growing vs aging: lessons in business transformation

Growing vs. AgingLessons in business transformation from the Adizes Methodology *

Alejandro Fernández CervantesPartner Sales ExecutiveMicrosoft Costa Ricahttps://cr.linkedin.com/in/alefer

* Based on the presentation from Chris Jones, MBA 5320, Corporate Lifecyles, slideshare:

https://cr.linkedin.com/in/alefer



http://www.slideshare.net/davis1cc/corporate-lifecycle-presentation?qid=21c22ffd-80b8-440e-9a2b-8b0c0a624b15&v=default&b=&from_search=4

http://www.slideshare.net/davis1cc/corporate-lifecycle-presentation?qid=21c22ffd-80b8-440e-9a2b-8b0c0a624b15&v=default&b=&from_search=4

http://www.adizes.com/lifecycle/



Growing vs. AgingGrowing Aging

Personal success stems from taking risk

Expectations exceed results

Function over Form

People are kept for contributions to organization in spite of their personality

Personal success stems from avoiding risk

Results exceed expectations

Form over function

People are kept for their personalities in spite of their contribution





Everything is permitted unless expressly forbidden

Problems are opportunities

Political power is with sales and marketing

Responsibility is not matched with authority

Everything is forbidden unless expressly permitted

Opportunities are problems

Political power is with accounting, finance, and legal

Authority is not matched with responsibility





Management controls the organization

Management drives momentum

Change in leadership can lead to change in the organizations behavior

From value added goals (profits)

The organization controls management

Management is driven by the inertia

Change in the system is necessary to cause a change in the organizations behavior

To political gamesmanship




Growing Stage – Infancy (Paei)

Focus shifts from ideas and possibilities to results expressed in terms of sales.

Time to talk and think is over and the time to produce and act is now

Cash is necessary to survive so generating it fast is number 1 focus

Founder must stay committed for company to survive

Growing stage – Go-Go (PaEi)

The idea is working, sales are up, cash flow problems have been overcome

Company can experience uncontrollable growth, lack of systems, lack of budgets, lack of policies, lack of structure, founder(s) can become arrogant and continue to do what got them there, will and persistence

Methods no longer work and crisis occurs leading to the next phase of the cycle




Second Birth/Coming of Age – Adolescence (pAEi)

The shift from management by intuition to a more professional orientation occurs it’s the shift from entrepreneurship to professional management

New leader creates systems, designs compensation packages, redefines roles and responsibilities, and institutionalizes a set of rules and policies

New leader says no no no when people are used to go go go




Second Birth / Coming of Age – Prime (PAEi)• Organization achieves balance of self control and flexibility –

they know what they’re doing, where they’re going, and how to get there




Aging Organization – Stable (PAeI)

Still growing but losing flexibility, sticks to what worked in past, sense of urgency disappears, expectations for growth and new markets are lowered

This organization starts to reward those who do what they are told to do and they are more interested in interpersonal relationships than risk




Aging Organization – Aristocracy (pAeI)

Organization places an emphasis on how things are done rather than what and why it is done

Individuals are still concerned about the company’s vitality, but as a group, the operating motto is don’t make waves

There is low internal innovation….




Aging Organization – Early bureaucracy (pA-i)

Emphasis on who cause the problems rather than what to do about it

There is much conflict, backstabbing and infighting, paranoia freezes the organization; everyone is lying low, focus is on internal turf wars

The external customer is a nuisance

Aging organization - Bureaucracy and death (-A--)

Has many systems with little functional orientation

Disassociates from its environment, and focuses mostly on itself

To work effectively with the organization, customers must develop elaborate approaches to bypass or break through the system




PAEI Framework

P – Perform…Sales, Service, get results now

A – Administer… be efficient, routine, order, enforcement

E – Entrepreneur…Proactive, identify needs which you can serve

I – Integrating…Develop culture, create environment where solutions can be found by employees themselves




Growing vs. Aging and Cloud Partner Maturity Overview

The world is changing—now is the right time to transform

your business to the cloud!Transformation requires change.

18

Stages on the journey to cloud success

Inactive Early stage Mid stage Advanced stage

Not yet selling cloud solutions

Early sales Stable cloud revenue Most profitable cloud partner

As an inactive partner, you are:• Identifying the initial

steps you can take.• Starting to sell cloud

solutions.• Starting to build your

online presence.

As an early stage partner, you are:• Focusing on optimizing

cash flow and training.• Focusing on

transactional and lower-margin activities (such as on-going administration and support).

As a mid-stage partner, you are:• Differentiating your

cloud solutions by building richer offers.

• Building stable cloud revenue.

• Continuing to tweak and improve your business to better support the cloud.

As an advanced-stage partner, you are:• Building long-term

relationship with your customers.

• Focusing on business value and higher-margin activities.

• Developing strategic partnerships so that you can scale upon demand.

While each partner is unique, there are behaviors and activities that distinguish partners at different points on the journey.

Start Grow Optimize

https://drumbeat.office.com

https://drumbeat.office.com/


Advanced-stage partners are more profitable

Realize 3× higher profit margins from cloud productivity solutions

Earn 8× more cloud revenue

Early stage

Advanced-stage

Cloud-Based

Revenue (median)

Earn 1.6× more revenue per employee

Early stage

Advanced-stage

Revenue per

Employee(median)

15%Early stage

Current Profit

Margin(median)

43%

Advanced-stage

X

8X

X

1.6X

6https://drumbeat.office.com



Effectiveness Index for Cloud Training Activities

Early stage Mid-stage Advanced-stage

34%46%

58%

Opinions of Cloud Solution and Microsoft Office 365

Provides an entrée for other solutions

Enables us to accelerate the profitability of our business

Is in high demand among our customers

38%

30%

30%

50%

52%

53%

63%

69%

71%

% Hired Staff for Cloud Business


69%81% 91%

Advanced-stage partners have embraced the cloud Have positive opinions on

opportunities the cloud deliversAre 3× more likely to recruit staff for the cloud

Consider training for the cloud to be 1.7× more helpful




Attach/Upsell Products


58% 64%81%

Use strategic partnerships to…

Cloud Revenue from Services (median)


38%58% 68%

22% 27%35%


35% 40% 50%

Advanced-stage partners sell more services

Earn 50% of revenue from services

Attach twice as many services

as early stage partnersNumber of Attached Services (median)

5 service

s

7 service

s

9 service

s

Are 1.6× more likely to upsell products

Use strategic partnerships to strengthen offers

Handle components of offer Scale upon demand




Advanced-stage partners get more leads from digital marketingSpend 4× more on cloud marketing

Get almost half their leads through digital marketing

Have lead-generation partnerships in place

Early stage

Mid-stage

Advanced-stage

13%

26%

50%

% of Marketing Budget for Cloud Solution (median)

15%Early

stage

25%

Mid-stage

44%Advanced-

stage

% Cloud Leads from Digital Marketing (median)

Early stage

Mid-stage

Advanced-stage

62%

74%

87%

% with Lead-Generation Partnerships




% Ranking Unmanaged Web Sales as Top Sales Motion for Leads


10%23% 28%

% with a Separate Cloud Sales Team


20%39%

61%

% with Account Managers

Advanced-stage partners have sales teams dedicated to the cloudAre 3× more likely to have separate cloud teams

Are 2× more likely to include cloud quotas in their sales-team compensation

Are 3× more likely to sell directly from the web

Are 3× more likely to have an cloud-account-manager team


25%

51%69%


27% 35%51%

Cloud Sales Compensation—Separate Quotas for Cloud




Mature cloud partners focus on understanding the customer’s needs and building a comprehensive offer to meet them. On average, they double the number of attached services per sale of cloud solutions such as Office 365.

Define and structure your offer

25

Upsell a workloadAim to attach seven services (average) to each Office 365 sale within six months of sale.

Typical attached services include those from the early stage, plus: End-user training Managed services Change-management consulting External IT services/CIO services Customization projects

Use strategic partnerships to extend/handle components of the cloud-productivity offer.

Types of attached products include: Collaboration solutions Conferencing solutions Storage solutions

Sell a solutionAim to attach nine services within six months of sale, and use future releases and software renewals as opportunities.

Maintain close relationship with your customers, and use feature releases and software renewals as opportunities to upsell.

Typical attached services include those from earlier stages, plus: Business-process re-engineering IP solutions Consulting solutions

Use strategic partnerships so you can scale upon demand.

Types of attached products include: Enterprise social networking Customer relationship management (CRM)

Sell a productAim to attach five services within 30 days of sale.

Types of services to attach include: Pre-deployment services Deployment and migration services On-going management and administration Help-desk support

INACTIVE EARLY STAGE MID STAGE ADVANCED STAGE

Advanced-stage partners have a strong online presence and they generate leads using inbound marketing.

Market your offer

26

Generate more leads for cloud solutions Allocate 25 percent of marketing budget to the cloud

and aim to generate 25 percent of cloud leads with digital marketing

Establish partnerships with other cloud partners to generate leads

Monitor marketing KPIs: Number of leads Marketing-conversion rate Unique website visitors

Participate in thought leadership, continuing earlier activities

Engage in five marketing activities (average), including:

Email marketing Peer-to-peer platforms Search-engine marketing Community and other in-person events

Consider hiring market personnel for the cloud

Strengthen you thought leadership Allocate 50 percent of your marketing budget to the

cloud and aim to generate 44 percent of cloud leads with digital marketing

Partner with PR and marketing agencies to generate leads

Monitor marketing KPIs, including: Number of leads and email-open rates Marketing-conversion rate Digital-marketing spending Unique website visitors

Participate in thought leadership: Publish blogs and white papers Speak publicly about cloud solutions Collaborate with key opinion leaders

Engage in six marketing activities (average) Types of marketing activities include:

Online advertising and peer-to-peer platforms Social-media and search-engine marketing Community and other in-person events

Hire dedicated cloud-marketing staff

Generate awareness of your cloud offers Allocate 13 percent of your marketing budget to the

cloud Experiment with inbound digital marketing Collaborate with Microsoft to generate Office 365

leads Monitor marketing KPIs:

Number of leads Marketing-conversion rate Search-engine traffic

Aim to engage in four marketing activities, such as: Community and other in-person events Email and search-engine marketing Blog

Start building thought leadership by publishing industry-related and solution-related content

Build your online presence with a few customer references


Advanced-stage partners focus on building long-term relationships with their customers. They perceive Office 365 sale as a foot in the door that enables them to attach products and services. Each upgrade and renewal date is a sale opportunity for the account team.

Sell your offer

27

Create a separate cloud team Implement a separate cloud-compensation

model Work to become a trusted advisor by

learning your customers’ business needs Use compensation-based KPIs, and include

renewal rate in the compensation structure Monitor sales-related KPIs, including:

Revenue per deal Deal-conversion rates Number of seats per deal Consider adding number of managed

services sold per salesperson Focus on selling to the Business Decision

Maker instead of to the CIO/CTO Add an account manager for the cloud Monitor account-management-related KPIs

including customer-renewal rates Use direct, unmanaged sales

Maximize your cloud sales Aim to have more than 50 percent of your

sales team dedicated to cloud sales Have separate quotas for cloud solutions Include usage KPIs in the compensation

calculation, such as percent of assigned seats or percent of services utilized

Monitor sales-related KPIs, including: Revenue and number of seats per

deal Deal-conversion rates Consider adding number of managed

services sold Add an account management team Monitor account-management-related KPIs,

including: Customer-renewal rates Consider adding number of assigned

seats Direct, unmanaged sales provide prominent

source of new revenue

Start building a cloud-sales plan Provide incentives to drive sale of cloud

solutions Monitor sales-related and account-

management-related KPIs: Revenue per deal Deal-conversion rates Number of seats per deal Customer-renewal rates


Advanced-stage partners have embraced the cloud. They have hired new employees who are passionate about the cloud and have provided cloud training to their current staff.

Embrace the cloud

28

Develop a long-term cloud vision

Engage in training activities, including: Actively training staff on Office 365

and cloud solutions Installing Office 365 for internal use

Gather feedback from staff to gauge training effectiveness

Hire new staff to support the cloud

Invest in training and staff Expand training activities to include:

Watching online, on-demand training videos

Attending in-person training events Reading online materials about new

products Reading customer case studies

Aim to raise training effectiveness by 50 percent


Maximize your potential Expand your training activities to include:

Reading white papers Attending live webinars

Aim to raise training effectiveness by an additional 30 percent






Next StepsTake the Lifecycle Assessment and the Maturity Assessment

Leverage your partnership with Prime-Advanced Organizations

Set goals that exceed your own expectations

Use WPC as an input for your long-term cloud business plan




Resources• Adizes Lifecycle Assessment: http://lifecycle.adizes.com/

• Adizes Webinar: How to Rejuvenate an Aging Company

• Partner Maturity Overview

• Partner Maturity Playbook

• Partner Maturity Assessment

http://lifecycle.adizes.com/

http://lifecycle.adizes.com/

http://www.adizes.com/live_lectures/





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growing vs aging: lessons in business transformation

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