Steve Blank

The Sharp End of the Stick
At some point in my career as I began to formulate thoughts about mission and intent, I started to think about the broader role of marketing in a growing technology company. It became clear to me that the mission of marketing in most companies has to be to support sales.  While this may seem obvious to anyone not in sales and marketing, trust me, in a technology company this is a conceptual breakthrough. In my experience, every marketer with an MBA wants to “do strategy.” Every marketing communication hire couldn’t wait to produce the next great ad or PR program.  Every product marketer thought they should help define the product feature set, etc.  But without sales there is no revenue, and without revenue there is no company.  All the strategic thinking in the world won’t make up for a missed revenue plan.  74HGZA3MZ6SV

Sales was the Sharp End of the Stick, and Marketing was the Stick
The epiphany for me was that in any company where I was running the marketing department, marketing’s number one job (its mission) would be to support sales – and to make the (commission-driven) sales VP the highest-paid person in the company. We were going to do that by turning marketing into a machine to generate end user demand, drive the that demand into our sales channels, and educate our sales channels.  And the same time we were also going to do all the other strategic stuff about pricing, positioning, promotion and customer discovery and validation to help engineering understand customer needs.  But sales came first.

(By the way, companies that have a single individual as the VP of Sales and Marketing have decided that marketing doesn’t add any other value then tactical sales support, and the only way to get is to put it under the VP of Sales.  That’s why you almost never see a marketer as the VP of Sales and Marketing.)

My way of explaining our support and service role to the marketing department was that:

1. Sales is the sharp end of the stick, and marketing at best, is the stick.
2. But while the sales team works for commission, the rest of the employees have equity (stock) in the company.
3. If sales revenue and profits are high enough, we could take the company public or sell it, and the stock would be worth more than the paper it was printed on.
4. In exchange for being the “point” organization, performance of a salesperson is measured continuously and individuals who fail to deliver quota are removed.
5. If sales as an organization failed to deliver revenue to plan then all we had were worthless shares.
6. In reality the sales team was working for the rest of the company to make all of our stock valuable.

No one was confused after that.

Who’s on the Sharp End
In an early stage startup, instead of sales being up front, the point departments are likely to be product development and customer development. Later on in this same company’s life, sales will become the pointy end and product development moves to a supporting role.  In other companies it may be that manufacturing or finance is the sharp end of the stick.  In an IP licensing business, legal and finance are the sharp end of the stick. It varies by company and changes over time.  There’s no magic formula but there are always “leading” departments.  And all “leading” departments have some type of “consequence-based” feedback loops that make success or failure obvious.

The clearest example is the U.S. military.  Combat troops are the “tip of the spear” while everyone else is the logistical tail.  No one in the support chain of the troops is confused or resentful as they all understand that the greatest risk is up at the front.

Killing The Company With Equality
I’ve been on boards where the CEOs took the egalitarian position that “all our departments are equal, no one is more important than any other.”  The unfortunate corollary is that in these companies no department believed it was in a supporting or service role.

In these companies, departments that should have been providing support and service instead behaved like they were the “sharp end” organizations. I’ve encountered finance organizations with budget processes designed to simplify their lives, but not the rest of the company’s. Or expense reporting requirements that took hours of a sales teams time to fill out every week.  Sometimes it was the legal department crafting contracts so onerous I wouldn’t even sign it, let alone expect a customer to do so. At times it was human resources with policies that made people leave rather than stay, or it was a CIO more interested in standards than deployment.

None of these departments operated with any particular sense of malice – just with the certainty that the company revolved around them. But they were misguided because they lacked a clear departmental mission statement that reminded them of the corporate goals. If each department had a mission statement, it would have been clear whether their role was in support or at the sharp end. Having each department develop a mission statement depends on leadership and direction from the CEO.

“Going Out of Business” Strategy
I’m now convinced “all our departments are equal” is a “going out of business” strategy. Not understanding who are the “lead departments” makes companies feel like ponderous, bureaucratic and frustrating places to work.  The best people in the “sharp end” organizations simply vote with their feet and leave.

I loved to compete against these companies.  Their own internal culture would tie them up in knots, and agile startups could run rings around them.

Don’t let this happen to your company.  Embrace and then communicate the idea of a lead department(s).  Build a company culture where everyone supports the “sharp end of the stick.”  

Stay agile, stay focused. 

Filed under: Customer Development | Tagged: Entrepreneurs, Startups, Steve Blank, Tips for Startups |