First, I would like to extend my apologies for taking so long to post again! With music performances, Kerrville Folk Festivals and client work, it has been a busy year!
Following my earlier posting on JVP's and Extracting Value, I thought it would be interesting to discuss an example where finding strategic Joint Value unlocked an alliance discussion and led to a unique opportunity for both sides.
In this case, the two companies were participants in the adjacent segments of enterprise security. One large company - call them BigSecure - with a mature customer base and an ageing product in this market, and the other, a smaller company - NewTech - offering complementary technology. During some relatively tactical go-to-market discussions, NewTech realized that its own product direction would eventually compete directly with the mature product from BigSecure.
An interesting dilemma. Should NewTech (i) continue down the go-to-market path, which promised some exciting revenue opportunities, albeit tactical, ignoring the eventual, likely inevitable, collision that risked alienating BigSecure when its new product came to market, (ii) drive the go-to-market discussions off the road and avoid wasting any more time, or (iii) try to figure out how to engage BigSecure in a discussion about the potential collision.
NewTech knew that BigSecure's adjacent product was old, but there was still considerable momentum in the field and a huge installed base to be reckoned with. More importantly, NewTech could turn this approach to its advantage, by finding ways to integrate its technology with BigSecure, and realize even more upside (than a tactical GTM). Finally, there was the threat that NewTech's competitors would get to the table first, eliminating the opportunity. But, NewTech also risked the loss of competitive IP and marketing plans to BigSecure if they opened discussion too far.
What to do? What to do? Tactical gains vs. longer term strategic gains vs. a complete blowout!
The answer is often found in how you negotiate, rather than an "either-or." NewTech decided to negotiate down path (iii). But before showing its cards, it spent considerable effort in a short time negotiating away from the table exploring ways to move forward. NewTech began by carefully assessing BigSecure's options and possible moves, before making a more of their own, introducing a 3D approach into the strategy. With more information about BigSecure's challenges, and its plans with other partners to improve customer satisfaction with the ageing product, NewTech decided it would be able to gain advantage and decided to disclose its own new product plans.
This resulted in (i) identifying competitors who were vying to partner with BigSecure in addressing the problem; and (ii) unlocking new Value Creation opportunities to work with BigSecure by delivering its innovative capabilities into BigSecure’s installed base and new initiatives, both huge strategic advantages.
Lesson learned: It wasn't foreordained to turn out this way. “Turning over rocks” at BigSecure yielded significant rewards. But it was certainly true that the partnership would remain only a tactical GTM alliance if they did nothing. So the key was to explore strategic options in a 3D negotiation paradigm. Then decide a way forward.
Think 3D - it really can make a difference in the outcome and help identify and unlock Value in a relationship...
As aye.
Michael
PS Thanks to my friend John Soper for his invaluable editing!
Thursday, December 9, 2010
Thursday, December 2, 2010
Panel discussion - Dec 7th - San Jose CA
Friends & colleagues,
I will be participating in what promises to be a most exciting and interesting panel next Tuesday evening (Dec 7th) in San Jose. The subject is "You've signed the deal, now show them the money: engaging alliances in the field". The panel starts at 5:30 and is to be held at TechMart
Network Meeting Center
5201 Great America Pkwy
Santa Clara, CA 95054
You can find more details about the event here:
http://events.linkedin.com/Youve-Signed-Deal-Now-Show-Them-Money/pub/484626
There is also a LinkedIn group you can join to engage in the discussion before and after the panel... check here LinkedIn Alliances Field Engagement Group >>
I hope to see you there! Please come and share your experiences in creating a strong and effective sales effort within a strategic alliance.
Michael
I will be participating in what promises to be a most exciting and interesting panel next Tuesday evening (Dec 7th) in San Jose. The subject is "You've signed the deal, now show them the money: engaging alliances in the field". The panel starts at 5:30 and is to be held at TechMart
Network Meeting Center
5201 Great America Pkwy
Santa Clara, CA 95054
You can find more details about the event here:
http://events.linkedin.com/Youve-Signed-Deal-Now-Show-Them-Money/pub/484626
There is also a LinkedIn group you can join to engage in the discussion before and after the panel... check here LinkedIn Alliances Field Engagement Group >>
I hope to see you there! Please come and share your experiences in creating a strong and effective sales effort within a strategic alliance.
Michael
Wednesday, May 5, 2010
Creating Value – What is a JVP anyway?
As I have thankfully been quite busy since January, I have been talking to my friend and colleague John Soper at New Paradigms Marketing about collaborating on some postings - this is the first in that series of work. Thanks, John, for taking the initiative!
In a previous blog [Northeast, you say?] I have talked about Creating Value with an alliance partner, leading to a compelling Joint Value Proposition (JVP). This is one of most important components of a successful alliance and requires focus over the life of the alliance.
Creating Value is about connecting points of value in you and your alliance partner's business that yields "1+1 is greater than 2" value to your joint customers. But as I pointed out earlier, the best yields usually come from looking beyond existing products; or existing systematized marketing and sales channels; or the existing structure of the support organizations: beyond what's already in your collective "sales bag."
Rather, the Joint Value that often yields the highest return is found by peeling back the layers and looking at the underlying technologies, marketing and sales capacities, service offerings and so forth. For example, you might find move value in combining a platform underlying your product with capabilities in your partner’s application to expose higher value functions that are “must have” upgrades for your collective customers. Or more value in adjusting sales processes to better complement each other (e.g., in combination, broader market coverage, more technology depth). Or, possibly, you can create more value by combining an innovative product offering with your partner’s strong service expertise, so they are seamless to customers.
Progressing down this path of value creation is an evolutionary risk-taking exercise for both companies. So, often you will find executive resistance to devoting effort and expending time and money towards new value creation when you have not yet extracted the obvious value that brought you and your partner together, or there is concern that you don’t yet know the “joint customers” needs well enough to devote more scarce resource. The challenge for the Business Development executive is, then, to lead the formulation of an evolutionary plan that creates sufficient value for launch, demonstrates success and learning from that value creation and then builds on the success to create new value. And repeat! Easy to say, but harder to do successfully – it requires a commitment on both sides to stay in tune with the pulse of the alliance, to learn from each experience, and to have well-supported plans ready to move down the evolution path together.
This search for new Joint Value can be the most creative. And fun! But how do you do you get this value to your bottom line? How do you Extract Value so you are getting your share?
In the next blog, I will discuss some examples, leading into how to Extract your fair share of the Value Created.
Until then - Michael
In a previous blog [Northeast, you say?] I have talked about Creating Value with an alliance partner, leading to a compelling Joint Value Proposition (JVP). This is one of most important components of a successful alliance and requires focus over the life of the alliance.
Creating Value is about connecting points of value in you and your alliance partner's business that yields "1+1 is greater than 2" value to your joint customers. But as I pointed out earlier, the best yields usually come from looking beyond existing products; or existing systematized marketing and sales channels; or the existing structure of the support organizations: beyond what's already in your collective "sales bag."
Rather, the Joint Value that often yields the highest return is found by peeling back the layers and looking at the underlying technologies, marketing and sales capacities, service offerings and so forth. For example, you might find move value in combining a platform underlying your product with capabilities in your partner’s application to expose higher value functions that are “must have” upgrades for your collective customers. Or more value in adjusting sales processes to better complement each other (e.g., in combination, broader market coverage, more technology depth). Or, possibly, you can create more value by combining an innovative product offering with your partner’s strong service expertise, so they are seamless to customers.
Progressing down this path of value creation is an evolutionary risk-taking exercise for both companies. So, often you will find executive resistance to devoting effort and expending time and money towards new value creation when you have not yet extracted the obvious value that brought you and your partner together, or there is concern that you don’t yet know the “joint customers” needs well enough to devote more scarce resource. The challenge for the Business Development executive is, then, to lead the formulation of an evolutionary plan that creates sufficient value for launch, demonstrates success and learning from that value creation and then builds on the success to create new value. And repeat! Easy to say, but harder to do successfully – it requires a commitment on both sides to stay in tune with the pulse of the alliance, to learn from each experience, and to have well-supported plans ready to move down the evolution path together.
This search for new Joint Value can be the most creative. And fun! But how do you do you get this value to your bottom line? How do you Extract Value so you are getting your share?
In the next blog, I will discuss some examples, leading into how to Extract your fair share of the Value Created.
Until then - Michael
Monday, February 15, 2010
Developing Alliance Strategies with a View to an Exit
I will be moderating what promises to be a very interesting panel at the upcoming Americas Growth Capital Conference, to be held March 1 at the Westin San Francisco. You can read details about the Conference here. The panelists are from a cross-section of large and small companies, both public and private:
- Tom Reilly, President and CEO, ArcSight (ARST)
- Charles Sansbury, CFO, Attachmate
- George Kurtz, Worldwide CTO and EVP, McAfee (MFE)
- Marc Boroditsky, President and CEO, Passlogix
- Mark McClain, CEO and Founder, SailPoint Technologies
- What strategies have worked in maximizing the outcome for entrepreneurial companies?
- Is there real advantage if companies approach alliances with a view to an exit?
- What lessons have been learned by entrepreneurs when things go wrong?
- What is the role of partner programs at companies that grow through acquisition?
- With a number of new “roll-ups”, must corporate funding & alliance strategy change?
- What alliance strategies can small companies use to maximize their chances of success?
- How do acquisitive firms form their list of possible targets?
- Is there an advantage in having a prior relationship with a large vendor?
With both Private Equity and Public companies represented, I hope the audience will be able to gain some insights into the differing acquisition metrics, and how that might affect Corporate financing in the future.
The panelists are excited about participating, and I look forward to moderating the panel in two weeks.
Stay tuned!
Michael
Monday, January 18, 2010
Value Creation - Developing a Joint Value Proposition
First, I would like to wish a Happy and Prosperous New Year to all of my readers! I have to say that 2009, while a year of hope and change, was also one of challenges for many friends as everyone figured out how to live in a recession. Although the news from Haiti makes us all realize the importance of basic life, health, family and friends, 2010 promises to be an exciting year!
I have circled around the subject of Value Creation in previous blogs, so I thought I would spend some time discussing development of a successful Joint Value Proposition (JVP). As discussed in my October 1 blog "Moving Northeast", developing a Joint Value Proposition involves considering the potential of value created by the alliance. Sounds simple enough, right? Well, there are challenges to getting it right.
First, you are probably trying to figure out the JVP at the same time as you are forming the alliance and, hopefully, even quite early in the alliance (see August 1 blog, "While using a chainsaw..."). So, the target is moving. And, it will continue to move as the alliance evolves, so there will be ongoing opportunities for Value Creation that should be exploited.
Second, you don't know what you don't know - about your potential partners strategies, goals, potential market-changing moves, acquisitions, development plans, constraints and so forth, so you will need to listen well along the way.
Lastly, it is important you are not representing your company's offerings as they exist today, but the entire company's capabilities, including subsets of products and services that might be pieced together with those from your partner to create value. That takes a special skill.
So, how do you get to a JVP?
In my experience, one key to success is building a trusting relationship early in the alliance development phase, so that you can explore opportunities for value creation with your counterpart. Another is having the right people in the room - so that you can seize opportunities to explore value creation when presented.
Personally, I favor the 2-hour brainstorm, where one or two business and technical people from each partner can jump to the white board and test out concepts for value creation and explore the other party's interest. It is always best to walk in with a few ideas of your own, of course - your "agenda", I suppose - so that you can steer the discussion in a direction that is based on your knowledge of markets, products, services and customers. I have been amazed at the results we've obtained when the right people are in the room, with the right attitude. Setting the scene for this is part of the critical skill set of BD professionals, in my view.
Let's contrast this with the typical selling proposition or reseller recruitment effort. In that case, I have a set of products and services in my sales bag, and my goal is to consult with and sell those to my prospective customer or channel partner. Developing a JVP is closer to consultative, solution selling than to traditional sales, but solution selling still lacks the flexibility. The sales exec is, by design, constrained to offering what is in the bag.
With Business Development, the whole company's capabilities are in the bag, and we need to be able to represent all of them to a prospective partner, without going so far out on a limb as to suggest something that cannot be done.
Identifying opportunities for Value Creation definitely uses skills from the artistic side of the Business Development tool set, but following some basic steps can increase the likelihood of success. A marketable Joint Value Proposition is the basis for all truly successful relationships.
See you next time.
Michael
I have circled around the subject of Value Creation in previous blogs, so I thought I would spend some time discussing development of a successful Joint Value Proposition (JVP). As discussed in my October 1 blog "Moving Northeast", developing a Joint Value Proposition involves considering the potential of value created by the alliance. Sounds simple enough, right? Well, there are challenges to getting it right.
First, you are probably trying to figure out the JVP at the same time as you are forming the alliance and, hopefully, even quite early in the alliance (see August 1 blog, "While using a chainsaw..."). So, the target is moving. And, it will continue to move as the alliance evolves, so there will be ongoing opportunities for Value Creation that should be exploited.
Second, you don't know what you don't know - about your potential partners strategies, goals, potential market-changing moves, acquisitions, development plans, constraints and so forth, so you will need to listen well along the way.
Lastly, it is important you are not representing your company's offerings as they exist today, but the entire company's capabilities, including subsets of products and services that might be pieced together with those from your partner to create value. That takes a special skill.
So, how do you get to a JVP?
In my experience, one key to success is building a trusting relationship early in the alliance development phase, so that you can explore opportunities for value creation with your counterpart. Another is having the right people in the room - so that you can seize opportunities to explore value creation when presented.
Personally, I favor the 2-hour brainstorm, where one or two business and technical people from each partner can jump to the white board and test out concepts for value creation and explore the other party's interest. It is always best to walk in with a few ideas of your own, of course - your "agenda", I suppose - so that you can steer the discussion in a direction that is based on your knowledge of markets, products, services and customers. I have been amazed at the results we've obtained when the right people are in the room, with the right attitude. Setting the scene for this is part of the critical skill set of BD professionals, in my view.
Let's contrast this with the typical selling proposition or reseller recruitment effort. In that case, I have a set of products and services in my sales bag, and my goal is to consult with and sell those to my prospective customer or channel partner. Developing a JVP is closer to consultative, solution selling than to traditional sales, but solution selling still lacks the flexibility. The sales exec is, by design, constrained to offering what is in the bag.
With Business Development, the whole company's capabilities are in the bag, and we need to be able to represent all of them to a prospective partner, without going so far out on a limb as to suggest something that cannot be done.
Identifying opportunities for Value Creation definitely uses skills from the artistic side of the Business Development tool set, but following some basic steps can increase the likelihood of success. A marketable Joint Value Proposition is the basis for all truly successful relationships.
See you next time.
Michael
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