Sales Management

Why CEOs of some Scandinavian technology start-ups choose to fail, and why you may want to increase your sales process maturity level

OLYMPUS DIGITAL CAMERA8 of 10 technology start-ups fail, according to some research.  It is generally believed that Europe has a lower success-rate than US, though this is open to debate (depending on what constitutes success, what constitutes failure).  There are various reasons for failure (see for example www.forbes.com/sites/davefeinleib/2012/11/13/why-startups-fail-2/ and www.slideshare.net/bigdatalandscape/why-startups-fail-15160643) but market, product, entrepreneur, and environment, are generally seen as typical reasons.

My hypothesis is that many Scandinavian start-ups in particular fail because an industry-wide and historical lack of proper sales culture.  This hypothesis was strongly corroborated by a number of representatives from the VC community at the recent Technoport conference in Trondheim on April 28-30, see http://www.technoport.no/conference-2014/.

It is then of interest to explore ways of rectifying this situation.

Based on experience from a number of technology SMEs and advisory firms (including my 17 years of senior sales management experience), we have developed the following sales process maturity model:

sales propcess maturity

(There are a number of alternative sales maturity models out there, most of them focused on ‘doing things right’, rather than ‘doing the right things’.  The one above has been developed for technology companies and is focused on than ‘doing the right things’, but is tough to benchmark against.)

There are three reasons why getting to level 3 or 4 is important for a technology start-up: i) There is strong statistical correlation between getting to level 3 or 4 and start-up success.  ii) Most VCs like early focus on sales, and are therefore more willing to fund start-ups with an aspiration of being at such levels.  iii) Early interaction with and early feedback from customers allow for continuous product idea improvement / road map adjustment, and therefore a better product.

There are three ways of getting there (plus a forth one): i) develop such capabilities in-house; ii) recruit someone good from the sales management community; or iii) enlist the services of someone external with such insights (e.g., various governmental schemes, sales development consultants or strategy consultants).  (The fourth one is really about recruiting a stellar sales person, an option which is generally not available for most start-ups, for three reasons: you most likely cannot afford him or her; the person is most likely not interested in your company, given your financial status; and the availability of relevant talent is generally very limited.)

In general, I recommend option (i): develop such capabilities in-house. This is low-risk, high-return, and if successfully executed, demonstrates to your Board and to potential investors your CEO talent in a compelling way.

Discussion

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