A BUSINESS EXECUTIVE’S “4 P’S”: PEOPLE, PRODUCT, PIPELINE AND PERFORMANCE

 

Managing profitable growth and transitions across technology companies, I’ve experienced many critical pivot points including growth at scale, increasing profitability, restructurings, Initial Public Offerings (IPO’s), divestitures and acquisitions. As a business management consultant, I’m often asked to provide experienced Business Leadership “on-demand”. These situations require a consultant to immediately “hit the ground running” to rapidly assess the situation from a finance, business operating model and market perspective.

When embarking on a new engagement, I always focus on evaluating the current stage of a company across four key areas: people, product, pipeline and performance. I like to think of these categories as a Business Executive’s “4 P’s”. I have seen time and time again that successful companies can build significant competitive advantage as they improve, advance and enable effectiveness across these four areas.

PEOPLE

The people part of a company’s success is inherently linked to organizational effectiveness. An operationally focused leader should remain independent and continuously evaluate if the organization has the optimal design given the internal and external interrelationships required to drive value in the enterprise. I often evaluate a few key topics on day one of any engagement. 

(1) Are leadership roles clearly defined with comprehensive role charters including clearly defined decisions rights?

(2) Are corporate objectives assigned to each individual leader with transparent expectations for success and measurable outcomes?

(3) Are business unit leaders and functional owners operating hand and glove on cross functional imperatives in clearly understood manner?

(4) Does leadership rank order priorities and help each other achieve corporate goals?

(5) How well does the company report on progress to plan for each objective weekly, monthly and quarterly during the year?

In addition to structure, role charters and aligned objectives, compensation and incentives should be part of the initial people review.  Fundamental to the success of any team are the incentives incorporated into the compensation structure and confirm such incentives are linked to the company strategy to drive individual and collective results. A balance of longer-term and short-term incentives should be designed around the behavior the company wants from each leader and from individual contributors.  It is quite valuable to incorporate incentive design as part of the strategic planning cycle.  These key areas can make a huge difference in achieving desired performance.

PRODUCT

You might not expect that a business consultant would be integrally involved with product at a company, yet it is central to the business consultant’s role to maintain a strong focus on product market fit, the economic business model of the company as well as product packaging and pricing. Consultant’s should ideally begin their evaluation of product with a clear understanding of the specific use cases for a product, the value proposition for the customer and the return on investment for the company. It is quite important for the realization of the economic model to clearly understand how value is obtained from a customer standpoint as well as who are the company’s “target customers” including their personas and buying patterns. Competitive advantages associated with the product should be independently verified and product-market positioning fairly assessed. A business executive should be central to how “customer success” is quantified at a company based on the customer’s realization of product value and benefits.

Future product planning is a key area when allocating capital in a business.   All business executives should participate when formalizing the company’s product roadmap and product development investments. There should be a clearly defined process to determine how capital is allocated to product development.  A few areas I evaluate include the following:

(1) Does the company implement a business case analysis for each product or product family?

(2) How are progress towards milestones in the product development roadmap monitored and measured?

(3) How economic outcomes are measured for R&D investment.

PIPELINE  

Analyzing sales bookings trends for company products should be a daily routine. Developing a clear understanding of historical trends and current and projected market demand is essential to the evaluation of any business plan and forecast. It is critical for a management consultant to dissect the various stages and components of the sales pipeline. Business management should know how an inquiry becomes a lead, leads are qualified, understand the sales process and timeline as opportunities transition from each stage in the pipeline and ultimately convert into a sales booking. The business discussions, demonstrations, events, negotiation and business processes integral to leads moving through the pipeline and the resources necessary at each stage can make all the difference to the effectiveness and efficiency of the sales function. Maintaining a healthy pipeline, with a strong flow of incoming qualified leads and the quality of the volume of opportunities at each stage of the pipeline, is a key momentum indicator for the effectiveness of the product, pricing, brand and company forecast.

Management should evaluate how predictable the pipeline is at achieving sales growth targets as well as the salesforce’s ability to obtain their incentives as compared to market appropriate benchmarks. For example, is the coverage ratio of assigned-sales-quota to sales bookings targets aligned with benchmark levels for the industry served at the appropriate stage of growth in the company’s business? Week-to-week changes in pipeline opportunities often provide valuable insights into customer, region or market demand patterns for a company’s product.  Leaders should also look to other factors, like competitive   key indicators from deal win loss data, which may inform future business performance or necessary adjustments to sales strategy.

Finally, a management consultant should come equipped to evaluate other sales performance parameters beyond strictly sell-in and sell-through. These might include:

·        New account development trends

·        Business development qualitative data

·        Partnership opportunities

·        Identification of packaging and pricing changes which may influence deal performance

·        Implementation services trends

·        Product development extensions

All of these sales drivers influence competitive advantage for the company.

PERFORMANCE

While “performance” is without question a joint responsibility held by all functional leaders and department heads at a company, no one owns this objective more than the chief financial officer. How performance is monitored, measured and communicated is one of the most critical decisions made by a CEO and the management team. Whatever the company and departmental “score card” maybe, it should be clear, relevant to the company’s customer/product/market objectives and meaningful to company employees and shareholders. In my experience, the most successful companies measure, report and manage to objectives in a transparent and aligned fashion across the entire enterprise.   

Performance metrics enable data driven decisions when distributed in a timely manner. The business management should participate in architecting enterprise system design to deliver performance monitoring and measurement. With the investments occurring around digital transformation, dashboard business intelligence infrastructure, which integrate legacy siloed reporting systems across the entire company, has the power to provide real time or near real time data to executives. These timely delivered metrics allow executives to rapidly adjust priorities and workplans and align opportunities to achieve objectives or adjust expectations. Reporting may be customized to provide relevant and actionable information.  Companies should also include reporting on incentive plan achievement encouraging alignment which motivates the right behaviors across the enterprise. Ownership should be defined for each business objective to individual leaders providing each executive the necessary performance metrics reporting and measurement, in a closed loop process, to “monitor”, “measure” and “manage” desired business outcomes.

Today’s executives drive data driven decision making enabling improved company performance. Mastering a business executive’s “4 P’s” lays the groundwork and a foundation for that success across all sectors and at all stages of company growth.