Back to Basics: new world, same rules?
The world has changed. But the basics still apply. This is the message from two multi-unicorn builders, Pete Daffern and Howard Bell who have been guiding CEOs throughout the pandemic. So what are these âbasicsâ, and how is it that they still apply in a world changed by Covid?
âThe stakes are higher due to this pandemic but weâre seeing that itâs even more important for CEOs to sit back and take a dispassionate look at their strengths and weaknesses versus their rivals,â says Howard.
Process
âWhen Pete and I ask the basic questions,â Howard continues, âand dig back and back, we sometimes find that a company doesnât really know what market theyâre in. Theyâve got no identifiable crown jewels, and they want to throw lots of cash at customers who will only stay for six months and then churn. Thatâs not a business model anyone should invest in.â
âWhat Howard and I do is simple,â says Pete. âWe donât tell CEOs what to do, we just walk them through a process.â The data, Pete says, holds the answers. â2+2+2=6. Itâs often that simple. And yet itâs amazing how often the leadership conversation veers off in other directions.â Itâs a legacy thing, Howard explains: âAt first youâre experimenting like crazy, because thatâs what you do in the early days. Then something sticks. Maybe itâs mid market, maybe itâs enterprise. Either way, you’re at a gear change moment where youâve got to make a choice. You canât go left and right at the same time.â
Pete, who steered companies through previous financial crises says heâs often just naming the obvious: âwe often find ourselves pointing out to CEOs that they already have the good idea – all they need to do is execute on it!â says Pete. âThe focus can then change from product-centric – how the product works – to buyer-centric – why the product matters to the customer.â
Playing to win
Many SaaS companies are loyally selling to small, medium and enterprise customers, when the numbers are clearly saying that itâs enterprise alone, for example, that is the $billion space to be doubling down on.
âThe courage of the leader is to say: pause that, this is what weâre doing. This is our priority one. We can win here. Playing to win is a psychological attribute we get frustrated when we donât see. The alternative is just spread betting,â says Howard.
And all this through a global lockdown? âYes,â says Howard.âItâs still a golden age for technology and the leaders continuing to make the clear, tough decisions are winning. These are the ones who look through the lens of what their customer cares about, not what their product guy shouts about.â
âWhen you start a company, youâre very keen to get customers,â says Pete. âYou donât yet fully understand who you built the product for. Thatâs understandable. But the time comes when youâve got to lose that mindset, leave it behind, and stop just chasing the next dollar. When we ask why theyâre wasting their time with small customers, the answer we often get back is, âwell itâs what weâve always doneâ.”
Basics
âInvestors donât always have patience for strategy or model because it takes time and itâs long winded. They want to see founders in the fast lane, see them win and see a return on their cash – of course they do. But in order to do that youâve got to understand who youâre up against and what your crown jewels are – and to do that youâve got to understand who your customers are and what they want in this new market.â In other words, the basics still apply.
âTechâs just getting going,â Pete says. âThere are 100 times more ideas than there are people to fulfil them. And this will be the situation for the next 20 years.â
So with tech âjust getting goingâ, as the world accelerates towards a post-Covid future, itâs perhaps a good time to be reminded that it all comes back to the customer, and the data-driven strategy that will deliver that customerâs critical, urgent un-met needs.