Posted by Cross-posted on my LinkedIn account.
One topic I’ve thought a lot about over the years is why teams and companies get stuck. What keeps them from growing up? Why do companies experience growth and then plateau? Why do teams innovate or provide great service and then stop? I first thought about this at Saba years ago as the company transitioned from traditional on-prem/perpetual license to SaaS. That story had a happy ending, but I’ve continued to observe teams and companies that get stuck.
Being stuck for a company is characterized first and foremost by a failure to achieve top-line growth, produce new product, win new business, or retain customers. For teams, it is characterized by repeated failure to achieve significant business objectives. Finally, for both companies and teams, being stuck means higher costs, particularly costs of sales, customer success, or support.
Businesses that get stuck fail to make the connection from culture and process to business outcomes in identifiable ways. In this article, I present my observations for why this happens and invite your thoughts and comments below. These reasons are grouped as culture reasons, product reasons, and sales reasons for why companies get stuck.
Businesses that get stuck fail to make the connection from culture and process to business outcomes in identifiable ways.
In small companies, people frequently wear multiple hats. While this may truly help to earn some early wins and create success stories, it contributes to what I characterize as cultural reasons for getting stuck, including the first three. The final four reasons listed below have to do with structural issues related to process, sales, product, and strategy.
Stuck reason #1: You have a hero culture
The first cultural problem of teams and companies that are stuck is a hero culture. A hero culture exists when key functions in our business are dependent on the knowledge, skill, and dedication of a few people to make progress or solve problems and that dependency is celebrated or encouraged. The problem in a hero culture isn’t just a lack of process. It is that our culture discourages process improvement by encouraging heroism.
A hero culture keeps us from developing the systems and processes that are necessary for scale. The hero culture rewards behavior that is detrimental to growth.
How do you know if you have a hero culture? First, do you have recurring problems? My rule of thumb is to look for patterns of three. If I see 3 similar problems occur close together (my “rule of 3”) in time, then I check for a systemic problem. Second, is that problem consistently solved by the same people? Finally, does the hero or the heroic act get celebrated but the systemic issue continues unaddressed? Then you have a hero culture in that part of the business.
Stuck reason #2: Your culture plays favorites with teams or people
A close partner to hero culture is favorites culture. This is a culture where leaders evaluate people or teams based on perception, not on objective metrics related to their performance. At worst, work becomes a popularity contest. Whether the favorites are heroes or not, companies or teams with a favorites culture inevitably end up with the wrong people in key roles — but these people are untouchable.
We can create a favorites culture around entire teams. This can happen, for example, when leaders protect the sales team from accountability for selling bad deals because “we need the sale” or when the product team is protected from quality problems because “we need new product pushed”. This may happen with good intentions but anytime we play favorites with individuals or teams, we are avoiding accountability and, likely, pushing problems (and the cost of those problems) onto other teams in the company.
How do you know if you have a favorites culture? Are people or teams consistently having to pick up after other people or teams? Are problems created by one team consistently getting pushed downstream for resolution? Are there popular people whom you wonder what they do?
Stuck reason #3: You have analysis paralysis
Analysis paralysis occurs when a company or team takes too long determining how to respond to market changes or process challenges. Putting this in the RACI framework, when this problem occurs, we are spending valuable time consulting and informing large groups of people but failing to establish responsibility and accountability for addressing the problems.
When a company has analysis paralysis, large numbers of people are engaged in long cycles of decision-making. The number of people involved is too large. Decision-making is likely centralized rather than distributed. The conversation winds around forever without people agreeing on the problem or agreeing on the solution. And on the off chance that the problem is identified and a plan is created, there are too many people engaged to execute it.
In addition to the characteristics above, I’ve observed on multiple occasions that analysis paralysis manifests in leadership teams with the team unable take on more than one or two strategic initiatives concurrently. If you feel like you aren’t moving fast enough on key initiatives or getting enough strategic things done or addressing systemic challenges, then you may be stuck in analysis paralysis. The “rule of 3” I introduced above applies here, too.
Stuck reason #4: You are hard to work with (immature processes)
Even if we have overcome hero culture and favorites culture, we can still get stuck because of immature processes that cause customers to exert great effort to see their issues addressed. This most often occurs in prospects or customers getting caught in hand-offs or exceptions to our defined processes. A prominent example of this is a customer escalation for a technical support issue. But other examples are prospects requesting special contract terms in the sales cycle or billing irregularities. (My favorite example of the latter is when a finance team could not manage to cut an invoice to a customer who asked to pay their annual bill 6 months early. You have one job!)
Why does this happen? First, when we move on from hero culture and we embrace process, we initially build our processes for success within our teams, not across teams. (Siloes are the result of process and accountability gaps, not org charts, in my opinion.) Second, we build these processes to fulfill the core mission of the team. Product, for example, might be incented on new features and new customers, not on code quality, regressions, rapid bug fixes, or upsell. Sales might be incented for new licenses but not for services or scoping accuracy. Services might be incented for booking revenue but not for product adoption by the customer.
When our processes are immature because we haven’t built essential, cross-team processes focused on customer outcomes, we create tremendous customer frustration. The outcome of immature processes can be lost sales deals. However, I see it more often as customer frustration and heightened churn risk.
Immature processes are indicated by:
- Low customer satisfaction survey scores
- Repeated and high-profile customer escalations
- Long times to resolution for customer issues, including but not limited to support issues
- Customers having to be the squeaky wheel to get resolution
Stuck reason #5: Your sales team lacks process, discipline, and accountability
It is fantastic when you have a hot product that sells itself. It is even better when you have the monopoly power that a few, large, global vendors enjoy. But what happens when you no longer have either of those? What happens when your sales team can no longer just book appointments, have the technical sales team do a demo, and send over a quote to the prospect?
Your market success invites competition. You’ve proved the market exists! When competitors enter, that’s when your sales team really has to sell. Win rates crash if your sales team lacks process, discipline, and accountability.
How do you know if your sales team is struggling with these things? Check for the following: Your sales team isn’t qualifying customer business needs. You are chasing deals. You offer proof-of-concept or pilot engagements regularly without knowing what the path to close the opportunity is.
I attribute a big part of Saba’s turnaround to the Saba Sales team’s adoption of a disciplined (in Saba’s case, solution sales) methodology. The growth in number of deals and deal sizes over a two-year period was astounding due to the increased discipline in selecting (and more importantly, declining some) and cultivating deals with a defined methodology that the sales team was accountable to.
Stuck reason #6: Your product isn’t truly innovative
Market leaders frequently encounter products from new entrants that don’t fundamentally change the way customers derive value. These products may provide usability improvements such as a better user interface, or they may have a different combination of feature-function. They might promise to be easier to deploy and gain value from. All good things! (And all things that market leaders have to respond to.) But they aren’t truly innovative.
In the talent management space that my former company Saba competed in, there were dozens of start-ups that offered a prettier user interface or some simpler workflows for traditional, company-driven, employee learning activities. However, they weren’t solving new problems or solving the same problem in a new way. They were a nuisance. But Degreed.com and other Learning Experience Platforms truly innovated by putting the employee in the driver’s seat. And that created real competition for customer dollars for Saba and Cornerstone. Similarly, in the same space, there are learning, recruiting, and payroll products that are redefining the category with artificial intelligence.
If you’re only making a prettier version of products that already exist and not fundamentally reinventing the way that people or businesses solve their problems or addressing previously unmet needs altogether, then you’ll likely find yourself competing on price and losing to market leaders. After the initial buzz has worn off, you could get stuck.
Stuck reason #7: Your company missed the market
Finally, I believe companies get stuck because they misread or mis-time the market. This can show up in a couple of ways: First, your company might be trying to sell a truly innovative product into the wrong market. It could be a solution for buyers who aren’t ready to buy or who might never be ready to buy. This notion is one aspect of Clayton Christensen’s Innovator’s Dilemma.
Second, and more commonly, I believe, is that technology and market demands have shifted while your company has maintained a focus on your existing go-to-market plan, sales strategy, or customer base. We are missing or unable to move quickly enough to address changes in buyer needs.
Christensen writes of this:
“Successful companies want their resources to be focused on activities that address customers’ needs, that promise higher profits, that are technologically feasible, and that help them play in substantial markets. Yet, to expect the processes that accomplish those things also to do something like nurturing disruptive technologies – to focus resources on proposals that customers reject, that offer lower profit, that underperform existing technologies and can only be sold in insignificant markets– is akin to flapping one’s arms with wings strapped to them in an attempt to fly.”
Conclusion
I’m going to end on a humorous note: When I was in first or second grade, this was my lunchbox. It must have traumatized the entire class. But there are two lessons about being stuck from this “Antiques Road-Show” memorabilia:
1. Instead of getting stuck, the kid could have walked around like the officers did. It’s possible to avoid your team or company getting stuck, and I hope this article helps.
2. If you do get stuck, somebody is going to be happy about it. Like your sister. Or your rivals. 😊
So, don’t get stuck! And tell me what you think below.