People say it all the time, usually with great pride: “We are a sales-led company.” Or, in businesses with deep technical roots, it might shape-shift into: “We’ll always be an engineering-led organization.” Marketing, finance, and product management can also feature in such statements. In fact, there are many versions of this claim by companies — and every one of them stinks. Here’s why; followed by a simple tool to help sidestep the alluring “we are led by X” pitfall.
In general, this whole way of thinking is wrong-headed for SaaS businesses, where organizational balance is key to sustainability. If one department or functional group within a company unilaterally leads, doesn’t that relegate all others to simply following the leader? Such an approach implies that those so-called secondary departments exist overwhelmingly in service to / support of that leading functional group. At best, this creates imbalance. Specifically, it sub-optimizes the potential of the whole organization, in favor of maximizing the output of one part of it. Worse, such thinking prioritizes pleasing internal “lead dogs” over the needs of important external stakeholders (e.g. customers, prospects, shareholders). This often results in unhealthy politics which eventually limit the growth and profit potential of the business. Regardless of which department we drop into this corporate Mad Lib, the outcome is consistently negative.
Beyond being a bad idea in general terms, “X-led” companies suffer unique downsides depending on which department occupies that leading role. Though the problems differ by department, they are highly consistent in how each appears from one company to the next:
Again, there are many variations of this same tune: Finance-led companies are fiscally responsible but can be brutally rigid workplaces. Even customer-led companies (as good as that sounds) often devolve into rampant incrementalism around customer feedback, risking eventual disruption by innovative market newcomers. Note: if forced to choose, I favor being a product-led company, as described by Marty Cagan in his excellent book, Inspired: How to Create Tech Products Customers Love. But even that can go wrong if implemented in a narrowly literal way (more on that in another post).
If any of these types sound familiar, you are not alone. To some degree this problem will always ebb and flow in organizations that are every bit like constantly evolving organisms. This makes it quite difficult to tackle this problem in its totality, without first mustering a ton of organizational will. Instead, one simple practice can improve life for all within any X-led company: rethink when each department engages with the others. Here’s how:
In an X-led organization, one department tends to act; and all other downstream departments are later forced to react. Of the many problems this creates, a big one relates to timing — when one department leads, all others are usually late to the game. For example, a company’s Client Success team will always struggle to delight the customer if they only learn after-the fact what commitments a salesperson has made in the sales cycle. Similarly, salespeople cannot credibly convey the company’s product vision to prospects, if they are only informed of the product roadmap as new features are being released. In both cases (and countless others in companies everywhere), the problem relates to WHEN one department is engaged by others. Two questions to ask in virtually every one of these situations are:
If this sounds simple, it is. But it is also effective. These seemingly simplistic questions never cease to foster a rich and wide-ranging discussion. They also inevitably reveal opportunities to move cross-department collaboration earlier in the value-chain, which yields demonstrable benefits. These include: informing more successful client implementations, surfacing development issues in a more timely / manageable manner, and driving more holistic support and activation of Marketing initiatives.
One last pro-tip for getting your money’s worth from such an exercise — invite every department to the party. Just as it is sub-optimal to have a company that is led by a single department, this exercise also suffers when it is undertaken by only one (or two) departments. Instead, it should be all-inclusive. When every department needs to answer these questions for each of its peers, it won’t be long before everyone leads…and everyone follows.
There’s some debate about who first said, “Never waste the opportunity offered by a good crisis.” (N. Machiavelli, W. Churchill, R. Emmanuel). Whatever its origin, its meaning is clear: turbulent times lower collective resistance to change and provide a rare opportunity to challenge conventional wisdom. Unsurprisingly, this quote seems to have resurfaced frequently during these recent chaotic weeks; and its sentiment deserves some focused attention as it relates to small-scale software companies.
First things first: it’s hard to think of any crises that are actually “good.” The current COVID-19 pandemic is heartbreakingly awful in countless ways; and this post will not debate that. Neither will it focus on the specifics of the current crisis. Rather, this post is intended to support leaders looking to optimize this moment to bring both stability and positive change to their organizations…and to avoid mistakes that can make a bad situation worse. It does so by building on John Kotter’s 8 Step Process for Leading Change to help ensure that change initiatives are beneficial, successful and long-lasting.
What follows is the officially published “hook” and high-level summary for each of Kotter’s 8 steps for leading change, along with some brief situation-specific commentary from me. Please note: Any text in BOLD ITALICS is the exclusive work of John Kotter and the Kotter organization.
Amid the current crisis, Kotter’s steps for leading change appear as timeless and universally applicable as ever. And they seem particularly valuable for small-scale software businesses, given the existential threats start-ups face and the lightening-quick rate of change in their operating environment. In the midst of the current pandemic / economic crossfire, these steps offer some structure and security for those leaders looking to implement positive change and “make the most” of a decidedly challenging crisis.
In the 1992 legal drama film “A Few Good Men,” Colonel Nathan Jessep (Jack Nicholson) barks an iconic and scathing reproach to Lieutenant Daniel Kaffee (Tom Cruise) and to the world at large, “You can’t handle the truth!”
While this made for an epic movie moment, Colonel Jessep got it wrong when it comes to team members in small-scale software businesses — they can, indeed, handle the truth. Actually, they require it. Highly intelligent and resourceful knowledge workers don’t need a ton from their leaders; but there is a short list of critically important must-haves, particularly in times of crisis. Specifically, they need to know these few things about company leaders:
Like many people, I’ve spent a lot of time in recent weeks trying to get a handle on things by understanding what others are seeing and hearing. As a result, I’ve had the opportunity to speak with many company leaders about what they are experiencing and the nature of communications within their own teams. Particularly interesting to me is how they are choosing to address the harsh and uncertain reality of today’s business climate.
What I observed is that many leaders whom I deeply respect are being quite transparent regarding the challenges their companies face, and about the various options for navigating those challenges. A number of those same leaders expressed pleasant surprise at having received positive feedback following particularly hard-hitting messages to their teams. Intrigued, I researched further and was able to review and compare in varying levels of detail how a number of leaders have been communicating with their teams of late. What emerged from that informal study was a wide range of styles, but also a highly consistent set of practices employed by experienced and effective leaders. These include:
In sum, small-scale SaaS company teams want a few core behaviors from their leaders; and those don’t include babysitting or happy talk. Quite simply, they want the substantive and relevant truth. But neither do teams desire information overload. They don’t need every little shred of information that impacts the company either positively or negatively on a minute-by-minute basis. They should not be subjected to the turbulence and air-sickness which comes from experiencing first-hand every rise and fall in altitude as the company flies along. That’s a different Tom Cruise movie altogether.
The number one reason startups die is that they run out of cash. This is well known; and plenty of resources currently offer excellent advice for surviving turbulent times. But this is scary stuff with existential consequences for small-scale businesses; and guidance around cash-preservation can be overwhelming for company leaders. Having experienced challenging environments in 2001 and (even more so) 2008, I remember making the mistake of being trapped for days in forecast models or repeatedly scouring a laundry-list of line-items to be considered for cost-cutting. I was mired in the tactical weeds and later came to appreciate that some broader perspective would have helped guide my approach. The purpose of this post is to share a few lessons learned on this front and to offer some high-level frameworks to inform the thought process behind cash-conservation efforts.
I. Secondary Goals / Sacred Cows: Leaders intuitively understand the goal of cash-retention initiatives — to survive. It’s quite simple; just don’t run out of cash. But it is never that simple; and that is why it’s helpful for leadership teams to clearly set secondary goals for any expense-management initiative. This approach answers the question, “what is the NEXT most important objective of this effort (beyond simply staying solvent)?” For some companies, that may be safeguarding the customer experience and brand loyalty. For others, it could be maintaining the engagement / continuity of the entire team or retaining top talent. For more mature businesses, it might mean ensuring the business is positioned optimally for whenever the economy eventually turns around. Another way to arrive at similar clarity is by identifying “sacred cows” — those parts of the business where compromises will never be made. Whichever route is taken, this exercise helps leaders keep one eye — even in a crisis moment — on what is important for the longer-term health of the business.
II. If / Then / Then-by-When: The purpose of this mnemonic is to help leaders rise above the detail of expense-management and think beyond the tyranny of spreadsheets. It forces execs to go through a three-step business planning process, as follows:
In sum, this framework forces structure in what can otherwise become an ad hoc reaction to environmental challenges. It demands that company leaders a) thoughtfully envision potential scenarios, b) identify the qualitative and quantitative impact of those environmental forces on their business, and c) codify the steps and related timelines needed to address the challenge faced.
III. Assumptions, Decisions, and Control: Re-forecasts are inherently unsettling; and it can be difficult to know where to begin. One way to get a foothold is to separate where to make “assumptions” and where to make “decisions.” A general rule of thumb is to make assumptions about the top-line (sales / bookings and corresponding revenue) and make decisions around expense management. Why?
The truth is that companies ultimately cannot control whether clients actually buy from them; so, they need to make educated assumptions about customers’ buying behavior. Further, we’ve found it helpful to first focus on (and make the most pessimistic assumptions about) the types of revenues that companies least control. This generally means new sales to new customers, since they are the most speculative and rely most on customers making a proactive and incremental outlay of cash. Then, we move methodically down the risk ladder. The next most at-risk revenue class tends to be expansion sales to existing customers. Then come usage-related revenues. Finally, existing client renewals tend to be the most secure (but still ultimately at-risk!). When companies have great data, they can even further refine their renewal assumptions based on cohorts (products used, type or size of customer, and date of initial purchase). Breaking revenue streams out in this way allows companies to thoughtfully and granularly quantify risk to the top-line.
When (and only when) a company updates its top-line expectations, they can then begin to make informed decisions about expense-management — because they ultimately control expenses and can manage them accordingly. It’s helpful to sequence expense related decision-making opposite to that on the revenue side. Start with the expenses over which the company has the MOST near-term control and work the other way. This is because controllable costs offer the best ability to quickly aid in cash conservation. Highly controllable costs are almost always discretionary / un-committed, non-personnel expenses (e.g. marketing campaigns). Month-by-month subscriptions tend to come next. Consultants and contractors are also somewhat manageable (albeit not nearly as easy to pare back). Drastic measures such as “reductions in force” are far trickier still; and long-term leases (e.g. rent and pre-paid annual contracts) are often most challenging to derive savings from in the short-term. The following graphic from an excellent recent study by A&M (Alvarez and Marsal) concisely captures these dynamics and expands well-beyond.
A note about the elephant in the room: By far the most excruciating expense-related decisions revolve around personnel costs of the core team. Unfortunately, this is also the richest vein to mine from an expense management standpoint, because the majority of expenses in SaaS businesses are people related (yet again proving the adage that nothing valuable is ever easy). Moreover, the dynamics of personnel decisions are deeply complex and interdependent both financially and culturally; and leaders need to make choices in this area with the utmost consideration and care. This topic certainly warrants a more complete discussion but is not the focus of this particular post.
Okay, so…with these frameworks in the toolbox…what comes next? As is often the case when it comes to operational execution, it starts with communication. A range of diverse stakeholders will be involved in, and impacted by, any of the activities described above; so clear, effective communication is key. Although these decisions are made based on data and reason, their communication demands empathy and compassion — none of us wants to be the leader who gets stuck in spreadsheets(!). In a world where working at a physical distance is not just a choice, but a necessary health condition, such compassionate communications are more important ever.
This blog recently featured a post that invoked the First Rule of Holes (“Stop Digging!”). That piece had been triggered by some business-planning discussions; and it advocated taking a structured approach when tackling deceptively difficult business questions. In that case, the seemingly innocuous question was “What do you do when it’s not working?” That post offered a framework to assist in the first step of problem-solving — actually identifying the existence of a problem in the first place.
This is part two of that post. It picks up where the last one left off: developing hypotheses to test why something isn’t working. Building on the initial framework, this piece endeavors to share a structure to use in the critical step of diagnosing the source of a business problem.
When I joined my first subscription-based software business in 1999, the term Software-as-a-Service wasn’t even a thing. Since then, SaaS has emerged as the dominant form of software delivery, accompanied by quantum leaps in the study and understanding of its underlying business model. Correspondingly, there is a wealth of outstanding available resources that explain the fundamental principles and performance indicators used to evaluate and operate SaaS businesses (including this and this and this, to name only a few). These and countless other sites are invaluable in explaining the metrics that matter in SaaS. But there is an important metric that seems to consistently fly below the radar. While it likely has many names, we call it DROP ALLOWANCE. Drop allowance takes an opaque retention target and brings it to life by applying it to the actual pool of renewing client logos and revenue. The purpose of this post is to examine the concept of drop allowance and to explore some related metrics and their use.
First things first: drop allowance is focused on GROSS CHURN. For good reasons, the SaaS world seems to have increasingly focused in recent years on NET CHURN and the related NET REVENUE RETENTION. While those KPIs can be quite useful, I’d argue GROSS CHURN (and the inversely correlated GROSS RETENTION) is unique in its ability to spotlight and quantify the underlying stickiness of a software solution. Whereas successful upselling can boost NET REVENUE RETENTION and camouflage troubling subscription-drops, there is simply no hiding drops and down-sells with GROSS CHURN. And, although virtually all SaaS businesses set targets for some flavor of churn/retention, seemingly fewer monitor gross churn against an actual drop allowance pool.
Another point of set-up: the core value of a drop allowance is to translate high-level retention targets into something meaningful and actionable for operators of the business. Churn/retention targets tend to take the form of high-level percentages (e.g. “…our goal is 5% gross churn,” OR ”…we’re planning for 95% gross retention”). The problem is that such percentages tend not to be very meaningful on a day-to-day basis to front-line people responsible for ensuring client renewals. To combat that, drop allowance can be easily calculated, as follows:
Hopefully, this is all straightforward, so let’s dig into an example of a business with the following profile:
We’ve found that this small act of translating percentage-based objectives into a $-based goal to be helpful to the whole team, and particularly to renewal professionals (such as Client Success Reps, Account Managers, and Salespeople). But that’s just a start. Next, layer in ACV, as follows:
This simple math makes it clear that if we head into the year with 300 paying clients, achieving our retention goal relies on having no more than 15 average-sized cancel their subscriptions across the course of the year. Gulp — this just got real.
Of course, we have large clients and small clients; and this approach also helps quantify the clear-and-present danger of large drops to our company’s health. Although I tend to err on the side of believing every client is worth working to retain, this also raises awareness among the team around where to direct their finite retention-focused resources.
By quantifying the total number of budgeted dropped logos, this also offers an approximation of the acceptable rate of drops across the year. If this business has ZERO seasonality (and hence, no renewal concentration in any given quarter or month), it can theoretically afford to average 1.25 logo drops per month [15 Average Logo Drops Allowed / 12 months]. But we can be even more precise than that, and this is where the real value of metrics related to drop allowance emerges. For the sake of argument, let’s proceed with that simplifying assumption that there is zero seasonality in the business; and that all 300 of the existing clients had been sold evenly across all historical months. We could plot out the renewal pool ($1.5M across 300 clients), drop allowance ($75,000 across 15 logos), and a related monthly budget for each, as follows:
Then we can make it more useful and dynamic by showing these numbers as cumulative across the year, as follows (with shading to help readability). It would look like this:
So far, so good, right? Now…let’s move out of the realm of plans and averages, and into the messiness of the real world.
Let’s assume for a minute that we’re through five months of 2020, and we’ve been actively managing and monitoring our renewals, and they look like this:
Viewed through this lens, it’s clear that retention has significantly worsened after having started the year well. But without a baseline, it’s hard to deduce much beyond that general assessment; and it’s even harder to quantify when we factor in complexities such as down-sells, seasonality of renewals, and widely variable client-sizes. Instead, leveraging drop allowance can offer a granular budget-versus-actual look every month (or even more real-time) and on a cumulative basis, as follows:
This is where the real pay-off comes. Armed with the above information, we can boil all of this renewal complexity down to one single metric that will tell us how we are performing on renewals, not just against the (maddeningly distant and monolithic) year-end goal, but rather on a rolling basis and relative to the seasonality of our renewal pool. This can be done by establishing a ratio of the RENEWAL POOL COMPLETE (“RPC”) [A] / CUMULATIVE DROP ALLOWANCE USED (“CDAU”) [B]. Using the numbers from above, it looks like this:
Admittedly, that is an awful lot of words, so we like to simply call this the YEAR-TO-DATE RETENTION RATIO. Whatever it’s called, this KPI offers easy-to-understand clarity around gross retention. By looking at this one number, we can know where we stand, relative to what renewals have already come due and which are still outstanding throughout the year. Quite simply, a YTD retention ratio >1.0 means that we are outperforming relative to possible renewals year-to-date; and a ratio below 1.0 should be cause for concern (i.e. we’ve already used up more of the drop allowance than budgeted, relative to renewals past due). Because I’m a visual learner, I like to see all of the above numbers as charts; below is a simple one for the YTD RETENTION RATIO from this example.
This chart helps highlight how YTD retention ratio can serve as an early warning system, signaling the need for intervention. More so than most metrics, it spotlights changes in churn patterns with speed and sensitivity, which can tip-off operators to dig into any number of related variables and levers. Taken together, these can that help inform a number of operating decisions, including: timely personnel changes (e.g. does this problem warrant hiring an AM dedicated to renewals?), systems investments (should be invest in client engagement solution?), and process improvements (e.g. how can we enhance our on-boarding?). I’ll plan to dig into this aspect of things in a future post.
Closing: I know that was a lot of math above, so let’s conclude with a few closing comments.
The “law of holes” was drilled into my head as a kid; and it is sound advice. The problem, of course, is proactively identifying whether and when you are actually digging yourself a hole.
I was recently reminded of this dynamic while visiting with the impressive leadership team of a 40-ish person SaaS company. We had met to discuss a range of topics relating to the life cycles of growing businesses. One person posed a seemingly straightforward question to the group that resulted in an immediate and spirited exchange: “What do you do when it’s not working?”
As a rich discussion unfolded, I remained silently stuck in the subtle, complexities of the question. While the debate whizzed past, I did what I often do when stranded in such situations — start to draw. The graphic below is a more formalized version of my notes and thought process from that session. It’s also an attempt to offer a simple approach to tackling this deceptively tricky question, and potentially others like it that prove surprisingly elusive to wrangle.
In a previous post, I shared observations relating to the process of re-platforming a SaaS solution. I was grateful when a former colleague reached out to comment on that piece. He offered that the term “SaaS” was somewhat limiting in this case, and that the principles in the post applied to any number of modern software delivery models. And, because no good deed goes unpunished, I asked him to guest-write an article that topic. Thankfully, he agreed! Chad Massie is highly qualified to opine on the issues encountered when deciding how to utilize cloud services while modernizing the architecture of a SaaS solution. I’m delighted to share his thoughts on this topic on Made Not Found. Thank you, Chad for the post that follows.
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For any business, but especially for those providing software as a service, cloud infrastructure offers a tremendous opportunity to drive organizational value. The question is not if a cloud strategy is appropriate, but rather which strategy to pursue and how to ensure that business and user value drive the decision-making. The five observations below were developed over five years of operating a high volume, high availability, cloud native software platform, and though there are several technical take-aways, the most important lessons are the human ones. Those observations and the related reflections on people and teams are below:
There is no single cloud strategy
In ways that can be both advantageous but also challenging, not every software or business will be best served by the same cloud strategy. This provides great flexibility in terms of timing and investment, but it also signifies that time spent up front posing the essential questions, understanding the needs and clearly defining the desired goals, and establishing the acceptable risk profile will pay considerable dividends (e.g., start with why).
The primary question of whether to “rehost” or “replatform” or “rearchitect” has no obvious answer. Each of these approaches has pros and cons — from a technical perspective, of course, but just as importantly from cultural, operational, and business value angles — and all can offer benefits for your organization. A rehosting strategy can help reduce near-term risk but might slow the upside value for an aging application; rearchitecture can provide a path for addressing major technical debt and modernizing the user experience but brings with it more significant complexity and change that may be more than your business or team is in a position to accommodate. Again, understanding your own context and priorities will help lead you to a better decision for your organization. You might determine that experimenting with an application that has a lower risk profile (e.g., an internal application, a non-mission critical platform) or a specific operation (e.g., disaster recovery) is the path that will ensure long term success, or you might determine that an all-in approach is the way to best serve your customers and inspire your staff.
Cloud is a culture (change)
Processes, organizational structure, and technical strategies that were foundational to success in an on-prem or hosted SaaS operation will not necessarily translate in a true cloud environment. The cloud requires a shift in cultural thinking, and as a result, demands a well-considered change management strategy for your team(s). One common theme is establishing a Devops mindset whereby the members of your various technical teams are involved in the full lifecycle of product delivery and support. Another is fostering an environment of knowledge-sharing and a blamefree ethos. The amount of new learning to be performed and the pace of change in cloud technologies require open communication, collaborative work, and “failing forward.” Further, the culture of learning and partnership requisite to success in the cloud extends beyond technical roles; product, marketing, finance, support, and management positions will all see implications to their work and their team interactions as a result of a cloud-oriented strategy. They must be incorporated into the transition planning and energized by the opportunities every bit as much as the technologists.
Patterns are your friend
Similar to the way software and user experience patterns have emerged over time, there exist many proven cloud architecture and process patterns that can help reduce effort and risk while ensuring security and operational reliability at scale. Whether incorporating elements of Amazon’s well architected framework, pillars of great Azure architecture, or Google’s cloud adoption framework — or something else — make use of these cloud patterns to shorten the time it takes to realize benefit for your organization. As with anything in life, though, an extreme position can limit our perspective, and cloud architecture is no different; it is both a science and an art. The scientific patterns and frameworks should be used to help streamline your architectural approach, but their parameters shouldn’t get in the way of your team’s creativity, the practice of experimentation, and applying their unique contextual knowledge in crafting the most valuable solutions for your business.
Instrument, monitor, and automate
Cloud infrastructure and the technologies that have been developed to support cloud-based software lend themselves extremely well to measurement and instrumentation. The fidelity of this information provides exceptional insight into the operations of your technical platform, in identifying issues proactively, and in understanding user behavior. Additionally, since utilization of a cloud infrastructure eliminates the dependence on physical hardware and enables access to on-demand scale, your strategy should push to automate as much as possible. Besides reducing repetitive efforts, automation will diminish the risk of human error and security exposure, increase overall quality, and help in delivering an optimal experience to your end consumers.
The cloud is constant innovation and reinvention
Advancing a cloud infrastructure strategy is an amazingly exciting journey. The dynamic nature of the landscape forces evolution and thoughtful change. As with any sound technology strategy, it demands attention to maintenance, performance, and reliability, but it also provides for reinvention and innovation in manners that did not exist previously, especially for small and medium sized software businesses. Rather than investing large amounts in original R&D, you could choose to utilize your cloud vendor/partner as your R&D arm, investing your resources in making the most of the innovative assets they bring to market while also providing enormous professional growth opportunities to your team. A cloud architecture gives you much more flexibility and a broader range of strategic options than has been historically available to SaaS companies, allowing you to select an approach that best meets the needs of your business, your team, and your customers.
Though the pathways toward a cloud architecture are now much more well-worn than they were several years ago, each software platform and each business is different. Coupled with the reality that cloud technology is a perpetually changing environment, there are no universal strategic approaches that will guarantee success. However, if you start with the right questions and understanding of the business drivers, build a work and communication plan aligned around strategic goals, and advance a team culture that values learning and collaboration, I believe the lessons above are applicable globally and can help ensure that your organization reaps a cloud strategy’s tremendous benefits.
The CEO role can be described in countless ways. One definition comes from the Corporate Finance Institute, which states: “The CEO is responsible for the overall success of a business entity or other organization and for making top-level managerial decisions.” Accompanying that description is a list of the CEO’s roles and responsibilities, which is peppered with dynamic verbs such as: leading (X), creating (Y), communicating (Z), ensuring, evaluating, and assessing. Such a high-powered portrait of the CEO is unsurprising, especially given the commonly held notion that “real” CEOs should courageously lead from the front. And although Jim Collins’ classic book Good to Great introduced us to Level 5 leaders who are characterized as humble and reserved, the image of CEOs as vibrant action-heroes-in-board-rooms is a persistent and alluring one.
It is with all of this as context, that I was surprised in a recent board meeting when a CEO characterized his role in an entirely different way: as Chief Conversation Officer. “If you can create good conversations,” he offered, “You can create good outcomes.” This initially struck me as being a far more passive role-assessment than I’d expect to hear from an actual CEO. But, with its unwavering focus on delivering results (which is undeniably the responsibility of CEOs), this description resonated with me as being worthy of serious consideration.
Upon further reflection, I view this as an accurate and valuable addition to the responsibilities of the CEO. It is undeniably important for CEOs to foster effective discussions among a broad range of stakeholders. They need to create open dialogue with prospective customers in order to gain an informed understanding of jobs to be done. It’s imperative to cultivate candid conversations with existing clients in order to consistently improve products, inform future investments, address service issues, and avoid churn. A balanced and candid exchange with team members is crucial to enable them to perform, and to identify what obstacles stand in their way personally and professionally. And, finally, open dialogue with owners / investors is needed to align expectations and leverage their helpful perspective from above the fray of day-to-day operations.
Being a good conversationalist takes work; and not every CEO is naturally gifted in this area. Rather, the art of conversation is the subject of countless studies and far exceeds the scope of this post. But, as this previous post highlights, a bit of structure and a few simple practices can help CEOs up their game in terms of fostering effective conversations with consistency and intentionality:
This whole topic of CEOs as Chief Conversation Officers reminds me of the well known African proverb: If you want to go fast, go alone. If you want to go far, go together.” In today’s business environment where speed is rewarded, CEOs are wise to also remember to focus on going far, together. And that if you are going to travel far, it is always better to have good conversations along the way.
Strong communications skills are a must-have for any aspiring executive; and leaders in small-scale SaaS businesses need to be comfortable in a range of messaging situations. In these intimate, dynamic businesses, public speaking represents a major slice of a leader’s communications responsibilities. Executives’ speaking duties can take many forms, with a main one being at trade shows or conferences. At these events, the cardinal rule is knowing one’s audience, as discussed in detail here. But this same rule applies to all speaking situations and all audiences, of which leaders are faced with a broad span. Although this is a seemingly obvious point, it is frequently underestimated and poses a surprisingly tricky hurdle that blocks many leaders’ public speaking efforts. This post examines this issue and offers some simple ideas to help leaders navigate the complex and sometimes intimidating world of speaking to different groups.
To start, I want to refute the widely held notion that public speaking is an innate trait that some of us are born with (or, cursedly, without). While people undoubtedly start with a range of natural abilities, public speaking is an intricate skill that inevitably requires practice and discipline. The more practice, the better one becomes — obviously. But what is less obvious is that the environment in which one practices has a massive influence over how that competence evolves. To make this point, let’s take an example from the world of professional tennis:
Rafael Nadal is one of the world’s all-time great tennis players, having won 35 masters titles in his remarkable career. He has won the French Open a record twelve(!) times, including the recent 2019 crown. Conversely, he has won Wimbledon “only” twice, and not since doing so in 2010 at the age of 24. Why the discrepancy; after all, tennis is tennis, right? As it turns out, Nadal grew up practicing thousands of hours (literally) on the clay courts of his native Mallorca, Spain, which is the same surface on which the French Open is played. He is imminently comfortable on that playing surface, and far less so on the grass courts of Wimbledon’s All England Tennis Club.
Public speaking is very similar: we improve where and how we practice. I don’t mean the physical space (the playing surface is irrelevant here), but rather the types of situations we experience on a regular basis. In my experience, the most important factor in a presenter’s evolution is the kind of audience to which he / she becomes accustomed. This point was driven home recently by an executive with whom I was working. He has vast experience in sales leadership roles and is supremely competent and confident in front of prospects and customers. Having recently moved into more of a general management role, however, he suddenly has far more responsibility for presenting to internal audiences comprised of company-wide team members. He expressed that he finds the experience to be a new and different challenge, to which he is still becoming acclimated. He further shared that he currently requires far more presentation prep and notes in order to feel ready to present to this group. Given his background, this makes total sense; and it raised for me the following related observations.
A large part of leading SaaS businesses revolves around balancing the needs of different stakeholders, as referenced here and more briefly here. I often think in terms of a company’s four key sets of stakeholders: (1) its addressable market, (2) existing clients, (3) company team members, and (4) shareholders or owners. In the context of public speaking, it is helpful to think about these stakeholder groups and simply bear in mind the uniqueness of each as an audience. If nothing else, doing so can raise a presenter’s awareness around which audience represents a personal comfort versus one that may fall further outside his / her comfort zone. This alone can lead to more thoughtful and effective prep.
For some presenters, it can be helpful to overlay the concept of “altitude” on this stakeholder framework. Specifically, we often use the term “altitude” to describe the appropriate level of detail for a discussion or presentation. As a general guideline, each stakeholder group tends to have a different preferred altitude, or level of detail, at which they want to be engaged. This might look something like this:
Taking this concept further, presenters can further identify the general / typical information needs of each different stakeholder group. This might look roughly as follows:
Finally, it’s also worth noting that the each of these stakeholder groups is comprised of a rich and diverse set of sub-groups. For example, within a group of team members, the needs and perspectives of software developers will be different from those of salespeople or marketers. Likewise, in the shareholder category, existing owners who are current board members will have a very different viewpoint than prospective new investors. Further segmenting each stakeholder group can only help a public speaker to mindfully target content and delivery style to match the audience needs.
To finish at the beginning, public speaking is a critical tool in a business leaders’ toolbox. Knowing one’s audience is paramount across a wide spectrum of prospective speaking situations. And this framework can hopefully be helpful in making it easier for thoughtful leaders to prepare effectively and present expertly in any situation.
