Morettini on Management

General Management and Marketing Advice for Software and Tech Companies

Category: Operations

System Integration vs. Product Development

I’ve recently engaged on assignments with two new clients. Both of them have businesses selling to large, blue chip customers. Customers of the size that are used to “having it their way”; as a result, getting a deal with them often includes the need for a lot of customization.

The interesting thing about these two clients is how they perceive and approach that need to customize.

A Tale of Two Companies

Company A views customization somewhat as a pain and distraction, something to be controlled–I am assisting them with creating a standard solution offering menu outlining the “Base” offering, with a list of options available at an added cost. They really want to discourage certain customizations, absolutely won’t do some things that will be asked, and want to make sure that they charge dearly for items that they find painful. They have the classic mentality of a product company; they want to do the amount of customization necessary to make a large sale to this important customer–but NO more than they have to.

Company B, which also considers itself a product company, has a very different mentality about customization. They welcome it, pride themselves on it, and position themselves to these potential large clients as someone that can quickly bring solutions to the client, customized to their desires. They want their big account reps to be scouring the big accounts for unique pain points or opportunities, which might fall within the company’s core capabilities, enabling them to propose a customized solution. In fact, up till now, their product development approach has really been to find out what individual accounts want–and build it for them.

So which of these two business models is the best way for technology companies to go?

System Integration Business Models

Advantages:
*More flexible and able to change with shifts in the marketplace
*Not as capital-intensive due to less “betting” on upfront product development
*Easier to grow business organically with internally-generated capital than in a product business

Disadvantages:
*Less risk due to lower upfront investments
*More competition; System Integration is an “easier-entry” business
*Generally lower operating margins
*Growth is less scalable than a product-oriented company

Product-Focused Business Models

Advantages:
*Provides greater opportunity for strategic advantage and resulting fast growth
*Less competition if a product/brand/technology differential advantage is created
*Can scale much quicker if a hit product is developed
*Higher operating margins if product is successful
*Usually more marketing-driven and less labor-intensive
*If creating a very large company is the goal, much easier to raise outside capital

Disadvantages:
*Much more risk of “crib death”, resulting in complete capital loss if first product has problems in development or marketing
*Harder to “get over the hump”; success is harder to come by, and success often happens as a step function after a difficult startup period

First of all, I want to emphasize that there isn’t necessarily a “wrong” approach with either of these business models. You can make a lot of money pursuing either model. Both of the companies I have used as models have managed to attract blue chip customer which would be the envy of any company. What we are really talking about here is the difference between a classic product-driven company and a system integrator.

Company A is that classic product-driven company. They customize when they have to, but also have a point where they will say “no”.

Company B also self-identifies itself as a product company, and in fact they have built their business around a small number of standard offerings. But as their core strategic advantage they really are utilizing relationships, the ability to customize beyond what standard product companies (especially larger ones) are willing to do, as well as to react very quickly to customer requests. They’ve built a very nice business doing this, but have some frustrations as well. They are highly dependent upon a small number of major accounts for virtually all of their revenue, and have the major revenue/profit swings that are associated with this type of business–up one year, back down the next. They also are in constant fear that a larger company will come along and “take away” their marketplace, because they’ve continuously failed to create new products which build upon a core offering which is very dated technologically. The core offering appears long-in-tooth and vulnerable. This company is very account-focused, and the lack of a market focus has kept them from being able to create additional, broadly marketable products which provide them with a strong proprietary advantage (and causes a lack of sleep at night!)

Company A understands who they are and what they want. That doesn’t guarantee success, but it makes it much easier to build a plan that everyone agrees on. At that point success or failure usually depends upon execution, unless the plan is awful. If failure ensues in this scenario, more times than not, the problem is in execution. Company B’s biggest problem is that they are floating right in the middle between the two business models. They are trying to leverage both of these business models, and struggling with execution, in some ways with both.

SUMMARY
It isn’t impossible to combine these two business models successfully. I’m sure that many of you can’t point to several examples of such a very successful compromise. In fact, many technology companies combine both of these models to some extent, with good success. But I find that usually, a company identifies itself primarily as a product company first, or a systems integrator. That identification is their strategic focus, and takes precedence when prioritizing the use of always scarce assets.

The secondary business model is usually utilized on an opportunistic basis. Product companies integrate and customize as needed to get a big deal. Integrators create “products” to fill the needs of a big account, and sometimes happily find they are saleable to other accounts. Occasionally, these “products” prove so widely saleable that they are spun off into a separate product company, or the integrator changes its focus into becoming a full-blown product company.

The most important thing, in my opinion, is to understand who you are, and what you are trying to accomplish strategically. It’s the company’s that are trying to leverage both business models at once, without one model taking the lead, that gets itself in a heap of trouble. That’s my opinion–what’s yours?

Phil Morettini
PJM Consulting
www.pjmconsult.com

1 Comment by admin on September 21, 2007
filed in Business Models, Corporate Strategy, Financing, Operations, Software/Product Development, Startup/Early Stage, VARs
tagged , , , , , , ,

Expense Controls for Early Stage Software and Tech Companies–Can You Overdo It?

You’ve seen it too many times before–the free-spending startup company which burns through their funds like a cocaine addict on vacation in Columbia. It’s ultimately a sad tale, with great potential often wasted, many jobs lost and multiple lives hurt. But it is sometimes hard to feel sorry for the management teams that put these companies in precarious positions with poor judgment and lack of self-control—they should know better, and end up getting what they deserve.

4 WAYS THAT STARTUP COMPANIES SPEND THEMSELVES OUT OF BUSINESS

  • Spend it almost as fast as it comes in, because the market is overheated. This was endemic during the Internet bubble years, when even formerly conservative VCs were imploring their portfolio companies to “spend money faster”, and “get the eyeballs now, we’ll figure out how to monetize them later”. A lot of that was going on back then. Crazy, as we all look back at it now.
  • A more common situation where money tends to get spent way too fast is when a startup management team is staffed primarily with “big hitters”, coming from big company backgrounds. I remember in particular a mesh networking company here in San Diego, which burned through over $60M in VC money, while creating almost no revenue along the way. They hired an almost endless list of VPs from name brand, blue chip companies, paying them well over the going rates at early stage companies. The CEO came from a big telecommunications company (with no startup experience). He was paid a SALARY of $750,000/year. Yes, you read that right–I’m not even counting his bonus and option grants. In a company that was barely past the pre-revenue stage, and nowhere near profitability. It still amazes me.
  • Another scenario I have seen quite a lot, are pioneer companies that are developing a novel technology or product, attempting to create a truly new market. What happens often in this situation is what I’d call an “itchy trigger finger”. That’s when it’s still too early to create the critical mass needed in a market. Instead of being patient, marshalling their resources and continuing to develop their products while educate the market, these innovators get impatient. They blow through their investment capital with a premature, huge ramp-up in Sales and Marketing, well prior to their product or the market being ready for this expansionary phase. Their large expenditures in Marketing serve only to prime the market, to the great advantage of their fast-follower competitors.
  • The final situation that you often see leading to overspending is the company that has been bootstrapping successfully (but also painfully) for a very long time–then finally is able to attract a round of Institutional Capital. Every startup has a long list of “like-to-haves” that they would spend money on–if they only had it. So it’s ok to knock off the most important areas at the top of the list, when that initial funding finally comes through. But like a starving man let loose after hours at McDonalds, some of these formerly prudent managers gorge on the newfound capital–spending it like its ongoing cash flow–not the precious investment capital that it actually is. Not being miserly with investment capital is one of the cardinal sins indicative of bad startup management. In this particular situation, it is otherwise sound managers who undergo a bout of “temporary insanity”– a particularly sad story.

So that’s one side of the coin–overspending. We’ve all seen it, and when you’re not inside the eye of the hurricane that is a startup company, it’s pretty easy to recognize. There is no doubt that this free-spending behavior has killed many a promising startup.

But what about the flip side of the coin–when managements are TOO miserly, and spend too little? This is an area that I have not seen discussed very much lately, in early stage tech circles.

Now please keep in mind, I’m not advocating spending funds that you simply don’t have. Borrowing is rarely a good idea for an early stage software or tech company. If you don’t have the money–please, don’t try to find a way to spend it anyway! Conservation of capital is one of the basic pillars of good startup management practice.

Yet, there are some places where an early stage company simply HAS to invest, or the outcome will be almost certain crib death. Below are a few important examples:

STAFFING WITH GOOD PEOPLE

Good companies are built with good people. Great companies are built with great people. Period. Even the company with great brand equity and outstanding IP, are doomed for a fall without the continued benefit of committed, smart staff. In a startup, it’s even more critical, because you don’t have any of the built-in advantages that a big company has, which might allow the enterprise to coast for a bit before heading south. Without good people, startup companies will not thrive for long. Even if a profitable business can be built, it will eventually hit a wall, as a result of lack of depth in the employee pool. The initial founders can only take it so far without a strong supporting cast–growth will eventually stall. I have a client, a young CEO, who has done a great job building a strongly profitable, multi-million dollar business in a large and competitive market. But his growth appears to be stalling, because he views much of his staff like desk chairs, or any other overhead line item–an expense item to be minimized. Don’t make this mistake. Your staff is your lifeblood, not a ball & chain to be jettisoned at every opportunity.

CREATING A GOOD PRODUCT

Almost important as good people to a software or high tech startup, is a killer product. Although there are many, many things that are important to a successful startup tech business, by their very nature, tech companies are almost always driven by a great product. There are exceptions, no doubt–but this is a pretty good rule. It makes little sense to cut expenses in product development (assuming that you’re spending the money wisely!), until you have created a product that can lead to winning in the marketplace. With a startup, that almost certainly means something that’s not “me too”–it needs to be faster, cheaper, more capable. I was at one point VP, Sales & Marketing for a small public company that was still in development of its primary product (a PUBLIC company that is pre-product is the subject for another interesting article…). The company was still losing money due to high development costs, and a small revenue stream. Because it was a public company, there was a strong reluctance on the CEO’s part to raise money due to the resulting stockholder dilution. He was also always threatening to cut costs, to make the quarterly numbers look better. INSANITY. There’s nothing more than I can say–cutting product development until you have a product to sell is suicide. Worrying about quarterly profits until you have made the company a going concern from a product perspective is stupid. You have to do what you have to survive, of course, but this was a company with access to the public capital markets. A strong product is the muscle that allows you to break though the barrier of embedded competitors with strong positions and brands. Don’t kid yourself and save your money for other uses, until you’ve hurdled this bar.

BUILDING A CRITICAL MASS OF UNIT SALES

Lastly, you’ve built a killer product and have a savvy staff pushing it out into the market. With whatever you’ve got left in your tank–use it. Stomp on the gas peddle, spend whatever you can muster on outbound sales and marketing programs. This is where the proverbial “crossing the chasm” really takes place. There are a certain number of successful customers you need to sell, before you get over the peak of that initially steep sales curve–and things start to get easier. Once that happens, people k
now your company name and product. Enough happy clients are out there so that word of mouth marketing kicks in. Instead of fighting for every new customer, they start coming to you in increasing numbers–without any effort at all. Your product is now showing up in the market share figures. The press and analyst community start to call you, instead of you leaving endless unanswered messages in their voicemail boxes. Yes, at some point, believe it or not, it really does get easier! But this happens only if you are able to close the number of initial sales necessary to reach critical mass in your specific market. Until you reach this point–SPEND WHATEVER MONEY IT TAKES–AS LONG AS YOU HAVE IT.

I’m sure there are more very important situations that you can list, where spending too little can cause big problems for startups. Let me know what your examples are–post a comment or send me an email.

Phil Morettini
PJM Consulting
http://www.pjmconsult.com/

No Comments by admin on September 12, 2006
filed in Business Models, Corporate Strategy, General Management, Operations, Startup/Early Stage

Free Conference Calls

Let’s talk once again about some great free sites, which help you run your business like a Fortune 500 company–on the thin budget of a startup.
 
Web 2.0 has risen to bring back a multitude of “free” web-based services, which were common before the “original” advertising-supported web companies nearly went extinct after the dot.com bubble burst in 2001. For early stage companies in particular, the return of this “no-fee” model can be a great thing. All you need is to do a bit of searching, and you can find many great services on the web to help you grow you business, efficiently and cost-effectively. I’ve found a couple of sites that will make you look like one of the giants of industry, to your partners and customers, in one important area.

Formal conference calls have historically been the domain of big companies, but no more. Here are two sites that allow you to set up the ubiquitous “dial-in” conference call, to simultaneously connect multiple parties in one call. Everyone gets a dial-in number and pass code for the conference. The two sites I’ve found are very similar in how they work. Both offer a robust, completely free to schedule such calls with a simple web-based interface—while offering an upgraded service, which is available for a small charge.

The two sites operate very similar business models. The major “upgrade” in both cases is a toll-free call in number, for a modest charge. There is also a premium charge for exceeding approximately 100 callers on the conference call (that’s a pretty big conference call for most people!), as well as for calls exceeding several hours, on one of the services. All told, very few restrictions, and a great, FREE, easy to use service—imo. Don’t take my word for it, try them yourself. The two sites are:

www.freeconference.com and www.totallyfreeconferencecalls.com

Let me, and all your fellow readers, know what you think!

Phil Morettini
PJM Consulting
www.pjmconsult.com

1 Comment by admin on June 15, 2006
filed in Operations, Startup/Early Stage, Uncategorized

Software and Technology Customer Service

An under-rated competency, which should be considered more important to software and technology companies, is customer service. I guess that’s only natural; tech companies are very focused on gaining strategic advantage via technological advances and product differentiation. Once the product is in good shape, companies shift there focus, and become hell bent on marketing and sales activities to attract new customers.

But what about taking care of existing customers?  And how about the operational details of what happens when someone—be it a prospect, new customer or existing customer—contacts the company for assistance? I find these are areas that software and tech companies aren’t “naturally good at”. It’s not part of the DNA of most tech companies. Very seldom will you see a founder or CEO who came up on the support, or customer service side of the tech business.

Because of this, customer support is quite often an afterthought, a detail that senior management never seems to have time to get to—as they struggle with the issues that are viewed as strategic: product development, marketing and sales.

Now I won’t pretend to espouse that if you have good customer service and support, all is good, you’re going to be successful. Nothing could be further from the truth. Yes, building great products and marketing them effectively is still of critical importance to growing a tech company. But I have seen many companies with otherwise good products and market penetration techniques, who mess it up big-time in the customer service area. Below are some of the ways to waste all of the hard work you’ve put into acquiring hot prospects and new customers:

Unfriendly User Interfaces
This doesn’t seem to fit in the category of “customer service”, and technically it doesn’t. But bad user interfaces are a primary reason that your customer service organization becomes overwhelmed. So put extra work into getting your interface right—you will benefit greatly, through less “negative call” volume, and resulting strain on customer support.

Viewing Customer Support only as a cost center
Customer service and support is viewed almost universally as a cost center. I will admit that I viewed it that way when I was managing a P&L.; With this view, it is very easy to put Support first in line, when you need to cut money out of next year’s budget. Beware of doing this too often. Excellent customer support leaves a lasting impression with clients—and bad customer support leaves an even BIGGER impression. I have had money with Fidelity Investments for years, and this long term relationship is due in great part to their consistently excellent support. I also have an account with ETrade, whom I am intrigued with due to their innovation business practices. But if you actually need to speak with a real person at ETrade—oh boy, can it be painful. So the bulk of my money remains with Fidelity. Dell Computer is a company that I believe is jeopardizing their historically dominant position lately, via reduced support quality. They will no longer support the software that comes on their computers—just the hardware. And even a basic hardware warranty costs extra. I understand the concepts of unbundling and customer choice, but I find this extreme. And unfortunately personal computers are just pieces of metal; they are complex hardware/software systems. Supporting software really isn’t optional, if you want a good user experience. Dell has also taken their Call Centers overseas to save money. While it’s still possible to get an excellent support rep on the line from their faraway call center, it’s become quite spotty, and you more frequently get someone that can’t help at all. I’m sure some operations VP received big bonuses for reducing support costs through these, and other steps for Dell. The cost savings no doubt look huge. But is the true cost in reduced sales, and fleeing of long-time customers (like me!)? This reduction is sales is not as obvious as the direct cost savings, but no less real—and probably more important to the business in the long run.

Voice Mail Hell
This is my pet peeve and the pet peeve of many other people as well. I’m a tech guy, and love the application of leading edge technologies to reduce labor costs. But enough, already! A number of otherwise good companies have taken automated voice mail attendants way too far. They make you feel like a mouse in a 6 square mile maze. Companies need to remember that when you pick up the phone to call, it’s with the intention to TALK TO SOMEBODY. Using technology to quickly route people to the correct department, or answer simple inquires like directions to the company, is an efficient use of technology for both the company and customer. But making it extremely hard to get through to ANYONE, even after wading through seemingly endless nested menus—is just ridiculous. The only purpose it serves is too alienate your customers and prospects. This is truly the definition of “penny wise, pound foolish”.

Untrained or under-qualified customer and technical support reps
After waiting in voice mail hell, you think it can’t get any worse. But wait. After the one half hour wait, your call is now answered by someone so green, so incompetent or so rude that frustration turns to rage. You are asked to enter your account number on the phone pad. Then the rep answers, and again requests the exact same information. You haven’t reached the right department, of course, so you are transferred to another department, where the rep asks you, yet again, for the exact same information. After this rep finally fills in his or her form (not answering ANY questions until it’s complete), you ask them about your situation, that cries out for an exception to normal company policy. The rep robotically and coldly repeats the company policy—which you already knew. Think someone will want to do business with this company again? Customer and technical support is CRITICAL in the long run. It’s one of the true long term differentiators in the market. Spend a little more to hire and retain good people, train them well, and empower them to actually take care of real world customer issues. It will pay back many times in the future.

Unfriendly Hours of Operation
I’m on the West Coast of the US, so this happens all the time. Try to call customer support in the early afternoon, but the office closes at 5P Eastern Standard Time. This is a particularly important issue for those of you serving consumer markets—many people can’t easily call support lines from work, without putting their employment in jeopardy. In this day of inexpensive, fast communications technology and worldwide commerce, there is no excuse for inconvenient business hours for the markets that you serve.

Predatory Support Costs
This is something that has continually degraded for customers over time. It used to be that technology companies supported their products for free. The economics of competition has, in the long run, made this go the way of the dinosaurs. Many times, this is with good reason. A well-priced maintenance contract, from a B2B software company which provides an 800 number, unlimited supported, and all major and minor updates, can be a really good value. If it is priced at the industry standard 18-20% of product cost, and enables the vender to provide excellent support—that’s great. But what if the support is lousy and it’s priced at 30% of the cost of the product annually? Or how about a consumer software company that is charging $100/hour, without even the benefit of a free 30 day startup window, to troubleshoot their buggy and non-intuitive product? Give me a break! If you want to stand out in today’s market, try providing an intuitive, bug free product, coupled with free or reasonable support (there won’t be many
support calls needed if you do this!). People will beat a path toward your door—and tell every friend they have. This won’t show up in the Controller’s cost control report—but the benefits to your company’s top line will be enormous.

So these are some of the low tech ways to screw up a high tech business. Software and Tech CEOs, keep your eye on the customer service ball. Otherwise, a savvy and opportunistic competitor, with lesser product technology, may take advantage and steal a piece of your market share.

Feel free to add to this discussion—post your own views on how you provide great customer service in the comments below.

Phil Morettini
PJM Consulting
www.pjmconsult.com
‘

2 Comments by admin on April 25, 2006
filed in Corporate Strategy, General Management, Operations

Hiring and Retaining High Tech Employees

Among the many interesting things that I get to examine in my Consulting Practice, one of the most fascinating is the differing cultures that are created within Software and Technology companies. Much of a company’s culture flows from the attitudes of the founders of the company. But the culture really consists largely of the people who are employed by make up the company. A company’s culture is a living, changing concept that is controlled by these employees in aggregate—from the CEO all the way down to the “worker bees”. I believe that culture plays a huge role in the company’s success or failure in the long run. For this reason, as well as many other obvious ones, there is probably nothing more important to a high tech company’s long-term success, than hiring and retaining employees.

So what’s the best way to hire “the best” and motivate and retain them for the long haul? That’s the $64,000 question. There are many paths to success, and even many ways of accomplishing the same goal. I will present one path and lay out my “best practices” in hiring and retention.

Hire Slowly
This is a major part of my hiring philosophy, and one that I must credit my time at HP for teaching me. When I worked at HP our hiring process was very thorough and deliberate. Employees weren’t simply chosen by a manager filling out his or her staff. A major part of the interviewing process was “chemistry interviews” with potential peers and other managers. While a company thrives with a diversity of styles and opinions, it is also very important that a prospective employee be a “fit” in the culture. It’s good for the candidate as well; they should have a good idea of what they are getting into, should they join the organization.

Another aspect of “hire slowly” that I will credit to my HP experience is to limit your growth in headcount, to a fraction of your revenue growth. This isn’t a hard and fast rule. When you are a startup, there are no revenues—and there must be employees! But this practice, if used as a general rule, puts a governor on exuberant hiring, which often quickly needs to be undone—at great financial and emotional cost to the company. Many times hiring accelerates just at the peak of the revenue growth curve—right before a downturn. I’ve always been a proponent of expanding “program spending” first to support business expansion—hire permanently only when you are more certain that your financial resources and revenue levels will support it.

Fire Slowly
This is another basic tenet of mine. It’s by far the best to hire properly up front, so that you don’t have to fire. In all companies, however, there comes a time when this becomes necessary. It may be layoffs due to a business downturn, or someone who isn’t pulling her weight in their present role.

I believe strongly that if you’ve hired someone, you’ve received a commitment from them, and you owe them a commitment in return. Now that’s not guaranteed lifetime employment, mind you! But it is important to do your best to treat them fairly. If it’s a layoff, don’t pull the trigger until you’re sure it’s necessary, and then give them all of the outplacement assistance and severance benefits that you can afford. If it’s someone that is under-performing in their present position, first think how you can remedy the situation without firing. Will additional training or an inside mentor make a difference? Is there another role within the organization, where they may be better suited to contribute? It is imperative to consider all possibilities before using termination as a last resort.

There are exceptions to my “Fire Slowly” advice. Bad attitudes, disruptive personalities and general disloyalty have no place, and are poisonous to a culture. Address these cases quickly, and let them know where they stand—including the consequences without a quick change of behavior. If you don’t see sincere change in a short time period, do what must be done quickly, and move on.

Don’t treat employees like fixed assets—they’re not furniture
In my “Hire Slowly, Fire Slowly” advice above, some of you may have been thinking that I’m a bleeding heart. Trust me; my advice comes strictly from the perspective of optimizing a business. The things I recommend can be done entirely for self-serving reasons as a manager. If you feel good because you’ve done the right thing—that’s an added bonus.

In my experience, if you treat people with respect, consideration and loyalty, you are most often rewarded in kind. Organizations that treat their employees as their biggest asset, to be protected and nurtured, usually have a workforce that will run through the wall for them. What could be more important to the success of a business?

I’ve worked in organizations that treat all assets the same—like items on the balance sheet. Anything that is fully depreciated or is excess due to current business levels, was simply disposed of. It didn’t matter if that asset was branch office furniture, or Sally, the clerk in Accounting. It should be intuitively obvious—but what a great way NOT to build morale among your employees! If you treat people like furniture, you will get the initiative, loyalty and energy of a desk chair in return. Why would you expect anything different? Remember, there are survivors left behind, and they know what you did. They will have no reason to feel that their fate will ultimately be any different.

I find this to be the single-most stupid management practice, a relic from a bygone era, which unfortunately is still in widespread practice. It amazes me how often I see this in practice—I consider it an attribute of managers who have risen above their level of competence.

Match Temperament and Personality to the Job
In job advertising and position specifications, you will see much effort devoted to attracting people with experience and technical skills which match well with the requirements of a particular position. Much less thought is given to “softer” aspects, which often mean the difference between success and failure.

That sales rep you’ve just hired may have been great in a big, well-known organization, “farming” a major account. Does he have the drive and perseverance to be as successful, now that he will be “hunting” new accounts, for a company with little track record and an unknown brand?

The new technical support rep has five years of experience in software applications similar to yours—but does he have the temperament to deal with anxious and angry customers, 8 hours per day?

Look past the obvious and pay attention to the more mundane attributes which may differentiate between success and failure.

Treat everyone fairly—not necessarily the same
One of the areas I think managers often make a mistake, is to have a firm set of rules that apply to all equally, at all times. I believe that to optimize an organization’s performance, you must manage people as individuals. Different people respond in a dramatically different manner to the same stimuli. An employee with one type of personality may respond to an independent assignment with pride that you’ve showed such confidence in them. Their colleague, with a different personality, may treat the same assignment as a sign of neglect and lack of caring about them. Each of these people may be equally capable, but how you manage them will greatly affect their ultimate performance. This area is where managers really earn their money, in my opinion. Figure out how to get the most out of every single employee, while maintaining an overall environment that still appears equitable, and fair to everyone as a whole.

Tie compensation to the long term success of the company
I want all of my employees to think like owners. So give everyone stock options—that’s my strong advice. If that isn’t desirable or practical for some reason, figure out a reasonable proxy to try to get the same results. Utilize Profit sharing programs based not only on short term results, but long term as well. It’s important to get everyone to share your goal—which is building the long term value of the company. If your compensation looks like that of a King, and theirs looks like that of a serf—it won’t happen. Cut everyone in on a piece of the pie, and your slice will end up much bigger in the end.

Build teamwork with group goals & incentives
Just as it’s important to tie everyone to your long term goal for the company, it’s also important to tie people to each other. I’ve seen many cultures which are very collaborative, where everyone is pulling in the same direction. There are organizations which have the greatest chance of success—the whole ends up being bigger than the individual parts. But all too often, even in early stage tech companies, I see companies where the employees seem to be fighting each other in an attempt to get ahead. They are expending energy fighting over the biggest piece of a still small pie, rather than using that same energy to expand the pie for everyone. Cutting everyone in with stock options helps. But I also recommend that part of each employee’s incentive compensation be based upon their internal team reaching its objectives—not just the achievement of individual goals. I find this really helps create greater teamwork, and ultimately a higher value company.

Hold employees accountable—but with compassion
Finally, the sum of it all is that I don’t recommend a country club environment, where no one is responsible for their actions. On the contrary, I recommend that you do your best to attract high performers, give them the tools to do their jobs, and hold them accountable for their actions. But do it with respect, helping them in every way that you can. And above all, treat them with compassion.

That’s my take on hiring and retaining employees for high tech companies—what’s yours? Post a comment or drop me a note by email.

Follow Phil Morettini and Morettini on Management via Twitter, Facebook, LinkedIn, RSS, or the PJM Consulting Quarterly Newsletter. Contact Phil directly at info@pjmconsult.com

5 Comments by admin on February 17, 2006
filed in Corporate Strategy, General Management, Operations, Startup/Early Stage
tagged , , , , , , , , , , , , , , ,

Outsourcing Software Development Offshore

This has become a very hot topic in the last several years. I’m referring to the practice of companies in the US, and other developed countries, outsourcing software development projects to companies in lower cost, developing countries. This is a strategy that has “taken off” and is rapidly becoming mainstream in the software industry. Much has been written on the social and macroeconomic consequences of this phenomenon. My take on it will be strictly from a business perspective.

In my research in this area for a number of clients, several important questions popped to the forefront. I’ll address them one at a time.

What are the circumstances whereby outsourcing to a lower cost country makes sense?

This is a complex question with no simple answer. There are actually many reasons to consider outsourcing.

The first and most obvious is to lower your development expenses, of course. How much can you save? The answer depends upon what your costs are in your home location, as well as where you outsource too. Let’s look at example of a California Software company outsourcing to a company in India, a common example. My research indicates that the California software company can reduce its hourly costs by at least 60-70%. This doesn’t even include the “fully loaded costs” of permanent employees. On the other hand, it doesn’t take into account the inefficiencies inherent in having software development done by a third party, let alone one with a very different culture, potentially a different language, and ten time zones away. These inefficiencies are hard to quantify, and will vary from situation to situation—they are largely dependent upon how well you choose your partner, and how well you manage the relationship.

Another important consideration that would lead you to offshore outsourcing might be the availability of software developers locally. A few years ago after the dot com bubble burst, developers were suddenly available, practically everywhere. But as we enter 2006, they are very scarce in Southern California, where I’m based. And if you are looking for a narrowly-defined skill set, you can almost forget about hiring internally. Conversely, there is still a large pool of educated, skilled and experienced developers, which have not yet been fully absorbed, in a number of developing countries with a tradition in technical education. So while it may not be obvious on the surface, labor availability can sometime be an even more important driver than cost.

A third important consideration is expedient access to specific skills. An example of this is that I have several early stage software clients, who are embarking on their first large scale software project. For the first time, having a sophisticated QA function has moved from being a luxury to a necessity. For a small software company, it can take several years, with many bumps in the road and significant investment in both people and equipment, to build up an adequate in-house QA department. Another approach would be to use one of the many outsourcing firms specializing in QA. QA is all they do, every day. As an alternative to building up an in-house department, you can get immediate access to a seasoned, fully functional QA team. In other circumstances you may already have a good in-house QA team, but can use the outsourcer to provide “overflow” support, as an extension of your in-house team.

What benefits can I expect from outsourcing?

  • Lower software development expenses
  • Access to a much larger pool of talent
  • Access to skill sets that are scare in your local area
  • Less investment in infrastructure
  • Immediate or “flex” capability for fast reaction to unforeseen needs

What are the pitfalls, and potential drawbacks of outsourcing?

Well, there are many—and this is what scares the “late adopters” away. The biggest fear, I believe, is entrusting your intellectual property to any third party, let alone to someone you don’t know, in a country with different customs (RE: more IP theft) and laws. This isn’t something that I would suggest being taken lightly. However, the outsourcers are aware of this fear. They won’t be in business long, if their clients IP is being stolen from them—this is the type of thing that tends to kill a service business. So they are very sensitive to this issue, and have erected many security features to allay the client’s fears. In extreme circumstances, the client code can be isolated to computers with no Internet Access or write devices.

The second most important fear is lack of control. Software companies are typically accustomed to internal development, and want to manage the process closely. You can still manage and monitor the product development process closely using an offshore outsourcer—and you should. It does, however, take a bit more work and usually an adjustment to the normal management processes. From what I have seen in my research, it is very possible to have the process go as well, or better, than it would in-house. It’s also very possible to screw it up completely!

The third greatest fear is dealing with a different culture and time zone. Except for the most bigoted among us, I believe that this is easily overcome simply by “doing”. Once you work closely with colleagues in other countries, you realize that we’re all “people”, with many of the same aspirations and fears, regardless of where we live. Most will get very comfortable quite quickly with their foreign counterparts, if they just jump in and give it a chance.

Lastly, there is the issue of inertia—“we’ve always done it this way”. Although it seems a bit silly, this is a very common problem. This problem has deeper roots, and is much more serious, than simply fear of outsourcing. If you don’t overcome it and roll with the changes, it could kill your company.

If I do outsource, to which country should I send my projects?

There are a number of choices—below is my current preference list, in ranked order:

  1. India
  2. Russia/Eastern Europe
  3. Brazil
  4. China

I rank India first, although at this point they are probably the highest cost. The reason is that the Indian outsourcing companies are the most mature, with the longest track record. They also speak pretty good English, which is important to those of us here in the US. You can expect the hourly rates to be in the neighborhood of $18-20/hour—still an enormous savings over US development costs.

The second choice is Russia/Eastern Europe. The companies there are far less mature than in India, so you are taking a greater security and execution risk. If you really need lower costs, however, hourly rates can be as low as $4-5/hour.

Brazil is an emerging place for outsourcing. I have a handle on the exact rates, but they are very low. For US clients, Brazil has the advantage of being in the nearest time zone, so you can talk during business hours, and is the easiest place to get to—especially from the Eastern US.

China, like in nearly every other market, is the potential thousand pound gorilla lurking in the wings. It is the most immature place for outsourcing software, an industry that is just emerging. The language differences can be a difficulty, and IP laws are still troubling. But there is a huge pool of competent technical resources, and the people that I spoke with expect rates as low as $1-1.50/hour.

What are the key things I should focus on to ensure the success of my outsourcing project?

My research turned up several key things:

Choose an offshore outsourcer that has a local office in your country. Over time, this may become less important, as you get to know your ou
tsourcing partner. But at least initially, it can be the difference between a successful first project, and dismal failure.

Choose an outsourcer who has been in business for a while, is stable financially and has low labor churn—but is still hungry. If they’re “too successful”, the priority sometimes shifts from client satisfaction to maximizing profitability—not to your benefit.

Choose an outsourcing partner who is appropriate for your size. If you are a small, early stage company, you might be too small for one of the large, major brand names in the outsourcing business. The potential for getting ignored, and being low priority, looms large in this situation.

Choose a partner who is growing by referral, not by large marketing expenditures. Great Service companies thrive on long time clients and their referrals—repeat business means satisfied customers.

Have a key member of the offshore team come onsite at your company for several weeks or months, if you can afford it. This was suggested as a key reason for early success, by many of the companies who had positive experiences from the start. It was a key link in creating understanding and good communications with the offshore team.

Start small, and with a project that is not mission-critical. This will allow you to “debug and test” the process, so that you can maximize efficiencies when you do outsource a larger, more critical project.

Demand written reports on a regular and timely basis. Certainly weekly on a first project—daily might even be appropriate in some circumstances.

Demand and hold regular status meetings. No less often the weekly on a first project.

If at all possible, “pick your own team.” If you can get to know the personnel at your outsourcer, try to specify who will work on your project and for how long. The worst thing that can happen is that you start off with “stars”, and mid-project labor churn and higher priority clients lead to turnover on your team, and a more junior staff.

So that’s my run-down on outsourcing. I’m sure there are many opinions on this one. Post a comment—let’s talk about it!

Phil Morettini
PJM Consulting
www.pjmconsult.com

5 Comments by admin on January 20, 2006
filed in Business Models, Corporate Strategy, Operations, Software/Product Development

Favoritism in the High Tech Workplace

I’m going to address a topic that isn’t often discussed formally by top management within a business, certainly not out in the open. It’s a major topic in HR circles, I’m sure. It’s also a major topic, in hushed tones, around the water cooler and during lunch among friends. But regardless of how little formal attention it gets, this is an important issue that exists in nearly every workplace, large and small. While it’s not something that gets addressed in management meetings or SEC filings, I’d venture to guess that it can have as much affect on a company as most “high profile” management topics.

The Problem

The issue that I’ m referring to is Workplace Favoritism. If you’ve ever worked in an organization larger than two people, I suspect that you’ve seen it. Favoritism is part of human nature. No two people interact similarly to any other two, so it’s impossible for all workplace relationships to be “equal”. It’s only natural to gravitate to people that you share common interests with, and with whom you have an easy rapport. And of course, there’s nothing wrong with any of this, on the surface. The problems surface when one of three distinct things ocurr:

  1. When a good rapport and shared interests lead to a PERCEPTION that an employee is getting favored treatment from a manager
  2. When a manager ACTUALLY PROVIDES unfair preferential treatment for one employee at the expense of others
  3. Nepotism, the granddaddy of workplace favoritism

So you might be thinking, hey, this is pretty subjective stuff. There are many people in the workplace who are extremely sensitive, and are looking around every corner for perceived slights and injustices. Women can be suspicious that they’re being shut out of participation in the best projects, or advancement, because of the “Old Boys Club”—oftentimes with good reason, unfortunately. There are also many under-performers who look at other’s relationships, in an attempt to convince themselves that it’s something other than their own shortcomings that is preventing them from getting ahead.

What defines favoritism?

I don’t believe that you can, or should, treat everyone the same. I’m not an advocate of communism. People who perform well should be rewarded. And a single management style doesn’t work equally well with all employees. Some people need more attention to fulfill their potential, while others excel with less attention and more autonomy. And speaking strictly about nepotism, just because an employee is related to someone in a position of power, doesn’t insure they are lazy or incompetent.

So when does smart, individualized management of employees cross the line into unfair favoritism?

It crosses the line when an employee receives extra benefits that are perceived to result from a “special relationship” rather than from excelling in job performance.

The actions in question can be pretty subtle, and the employees who feel slighted might be very good at hiding their true feelings. So it’s also very easy for a manager to think there’s no real problem, and often be totally oblivious to perceptions of favoritism.

But it is extremely important for management to be hyper-sensitive to this issue. While this is a universal business issue, I feel it is particularly important to high technology enterprises. High Tech companies, particularly startups, are built to move very fast. A big aspect of that speed advantage is often the company cultures, which tend to be open and collaborative. To ignore this issue in a High Tech business is to invite a loss of productivity, or in extreme circumstances, an actual destruction of the company culture that you’ve worked hard to create. Resentment can build quickly when favoritism is suspected. Resentment quickly becomes bitterness, and bitterness leads to all sorts of behavior which creates problems for companies. Plummeting productivity, divisions between the perceived “haves” and “have-nots”, absenteeism and attrition. All of this has the potential to slow down or even stop a fast-moving, but embryonic, High Tech business very quickly.

Perception, not reality

I want to emphasize that it’s the PERCEPTION of favoritism that does the damage. If there is actual favoritism, you can argue that management is just getting what they deserve. But I’ve seen proud managers who think that since they’re not actually doing anything wrong, that should be enough—people will recognize it. They may also feel that they are too busy worrying about “real” business problems that are critical to the business in the near term, to be concerned with such “soft”issues. They’ll let HR worry about such things. Or since they’re not actually guilty, they believe that they just don’t need to defend themselves further. Lastly, they might think that since they’re the “all powerful” boss, they can do what they want, and no one will challenge their decisions.

In nearly all cases, no matter the justification, the companies of managers who ignore perceptions of favoritism will suffer as a result of the oversight.

This is a pretty confusing topic, with a lot of room for misperception on both the management and employee sides. But it’s extremely important for management to directly address the issue head-on. So what’s a manager to do to avoid the PERCEPTION of favoritism, which as discussed above, can be just as damaging as actual favoritism?

Common Sense Approach

I propose that it’s not hard to take a common sense approach to favoritism. Here are the rules I suggest management try to live by:

  1. Do everything within your power to insure that advancement, perks and compensation are based strictly upon objective performance measures
  2. Strive to treat everyone fairly, if not necessarily the same
  3. Put yourself in your employee’s shoes–think back to before you were a manager, and evaluate whether you might feel a particular action feels like favoritism
  4. Create an environment where any employee feels comfortable discussing a perceived injustice with management—this enables managers to nip misconceptions in the bud
  5. Practice an open door policy—this also contributes to a culture of trust, which can sooth ruffled feathers before hurt feelings can fester and turn a situation far more sour
  6. Manage potential perceptions of favoritism proactively—it’s much easier to prevent the perception up front, than it is to “put out the fire” once it’s raging
  7. If at all possible, avoid family relationships within the workplace. If this isn’t possible, apply the highest performance standard possible to the relative in the junior position

Follow Phil Morettini and Morettini on Management via Twitter, Facebook, LinkedIn, RSS, or the PJM Consulting Quarterly Newsletter. Contact Phil directly at info@pjmconsult.com

No Comments by admin on November 30, 2005
filed in Corporate Strategy, General Management, Operations

Shooting Stars or Industry Stalwarts—What Makes a Great High Tech Company?

You’ve seen them many times. The software company that starts off like a bullet, racing at the high tech equivalent of 0-60 mph in 4 seconds. These companies come out of nowhere, and are an immediate factor in their market.

There are many examples, in nearly every major market segment. Netscape comes to mind as one of the more famous. Peregrine Systems here in San Diego is another example. I’m sure every reader can think of many more.

So what is the difference between one of these “shooting stars” and the Microsoft’s, Hewlett Packard’s and Dells of the world? After all, in the beginning, they pretty much all look alike on the surface.

Cutting Corners

I believe if you look under the covers, however, there are real differences. It’s the difference between a fast rising house of cards, and a mansion built to withstand Hurricane Katrina. You start with a solid foundation when you go to build something lasting—which of course a house of cards is lacking completely.

Now most of the time, people don’t intentionally set out to build a house of cards. It usually happens when the stress and strain of the marketplace gets in the way. That’s when management begins taking short cuts. It’s often an incremental thing. Cutting expenses in that key project, so that you can appease Wall Street by making next quarter’s numbers. Accepting just a slightly less than normal quality level, to allow that behind-schedule new product to finally get out the door. Hiring just a few less engineers than was in the plan for this year. Reducing the corporate, brand-supporting Ad buy—a ten percent reduction won’t hurt—will it?

It’s all just meant to be temporary—but cutting corners has a way of becoming permanent by default, especially when there is brutal competition, or extreme pressure from the Street.

Winners Maintain the Foundation

Every great company has a foundation that it is built on—and the care and maintenance of that foundation is a non-negotiable expense for long-term success. With HP, it was historically the R&D; budget and reliability of its products. The R&D; monster was always fed, because product innovation was what fueled the company’s growth for over 60 years. And for a long time, reliability was never compromised. The product might end up being a little too costly, a little too big, a little too heavy or late to market—but it was built like a tank, and the products were unquestioned leaders in reliability. Indeed, I would say that the HP brand stood for strong reliability for many years. Now that the company has lost it’s way a bit, I don’t know that the HP brand still has the same reliability cache, which it had in past years. Still it’s a quality brand; mind you, just not quite the same. The maniacal devotion to quality just isn’t quite there anymore. And it’s funny that just about the only thing that has been truly “invented” at HP in recent years is the word “Invent” being placed alongside the logo in advertising. Ironically, even with the dearth of HP engineering invention in recent years, R&D; expenses remain high relative to competitors—the worst of both worlds.

Microsoft was built on monopoly power and paranoia. And I don’t mean that in a negative sense. Depending upon your perspective, Microsoft either shrewdly created the DOS/Windows monopoly position it has enjoyed for years—or luckily fell into it. I suspect it was a bit of both, but no matter. Since realizing their position, Microsoft has never lost their aggressiveness, or failed to leverage their monopoly platform. Some believe they’ve overstepped at times, and I have always felt that they left a lot of money on the table rolling things into the Operating System—essentially given it away for free. But they’ve reacted every time there has been a threat—Apple, WordPerfect, Novell, Lotus, Netscape—the list of road-kill is quite long. Some of their moves may have been overkill, as their paranoia seems to present every software company in the world as a potential threat to their dominance. But they never took their eye off the ball, building and protecting their OS and Office franchise with as much firepower as required, for as long as it took. Even though Microsofties are very pleasant to deal with on an individual basis, the company as a whole is predatory. They believe it’s their birthright to sell every last line of software code in the world. I believe that this aggressive corporate culture is a big part of the foundation that Microsoft is built upon. It has let them survive and thrive since the infancy of the PC until today—alive and well for the fight with the latest pretender to their throne—Google. But more on Google later.

We’ve examined a couple of long time winners—now let’s look at one of those classic shooting stars—Netscape.

Formula for Losing

It looked like the next big thing—the Microsoft if the Internet Age. They were to be the successor to the throne. They were the darlings of High Tech, and Microsoft was shaking in its boots. It was one of those times where Bill, Steve and the Microsoft gang got caught napping a bit. They didn’t see the Tsunami of the Internet coming at them—until it was almost too late. But the boys from Redmond recovered in time, and put all hands on deck until they finally smothered the upstart Netscape. So what happened to Netscape?

Well, in large part, Microsoft happened to Netscape. Microsoft put together a Herculean effort to change their company to compete in the Internet Age. But they stumbled a bit a first, giving Netscape some breathing room. Early versions of Internet Explorer, like some much software out of Microsoft, were not very good. They were almost laughable, to be frank. But Microsoft is the Terminator of the software business. It just keeps throwing people and money at the problem, and version after version comes out until they get it right. Unfortunately, Netscape had never built a solid foundation to combat this onslaught, in my opinion. The browser was what they were about. But an early decision to use the browser as the “razor” in that classic razor/blades marketing strategy, turned ultimately into a flaw. Intending to make their money on Servers, I feel that they neglected to keep the Navigator Browser as the market leader. It was a tough battle, with Microsoft bundling IE into the OS. But they needed to find a way, through innovation, to keep Navigator in the forefront of the browser wars. It was a tough task—no doubt. But once that browser franchise began to erode, their reason for existence began to fade away. It was really their foundation—which began to crack when it wasn’t built to last. The other mistake, which compounded their plight, was fighting a multi-front war with Microsoft—much like Hitler in WWII. They didn’t have the corporate infrastructure or resources, but chose to compete head to head in every market Microsoft was in. Novell made the same mistake, both companies buying some second-rate competitors to Microsoft, just to get in the game. Instead, they should have focused their resources where they had a lead, and a chance to win—Netscape in Browsers, Novell in Networking. History tells us that the upstart must focus and win decisively in that first battlefield, before they move on. Or they almost certainly will be crushed.

How Will Google Do?

Which brings us back to Google. They are the current technology darling and high flier, next big thing, and the latest threat to Microsoft. Once again, Microsoft is treating this threat as real. Right now, we’re at that stage where it appears Google is winning. But I remember when Novell and Netscape were, too. It didn’t last. And I see some parallels emerging—Google is diversifying rapidly, even recently making noises about competing with Microsoft in office sof
tware. That would be a huge blunder, in my opinion. Eric Schmidt, the CEO of Google, is a veteran of mammoth battles with Microsoft from his time at both Sun and Novell. It will be interesting to see what he has learned from the past.

What do you think—is Google the next Microsoft, or will they end up as a footnote like Novell or Netscape? Post a comment and tell me what will happen—and why.

Phil Morettini
PJM Consulting
http://www.pjmconsult.com/

1 Comment by admin on October 10, 2005
filed in Business Models, Corporate Strategy, General Management, Mergers & Acquisitions, Operations, Product Marketing/Management, Startup/Early Stage

Engineers Hiring Sales Reps

The hiring of salespeople is often one of the most frustrating aspects of staffing a high tech enterprise.

Necessary Evil

Particularly in the startup phase, senior management has often come from a technical (or at least not sales) background. They know that they need a sales force (usually!). But they’ve certainly never hired them before. Or if they have, it’s not been successful. And truth be told, technical founders often don’t have a high opinion of the sales profession. They may think sales looks like an easy job that anyone can do.

Salespeople are often stereotyped as having several of the following, rather undesirable traits:

- Lazy
- Opportunistic
- Over-paid
- Not particularly smart (certainly not smart enough to be an engineer!)
- Un-ethical
- Pushy or High Pressure personalities
- A backslapper and BSer
- Only interested in money

You probably could add a number of others to this list, but you get the picture. Sales people are often seen, at best, as a necessary evil.

The Two types of “bad” hires

This is really very unfortunate and is based upon many years of stereotyping and misunderstanding by people from the technical end of the business. The fact of the matter is, salespeople and technical people are very different. What makes a great salesperson is quite different from what makes a great engineer. The problem results when an engineer evaluates a sales candidate using his “engineer” filter, or worse—using the salesman “stereotype” as his hiring model.

So when things go poorly, who gets hired? There are two common scenarios that often take place. Let’s take a brief look at them:

The first one is the technically adept but “virgin” sales rep. It might be another engineer who is tired of designing or writing code. Because they can relate well to the hiring manager, a good rapport develops leading to their hiring as a new rep. This candidate obviously has the technical skills to have a great grasp of the product technology. The hiring manager is quite happy, really likes the guy or gal he’s hired, and is quite optimistic that sales will be increasing in short order. Unfortunately, it doesn’t happen. Why?

The new rep has little to no experience or formal training in sales. There is no strong sales mentor at the company, and he’s left to his own devices to “figure it out”. He calls a number of potential customers, with very little positive feedback. He gets very discouraged; this isn’t as easy (or as fun) as he’s expected. In fact, it’s hard work and pretty deflating. He quits within weeks or months and looks to return to a technical position.

The second scenario occurs when the technical CEO decides he needs to hire a “real sales rep” (this often occurs immediately after the technically-oriented “virgin” sales rep has left!). The CEO or founder sets out to find someone with experience in sales, and preferably someone with existing contacts in their market segment. This looks like a great step at first blush. Sadly, this time our founder falls back on his “stereotype” of a sales rep.

He hires a bubbly, talkative guy or lady who never shuts up. He’s always “selling”- customers don’t’ have a chance to get a word in edgewise. He really doesn’t understand the product very well, but he has high energy and makes lots of contacts. He’s buddies with everyone and never offends. Initially, this looks like it might be the ticket for the company, as the “sales pipeline” seems to be filling up. But in the end, sales don’t increase significantly, and our second new hire either quits or is fired for non-performance. The founders are despondent. This sales thing seems so simple, but they feel they’ve just been unlucky with the people they’ve hired.

The “right” way to hire

I’ve seen these two “mistake” hires repeated over and over in my career by my clients and colleagues. Technically driven companies, especially the startup variety, grossly underestimate the importance of sales and exceptional sales reps. In reality, the sales rep who is exceptional at his job is every bit as important to a company’s success as the star engineer in product development. But what are the key attributes which make the great high tech sales rep?

I list below the critical attributes of a great rep in no particular order:

A listener, not a talker: High tech sales is about listening to customer needs and connecting product benefits to those needs. The aim of the sales call is to get the customer talking about his needs, using the least amount of prompting by the rep.
Need to be smart: it’s a different kind of smart from the product developer, but there’s no substitute for intelligence
A very strong work ethic: Sales is a very hard job that has no substitute for making lots of calls.
Exceptional honesty and integrity: Customers have their antennae up for dishonesty in every sales situation. If they get even a whiff of it, your company has no chance.
A strong self-concept with a lot of self-confidence: Rejection is much more common than success in sales. If you can’t handle it, you won’t last.
Ability to understand and enjoy technology: After all, it is still high tech. And just because you can sell soap, doesn’t mean you can sell enterprise software or electronic components.
A competitive, risk-taker by nature: Sales is a pressure-packed, performance-oriented field. With typical rep comp plans that are heavily commission-based, if you don’t perform—your family doesn’t eat.

So that’s my map of a great sales rep. You won’t often find someone who is the strongest in every category. But simply using these categories in the interview process will enable you to rank candidates properly, thereby optimizing your sales hiring.

In future posts I’ll be discussing other topics relating to the high tech sales force such as compensating, managing and motivating reps. As always, I’d love to get your feedback.

Phil Morettini
PJM Consulting
http://www.pjmconsult.com

5 Comments by admin on May 26, 2005
filed in Operations, Software/Product Development, Startup/Early Stage, enterprise software, sales
Newer Posts »