Over 20 years ago I was a young consultant working for one of the coolest and hottest technology companies in the world. In a few short years, they got over $14B and were on a roll.
Not only did I get to have this account as my client (for over 5 years) but we worked on projects with famous people and elite consulting organizations – there were times I was in AWE. There was a regularly scheduled meeting where I represented my Business Unit client. The meeting was attended by other Business Units, these elite consultants and famous people. We were tackling a critical issue. The issue was channel conflict. Most $14B technology companies use a long list of channels and getting them to play together well without conflict is good for the manufacturer, all the channels and most important for the customers.
My AWE lingered for months. I was sure they all knew stuff I had not learned because I could not see why we had this channel conflict problem. Having spent my life as a sales person and business owner I really understood this issue, but not the way my client did.
One day I got brave enough to challenge the conversation. I said “I don’t understand the conflict. Every customer knows which part of the channel they want to do business with. So why are we trying to change that and pay members of the channel the customer doesn’t even like?”
After that meeting I was not invited back because of what I said next. I said “It looks to me like all we are worried about is who gets paid, not what gives the customer the greatest value.”
Big companies don’t get simple. Everyone in the meeting was trying to get paid even if they did nothing. They were trying to get paid even if it did not help the customer. They build complex ways to share, measure, manage, litigate and hide all of this from the customer.
Simple would have been that the customer (word 1) gets to pick the part of the channel where they get the most value and make a buy. The part of the channel the customer bought from gets paid. When it works that way we also learn the best way to add value to customer because they tell us with their money.
In my simple world that seemed obvious, so why did it happen?
- First, big companies think from “HQ out” (the opposite of customer back) and when they started from HQ thinking this process made sense.
- Second, everyone in the room believed this channel conflict meeting could help their team make more money without having to do more real work. They all wanted the other guy to do the work yet they still want to get paid (this company had funny accounting and they double or triple paid almost everyone) – more HQ thinking.
- Third, everyone liked the regular prestigious meeting with lots of powerful people. It was good for their career.
- Last, it never dawned on them that the only reason to be in business was give the customer value.
For an enterprise “simple” can be disruptive.
So when we think about our key words CROs, Intrapreneurs, disruption and customer we can be pretty sure that almost no big company gets up in the morning to think about customers. They go to HQ and think about themselves first, second and last.
Let’s look at the word disruption (word 2). Today there a lot of books, articles, research projects and conversations about having a clear definition of exactly what does disruption mean. The definition is always about disrupting HQ and HQ’s strategy. The one thing every company needs to do is to align with their customers. Solve their customer’s problem by adding value. As their customers and their problems move the company moves (hopefully just a little ahead) and then there can be a life time of NO disruption. The real disruption today at HQ is designing the business from the customer back and aligning everything that way – not the changes in technology, products or business models.
Easy for me to write about “all you have to do is align with your customer and stay ahead of them”.
How does an enterprise do that in real life? An example might be:
There is a manufacturer of professional grade hand tools. Today they produce a catalog list of tools that vary in function, specialized use, and quality of material. The manufacturer then attempts to persuade the market to purchase these for jobs they will do now or in the future. This is “HQ out” thinking.
Customer back would be the customer has the option of buying online, at a local tool shop or loading the tool design to the customer’s computer and changing the handle size, the materials the tool is made from, the color, the storage hook on the end and flip the design for a left hander. The manufacturer could use their 3D printer to create that exact tool today and ship by 5PM, or ship the production information to the local tool shop to create it on their 3D printer for pickup this afternoon or the customer could get the download information (for a fee) and print the tool themselves for use this morning.
In the “HQ out” the manufacture is a commodity vendor and the customer only cares about price and availability as purchase criteria (commodity venders are subject to constant disruption).
In the customer back business model the manufacturer is a partner. All the changes the customer needs may be part of the next design and keeping the new tool design in a database means this customer or other customers have access to this tool instantly anywhere in the world. The custom tool can become part of a maintenance manual or required tools for specific jobs or equipment management. In this case the customer will pay more, more often and often sole source to this manufacturer.
It is clear today’s challenge is how to continually grow more profitable revenue when the customer is in charge, so business growth is predictable not disruptive. This answer is “Revenue Science” and the discipline to apply it.
Part of “Revenue Science” is to develop an Intrapreneurs culture (word 3). The definition is:
- Intrapreneurs – an employee of a corporation who is given freedom and financial support to create new products, services, systems, etc., and does not have to follow the corporation’s usual routines or protocols.
Finally get a CRO (word 4) to lead the Intrapreneurs culture. The definition of a CRO is:
- A Chief Revenue Officer – (CRO) is a corporate officer (executive) responsible for developing a science based Revenue Strategy and deploying that strategy across an organization.
The role of the CRO is to develop a Revenue Strategy from the customer back that Intrapreneurs get to deploy and execute. This includes the freedom and financial support necessary to be in constant transition based on the transition of the customers. The focus is on solving customer problems vs developing a product and persuading the customer to buy regardless the fit with the problem.
The CRO brings “Revenue Science” to the Intrapreneurs deployment. “Revenue Science” brings tools, best practices, metrics, a language and principles which results in doing routines or protocols that are both aligned to the Revenue Strategy and the customer’s problem.
It is the of the CRO’s strategy and science that enables the Intrapreneurs deployment and execution. This team is not only to be able to do unique work but is required to do unique work to keep adding more value and leading customer transitions.
The combination of CRO’s science based “Revenue Strategy” and the Intrapreneurs deployment of new products, services, systems, etc., using “Revenue Science” business models that continually deliver new and added value to the customers is a steady state business model with changing customer focused offers.
“Revenue Generation” success is an organization wide effort that is lead at the strategic level by the CRO and given operational life by Intrapreneurs engaging the total organization, customers and partners. No one group can succeed without the other.