For B2B Software Businesses, Change Is all about Timing

August 1, 2015

4:00 pm

Product managers work at the nexus of marketing, sales, product, and engineering, which makes them often among the first to see trouble on the horizon. When a good product manager sees trouble brewing, he gathers facts, figures, and customer feedback that supports his case. He shares this information with the executive team, vehemently arguing that it is time to change — before it is too late… And usually nothing happens because senior management won’t endorse any major changes.

The failure to change is one of the most prevalent traps in the business world. It leaves businesses clinging to past successful products and assuming that their current customer base will always need the same solution. It also leads to stagnation and frustration within the business and client abandonment outside of it.

While never changing is a bad business plan, changing too often can be dangerous, too. Constant change upsets the customer life-cycle and identifies the company as inconsistent and immature.

A good friend recently had success convincing senior management it was time for a radical change. They agreed to fund refactoring a product’s code, selling through a new channel, and selling to new customers — and now her product is meeting all its financial objectives.

How did she do it? By articulating the following four early warning signs:

1. Important numbers yield unexpected results.

When your competitors start reporting unusual success, the odds are high that something important is happening that you do not see. The same logic applies to customers who start changing how they use your product. Each unexpected result is evidence that there is a disconnect between what your business thinks is happening and what the market is experiencing.

Every change warrants careful evaluation because they represent a shift in the market that you haven’t identified. Even unexpected positive results (such as a 15 percent increase in revenue or profits ahead of plan) bear investigation to make sure you are working with as much and as accurate data as possible.

2. Key stakeholders know change is necessary.

Long before a consensus emerges about what to do next, most of the key players in your organization will recognize that something needs to shift. Beyond the low-level grumbling that tends to exist in any organization that has humans in it, these kinds of indicators involve the recognition that the world has changed and the company must respond.

For example, few outside a company hear about the loss of a key customer or a hopelessly over budget project right away, and at many firms these are life-threatening crises. But a single look around the room will show concern in the eyes of your colleagues and a clear indication that it is time to stop talking and start acting.

3. The business’s fundamental assumptions are no longer true.

Years ago, Cisco turned corporate networking upside-down by emphasizing software over hardware. A team no bigger than two dozen software engineers could suddenly build products that previously required hundreds of hardware engineers, leaving industry titans like Lucent and Nortel completely caught off guard.

More recently, many firms have used the Internet to empower customers by reducing transaction costs and information asymmetries. Three decades ago, two entrepreneurs in a garage could invent new technologies. Today, they can also collect payments from 100,000 customers and outsource the manufacturing and shipping.

It’s vital that businesses identify and monitor the fundamental assumptions they make about their customers and their technology so that they are not surprised by an avoidable crisis. If the assumptions underlying your business change, then you must change, too.

4. Impending change takes the form of a long-term trend.

For 400 years, miniaturization has been a powerful long-term trend. Once, clocks were so large they only fit in towers. Then clocks began shrinking. First they fit inside large buildings such as banks and soon after they were small enough to hang on walls. Then, suddenly, the wristwatch was a standard accessory for men and women across the globe.

Long-term trends affect every industry, and they are some of the most powerful and underappreciated aspects of business. This is still true for businesses today, so when you spot another stage in a long-term trend, you need to take it seriously.

What to Do When Change Comes

Change comes for every organization. Strong leaders will use these moments to rally their organization by showing that they value the diverse opinions that protect established operations from being blindsided by change.

When advocates argue for strategic change, respond by acknowledging their efforts. In many cases, the work represents some of their best thinking. More importantly, advocating for change – provided it’s not self-serving – demonstrates tremendous dedication to the business and its future growth. The last thing you want to do is dismiss a colleague’s intelligent concerns.

But before you embrace change for the sake of change, push beyond facts and figures. Get to the kernel of the advocate’s concern and push them to consider how they can take their concern from tactical to strategic. Then assess the context of this change to see if you can identify any of these early warning signs.

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Brian O’Connor is a 20-year veteran in the business and consulting industry, bringing strategic consulting and marketing expertise to Fortune 500 clients around the world. Brian helps organizations navigate a course to growth and prosperity with a unique blend of strategic insight, entrepreneurial spirit, and operational prowess. Tapping into Brian’s insight allows organizations to overcome challenges and identify and execute on untapped opportunities.

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