problems – markets - responsible

Are Your Revenues Stuck in Neutral?

How to Get Out of the Flat Revenue Rut

DevelopmentCorporate

problems – markets - responsible

Are Your Revenues Stuck in Neutral?

How to Get Out of the Flat Revenue RutDoes this chart look uncomfortably familiar?

problems – markets - responsible

Are Your Revenues Stuck in Neutral?

How to Get Out of the Flat Revenue Rut

DevelopmentCorporate

Does this chart look uncomfortably familiar?

Things You Have Tried to Change the Trend . .

√ Hired and Fired 3 VPs of Sales√ Invested $750,000 in a Website Redesign√ Conducted 293 Email Campaigns to 1,329,865 Prospects√ Spent $1.5 Million Re-Branding & Re-Positioning the Company√ Got Rid of Field Sales and Went Entirely to Tele-Sales√ Spent $825,000 to Get Into a Gartner Magic Quadrant√ Built ‘Son of Fusion’ and Wondered Why Nobody Upgraded√ Got Rid of Tele-Sales and Hired Elephant Killers√ Opened an Office in London and Hong Kong√ Implemented SalesForce.com√ Channel Program – You Built It . . . But Nobody Came . . .√ Hired Social Media Wonk & Launched on Twitter, Facebook . . .

The Results, Unfortunately Were All The Same

problems – markets - responsibleAfter All These Years Has Your Team Forgotten How to Win?

Pirates 1993-2008

Year Won Lost2008 67 952007 68 942006 67 952005 67 952004 72 892003 75 872002 72 892001 62 1002000 69 931999 78 831998 69 931997 79 831996 73 891995 58 861994 53 611993 75 87

problems – markets - responsibleAfter All These Years Has Your Team Forgotten How to Win?

There are no magic bullets when it comes to reversing long term flat to

declining revenue trends for tech companies. Companies get ‘stuck in

neutral’ for a reason. Most of the time it’s a market problem versus a

‘people’ problem. Breaking out of the rut, however, takes courage and

decisive action.

The balance of this presentation presents an overview of three strategies

your company could consider. There will be follow on presentations that

explore each strategy in significant detail.

problems – markets - responsibleAfter All These Years Has Your Team Forgotten How to Win?

The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise with the occasion. As our case is new, so we must think anew and act anew

Technological change is like an axe in the hands of a pathological criminal.

Change will not come if we wait for some other person or some other time. We are the ones we've been waiting for. We are the change that we seek

It’s Time for Some Significant Change

problems – markets - responsibleAfter All These Years Has Your Team Forgotten How to Win?“Shift” Your Way Out of Neutral in 3 Steps

1st Gear

OptimizeExisting

Revenues

2nd Gear

Buy a RevenueWedge

3rd Gear

Invest in Long Term

Growth

problems – markets - responsibleAfter All These Years Has Your Team Forgotten How to Win?1. Optimize Existing Revenues• It’s never popular but it’s the easiest placeto start. Optimization is a nice term for programs to maximize revenues out of existing customers

• Some Classic Revenue Optimization Programs• Billing Audits – Are all of your customerssetup for the correct billing plans?

• Maintenance Price Increases – When was the last time you raised maintenance prices?

• Price List Policy Enforcement – Do you sell add-on products? Do you require customersto keep maintenance on the base product to get maintenance on the add-on product?

• Test/Disaster Recovery Licenses – Do you sell test/DR licenses

• ‘Bottom Dweller’ Programs -- Convert low value month to month customers toprepaid annual subscriptions

Properly executed revenue optimization

programs can generate 2% to 4% year over year

increases in revenues

problems – markets - responsibleAfter All These Years Has Your Team Forgotten How to Win?2. Buy a Revenue Wedge• Lowest risk, highest probability strategy to grow revenues year-over-year is to acquire a small, but complementary business.

• Target companies that are about 3% to 7% of your total revenues

• Small companies limit risk to your overall business

• Can typically be financed from cash reserves, untapped credit lines, and earn outs

• An acquisition of this size will ensure that your firm can post some year-over-year growth

• Key requirements• Target company’s customer base is a close

match to your firm’s target market (High potential to cross sell your offerings to them)

• Some opportunity for profit improvement through consolidation of overhead functions (HR, Accounting, I.T., etc.)

A ‘Wedge’ acquisition is not intended to solve

revenue growth problems. It buys time and provides cash flow for your true revenue

growth initiatives

problems – markets - responsibleAfter All These Years Has Your Team Forgotten How to Win?3. Invest in Growth• Using a portion of the profits generated from the incremental revenues from revenue optimization programs and a wedge acquisition to fund your company’s version of a Y-Combinator / SeedPhase/ Startup Riot

• Create a local/regional competition where entrepreneurs pitch product/service ideas to create products / services for your company’s existing / prospective customer base

• Reach out to local entrepreneurs• Allow selected senior employees from your firm to participate

• Focus on ‘capital-light’ solutions that leverage Web 2.0 technologies / principles

• Pick 3 opportunities to ‘invest in’• $50K to $75K initial funding• 3 months to get to public beta stage• Host the teams in your facilities to reduce costs

Companies get ‘Stuck in Neutral’ because

traditional product management doesn’t

generate break through ideas. A fundamentally new approach is needed

problems – markets - responsibleAfter All These Years Has Your Team Forgotten How to Win?3. Invest in Growth• Give the founders attractive compensation

• 15% of total revenues• 15% of operating profit• Equity in your overall company if revenues >$5 million in 18 months

• That’s a better deal than they would ever get from VCs who would cram down their ownership to <15% in three rounds of funding

•Huge benefits for your company:• Great publicity and traction with analysts,

press, investors, existing and prospective customers

• Re-establish the entrepreneurial passion that built your company to begin with

• Real chance to leverage modern Web 2.0 technologies in a capital-light manner to bring organic revenue growth back to yourcompany

Companies get ‘Stuck in Neutral’ because

traditional product management doesn’t

generate break through ideas. A fundamentally new approach is needed

problems – markets - responsibleAfter All These Years Has Your Team Forgotten How to Win?Cultural Resistance

When a company is ‘Stuck In Neutral’ it is difficult for everyone – employees, managers, executives, investors, and even customers. Everyone tries hard, but at the end of the day revenues, profits, and valuations are flat to declining.Change is hard. People perceive admitting that the company is ‘Stuck in Neutral’ is a threat to reputations and their continued employment. Politics versus entrepreneurial passions rules the day. If you want to get out of the rut you are in you will have to lead your team on a journey they probably do not want to take.

problems – markets - responsibleAfter All These Years Has Your Team Forgotten How to Win?Break Some Glass . . .

If your firm is ‘Stuck In Neutral’ it’s been there for a while. While the business climate is simply horrible now, eventually it will turn and the economy will recover. When the recovery begins organizations will have funds to invest in solutions to improve their business. If you start executing the three strategies of Optimizing Revenues, Buying a Wedge, and Investing in Growth you can get out of neutral and be positioned to participate in the revitalized economy