View technology headlines at MSNBC
 

SSR Winter Report

"So, how’s the market?" A question we hear hundreds of times over the course of the day. It seems everyone is asking the question, trying to gauge the market for themselves and their corporate prospects. As salespeople, it's sometimes hard to "get back to selling", when over the last six years, many salespeople really didn’t sell, just took orders and counted their stock options.

What makes today's market different also makes it refreshing. Old sales tactics such as asking how your customer is doing or helping them to solve a business problem is "old school" right? Funny, but many people in software and technology tend to forget why they started working in the business to begin with. Taking care of the customer and solving their problems are the key ingredient in sales yet it takes a stiff "punch in the gut" to realize that the last six years were a dream. You will never see it again and for many it turned out to be a rather large nightmare. We all decided to get into technology for two reasons;

1. Work on forefront of technology, selling complex business solutions to Fortune 1000 customers with a goal to be #1 in your area of technology.

2. Use your sales, business development, marketing, development and management know-how to help your company to do #1

3. Make money by accomplishing #1 and #2

So, have you accomplished your goals? This is just a simple example of how "out of control" everyone was. Yes, I know you have a friend who's brother's uncle made a zillion dollars by reporting to work one day after only a week there and finding his five cent stock options turned into 80 million dollars and he cashed out that day and now scales the great mountains of Tibet? Right???? Let's get real here; much of these stories were simply a matter of pure luck. Being at the right place at the right time, nothing else

Now we fast-forward to the end of 2002,

* Customers want to see real products from strong companies

* Vendors want to see salespeople with REAL sales skills and REAL products developed because it all comes down to REAL BUSINESS! There are still companies selling "vaporware" but very little money given out by V.Cs to be wasted on comfy chairs and pool tables in the "comfort Zone" (somewhere situated near the development area).

SO, LET'S GET DOWN TO BUSINESS AND FORGET THE LAST FEW YEARS. BACK TO BASICS AS THEY SAY!!


This Quarter's newsletter will include these topics:

- The Perils of Pedigree by Ross Rich of Selection Strategies
- Market Analysis
- The Job Search

The Perils of Pedigree
By Ross Rich, Managing Principal, Selection Strategies, Inc.

Today sales managers are facing a very different world than they did just a couple of years ago. We all got accustomed to operating at breakneck speed, having more deals than we could adequately manage and too few, if any, candidates for all the positions we needed to fill. Today deals are few and each is a “must win” and it seems that, given the few people managers need to hire, each hire needs to be “perfect.” These pressures are real but they’re leading to practices that are proving to be counterproductive especially when it comes to hiring.

Frankly, the pressure to hire well should never have become something dictated by the market conditions but, in fact, during the heyday of the Y2K & Internet sales period there was far less concern about hiring diligently simply because speed and volume were the only two factors that guided how an organization grew. That shouldn’t have been the case since the ability to sustain the meteoric growth that companies were experiencing was predicated on the ability to continuously hire talent. Now that the market has contracted and deals have slowed to a trickle the need for extremely talented sales people is no less critical but is certainly more acute. The fact is that up market or down, the factors that make sales people successful don’t change but current hiring practices are ignoring these critical traits.

The characteristics -- Motivation & Drive -- which fundamentally determine success in sales are…

· Work ethic

· Competitiveness

· Initiative

· Self-reliance

· High-energy

Experience, that is, previous companies & jobs, matter but is not as critical as people think. Experience and domain knowledge can contribute to shorter ramp up times and faster productivity but they can’t ensure success. It’s pretty common to find sales managers who can tell horror stories about salespeople they’ve hired that looked great on paper and should have been a killer rep but failed miserably. Well, the answer can be found in the statement itself…the rep looked good on paper.

Hiring today has become all about how someone looks on paper, what company they worked for and what position they held instead of concentrating on those traits with greater predictive value in gauging success. It isn’t wrong to define experiential criteria for hiring and to even express that criteria in “ideal” terms to guide the search process but they should be just that…guidelines. Our recent work with clients has shown that most companies are content with simply using “pedigree” as the only measure for determining whom to interview & hire. The problem is that by failing to rigorously investigate the presence of the Motivations & Drives a sales manager may be hiring a sales person who, while they have the pedigree, is a mediocre performer with an acceptable resume…the empty suit.

The biggest falsehood is that pedigree-based hiring ensures “A” Player talent and guarantees the hiring manager the highest level of sales performance. It may ensure awareness and knowledge of the space and the process but it doesn’t ensure the sales person will produce the desired results. Think about the most successful sales people you know and ask yourself, “What is it about them that makes them successful?” Your list will likely identify traits like drive, determination, tenacity and aggressiveness but rarely include factors like previous experience with a direct competitor or in-depth product knowledge. To use a sports analogy, Michael Jordan wasn’t considered the greatest college player when he was drafted and while his experience may have made him a smarter player it is his overwhelming competitiveness and unrelenting will to win that makes him a champion.

In software, for example, a company seeking a CRM sales candidate may specify that they only want to consider prospective candidates from Siebel. While this profile may seem to make sense it is based on a couple of premises that are either false or flimsy. First, there is a presumption that because Siebel is the market leader that people coming from Siebel will perform better than their peers from other CRM vendors. There is a strong argument to be made that those who are successful in lesser-known companies without the force and presence of market leadership are, in fact, stronger salespeople. Also, it rests on a dangerous hiring myth that Experience = Excellence. This false logic assumes that simply because someone did something they must have done it well. It is important to remember that Siebel is well known for regularly culling its ranks of its moderate to bottom performers. One must consider that those willing to leave may have already been identified as expendable performers. The exclusive emphasis on pedigree can lead to a degradation of your company’s talent pool because of an over reliance on the virtues of the candidate’s resume. Research has shown that Experience, that is, the resume, past companies and jobs is the least predictive of future performance and success so current hiring practices are relying on the least stable factor in determining successful performance.

The narrow focus on pedigree creates a couple of other problems that contribute to poor hiring practices. The economic slowdown and the demise & downsizing of so many software vendors has given rise to the belief that there is an over abundance of experienced “A” Player talent running loose in the market. This belief, which is in fact a myth, has led companies to adopt very narrow hiring profiles that begin to make hiring a mathematical impossibility. In other words, some companies have defined their profiles so narrowly as to make only a handful of people acceptable candidates. Given today’s high degree of risk aversion and reluctance to change jobs unless forced to, companies must be willing to be patient or extremely creative in order to attract the people they specify. But basing your hiring on a “competency profile” and not the resume not only opens up a larger pool to draw from but also focuses on the characteristics of success.

The second problem with pedigree hiring is the reliance on the presumption that the term “A” Player is universally understood and identifiable. “A” Player performance can be quantified in terms of “Best Practices” (we have done this in our work with our clients), which can serve as a measuring stick to evaluate candidates, but it is essential to understand that these best practices identify key behaviors and have little to do with factors like where the person worked. The designation “A” Player is not a fixed or ultimate state of being and it is quite possible for someone to perform as an “A” Player in one role and a “B” Player in another. Careful adherence to assessing the candidates ability to do the job you’re seeking to fill based on strict performance competencies is the only way to avoid hiring mistakes made by making assumptions about performance or relying too heavily on past experience. We recently encountered a prospective client that freely admitted they were willing to hire “B” Player talent so long as they had the right pedigree (direct competitors with specific industry knowledge & experience) over “A” Players. We candidly informed them that we considered that to be a prescription for disaster

.

Seeking to hire “A” Players is a no brainier but the basis for identifying them seems to be based more on intuition and guesswork rather than process and hard facts. Hiring managers and recruiters should take the time to define what an “A” Player is and ensure that the profile includes the following three dimensions: Abilities (Motivations& Drives; Sales Competencies), Chemistry (Corporate culture and personality fit), and Experience (Performance track record and knowledge).

Many of the “A” Player reputations were made when the market was red-hot and it is critically important today to thoroughly investigate a sales person’s deals, activities, actions, skills and approach to ensure that their successes are the result of authentic ability not simply a highly demand-driven market. In other words, look at the circumstances of success rather than the outcome alone.

Your hiring process must be measured on the basis of increasing your competitive advantage based on the quality of the people you bring in. Our work has shown that no company deliberately sets out to hire badly but that misguided policies, misplaced priorities, lack of discipline, and arrogance lead to hiring blunders.

The current market conditions have led many sales managers to say that selling has returned to the basics. The high technology adoption and demand-driven market has been replaced by one in which sales people must make each deal count. Sales people must be on top of their game and so must hiring managers. Hiring talent and not a resume is a call to return to the basics of selection. Here are a few “basics” to guide your hiring…

· Don’t get lazy and complacent, hiring requires constant vigilance

· Know what you’re looking for, know what competencies, skills & characteristics needed to succeed

· Don’t give in to first impressions, take at least 30 minutes to interview the candidate

· Stick to the fundamentals of selection – use a structured interview and competency-based questioning

· Assess Motivations & Drives first, then evaluate Sales Competencies and validate Experience in-depth

In retrospect, many of the business practices in the period from the run up to Y2K and through the Internet boom were not particularly sound and shouldn’t be repeated even if we soon return to growth, however, we shouldn’t adopt practices, in light of our current conditions, that are equally dysfunctional. Sticking to fundamental principles that work regardless of the highs & lows of the market are the only sound way to ensure success.

Market Analysis

Unfortunately, nothing amazing to report this quarter. All members of SSR still hear the same thing out there. Companies are still very careful with any technology purchase they make. From what we gather from sales people in the field, their customers are interested in purchasing but will not commit to a contract. There is momentum in the marketplace, but not enough to make the corporate customer want to buy now. Many say they are simply in a holding pattern until they see a more optimistic recovery as a whole.

The Application Dilemma

What makes this market so unique is the convergence of many different factors, leading to a decrease in technology spending. Applications are one piece of the problem. Many companies are very reluctant to purchase applications because of prior high expectations from vendors which were never met. Vendors from CRM, Manufacturing to E-Procurement had promised very high ROI, simplified implementation and ease-of-use, all of which never amounted to much more then broken promises. Many customers spent 1+ million dollars on product, only later to find the implementation costs were 10-20 greater then the software!

Many vendors in these areas promised a very high internal adoption rate for there clients because they believed their product was (1) easy to use (2) Once companies adopt, they will see the major advantage the software brings. Unfortunately, it doesn’t seem to be working. ROI is now calculated in years, not months with companies who spent freely a few years ago, saving only pennies!

Telecom…Telego

After talking to one of our clients who happened to be a Sr. Partner at KPMG, we believe the telecom market will not see any signs of picking up for another two years. Over-production and over capacity are not helping. New equipment, still in the box is auctioned off on E-Bay or sold for pennies on the dollar. We have not seen any company in the telecom space, (including wireless) that’s doing well. Sorry…

Tools

Many of our current customers are software tools vendors and for good reason; tools still sell! Companies such as Concord Communication in the Network Management area or application lifecycle development tools companies such Mercury Interactive seem to sell when applications sales falter, why? Many simple reasons: (1) tools are easy to use in comparison to applications (2) ease of installation without additional implementation services, (3) fix an immediate business problem which can usually be shown in an on-site demo (4) the price point is relatively low, usually $50-250k, so the contracts “squeak” by a CFO when a two million dollar application won’t.

Business Intelligence

Something falling somewhere in the middle of applications and tools sales are the Business Intelligence products such as Cognos, Business Objects, SAS, etc. This area of software seems to be doing rather well, even though it’s hard to figure out what category they sit in. I say because some of the vendors in the space are adding on “front-end_ components and calling them applications. Whatever you want to call them, they fit into a companies business model as a “need to have” rather then a “nice to have” product. Our contacts at some of these companies are very happy and seem to be doing better then others.

Start-ups

Start-ups are starting to flourish again and now makeup around 50% of our clients. We feel more comfortable dealing with start-ups now because we believe the new wave of companies have REAL business plans and a higher chance of success. We’re not saying you will make a “home run” at one of these companies but we do believe that investors are making the new wave of start-ups jump through hoops before agreeing to fund. This is a far cry from three years ago where you didn’t even need a business plan to obtain money! You should still be careful when approaching a start-up because they can be a “re-start”. Going to a “re-start” tends to be risky since there usually a reason for the restart…usually not a good one. Selling for any start-up will be hard these days since companies have become “gun-shy” buying from small vendors; many of which are no longer in business. If you like a challenge, go for the start-up.

Closing

It’s been a tough year and we all hope 2003 looks much better. Keep looking at tools like security, network management, performance tools and business intelligence products. It’s going to take a while for companies to start looking at applications but it really comes down to price point and ROI (a realistic one). Let’s all hope for the best and a great January!

The Job Search

Here are some pointers that you will need to “land a job” in this market.

1. Be very aggressive - You’re competing with many others equal to or better then yourself. Companies ARE hiring but only want someone who can take a very complicated sales cycle and build a roadmap to closing deals. You need to convey your knowledge of this in the resume and during the interview process.

2. The most successful way to find a job is still networking - Start calling your friends or a few recruiters you can trust.

3. Make the resume represent a top candidate, not a “B” player - Be sure to show your “value add”, clearly and concisely throughout the resume.

4. Go out and get a consulting job in the short-term - Many of our clients will not talk to someone out of work. Make the effort to stay in the market, even if it’s a “commission only” job or small development project.

5. Stay on the offensive, not defensive throughout the recruiting process - Even though you’re out of work, that’s no excuse for loosing control of your search. Be prepared for the interview and ask intelligent questions. Try to keep the whole conversation with you in control. REMEMBER, YOU’RE SELLING AT ALL TIMES!

6. WEAR A SUIT!!!!

For more information, please call 949-497-0077 or e-mail info@ssrcorp.com

     
    Copyright 2003 Strategic Software Resources, Inc. All Rights Reserved.