In Part 1 we reminded you that our space is filling up with dumb companies and that this number, at least in the view of the doctor, is likely at an all time high.
We also reminded you that the doctor believes that your favourite vendor likely won’t be around, or at least not in it’s current form, within two years (or less), as he’s predicting a failure rate of 20% (or more); which, while it sounds pretty significant, is actually a mild prediction compared to THE REVELATOR‘s bold prediction that 75% of companies won’t be around, or at least not in their current form, within 18 months. Wow!
Why? First of all, as highlighted in the doctor‘s revised Dumb Company article, the companies that are (finally) starting to panic (internally) are starting to make the classic mistakes that often signal the beginning of the end.
Secondly, they have been, or are starting to, make the Dead Company mistakes, first highlighted by the doctor in December, 2008, as well as some scary new mistakes that weren’t as common, or that were overlooked by the doctor, sixteen years ago.
And while we can’t compile an exhaustive list for a number of reasons, as per Part 1, we can identify a number of common mistakes that companies who are dead companies walking tend to make (in the final days, even though they don’t always know it’s the final days yet). So if you see these mistakes in spades as a buying organization, best to steer clear until the ship is righted (assuming the vendor recognizes they are off course before it is too late and takes action). (You don’t want to go down with a sinking ship!)
In Part 1, we identified the first six common mistakes we are seeing too often. Today, we identify the next six.
Buzz and Sound Bites are more important than timeless educational content
As the doctor has been lamenting for months and months, the marketing madness is apparently at an all time high, buzzwords have replaced meaningful messages, and the hogwash doesn’t convey any useful information a prospective buyer can use to figure out what the product actually does! (And that’s one of the major causes of the current Procurement Stink, as we hinted at in this article about the Vendor Contribution to the Procurement Stink.)
Sure the hype gets attention, but it doesn’t deliver results!
So if all your research uncovers is buzzwords, sound bites, and hogwash, then you best stay clear of that vendor. As THE PROPHET has stated, M&A is about to make a comeback and the best you can hope for is that they get bought and merged.
If there is interest, your product is the solution
Not only is the doctor seeing too much rapid fire sound bite marketing to see what sticks in the marketers equivalent of throwing pasta against the wall, doubling down on whatever is getting the mot interest, assuming that their solution is the perfect solution for whatever they sold and, finally, assuming that any organization that contacts them is a potential customer and that their product will be the solution, no matter who the organization is, what the organization needs, or what their product actually does.
In short, they are adopting the Big X consulting playbook, everyone’s a client, sell whatever they can, whenever they can, and then hope they can figure out how to deliver later (without the deep strength across domains or the deep bench depth to take on big projects that the Big X have). But they are not consulting firms, they don’t have a suite of third party vendors they can proffer up, and they certainly don’t have the budget or bench to build custom solutions on the fly.
So if the first thing you get to an inquiry off of a sound-bite marketing advert is a hard sell, take a hard pass. A good vendor learns about you and your problems before proffering up a potential solution.
Sales is about numbers, not solutions
As outlined in detail in our recent article on why are there so many tech failures, at the majority of tech enterprises:
- sales people are compensated on how much they sell, not how successful the solution is for the customer
- sales people are pressured to hit numbers, or be cut if they have even ONE quarter in the bottom 10% of performers
- sales people don’t stick around long enough for success to matter
There’s a reason that THE REVELATOR has outright stated in a recent article that after 40-plus years, I say this with the deepest sincerity -– 90% of salespeople aren’t worth the gum stuck on the bottom of a shoe, and that’s because the majority of them are just focussed on selling, not on actually solving a customer’s problem.
If the sales person is rushed to sell, keeps making one time offers that expire at the end of the quarter, or promises rapid returns without a detailed use case analysis, you can be sure they only care about getting your cash in the door, not about whether or not the solution can actually solve any of your problems.
Any temporary price cut to get those initial clients can be made up later!
When times start to get desperate, that’s when desperate organizations that know they need to sign customers now to keep the investors happy (including the venture capitalists and private equity investors) will offer “a few select marquis organizations an initial discount in exchange for joint press releases, quotes, case studies, and marketing sound-bites“, thinking that they can satiate the investors for a while by telling them that those success stories will allow the organization to jack the prices further and that they’ll be able to jack prices considerably at renewal time because of “all the added value” they will have built by then.
However, investors are not dumb and not going to fall for the “price cut now will lead to riches later”, because they’ve seen that fallacy over and over again (and they know that the prices never go back up). Plus, if the solution is really worth 1 Million, there’s no way any successful vendor is going to give you an introductory rate of 100K for a “case study and positive recommendation”. That’s a big red flag for any organization looking for a vendor with a successful solution.
Our tech works, any failure is the result of the implementation team/org
Going back to our recent article on why are there so many tech failures, we noted that one of the primary reasons there are so many tech failures is that, as also noted above, sales people are being forced to sell at any cost. And the reason that even those with a conscience can do this is because they have been told the solution can be adapted and customized as needed, and if it doesn’t work, then it’s the fault of the third party consulting partner’s implementation team for screwing it up.
But that’s bullcr@p, and you know it! First of all, it’s the vendor’s responsibility for selecting their partners as much as it is the partner’s responsibility for recommending the vendor. Secondly, even if the vendor has vetted the partner and assured that they are good people, it is still the vendor’s responsibility to train the partner’s people on their solution, implementation requirements, and best practices. Thirdly, and most importantly, it is the vendor’s responsibility to ensure they don’t make any promises the tech can’t keep, as well as insuring that any customer referrals don’t come with unrealistic expectations. (Heightened is okay if the vendor is willing to put the extra work in, but it must be within the realm of possibility with the current solution … not a future roadmap that may never materialize.)
We know what we’re doing
Just because a founder ran a Procurement Department or convinced an investment firm he knows how to run a company, that doesn’t mean he actually does, especially if it’s his first time. And it doesn’t matter how fast he can learn, how smart he is, how good he can sell, or how charismatic he is. Startup success requires a suite of critical skill sets (which are outlined in Garry Mansell’s Simplify to Succeed), each of which takes years to learn and sometimes a lifetime to master. You can’t wait to learn what you needed to do yesterday. Selling investors is not like selling Procurement technology buyers. And charisma only gets you in the door, on the stage, or an interview with Mr. X himself. It doesn’t necessarily get you the signature, the return invite, or the limelight.
This results in two major mistakes. Unless the founders raised (way) too much money and are under pressure from the investors to put a proper management team in place, they’ll go too light on real operational management (and sometimes marketing management, opting for the attention seeking sound-biters over the steady-state educationally focussed marketers that hook real customers with real problems the vendor’s solution might actually solve), thinking that all they need are a few rock-star developers, a sound-bite marketer, and aggressive sales people. Which isn’t a complete team and not a complete recipe for success.
The next mistake is believing they can do everything in house, and that they “don’t need no advice from no one“. Not other founders (including those who failed once or twice and know what not to do). Not consultants, who specialize in startups and helping companies operate successfully. Not analysts, who’ve seen hundreds of companies come and go (and seen the commonalities in successful solutions and successful companies). And definitely not independent Procurement technology experts who’ve had 20+ years in the space and seen thousands of companies come and go over the decades (and analyzed hundreds and hundreds in detail).
In the mid to late 2000s, even the above average companies, who (in hindsight) probably didn’t need any help, would look for any expert they could find with a decade of experience to help them survive the (coming) downturn (which came, as it always does), improve their solution offering, and grow. Today, a significant percentage of the new generation of founders, high on raising ridiculous amounts of early stage (often pre-beta) funding, running companies making a significant number of dumb company and dead company mistakes, won’t even consider that a third party with a decade or more of experience on them in the space could actually help them.
And while this is a hard mistake to tell directly (as the smart companies won’t necessarily disclose the experts they are working with to give them an edge), if you pay attention to their messages, their speech, and their words, you’ll get some indirect hints as to where the egos might still be too inflated for the company to see success (and you can hence identify it as a company that needs to be evaluated against the dumb company and dead company walking checklists). Phrases such as “I was a buyer for F500 for years managing $B categories“, “We raised 100M because our investors know that we know what the next generation of tech is“, “I’m not a sales guy, I’m a practitioner like you“, “Don’t worry, we know what you need” even before they’ve even asked a single question about your problems and reason for reaching out, etc.
Before we conclude we’d like to again remind you that this is not a complete list of mistakes soon to be dead companies often make, but a starting list of red flags you should look for as a potential buyer of their solutions. There are real, solid, solutions out there from real, solid, vendors who care about your success and who will likely survive the coming implosion. You might have to look quite hard to find them (especially if THE REVELATOR is right and 3/4 will not survive unscathed), but the effort will be worth it because the last thing you want is your solution to fall out from under you just after the implementation is complete.
(And it’s critical to remember that any deep solution is going to take multiple quarters to implement, especially if you need to collect, classify, cleanse, and map years of historical data from multiple systems. For a mini-suite, always expect six [6] to twelve [12] months as a mid-market, and more for a full suite. Yes, some functionality that doesn’t require historical data will be available day one, and other functionality that only requires a year or two of data to get going will be available day ninety one, but no solution with depth is going to be completely implemented in under a quarter. So the next time a vendor says they can do an end to end complete enterprise Procurement installation in 60 days, they don’t have anything deep besides a shiny faketake-to-nowhere UX or a wrapper on third party tech from a company that poses more risk than they do.)
