5.0   Facet Technology

Scale back your imagination to some limited applications and you'll find one of the earliest entries in to this market category; Facet Technology - www.facet-tech.com. Image processing and object recognition as well as database management separates Facet Technology from your typical technology company. Also, Facet expects to grow over 300% in 2004 based on organic customer growth.

You won't be surprised to learn that Google is working on this as well. So is a company called PicSearch. Do the same search for an image of a football at http://images.google.com/ or http://www.picsearch.com/. The secret to Google and PicSearch is that the images must have the search name as part of the image file name; hardly an image search but interesting results, nonetheless.

6.0   Who’s Taking Responsibility for Results? 

Sadly, the Blame-Game has become a pervasive phenomenon in America’s corporate culture with Enron epitomizing increasingly popular finger pointing among top management.  In helping my client companies grow their businesses, I invariably meet Blame-Game players, the people who make and accept excuses for non-performance, in all strata of the organization. 

Taking a cue from Dave Kurlan, president of Objective Management Group, I believe it’s important to identify and eradicate lack of accountability in the sales organization in order to improve sales productivity.  “Real growth and change won’t occur until an individual stops making excuses and starts taking responsibility.”  

Identifying Accountability Issues

A local manufacturing company experienced declining revenues and margins for four years.  Determined to reverse the trend, the management team asked me for an objective assessment of their organization’s business-development processes.  The evaluation revealed that the entire team had a problem with excuse-making, even the president/owner.   

Interviews with key players in the company about why sales were declining yielded comments that ducked accountability, blaming the market, competition and management:

§        Customers have such unreasonable expectations.

§        Our competitors are slashing prices.

§        Manufacturing needs to get their act together.

§        We don’t get any training around here.

§        Marketing is way behind schedule.

§        Management is so confused; they’re clueless.

§        There’s no support help around here.  We have to do everything ourselves.

§        The marketplace as a whole is declining.           

In reality, when someone blames the economy, an external element, they don’t believe they have control over the outcome.  Therefore they’re unlikely to do anything that will improve their effectiveness.  When competition is cited, it’s really an admission of being outsold by the competition.  When management incurs blame, that’s just the easy way out.  As Kurlan explains, “They would be criticizing themselves if they were to take responsibility for not following through on something or letting something fall through the cracks.”  

Fixing Accountability

Here are four rather simple, effective ideas to start eliminating lack of accountability:

§        Hire disciplined people.

§        Implement a No-Excuse policy.

§        Require powerful questions.

§        Track performance metrics.  

Hire Disciplined People

Ian Troup, the leader of Upsher-Smith as they grew from 8 to 200 Million in annual revenues over an eight year time frame, recently said, “If you don’t have the right crew, the right captain doesn’t make a difference.”  Although I discussed recruiting in a previous article, having the right people cannot be overstressed as critical components of building a high-performance sales culture.  Disciplined people, who operate with a high degree of personal responsibility (they don’t make or accept excuses for themselves or others), have disciplined thoughts, which fuel disciplined actions, which fuel disciplined results.          

          Thoughts--------Actions-----------Results 

Case in point: A client company had a growing gap between their revenue projections and results.  The president was quite proud of the leadership team he had recently put together, each with more than 25 years in the industry and excellent technical knowledge.  However, upon further evaluations, both blamed their lackluster results on stiff competition in their respective markets.  They let their competitors be an obstacle versus a stepping-stone to creative brainstorming and strategic development.  Even given stiff competition, people with a high degree of personal responsibility would have delivered better bottom-line results. 

Implement a No-Excuse Zone

Like the president of that company, we too often accept excuses.  It’s imperative that we start recognizing excuses.  Then, we need to enforce a No-Excuse zone where we stop accepting excuses of any kind, from any one, at any time, for any reason—even if there is a shred of validity to them!”  Kurlan advises us to raise expectations by asking, “If you couldn’t use that excuse, what could you have done differently to overcome that obstacle?  It sounds harsh, but the strategy empowers your people to work harder and smarter, knowing that you won’t accept that excuse ever again. 

The VP of Sales for a local medical-device company flew all his sales people in for their annual national meeting.  They only had one piece of “homework,” which was to be turned in at 5 p.m. on the first day – a major account strategy worksheet for three of their largest accounts.  At the appointed time, only three of the 17 people had completed their worksheets.  

They all had legitimate excuses: they were going to work on it on the plane, but the person next to them talked too much; they were going to do it last week, but they had a family crisis and couldn’t fit it in.  Every excuse was legitimate.  However, legitimacy does not change the fact that the paperwork didn’t get done. 

What a dilemma for the sales managers who’s trying to build a disciplined sales group!  Does he let them off the hook?  Despite the fact that accountability is one of the sales manager’s most dreaded responsibilities, Bob took the high road and delayed the evening festivities until all 17 sales people had completed their documents.  Oh yes, there were lots of groans.  However, the next time Bob asked for a report, it was done on time! 

Require Powerful Questions

The third step is to train yourself and your staff to ask empowering questions. John Miller, author of QBQ! The Questions Behind the Question, suggests the following format:

§        Begin with “What” or “How” (not “Why,” “When,” or “Who.”)

§        Contain an “I” (not “they,” “them,” “we” or “you.”)

§        Focus on action.  

In using the QBQ! process, the accountability-ducking comments identified earlier, now become:

§        What can I do help set proper customer expectations?

§        What can I do to differentiate my products/services?

§        What might I do to ensure that my customers get the right products at the right time?

§        What training do I need to move my skills to the next level?

§        How might I improve my communication with marketing so that my projects get done on a timely basis?

§        What information might I provide that will help them make good decisions? 

§        What steps might I take to better organize my time?

§        What can I do to jumpstart the sales in my territory?

Jake constantly complained to his sales manager, Sue, that sales were down because his prospects just didn’t see any reason to pay a higher price for their product and services.  Sue challenged Jake to reframe the situation.  Instead of complaining, she invited him to ask himself, “What can I do to begin providing added value so that prospects will begin to see why they should do business with me?”  Of course, Jake thought the exercise was a waste of time.  However, at the end of the week, he reported that after talking with colleagues, clients and prospects, he’d come up with three new ways that he could help his clients either reduce expenses or increase revenues.  Within 30 days, Jake’s pipeline was full. Within 60 days, he was closing new business.  Why?  Because his manager challenged him to think differently.  

Track Performance Metrics

Step four is all about performance measurement and holding people accountable, the most critical aspects of revenue generation.  Research by Objective Management reveals that in growing organizations committed to developing consistent growth in revenues, 25 percent of a manager’s time is spent holding people accountable and measuring their performance in both activities and results.  

Numerous tools can be utilized to enhance the accountability process, from fast-start programs to pipeline management tools to scorecards to Quick Quote Qualifier.  Here is an example of one tool that can be helpful.  One of my clients, a successful IT consulting company, uses Sales Track, an on-line activity-tracking tool.  The sales manager set up the program with each rep, jointly establishing weekly/monthly/quarterly and annual revenue and/or margin results.  Based on each personal income target, the managers and their reps determined together what revenue needed to be in the pipeline in order to meet their income goals.  Once the revenue number was determined, they worked backwards to determine how many prospects were needed based on the rep’s closing percentage.  By continuing to work backwards, they were able to determine exactly what key activities (phone calls, appointments, proposals, seminars and other best practices) were needed each day/week to achieve the company’s and sales rep’s goals. 

Each Friday the sales people input their data.  By Monday morning, both the sales rep and the manager get an activity/results report that analyzes where they are against annual objectives. 

Accountability Accounts for Growth

The line that separates winners and losers in organizational growth is accountability. Losers only talk about why past efforts went awry, while winners take action and make changes. 

Stop accepting excuses and making your own.  Step up to industry’s most difficult challenge and make sure everyone’s responsible for results.  To inspire your sales people to rise above their circumstances and to take action to achieve profitable growth, try implementing some of the ideas I’ve shared.  And let me know how they work for you by emailing danita@salesgrowthspecialists.com.

7.0  Staffing Software Industry Consolidation And What to Expect In 2004

by NetSudser Tim Giehll, tgiehll@eempact.com, CEO, eEmpACT Software, 952.854.3050 x230 

The staffing software industry has seen Covantis shut its doors in 2000, VCG acquire Caldwell Spartan in 2001 and eEmpACT absorb Allegro last year. Quite understandably, these developments – coupled with similar ones in the tech sector at large – have people wondering whether such consolidation portends an accelerating trend. 

In a nutshell, I think that it most certainly does, and that we’ll be seeing considerably more of the same over the next two years. Some staffing software companies will be forced to close their doors, and others will be acquired by stronger competitors.

In order to understand why, it will help to first take a look at the past to get a broader perspective. History shows quite clearly that consolidation within an industry is a natural and inevitable occurrence – an outcome of the business equivalent of Darwinian evolution, based on the same “survival of the fittest” principle that rules the plant and animal kingdoms. Typically, the earliest years of an industry are marked by a proliferation of players, all lured by the marketplace’s profit potential and all eagerly competing for the same customers. Then a winnowing process takes place, with the weaker players succumbing, until a balance is reached – often with only a few major players dominating. 

For example, in 1855 there were 50 telegraph companies in the United States, but within two short years that number had dwindled to only six, and nine years later Western Union dominated the entire industry. Similarly, there were 253 automobile manufacturers in 1908, 108 in 1920, and by 1929 just three companies (Chrysler, Ford and General Motors) controlled 80 percent of the market. More recently, we’ve seen the number of computer companies drop from 100 in 1993 to 30 today, with two of them (Dell and Hewlett-Packard) controlling 51 percent of the U.S. market.

In addition to such historical precedent, experts say that today’s tech sector – of which the software industry is a critical part – is still bloated, despite the massive pruning that followed the recent popping of the tech bubble. For that reason they predict the imminent demise of 1,000 or more of the 10,000 companies that currently swell its ranks. 

But there are a number of other compelling reasons to expect further consolidation among staffing software companies. First, most staffing software was created in the late 1980s and early 1990s, so its technology is roughly 10 years old – which is typically when industries see their first wave of consolidation. Within that period of time, competing products tend to become fairly uniform in terms of features, as manufacturers fill in gaps that they see are covered by their competitors. And in fact, this is exactly what has happened to staffing software: the various staffing software solutions have become so similar that it’s hard nowadays for customers to choose one purely on the basis of functionality.

When functionality is fairly uniform among competing software solutions, buyers turn to the quality and dependability of customer support to differentiate between products. But roughly half of the 60 staffing software companies provide adequate support, which doesn’t narrow the field down much and leaves only price as the key remaining differentiator. If functionality and service are both pretty much the same, customers will choose the software solution with the lowest price. That’s precisely what we find has happened with staffing software, which has had its prices slashed in half over the past year, from an average of $1,800 per user down to $900, as manufacturers have begun to differentiate themselves by charging less than their competitors. Some vendors have even dropped their entry-level prices to only $199 per user for small installations. 

But there’s a very important cause-and-effect that occurs when everyone in the industry drops their prices, as has happened with staffing software. When price drops, revenue drops accordingly. But spending can’t be cut back to the same degree, or else product development will suffer. So while price and revenue for staffing software have been cut in half over the past year, vendors’ expenses have remained pretty much the same. In that kind of environment, something has to give.

And that’s just what is starting to occur now. The weakest fish in the pond – those staffing software companies with the smallest customer bases and the least-efficient products – are beginning to lose their vigor because they can’t find a way to stay profitable under the kind of pricing pressure they’re now facing. The most robust fish – those companies with the largest customer bases and the most-efficient products – are the only ones that can survive under those conditions, and some of them will, inevitably, end up consuming (i.e., acquiring) their weaker competitors, as is already starting to happen.

This can have disastrous repercussions for the firms that rely on the software solutions these weaker fish sell. There are two main scenarios that can occur. One is that a software vendor gets acquired by a more robust one. Since the acquired company is invariably the one with the inferior product, this means its customers will need to move to the dominant technology.

The second possibility is that a software vendor simply closes its doors, leaving its customers stranded, with neither technical support nor a means of adapting their systems to meet the ever-changing needs of their businesses. This is what happened, for example, when Covantis closed its doors without warning in 2000. Not only were its 100 customers forced to scramble to find new software solutions, but many had prepaid for the coming year’s technical support – money which they never got back.

The best way for customers to protect themselves from either eventuality is by taking a long-term view when buying staffing software. That is, they should determine who the dominant staffing software companies are, because those are the ones that are likely to still be around five years from now.  

The trend toward consolidation in the staffing software industry will eventually lead to the creation of an industry standard (i.e., a dominant technology), similar to what has happened with the operating systems of personal computers. There used to be a number of PC operating systems, including IBM’s OS2 and Novell’s NetWare. What happened over time is that the dominant technology – Microsoft’s Windows – surpassed those other players and either put them out of business or acquired them.

But we’re not yet at that point with staffing software, which hasn’t seen the emergence of one dominant vendor. I think that’s still two years in the future. There are only three staffing software companies that are starting to move to the forefront, but it’s not yet clear which one is the leader. Those three companies are gaining new customers at an average rate of anywhere from one to three a week. The other 57 staffing software vendors are, in my opinion, in serious danger of folding or getting swallowed up, because they aren’t growing but are just in a holding pattern. They may be adding only one to three new customers a year, and so are basically dependent on the money they get from servicing their existing accounts. That may allow them to keep their doors open, but it’s not enough to reinvest in their products – to develop new features, functionality and services – so that they can successfully compete in today’s marketplace.

In light of all this, companies that use staffing software would do well to give some thought to what eventually happened to the owners of such ill-fated products as Edsel cars and Micron computers. Change is inevitable, but it’s always better – translation: cheaper, easier and more efficient – to be proactive than to be reactive.

8.0  Guest Writers for This Report

I have opened up the Monthly NetSuds Report to guest writers. If you have a passion for a topic, and you can write (at least no worse than me), send an email to me matt@netsuds.com.  You can even send copies of your work.  It needs to be on "com and .com" topics and can include entrepreneur/investor activities.  Good information from our service providers and vendors is also welcome so long as it is not a "commercial" for any one company or individual.

If you are aware of others who would like to receive the NetSuds Report, ask them to visit http://www.netsuds.net/mail.htm to subscribe or unsubscribe.

Please send your comments and feedback regarding this issue of the NetSuds Report to matt@netsuds.com.

Matt Noah

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Chanhassen, MN  55317

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matt@netsuds.com

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