Just Say No to Being an “X-led” Company

May 20, 2020
5 Minutes
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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.

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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:

  • Sales-led companies: Tend to be good at selling things…but less good at delivering on what was sold. This can trigger a cascade of pain that is felt by every other department and paralyzes what outwardly appear to be healthy, growing businesses.
  • Engineering-led companies: Tend to execute / deliver high-quality development projects on-time and budget…but frequently struggle to discover and address the true needs of customers and prospects. This hamstrings those companies in terms of sales and customer retention.
  • Marketing-led companies: Tend to effectively build brand, drive demand, and articulate value to the market…but often fail to deliver returns on costly marketing spend. Generally, they lack a cohesive business behind the marketing engine to predictably convert awareness into loyal and profitable customers.

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:

  1. When does X department engage Y department (and what is the impact)?
  2. What would it look like for X to engage Y earlier (and what would the impact be)?

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.

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