development - Artful Thinkers

Enterprise organizations are taking a rigorous look at the principles used in the Lean Startup movement. They are carefully considering how they can incorporate the approach for building and launching new products faster to increase revenues and reduce costs.

Why? Speed of innovation and time-to-market can translate to millions in revenue gained or millions in lost opportunity costs for organizations of every size. One known fact for product-based businesses is that the typical time for market development can no longer take years for planning to launch. Competitive forces require organizations to be in cycles of continuous improvement and a constant state of innovation.

Some businesses acquire other businesses to gain momentum, others set up lean approaches within their product development and design centers. If enterprises want to compete with the “young and restless” entrepreneur community, they need to consider moving faster in definition, development and bringing new products to market.

The father of the lean movement is Eric Ries, author of The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses. The Lean Startup methodology promotes shorter product development cycles driven by experimentation and validated learning. Instead of waiting until the final product is “complete” before launch, the lean practice recommends to use iterative releases to confirm adoption and use cases for a minimum viable product.

The constant develop-release cycle provides for ongoing feedback to modify and pivot to meet buyer and user needs faster. The goal for this technique is to speed products to market, maximizing early product adoption cycles and capturing the most market opportunity. This all translates to revenue.

The risks associated to this approach are primarily related to creating products that seem to never be finished. Consumers must have a strong loyalty to stay committed to products that are always upgrading. Businesses have to evaluate the risk-rewards of being first to market with products that are viable and utilize the information gained in the customer feedback process during each release to keep customers happy.

The growing consideration of going lean for many business owners today is whether they do so through an M&A strategy or reorganization of the product development operation. “The only way to win is to learn faster than anyone else.” – Eric Ries

By Jamie Glass, President and CMO of Artful Thinkers, @jglass8

This article appeared in the CKS Advisors CKS Updates May 2013 Newsletter. Visit www.cksadvisors.com for additional information.

Using partnerships to grow your business is smart business. Partnering drives market awareness, aligns your brand with other credible brands, opens doors to new customers and can even provide value-added products and services to increase your average sale.

There are different types of partners, which are defined by the level of engagement and the agreements each party enters into to manage the relationship.

Sales Referral Partners are the entry level of business development partnerships. This type of partnership has little accountability and responsibility for performance. The value of this strategy is often used to grow market credibility or to align with a partner that has strong relationships with your prospective customers.

Entering into a partnership for referrals is a first step to test the waters in a relationship. It allows both entities to measure the commitment, willingness and effort required in working together to develop business. A sales referral partnership gives you the ability to determine if this is simply a PR initiative or will actually grow revenues. You can also monitor the organizational support in sales and marketing required to get deals closed.

The relationship can be a one-way lead pass or a two-way referral agreement. Both parties need to determine the best opportunity to refer business by passing on leads, receiving referrals or both.

Sales Referral Partners can be “handshake” in nature if you do not plan to hold anyone accountable for the outcome. It is commonplace for business service professionals who network together to develop non-binding relationships to help open doors and extend value by making credible introductions to other service providers or their respective clients.

If you plan to use compensation as an incentive to drive referrals you need a legal agreement, signed and executed between both entities. Compensation is a way to show appreciation for the referral and is an incentive to work together. If your partner offers to pay you for referrals, you also want to make sure it is in writing.

There are two ways you can determine the referral compensation. Referrals can be compensated at the same rate as your sales commission. For example, you can offer a set figure between 5-10% of the net proceeds of any closed deal. You can also set the commission rate at the percentage of your average marketing spend to acquire a new customer. No matter the rate chosen, it should be perceived by your partner as rewarding and drive the expected behavior. Make it worthwhile for someone to act as your front-line sales person and help find you new customers. If the rate is not worthy of the effort, you can expect to pay few or no commissions, as you will likely not drive the behaviors needed to get a referral.

If you do choose to enter into a binding agreement that includes compensation for referrals, you need to set rules just as you do for your own employees. Specifically outline in your agreement how payments will be made and when the partner will be paid. For example, will you pay when the sale is made or when you are paid by the new customer? Be sure you state in your referral agreements if the referral fee will be paid over the lifetime of the relationship or for only the first sale.

It is critical that you track all your sales referrals, whether you enter into a formal agreement or simply take an email of a lead pass from a trusted business partner in your network. Enter the lead into your CRM with the proper tag to identify who gave you the lead. Enter when you receive the lead and monitor the progress of the lead as it moves through your sales pipeline. Measure all your partners quarterly to see how they are helping you grow revenues. It will provide you intelligence in how to manage the relationship for maximum profitability.

If you do enter into a sales partnership where the other entity is representing you on the front-line, you need to equip your partner with the same tools and resources you provide to your own sales team. You need to give them the ability to introduce you, what you do, the problems you solve and the value proposition of your products and services. Spend time providing regular updates about your business and services to keep your partners informed and engaged.

Top of mind awareness in this type of partnership is essential to getting value from your relationship. When you provide value, you will get value in return. A partnership requires efforts by the giver and the receiver. Be persistent in developing good partnerships, measure activities and reward the efforts of those that help grow your business.

“Try not to become a person of success, but rather to become a person of value.”
– Albert Einstein

Other types of partnerships that will be discussed in future posts include Co-Selling Partners, Channel Partners, Strategic Partners and Investment Partners.

Jamie Glass, Founder, President and CMO of Artful Thinkers

Tag: development

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