A few years ago Dharmesh Shah highlighted an insight he'd gotten from Elon Musk:
“Every person in your company is a vector. Your progress is determined by the sum of all vectors.” — Elon Musk
I’ve found myself thinking about Dharmesh’s presentation quite a bit lately. At Imagine, we've been digging deep into the drivers of smart growth.
This has led to a maniacal focus on the role of structure and how it impacts strategy, culture, and execution.
A key discovery from our efforts is how friction places a significant drag on growth efforts. (BTW, I’ll be speaking on this at Inbound20; register here if you haven’t already).
Last week, I received a question in a private forum asking about the type of marketing role they should hire. My response: “fwiw i think the structure of the team needs to be adjusted before you can hire for roles effectively.”
I see this situation often, so I thought it would be worthwhile to expand on my response in this post.
Let’s take a closer look at aligning vectors through the prism of your people.
You’ve built a team of strong players, they’re all 9s (out of 10).
Here’s Mary, and every day she creates 9 “units of productivity”.
But, Mary isn’t working alone. Sheila, Raj, and Warren are working as well. They’re also strong players, producing 9 units as well. The problem is that their work isn’t aligned:
This team is generating 36 units of productivity every day, but their throughput is nothing.
It’s unlikely your team is this dysfunctional, so let’s take a look at a more realistic situation.
They’re generating 36 units of productivity, but only producing 18-20 of throughput.
What’s more, if they were to work any harder, they would generate more velocity. Most people would look at the “data” and determine the team has no more capacity so it needs more resources. Imagine what hiring another person would do? You’re right - not much. You’d likely add 9 more units (assuming you made a good hire) and only generate 4 units of output.
It’s no wonder employees feel so frustrated and exhausted.
You’ve Got More Vectors
There are at least three more vectors that you must manage and align:
- The Market
Orchestrating these four areas well enables you to generate the flywheel effect. This creates more momentum and multiplies the output you gain from your efforts.
The conflict between vectors is the primary cause of negative friction.
As a result, you’re likely working too hard, spending too much, and taking too much risk for the results you’re getting.
It’s also the reason that applying more force can produce negative outcomes. Investments made in technology, people, and other resources designed to speed up outcomes fail. There’s nothing wrong with the solution per se; the problem is how you’re managing vectors.
Vectors, Go-to-Market & Building Your Revenue Team
I’m often brought in to discuss how to best increase the size of a sales team. It’s only about a third of the time that I conclude adding salespeople is the right decision. It initially looks as though it's the right decision, but after digging in we uncover the real problem is friction.
Here’s an example. A full cycle sales rep is a low-efficiency approach. If a rep needs to find, land, and manage new customers, the moment they become successful, the less time they have. What's more, the processes, mindsets, and skills needed are quite different.
Sales organizations create inside sales teams. These teams have evolved to become today's sales/business development teams. In this approach, one rep finds opportunities, and the other lands them. Both reps increase their output and capacity multiplies.
This approach creates greater efficiencies, which is at the first-level vector alignment.
The Problem With Efficiency
Efficiency has a powerful effect initially, but its impact quickly diminishes. It can actually create harm in complex systems. To understand this, look at the history of US manufacturing.
Efficiency was the dominant focus for manufacturers. Then they noticed a problem. As they became more efficient, they lost more money. (To gain a deeper understanding of this I encourage you to read The Goal, by Eliyahu Goldratt.)
Today, revenue teams obsess about speed and efficiency. Sales, marketing, and success teams move so fast, their vectors look like a pinball machine with multiple balls in play. There is tremendous activity and movement, but it’s only capturing a fraction of the output.
The obsession with efficiency is leading to an even more intense focus on internal processes. Consider a typical sales/pipeline process. In most cases it looks something like this:
Or, how we structure marketing teams:
- Email Marketing
Or, the funnel. The funnel is a horrible metaphor. With the funnel, you can’t impact velocity. There are only two actions to take: push more into the top of the funnel or try to suck more out of the bottom.
Constraints & Bottlenecks
In the real world many, complex processes act interdependently. They must adjust to several bottlenecks and constraints.
Increasing efficiency is great until it comes up against a bottleneck or constraint. It’s even less effective when it encounters a resource that you don’t control - the customer.
The customer is pursuing their own path. Unless you’ve built your structure to align with their journey it’s unlikely vectors are going to align.
You have to make a choice. Are you going to overcome this seller-customer vector misalignment with brute force? Or, are you going to work to align your vectors and reduce friction?
There are six potential bottlenecks you must manage:
- Customer Identification
- First Action (lead generation/lead engagement)
You must take these bottlenecks and constraints into account to align your vectors.
Inflection points are waypoints or events. They have a significant impact on the course/speed towards the desired goal. There are very few inflection points in any system. (Think the 80/20 rule.) An effective way to identify inflection points is to conduct a “what causes sales” analysis.
While an inflection point can be a bottleneck, it does not have to be. An inflection point in our process is the realization on the part of a primary influencer that their path is unlikely to get them where they need to be.
This occurs between activation and consideration waypoints. The realization is important, but it’s not a bottleneck. The bottleneck is getting target contacts to the activation stage.
You must know your inflection point to align your vectors. Inflection points are the true waypoints to ensure your efforts translate to progress.
Structure, Vectors and Accelerating Revenue
Let’s start bringing this all together and go back to where this blog post started. How does the structure frame a hiring/team development plan?
To answer that question, you’ve got to understand the context of the situation first. Here is a common situation:
- The market is well defined
- Approximately 750-1,250 companies fit the target account schema
- 4 Enterprise Account Executives and 2 SDRs
- 2 marketers with outside agencies, freelancers, or other service providers supporting the workload.
In the most common structure, each of the account executives works independently. Each SDR responds to inbound leads and fills any gaps by doing outbound. SDRs then feed the SQLs they create to an account executive.
The marketing roles are likely divided by their various disciplines. One marketer may be responsible for the content and website, while the other focuses on paid and SEO.
This is a common structure. It’s so common that very few would even question it. It's efficient (through focus and specialization) and it scales.
But, does it do a great job aligning vectors?
I don’t think it does. In my experience, this team will max out at about 60-70% of the impact it should have. What’s worse, as the team grows it loses even more velocity (relative to the increased effort & cost).
Here are the key misalignments:
- There’s significant redundancy (the 4 AEs and 2 SDRs). This amplifies any gaps and increases risk exposure.
- It has an internal orientation. It is not aligned with the most important vector - the market.
- The misalignment creates multi-tasking conflicts.
- It’s unstable. There are significant turnover and execution risks.
Aligning Vectors With Structure
How can we get "more juice for the squeeze"? First, we'll dig deeper into the context of the target market:
- The market is well defined so it must be mature.
- It’s an enterprise market and sale. There are likely competing priorities, a significant consideration period, and consensus decision-making.
- There are a finite number of potential customers that fit. Identifying them should be relatively easy.
- There are four verticals in the market, so the target companies are not homogeneous.
How would I align the vectors here?
I’d build two market development teams. Each team would have 2 AEs, 1 SDR, and 1 marketer. Each team would cover two verticals. I'd provide each team with a great degree of latitude to how they work together.
This structure provides several benefits:
- It aligns with the market, enabling more momentum in its efforts.
- It builds customer expertise, giving the sales team a competitive advantage.
- It’s easier to hire for, thus expanding the hiring pool and likely decreasing the cost of sales.
- It’s much harder to replicate as the system contributes to the success of its members. This means a salesperson (or marketer) can leave and recreate their environment.
- The team approach aligns better with the nature of how companies buy today.
- There are natural backups in place, making an otherwise small growth team far more stable.
I could go on.
The structure does have two potential drawbacks (there is no such thing as a perfect solution):
- Putting a marketer on each team creates some redundancy. Greater vector alignment makes this a worthwhile trade-off. I'd argue that the primary purpose of a marketing team in a company like this is buyer (and sales) enablement. The market focus created by this approach will translate into better enablement.
- This approach requires a stronger go-to-market approach and ongoing management. The advantage of the traditional approach I shared earlier is that it’s easier to put on auto-pilot. So if your goal is easy oversight you shouldn’t change structures.
My goal in this post is not to say this structure is the “right” one. The truth is that there is no right “one.” Choosing your structure is a choice you make about trade-offs.
The decision you must make is how important aligning your vectors is. Your answer will determine how hard and how much risk your path to growth will have.