#0072 - Rich Mironov – the problem with sales led development
Feb 16, 2023
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Rich Mironov discusses the problem with sales led development in B2B enterprise companies, the challenges it poses to product development and profitability. The podcast covers issues with sales-led product development, the importance of executive discipline, improving sales revenue and engineering costs, qualities of a good Chief Product Officer, importance of Agile and Lean Startup in product development, implications of a sales-led organization, and where to find the guest's extensive collection of free content.
Sales-led development in B2B enterprise companies often results in a customization-focused approach that hinders innovation, new features, and quality improvements.
A collaborative approach between product and sales teams, along with a shift in sales compensation models, is crucial to address the problem of sales-led development.
Product managers and teams need to quantify the economic impact and monetary value of their product to gain support from C-level executives and make impactful product decisions.
Deep dives
The Problem with Sales-Led Development
Sales-led development in B2B enterprise companies often leads to a customization-focused approach that starves the core product of resources for innovation, new features, and quality improvements. This results in frustrated product development and engineering teams, uninspiring products, slow growth, and low profitability. The solution lies in product leaders helping executives understand the differences between a product and service business. It requires a shift in behavior towards prioritizing the development of a product that can be sold to multiple customers, rather than constantly catering to individual customer demands.
The Negative Consequences of Sales-Led Product Development
When companies succumb to the sales-led model, they sacrifice their product roadmap, fail to meet commitments, and struggle to deliver to customers' expectations. Constant interruptions from individual sales opportunities disrupt planned development, causing delays and frustration among product and engineering teams. The focus on chasing one-off deals hinders long-term profitability and growth, as it diverts resources from building a scalable product that can be sold repeatedly. This practice leads to a cycle of missed deadlines, unhappy customers, and a lack of trust in the company's ability to deliver.
The Importance of Aligning Product and Sales Strategies
To address the problem of sales-led development, a collaborative approach between product and sales teams is crucial. The chief product officer (CPO) and the head of engineering should work closely together to advocate for a product-focused strategy. Building alignment with the finance and marketing departments is also vital to ensure the long-term success of the company. Encouraging a shift in sales compensation models, where salespeople are rewarded for selling the standard product rather than customizations, can help drive a more sustainable and profitable approach to product development.
The importance of distinguishing between a product company and a service company
The podcast discusses the need for companies to clearly identify whether they are a product company or a service company. It emphasizes that if a company is making an investment in a product, they should expect a significant return on that investment, such as a 6x or 10x multiplier. However, if a company is behaving like a service company, offering services to make their product work and focusing on short-term revenue goals, they won't achieve the profit margins or long-term success of a true product company.
The critical role of translating product value to executive language
The podcast highlights the importance of product managers and product teams in translating the value of their product to executive language. This involves quantifying the economic impact, revenue, or savings that the product will bring to the company. The podcast emphasizes that speaking in business terms and attaching monetary value to product features and upgrades is crucial for gaining the attention and support of C-level executives. Without quantifying the value, product teams risk being ignored or overridden by sales teams and missing out on opportunities to make the most impactful product decisions.
Join Murray Robinson and Shane Gibson as they talk with Rich Mironov about the problem with sales led development. It’s easy for B2B enterprise companies to fall into a sales lead development model where the majority of development work is customisation starving the core product of resources for innovation, new features, quality improvements and technical resilience. The end result is frustrated product development and engineering teams, uninspiring products, low profitability, slow growth and difficulty getting investment. Fixing it requires product leaders to help executives understand that the economics of a product and service business are very different and they need to change their behaviour accordingly.
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