Growing vs Aging: Lessons in Business Transformation

Growing vs.
Aging
Lessons in business transformation from
the Adizes Methodology *
Alejandro Fernández Cervantes
Partner Sales Executive
Microsoft Costa Rica
https://cr.linkedin.com/in/alefer
* Based on the presentation from Chris Jones, MBA 5320, Corporate Lifecyles, slideshare:

http://www.adizes.com/lifecycle/

Growing vs. Aging
Growing Aging
Personal success stems from taking risk
Expectations exceed results
Function over Form
People are kept for contributions to
organization in spite of their personality
Personal success stems from avoiding
risk
Results exceed expectations
Form over function
People are kept for their personalities
in spite of their contribution

Growing vs. Aging
Growing Aging
Everything is permitted unless
expressly forbidden
Problems are opportunities
Political power is with sales and
marketing
Responsibility is not matched with
authority
Everything is forbidden unless
expressly permitted
Opportunities are problems
Political power is with accounting,
finance, and legal
Authority is not matched with
responsibility

Growing vs. Aging
Growing Aging
Management controls the
organization
Management drives momentum
Change in leadership can lead to
change in the organizations behavior
From value added goals (profits)
The organization controls management
Management is driven by the inertia
Change in the system is necessary to cause
a change in the organizations behavior
To political gamesmanship

Growing Stage – Infancy (Paei)
Focus shifts from ideas and possibilities to results
expressed in terms of sales.
Time to talk and think is over and the time to produce and
act is now
Cash is necessary to survive so generating it fast is number
1 focus
Founder must stay committed for company to survive

Growing stage – Go-Go (PaEi)
The idea is working, sales are up, cash flow problems have been
overcome
Company can experience uncontrollable growth, lack of systems, lack
of budgets, lack of policies, lack of structure, founder(s) can become
arrogant and continue to do what got them there, will and persistence
Methods no longer work and crisis occurs leading to the next phase of
the cycle

Second Birth/Coming of Age –
Adolescence (pAEi)
The shift from management by intuition to a more
professional orientation occurs it’s the shift from
entrepreneurship to professional management
New leader creates systems, designs compensation
packages, redefines roles and responsibilities, and
institutionalizes a set of rules and policies
New leader says no no no when people are used to go go go

Second Birth / Coming of Age – Prime
(PAEi)
• Organization achieves balance of self control and flexibility – they know
what they’re doing, where they’re going, and how to get there

Aging Organization – Stable (PAeI)
Still growing but losing flexibility, sticks to what
worked in past, sense of urgency disappears,
expectations for growth and new markets are
lowered
This organization starts to reward those who do
what they are told to do and they are more
interested in interpersonal relationships than risk

Aging Organization – Aristocracy (pAeI)
Organization places an emphasis on how things are done
rather than what and why it is done
Individuals are still concerned about the company’s vitality,
but as a group, the operating motto is don’t make waves
There is low internal innovation….

Aging Organization – Early bureaucracy
(pA-i)
Emphasis on who cause the problems rather than what to do
about it
There is much conflict, backstabbing and infighting, paranoia
freezes the organization; everyone is lying low, focus is on
internal turf wars
The external customer is a nuisance

Aging organization - Bureaucracy and
death (-A--)
Has many systems with little functional orientation
Disassociates from its environment, and focuses mostly on
itself
To work effectively with the organization, customers must
develop elaborate approaches to bypass or break through the
system

PAEI Framework
P – Perform…Sales, Service, get results now
A – Administer… be efficient, routine, order, enforcement
E – Entrepreneur…Proactive, identify needs which you can serve
I – Integrating…Develop culture, create environment where solutions
can be found by employees themselves

Growing vs. Aging
and Cloud Partner
Maturity Overview
The world is changing—now is the right
time to transform
your business to the cloud!
Transformation requires change.

Stages on the journey to cloud success
Not yet selling cloud solutions Early sales Stable cloud revenue Most profitable cloud partner
As an inactive partner, you are:
• Identifying the initial steps
you can take.
• Starting to sell cloud
solutions.
• Starting to build your online
presence.
As an early stage partner, you
are:
• Focusing on optimizing
cash flow and training.
• Focusing on transactional
and lower-margin activities
(such as on-going
administration and
support).
As a mid-stage partner, you
are:
• Differentiating your cloud
solutions by building richer
offers.
• Building stable cloud
revenue.
• Continuing to tweak and
improve your business to
better support the cloud.
As an advanced-stage partner,
you are:
• Building long-term
relationship with your
customers.
• Focusing on business value
and higher-margin
activities.
• Developing strategic
partnerships so that you
can scale upon demand.
18
While each partner is unique, there are behaviors and activities that distinguish partners at different points
on the journey.
Start Grow Optimize
https://drumbeat.office.com

Realize 3× higher profit
margins from cloud
productivity solutions
Earn 8× more
cloud revenue
Early stage
Advanced-stage
Cloud-Based
Revenue
(median)
Earn 1.6× more
revenue per employee
Early stage
Advanced-stage
Revenue per
Employee
(median)
15%Early
stage
Current
Profit
Margin
(median)
43%
Advanced-
stage

Effectiveness Index for Cloud Training Activities
34%
46%
58%
Early stage Mid-stage Advanced-stage
Opinions of Cloud Solution and Microsoft Office 365
38%
30%
30%
50%
52%
53%
63%
69%
71%
Provides an entrée for
other solutions
Enables us to accelerate the
profitability of our business
Is in high demand
among our customers
% Hired Staff for Cloud Business
69%
81%
91%
Have positive opinions on
opportunities the cloud delivers
Are 3× more likely to recruit staff for
the cloud
Consider training for the cloud to be
1.7× more helpful

Attach/Upsell Products
58% 64%
81%
Use strategic partnerships to…
Cloud Revenue from Services (median)
38%
58%
68%
22% 27%
35%
35% 40%
50%
Earn 50% of revenue from services
Attach twice as many services
as early stage partners
Number of Attached Services (median)
Are 1.6× more likely to upsell products
Use strategic partnerships
to strengthen offers

Spend 4× more on cloud
marketing
Get almost half their leads
through digital marketing
Have lead-generation
partnerships in place
13%
26%
50%
Early stage
Mid-stage
Advanced-stage
% of Marketing Budget for Cloud Solution (median)
15%
Early
stage
25%
Mid-
stage
44%Advanced-
stage
% Cloud Leads from Digital Marketing (median)
62%
74%
87%
Early stage
Mid-stage
Advanced-stage
% with Lead-Generation Partnerships

% Ranking Unmanaged Web Sales as Top Sales Motion for Leads
10%
23% 28%
% with a Separate Cloud Sales Team
20%
39%
61%
% with Account Managers
Are 3× more likely to have separate
cloud teams
Are 2× more likely to include cloud
quotas in their sales-team compensation
Are 3× more likely to sell directly from
the web
Are 3× more likely to have an cloud-
account-manager team
25%
51%
69%
27% 35%
51%
Cloud Sales Compensation—Separate Quotas for Cloud

Upsell a workload
Aim to attach seven services (average) to each Office
365 sale within six months of sale.
Typical attached services include those from the
early stage, plus:
 End-user training
 Managed services
 Change-management consulting
 External IT services/CIO services
 Customization projects
Use strategic partnerships to extend/handle
components of the cloud-productivity offer.
Types of attached products include:
 Collaboration solutions
 Conferencing solutions
 Storage solutions
Sell a solution
Aim to attach nine services within six months of sale,
and use future releases and software renewals as
opportunities.
Maintain close relationship with your customers,
and use feature releases and software renewals as
opportunities to upsell.
Typical attached services include those from
earlier stages, plus:
 Business-process re-engineering
 IP solutions
 Consulting solutions
Use strategic partnerships so you can scale
upon demand.
Types of attached products include:
 Enterprise social networking
 Customer relationship management (CRM)
Sell a product
Aim to attach five services within 30 days of sale.
Types of services to attach include:
 Pre-deployment services
 Deployment and migration services
 On-going management and administration
 Help-desk support
INACTIVE EARLY STAGE MID STAGE ADVANCED STAGE

Generate more leads for
cloud solutions
 Allocate 25 percent of marketing budget to the cloud and aim
to generate 25 percent of cloud leads with digital marketing
 Establish partnerships with other cloud partners to generate
leads
 Monitor marketing KPIs:
 Number of leads
 Marketing-conversion rate
 Unique website visitors
 Participate in thought leadership, continuing
earlier activities
 Engage in five marketing activities (average), including:
 Email marketing
 Peer-to-peer platforms
 Search-engine marketing
 Community and other in-person events
 Consider hiring market personnel for the cloud
Strengthen you thought
leadership
 Allocate 50 percent of your marketing budget to the cloud
and aim to generate 44 percent of cloud leads with digital
marketing
 Partner with PR and marketing agencies to generate leads
 Monitor marketing KPIs, including:
 Number of leads and email-open rates
 Digital-marketing spending
 Unique website visitors
 Participate in thought leadership:
 Publish blogs and white papers
 Speak publicly about cloud solutions
 Collaborate with key opinion leaders
 Engage in six marketing activities (average)
 Types of marketing activities include:
 Online advertising and peer-to-peer platforms
 Social-media and search-engine marketing
 Hire dedicated cloud-marketing staff
Generate awareness of
your cloud offers
 Allocate 13 percent of your marketing budget to the cloud
 Experiment with inbound digital marketing
 Collaborate with Microsoft to generate Office 365 leads
 Monitor marketing KPIs:
 Number of leads
 Search-engine traffic
 Aim to engage in four marketing activities, such as:
 Email and search-engine marketing
 Blog
 Start building thought leadership by publishing industry-
related and solution-related content
 Build your online presence with a few customer references

Create a separate
cloud team
 Implement a separate cloud-compensation model
 Work to become a trusted advisor by learning your
customers’ business needs
 Use compensation-based KPIs, and include
renewal rate in the compensation structure
 Monitor sales-related KPIs, including:
 Revenue per deal
 Deal-conversion rates
 Number of seats per deal
 Consider adding number of managed
services sold per salesperson
 Focus on selling to the Business Decision Maker
instead of to the CIO/CTO
 Add an account manager for the cloud
 Monitor account-management-related KPIs
including customer-renewal rates
 Use direct, unmanaged sales
Maximize your cloud sales
 Aim to have more than 50 percent of your sales
team dedicated to cloud sales
 Have separate quotas for cloud solutions
 Include usage KPIs in the compensation
calculation, such as percent of assigned seats or
percent of services utilized
 Monitor sales-related KPIs, including:
 Revenue and number of seats per deal
 Consider adding number of managed
services sold
 Add an account management team
 Monitor account-management-related KPIs,
including:
 Customer-renewal rates
 Consider adding number of assigned seats
 Direct, unmanaged sales provide prominent source
of new revenue
Start building a
cloud-sales plan
 Provide incentives to drive sale of cloud solutions
 Monitor sales-related and account-management-
related KPIs:
 Revenue per deal
 Number of seats per deal
 Customer-renewal rates

Develop a long-term
cloud vision
 Engage in training activities, including:
 Actively training staff on Office 365 and
cloud solutions
 Installing Office 365 for internal use
 Gather feedback from staff to gauge training
effectiveness
 Hire new staff to support the cloud
Invest in training and
staff
 Expand training activities to include:
 Watching online, on-demand training
videos
 Attending in-person training events
 Reading online materials about new
products
 Reading customer case studies
 Aim to raise training effectiveness by 50 percent
Maximize your potential
 Expand your training activities to include:
 Reading white papers
 Attending live webinars
 Aim to raise training effectiveness by an additional
30 percent

Next Steps
Take the Lifecycle Assessment and the Maturity Assessment
Leverage your partnership with Prime-Advanced Organizations
Set goals that exceed your own expectations
Use WPC as an input for your long-term cloud business plan

Resources
• Adizes Lifecycle Assessment: http://lifecycle.adizes.com/
• Adizes Webinar: How to Rejuvenate an Aging Company
• Partner Maturity Overview
• Partner Maturity Playbook
• Partner Maturity Assessment

Growing vs Aging: Lessons in Business Transformation

Growing vs Aging: Lessons in Business Transformation

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