Know Your Neighbours: Disentangling Value Chains

One of the benefits of my job is getting an opportunity to sit in on meetings of the board and management of some world-class management teams. Certainly such meetings are often underwhelming (believe me, the teacher’s voice from the Charlie Brown holiday specials makes a frequent appearance), but I also regularly get blown away with an appreciation of the complexity of a startup’s technology build and, more importantly, the depth and intimacy to the customer required in order to sell their products effectively.

Especially with startups focusing on ambitious carrier or enterprise sales strategies, the internal organization structures of the technology leaders such Intel or Microsoft are byzantine labyrinths, seemingly created to ward off intruders much like the many obstacles that Indiana Jones routinely overcomes in order to claim his prize. The value chains for selling technology are often even worse (see the sample value chain for the mobile industry, just as an example, which looks alarmingly similar to an artist’s rendition of the central nervous system of your average small mammal). One way, of course, is to avoid the problem altogether. You can build a business that swaps this problem for another: selling direct, especially online. But since many startups are stuck with them, how do you make sense of value chains, and make them work for your business?

The great business development and product line management guys that I see in action definitely spend time on the traditional landscape analysis to determine their "neighbourhood" (and, I'm happy to report, typically in a more elegant way than in my example above). They don't stop at this, however, and I think this is absolutely key for startups selling to big enterprises. These guys make a strong, dedicated and relentless effort to get to know and help their neighbours, at a very personal level. Think of it as business small talk (and probably more listening, actually) on the front lawn or at end of the driveway, and the information exchange is very similar:

Where do you live? Understanding not just geography and where in the value chain the player fits, but also the player's key and historic partners and end customers, as well as what product and services these relationships have covered.

How do you make your living? Understanding how the individual you are dealing with is compensated is absolutely key to genuinely advancing relationships (what gets measured gets done, after all, especially if you are measuring a sales guy's year end bonus). This is great information to get - who owns P&L? who/how are contacts compensated on new sales that you might support?

How’s your family? It is great to get under the hood of how the various players in a value chain are working together, at an individual and corporate level. Is everyone getting along, or are their rifts (to be avoided or exploited, as the startup can strategically decide).

And, above all, anything I can do for you? Listening for a problem that your startup can solve, and result in personal rewards for your contacts, is probably the most elusive skill and result for business development gurus. Sometimes you have to resist the power point imperative to get through your slides, and just sit down to hear what is going on, and how might make that contact's job a little easier.