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Most Asian partners are walking dead, here’s how to change
- 07 May, 2019 16:12
Nigel Parsons (IDC)
How many examples of zombie movies and TV shows are there currently on Netflix and other viewing avenues?
Probably almost as many as there are partner companies in Asia that closely resemble the post dead creatures staggering along trying to find life to chew on and sustain them.
Unsatisfyingly, these creatures are doomed to struggle on increasingly meagre morsels until their own bodies and flesh finally dissipates into nothingness. As if they never even existed in the first place.
Zombie partners can enjoy an extended life span. In many cases, they can struggle from low to no margin business opportunities almost indefinitely. This is particularly true for many Asian companies who for one reason or another are unable or unwilling to transform their businesses.
These companies do not ‘infect’ other similar organisations, but transmogrify unappealingly into depressing business-as-usual entities without ever comprehending there is just no such thing as ‘business as usual’.
This walking dead image unfortunately typifies many partners across Asia. Whilst this may sound like a depressing scenario, it is the simple reality of what is happening to many partners who even with the proactive support of their multiple vendors seem to have lost their way.
We are well aware there may be a multitude of reasons why certain companies understand the issues at play and do not wish to change.
The rest of this Channel Asia article is not for those organisations who have consciously made that choice. This article is intended for those partners who recognise the danger and seriously want to try and avoid the walking dead future.
These are typically the key issues the walking dead struggle with in their business and thereby prevent them from transforming.
1 - Compensation plans
One of the first things that I look at when examining a partner's business model are their compensation plans. The old saying that 'compensation drives behaviour' is still as true today as it ever was. Compensation does drive both desired and unwanted behaviour.
Like water running downhill, sales people will always seek the quickest and simplest way to maximise their own commissions. If they didn't then they wouldn’t be worth much as sales people otherwise would they?
Some basic questions that get the heart of the matter are typically:
- Do individual contributors still achieve 100 per cent of quota by reselling only hardware and the maintenance services associated with that hardware?
- Where there are quota/goals for annuity revenue streams, how are these paid out over future years?
- Does the partner have a ‘deal desk’ with fixed rules to determine eligibility criteria and approvals, excluding previously unregistered deals that come with 12th hour suicidal margin proposals?
- Does the partner pay sales over and above what they would normally for desired business such as services (not including regular vendor maintenance)? And where these quotas are allocated out, does the sales person who does not meet that component not achieve their OTE (On Target Earnings)? Or in other words, can they still make their targets by simple overselling on low margin hardware?
Traditional compensation plans with a long serving sales staff are very difficult to change to annuity-based plans, even over a multi-year period.
If your company is struggling in this area then rather than trying to get the older, established sales people to change, it is probably best to consider two separate and distinct compensation plans.
One for the old guard and another for the new. Both need to be aligned to suitable metrics to reflect the desired behaviours. Sales management need to be rigid in promoting a best of both worlds approach and ensure that there is no competition between the two sales teams.
2 - CRM and forecasting
How many partners still manage forecasts solely by spreadsheet?
Where a partner has a CRM system tightly integrated into digital marketing, forecasting, service delivery, proposals, and problem management, then we typically assume this partner is probably well adept at managing new business opportunities and is tightly plugged into their vendors digital offerings.
I constantly hear partners complain about the lack of qualified leads from their vendors. The wake-up call is that when we closely examine the business of an individual partner and in many cases as an independent assessor, we are not always 100 per cent convinced the partner has the capacity and capability to properly follow through on any leads provided.
Conversely therefore, if we were the vendor we probably wouldn't give them any leads either.
As a vendor, if our business relied on that partner to explore and close that business, would we trust them to do it if they cannot invest something in their own lead management systems? Without the confidence level being high - likely not.
The reality is that vendors do have leads, but one cannot blame them for farming them out to those partners that they confidently believe can close them within budget and timeframe.
3 - Staffing and headcount
Simple question for partners: how many millennials are currently working in your company? And in what areas?
The problem for many partners is that they do not have the corporate culture of a Google, they are not Amazon Web Services and they are simply not considered ‘cool’.
The reality is, when partners decide to recruit by setting up a booth at a job fair, most of the attending graduates will have already visited your company's website. And probably other HR sites as well.
Here is a free marketing tip: if you still have the initials ‘IT’ in your company name, you probably won't be swamped with applicants. Certainly not the future achievers that you are likely seeking.
The next question concerns the age demographics of partners. Partners facing challenges typically have a high percentage of their headcount with staff who have been retained for 10-15 years or more and staff that have been there for less than two years.
In the critical development period of 2-10 years, there are hardly any employees. You can probably count them on one hand. And if you are one of the walking dead, then these are staff at high risk of imminently deciding to develop their careers with alternative employers.
Whilst millennials have notorious reputations for being difficult to manage and frequent job hopping, it does not make the problem of succession planning for partners any easier.
The familial environment that typically occurs within these partner companies for long-term employees might be cosy and comfortable for the long-retained staff, but it does not promote growth, creative thinking and the big ideas that these partners now need to ensure their future survival.
‘Rewarding’ these long-term employees for mediocre performance over many years creates a sacred cow (zombie?) that does a major disservice to both the individual and the company.
The management of walking dead partners must consider the other side of the fence. What is the perception that potential employees have of their company? What does their branding say about them? There are a number of baby-steps that partners can take to begin the journey here.
Every partner organisation in Asia is unique. Many feel beholden and subject to the whims of their existing customer base. For partners that wish to, the challenge is to break out of the mindset that things cannot change.
Culture is certainly one of the key challenges, but we have worked with many organisations that have led from the top to determine their futures are not set in mediocre stone and that they can have their cake and eat it to - transforming themselves away from the walking dead scenario.
Nigel Parsons is a research director at IDC