Growth by Document

The current business has experienced pleasant success despite a challenging market.  We grew our ASP from $40,000 by nearly 20x, increased our industrial installation base by similar numbers and have figured out how to grow in a long sales cycle market.  There are many factors that have driven these achievements, but one that has helped given our international and manufacturing driven culture has been consistent use of good documents.

Documents are any piece of material that you put together as a team.  As a manager and leader, the following have been very helpful.

The amazing fact is that America is founded on a document. It’s a work in progress. It can be tested by each generation. Christopher Hitchens

Sales

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Everything is a hypothesis waiting to be tested until you have data.

Pitch deck – it all starts with the customer and what you are selling.  This is the start of the chain of contracts a business enters into, it is the start of the series of promises and commitments that take a product from idea and out into the world.  Ideally those first sales decks / presentations / slides will have a clearly defined customer value proposition (“CVP”) and unique selling proposition (“USP”) for your business or product.  Often times that is not possible.  It is better to go out with a slide deck that states, “this is what we think” such that early customers / sales calls can correct you, than it is to go out with nothing.

Website – it is never too early to have a website.  Even if it is a simple page with a ‘coming soon’ it is crucial to have it as a sign that you are serious.  Make sure your team all has access to good email addresses as well!

FAQ – In the early days an FAQ helps train up your sales and technical team about the kinds of customer questions you are getting.  Forcing the team to agree on and write down the right answers is a great alignment activity.  Noticing that you get the same questions over and over again will help steer product development.  Lastly, as your FAQ extends in depth (especially if it is not publicly available), it allows you to answer customer questions with inside sales or other lower cost personnel.

Account plans – whatever your selling strategy might be, writing down an account plan is an easy way to get feedback across an organization and make sure there are no clear holes in your objectives.  If you’ve got a broad reach, then this documentation can be used to make sure the same plans and methods are used globally.

Quotes and product scoping – customers must have a way to buy from you.  If it is an older industry, electronic invoicing and other methods may be slim.  Be ready to quote and invoice before you have your first sales lead.  Know how to collect before you pursue an order, so you can be sure your expectations are in line with the account.

Contracts – if you are selling high value items, your customer may have a contract that they like to use.  Having your own contract is crucial, even if you know it won’t be used.  By preparing the ground and taking power of authorship, you can help frame what components will be important to you in your customer interactions.  (It was great to hear similar sentiment on a recent A16Z podcast, Pricing, Pricing, Pricing.)

Technology: Recipe & Design

Process Notes – it is crucial that you have good notes and methods from your technical team.  Design changes must be documented.  Chemistry and recipe work must be documented, any item that leaves your hands and goes to a customer must have a summary (and retains must be kept).  Good process notes and methods are absolutely essential.  In the early days it will always feel as if big answers are around the corner, and that a short cut might be okay… Short cuts are never okay.  Document the work correctly.  Put in place the right methods so that you’ve built a robust system and method with sound data that allows you to continuously learn from what you are doing.

Project Charters – these simple, programmatic documents go a long way in forcing a disciplined process before you begin pursuit of a new activity.  Our projects tend to be either focused on reference products or on platform level technology changes.  By following the same template every time, we’ve gotten better at laying out what needs to be considered.  As this process extends in an organization, it becomes important to define what rises to the level of a ‘Project’ and what does not.

Roadmap – different customers have different methods of doing roadmaps.  Our Director of Recipe team did a great long term technology roadmap, and on it outlined the major themes he thought we would need to pursue over the next ten years.  As our Recipe team continued to work more closely with the Design (hard asset and equipment) team and the Operations team – we put together a reference product roadmap that clearly laid out what our end goals were and identified the major projects we would need to complete.  Anything that has a ‘Project Charter’ gets a spot on the GANTT chart and this enables our team to visualize how the different initiatives work together.  By putting this visual document in front of everyone, we’re able to manage risk and look for ways get work done more quickly.

Finance & Admin

Cost model – the only thing you can say with certainty about an early cost model is that it is wrong.  However, like many of your selling components, it is important to be transparent with what you know in order to get the right customer feedback.  As is preached in Ries’s The Lean Startup, in the early days we are testing hypotheses about what does and does not work.  We think we know how our customers look at cost and ROI, but by putting our vision out in the market we get feedback faster and from a user with more experience.

Reporting – every business needs a financial report that states clearly what has happened in the past in order to know what they want to do in the future.  Project and personnel costs must be allocated correctly.

Forecasting – forecasting has to be done on a regular basis and in a consistent fashion.  Just like the cost model, it will be wrong.  It is crucial that management and sales be able to go back in time and evaluate how and why past sales efforts were wrong.  If when you look back at past forecasts you see names that you now know, “these guys were never going to buy” – then challenge yourself if the current pipeline will lead you to the same results.  Forecasts also help you go through thought exercises about what is necessary for growth and how you can achieve your corporate goals.

Budgets – budgets tie together your forecasts, your roadmap plans and all of the other activities.  If you won’t have a product concept done for a year, then don’t forecast a sale in six months!  Budgets are driven by input from the technology team and overseen by finance to make sure that your business is on track and investing properly.

Operations and Assembly

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Critical path methods are a special case of the critical chain approach to project management.

GANTT charts – these rule the roost for project planning in any kind of environment.  We’ve always used critical chain project management (CCPM) based on theory of constraints (TOC) which has its own language and methodology.  Creating these documents aligns resources, personnel and risk management methods.  (If the academic nature of the CCPM text is overkill, then Hanging Fire is more like Goldratt’s The Goal, in which the concept is illustrated with fiction.)

Product documentation – How do customers use your product?  It doesn’t matter if it is hardware or software, how do they learn how to use it?  How do you do training? Our methods here tend to overlap between Service, Operations, Recipe and Design.  For industrial assets, these operating manuals can be quite sizable and supported with Youtube videos and other ways to help customers familiarize themselves with what is needed for them to make money off of what they’ve bought from us.

Strategy

The Strategy House – this simple method of laying out corporate goals, charters and methods initially seemed to basic to provide value.  However, it has had a broad and lasting impact.  By following the layout of corporate ethics we were able to transfer some very clear concepts about employee and customer safety that hadn’t previously been fully understood.

Monthly Reports – a team should not spend more time reporting than it does doing. However, there is great value in starting at the department level and rolling reports upwards.  Even if the reports are only used internally, it creates alignment, and just as with the sales forecast, it allows you to go back in time and check on the reasons that decisions were made as you get further and further into the future.  Simple monthly reports with a slide on strategy and a one page summary of each department are sufficient.

Regular meeting notes – given our cultural split and global reach, we’ve settled on a method of note taking that is a bit different.  The senior team member takes the notes.  Notes are sent out *immediately* after a meeting.  This allows everyone to read (at their own pace given different experience with English) what happened and what the next steps are.  Further, we hold global management meetings every 8 weeks (six times a year) as that has been the right cadence for major customer and internal projects.

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Moore’s Chasm model explain market growth and customer behavior with new products.

Market analysis – this is a strategic, rather than a sales decision.  Your sales team is providing fast feedback, integrating customer needs to the roadmap, but choosing how to align your technology capabilities with market feedback is fundamentally a question of strategy.  If your sales team is making ad hoc decisions about what markets to pursue, then you have not yet done enough market validation and market testing.  Market analysis should start with high level macroeconomic analysis of where you are selling (does it grow faster or slower than GDP), look at where this activity is done globally, then map that work to your sales outlook.  Customer feedback should constantly be mapped against your market analysis to make sure that the market’s words match to your businesses underlying fundamentals.

In our current business, we map the volume of the benchmark materials against which we measure our reference products.  We then look at aggregate CapEx (which we can find from public company records) and look at what share of that we currently capture and what share we want to capture in the future.  This allows us to do a sanity test on the volume of heavy assets we can plan to sell based on the market’s absorption rate of end materials.  Just like the sales pitch, this work is never right – but over time you can get better at it and it is always a valuable test of your revenue forecasting.

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