Kill the SWAG

It is time to get rid of the SWAG. I don’t mean how the Urban Dictionary defines SWAG (“the way one carries their self”) or the “Stuff We All Get”, sometimes called “chotchkies”. What I mean is let’s get rid of the…

Silly Wild Ass Guess

With all of the information available to us, why is it that the SWAG has become common business lingo? I can’t imagine what compels a person to proclaim, “I have a SWAG” or “It’s just a SWAG” in front of their peers, subordinates, superiors, or even their customers. Yet, as I am sure you can attest, we hear this all the time. It is time to kill the SWAG!

I was reading through the 2009 Fortune 400 and it occurred to me that in virtually every situation the wealth created was due to hard work, persistence, timing, and/or brilliance. I seriously doubt that any successful business person made their wealth by guessing. Naturally, some were lucky or born with the right last name, but the actual wealth created was not the result of a SWAG. Their “swag” did not come from a S.W.A.G.

Our job as marketing leaders and managers is to present and implement the best solutions possible. We assess and mitigate risk. There is no such thing as a guarantee, so we tap our resources and make decisions. We do not guess or leave the result up to chance. Channel leaders make these decisions every day. Luckily we have so much information at our disposal that the need (or temptation) to guess is unnecessary.

Perhaps this post should have preceded the last two that I wrote about intuition, experience, and the heuristic method. We use processes and methods to help us gather, organize, and assess opportunities and risk. These processes apply to absolute, quantitative data, as well as instinct, intuition, gut-feel, and historical bias. The result is that we can present an idea or solution without the SWAG.

Who is with me? Let’s kill the SWAG!!!

Channel Leadership - What You Said

First, I wanted to thank everyone for replying to my previous post. I received a good deal of input via LinkedIn groups, email, and conversations so I wanted to summarize what you said about the qualities of a great channel leader. Instead of a laundry list of responses, here is a summary with some added commentary:

VISION & THOUGHT LEADERSHIP
This was interesting to me not because I was surprised to see so many responses regarding vision and thought leadership, but because of the lack of responses related to tactical execution. You identified the more strategic qualities of a channel leader much more frequently than the qualities related to the ability to deliver on the vision.

CREDIBILITY
I was pleased to see this quality mentioned a few times. It is not uncommon for companies to have a rotating door of channel leadership. It seems, especially in larger organizations, that there is a fair amount of churn in the channel leadership ranks. Solution Providers typically adapt pretty well to the changes, but they want credible leadership – someone that truly understands the channel model and how to best partner with their channels.

CURIOSITY
This is perhaps related to “credibility”. You want a leader that has a natural curiosity to the business. I have often used the phrase, “relentless discomfort with the status quo” as a quality of a great channel leader. Curiosity is just that; a desire to learn and implement innovative solutions to the channel challenge.

COLLABORATIVE
I wanted to highlight this quality because nobody mentioned it in their responses. I believe that a great channel leader must be collaborative with both their internal and external constituencies. As we all know, executing and delivering on a channel vision requires the active participation of virtually every functional team. If the channel leader cannot or will not collaborate with sales, marketing, customer service, operations, engineering, finance, etc… they will find themselves with a poorly developed channel initiative. I believe this is a critical quality and I was surprised this wasn’t mentioned…am I missing the boat on this one?

INTEGRITY, TRANSPARENCY & AUTHENTICITY
These are absolutely the most critical qualities of a great channel leader in your eyes. Almost every single response had at least one of these mentioned. Interestingly, the cover story of the latest issue of Business Week is dedicated to Trust. I am sure that the recent corporate bailouts, unethical business behavior, and irresponsible compensation practices have contributed to integrity, transparency, and authenticity being the most important qualities of leadership. This is clearly not reserved for channel leadership, but rather for leadership in general. I also believe that with the increasing power of consumers and their ability to organize and communicate quickly and effectively, companies and leaders must engage in open conversations. If they are transparent and authentic, then trust can become a great asset and improve for their brand. Interesting article…you should check it out.

Thanks again…keep the ideas coming!

Lessons From The WSOP

I am not a poker player. Sure, I have played a few neighborhood games here and there…won some, lost some, but I certainly do not consider myself even an amateur player. When you are playing for nickels, dimes, and quarters it really doesn’t matter. I do like to watch the World Series of Poker, however. I am fascinated by the ability of the top players to assess and act on each situation so quickly. There is some luck, to be sure, but over the course of a tournament the best players usually win. It got me thinking about why they are so good at taking advantage of “lesser” players. Here is what I have come up with:

Data: The best players know the odds of winning every hand, all the time. It is very rare that you will see a poker professional make a mistake based on the data at their disposal. The information is available to everyone, but the best know what to do with the data and usually act accordingly.

Know Their Competition: There is a lot of talk about being able to “read” another player, but it is more than seeing a facial expression, tick, or change in behavior. The professionals look at betting patterns and changes in those patterns. They realize that the data available to them goes way beyond the calculated odds of winning a hand. They look at both the quantitative and qualitative information accumulated over a period of time and use it to beat their competition. These “tells” give them a distinct advantage over their competition.

Exploit & Mitigate: Kenny Rogers got it right when he sang, “You’ve got to know when to hold ‘em and when to fold ‘em.” With the accumulation of data (quantitative and qualitative), the best players will exploit their competition when the timing is right, but they will also mitigate their losses by getting out of a hand. It is as much fun to watch a player fold his/her hand just when it looks like they are heading for a big loss, as it is to watch them take advantage of a lesser opponent and take the pot.

They Have a System: The best players use a system. Some are very aggressive, while others are more conservative. Some will play a hand, while others decide to fold with identical cards. Some are very vocal, while others are quiet. Some are emotional, while others remain cool. There is not a right or wrong, but the top players all have a system that works for them. It is very rare that a good player will let his/her emotions dictate their play. When players “meltdown”, it is usually because they have abandoned their system.

They Manage Their Resources: Amateur players will very often lose sight of their resources, inevitable leading to a “bad beat” or a “bust”. Pro’s will very rarely make the same mistake. They lose hands. That is the nature of the game. They will not typically, however, overplay a hand. The result is that their resources last longer, offering them more opportunities…additional hands to play.

Ebbs & Flows: The previous point about managing resources is important because the top players understand the natural ebbs and flows of the game. Some players get hot, while others get cold. This is true for even the best players. By managing their resources, the professionals get to works through these patterns, accumulate more data, and act when the timing is right.

They Eliminate Biases: Because they are so adept at analyzing each situation, the professionals eliminate biases from their thought processes. Inevitably, each player will have to deal with someone they don’t like, or where there is some history. The best players will remove the historical bias and only focus on the present situation. They will absolutely use historical knowledge, but they will remove the “noise” from their analysis.

Now consider those companies that are great at managing channel relationships. Every one of them shares the same qualities of the best players. By the way, you can apply these same points to any superior sports team, company, charity, non-profit, or politician. I didn’t include “passion” in my list because I think that even amateurs can have passion. Certainly all of the best companies, sports teams, politicians, etc. all have passion for what they do.

Would love to hear your thoughts on this list and any other qualities that you would like to contribute.

Belief, Truth, and the Power of Observation

Observation is what separates belief from truth.

It is unclear who invented the Scientific Method, although much of the credit is given to John Stuart Mill, a social, political, and scientific pioneer of the 1800’s. It is likely that the method had roots as far back as the year 1,000, but Mill is credited with formalizing the structure. Regardless of its origin, the Scientific Method has withstood the test of time, because its premise is based on the power of observation.

I am fortunate to have a seventh grader that has reintroduced me to the Scientific Method, but for those less fortunate to share in the joys of middle school homework, here is a brief re-introduction:

There are basically six steps to the method:

1. Ask a question about a phenomenon
2. Make observations about the phenomenon
3. Hypothesize an explanation
4. Predict a consequence of the phenomenon
5. Test the prediction (usually in some controlled environment)
6. Make a conclusion using data acquired

The beauty of the Scientific Method is that, if done properly, biases can removed from the process. Too often in the workplace, many of our actions are based on biases that could alter our decisions. If committed to the Scientific Method, we are able to base our actions on “truths” instead of “beliefs”. This can be extremely difficult to do, especially when our belief systems can be so profound. Have you ever had a “discussion” with someone whose political beliefs are different than your own? These are usually debates where the Scientific Method is missing. The result is typically an “agreement to disagree”…not the result you want when a business decision is on the line.

The relationships we have with our channel partners are often based on beliefs. Sometimes the relationships change and our judgment can be clouded because of an historical bias. This is often the case when a good relationship turns sour, or when a poor relationship becomes solid. We need some methodology to see through the bias so that we can we can make decisions based on current observations and data.

Channel management requires the investment of resources to build a more effective and profitable channel ecosystem. Every investment is critical, especially in today’s economic environment. Using analytics to measure relationship trends will provide data (observations) that will help guide those investment decisions. Do you have a method to identify and observe a phenomenon, question it, hypothesize an explanation, and test the theory? If not, then are you making biased channel investment decisions?

Ch...Ch...Changes

I am frequently asked about the best way to measure the relationship between a vendor and their channel partners. It is not uncommon for companies to try to assess the relative strength or weakness of their channel relationships by looking at a single point in time. For instance, they may look at total revenue, margin, market share, share of wallet, or number of customers to gauge the value of the relationship(s). Relationships, however, are not static. Every relationship has ebbs and flows, which should dictate how you manage them at any given moment. To effectively market to your channel partners, you need to carefully consider the following:

CHANGE: This is perhaps the simplest calculation. Basically, you take two points in time (A and B) and look at what has changed during that elapsed period of time. Has revenue or profitability increased or decreased? Have we gained share of wallet? So while it is good to know your revenue at a single point in time, it is better to understand whether or not revenue has increased during a period of time.

VELOCITY: Velocity considers the rate of change. For example, let’s say that during a period of time, Partner X increased revenue from 100,000 to 150,000. Calculating the change would tell you that there was a $50,000 increase in sales. During the same period of time, Partner Y increased revenue from $25,000 to $75,000…also a $50,000 increase in sales. While both Partners increased sales by the same absolute amount ($50,000), the velocity was quite different.

ACCELERATION: Acceleration considers the rate of change in velocity. This metric offers an effective way to measure specific actions taken to affect velocity. For instance, let’s assume that a Partner relationship has turned sour and, as a result, there has been a decline in revenue over a period of time. In fact, over multiple periods of time, revenue has declined at an increasing rate. To mitigate the downward spiral, you implement an aggressive program designed to re-engage the Partner. By examining the rate of change in velocity, you can effectively measure the effects of the program.

The “scientific” and ongoing management of channel performance data is essential, because it will help formulate the most effective initiatives to either mitigate or exploit current opportunities. To me, the biggest challenge is to consider multiple variables simultaneously. In the above examples, we only considered one variable…revenue. While this is ok to illustrate the principles, it is not realistic, however, as there are many variables to consider. The “new” channel marketing model should be to effectively measure the change, velocity, and acceleration of multiple variables simultaneously and quickly implement effective campaigns to take advantage of what the data tells us.

If you want to know the strength of each of your channel partner relationships, you need more than a “picture” or single snapshot in time. You have to know and understanding how the relationship is changing, why it is changing, and how quickly it is changing. Companies that are able to gather and analyze this data will be in the advantageous position of building stronger and profitable relationships with their partners.