In the last part of this series I have discussed how difficult it can be for managements and boards to detect dangerous developments before they are so far gone that they threaten to become disasters. In this part we can drill into some of the solutions to this common problem.
Marketplace trouble might be the easiest for executives to spot given all the tools we have to monitor the market, provided that we are looking for trouble's signs instead of congratulating ourselves on our own perspicacity. Extending sales cycles for enterprise-oriented companies are a big warning sign, as are flattening conversion rates for freemium product categories. Missing target sales numbers for more than a single period should ring alarm bells. The questions that are always asked when these signs of trouble show up are "why?" and "what could have been done to prevent the sales decline?" Preventing marketplace surprises is a capacious topic, worthy of a book-length treatment at the least. I will highlight a couple of the highest-value strategies which I found to be useful.
First and foremost, it is imperative to make the salesforce your strategic partner in the business. Too many companies have so much confidence in their product vision that they lose track of what their sales prospects are actually demanding. The salesforce is your eyes and ears into the market. Salespeople are the first to hear about problems with your product concept, feature set, competitiveness and pricing. If you fall into the thinking that their job is flogging whatever gets thrown over the wall to them by product teams, then you will be running blind until your sales begin to wither. What might sound to an untrained ear like mere sales-folk whingeing may in fact be actionable information. To maximize your effectiveness in the market, you might want to make sure that you attend lost-sale postmortems, as well as postmortems on sales that were close calls. When salespeople talk - listen, because in the end none of us are wiser than the market.
No less important than the salesforce is your competitive research, and I do not mean comparing spec sheets with those of the competition. It means understanding what your competitors are telling customers about you when you are up against them in a sale. It means getting insight into the competition's product pipeline that they are making public, semi-public, and what they keep internal. Interview their employees for open postings should they apply, have your proxies visit their trade show booths, and don't stint for competitive research consultants - every iota of information about competition is a finger in the levee which is always threatening to break.
Of course much of the demand issues can be prevented given sufficient market validation before the product vision is finalized. Given how quickly product cycles move in today's market, it is no longer possible to take many months to validate specs and feature sets, so we must take advantage of the agile development techniques to get the product in front of customers as early as is practical and iterate rapidly based on feedback. We simply do not have the luxury of waiting for them to come simply because we had built it.
Another area where managements are often blindsided by negative surprises is in product development efforts that suddenly head off into the weeds with blown deadlines and busted budgets in their wake. Again, the topic is too large for a short article to really cover, but I will mention a few signs of trouble that might help you detect this early.
Engineering managers know to break down projects into small and manageable tasks, so they can detect trouble relatively early. Executives, and boards even more so, are often loath to monitor development projects quite so minutely. Engineering managers, for their part, are understandably reluctant to air emerging problems early - mostly because they believe these can be repaired before they become disasters, even though they so often do. A solution I find to be useful is to set up incentives for product managers in such a way that their success depends on engineering results as much as it does on the PMs' own. This tends do a decent job of focusing PMs' minds on monitoring schedules and budgets and discourages them from forming common fronts with developers against the management.
In the next several articles I will discuss how boards and CEOs can architect their enterprises to be resistant to negative surprises and more nimble in navigating through the dangerous waters of their markets.
Cross-posted to LinkedIn Pulse
