Sales 3.0 & 'Problem Finding'

I've been reading To Sell Is Human by Daniel Pink, a great book that argues quite persuasively that we are all salespeople; that the most important thing that each of us does every day -- regardless of whether or not we're in sales -- is to sell. Selling your family, your friends, your colleagues, your customers, your boss. And he argues that most of the jobs of the future (mostly focused around education and healthcare) are going to be all about "moving people", e.g. selling people. Pink also puts a fine point on what I wrote about the other day where I compared Sales 1.0 and Sales 3.0. He notes that today's sales environment is more about “problem finding” than “problem solving”. He uses the example of someone purchasing a vacuum cleaner.

A guy might say, "I need a new vacuum cleaner". So the problem, is: he needs a new vacuum cleaner. It used to be that to solve this problem he would drive down to a a store and talk to a vacuum cleaner salesperson who would explain the options, features and pricing. This salesperson no longer exists -- or if they do, they're not that valuable anymore. Information on vacuum cleaners is easy to find on the internet. You can educate yourself on everything you need to know about buying a vacuum cleaner while sitting on your couch. The information is now a commodity. So the “problem solver" type of seller is going away. We don't need salespeople to solve the "I need a new vacuum cleaner" problem anymore.

But suppose that this guy’s problem isn’t that he needs a new vacuum cleaner. What if the screens in his house are letting too much dust into the house? Or what if his carpets are of poor quality and are attracting too much dust and replacing them would solve his problem?

This is what sales 3.0 does. It gives buyers insights (that's where the value is). But not insights on how to solve the problem, but what their problem actually is. Remember, information on the solution, in most cases, is now a relative commodity.

I love the vacuum cleaner analogy.

Sales 3.0 is about helping buyers understand their true problem.

Related to this, this is why RFPs (request for proposals) are now so backwards. Large enterprises don't need to execute an RFP to figure out what feature set will solve their problem at the lowest cost, they need advisers (sellers) to help them figure out what their problem is.

As more and more salespeople adopt the sales 3.0 approach, I think we’ll start to see the perception of salespeople begin to improve. If sellers are sincerely trying to provide buyers with insights on their business and helping them think through their problem, buyers won't avoid salespeople, they'll seek them out.

Is Innovation Accelerating Or Decelerating ?

I came across a great debate the other day between Peter Thiel and Marc Andreessen on the question of innovation and whether it is accelerating or decelerating. I found Thiel's perspective on this super interesting as he talked about the massive lack of innovation we've seen since the 1970s with regard to transportation and energy and infrastructure. I also enjoyed the debate around which metrics are best to use when measuring innovation acceleration -- things like GDP per capita, number of engineers and researchers, cultural attitudes toward technology, speed of cars and planes, patents filed, etc. Finally, I've always wondered why it seems that most of the notable venture investors out there always seem to be so heavily focused on computer and software engineering as opposed to more structural opportunities like energy, transportation, construction, finance, education or healthcare. The simple reason is that computer and software engineering is the one area that government regulation has (for the most part) not yet slowed down. This is why you're seeing the venture community so interested in things like virtual reality, drones and Bitcoin -- these are opportunities outside of software engineering that haven't yet been regulated. Little regulation means good opportunity for growth.

I enjoyed the debate so much I posted the video below. It's about 57 minutes long.

[youtube http://www.youtube.com/watch?v=VtZbWnIALeE&w=560&h=315]

Sales 3.0

I've written about this topic here in the past but lately I've been thinking a lot about modern methods of selling and figured it was time to update my thoughts. Over the years, I have witnessed three phases of sales:

Sales 1.0: Pitching and objection handling. This is the old fashioned approach of 'sell, sell, sell' and 'always be closing'. This is where a salesperson talks about themselves and their company and their product's features and makes bold claims and defends their pitch by responding to objections. It's selling with brute force. There are lots of salespeople still using this approach.

Sales 2.0: Consultative or solution selling. This is where a sales person focuses most of their time learning about a prospect's business, asking questions, understanding the prospect's challenges and problems and 'what keeps them up at night'. The trick, of course, is that the answers to these scripted questions result in the prospect believing that they need the seller's product to solve their problem. This is almost the exact opposite of Sales 1.0. The thinking is that the sale is not about the seller, it's about the prospect and the prospect's business. I've found that most people still believe this is the right way to sell.

Sales 3.0: Disruptive selling. With the emergence of the Challenger Sale, this approach is becoming more and more popular. With disruptive selling, a seller is basically saying this:

I don't know much about your business, but I know a lot about the specific area that my product focuses on. And the way that you are currently addressing the problem that my product solves is completely inadequate. I'm not here to sell you something and I'm not here to ask a bunch of questions about your business. I'm here to challenge you on a very specific part of your business and to get you to think about it differently and change the context with which you think about it. I'm here to educate you and inspire you and move you. Again, I don't know your business all that well but I do know this area much better than you do. I think about it all the time and I talk to your peers about it all the time. So I'm going to give you our perspective on it. If at any point you don't think what I'm saying is interesting or don't think that a partnership makes sense, please tell me and we'll shake hands and I'll leave. And if at any point I don't think a partnership makes sense I'll do the same. This is not a sale, it's a discussion about an issue that is relevant to you and an opportunity to determine whether a partnership might make sense.

The seller likely wouldn't say this so bluntly, but you get the idea.

Sales 3.0 is most frequently used in selling innovation, but from what I hear it's becoming more popular across all industries. The world is incredibly complex. It's simply not possible for an executive to understand and manage all aspects of their business perfectly. And that's ok. And that's why they need specialists (salespeople) that are super competent experts in their domain to challenge them aggressively on different aspects of their business. Increasingly, for salespeople, knowing the product (Sales 1.0) and knowing the customer (Sales 2.0) are commodities. That should be a given.

Salespeople should know everything about their domain: products, customers, competitors, trends, the history, the future. Everything. And then use that extreme expertise to challenge a prospect on that aspect of their business. With Sales 3.0, salespeople shouldn't sell or ask a bunch of scripted questions. They should be interesting. They should give insights. They should have a point of view. They should influence. They should challenge. They should find authentic synergies.

And if authentic synergies aren't there, they should leave.

A Word About Employee Stock Options

There's been a bunch of talk in blog circles about employee stock options over the last couple of weeks. I wrote a quick thought on this topic in a comment on a blog post the other day and thought I'd post it here as well. Put simply, in order to have an effective stock option plan that motivates and rewards employees, the employee must know three things:

1. The number of options they have.
2. The current valuation of the company.
3. The total number of shares outstanding in the company.

If an employee doesn't know these three things they should place no economic value on their options. Don't get me wrong, employees should take the options if they're offered, especially if they believe they're working for a high growth company, but the options should not be considered a measurable part of their compensation package.

You can't value something if you don't know its value.

ACOs: Cost vs. Convenience

Uber’s announcement that they’re launching an online delivery service is the latest sign that more and more consumers want more and more convenience. Personally, among other things, I book travel, buy groceries, order takeout, book dinner reservations and buy concert tickets from my iPhone. Amazon Prime and one-click shopping is now my expectation for a quality online shopping experience. People want convenient and easy and simple and beautiful in all aspects of their life. Slick apps like Kayak and OpenTable and Stubhub have caused consumers to be more and more spoiled.

We’re seeing this manifest itself in healthcare as well now with the explosion of urgent care centers, concierge medicine and tele-health sites.

This trend in healthcare is not only not going to not stop, it’s speeding up. When consumers want convenience, lots of companies pop up to give it to them.

It is this continuing demand for hyper-convenience -- and the willingness of organizations to offer it -- that makes me skeptical about the future success of Accountable Care Organizations (ACOs). Given the demand for convenience, will large portions of the population agree to be locked into a narrow network that limits choice, flexibility and ease of use? Do consumers (patients) want that?

The answer is complicated. But I think it hinges on an ACO’s ability to lower costs significantly enough that consumers are willing to start making some sacrifices.

When you consider the pendulum of convenience versus cost in healthcare, there are clearly defined markets on the fringes -- there are patients that will be happy to pay more for convenience and patients that will be happy to have less flexibility in return for lower costs. But the reality is that most patients are somewhere in the middle. The huge segments in the middle where convenience and cost matter is where the money will be made.

Providers' ability to walk this fine line between cost and convenience will be the thing that dictates the winners and losers and will be the key to the adoption of quality-driven accountable care.

People are going to want Uber to deliver their groceries, but if the price point is too high they'll just drive themselves to the store.

Facebook's Defensibility Is Gone

Traditionally when people have thought of Facebook and their defensiblity, they've pointed to its ubiquity and the size of its network – at last check they had something like 1.1 billion active users. People reasoned that Facebook would continue to dominate social because it's the one place that has profiles for all of your friends. All other social  networks would be forced to plug-in to the Facebook ecosystem. But as Facebook’s defensive purchase of WhatsApp shows, this is no longer the case. Users are bouncing from social network to social network. Social apps are much, much less sticky than initially thought.

Benedict Evans and others have pointed to the seemingly minor but incredibly impactful fact that any newly launched social app can easily tap into your mobile phone's address book and instantly build out a network equal to -- or better than -- Facebook's.

This wasn't a big a issue when most users accessed Facebook through the desktop site, but now that most users access it through their mobile app, Facebook's unbundling has accelerated.

More and more users are migrating to WhatsApp for messaging, Vimeo for video, Instagram for photos, Foursquare for location sharing, etc. And there are niche players internationally that are focused on badges, stickers and other features valued in those communities.  There are now dozens and dozens of social apps in the app store with more than one-million downloads.

Facebook's strategy of running the social ecosystem seems to be shifting more rapidly than they had planned. Because of the mobile phone's address book, the approach of plugging social apps into Facebook may be losing steam. Instead of just letting them plug-in, the better approach, it seems, might be to buy them.

5 Ways To Address The 'Build Versus Buy' Question

When a prospect says something like, "well, at this point, our decision really comes down to build versus buy", don't fear, you've already won most of the battle. Your prospect has recognized that they need a product like yours and that they have to act. Getting a prospect to act -- and act quickly -- is the hardest part of selling innovation.

That said, you still have to address the issue.

I've always believed that the best way to address this concern isn't to give an opinion or a pitch; instead, the best approach is to give the prospect some topical things to consider as they look to make a decision. You're an expert in this area, you know lots of stuff that they don't. Help them think it through.

Here are five things you can encourage them to consider.

1. Specialization -- the world is complicated, companies need to focus on what they do well. Your prospect is good at their business and you're good at your business. Is it worth it for them to deviate from what they do well to try doing what you do well? Could that energy and those resources be better utilized on their core business? As Peter Drucker said, "do what you do best, and outsource the rest."

2. Unintended costs -- project and product managers know that when they begin a new project they don't know what they don't know. There are always unintended costs, requirements, hurdles and delays that come up when pursuing a new venture. It can be helpful to lay out, based on your own experience, what some of those unintended costs might be as your prospect sets out on building it themselves. Give examples. Highlight some of the things you've learned yourself.

3. Leverage with vendors -- because your prospect would be building the product for just one client (themselves) there are no economies of scale and little leverage with vendors. The costs could be far greater than they might think. List some vendors where this might apply.

4. Risk --  in my experience, when a company is considering building something themselves, they generally don't believe that the thing that they're looking to build is all that important. They'd admit that they might not do it as well as an expert but, "what's the big deal?" It's worth having a few ideas about what might make it a big deal if your prospect doesn't build it well; e.g. "if you don't want to be very high quality in this area, that's ok, but here are some potential consequences."

5. Experience -- over the last few years I've interviewed lots of consultants at top consulting firms. I always push them on describing why they're valuable. That is, how do they justify going into a business that they know nothing about to people there what to do?  The answer is the same every time: "experience". They've worked on similar problems with similar companies in similar industries. They've been through it before. The same thing exists in 'build versus buy'. If you're really good at what you do, it's generally not because you hit a few home runs, it's usually because you've done all of the little things over the years, learned some tough lessons and iterated to make the product better. Your prospect is going to have to go through that pain too. Is it worth it?

As Drucker says in the quote above, if a project deviates from a company's core mission, it's generally best to outsource it. Pushing a prospect to consider these five things not only positions you as a thoughtful expert but it also helps screen out clients that aren't a good fit.

That said, be sincerely open to the fact that building might be the right thing for your prospect. So don't "tell" them, help "guide" them. If after considering each of these factors your prospect still decides to build it themselves, that's a good outcome. It truly is. It means that they don't value the uniqueness of your mission or product offering and likely won't make a great partner down the road. There's nothing wrong with that.

When a prospect is considering build versus buy, raise the five issues above. You'll typically find that the way your prospect addresses these concerns will either help them see your value more clearly or will help you screen out a partner that isn't a great fit.

Adaptability

A few weeks ago I read Thomas Friedman's new book, That Used to Be Us: How America Fell Behind in the World It Invented and How We Can Come Back. One of the early chapters begins with this quote from an unknown source:

It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.

This is so true. I've been fortunate to work with incredibly smart people with incredible credentials: people who have worked at the top consulting firms and investment banks that have worked at some of the world's most admired companies -- Goldman Sachs, Apple, Google and Amazon -- and have attended the best colleges and business and engineering graduate programs. But when I think back on the people who were successful in the start-ups I've worked in, I've seen that there is almost no positive or negative correlation with those great credentials (great companies, great schools, high standardized test scores) and actual success in the workplace.

As the quote suggests, it really isn't the smartest or the strongest that are the most successful.

To emphasize this point, it's helpful to use a sports analogy here (I like sports analogies because sports is very results-driven and the results are extremely transparent).Regarding strength, you might think that the best NFL players are the strongest and most athletic and come from the best college football programs and had the best college football careers. But this isn't true at all. There are countless instances of great college football players not making it in the NFL -- particularly in the more complex and cerebral positions. Case in point: Tim Tebow won the Heisman trophy and a national championship at the University Florida, Tom Brady was a third string backup at Michigan.

Regarding intelligence, each year every professional football recruits takes the Wonderlic Test. It's a test that measures the intelligence of the player and is often used in making decisions about which players to draft. You might suspect that higher scores lead to greater success. Wrong again. Ryan Fitzpatrick, the Harvard educated, backup quarterback for the Tennessee Titans scored a 50 -- the highest score of any current player in the NFL. Peyton Manning, arguably the best quarterback in the NFL, scored a 28.

I see the exact same thing in the workplace. It isn't great credentials or talent or SAT scores that makes people successful in a start-up, it's traits like grit and humility -- and perhaps most of all, adaptability. Something to keep in mind when looking for "A-players" to join your team.

Presenting To Large Groups Is A Bad Idea

No matter how much research, planning and preparation you do prior to a presentation, you should know going into the meeting that the presentation you've prepared is wrong. It's going to miss the mark. No matter what you do, it won't be perfect. It can be good. It can be great. But it won't be perfect. The reason for this is that you can't get inside of the mind of your listeners to understand the precise things you need to show and say and do to get them to fully understand and support your message. It's just not possible. You don't know your listener that well.

The way to deal with this challenge is simple: don't present.

Instead of presenting, have a conversation. You can have an agenda and slides and talking points and a message you want to get across, but you have to be ready to abandon it completely as you chat with and get a reaction from your listener.

Given this, it's important that you turn the presentation into a conversation right off the bat. The best way I know to do this is to start the conversation with something provocative. For example, "we think that the way that you run this aspect of your business is completely unacceptable". Another way is to point out one of the features of your product that is most controversial and generates the most questions.

Whatever it is, find a way to get them interested and engaged. You have to make it into a conversation because if you're the only one talking you're going to be slowly become more and more off the mark. Having a dialogue ensures that you're talking about things that matter to your prospect in a context that is relevant to your prospect.

That said, of course this is much, much easier to do when you're doing a presentation to one or two people. It's much harder to execute when you're presenting to a large group -- in fact, it's impossible. You can't possibly have a productive conversation with 10 people at the same time. No matter how well you present, some number of people are going to leave frustrated that you didn't answer their questions or that you didn't talk about things that were relevant to them in their context.

So try not to find yourself in a situation where you're presenting to a large group -- anything more than 2 people is generally bad. But if you can't avoid it, I recommend starting the meeting by asking the group what they know about the topic you're about to discuss. Then go around the room and ask people to point out hesitations or concerns they have about the topic you're about to present. This is a great way to get some insight into what matters to people and what's on each person's mind.

If possible, do this again at the end of the meeting. And then ask the group who are the best one or two people to work with on next steps and setup a follow-up meeting with that person immediately. Remember, you were off the mark, you need to get that person to be your champion and get you back on track.

But again, whenever you can, try to reduce the number of people in the room when you're making a presentation, this may require you to do multiple meetings, and may drag things on, but when you're trying to influence people to innovate, the fewer minds you have in the room, the higher your chance of a successful presentation conversation.

Attackers & Defenders

A few years ago I had the pleasure of meeting Steve Case -- the original founder of AOL and current CEO of Revolution. He was considering an investment in our company and I was lucky enough to be able to pitch him our business. In the short time that I spent with him I could tell that we were dealing with an extremely savvy investor. He got right to the key issues surrounding our growth and his questions were extremely challenging and relevant.

I came across an interview that he did recently with Adam Bryant from the New York Times. In talking about different types of businesses, he said this:

...I realized the world of business really separates into these two groups. The attackers are the entrepreneurs who are disrupting the status quo, trying to change the world, take the hill, anything is possible, and have nothing to lose in most cases. They’re driven by passion and the idea and intensity. Large organizations — and it’s true of Fortune 500s and it’s also true of governments and other large organizations — are defenders. These guys aren’t trying to pursue the art of the possible, how to maximize opportunity. They actually are trying to minimize the downside, and hedge risk. They’re trying to de-risk situations. Entrepreneurs can’t even think this way. It’s not even a concept they understand.

For the traditional executives running these large companies, of course they want to grow, of course they want to innovate, of course they’d rather have revenue grow faster than slower, but they mostly don’t want to lose what they’ve got. But entrepreneurs are deathly afraid that they won’t be able to change the world, and that somebody else will. Again, these generalizations are a little unfair, but corporate executives are all too often deathly afraid that the business they inherit will be less valuable when they leave than when they started.

This is so true and exactly why no company will last forever. Even the best eventually flame out. The cycle of disrupt >> succeed >> defend is unavoidable and, frankly, perfectly logical. When companies reach a certain level of success, innovation becomes too risky and the smarter, rational move is to protect your turf.

This is why companies like Apple are so impressive and so rare. They somehow continue to attack and innovate despite their immense success.

Phillip Seymour Hoffman

I was really shocked and sad when I saw the news that one of my favorite actors died at his home in the West Village on Super Bowl Sunday. He was a phenomenal talent and it's really sad to see him go well before his time. I was thinking about the movies he's made and I looked back at the Top 20 movies list I made a while back and realized that he was in 3 of them -- Scent of a Woman, The Big Lebowski and Capote. Most people would probably argue that Capote, in which he won an Oscar for best actor, was his best performance. He was incredible in that film. But I would argue that his best performance was actually in a much lesser known movie titled, Doubt. It's a somewhat disturbing story about a nun (played by Meryl Streep) that accuses her school's priest (played by Hoffman) of inappropriate behavior with a troubled young student. The acting in this movie is absolutely amazing. I highly recommend the film.

With all of Hoffman's success and talent and brilliance, it's hard to imagine that he would die of a drug overdose. He had so much to live for. As I much as I hate to say it, you can't help but wonder if his talent and troubles were connected. The New Yorker summed up that thought really well in a blog post a couple of days after his death.

The controversy over “The Wolf of Wall Street” also involves the allure of drugs; though the movie makes it pretty clear that the character Jordan Belfort acts monstrously under their influence, it also leaves little doubt regarding the pleasures and powers that they provide him and his cohorts. It also suggests the poison pill of imagination, the diabolical—even self-destructive—power of theatrical rhetoric, its eruption from the depths of a soul that hardly dares to consider itself. Hoffman, with his seemingly infinite range of possibilities and self-transformations, was at the diametrically opposite end of the spectrum: he couldn’t help but look at himself, from angles he had never anticipated and in aspects he might not otherwise have fathomed. Genius, whether at its most constructive or destructive, its most sublime or its most repugnant, is unnatural; Hoffman lived for great art, and it’s impossible to escape the idea that he died for it. The complete price of his nearly superhuman ability has yet to be reckoned.

RIP, PSH.

Some Thoughts On Health Monitoring Devices

About a week ago, there was a good discussion on Fred Wilson’s blog regarding news from Apple that the next iPhone will be largely focused on health & wellness. The thinking is that, with Apple focused on this problem, our phones will become the central device for tracking movement, sleep and other physiological measures – as opposed to the wrist bands and watches that have been dominating the space (hold on to your Fitbits, they could soon be a collector's item). The discussion on Fred's blog got me thinking about this trend and how it's going to impact health, wellness and healthcare. A few thoughts:

1. To date, most of the popular devices are focused on prevention and self-management of wellness -- e.g. staying in shape. This is obviously a great thing, but to really make an impact, these devices are going to have to 1.) easily provide healthcare providers with digestible data and 2.) provide them with data that they actually can act on. From what I’m hearing, most of the data being captured on these devices isn’t terribly helpful to providers, and it’s definitely not actionable. There's lots of data being captured, but a provider wouldn't actually know what do with it (other than to cheer you on).
2. A few providers have told me that, in the future, the most effective self-measuring device may actually live in our toilets. There's a huge amount of data that could be captured there (signs of digestive diseases, cancer screens, infections, low nutrient absorption, protein levels, etc.). This kind of data passes the 'actionable' test, but it's unclear how this data will get to your provider.
3. There's no easy way to transmit data from your home to your provider’s office. There are big HIPPA concerns around moving data from a home to a doctor's office. And even if it gets to the provider, it has nowhere to go. The big EMR vendors-- the software makers whose products providers use to manage their patients' health -- haven't opened up to accept this kind of data, much less put it in a format that's digestible and actionable.
4. Finally, once actionable data gets to your provider in a digestible format, we have to ensure that there are payment models that incentivize providers to actually do something with it. For the most part, this doesn't exist yet. More and more payers are offering outcome-based plans but it's unclear how self-monitoring devices will fit into that model. And payers will have to agree to reimburse for this kind of health monitoring.

There are obviously lots of challenges in getting the quantified-self movement to impact healthcare in a productive way. But the news that Apple is going to make an aggressive move into this space should give us lots of hope that some solutions are on the horizon.