In SaaS businesses, operating results are earned every single day; and good businesses are made, not found. Writing here about building organizations, learning from the experience, and appreciating the ride.
I stated in a recent post that developing a core set of disciplines is critical to the success of B-2-B SaaS companies. The main point being that such disciplines are universally valuable in virtually any market, but also pragmatically flexible and tactically applicable across a wide range of highly specific situations.
Because, like many things, this sounds good when you say it fast, the purpose of this post is to tackle this idea a little more slowly. The aim here is to explain and explore some of these disciplines more deeply, with an emphasis on (a) why they matter, (b) what they tend to look like within companies, and (c) how they measurably impact business outcomes. In the end, I’ll also present them within a framework to make it easier to mentally organize and actively implement them.
When companies build this set of 8 capabilities featured below, they generally put themselves in a very good position to succeed.
1. GO-TO-MARKET RIGOR: A purposeful, structured approach to what / why / how / to whom we sell.
Why it matters: The software universe is littered with companies that have cool solutions in search of compelling problems. These businesses also tend to misunderstand or underestimate the environment in which their offerings compete.
What it looks like: This discipline includes ensuring product-market fit for your solution, nailing down the exact customer problem it solves, and how to concisely articulate its value. It also means doing rigorous competitive research, solidifying in concrete terms how to position your offering against that competition, and establishing easily understandable packaging & pricing that offers customers undeniable value.
How it impacts the business: Doing this well improves customer acquisition and win rates, increases average contract value, effectively differentiates your offering, and can unlock new markets. Doing it poorly stalls sales, which can cripple a company.
2. TOP-LINE TACTICS: Detailed execution from top-of-funnel all the way through to successful sales, renewals, & upsells / cross-sells:
Why it matters: The world is also filled with legendary “best-in-class technology” that failed commercially. As Peter Thiel famously said, “Poor distribution — not product — is the number one cause of failure.” Here is a great post from one of my new favorite bloggers, Dave Bailey, on this topic. In short, even the best product / branding / positioning relies heavily on effective, replicable, cost-efficient distribution.
What it looks like: This discipline is characterized by efforts to optimize a company’s customer acquisition model. Said more simply, this is the relentless pursuit of improving sales tactics. It focuses on identifying and sharing best practices around selling / renewing / account expansion, and on scaling those practices across an ever-widening circle of market-facing professionals. It also examines and seeks to minimize all operational friction from each customer’s purchasing experience, including how they evaluate, gain internal consensus, navigate procurement, and sign contracts.
How it impacts the business: Ultimately, this has an enormous impact on the unit economics of a business, which impacts all commercial realities. More tactically, doing this well grows bookings, enables scale, increases forecasting visibility, improves productivity per sales professional, and raises renewal and expansion uptake rates.
3. CLIENT JOURNEY MAPPING: Seeing the world through clients’ eyes & orienting around that vision:
Why it matters: Steve Jobs said it beautifully: “You’ve got to start with the customer experience, and work backward toward the technology — not the other way around.” It also matters because this is whole lot harder than it sounds and requires a serious commitment to do consistently well.
What it looks like: This discipline demands paying close attention to client voice, synthesizing it with company vision, performing gap-analyses around the current vs. ideal client journey, and a brave willingness to test out new customer experiences.
How it impacts the business: When this is done well, the client voice cuts through all other noise with an astonishing level of clarity. That clear voice simplifies resource allocation, establishes accountability to paying clients, and encourages process innovation across the entire business (including, but also far beyond, the product).
4. OPPORTUNITY-LED INVESTMENT: Developing what matters most to the market and which it will reward with spend:
Why it matters: Some of the thorniest debates and decisions within SaaS businesses revolve around where to invest development dollars and resources. These are incredibly complex, high-stakes, multi-variable decisions, that demand our best efforts that are well-informed and consistently executed.
What it looks like: This discipline establishes thoughtful, and intentional, processes, principles, and business objectives to guide resource allocation. It results in prioritizing growth-driving initiatives over risk-mitigating ones and leads to ruthless investment in resources / initiatives with positive returns.
How it impacts the business: When done well, this minimizes potentially arbitrary or overly personalized product debates. In short, it takes the guess-work out. It optimizes resource allocation, ensures high-return investment initiatives, and can help avoid the interpersonal strain that often accompanies ongoing product-related battles.
5. TEAM ALIGNMENT: More than just the right pieces; rather also how they fit and work together.
Why it matters: There are countless examples of groups of talented individual all-stars failing miserably as a team, with one of my favorites being Patrick Lencioni’s “The Five Dysfunctions of a Team.”
What it looks like: This discipline centers around a shared understanding and appreciation across an organization of the interdependencies among its parts. This awareness is crucial to any complex, growing organism, and certainly so in a SaaS business. While challenging to codify, thoughtful organization-wide “Give-Get Frameworks” and “True North Maps” can help immensely to solidify cohesive cross-company working relationships.
How it impacts the business: Done well, this builds vibrant / cohesive / inclusive culture, drives operating efficiency & effectiveness, addresses toughest cross-functional challenges.
6. CATALYZING CULTURE: Growth mindset as a way of life & commitment to organizational health.
Why it matters: In growing companies, everything is subject to change, including: product direction, business model, personnel needs, systems and policies. And while culture also is ever-evolving, it is the one thing that can stand the test of time and scale, and even catalyze a company’s growth.
What it looks like: Intentional, consistent, committed approach to defining and fostering a thriving, safe, inclusive environment for stakeholder success.
How it impacts the business: The multiplier effect of excellent teamwork is limitless, as is captured incredibly well in Daniel Coyle’s Culture Code (more on that in a separate post). Far from being a touchy-feely cost-center, this discipline lowers hiring / personnel costs, increases employee retention / engagement, accelerates decision-making and pace of change, while avoiding the high cost of re-training out old / bad habits.
7. THOUGHTFUL GOAL-SETTING: Holistic attentiveness to inputs and outputs that sustain the business.
Why it matters: Per Peter Drucker, “what gets measured gets managed.” And / but if everything is important, then nothing is. So, we need to choose our goals very wisely in order to cover the needs of multiple time horizons and groups of stakeholders.
What it looks like: This discipline drives a shared understanding of business drivers across all of a company’s team members. It also promotes balance across stakeholders and organization-wide measurement and alignment. All of this must be supported by systems that produce widely accessible data to inform thoughtful decision-making at all levels of the business.
How it impacts the business: Empowers every team member to think and act, enables scale through consistent values / priorities, ensures balanced system ID of business constraints.
8. LEADING CHANGE: Highly developed ability to manage the one universal constant — change.
Why it matters: Every market is dynamic and rapidly evolving. And the necessary skills in every business change at every phase of company growth. So, becoming adept at not only managing change — but embracing and catalyzing it — is the one discipline that every business needs to thrive.
What it looks like: This discipline relies on an organizational commitment to be consistently and critically introspective — to inspect and refine continuously. To be good at this, organizations view change management as a core competence, and not simply something to endure. There is so much to say about this topic, but a growth mindset and a repeatable, structured approach really help to increase organizational agility.
How it impacts the business: This discipline allows organizations to evolve fluidly, but also to confidently undertake major change initiatives when necessary. It fosters a comfort with the inevitability of change, encourages ongoing improvement on many levels (e.g. personal & organizational, product and process), and establishes open dialogue about even the toughest issues.
It’s important to note that one critically important discipline may seem conspicuous in its absence from this list: the capability to efficiently and effectively create world-class software solutions. I want to be careful to stress that this is so central to any SaaS business that it is a sine qua non that underpins and is interwoven into all of the other disciplines. This topic — appropriately — gets tons of coverage on this blog, so it has not been given top-billing here.
Admittedly, there is a lot to the 8 disciplines above; and they can certainly be a bit overwhelming. I find that thinking about them within a broader framework is helpful. Specifically, I like to organize them in a balanced way around a company’s primary stakeholder groups (described further in this post), with each of these disciplines addressing particularly well some of the core needs of each stakeholder group. This is what it looks like:
I find this format to offer a shared language and view for assessing the health of a company, diagnosing its pressing needs, and agreeing on priority areas for investment.
This framework continues to be an evolving work in progress, so please share any comments, questions or experiences you’ve had with any similar or divergent approaches. Oh…and…I don’t have a particularly snappy title for this framework, so if you have any recommendations, I’d gratefully welcome them — thanks in advance!