As a Service, Customer Success, Startup Innovation

Cloudy with a chance of churn and how to retain your SaaS customers

One of the first things a customer will question in a downturn, is where they can cut or reduce recurring payments or OPEX. They will look for any reason, rational or otherwise. Licensing commitments aside, if you are a SaaS business and have been doing your job well, they should find only reasons to stay. Going forward, you can also do things to keep them committed.

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Customer Success, Future of Work, Startup Innovation

For citizen development to work address innovation culture first

I’m seeing more and more signals driving this trend which has only been around a short while. Gartner describes citizen development thus.

Its precursor was the consumerisation of IT. One of the key aspects of this trend was that decision making on the use of software in organisations was increasingly being taken by business users, not IT.

Once the floodgates are open you can imagine a logical next step would be to open up not just the purchase of applications by the business, but development of them.

The signals I’m seeing are two-fold. One is vendors’ increasing emphasis of it. The other is customers adoption of programs in their organisation. But for all these efforts, the crucial first element of success that needs addressing is a culture of innovation.

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Future of Work, Sense Making, Startup Innovation

Workplace collaboration on fire but distribution uneven

Some interesting articles and research have just been published about this exploding market. This is where it started for me: Mapping Workplace Collaboration Startups.

That article as the title suggests, focuses on startups. I haven’t even heard of many of the companies/tools. It got me thinking they are either very early stage or niche products. I tried to make some sense and created this doodle.

I’m not saying this is the way to define the market, for the moment it was just a way to make sense of where the batch of startups in that first article fell. As you can see, I’m suggesting they are for early adopters and small companies, startups themselves probably.

The post rightfully points out the dominance of the big players like Microsoft and Google with their suites. Which led me to think about another big factor on which one could slice the market: best of breed versus suites or bundled solutions like Office 365.

These are clearly dominant players but here too its debateable where these would fit. I would say O365 predominantly with large customers and with over 200 million active users is probably in the upper right quadrant. Google’s G Suite perhaps lower down in that quadrant.

Playing a positioning game in this fast moving market is pretty ambiguous. Having said that I have played it before: Thought rocket: state of enterprise collaboration.

The first article linked to has done a pretty good job of slicing the market up into categories. Admittedly the focus is “private companies that rely on network-driven growth rather than enterprise sales.”

Positioning games aside, that article also mentioned a “report from Zapier on remote work which found that 74% of American knowledge workers would quit their jobs to work remotely. Since only 3% of American workers in 2017 worked from home, there’s a huge, aspirational gap between today and the future of work.” That, if it is to be believed as a driver of workplace collaboration and extrapolated to the rest of the world, says there is still huge amounts of growth to go.

Another interesting report just out is from Okta: Businesses @ Work 2020: New Decade, New Apps, and New Ways to Work.

This article touches on the best of breed versus suite debate and also gives a nod to startups and incumbents. But the real point of this article is it’s focus on Apps and not just the ready made ones provided by startups and incumbents alike.

This year, the number of apps per customer is up 6% from last year — 10% of our customers now use 200 apps or more to power productive, secure collaboration.

I’m pretty sure a lot of those Apps are custom built. What this points to is the increasing number of companies that are providing App development platforms. Like Microsoft’s Power Apps but more broadly Azure, AWS, Google Cloud Platform, etc. Another interesting point from the Okta report:

App FOMO is real: More so than ever before, customers are “double-dipping” by purchasing best-of-breed apps in addition to bundles. 78% of Okta’s Office 365 customers have adopted one or more best-of-breed apps with the same functionality as the Office 365 suite, up from 76% last year. When it comes to the trade-off between a centralized provider and individual solutions, functionality, ease of use, and employee needs come first.

All of which leads to an even greater explosion. I don’t believe any of this is actually helping productivity, possibly even hindering, if improved productivity is even something you should target. I doubt that as I’ve written about here: Why selling productivity is hard and what to focus on instead.

Customer Success, Sense Making, Startup Innovation

Why selling productivity is hard and what to focus on instead

David Sacks who founded Yammer (the original enterprise social network) alongside Adam Pisoni, knows what it takes to build a business or two. He nailed it in this tweet from the other day:

Having worked at Yammer and been in the productivity game for a while now, I absolutely concur. I have always maintained that focusing on something as generic as improved productivity is not going to cut it🔪 Not in sales, nor customer success. Neither will focus on technology and feature or functions do. I’ve written about this before:

The two alternatives to focusing on productivity and their relative merits and challenges are discussed below:

Bottom-up freemium groundswell

Sacks is the master of this tactic. Yammer was predicated on making it easy for users to try Yammer for free, invite other users to try it and then start the groundswell needed to convince IT they couldn’t shut it down.

This is hard to do well. It depends a lot on the usability and virality of the product. The first is about getting users excited to use the product to such an extent that they want to share it with others.

Especially with products that rely on social collaboration, virality is probably built in because you cannot collaborate alone.

Building massively attractive products is also not easy but is made easier depending on how new the proposition is. These days with so much competition in enterprise software, that is really difficult.

From a people change effort, building a groundswell from the bottom up is also really heard in certain cases. Like when there isn’t an initial spark from product attractiveness or demand or it goes against the grain of the current company culture.

Solving a business pain

For me this is the more worthwhile alternative, at least in enterprise software. Its also not easy to do but if you nail it, you convince the people with the purse strings 💰 This is an eventual hurdle you need to overcome, may as well do it upfront.

Solving a business pain often means working outside of IT and that is often the first challenge. Ideally, you have business users that have come to the product through the viral groundswell 😁

If the business is engaged, whether through some initial use or not, on understanding how a product can solve problems or address opportunities, the battle is two thirds done 💥

Deep understanding of the environment the business operates in and mapping that to the use of technology is needed.

The more you focus on leaders in each business domain, the better. Although you can can also focus on regular business users and how they use technology currently and could do to meet their needs. Showing this to business decision makers will nail it 🔨

Future of Work, Startup Innovation

Startup lessons for the workplace

I discovered this really awesome resource on the BBC – articles and exposes on work life: https://www.bbc.com/worklife/

In it I came across this intriguing concept of Adaptability Quotient in an article: Is ‘AQ’ more important than intelligence?

This is based on the thinking of someone who has extensive experience working with startups, investing in them really, in her role at Goldman Sachs. Here is her Ted talk on the subject.

AQ is not just the capacity to absorb new information, but the ability to work out what is relevant, to unlearn obsolete knowledge, overcome challenges, and to make a conscious effort to change. AQ involves flexibility, curiosity, courage, resilience and problem-solving skills too.

Natalie Fratto

My interest is in how lessons learned working with startup founders on what is likely to make them successful can be applied to work and career management. This is the essence of the BBC article. It’s especially relevant in the work I do with customers in Digital Transformation, with concepts like tech intensity that speeds up the need for change and adaptability which I wrote about here: Tech Intensity and the Adaptive Organisation.

So compelling is this interest that I wrote an eBook and trend report about it (more here: Startup Innovation) and write many posts like this one under the category with the same title. My premise and that of many others is that large traditional and incumbent organisations (and the employees in them) would do well to emulate startups in many ways and innovate like them.

Customer Success, Sense Making, Startup Innovation

What business are you in?

The question in the title derives from the classic marketing thought piece by Theodore Levitt entitled Marketing Myopia. At the time it rocked not just the marketing world but the business world in general and has shaped business thinking ever since.

Published in the Harvard Business Review in July/August 1960, it is no less relevant today. I remember being excited about the concept on encountering it for the first time when doing my Masters in Marketing and I still am. It’s a foundational positioning model that I consider in some of my mentoring work. There are limitations to its applicability but it is still a sound concept.

By way of explanation, the famous piece starts with an illustration:

“The railroads did not stop growing because the need for passenger and freight transportation declined. That grew. The railroads are in trouble today not because the need was filled by others (cars, trucks, airplanes, even telephones), but because it was not filled by the railroads themselves.”

“They let others take customers away from them because they assumed themselves to be in the railroad business rather than in the transportation business. The reason they defined their industry wrong was because they were railroad-oriented instead of transportation-oriented; they were product-oriented instead of customer-oriented.”

The myopia referred to is a failing of definition by being too narrow in how you view the business you are in. Levitt urged marketers and business owners to stop defining themselves by what they produced and instead reorient themselves toward customer needs. This would ultimately define the business they were in on the basis of the most important stakeholder group that mattered – the customer.

An example of mistaken definition

Again by way of explanation, I made these points to one of the founders of Percolate about two years ago, mid way through my employment there.

I had questions around the business Percolate was in and how it was being defined. I framed my thoughts and feedback in the context of Levitt’s.

At the time (thankfully this has now changed), they defined their business as being in the supply of enterprise systems of record. They compared themselves to Salesforce for sales, Workday for HR.

In Percolate’s case, they were catering to marketers with a system of record for marketers. All of their marketing messaging and branding was centred on this key definition.

I questioned this fundamentally as a short-sighted and inward looking approach to marketing that focused on the needs of the company instead of defining the company and its products in terms of the customers’ needs and wants. It would result in a failure to see and adjust to the rapid changes in the market. My reasoning was as follows:

  1. The marketing record is the byproduct of a transaction and necessary for monitoring and tracking outcomes over time. But as a concept it’s not very inspirational to a typical user. It’s also the function of technology and by that virtue, product-oriented.
  2. It may appeal to an executive who wants to account for expenditure and effort in his or her organisation and you should appeal to this person’s needs in selling efforts. But to be successful you also need to focus on and inspire end users.
  3. Focus on end user input and how it is facilitated (briefing and planning necessary for creative work). Focus on output (execution of great creative marketing campaigns). Focus on how it makes them better at their job. System of Results might be a more appropriate positioning statement, especially in a SaaS world where usage is a major factor in retention and you need to go beyond the initial positioning focused around customer acquisition.
  4. Increasing pressure is being placed on marketers to be more creative and stand out. Creative work that can, will be operationalised, automated and performed by AI. Most creativity that counts, dealing with imagination and innovation that moves other humans to action, will remain with humans.
  5. Marketers are in the creativity business. Data skills are increasingly coming to the fore but that can be handled by machines. Products that help marketing customers manage their creative work and stand out, will stand out themselves. Doing more to spark creativity and collaborative features to aid collective creativity will stand out but it’s also what’s done on the service side and how you orient to enable organisational actualisation that matters.
  6. The Modern Organisation’s Hierarchy of Needs positions creativity and innovation as the pinnacle of organisational actualisation and all other layers as necessary but supporting elements – like a system of record.
  7. Focus the Customer Success service on helping customers achieve this level of actualisation. It takes the focus away from product and features which is always tricky and prone to disappointment (the difference between what is promised by sales and what is delivered post-sales often falls short).
  8. I would argue that all of the above positions the company proposition on uplifting and inspiring activities like enabling creativity, imagination, innovation, etc. This is the right way to position it, on the right activities, that will make humans stand out in a sea of machines. That move away from products and technology and onto human ingenuity. This will make all the difference as good positioning strategy should.

I didn’t share the above to dis Percolate. I wanted to share my original thinking and revisit it because I’ve been thinking a lot about this again recently. It keeps coming back like a bad habit. So many industries are faced with a fundamental re-evaluation of the business they are in because of rapid changes in the market. Much more so than the railroads faced back in the day.

Changes that are disrupting incumbent players and being taken advantage of by opportunistic startups that are positioning themselves in the right way.

What’s working and what isn’t?

It’s about getting creative with how you deliver products and services, leverage technology and position yourself. Getting creative with the very fabric of your business, its business model. That is what creates the Uber’s, WeWork’s and Air BnB’s of tomorrow.

My view on where Microsoft is (re)positioning itself.

And it’s not just startups. Microsoft is reinventing itself very successfully on the back of its new positioning. It’s why I am (back) here. It also goes beyond business models and touches on aspiration and effects culture which is what Microsoft has fixed led by its new CEO Satya Nadella. From an aspiration led vision to be “a PC on every desk” which was applicable then and worked well for them and the time, to “empower every person and every organisation on the planet to achieve more”. This latter is very much focused on the type of creativity we need to engender with employees and is reflected in its (re)positioning – in my view. How we help customers get creative is what I was arguing Percolate should do and what I think Microsoft is helping do more and more.

The auto industry is not doing so well. If you leave Tesla aside you will see an industry struggling to find its place in the new world and with reinventing themselves as they must. I’m not the only one to think so: Why Car Makers Are In A Death Spiral.

Since I’m working with the industry at the moment I am noticing first hand the lack of speed and imagination in doing the work necessary to reinvent themselves

I’ve suggested solutions (see below) – time will tell if they listen and how things pan out.

SaaS beyond Software – Automakers

The connected car vision is missing a few connections

Customer Success, Startup Innovation

Agile in nature not just by name

Satya Nadella (CEO of Microsoft where I work) recently shared his thoughts on how organisations need to embrace “tech intensity” to innovate and grow in today’s high-intensity digital economy.

He didn’t specifically call out speed but its implicit in everything he said.

I’m surrounded in the work I do at Microsoft, by IT teams that have embraced Agile. I’m sure Satya would agree that this would form a key part of tech intensity efforts.

Yet of all the things that Agile is, the one I find most often missing as the name would suggest, is the need for “rapid and flexible response to change”.

I’m on a mission to emphasise the need for speed in the work I do in Customer Success around technology adoption.

Here is the line I push:

I am not one to be be speeding things up just for the sake of it. As a DharmHacker I actually think stopping, slowing down and reflecting frequently is crucial for effective decision making. Mindful over Mind Full is the title of an eBook / trend report I wrote that pretty much sums up the imperative.

Speed and Innovation together make the difference

Mindful decision making does not contradict speedy actions once you have realised the need for change and decided on a course of action. And speedy action carried out with intensity is what distinguishes leaders in today’s digital landscape.

digital innovationIf you are changing at speed as a result of external pressure, you will be better off than those that are slower or not changing at all. But as Satya pointed out, innovation is a key part of tech intensity and if purposeful innovation efforts are executed at speed, then you will become a leader in your industry. If innovation needs to be the “why” and change the “how” then your “when” has to be yesterday.

In the video above and in the last post I just linked to, you should see how I’ve positioned speed and innovation efforts side by side as key differentiators of digital transformation success.

Why agile is not just a software development methodology for IT

As you may also have seen in the video above where I included a snippet by Paul Willmott (Senior Partner and Digital McKinsey Leader), they have a clear view on the importance of speed in digital transformation efforts.

As a leader in digital transformation strategy setting and execution, McKinsey also have views on the many other factors that need to be considered. Here are just a choice few of my favourite articles that they and others have recently published which elaborate:

Startup Innovation

Round up of latest #innerventures trends

innerventures-vennI’m tracking these updates with the #innerventuresupdate tag – you can find all of them by following the link. They all tie in with and add to the findings from my trend report which covers startup driven innovation in large corporates, corporate venturing efforts and the role of the intrapreneur. You can buy the report from iBooks or add a comment (which requires an email that no one will see) and I can provide a voucher for a FREE COPY :)

ibooks

Sense Making, Startup Innovation

Lean startup methodology applied to successful enterprise technology adoption

The Lean Startup isn’t just about how to create a more successful entrepreneurial business. It’s about what we can learn from those businesses to improve virtually everything we do. I imagine Lean Startup principles applied to government programs, to healthcare, and to solving the world’s great problems. It’s ultimately an answer to the question ‘How can we learn more quickly what works, and discard what doesn’t?

What Tim O’Reilly, CEO O’Reilly Media, said above pretty much sums up what I am trying to do here: apply the methodology to a great challenge I face daily in my role in customer success – successful enterprise technology adoption. To find out more about the core methodology you can head on over to www.leanstartup.com.

The methodology has been highly successful in its application with startups but far more broadly now too as Tim O’Reilly suggests. I’ve been thinking about it a while and captured how I wanted to apply it very briefly and simply in a customer success management primer I put together on SlideShare. I’ve added the relevant bit as a diagram above.

It’s not unlike what the co-founder of Percolate where I currently work has suggested in this article: Noah Brier’s Three Rules For Leveraging New Technologies. There’s no specific reference to the lean startup methodology but you should see the similarities and they are based on the lean startup methodology’s heavy reliance on software engineering approaches which Noah Brier does reference.

I’ve been applying the approach loosely with the customer success planning and execution work I have been doing with customers and now felt it time to capture that in a little more detail. That is what this post is about. It’s also in the context of my most recent work which is marketing, as in Noah Brier’s post, but I believe it can be applied widely for most enterprise technology platforms. It also chimes with earlier thinking I’ve done which seemed to resonate at the time: Why leaders of digital initiatives inside organisations need to think like start-ups.

Contrasting approaches between enterprise technology then and now

This approach I am taking is in direct contrast to previous approaches to technology adoption. Enterprise technology platforms used to be highly configurable and customisable and were often planned and prepared for launch far in advance of launch dates. They would exist in this form for years afterwards until a new version was ready for re-launch. This was tied in, to a large degree, to a vendor’s approach who would plan new features and functions years in advance before releasing a new version. Now with SaaS (Software as a Service) that has all changed.

Customers no longer get to change the platform to the degree they used to and vendors have vastly reduced development cycles to ship new features more frequently, sometimes as often as weekly. However, most often these are tested with a handful of BETA customers and then shipped when ready on a quarterly basis.

With new features coming this frequently and with the lack of customisation and configurability, it doesn’t make sense to plan too far in advance. A far more iterative and experimental approach is called for.

The model in summary

lean-success-planning

This approach supports customer and end user success with the use of their enterprise technology platform. So those chiefly responsible for the platform’s success as well the users of it. It combines what has worked well with many global customers in my experience and incorporates lean startup methodology. It’s based on the view that success cannot be achieved by chance but needs a good design which is measurable, executable and iterative. 

It targets key outcomes including measures of success (KPI’s), plans the necessary activities and resources required to succeed and reviews progress periodically that allows for course correction or continuation of successful activities. I simplified the steps from the Lean Startup methodology for my purposes to three.

Note that this model is narrowly focused on planning and execution activities and does not take into consideration some critical supporting activities. Things like a champion network, an online support environment, etc. I’ve written about all of these to some degree or other under the customer-success tag so follow the link to find out more.

Where the cycle starts in relation to implementation/onboarding

Generally there is a phase of work prior to the success management cycle starting that includes getting the platform ready for launch. This would include things like configuration of the system, setting up workflows and permissions/ roles, access and security settings, provisioning of users, etc. These technology, governance, authentication, legal, support and security considerations have to be mapped out and delivered in accordance with the organisations policies, most often managed through IT. This would ideally be followed by a successful launch of the platform which I’ve written about here: Launch like a boss – bringing consumer startup practice to your enterprise technology platform

The success management cycle would ideally have been been planned ahead of launch as part of the implementation planning, e.g. the initial uses cases and workflows you launch with form part of a longer term success vision and planning cycle.

In some cases, a customer will have launched and have been using the platform for many months, even years, without a robust success methodology in place. In this case you would have to take stock of where successful (or not) platform usage is and work from there. It may require a platform relaunch. At best, there are some successful uses of the system in place already and you want to take these to the next level.

Envision

  1. Set vision, objectives and broad measures of success
    On overarching vision is a good thing. Some of the best work I’ve seen done articulating the work needed here is in this article: Strategic Communication: How to Develop Strategic Messaging and Positioning. This drives the overall program of activities and provides focus for the use cases that will deliver against the vision and objectives. Generally I would suggest planning in yearly cycles as this will be made up of 4 quarters of iterating use case delivery.
  2. Identify and plan use cases
    Enterprise technology adoption – Use cases are the currency of success – go to this post I wrote to find out more about uses cases. As mentioned above a set of uses cases should be iterated for at least three months of active use – this is probably the minimum amount of time needed to properly use and test use against set outcomes. These uses cases should broadly align with the vision and high level objectives you have set for the year.
  3. Stakeholder engagement and delivery /change program
    This is essentially the execution plan. It should at least incorporate time, task and responsibility elements that you can tick off as you go along. Many of the supporting elements that I cover in my primer referred to earlier should also be considered: a champion program, training, a governance model involving main stakeholders, etc. I’d also call out a collaborative community and online support elements in particular – covered in a post here: Scaling your customer success efforts online – a guide.

Execute

  1. Launch platform and use cases
    I’ve already linked to the post I wrote about the importance of launching well – see further up this post.
  2. Governance / monitoring
    Ongoing monitoring, especially in the early stages, should include key stakeholders and regular check-ins. You could set up a steering committee and meet monthly for instance. If the platform was critical to your business, why wouldn’t you do something like this and have the most senior of stakeholders involved.
  3. Champion check-in
    This is called out specifically because champions are crucial to success. Champions help to reduce the strain on the resources of the core project team and help drive engagement throughout the community, especially in early stages.
  4. Ensure ongoing support through dedicated channels
    The article mentioned under point three in the Envision section covers what I am referring to here.
  5. Gather data
    You should have set the key metrics you want to measure as well as how you are going to measure them in the use case definition phase. Don’t leave it as an afterthought and whether its qualitative or quantitative, gathered through survey responses or as output of system use, collect data as you go.

Evaluate

  1. Evaluate progress holistically against vision, objectives
    Check points could occur monthly, even weekly in the early stages, but at the very least should be quarterly. Whenever you check in though, make sure you are looking directly in front of you as well as in the distance, i.e. are the activities in the immediate past still leading you to where you want to get to in the long term. The best way to explain is through analogy. If you are walking looking at a map, if you don’t look up from time to time you might walk into a lamp post :)
  2. Evaluate against set KPIs and measures of success
    This is the practical task of studying the detail. Mapping the data against the expected outcomes.
  3. Revise plan as necessary
    Adopt the way of the minimalist, remove until it breaks. If the data doesn’t support the hypotheses you set out to validate, then check where you are going wrong. The measures, the tools or the hypotheses could all be wrong. If you cannot correct, you may need to discard.
  4. Rinse and repeat with following initiatives
    You need to repeat the cycle above at least 4 times in a year as mentioned and hopefully at the end you get to a level of use and maturity that you can then progress on from for the next year. See maturity point below.

NOTE: When starting with your first success cycle, be aware of any preceding activities like an implementation or onboarding phase with all that it set out to achieve. This can be used as a baseline for the use cases and measures in your initial success cycle.

Maturity over time and an approach to driving it


Over time, with successive quarters and years of use, you would expect an organisation to become more and more proficient in its use of a technology platform and that value outcomes will also increase over time – see diagram.

And if you expect that all users will be equal in their stages of maturity well you are likely to be disappointed which is why you might want to break maturity levels up between your users and segments of users – see next diagram.

Also, there is likely never to be an end to the overall maturity path as new features are added to the platform and new users come and go.

An approach to managing maturity levels between different users and /or segments of users is not critical to the success methodology. But if you are dealing with a great many users in a large organisation with many different geographical or vertical segments, you may want to consider it.

The diagram above is pretty self explanatory and hopefully its clear how you might be able to work with something like this. You really want to keep it as simple as possible because you don’t want to add complexity especially where the organisation or technology already is.

Which leads me neatly to a final point. This whole methodology, like the lean startup approach, is very simple and experimental. That is the beauty of it and the reason for its effectiveness. Good luck using it and if you have feedback about what works or doesn’t or any improvements, please do let me know in a comment.