Navigating the Shift from Hardware to Cloud Services

Welcome to the Inside Sales Enablement Podcast, Episode 8

Scott Santucci and Brian Lambert tackle decision-making in times of rapid change. Unintended consequences are a common variable when some humans make decisions where other humans are a big element in the success of that plan. In hindsight, its easy to say "why didn't they just...." but human nature prevents people from asking some of the right questions at the right time.

They guys use an interesting story about problems the builders of the Brooklyn Bridge encountered. When they built the bridge back then, the followed "what they always knew". And their beliefs actually made the problem worse. Their view of the challenge actually made the cure take longer. How did they figure it out? Well, It took looking at the problem from a different perspective to finally come to a simple solution. 

Join us at https://www.OrchestrateSales.com/podcast/ to collaborate with peers, join Insider Nation, participate in the conversation and be part of the continued elevation of the profession.

EPISODE TRANSCRIPT:

Nick Merinkers 00:02

Welcome to the inside sales enablement podcast. Where has the profession been? Where is it now? And where is it heading? What does it mean to you, your company, other functions? The market? Find out here. Join the founding father of the sales enablement profession Scott Santucci and trailblazer Brian Lambert as they take you behind the scenes of the birth of an industry, the inside sales enablement podcast starts now.

Scott Santucci 00:33

Hi, I'm Scott Tucci.

Brian Lambert 00:35

And I'm Brian Lambert and we are the sales enablement insiders. Our podcast is dedicated to asking the big questions you should be asking if you want to be successful in sales enablement. Specifically, we rethink reframe and revisit specific sales enablement, principles, topics and trends. And today, we're going to reframe specifically we're going to reframe the approach to enabling headcount versus enabling productivity. In other words, saying it again, enabling the headcount versus enabling to productivity. And I know that may seem a bit intellectual. So, Scott, why don't you get us centered here with a story?

Scott Santucci 01:14

Sure. So, I don't know the story is really going to help with the contrast between enabling to headcount or enabling to productivity, but we'll get there. But in in terms of, you know how to think about this stuff, what I'd like to do is go back to 1869. And in 1869, George Roebling, had this idea of building a suspension bridge across the East River. It's now known as the Brooklyn Bridge. That was the first steel wire suspension bridge of its kind. And in this day, this Gilded Age this era of almost anything is possible building you know, trains, cross cross country, telegraph. All these explosion of innovations and in the huge explosion of innovation and value during this peak of the Industrial Revolution, everybody was doing something new. And they went out to build this. This Brooklyn Bridge. Now, unfortunately, during the construction of this bridge, they ran into unforeseen problems. And specifically, when they were laying down the base at the bottom of the Hudson River, there, their first group of workers started to get sick. And at that point in time, they couldn't figure out what it was. They just assumed it was the drinking habits at this point in time, the Irish this is these are all true stories. So, I'm not I'm not being racist. These guys were super racist at the time, so because they kept getting sick and stalling production. What did they do? They went and got another group of people, Germans, they got didn't work out. So, they got another batch of people recently freed slaves. That didn't work out. They got sick, too. They said, Hey, you know, the Chinese did a great job of building out, building out the railways, let's bring them in. They brought them in. It didn't work either. So, throwing all of this effort, all of this energy, time and time again, they just couldn't figure out what happened, what was happening, what was going on. And really, what what, what they ended up doing is doing some medical analysis to figure out what's going on. I mean, we've got to get this fixed so that we can get this bridge built. There's a lot there's a lot on the line. We said we're going to build the first steel suspension bridge in the world and dadgummit we need to figure it out. So that's it. My 1869

Brian Lambert 03:54

I like it. transported.

Scott Santucci 03:56

Exactly. So really what happened? What What What was going on? What was preventing all these people perpetually to get sick? Well, it turns out, what was happening is the people were being submerged to such depth in the Hudson River, that they were getting decompression sickness. What we now know is the bends. And anybody who's seen any any movie with scuba diving knows about the bends. It's it's ubiquitous everywhere. Well, they didn't know what it was, because they've never had an experience where they had to put people under that under the water at that depth before to where they could run into decompression sickness. So, the the moral of the story here is they thought it was one problem. They threw bodies and activity over and over and over again getting more and more people sick and many, many dying from this condition. When in reality, there was a much simpler approach that was safe. That was wouldn't hurt anybody and to build these decompression tanks? Oh, you know, along the way. So that's, that's my framing story.

Brian Lambert 05:07

There you go. And so, you know, this is interesting, because in that story, you know, like you said, throwing bodies at it. One that's a bit, obviously inhumane. So that's obviously part of the challenge, but it's also pretty expensive to constantly do that. And, you know, you basically at some point, it sounds like in that construction process, realize that doing the same old thing over and over again, that isn't changing anything. And now, okay, at some point, there's a tipping point to say, maybe there's a root cause. Right. So, is that your point in telling that story with regard to sales enablement? Scott, what do you say?

Scott Santucci 05:50

Yes, so the reason that I'm the reason I'm sharing that framing story, for where we are today and the topic that we're going to get into further point number one, this when did that story take place? It took place during the Industrial Revolution when you're resetting and trying incredibly new bold things. Where are we today? We're doing the same thing where we're actually in the midst of a digital transformation where we're going through the same kind of big changes that were going on in the 1860s 1860s. The 1890s as insane changes they went through today. One contrast.

Brian Lambert 06:35

Yes, so stay in there real quick. So, I don't like that. I don't like that level of life and death change here, Scott. What would you say to that? I want to keep doing what I've always done.

Scott Santucci 06:48

No, he could do that. Or you could look at when adjusted for inflation. Every single one of the robber barons are, are more valuable than any of the super rich people that we know of today, every single one of them. So, the amount of explosive wealth and they explosive standard of living and the huge amount of lifting people out of poverty, all of the benefits that happened all were a result of these massive changes. And really it comes back to you could look at it as the future is bleak. AKA the, you know, industrial revolution that's bad. It's sort of the Frankenstein view of the road.

Brian Lambert 07:33

Going to work and nasty factories and get dirty

Scott Santucci 07:35

Right, or we still people in New York still revere that brooklyn bridge that was started in 1869. It's it's that contrast it's it's really depends on on how you look at it. Where would we be as Americans or where would we be as Western cultures without railroads, ourelectricity. Some of the basic things that we for without gas without combustion engines. So that's that's where we are today. Where would we be without the internet? Where would we be without mobile phones? Where would we be without what we're being able to do right now record a podcast this podcast would not be available. It's a it's a

Brian Lambert 08:17

Just think of all the millions of people listening right now.

Scott Santucci 08:19

Yeah millions, right.

Brian Lambert 08:22

All right. So, what's your second point? So, I wanted to.

Scott Santucci 08:25

So, the second point is when you go off into that Brave New World, sometimes the way that you think about solving problems isn't you're gonna run into unforeseen challenges. And sometimes you need to take a step back instead of just throwing activity and bodies at it. Maybe you need to take a step back and rethink it.

Brian Lambert 08:43

Like that. And that's an important analog for today. It because when you take that story, and you look at sales teams, you know, in the last 15 years, 10 years, somebody even say five years organizations sales leaders executives have been attempting to throw salespeople at their customer experience strategies or throw money at their digital strategies to look for skilled workers. I don't I don't have the number in front of me. But I read you know, a couple weeks ago that there are still 10s of thousands of jobs left unfilled, that are considered new economy jobs, digital transformational type of jobs. So there there is a gap in the ability to execute on these and when you throw bodies at it, the symptoms are going to rear their head. And I think when you frame out the the beginning of this podcast, when I said this idea of enabling to headcount versus enabling to productivity is what you're saying here through the opening story, Scott that that we've been throwing salespeople as headcount to, to the strategy

Scott Santucci 09:59

Yes. There's some, you know, there's a macro trend that's actually disturbing about our overall economy. And for the past 10 years, we've actually seen a decline, not an increase a decline in worker productivity. So why is that? And then you can factor in, let's, let's investigate the, you know, the overall work the workforce and all that other stuff. That's sounds like a political discussion. But when you zoom in, and start asking the question, how productive are our sales forces today? Are they more productive than they were 10 years ago? And there's a lot of ways that we can answer it. Uh, what I wanted to do is really talk about one specific company for which I have lots and lots and lots of data. I think we could shed I think we could shed light on that instead of going macro or instead of going back into history, we know talking about one specific

Brian Lambert 10:55

company. Yeah, let's do that. So, we've got as a proxy for this idea of tackling this issue, one specific organization, so maybe, you know, we'll start with, tell us a little bit about the sales team, the organization, and then what what transposed. And then I assume, through this discussion that we're going to be able to provide our listeners with some action items as well. I'll come up with three, you'd come up with three and we'll, we'll be able to provide a path forward to tackle this same type of discussion in our own organizations. Yeah, so let's do that. And then so tell us frame it out a little bit for us around this one specific organization and their sales team.

Scott Santucci 11:35

Okay, so let's let's go through the case study. So first, what is the company the company I'm gonna take the names out to protect the protect the innocent, but it's a $300 million company that is moving from selling a variety of security products in a you know, in hardware form to move into providing cloud-based subscription services. So that's that's basically what they were. So that's that.

Brian Lambert 12:07

So, let's do our first check. Is that indicative of a, in a shift in the revolution? Right, from industrial to knowledge work? Is that a massive shift?

Scott Santucci 12:16

Well, it is a, it's a massive shift in terms of saying we're selling physical products, old economy, to new economy, digital economy to a subscription based, you know, cloud based, cloud-based business model. Yeah, a lot of companies are going through this shift, some have gone through it earlier, rather than later. So, you know, everybody goes through it through a different way. But it's a common factor. And it's something that, oh, yeah, duh, of course, we need to make it but when you sold a physical thing, and now you're selling, moving to selling a subscription, there's a lot of changes associated with that.

Brian Lambert 12:50

Yeah, not only the business strategy, but the business model and how revenues recognized the way teams you know have to work together the actual solutions themselves, and how in Obviously, in what we're going to get to hear how those how those are sold,

Scott Santucci 13:03

Yes, how sellers actually behave and what they think they're selling and to whom they think they are and to whom they are actually selling to. So, the situation was the year before I was involved, the company had done some analysis and business analysis that pretty much every but every company does, and I'm oversimplifying it, it's way more way more detailed than that. But like most companies, in order to come up with a compensation plan, you build a low end and a high end in terms of target, and you set a threshold level of your bookings per rep target. And the reason that you do that is you do that to calculate different, you know, obviously, to define the role of a seller but you also do it to set the compensation thresholds. And what they recognized was in their, in their opinion, too many of their reps were below 80% threshold. So, what is 80% threshold? In this case, it's 80% of hitting quota. Okay, so far too few reps, how many we're not hitting what we're not hitting the 80% threshold is not important, what's important, but it was a lot, it was more than more than 60%. What's more important was how they were looking at it. So, in order to improve the performance of the average rep, you know, to get more of those reps up to the 80% threshold, which they were comfortable with. What did they do? Well, they looked at two things number one was the turnover and the overall turnover the Salesforce with 25%. And that checks with about industry averages or whatnot. So, it's not it's not a problem and they didn't investigate that. Then what they did is they did did you know sort of the classic let's survey the sellers and see what they need. Let's talk the salesman. And see what they need. They came up with a whole boatload of activities that they needed to do. And they spent over 500,000 out of pocket and then a whole bunch of other energy and resource to build that set of activities. They rolled it out in the kickoff. And you know, what happened throughout that year? Well, throughout that year, not one single new rep hit the 80% target threshold that you might as well have not spent that money, because literally, nothing changed nothing. So obviously, we're going were they This is where I enter the story and the conversation is, what more activities should we prescribe to the sellers? And my point was, all right, look, if you did all that work, there should be a relationship between activity and performance, right. So, we should probably figure out why that performance didn't happen. In other words, Let's not throw more bodies at you know, in the case ons, let's actually investigate what happened. So, you know, that takes some doing but by framing it out this way that I was able to, you know, persuade them to, you know, go through with our engagement. And what we did is that let's do a baseline, I call it a baseline analysis and simply put, what we're going to do is we're going to put in, we're going to examine, first we're going to categorize sellers into tiers of performance. And by performance, what we mean is their overall total bookings not not revenue per rep, but but but by booking bookings per individual. So of course, you know, we had some HR rules, and you know, that we had to follow to make sure it was blind and not and not that. And I think the biggest problem that we ran into Brian is this company was so comfortable tracking sales performance by quota and by product that we actually had to do a lot of data reengineering, we'll call it to actually get out the contract value. And part of the difficulty through this exercise was guys that I only care about the level of activity the seller does in order to get a contract. Because the contract is ultimately what all this effort is for. And this the customer chooses to put in that contract what the terms are.

Brian Lambert 17:36

So, this is one of those things, right? sales is simple. And then you'd like to say you know, simple as hard. Yep. And I like to say hard is doable, but you have to, you have to do the work. This is an interesting so if i if i at the risk, and I'm just going to give this an example here to breathe some life into it. I had a call with like a sales enablement intern like two weeks ago. And she was saying, Hey, you know, when, when people go online and they, you know, you know, want to attend our events, they put in their information, and we can't even cross reference that into our accounts. And that's, that's an example of a disconnect in from lead gen into, you know, an existing account via. And those types of disconnects are all over the place. And what you're bringing up here is an interesting, you know, potential disconnect that you're tackling on the front end, which is sales drives, bookings. And there's activities related to bookings. So, what type of questions Did you get on that? And why was that hard? Who is that hard for?

Scott Santucci 18:38

What was hard for the sales operations team because the sales operations team has worked out how to report to the CFO, and the CFO was interested in product sales, because the company is interested in driving product sales, not services sales. So, what you know, since we that's all we care about why would you look at things differently? And I said, I don't know, I just want to figure out whatever is required to sell a contract, who knows, maybe some salespeople are selling services along with the products, because they think the selling those services help sell those products. So, if they, if he took that away, maybe they'd have a harder time selling it. I don't know, I just know that there's a level of effort required to get a contract. And I want to start with measuring that which means I'd like to have this kind of data please. And back and forth,

Brian Lambert 19:35

That doesn't cross-reference into products at all

Scott Santucci 19:38

Right. So basically, what it ended up having to do is I took I said give me the you know, I went and got went...