Sunday, March 11, 2007

All Together Now....

Will Price (who is fast becoming one of my favorite bloggers) has another great post on the virtues of alignment. The key point he makes is that entrepreneurs can context-switch effortlessly, but that same capability cannot (and should not) be expected of the organization as a whole. In fact, this is the key test of the maturity of an early-stage company founder.

When your company starts out, you are hunting for validation, for a niche. You conduct small-scale experiments, involving marketing campaigns and product prototypes/demos. You then gather feedback and hopefully find a segment or two where the value proposition is easy to demonstrate, the need is urgent, and there is money available to solve the problem. You then double down on those segments. First, work your tail off to get anchor, referenceable customers, and then use those to streamline and accelerate the sales process. All the while, the product team is conducting small-scale experiments to identify the next couple of segments to target.

At least, that's how things should go. In practice, this discipline is very hard to achieve, and organizational alignment falls directly as a consequence of not following this disciplined approach. I've seen a couple of key areas that lead to a lack of alignment in the organization:
  • Failure to set up clear, time-bound success (and failure) criteria. Early-stage companies do need to experiment; its unclear up front in most cases where you should be selling your product, who the ideal customer is etc. However, too often these experiments are not controlled. Without an up-front definition of when to consider the experiment a success, and when to walk away, its too easy to be led into one rat-hole after another, where success is just over the horizon, just one demo away. A common case is when you're able to get a toe-hold into a large enterprise and keep trying to accommodate their every request for information, for endless meetings, for product enhancements etc, without a clear idea of the end game. While the sale may eventually happen, the opportunity cost for the organization is immense.
  • Trying to do too much. You've conducted a couple of experiments, and found a couple of areas in which your product might add value. However, these areas don't have a lot to do with each other. You might rationalize this away and find connections where none really exist, but really you know that you've come to a key decision-point. Do I invest in solving problem X or problem Y? The thing is: you have to pick and quickly align the organization behind your choice. If you don't, the default trajectory is that there will be people in the organization who try to solve each problem, and the organization eventually splinters.
Alignment is relatively easy to test for: ask your marketing and sales people what they think the company does. Then ask your engineers. Ask the back office folks: finance, adminsitration, HR. Ask your customers. Ask analysts and the press. Ask them once every quarter. If the responses are roughly the same, then congratulations! You've kept the organization aligned. If not, don't fool yourself - you've got a serious problem and you need to address it as quickly as possible. Alignment is relatively easy to test for, but I don't see it happening too often. Could it be because we don't particularly want to know the answer?