Speaker 1I always say when you walk into a bank, you expect to see a teller back there behind a thing and you expect to have a box and you expect to have carpeting in there or tile and there's all these things. And none of it is why we chose that particular bank. But if it's not there or if it's done badly, we get frustrated. And there's a line that goes in a restaurant, if the silverware is dirty on your table and you didn't get your drink for 20 minutes, it doesn't matter whether Bobby Flay himself delivers the food to your table. You're frustrated and you may not come back.
Speaker 2Welcome to the Revenue Builders podcast, a weekly show featuring B2B sales leaders and executives hosted by five-time CRO John McMahon and Force Management co-founder John Kaplan. The show takes guests in the barrel behind the scenes with the people who've been there, done that and seen the results. Revenue Builders covers best practices for scaling and growing your business while sharing the pitfalls to avoid.
Speaker 3In this Revenue Builders replay, we're revisiting a conversation with Dr. Chuck Bamford, managing partner at Bamford Associates and adjunct professor of strategy at both Duke University's Fuqua School of Business and the University of Notre Dame's Mendoza College of Business. Chuck has worked with more than 170 organizations to design and implement strategy that actually drives behavior. And he's the author of many books. In this conversation, Chuck breaks down why strategy fails, why half of strategy is just not frustrating your customers, and how to translate competitive advantage all the way down to the daily activities your people actually execute. Let's dive in.
Speaker 4Hello and welcome to the Revenue Builders podcast. I'm John Kaplan here with my good friend, five-time CRO and author of the wildly successful book, The Qualified Sales Leader, John McMahon. Johnny, how are you? Good morning, Cap. You're looking sharp today. Thanks, buddy. I'm feeling sharp. You're looking sharp too, bud. We need you to feel sharp. Yeah, man. Yeah. Hey, let's dive into introduction for our guest today. So Dr. Chuck Bamford is the managing partner at Bamford Associates, LLC, a firm focused on developing actionable strategic plans while teaching leadership teams all of the processes so they can run their future strategy efforts internally. Dr. Bamford led both M&A and corporate training groups for 12 years before pursuing his PhD. He's the author of The Strategy Mindset 2.0, obviously, Strategy Mindset 1.0 came out first and then 2.0, wildly successful, as well as two of the market-leading textbooks used in both undergraduate and graduate programs around the world. Dr. Bamford is the founder of Bamford Associates, LLC, and he's the founder of Bamford Associates, a regular speaker at conferences, trade shows, and corporate events. He served on the board of directors at Exinda Networks, VenturePrize, and Consumer Credit Counseling Services. He's currently an adjunct professor of strategy at Duke University, Fuqua School of Business, where he teaches strategy implementation at both the MBA and executive MBA programs. He's been a professor at the University of Notre Dame, University of Richmond, Texas, Christian University, and Tulane University, among others. Over the past 25-plus years, he's been honored with numerous teaching excellence awards, including 12 Executive MBA Professor of the Year awards. John, say hello to Dr. Chuck Bamford.
Speaker 5I believe you're muted, John, but hello.
Speaker 6Well, Chuck, good to have you on this morning, and thanks for letting me know. I was muted. It's the way we all live on Zoom these days, isn't it? Yeah, exactly. Sorry about that. My apologies. Well, glad to have you.
Speaker 4Thank you. Johnny, I first got introduced to Chuck back in 2014 when he was working with our company, Force Management, helping us with strategy, and we still benefit from the work that we did back then. We still benefit from it today. So, let's start. Start with the, it's not really a softball, but I'd like to just, Chuck, there are millions and millions of books, probably, that might be an overstatement, but there's certainly millions of clicks on the internet when it comes to what is strategy. Could you just start us off with a definition of what is strategy?
Speaker 1Yeah, I almost have to start this way, John, but here we go. I think that people overcome. I think that people overcome and complicate strategy. And to me, strategy is fairly straightforward. Half of strategy is not frustrating your customers. So, half of strategy is going through the orthodox table-staked things that we do day in and day out and ensuring that we're not frustrating our customers relative to what they could get with competitors. I think the other half of strategy is coming up with two or three things that are truly competitive advantages, such that customers will go past your competitors and buy from you. And I always tell people, you have to be able to go eyeball to eyeball with the customer and say, you should buy from me because, and it'd be real. So, figuring out what those things are and then aligning the whole organization around those really constitutes strategy from my perspective.
Speaker 4We're going to dig into each one of those. We're going to dig into each one of those categories that you just highlighted there. But another softball, maybe this is the one you would have preferred to start with, but where do people go wrong with strategy? Just at the top level and give us good grounding for the rest of the conversation.
Speaker 1You know, I think, John, they just, they use kind of their past or face validity and just decide on to do it. Yeah. Do something. I think that every new idea that comes across the table looks like it's fun. And so let's go invest there and then, oh, shoot, it didn't work. Or it's more fun to kind of put stuff together and it's not fun to actually implement it and get all the employees and the organization focused around it. So I think that it's just viewed as a, not a process. It's viewed as just something that you're endowed with. Yeah. There you go. Or an event. Oh, that's the word. It works, right? We're going to have our strategy event and then thank God we're done with that and we can get back to work for the other 363 days.
Speaker 6Hey, Chuck, we, a lot of listeners here, you know, are in the software world and, you know, the software world was once perpetual licenses. Now it's software subscriptions soon move into pure consumption, just like a utility. And, you know, what you said is half the strategy is not frustrating customers. Well, the other half is your competitive advantage. And a lot of these companies, as Johnny knows, focus heavily on competitive advantage. And then what happens is they don't focus as much on client success, yet they expect to get the renewal for the subscription. And because they do frustrate customers, because they don't put enough attention on client success, the turn numbers rise, you know, they start losing customers. And as much as they do, they don't put enough attention on client success. And as much as that happens, you know, I still don't see the type of attention that I think you should have in this world on client success. And you see it in the everyday services that we use, whether it's a cable company or some of the other service companies that, you know, we all use. You get so frustrated, even though you like the service, you get so frustrated with the, you know, customer support or client success. You want to change just because of that.
Speaker 4Hey, Chuck, let's, Johnny's on a huge point here. And it's, this was a big takeaway for me, Johnny, when we worked together with Chuck and he called this, I wanted to dig into it, the orthodox versus the unorthodox. And basically he's going to talk about the table stakes, but Johnny, what you're talking about is, you know, we're out there thinking we're killing it. And there are some basic expectations, table stakes that we were lacking, but we had some really good competitors. We had advantage in other areas, but until we went and, as you said, really kind of got eyeball to eyeball with customers, we found a big gap in the orthodox. So Chuck, I don't want to give away the punchline or whatever, but could you talk about what you mean by orthodox? And this one was, this one was a big epiphany for me because, you know, I'm looking for competitive advantage, unique innovation, and you got us focused on, you know, where how do you know you're not frustrating your clients? Could you talk about how you came up with the concept of orthodox and unorthodox?
Speaker 1Yeah, I wish. Thank you very much. I wish I could claim that I came up with it. But it has been, it's, it, it's been one of the foundations of a lot of the strategy researchers that strategy has got to be so much more than just cool new things. It's got to be making sure we're doing all the things that we're supposed to be doing well. And so the. It's a, it's a, it's a problem when, when our competitors. are above us, when we're below the median relative to our competitors, on just fundamental things like how we do billing or how we do invoicing or how we respond, how fast we respond to the customers. I always say when you walk into a bank, you expect to see a teller back there behind a thing and you expect to have a box and you expect to have carpeting in there or tile and lighting and there's all these things. And none of it is why we chose that particular bank. But if it's not there or if it's done badly, we get frustrated. And there's a line that goes that in a restaurant, I think I'll probably use this with you, John, right? The line to go to a restaurant that if the silverware is dirty on your table and you didn't get your drink for 20 minutes, it doesn't matter whether Bobby Flay... Bobby Flay himself delivers the food to your table, you're frustrated and you may not come back. So table stakes things are relative to our competitive set, who we're being compared to, but those table stake things all have to be relatively at median for us to then have cool
Speaker 6things that'll really separate us. But Chuck, in your experience then, why do so many companies focus on selling the product but not supporting, the customers? Why is that?
Speaker 1I think it's hard, John. I mean, you all, with what you do, you deal with this all the time. I find that a lot of leadership wants to come up with these great ideas, but they don't want to implement it. And then once you already said it, once you have your customer, you're like, oh good, we've got them. No, right? The customer, the client is sitting out there and they're comparing us all the time to our competitors and to what else they could do as substitutes. And I think that it's just, it's hard daily work that people just don't want to, they don't find it fun and they don't want to do it.
Speaker 4Johnny, I have a hypothesis in thinking about this. With the world that you and I live in and technology and so many of the great technical minds, like they came to their company, they came to their product with great technical innovation. And so the, you know, the first thought is, you know, having that innovation, innovation, innovation. And, you know, what we find in the work we do at Force Management, as you well know, John, is, you know, most times you have to change that customer's outlook from inside out. You know, it's all about the product and then from outside in. And what's the buyer journey? What is the customer experiencing? And I know it sounds trivial, but even the work, we did with Chuck, we had to go back to the basics and, and get close to our customers. So Chuck, how do you, how are you, how do people actually do this? You know, how do you suggest they do this? So, so first you got to make sure you're not frustrating your customer. First, you have to understand the buyer journey. What are some ways that you've
Speaker 1seen companies do that really, really well? I, I like to start with the, with the company people in the company first and then go validate what they find. So I always, I like to pull everybody together and say, who, whom are we being compared to? So I always start with what we call bump competitors, right? That is, if we win the deal, who did we lose? Who lost the deal? Or if we lose the deal, who won the deal? Who do we bump up against all the time? And then whom do we see as proxies for doing something unique or doing something special? And then I say, who do we see as proxies for doing something unique or doing something special? And then I say, who do we see as proxies for doing something unique or doing something special? And then I say, who do we see as proxies for doing something unique or doing something special? And then I say, who do we see as proxies for doing something unique or doing something special? And then I send them out and I say, let's go find out as much as we can about these companies. And, and John, you and I've talked about this before. I'm stunned at how little executives know about their competitors and why their competitors win. And I tell them, I said, I don't, I don't care about how many employees they have or what their revenue figures are. What I care about is why do they win business? What, what do you think they're doing that helps them win business and really analyze what that's going on in the business? And I say, who do we see as proxies for doing something unique or doing something special? I think my take is generally, we cannot do strategy by sitting in a room. Strategy has to start out where the customer starts and they start by seeing all the possibilities and they, all the substitutes are not doing it at all. They see all those things. And that's where we have to start in our comparison. And then it's got to be validated, right? I've got to go validate this with clients. I've got to, I got to make sure we're not kidding ourselves, but rather than start broadly and go, you know, all the way to the end, I'm going to start with the customer. Oh my gosh, it's everything. I want to narrow that list down. And I always tell people don't get more than five or six competitors in your list. Make sure they're good proxies for things
Speaker 4because you'll kill yourself with analysis. Yeah. I, I'm amazed at how many times we walk into companies and ask for voice of the customer. So we would think that table stakes is today that you would have, you know, a yearly, at least view of the feedback that your customers are giving you. And in there, you'll find great golden nuggets of areas of frustration. If you're bold enough to ask. So if you're listening and you're not doing voice of the customer, your best thinking is, that's probably, you know, if you have a problem, it's your best thinking that got you there. If you didn't go outside your company.
Speaker 6But Chuck, I think like you said, you have to, you know, be close to the customer and in a lot of companies, they get very big. Most employees can't understand how a company strategy affects them. They're and they're closest to the customer. So they don't really care. In my experience, what's in the corporate strategy, because they're too busy doing the whatever they do every day. So there isn't alignment between what they do and the corporate strategy. And I think that's a big, big problem between, you know, at the corporate level, many times, you know, setting strategies and goals, you know, it's a one-time annual event and they lay a strategy out for the board of directors, but they never consistently drive, measure and adapt it throughout the year. And it certainly don't get so, you know, the highest level employees to understand, you know, how they're affected by this corporate strategy.
Speaker 1Yeah, I, I agree. And I think that there's, there, there are two disconnects there that you were talking about. One is the disconnect from the leadership to the client to customer, right? The, what the customer's actually experienced. And I think the other is just that lack of understanding that we have to convert KPIs that we want up here, that we're talking about up here, to activities that we want. The employees to do that we think will get us to those KPIs. I, to me, I think one of the big disconnects in business is that everything that leadership does is a hypothesis. They believe that if we invest here, here and here, and our employees do this, this, and this, that as we move forward, number of customers will go up or our returning customers or our EBITDA or whatever it is. But they don't want to address what the activities are or to convert it to activity metrics. So I'm sitting there as the fry clerk in McDonald's and I don't know what you want me to do that you think ties to the strategy. My job is to make fries and, you know, pour them in and they converting this to, and getting leaders to think in terms of the activities you want your employees to do that you think will lead to those KPIs is hard work. And I think a lot of them just won't do that.
Speaker 6Well, I think the other part is, again, this is my experience of, you know, being at those lowest levels and then climbing up through the ranks is it's the way people are measured and compensated. It's misaligned with the corporate strategy. So like, let's take an example. If I'm a sales, the first line sales leader, you know, my sales comp plan says when your sales people sell. You get paid more. That's basically what it says. That's it. Versus these corporate goals. So I remember being in a big company, you know, when I was younger and I was a first line manager, I got called into this, you know, three day event with, you know, the next three levels above me. And what I realized is that I was so disconnected from those other levels. They were talking about corporate strategies and what the top people in the company wanted, but they never understood. And they were completely out of touch with what was going on in the sales world and what my sales reps were facing and what I was facing on a daily basis. And I had this huge epiphany when I looked around the room and I thought, I never want, I don't want to be here. I want to get out of here. So I left. And it was in that meeting where I had the epiphany. And it's because again, I was measured and compensated and my measurements and compensation was completely misaligned with whatever the corporate strategy was. And so are the executives above me.
Speaker 5Speaker 1 : Yeah. It's so I, I, you know, I, you know,
Speaker 1I think when that occurs, I think success in those organizations is just luck and happenstance and that, you know, that things just happen to happen. There's no alignment, so there's no way to push the organization forward.
Speaker 6Right. So you need to get the message down below to everybody in the company, especially the people closest to the customer. But you also need to make sure that their measurements, as you said, their personal KPIs and the way in which you compensate them, that has to be aligned to the corporate strategy also, or it's not going to work.
Speaker 1I frustrate folks and you all, you may push back on me too, John, that I frustrate folks when I say, look, the compensation needs to be based on the activities that you want those employees to do. And it's symbolic. Good. I'm glad. Because if they do those activities and it doesn't lead to the KPIs, it's my fault as the leader for what I came up with. And what I want them to do is I want them to do those activities and I believe it will hit those KPIs. And I think we flip it around and we throw KPIs on them. Right. You have to sell a million dollars a month. Right. Or you have to sell at least 20. Well, what happens is those sales, I would just, I just did, John, I was just on Houston two weeks ago. I did a keynote address for a large organization for their global sales team. So it was, I don't know, there were like 260 people in the room and I'm going through and I said, so what are you, what are you measured on? You know, what's, tell me what it is. And so they're calling out all these big KPIs, right? Classic. I've got a, you know, I've got to sell five new accounts. I've got to do, you know, and they were going through these things. And I said, wow. So how do y'all do it? Well, I do this. And what happens is there. They're all over the place. And some of them are just with all apologies, just frustrating customers to know and to get a sale. Some of them are promising anything they want to put anything they can promise to get. I mean, they're doing things that are destructive to the strategy of the fund because they have to hit their KPI or they're out.
Speaker 4One of the things I think that's critical in Johnny, in your case. There was a voice of. The field in the room. And the, um, I think when good, when companies do it really well, there's a permission to speak freely, um, culture meeting, you know, this is what we do. This is what our competitive advantages are. This is what our customers say about us. And if you're not getting that, you know, it's not just an outside exercise. It's also an inside exercise. And people having the ability to speak freely, um, you know, we don't even talk about that or that doesn't even resonate for our customers, or I don't even know what that means. So Chuck, when you're, when you're, you know, facilitating the strategy sessions, um, how do you keep it manageable? Like, so you got the right people in the room, you know, your herd cats. What is the, you know, for our, for our. Listeners out there that might be embarking on these things, how do you make sure you got the proper representation in the room? Wow.
Speaker 1Well, you just had, you were, I was going right down a nice path there, John, and then you just threw that monkey wrench in on that thing. Um, I asked and I've pressed the leadership team and I tell them, I need you to put as many people in that room as you can stomach. Uh, I need you to be willing to. Listen and get levels of the organization. I, as you all know, you get varying levels of acceptance of, of that. Um, I've we've turned down clients where I just don't feel like the CEO or the executive can be open and transparent to, to what's going on. I just don't think that they can do it when I like to get as many layers in the room as possible and as many people in there as I can. And I always, I, I tend to start off probably a way you all do as well. I always ask. Everybody. I said, look, I need you to reserve your right to be offended and set it aside because we're going to offend people in this room. We, we have got to be able to discuss what's wrong and what needs to be fixed without it being on egos. We've got to be able to discuss what really separates us, even though it might mean some of the things that you all were doing are just table stakes and we've got to be able to talk about what we can do without. without people going, but my project is, and it's, and I find it to be a challenge. John, I'll probably put it back on you. Without, without too much ego, part of it is just our ability at the front of the room to handle strong egos and keep it moving forward.
Speaker 4Yeah. I mean, we do this for a living when you, but when you came in and did it for us, you know, it was really difficult for, you know, myself and the other co-founder, you know, we had very specific ideas of what the company was and what the strategy is and what our differentiation is. And the bigger and bigger we got, you know, having the ability to really understand all those things that are, you know, orthodox and, you know, getting a little bit farther and farther away from the customer. And the best advice I think that I could give anybody in this is like you said, I'm not going to give anybody a chance to do it. I'm going to check your ego at the door. Um, if somebody's bringing it up, you know, where there's, you know, where there's smoke, there's fire. So I think, um, you know, I think the point is though, you know, getting the proper representation in the room and getting alignment and Johnny McMahon in our world, you know, with, you know, technology, um, you gotta have sales, you gotta have marketing, you gotta have product, you gotta have a customer success. You gotta have all the major food groups, um, you know, to really understand what are, especially in technology today, Johnny is there are more touch points that when you and I grew up, there are more touch points between a company and their buyers than there ever has been. Um, and unless you really understand that, unless you really analyze that, um, you're, you're probably missing an opportunity to ultimately differentiate yourself.
Speaker 6Yeah. I mean, when I was, I want to go back to, um, you know, when I worked in this big company that was, well, you saw where people were misaligned and as the companies get bigger, there's also all these different political agendas also. And, um, so I had looked, I was a first line manager. I'd looked at my comp plan. It said, when my people sell more, I get paid more. And I was like, well, I'm going to do this. I'm going to do this. I'm going to pay more. I thought, Hey, that's pretty simple. I know what I got to do. So I went out on sales calls every day and this is pre-internet. So I had an inbox and an outbox on my desk where people would, for the younger people in the audience, they would basically mail would come in into your inbox. And then there was an outbox underneath it, where your assistant would come and pick up the outbox stuff and distribute it throughout the company or outside the company. Well, what I did is I didn't know what was important in the company. And it seemed like everybody was trying to take my attention away from my compensation plan, which said when my sales guys, people get paid, I get paid. So I put the trash can right next to the, the debt, my desk near the in out box. And every day when I came back to the office, I take all the papers in the inbox and I throw them in the trash can. Well, that lasted about three weeks before people started showing up at my cubicle at night. And saying, Hey, you know, I sent you something three times how, and you've never responded. So I would ask, well, you have to tell me why it's important. You have to tell me why I got to do it now. You got to tell me how it's going to help myself. People sell more. And if you can't tell me those things, then it's not going to be one of my priorities. And, and I think that's what, you know, a lot of people don't understand is especially at the highest levels, they don't understand when you put these compensation plans, in place that drives behavior and people are going to, they don't really care about your corporate goals. If again, if they're not aligned, I don't know how many times you've seen that Chuck. And the other thing, Chuck is going back to, you know, people laying out these goals every year and strategies. How many times have you gone back the next year and seeing that they've never really implemented or measured or adapted throughout the year to the different strategies that they put in place?
Speaker 1Yeah. I, I, I love, love both of those, John. I think that you're exactly right. I, I tell everybody that the entire game in alignment with all my employees, I'm trying to get as many employees as I can to buy into my strategy. And the entire game is that it fits with how they view the company in the world and that they are compensated and rewarded for making that happen. I love the idea. That if I can't see how it fits with my compensation, um, is it important for me to do, you know, pull that out, put that in the trash and move on to the next thing. I just, sorry. I love that. I see it a lot, John. I mean, you do too, right? I mean, I am, I am, and they, there's 800 reasons why they didn't do it. And so what I then do is I show them the eight, then the last year who actually did implement it and what happened to their sales and what happened to the different metrics that they were using and what the success has been. We, we've had, I've been doing about 20% of my work is with nonprofits. So when I founded the firm, I founded it as 80% for-profit and 20% nonprofit work. I'd probably do more nonprofits, but I like to eat. And so, but we have, we have, we've just done a couple of nonprofit groups in a row where we have gone, this is our second round with them. And the last time was like 2016, 2017. That timeframe. And the reason they brought us back is because one had quadrupled in size in that time period. And the other one, I don't even know. I'm not great at math. It's with, they went from 6.8 million to 42 million in annual. And, and they, they were doing great things before and they'd been around a long time before they just hadn't had the focus. And so now all the employees, all the volunteers, everybody is saying the same thing. This is what we focus on. This is what separates us. We do all these things really well. This is what, why you should be with us. And donations are pouring in. So I try to show companies over and over again, that if you'll do this and if you'll focus, do all the things you were talking about, right? The implementation part, what are you doing for current clients? That it makes a huge difference. People, I swear people come to work every day and they want to do a good job, but they just don't know what good job is. Right. So they do what they think is right.
Speaker 6Exactly. Right. And it's, you have a, it's a line kind of corporate strategy.
Speaker 4Do you have a, um, it's a little bit related to the topic of an operating rhythm around, um, communication around measurement around review, um, around getting it down to the, you know, the three foot conversation for a customer. Do you, do you have some advice for companies to move it from an event to a process from a communication standpoint, operating rhythm?
Speaker 1So for everybody who's listening, he did not set this up with me ahead of time. So I just, so you all understand my response to the answer is I refer them to really smart people, who know how to put those kinds of things together, John, which includes force because that, that process and creating that process and developing that rhythm is critical. And it takes a lot of dedicated effort and time. So in all honesty, John, I pass that off to people like you all who know much more about it than I do. So maybe you should speak to what that rhythm should
Speaker 4be. Well, yeah. I mean, like, like we've been talking about, if you can't commit it, you're not going to be able to do it. You're not going to be able to do it. You're not going to to activities that like Johnny's talking about that map to customer outcomes that map to compensation. And then, you know, you can't map it to knowledge and skills that those individuals will need. Uh, and therefore you can observe the behaviors out in the field is, you know, a little bit of a little bit of that operating rhythm. I won't, this won't be a, this won't be an advertisement for force management. We can do that another day. But, um, before we transition, Johnny, I know we want to talk about ideal customer profile. It's a big part of, um, strategy. Um, um, just wondering advice in slower economic times, like we're potentially in now how to avoid knee jerk reactions. And what are the, what are the greatest companies doing, um, as it relates to taking a look at strategy? So I, my general
Speaker 1take is that companies are great for short periods of time. They, during, during short periods of time, they get everything aligned. They are able to focus and it's very difficult to keep it up for long periods of time. And it, and it sort of with really great companies, John, I think it kind of goes back to what you were saying. It's, it's, it's not, it's, it's not a, it's not a, it's, it's not a, it's not a, it's not a, it's not a, it's not a, it's not a, it's not a, it's not a, it's not a, I agree with you. I, I think that in, when people panic is when they, we run into problems and holding the line with, we realize what's going on. We've got, we want to evaluate. We don't want to be stupid relative to what our competitor is doing, but do we believe that these are still competitive advantages? Do we believe that these are still competitive advantages? Do we believe that these are still competitive advantages? Do we believe that these are still competitive advantages? Do we believe that these are still competitive advantages? Do we believe that these are still the things that need to get fixed, that we've got to do it to move forward. If we honestly believe that they're not, then let's reset and reevaluate. And, you know, I, I, I think we have big discontinuities, right. That cause those things, a recession, some crazy person over in Russia decides to invade a country. Some, we, we, or something, something big COVID happens that causes us to have to do a reset, but at the same time, we're not going to be able to do it. Absent that, it's simply the competitive moves in the market and we shouldn't panic. We should watch, observe, change, but not panic.
Speaker 4Yeah, I've seen, last point on this is, I've seen great companies with great strategies in times of economic turmoil or political turmoil or whatever it is that just hunker down and double down on their strategy and go for, I saw it in COVID, go for land grabs, go for market share against competitors that, you know, could be, you know, panic situation. It's a great, great, great time to double down on your strategy. John, did you talk about ideal customer profile or did you have something else to say?
Speaker 6No, no, that's so profound, I left you speechless. You actually got quiet, like, you know, when you're docking a boat, all of a sudden, Johnny, he's a very talkative guy and then all of a sudden he's got to dock his boat and the wind shifts a little bit and Johnny becomes really quiet. Yeah, buddy. Quiet. Yeah, buddy. Yeah, but Chuck, let's talk about ideal customer profile and how you help companies determine what their ideal customer profile is, you know, with the different use cases.
Speaker 1So I'm willing, I'm willing to start this. You all are experts in this as well, probably more so than me. So here's my fundamental strategy piece. The ideal customer is one who instantly gets the value proposition and is willing to pay us for it.
Speaker 6I mean, how do you find them? How do you find them? You got to start with trying to figure out who they are in the marketplace, right?
Speaker 1Yeah, and I think, so maybe you're all experienced. I'd be interested to hear what you're all experiencing this as well. When I ask companies, when we figure out what their competitive advantages are. So I have to start with the competitive advantages. And then the question is, what customers are going to, are most going to want these competitive advantages? They end up very high level, right? Very generic kinds of things. And I'm like, how does a salesperson find somebody who shares our values? How does a salesperson, right? We need to get it down to precise things. Well, this customer would also do such and such, or this customer would also, and I try to get them down to, I always tell them something that an 18 year old with a computer could go find me a bunch of customers for the need then to send to my, my people too. And I'll, I'll do a quick example, 30 seconds and I'll let it go. I had a really, really great client who I've worked for multiple times in the packaging industry and they had generic kind of approach to it. Anybody reached out to them, they quoted a package, they went and tried to sell it. They had about a 5% hit rate on their, on the one they tried to pitch. So we narrowed it down to, well, given that you, you do this, then these customers are not good customers for you. Given that you do this, these customers need you and are willing to pay. And we got it very precise, a list of them. And I literally, no kidding about it, went to my university. I was at Notre Dame back then, went to the university. I fired a bunch of really smart people and I put them on the internet. I said, go find me people that meet these categories. And they came up with things like, well, they would also fly airlines. And anyway, they came up with a list, sent the back to the salespeople, the sales team, and the sales team started pursuing this. Three years later, their hit rate is 41% as opposed to 5%. So the refining a daily down is one of my things, but you,
Speaker 6you both are far more refined than my strategy level. What we typically do though, is to your point, we start with the competitive differentiation. So you look at the competitive differentiation, you ask yourself, okay, what pain points do these differentiators in software, let's say, solve? What use cases are those pain points in? Okay, who owns those use cases? Which personas inside the organization own those use cases? Okay, how are those people measured? So again, we're making sure that we're aligning our differentiation with the use case of the persona. And then also to the earlier point, how is that person measured in their job? And then from there, we start to think about what is the realistic quantifiable value for solving those pain points for that customer? And then from there, you might come up with seven different use cases. But then if you're a startup company and you're trying to figure out where should I point my salespeople, you're going to start to prioritize those use cases based upon and the personas you're going to go after, based upon the quantifiable values. Based upon the value that that customer is getting, because that means that you're going to be able to receive a higher level order size based upon the value that they're receiving, right? So then we understand that. And then we start to really go deeper into those personas. Like what is their behavior? Who do they report to? What's their typical budgets? All those types of things. So we know more and more about that person. And when we go and talk to them, we're starting to ask open-ended questions to uncover the pain that we already know about. So we're basically like, a really good lawyer that's done so much homework. They're not asking any questions they don't know the answers to, right? So they're going to corner that witness, so to speak. So that's basically what good salespeople do is, based upon all that homework we just talked about, they go in and ask open-ended questions where the customer reveals, yes, I do have those pain points. Yes, I own that use case. This is how I'm measured. Yes, that would be good. And that's how you start to drive sales. Like that or no? You know, I'm like that.
Speaker 1I love it. I was taking notes. Sorry about that, Johnny.
Speaker 4Go ahead, Johnny. Johnny, when you look at ideal customer profile, where do the economics come in? Total addressable market. Have you ever been working with a company that is telling you what an ideal customer profile is, and then you realize what they're willing to pay? And or how many of them there are you had to adjust in some way?
Speaker 6Yeah, you have to adjust it, you know, based again, it's all based upon your competitive differentiation and the pains that you solve. So early on, let's say at a company you and I were at, we could only really go into two narrow areas. And we went down those bowling alleys, so to speak, until we basically got every customer in there, got enough money back so that you could invest, more and more in development and development could start to have more competitive differentiators that took you into different use cases, different personas. So you basically got to go with what you're given. Yeah.
Speaker 5And then build the product from there.
Speaker 1And just to reinforce that, John, I always tell folks that, you know, being in a business and when we step in like you do and John does and I do, when we step into a business, it's like we're stepping into a river, the river existed before we showed up and will after. And our job is to figure out how to modify the river, not go, ooh, I want to go to that river over there. It's trying to figure out what we've got first. I like that.
Speaker 6Yeah. Well, also in software, you basically, if you're going to, you know, your development team is going to come out with a new release or talking about what's going to be in the next release. You have to really ask yourself, okay, tell me how that, you know, feature or capability you're going to put in the product is going to go and enhance my customer. Current competitive differentiation or give me a new competitive differentiator. If it's not going to do those two, you know, really, why are we building that? Is that just a nice to have, or is it really a customer need to have? And that's how you can also get sales aligned with marketing aligned with development.
Speaker 4Yeah, I agree. So, so let's talk a little bit about the hygiene around ideal customer profile to either one of you. What happens with the concept of outliers people that are outside the ideal customer profile, but we go and, you know, get a deal with them and it's a, you know, let's say it's a, it's a, you know, large deal for the company. How do you, what hygiene, uh, do you, what is your advice around? I think that's going to happen. I think companies get in trouble with outliers.
Speaker 6Well, I think that's going to happen sometimes, you know, like you, when I first went into this one company, I won't say what, what it was, I asked them, let's talk about, you know, your different, you know, use cases. And they, and they told me, yeah, we, you know, we sell into like 13 different use cases right now, but it was a startup. And I said, like, I can't help you guys because I don't think I can get a Salesforce that is really, you know, knows 13 use cases intimately and knows those personas intimately. And I don't think you can get marketing to really market. To 13 different use cases effectively. And I don't think you can get your development team to be world-class in 13 different use cases. So what do you do is you focus on three or four, your top three or four, again, where your customer is going to get the highest customer about quantifiable value. And then if some of your salespeople do trip over an opportunity, you know, you got to decide to your point, whether or not you take it, but what you're really trying to do is make your sales team and the rest of your business, highly efficient and highly productive. And that's why you focus on what you do best and not, you know, what you do. Okay. Or average or below average.
Speaker 1Yeah. And I just, to my, my, I agree with everything Johnny just said, I, I think that these outliers and especially the ones that are scary, John, right. Where they, they show up with, you know, a huge, huge sale or huge front. They can destroy the firm. They can destroy what we have been trying to build and we end up being. Yeah. Being a generic also round.
Speaker 6Yeah, I agree. Yeah. Chuck, I wanted to go back to something that you said earlier. You said where a lot of the employees, um, try to have input on what they care about. So I went where I'm on to go is a little bit on, and I'm sure you get involved in these discussion these days, you know, the company culture and what I see sometimes, and like, especially the larger companies is they have a list of these company values and it's hanging on the walls and in the halls and it's even on the website. But in reality, the culture inside the company is quite, quite different. There's again, there's this misalignment between what corporate would like to believe are the company values. But in reality, maybe the employees haven't bought in, or again, there's misalignment. Have you, have you been involved in some of those discussions? No. Yes, sir.
Speaker 1And, and, or. Yeah, you were, you were very kind to the way you said it, or that the management just issues those values and has their own set of values and it's more toxic. Yeah, yeah. Yeah, I, when, when, um, a company tells me that one of their competitive advantages is their values. I, I usually laugh and I'm like, everybody's got values. Everybody's list them on the website. The question is, are they real or not? And, and all, all I'll just speak from strategy side. All I care about with values culture is doesn't enable strategic change or not. So I find that organizations, regardless of what the culture is, if they are aligned, at least in whatever that is, then when I have to make a strategic change, I can make it fairly quickly. But if they're all over the place, when we got this set of values, I kind of buy this, I kind of buy this, then strategic change becomes very difficult because they're not aligned. So. Yeah. What I love about a, a, a great culture, again, whatever that culture is, to be honest, I, I, it, it doesn't matter or whatever their values are, as long as they're all relatively aligned with them, I find that we can make change pretty quickly. And quite honestly, speed wins, right? If I can, if I can outmaneuver my competitors and get to a new spot faster than them, I can win.
Speaker 6So have you seen a disconnect then sometimes where companies put their strategy together with you? And then they put the company values and all of a sudden you say, uh-oh, we have a problem. There's a disconnect here on one or two of these values or your strategy. Oh. How do you, how do you, how do you resolve that, Joe?
Speaker 1Well, Joe, I'm not sure I've ever been successful at resolving it. I got a call, I got a call from a private equity guy. We had worked with this company less than a year ago. And there was just a total disconnect. The, the, the leadership, the CEO. And the COO and one or two of the people, including CRO, were all, all had an approach. And it didn't matter the fact that it didn't align with their competitive advantages. They were just going to ram it, ram through the way they did things and how they drove people and all this. The private equity guy called me about a month ago and he said, he said, we need you to, we need some help. We need to have work. I said, it's not going to work. I said, there is such a, he said, we got rid of them. He said, I cleaned out the entire leadership team and I'm started over because. And I started over with here's what we are and as a competitive advantage, and here's who we are inside. I need people who can make that happen.
Speaker 5Mm-hmm .
Speaker 1So, John, I'm very successful. How about you?
Speaker 6Well, sometimes I go into, I'll tell you a story. Sometimes I go into these startups, especially like in the Bay Area, where I'm talking to the CEO or maybe they want me to be an advisor or something. So then they say, you know, we have a really good company culture here. And I go, oh, really? And they go, yeah, let me give you a tour. And then they'll take me around. They show me the beanbag chairs, the beer taps, the pool tables, the ping pong tables. And then they come back and they may even show me like some company values that are hanging on the wall. And they go like, don't you think we have a great culture? And I'm like, I'm not so sure. I'm not so sure. I haven't spoken to any of your employees. I don't know if you really are invested in training those people, developing those people, enabling those people. I don't know. You know, I don't know any of that stuff. But it seems that people are very, these days are very mixed up on what a company culture really consists of. I mean, I love all that stuff because I make, don't get me wrong, I love beer and I love playing pool, but that's not a company culture.
Speaker 1No, it's, so what I've been doing for a long time is been telling all these clients that a great, thank you for hiring me. It looks like a great deal. Part of the deal is I get to talk to all of your executives. And then I. I need a selection of people that I can talk to or some people on the board of directors. And, and they're usually relatively comfortable with that. They're like, oh yeah, sure. It'll be fine. And with the first interview, I find out that there's a big disconnect between what they're saying and what, how they're treating people, what they're doing. And then I just address it head on first day of the retreat and say, one of the orthodox problem issues that you all have is you all are not aligned in. And I just. I'm trying to get it all out on the table. So we have a conversation about it.
Speaker 4One of the, uh, great cures for this conversation, Johnny, you and I have talked about this before. We talk about knowledge, skills, and character and character becomes culture tied to the strategy when companies provide their people with knowledge that they need to be able to compete and separate themselves from the competition. They invest in the skills and their ability to do it. And then you have a commitment of accountability at the culture. The culture is, is, is the people, you know, executing against the knowledge and skills. And I've seen just really, really great examples of culture and character of organizations. And I, I, I think it's that simple. Yeah, I do too, Johnny. Yeah.
Speaker 6I don't think, you know, you can't tell me you care. About me as an employee, but you're not training me, you're not enabling me. You're not helping me get to the next level. You're not helping me make more money, get promoted, you know, grow in my career, gain more knowledge. You can't tell me you care about me. It's the old, you know, you know, teach a guy how to fish, you know, that's the same. It's no different than that. Right. But a lot of companies think, say that they care about their people, but they're not training them. They're not developing them. They're not helping them. They're not helping them get to the next level, or even achieve their own, you know, personal compensation goals.
Speaker 4No doubt about it. Hey, the last thing I want to make sure we get in is this concept of differentiation. We've been talking about it a lot. Um, uh, we talked about, uh, in your book, you talk about competitive advantage. Um, you say it has to be relatively rare compared to the, um, compared to the. Uh, competitive set. So this is a big one for me. Um, really, so some hygiene around this, we already kind of talked about it. Chuck, you said narrowing the field to make sure that you get an ideal kind of competitive set. I just want to make sure that people really understand that. Cause when we went through our work, you can imagine with what we do, sales execution, sales training, what, I mean, it could go boom, boom, boom, and all of a sudden we have a competitive set. So what advice do you have around, we'll just talk about a few hygiene here as you see around competitive advantage, picking the right competitive set?
Speaker 1Yeah. So I think that the, it starts, it starts with a recognition that you cannot compare yourself against everybody and that customers are not doing that. You know, in, in the research that's been done B2B, B2C, it, it hasn't made much of a difference. Most buyers, whatever those are relatively quickly narrowed down to three to five that they're going to compare. And the key of course, is we want to be in that three to five. So I always tell people, don't kill yourself with analysis. Get yourself down to a set that you believe your bump competitors, some proxies about what they're also doing. Go confirm it. Don't kid yourself. Go out and talk to customers, go out and talk, make sure that you got the, a good set, but you're not going to have everybody. So that you can do the analysis work that you want to do. And, and John, you hit on the big spot. Now I'm going to go relative to that competitive set. Is it relatively rare what I'm proposing to do? And my rule of thumb is if one L one other company is doing it just as good as me, still pretty rare. But if more than one is, then it's orthodox, it's should you do it? Yeah. Do it, do it well, but don't do it any better than anybody else and put as much money, time, and mental firepower as you can. On the things that are separators. Then the other pieces real quick are what's the runway, right? How much of a runway do I get with this? You come up with something really cool that a competitor can take away from you in a week. It's not competitive advantage, right? It's just something differentiated. And what are the substitutes for these things? And let's carefully consider whether there's a substitute. And then what's the value to my company. And we've studied value up one side and back down the other, and it's either I can change. I can charge more, my personal favorite, by the way, or it costs less for various reasons. And I can charge the same as my competitors, but to get a better basis point run. Or the big one is we believe that customers, potential customers will go past competitors and buy from us because of this. And if he can get through all four of those elements in the leadership team with the group, that's all there really vetting it, then we can go check to make sure we didn't kid ourselves, do some market analysis, do voice to the cut. We do things we might have something.
Speaker 6Yeah. I really liked the, the one part that you said there, well, I liked it all, but the one I liked the most is that it's defensible. So from a sales perspective, I need capabilities that my product can, that we say the product can do, but I need to be able to show it in a defensive manner, you know, against the competition in front of the customer. If I can't do that, it's really useless to me. I agree. Oh, it's back to that eyeball to eyeball, right?
Speaker 4Yes. So there's, we can, we probably don't, we don't have enough time in this podcast to talk about resource-based analysis and all the things you gotta do. Like I'm amazed when we walk into companies and say, okay, walk us through your differentiation and they, like you said, Johnny, they'll just name. The differentiator and we'll, we'll, first of all, we'll ask the question. So what, what does that do for a customer? That's the, so what, why did they care? Yeah. And then the next one, like you said, Johnny, it says who, like, how is it defensible? How is it defensible? And so one of the tips that we just wanted to kind of leave the listeners with, cuz people rarely do it. Like everybody talks about loss reviews and they talk about going to competitors and going to customers where you're. Loss business and then interviewing them and ask them why they lost. And it's like being in a Senate hearing where somebody kind of puts their hand over a microphone and basically what they tell you is, yeah, um, you were so you guys were great. We loved you. Yeah. You were really close. It was really close and you really don't learn anything. No, some of the greatest companies in the world that I've seen, and we highly recommend this is to do win reviews. So when you win, you go sit down with a customer. Why are they gonna. Answer questions because they made a, a decision to purchase you. They're going to be highly invested in you being successful and understanding the truth. I've gotten unbelievable feedback. Like, why did you buy from us? That's one of the questions I ask. Another question I ask is cuz I always wanna know, um, who, who, oh, sorry. Where are we not as good as we think we are. Where are we not as good as we think we are. And then another one is where are we better than we actually realize? And then Johnny, I know you're gonna love this one cuz we're always recruiting.
Speaker 6I, I liked you last two.
Speaker 4Yeah, I didn't do we're always recruiting and I want people to really, really listen up on this cuz this is actually how I wound up at PTC. Johnny. Yeah. Who would you have bought from what seller would you have bought from? if they had a better product. And I have gotten some great names of some great sellers that were out there doing the right things, but they just didn't have just didn't have the right product, the capabilities behind them. That's it. Those are really good ones. ABR. Always be recruiting. Always be recruiting. So, Chuck, sorry, I didn't want to get out of soapbox there, but I know people are always talking about, you know, and you can in your book, you talk about resource based analysis and all the different acronyms. And there's there's a way to go and gather this information. But really, simply what you can go gather is go do some wind reviews.
Speaker 1John, I think that's the best takeaways I've had from a podcast in a long time. True.
Speaker 4Johnny never gives me that feedback. You heard him, Johnny. I had a good I had a good idea that I loved a couple of. Hey, last last thing here on this competitive differentiation, we've been talking about it and we've been talking about investing in, you know, investing in sellers and getting strategy all the way down. Let me give you some other evidence that I really, really like on this concept for me. To understand differentiation, to get it to the three foot conversation for sellers is that you have to teach them how to influence it into the decision criteria. So one of the ways to get strategy into tactics is to take and identify that competitive differentiation and do everything we just talked about on. It's got to have. All those characteristics got to be defensible, it's got to have value. But for me, the true evidence is, do your people have the ability to get it into a three foot conversation every day? Meaning I know how to influence it into the decision criteria. I know how to set traps against the competition. And as Johnny talked about earlier, I'm equipped with the right discovery questions and the trap setting questions, which is nothing more than a. Discovery. Every question with the intent to trap the competitor around that differentiation. If you can't follow differentiation from strategy all the way down to that three foot conversation, you didn't get it. It's not going to show up.
Speaker 6You have to get customer acknowledgement that your differentiation, again, is solving one of their pain points and creating value for the customer. If you can't get that acknowledgement, then you haven't, you haven't finished them. The path. That you just went down, John.
Speaker 4Yep. So I know I did a lot of translation of some of the chapters in the, in the book. Chuck, are we, is there anything that you would add on competitive differentiation?
Speaker 1I would just take away from all the great stuff we just said. So no, I wouldn't, this is fantastic.
Speaker 4That's two good points. John McMahon. That's two good points from capital. Yeah. Hey, Chuck, not bad. Not bad. Your, uh, uh, your time with us is fantastic. This is a tough topic. Like Johnny and I were talking about, you know, so many people talk about strategy and the difficulties we've had out there, just being a part of it. And, you know, as, as I had people that, you know, been operators before and now executives inside companies, just, you know, I think people overcomplicate it, but, you know, some big takeaways for me today, uh, you reminded me of the Orthodox, where are you frustrating your customers? And I remember you saying to us, um, you know, that's at least 50% of your strategy. And I remember you saying to us, um, you know, that's at least 50% of your strategy is fixing where you're frustrated, not only your customers, but as John McMahon talked about, where are you frustrating your employees? That's right. And I think companies that really do a good job of that are, are, especially right now, people are easily frustrated. Um, and you talked about converting strategy to activity, um, which I, which I loved. Um, and, uh, the, the last part, my takeaway is, and Johnny, you talked about it too. Is really making sure that you have a good competitive, realistic, competitive set to compare yourself to. Those are my takeaways.
Speaker 6Yeah. For me, the biggest one that resonated, um, Chuck was that half a strategy is simply not frustrating your customers. Cause again, I've seen, you see so many companies focusing on the competitive advantage piece, but man, they frustrate the hell out of their customers. And, uh, so that really resonated with me and hopefully it resonated. And I think it resonates with the audience so that they pay more attention to the customers they already sold.
Speaker 1I hope so, because I think it's such a, I think it's such a fundamental element that it doesn't matter what cool things you have. If you're doing that, you're not going to get them.
Speaker 6Yeah. And once they're gone, you chances are, you're never getting them back until the personnel inside that company leaves and change it over. Otherwise you have no chance.
Speaker 5Yup.
Speaker 6Yeah, Chuck, it was really, really good session. We bounced around on a, on a. You know, three or four things, but I think, you know, we did a good job on, on, on them.
Speaker 4Thank you so much. Really appreciate it. Chuck, thanks again for spending time with us on the Revenue Builders Podcast. You were awesome. You were awesome for us in 2014. Great job today for our listeners. Um, folks, uh, go get the book, The Strategy Mindset 2.0. Um, really, really appreciate you being with us, brother.
Speaker 1With such a wonderful opportunity. Thank you very much. I took, I took notes on y'all's, the whole conversation.
Speaker 4So it was fantastic. Well, you guys are the big author. So, you know, when I write my book, I'm going to come back to you guys and ask, so what did I say in that podcast? We'll keep track of it all, John. You got it. Yeah. You got it. And thank you all for listening to another episode of Revenue Builders.
Speaker 2Thanks for listening to today's episode. If you enjoy the content, please subscribe, rate and review the show to help us reach more people. This show is brought to you by. Force Management, where we help companies improve sales performance, executing the growth strategy at the point of sale. Check out forcemanagement.com for more information.
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