that appear to be sales organization challenges, they may not actually be sales organization challenges strictly they may be driven by other issues in the upstream disciplines like strategy or insight that aren't clearly defined or maybe they've changed over time. For example, if you think about the technology industry, we we've got companies called VARs, value added resellers. And what they do is they customize technology solutions for businesses that can include hardware and software and services. And they traditionally have operated on a model where they work with hardware and software manufacturers. They put together solutions, they sell with a very simple direct sales model. And the sales compensation programs tend to be largely simple commission based programs. But over time things started to change in the VAR space and the sales compensation programs in those companies started to limit the growth of the companies. So it seemed from a single discipline perspective that sales compensation was the big issue for these companies. And it all started to happen around the same time. And the first reaction from a lot of the leaders in these companies was that people just don't know how to sell anymore like we did when we were in the field. And they'd been paying reps large amounts of money on a commission program. And it used to be for acquiring new accounts and growing new revenue and customers. This is when those companies were in their earlier stages. But over the years, the compensation costs became really high in absolute dollar terms like reps making 2 million or 4 million dollars a year. And also in a percentage standpoint, high compensation cost of sales. So the new growth commission plan turned into an annuity plan over the years where reps kept getting paid every year for the stuff they sold years before. Not just the new revenue, but it was retained revenue and flow revenue and reoccurring revenue from customers they'd sold in prior years. And the problem was they were paying a new customer commission rate for all business and the company was choking financially in terms of the cost. And the reaction of the companies was we need to fix the sales compensation plan. Of course, that's the most visible thing. So it looked like a sales compensation problem, which is an enablement discipline. But actually things had changed in the sales strategy and the customer coverage layers over the years. So the sale became more complex with a broader range of products and a broader range of technical services. So they needed technical overlay reps to support the sale. That was an added expense. And the company had a coverage model that relied on continuing to recruit high paid commission reps from competitors. So there was a lot of poaching and they had to match or improve their commission rates to get them. So they kept increasing their cost of sales, but that wouldn't allow the businesses to scale effectively. So they needed to have a bench of new reps that could, they could develop, that would give them more leverage and allow them to scale, which is a coverage discipline. And they needed to segment their customers so they were aligning the right resources to the right types of customers at the right cost. So that's a sales strategy discipline. And behind all this was the fact that the companies had gone through changes in their company life cycle, moving from early stage where they had a very simple sales strategy, which was sell new customers and a simple coverage model and a simple commission compensation model, to a more mature stage where the sales compensation plan was starting to break down because their offers and their customer needs and process had evolved. So the old commission plans were breaking down and they were indicating that there was a problem. So if they just tried to fix the sales compensation program like a lot of companies do, they would have been taking an individual discipline view and it wouldn't have given them the result they needed. But when organizations in the industry looked at their revenue roadmap holistically, they could see it wasn't just a sales compensation issue. It was a challenge where they needed to plan and coordinate across disciplines and also lead across disciplines. This is a great example of what happens with companies that get lost on revenue because they're not taking a full revenue roadmap view, they're operating in silos, and they're not leading and managing with a revenue roadmap. In the next episodes, I'm going to explore some of the disciplines in Revenue Roadmap and look at a couple of key questions you can apply. First, what questions should you ask in each of the disciplines and what actions can you take to lead in each discipline? And thinking through these questions will give you a starting point for how you think about predictable growth and how you lead your organization to get there. So as you think about your organization and why it may be lost on growth, look at the revenue roadmap and ask how you can look at your growth capability holistically and how you can structure and lead the organization to work together for more predictable revenue growth. And try it in your freight of Friday and every day.