The Big 3: Demand Generation

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In our last post, we touched on some of the operational scaling challenges associated with nearly every growth-stage tech-enabled services (TES) businesses. Today we turn our attention to the last and arguably the most ubiquitous growth imperative, demand generation.

So what exactly do we mean by demand generation? Let’s start with what it’s not. If you’re the owner-operator of a SaaS or TES business that’s growing at over 20% and approaching profitability, your marketing and sales team has already demonstrated its ability time and again to get well-qualified leads over the line. Also, in many instances, that first $5 million or even $10 million in revenue was sourced from the team’s personal network, hyper-focused cream-skim marketing tactics and a lot of heroics. Smarts, focus and scrappy execution has gotten you to this point. Getting to the next level requires more than guile; it necessitates that you institutionalize what has made you successful while you develop new systems, processes and measurements to scale your demand generation efforts. Demand generation, however, is not a euphemism for marketing and sales execution.

If you are like CEOs of most companies that have achieved initial market success, you may find yourself asking the following questions:

How do we open the aperture at the top of funnel and identify high probability buyers?

Where will our next $10 or $20 million in revenue come from?

Have we used our initial market success to clearly define or refine our positioning strategy?   What long term business are we really in?

Where are we investing today; product vs. marketing, brand/messaging vs. campaigns/events?

Do we understand how buyers become customers?

What do they need in order to make an informed buying decision?

What role do our customers and our team members play in promoting the brand’s value?

These are just a few of the questions that must be answered before you can confidently invest in bending the growth curve. In order to build upon that initial market traction, many companies fall into the trap of focusing their growth initiatives on lead gen programs; experimental digital marketing campaigns, conferences and promotional events only to be disappointed with the results along with wasted time, energy and capital. Often confused with lead gen, demand generation is, on the other hand, a fundamental company-building block where positioning strategy, product, a deep understanding of the customer experience, content marketing, behavior-based nurturing, funnel management and conversion management align to form the foundation for accelerated growth.

Much like the other Big 3 scaling imperatives, demand generation is an organizational discipline. “Repeatable and scalable” should be the universal mantra. Unlike the other two,  team development and operational scaling, which left unchecked can be growth inhibitors, demand generation is a “force multiplier” growth catalyst. When done well, the impact on top line revenue, profits and value creation is significant and material. This cannot be overstated.

So what’s next? Well, there are no silver bullets here. As was mentioned earlier, demand generation is an organizational discipline and you must first assess the team’s readiness to develop and execute each of the components of a demand gen and content marketing strategy. Rest assured you are not alone. Most of this is very new to even the most experienced marketing professionals. Identify a thought leader – inside or outside the company – to help guide you through a step-wise process of both introspection and action. Start by deeply inspecting the customer segments in which you have been successful. Seek to understand the journey that the buyers of your services traverse. Getting to the right demand generation strategy requires a deep appreciation of your market, your customers and future buyers by everyone in the company – top to bottom.

As we’ve said before, the secret sauce for any of The Big 3 isn’t just figuring out what the hurdles are but also how to empower your team to take up the gauntlet to address these critical success factors in the most expedient, capital efficient and durable fashion. In doing so you’ll also help ensure that every invested and/or re-invested dollar in the business will generate the highest returns.

In future posts, we’ll expand our discussion of The Big 3, delving a bit deeper into each one. In the meantime, you can find more resources and growth perspectives for your business at The Growth Equity Blog and the Workhorse Capital Blog.

The Big 3: Operational Scaling in Your SaaS or Tech-Enabled Service Business

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In a prior post on the the Big 3 challenges common to nearly every growth-stage tech-enabled services (TES) businesses, we explored the importance of building and developing your team.

In this post, we’ll focus on a second growth imperative, operational scaling. Bending the growth curve to double, triple or quadruple revenues presents a new set of operational challenges for your business. Some are more obvious than others and, in fact, the “below the radar” hurdles left unchecked can pose the most troublesome and lingering impediments to your scale-up plans.

A Common SaaS/TES Scenario

Let’s start with a typical scenario; your TES operation is humming along at over 20% growth and you’ve just broken through a much anticipated revenue barrier, maybe its $5, $10 or $15 million. We’d all agree that, in most cases, the current organization, business processes and systems at $10 million won’t necessarily work as well (or at all) at $20, $30 or $50 million. We can some shed light on what to do about it and when by asking ourselves a few fundamental questions:

How should you think about developing a proactive yet measured approach to scaling the business?

How does your business strategy reflect the operational reality? Is it tailored to your operational competencies, assets, and processes?

Do you understand the link between your growth strategy and execution quality?

What are the most important and most challenging factors to mitigate scaling risks?

Your company’s ability to bend the growth curve is rooted in a healthy understanding of the current operational realities and the state of your change-capable organization. Can you add team members, new processes and systems while preserving everything that is special about your current, nimble unit? Any unforeseen issues with an evolving organizational and operational dynamic could divert your energies, the company’s focus and waste precious growth capital dealing with the necessary course corrections.  And while the focus in clearly on top line growth, you may have to prepare your team from the bottom-up.

Scale Functionally and Lead

Introducing new roles and team members into the organization is an obvious growth step. To scale your operation, the “mean, lean, wear lots of hats” machine must evolve to more functional roles with dedicated specialists (like customer support, product management, customer success, business development, line executives, etc.). No problem. What’s not so obvious is how the current team deals with these changes, particularly if they don’t have a lot of prior experience. If team members are used to taking direction from the top (the CEO or the founders, for example), they may have questions or concerns about their new manager, their role and the revised roles of everyone around them. When it comes to building a growth-oriented team, don’t assume everyone understands what you’re doing and why. Just because you’ve laid out a logical and viable scale-up plan, architected the new organization, hired all the right people and committed to new processes and systems doesn’t mean they know how to adapt and work together effectively. It may sound mundane but take the time to clearly define the new roles, responsibilities, process owners and who is ultimately accountable for the results. Then, assume the role of educator, conscience and sentinel every step of the way.

Develop a Value Creation Playbook

Scaling a a SaaS or TES business is hard work. Period. You’ll want to find a value creation playbook to be your situational guide. It should include a set of success factors, tools, methodologies and best practices necessary to scale a tech-enabled services business and complement what you already do so well.

And although most of it’s not rocket science – this phase of company building requires there be a clear link between the strategy, the plan, the value creation milestones and how every team member fits in. There are a few more subtle scale-up hurdles that can have a material impact (up or down) on the results. They include:

  • Communicating broadly, consistently and frequently to every team and team member at every level. This is far easier to say than do and is one of the “secret elixirs” to mitigating the scale-up risks.
  • Assessing the need for critical, long lead-time hires. Start recruiting early – it always takes longer than you think. Build a bench of talent for parts of the organization where you’ll need to scale the team. This helps you to make high quality hires – just in time.
  • Institutionalizing “tribal knowledge” – by documenting and sharing the essential stuff in the heads of the founding team that new hires need to do their job at the highest level and to avoid reinventing the proverbial wheel.
  • Determining early which systems and processes won’t scale – refactor them pre-emptively.
  • Courageously tweaking the organizational dynamics whenever necessary to find the business’ optimal cadence. As you scale-up, you’ll see a shift from mostly high performance individual contributions to team-based deliverables. It is one thing to execute as a high performance silo. It is quite another to consistently add horsepower, create new teams and redefine processes in order to meet your accelerated growth, EBITDA and productivity goals.
  • Knowing what to do today and what to put off until tomorrow, next month or next year. Most entrepreneurs and investors talk about and get the importance of “focus”. What separates the successful businesses at this growth phase is knowing what to focus on.

Inattention to any of these details can lead to indecisiveness, team paralysis, or lackluster performance and even put a drag on morale and esprit de corps – which, of course, is exactly the opposite of what you’re trying to achieve with an accelerated growth and investment plan.

Don’t React. Plan.

As we discussed last time, the secret isn’t just figuring out what the hurdles are but also how to take up the gauntlet to address these critical success factors – like operational scaling – in the most expedient, capital efficient and sustainable way. In doing so you’ll also help ensure that every invested and/or re-invested dollar in the business will generate the highest returns.

Next time, we’ll be discussing the 3rd and arguably the most ubiquitous growth challenge, demand generation where positioning strategy, buyer insights, behavior-based nurturing and meaningful conversion metrics form the foundation of an optimal content marketing and demand gen strategy. In the meantime, you can learn more about The Big 3 , the difference between building Unicorns and Workhorses in our Don’t Die Trying post, and If You’re ready for Growth Equity.

The Big 3: Organizational Development and Team Building Best Practices

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Bending the growth curve presents a new set of challenges for your expanding business. We recently touched on The Big 3 imperatives common to almost every growth-stage tech-enabled services (TES) business:

  • Team: Building and developing your team from top to bottom
  • Operational Scaling: Growing the operation and refactoring systems and processes to accommodate scale
  • Demand Generation: Opening up the aperture on the top of the the sales and marketing funnel – efficiently

Today, we’ll dive into the best practices, tools and methods associated with imperative #1: Team Building.  Getting to the right answers starts with asking the right questions:

Do we collectively possess the experience and expertise to be successful in this next phase?

 

If not, how do we architect, hire and nurture a high performance team to meet our goals?

 

Are all of our team members, especially our best and brightest, in the most effective roles?

 

How do we preserve the company’s culture as the business grows both inside and out?

As an owner-operator, you’ve successfully bootstrapped a business built upon a healthy respect for capital. The challenge ahead is how to expand your “bend the curve” team while preserving the company’s special attributes that got you here.

Team members that don’t scale, even one bad hire or unforeseen issues with team dynamics will divert your energies and the company’s focus from the task at hand. Furthermore, having to deal with the necessary course corrections will almost certainly waste precious growth capital.

Team Building Best Practices

There are best practices that cover every aspect of team-building from hiring to esprit de corps to leadership development. While there are many paths, choosing the approach and supporting tools that fit your particular situation is the special sauce. We’ve found that the most successful companies:

  • Common Language: Develop a common vocabulary and promoting consistent team communications. It’s been said that 95% of the issues you’ll face are rooted in communications.
  • Strategic Alignment: Are strategically aligned from top to bottom around “success”. You might be surprised how often teams aren’t unified on the long-term goals. Getting this right will streamline your hiring process, lead to better execution quality and feed a maniacal focus on achieving that “success”.
  • Focus on Performance Not Size: Build small, high performance teams. Company building begins and ends with elite teams. They are the foundation for sustainable, long-term success. Understanding the key attributes of high performing teams, starting with trust, and applying an effective operating model will produce the desired results. It will also promote and nurture leadership competencies throughout the organization.
  • Hiring: Hire well. A recruiting imperative for every growth-stage TES business is the ability to get candidates to reveal their strengths and weaker points from every job and to highlight their successes, failures, key decisions, and key relationships throughout their career. Mastering this approach can avoid misfires with strategic hires and identify potential high performers for front-line through manager roles that fit your team’s chemistry and company’s culture.
  • Psychology of Leadership: Great leaders really “get” their team members. Progressive leaders also focus on understanding their team’s conative faculties – the actions that result from their natural instincts which enable them to be the most productive. A simple assessment and collaborative tool can be used to improve organizational dynamics and hiring.
  • Prioritize: Prioritize continuous improvement. An important steps is transitioning from “the team you have” to “the team you want” through a continuous cycle of planned activities including:
    • 360-degree feedback
    • Creative on-the-job development of functional and communications skills
    • Action-learning team projects
    • Senior to junior level mentoring

The secret to all of this isn’t just figuring out what hurdles lie ahead but rather what “growth elixir” works best for your business. Then, follow through in the most expedient, capital efficient and sustainable way possible. In doing so you’ll also help ensure that every invested dollar in growth will generate the highest returns.

Next time, we’ll be discussing the 2nd imperative, Operational Scaling and how to proactively overcome the systems and process scaling challenges associated with doubling, tripling or even quadrupling your revenue. You can learn more about our views regarding The Big 3 Scaling Imperatives and the difference between building Unicorns and Workhorses at Don’t Die Trying.

The Big 3: Company-Scaling Imperatives in SaaS and TES

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If you’re the owner-operator of a SaaS or tech-enabled services (TES) business that’s growing at over 20% and approaching profitability…..savor the ride because you’re flying in rarefied air. It’s not every day an entrepreneur “bootstraps” their way from the risk and uncertainty of the “fuzzy front-end” to demonstrating a strong value prop and product-market fit on little to no institutional capital.

So what does the road ahead look like? You may feel that your best and maybe most challenging work within the business is still to come. Bending the growth curve presents a new set of problems for you and your team to tackle. How do we become the category leader in our market niche? How do we double, triple or quadruple our revenue over the next several years? How do we grow our profitability at the same time? How do we preserve the company’s culture as the business expands both inside and out?

The good news is that all of these questions represent “high-class problems” and you are certainly not alone. Almost every TES business at this stage in every segment of the market faces the same growth challenges; you can think of them as “The Big 3”.

So what are “The Big 3”?

  • Team: Building and developing your team from top to bottom. Read more of our thoughts on Team Building Best Practices.
  • Operational Scaling: Growing the operation as you approach un-chartered territory. Read more of our thoughts on Operational Scaling in SaaS and TES.
  • Demand Generation: Finding and expanding the number high quality customer prospects at the top of the sales funnel – efficiently. Read out thoughts on Demand Generation.

There’s no rocket science here. You’ve probably been dealing with the first two since you launched the business and chances are you’re losing sleep thinking about next year’s demand gen. The secret sauce isn’t in figuring out what the hurdles are but rather how to take up the gauntlet for these critical success factors in the most expedient, capital efficient and sustainable way. In doing so you’ll also help ensure that every invested and/or re-invested dollar in the business will generate the highest returns.

Companies that successfully address these company-building imperatives head-on will be well on their way to achieving the long term value creation milestones for their business.

Explore all of our thoughts on best practices, tools and methods for each of The Big 3.

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