Computers Commiditize Knowledge

30 years ago, the highest paid person in the room typically made most of the operational decisions. A CMO or Creative Director would determine the final language in an ad. A VP Sales would determine the exact language sales development reps (SDRs) would use when calling prospects. HR directors would set employee policies without much employee input.

Today, things couldn’t be more different. CMOs and Creative Directors may set high-level themes for a marketing campaign, but copywriters and junior marketers generate many unique sets of copy and split-test those messages on a small scale first. The best received messages will then be reproduced on a larger scale. Similarly, a VP Sales no longer needs to claim to know any best-practices about cold calling. She can split-test every variable using a tool like SalesLoft.

30 years ago, a VP Sales would never claim to offer a useful opinion regarding visual direction and ad-copy. And a CMO would never claim to guide SDRs through cold-call scripts. The processes outlined 2 paragraphs above couldn’t be more different. But the process outlined in the paragraph immediately preceding this one are identical. In both cases outlined above, the VP doesn’t need to claim expertise in much of anything beyond managing the experiment. The VP can and should defer to what the data says.

CEOs used to rely on expert VPs to make these kinds of decisions. The VPs had decades of experience. The VPs would synthesize all of their learnings and experiences and offer an answer. This process was not unlike the split-testing process outlined above. The only difference was that humans were responsible for processing the results of the experiments rather than computers. Computers are by definition orders of magnitude better at understanding, normalizing, and comparing data than humans.

Now that we have the tools to split-test and measure almost every action we take through computers, VPs no longer need to do this. In fact, they explicitly shouldn’t because they are inferior to computers.

I’m not suggesting that the experience that many VPs bring to the table is worthless. There will always be questions that computers cannot answer: will this person jump ship if they receive an offer for $5K more elsewhere? how can we structure our pricing proposal and presentation to maximize revenue on this $500K deal?

Rather, VPs are moving up to higher levels of thinking and operation. Without the need to worry about as many tiny operational details, VPs can focus on higher level issues to accelerate firm performance.

Each functional area still requires plenty of nuance that is not easily computable. But a lot of the basic questions can be answered by computers. Thus, VPs should be increasingly valued not on their willingness to dictate what should be done, but how they structure and manage experiments to make the best decisions from data. This isn’t to say that data commoditizes all knowledge, but that many facets of what were once knowledge have indeed by commoditized by data. I suspect that in 20 years, the most efficient management teams will operate in ways that we can’t fathom today. As computers offload more of the busy work that today is in the realm of, management, managers will focus on ever higher-order issues and accelerate firm performance even more.

The real question is: when will computers move further up the chain and commoditize wisdom? Is this possible before we achieve general-purpose artificial intelligence?

Why Is It So Much More Difficult For Healthcare Providers To Adopt Health IT Than Medtech?

Medicine has made great strides over the last 50 years. Modern medicine looks a lot different than the medicine of 1966. Today providers are 3d printing bones, replacing organs, and conducting minimally invasive surgery.

Yet healthcare operations of 2016 are remarkably similar to healthcare operations of 1966. Why haven’t the delivery systems of healthcare changed? Why haven’t core provider operations changed much in the last 50 years, and why do providers struggle to adopt health IT even though they’ve adopted so many medical innovations?

The Innovation Has Been In The Tech, Not The Process

In short, because it’s much easier to adopt new medical treatments than to adjust the operations of a healthcare delivery system. The former is an incremental improvement. The latter requires business model changes, changing job roles, and more.

The R&D burden for the vast majority of medical innovation is extremely high. Achieving FDA clearance is incredibly difficult and expensive: tens of millions of dollars, and in the case of pharmaceuticals, hundreds of millions.

But once a new pill, cream, device, test, or treatment has been invented, the healthcare system can “adopt” it pretty easily. All of the existing infrastructure is in place — pharmacies, labs, ORs, physicians, surgeons, etc. A few examples:

The only cost to healthcare providers to prescribe a new pill is educating the physicians. Physicians are mandated to earn Continuing Medical Education (CME) credits, and many are active in their respective specialty-specific communities. Pharmaceutical companies know this and market to physicians through these channels. Once a physician has learned about a new treatment and is convinced of its clinical benefit, her organization — a solo practice or hospital — doesn’t need to do anything else in order to prescribe the new medication to the patient. The physician prescribes the treatment, and the patient will receive a prescription and a nearby pharmacy will dispense the pills. This process happens identically if the treatment is brand new or if it’s penicillin. The medication prescription process is remarkably unchanged in the last 50 years. Even moving from paper to e-prescribing hasn’t really changed the workflow around prescriptions. The pharma company will work with medical distributors like McKesson to ensure the treatment makes its way to pharmacies in every geography. Providers don’t need to worry about where the pill came from or how it got there.

Similarly, the only cost to a healthcare organization to adopt a new piece of lab equipment is the cost of the equipment itself. A hospital already has an ASCP-certified lab (the ASCP certifies labs for quality and safety standards), lab technicians, etc. The only additional costs to the hospital of adopting a new medical diagnostic tool is the device itself, and few hours of training per lab technician. The hospital doesn’t need to build any new physical or virtual infrastructure, or define new processes. Once the new device has arrived, physicians are educated, and can then place orders that will utilize that machine. The process change required is minimal.

A significant majority of medical innovations are “black boxes.” Physicians don’t need to understand every chemical reaction that will occur in the body after a pill is taken. The pill is effectively magic — the patient consumes it and gets better. The same is true of the latest diagnostic tools. Put the blood in, get an answer out.

There are certain medical innovations that require some operational changes. For example, let’s examine robotic surgery. Surgical robots are a “black box” like other physical devices — surgeons don’t need to understand the control systems in the robot that guarantee millimeter precision. But surgeons and surgical staff need to be trained and certified to conduct robotic surgery. The training program for daVinci, the leading surgical robot, typically takes a few months to complete. However, surgical robots don’t change the operational processes around surgery. Patients are still referred to surgeons by more general physicians, surgeons still consult patients before surgery, patients still come to the hospital, staff still prep and sterilize the OR, the patient is still anesthetized, and the patient is still prescribed bedrest, antibiotics, and perhaps other medications afterwards. Although the technical implementation of surgery is vastly different, the broader process around surgery hasn’t really changed.

Health IT Requires Material Process Change

Health IT innovations couldn’t be more different than medical innovations. Health IT solutions by definition are not medicine. Health IT solutions do not directly impact the health of the patient at all, even if the patient logs in and uses an app. No It solution will magically make a patient better, and no IT solution will diagnose. Medical diagnostics and treatments require chemistry. IT is not chemistry.

It’s important to note that all health IT solutions require some level of organizational workflow change. The change may be relatively trivial, but a workflow change is required. Many of the greatest opportunities to improve outcomes and reduce cost to be gained from adopting health IT require massive organizational changes. Omada Health is a great example of a radically different diabetes management service. In fact, Omada’s technology and service is so unique that the company chose not to sell the software to existing providers, but to act as providers themselves and contract directly with self-insured employers, payors, and in some cases, at-risk providers. Omada determined that their clinical service would be more effective if they built it themselves, rather than helping hundreds of organizations modify their existing operations. Their success indicates that this was probably the right decision.

Information technology can do four fundamental things: collect, process, store, and share information. IT will never do anything more. When a provider organization adopts a novel health IT solution, there is an implicit acknowledgement that the organization was organized sub-optimally. When an organization adopts a novel piece of health IT software, the organization needs to rethink existing workflows and processes. Let’s use Patient IO as an example.

First, a quick primer on Patient IO. Patient IO is a cloud based care management platform that’s sold to large healthcare provider organizations. When hospitals discharge a patient after surgery, the discharge nurse typically provides the patient a few one-pagers that inform the patient on dietary restrictions, medication requirements, how to gradually get back into sports and athletics, etc. The patient is left to manage the entire post-discharge process herself. Using Patient IO, providers prescribe patients the app. The app sends regular reminders to patients using push notifications. For example, if the patient is supposed to walk .5 mile per day for the first week, then 1 mile a day for the 2nd week, the app will track activity on the user’s smartphone, and send the patient reminders throughout the day to increase activity. That data is reported back to the provider, and providers follow up with patients and their families as necessary to encourage activity. The same concept can be applied broadly for any care plan for any disease or procedure.

Adopting Patient IO is a big change for provider organizations. Previously, the organization may have staffed a few people to call patients and follow up after surgery. If the patient answered the phone, the caller may have asked a few questions about physical activity. The patient may have lied about the truth out of embarrassment. With Patient IO, nurses engage with dynamic dashboards based on hard data. These dashboards show compliance of patients based on time (eg all patients seen last week), by disease state (eg all diabetes patients), procedure (eg all patients who had knee replacement), and other factors that the nurse determines to be useful. The nurse then engages non-compliant patients with much greater rigor than the organization otherwise would have since the organization can devote energy and effort to help the patients most in need.

Patient IO is just an information arbitrage tool. Previously, healthcare organizations had no ability to track or understand this data. Now they do. As a result, it’s logical for them to rethink how they care for patients using this new tool. The tool itself does not make the patient better. Instead, the tool helps patients take better care of themselves, and helps providers engage with patients who are struggling with compliance.

Building Patient IO’s tech required 1/100th the financial resources that it took to develop a drug, but requires 1000x the organizational change. The same is true for most IT solutions. They are orders of magnitude more capitally efficient than traditional medtech, but require huge organizational changes to reap the benefits.

Over the last 50 years, providers haven’t developed the organizational capability to change their fundamental processes. They simply didn’t have a reason to. Although medicine was advancing rapidly, the advancement was literally contained to just the medicine. No one other than the vendor and the FDA really needed to understand the inner workings of the black boxes that were being invented. Healthcare delivery broadly remained unchanged until recently. Information technology is breaking old assumptions in healthcare delivery processes. This, coupled with the rapid succession of government mandates (meaningful use, ICD 10, managing lives at-risk, etc), has strained healthcare delivery systems. They are still learning how to adopt technology at the pace at which technology moves.

The future is incredibly exciting. As processes and medicine evolve together, we will be able to achieve results that were never before possible.

How To Cultivate “I like you, but…”

As a startup CEO, you’re going to meet a lot of people that you want to get involved in your company, but that you ultimately can’t. Examples:

1) Investors who like you personally and your business, but don’t yet invest.

2) Candidates and advisors you like you and the opportunity, but don’t yet join.

3) Prospects who like you and your solution, but who don’t become paying customers.

You will meet hundreds of them in the first couple of years of your startup. Most startup CEOs don’t do a good job cultivating these relationships. Here’s the quick and simple guide on how to do this in a few hours per month.

The first step is to track all of these people: use a CRM! You can use a personal CRM like Streak, Contactually, or an SMB-focused CRM likeRelateIQ. Manage the different classes of stakeholders with different tags or lists in the CRM. I wouldn’t recommend SalesForce for this purpose as SalesForce is overkill for the scope of effort here. The key attribute you will want is easy Gmail integration so you can add a contact to a list directly from your inbox to minimize workflow disruption.

The second step is to set aside 2–4 hours each month to do this. Just create a recurring calendar invite. If you schedule it now, it will be a priority. You will have time.

Cultivating Investor Relationships

In almost every blog post ever written about fundraising, one of the commonly repeated recommendations is to stay in touch with investors even when you’re not actively raising. The reasoning behind this is simple. Investors invest in lines, not data points. They want to see how a company progresses over time, and if the company can hit its stated goals. This also gives investors a chance to get to know you better to make sure there is a personality fit.

A common way CEOs manage this process is with regular investor updates and 10–20 minute follow up phone calls. A staggered quarterly cadence is best. Conducting 20–40 investor updates in a few-week span is too burdensome for CEOs. But spreading those 20–40 calls over 3 months into buckets of 6–13 per month is much more manageable. During each of those calls, CEOs should come prepared with one ask of each investor. Asking doesn’t hurt. The better the ask, even if the investor can’t help, the more the investor will like you for thinking strategically about the biggest sources of leverage. The best investors will help you even if they’re not invested. Cultivates the relationship per the Benjamin Franklin effect.

Don’t prepare fresh new content for these investor updates. No one is expecting a formal pitch deck. Instead, just share a handful of KPIs and graphs that they’re already using to run the business. You are probably already including these KPIs in your board meetings. The result is that the time burden of preparing these investor updates should be minimal.

Although this science is relatively known for managing investors, few CEOs do this well for other key stakeholders: candidates and customers.

Cultivating Candidate and Advisor Relationships

The process for cultivating relationships with candidates and advisors is remarkably similar. Candidates want to know the same basic things that VCs want to know: Are you growing? Is your business working? What are the key milestones you need to hit over the next 6 months? What are the risks? What roles are you hiring for?

Most of the investor update can be repurposed to be shared with candidates. As you grow, the diversity of your candidate base will increase. So you’ll want to add in content to appeal to technical types and not just business people. You won’t however want to hop on a phone call with each candidate. There will simply be too many who aren’t ready to leave their current jobs. Your candidate hot-list will swell to over a 100 quickly. There’s simply no way to have that many conversations on a regular basis. However, it’s probably worth it to hop on the phone with your top 3 favorite candidates. You want to stay top of mind.

As your startup grows and you hire capable VPs, you’ll want to pass this responsibility onto each VP. VPs can cater the content to be geared towards their respective audiences. The VP content should include a general note from the CEO as it will make the candidate feel good.

If you have 5 VPs — Sales, Marketing, Engineering, Product, Customer Success — who each own a hot-list of 30–50 candidates, that means you’re actively engaging 200 candidates each quarter. That’s a big deal. Hiring even just a few of them will make a huge difference in your business. And even bigger deal will be that those VPs will engage the 3 best candidates in their respective areas. Hiring even one of those top 15 will be a huge boost.

Cultivating Customer Relationships

CEOs should own this function for all relationships she personally establishes even past $10M ARR. In the early days, the CEO will lead every customer phone call. You’ll build relationships with lots of early potential customers. There will be a select few — typically the most sophisticated, the one’s that “get” your product almost instantly, but that aren’t interested in becoming customers today for one reason or another. Those are some of the best people to stay in touch with. They probably like you and want to see you succeed, but just can’t engage as a customer just yet. These can be some of your best advocates other than paying customers.

The message to potential customers should be very different than the messages to investors and candidates. Customers care far less about the state of your business and much more so about how you can help them. Give them some general information about the state of the business: e.g. “We grew 25% last quarter” even if they don’t know the base from which you grew. Or “We made 2 key hires: Joe and Bob.” But more importantly, highlight, if you can, customer success stories! And share new features thatmatter and explain how they will extract value from those features. Make sure this email doesn’t feel like a newsletter. It’s not. It’s a personal note from the CEO to a really important prospect.

It’s likely that this list of customers isn’t that large. So this may be something you want to individualize on a per customer basis. If you really really really wanted that person to be a customer, they are worth an extra 5–10 minutes of your attention each quarter to deliver a personalized message. And of course, ask for a 5–10 minute phone call to catch up.

That’s it! Cultivating existing relationships is one of the lowest-hanging fruits that you can pick. It’s not hard, but something that most forget to do when they’re caught up in the daily grind.

Why Are Tech Giants Investing in AR and VR?

All of the tech giants are investing at virtual reality (VR) and augmented reality (AR). For players like Apple, the target business model is obvious: sell high-end, polished consumer experiences at healthy margins. The same generally true of other hardware players such as Samsung and HTC. Sony and Microsoft are investing not to profit on hardware, but to profit on the ecosystem around the hardware.

But why are advertising companies like Facebook and Google investing in AR and VR? And how will direct response (Google’s dominant revenue stream) and brand advertising (Facebook’s dominant revenue stream) work in AR and VR?

Facebook and Google are investing in AR/VR as defense. The historical precedent is clear: Google bought Android as a defense mechanism to reduce the risk that Microsoft would dominate mobile. Although Android itself isn’t directly materially profitable to Google, Google leverages Android as a source of control over the technology ecosystem to ensure unfettered access to Google’s revenue engine: search.

Mark Zuckerberg has stated that he wishes that Facebook controlled a mobile OS. Why? Because he would prefer that the OS support social sharing through Facebook’s social networks as effortlessly as possible. Zuckerberg wants to create a social OS. This would make Facebook’s products even stickier, draw more engagement to Facebook properties, and ultimately generate more profit.

Given the power that Apple and Google exert over their respective mobile ecosystems, it’s natural that both advertising-based tech giants are investing heavily to control the AR and VR ecosystems of the future. What revenue opportunities do VR and AR offer Google and Facebook?

AR and VR present the greatest advertising canvases conceivable. AR and VR UXs will offer, on a per person basis, orders of magnitude more ad inventory that can be hyper targeted more precisely than ever before. That is the perfect combo for advertisers: scale, precision, and context.

OS makers dictate the rules of the game for their respective hardware form factors. The OS explicitly allows and disallows certain actions by 3rd party apps. Beyond supporting modal, foreground applications, iOS and Android define how apps can interact with the lock screen, home screen, notifications, hardware controls, and silicon components. Android is far more extensible than iOS, but even Android places explicit limits on developers. For example, 3rd party developers can’t replace the notification engine.

Mobile has eaten the world because smartphones have come to consume the white spaces in our lives: people turn to their phones to tweet, SnapChat, and check Instagram/Facebook while waiting at traffic lights and subway stations, at restaurants while waiting for a friend, and even in the bathroom. This has created an enormous opportunity to profit: attention is the world’s most valuable commodity. This is why Facebook has absolutely crushed it on mobile. Facebook controls a significant majority of attention for most users in a new advertising canvas (white space of people’s lives), and Facebook is selling access to that attention for enormous profit.

But mobile has, on a relative basis, hardly touched the active moments of our consumer lives: driving, eating, playing sports, watching movies, socializing with friends, etc. Yes, people play with their phones intermittently while doing all of the above, but one cannot read an actor’s bio and watch a movie at the exact same moment in time. Although Google Maps and Uber have transformed how all of us get around, none of us need to actually interact with our phones while we’re driving or Ubering (and in fact, we shouldn’t as a safety precaution). Audio cues are sufficient. No one uses their phone while playing sports.

AR and VR present an opportunity to layer in ads contextually into active parts of our lives. I’ll cover VR first, then AR.

Technically, VR is a modal activity. You can’t be doing something in VR and the physical world concurrently. But there will be virtual worlds that people can explore for hours on end with all kinds of virtual activities — games, Major League Drone Racing, virtual white boarding spaces, movies, porn, etc. These virtual environments will represent the ultimate advertising canvas for brand and direct response advertising.

For example, between drone races, Facebook/Google will present ads to buy similar drones and register for drone racing lessons. This represents the perfect combination of brand advertising — knowing who you are and creating purchase intent — with direct response advertising — efficiently finding and buying what you know you want.

Or while you’re drawing out the next UI in a VR whiteboarding space with a colleague who lives 500 miles away, you’ll see an ad for an app that helps you build better wireframes. The ad will show how you can literally drag and drop wireframe elements with your hands in virtual space, and interact intelligently with your whiteboard.

AR presents myriad awesome advertising opportunities. As you drive down the highway at 3PM, Google/Facebook will show you an ad to pull into McDonald’s in the next 15 seconds for a 15% discount on chicken salad. Google/Facebook know you haven’t eaten lunch today based on some health tracking, that you’re on a low-carb diet, and McDonald’s knows its slow time between lunch and dinner and will be glad to generate lower margin revenue during off-peak hours. AR is the perfect advertising medium for the physical world. AR presents the ultimate medium for gaming human psychology around scarcity. The opportunities for limited time offers are infinite!

Despite the huge opportunity mobile has presented, AR and VR represent advertising canvases that are orders of magnitude larger. The limitations that iOS and Android impose on 3rd party developers will be insignificant to advertisers relative the limitations that AR/VR OSes will impose on 3rd party apps and advertisers. There will no longer be a lock screen or home screen. Literally the entire world, virtual or physical, will be the “home screen.” The advertising opportunities are nearly infinite, and as such Facebook, Google, and the other tech giants are going to duke it out to dictate the rules of that experience.

It's Not About Me. It's All About You.

Google “common salesforce stage names.” You’ll find a bunch of articles that outline the basic sales process. Depending on the assumed annual contract value (ACV) of the article, you’ll typically see a list that looks something like this. The lower the ACV, the fewer items in the list.

Prospect

Marketing lead

Marketing qualified lead

Sales accepted lead

Sales qualified lead

Opportunity

Discovery

Online Demo

Onsite Demo

Negotiations

Proposal

Legal/Procurement

Closed Won

Closed Lost

This stage naming convention is not useful. It tells the selling organization very little about where the customer is in the buying process. The are a few problems:

1) These stage names are a series of actions the account executive (AE) has done with/to the customer. More importantly, these stage names do not reflect where the buyer is in their decision making process. If a deal is listed in Discovery, the selling organization knows the deal is still early in the sales cycle, but that’s about it. “Discovery” doesn’t indicate anything about the customer. These stage names do not highlight the problems the customer is facing in making a decision.

2) The more complex the sale, the less linear it is. This naming scheme attempts to force a non-linear sales process into a linear progression.

3) There is no consistency in the naming. In English class, we were taught that lists need to be consistent. A list of 6 items shouldn’t include 3 verbs, 2 adjectives, and a noun. This isn’t about being grammatically correct, but rather highlights that there is in fact something wrong with this naming convention.

The Right Approach

It’s called the Enterprise Integrated Sales Process (EISS). Full disclosure: I was taught the bulk of this by my good friend and mentor, Jim Banks of ShadeTree Technology. Although it’s designed for larger ACV sales, the frame of reference is usable for lower ACV opportunities. The stages are:

1) Awareness

2) Recognition

3) Determination

4) Justification

5) Acceptance

I’ll walk through these in reverse order because the key to the sales process is to reverse-engineer the deal from the end to the beginning.

Acceptance — an opportunity moves into Acceptance once every requirement from every stakeholder in the buying organization has been addressed. This includes legal and procurement. If all redlining has been finished, IT has approved security requirements, budgets have been allocated and approved, fee schedules set, use cases validated, and workflows understood, then the only remaining step is to initial paperwork.

In many organizations large and small just getting the signature can take days. Those few days are the Acceptance stage. By moving an opportunity to Acceptance, the AE is signaling to her company that every obstacle has been overcome. Nothing that was foreseeable can stop the deal now.

There are instances where procurement organizations will lie to the AE and a deal will move back to Justification from Acceptance. This should only happen when truly every foreseeable requirement was fulfilled, and then out of nowhere, something comes up at the end. “[Competitor] just offered us a price that’s 25% less than yours. If you don’t match it, no deal.” It’s unfortunate, but many procurement organizations are designed to do exactly this to vendors.

Justification — this is typically the longest stage of the sales cycle. An opportunity graduates from Justification into Acceptance when every foreseeable requirement for every stakeholder has been fulfilled. An opportunity moves into Justification from Determination when all of the requirements to close a deal are known. Thus, to move to Justification, an AE needs to understand the requirements of:

Approver — the person who literally signs the check. This is typically a procurement person, or in some cases, the VP whose budget is paying for the solution.

Decision Maker — typically the VP whose budget is paying for the solution. The DM and Approver can be the same person, although this is uncommon.

Recommender — these are people the VP looks to in assessing the solution. These can be Directors, or they can be SMEs. There may be a few Recommenders in a deal.

Influencer — like Recommenders, but they have less clout with the DM. This can include business analysts who help build business cases, or lower ranking SMEs who sit in on demos. There can be more than dozen Influencers.

IT — Although you could categorize IT as an Influencer or Recommender, they are an organization that almost always has its own unique of set of technical challenges that other Influencers and Recommenders don’t. As such, IT warrants its own role and in SalesForce. Note: if you’re selling into IT organizations, this this doesn’t make as much sense as most of the stakeholders are by definition in IT.

Legal — again, a functional group that AEs always have to deal with. Make sure that AEs know who these people are and what they want in a deal.

Procurement — again, a functional group that AEs always have to deal with. Make sure to know who these people are and what they want to see in a deal.

Each stakeholder in the buying organization has her own thoughts and views of the solution they’ve been asked to evaluate. Very few of them will directly shares their views with the AE. But most of them will share their opinions of the seller’s solution if the AE asks. The imperative of the Justification stage is to ensure that no one in the buying organization has any reason to object to the seller. NONE. If anyone has a reason to object, the deal is likely lost.

In order to fulfill everyone’s requirements, AEs first have to figure out what people want.

Determination — this stage is all about diagnosing. The AE has to 1) figure out who all of the stakeholders are, and 2) what their requirements are. This is an explicitly divergent problem, whereas Justification is a convergent problem.

“Here are the 12 people you’ll need to engage with. John makes the decisions around here. He needs to see a 25% ROIC and 12 month payback period to do a deal. He will rely on Sally and Bob’s judgement about the real value you can deliver. John will work with Jim and Jane on building a business case. And he’ll turn to Janet in legal, Nancy in procurement, and Dylan in IT to get their blessing. Here’s everyone’s contact info. Oh, and Nancy will be the one that signs the check. I know you care about that.”

That has never been said in the history of sales. AEs have to uncover all of that information and more.

During this stage, AEs need to rely on their Champion inside the buying organization to navigate. The Champion will be involved in Justification too, but the bulk of the work the Champion will do be in Determination.

Recognition — A deal exits Recognition when the AE has asked her primary point of contact these 2 questions:

1) “Will you be my champion? That is, will you help me navigate your organization and understand the pitfalls and processes that we’ll need to work through together?”

2) “If it’s not going to work out, will you be the first to tell me so that we don’t both waste our time?”

When the champion has agreed to those criteria, a deal moves to Determination. Recognition is about selling one person. The remainder of the sales cycle after Recognition is about selling the rest of the organization.

The most common reason deals fail in Recognition is when the contact in the buying organization says “let me get my colleague involved for a demo” before the two questions above have been asked. This almost always results in failure. Why? Because that statement implies that AE’s current contact isn’t Champion material. Champions by definition need conviction in the solution they’re bringing into the organization. Without conviction, there’s no Champion. Without a champion, there’s no deal.

Most contacts that a sales organization is talking to at the Recognition stage have never championed a project through before. They rarely understand how their organization buys solutions, or even that champions need to exist to shepherd deals. This is why question #1 above is so important.

Question #2 is just as important. This will be the first time that anyone from the sales organization expresses vulnerability to the buying organization. This is a crucial moment of trust-building. It also creates a commitment from the champion to be honest with the AE.

Awareness — Awareness means that at least one person from one side of a transaction is aware of and interested in the other company. For inbound leads, Awareness translates to unqualified marketing leads. For outbound sales efforts, Awareness-stage deals are all untouched, qualified prospects. A deal moves to Recognition when one individual from each side of the deal has expressed interest in the other. At this point, the sales organization has to convince this person to be the champion.

Note: most sales organizations will transition account ownership from an SDR to an AE when a deal moves from Awareness to Recognition, or after the 1st or 2nd conversation in Recognition.

The Power of EISS

So why is the EISS naming-scheme so much better than traditional naming conventions? Because these stages tell all parties inside the selling organization what’s going on in the deal. For example, is it more useful for a CEO or CFO to see “Demo” or “Determination” as the stage for a given deal?

“Demo” is a meaningless term. Demos can happen in Recognition, Determination, and Justification. But Determination means that there’s a champion, and that the AE is trying to figure out who else needs to be involved. With that information, the CEO/CFO can ask hard questions such as “What is the background of the SME/Recommender on this deal? Has she led prior technology implementations that impacted this population of employees?”

Another example. If an AE has listed as a deal as “Negotiation,” the natural inclination is to ask about the terms that are currently being negotiated. But this is the wrong first question about any negotiation: “Have we (the selling organization) diagnosed every issue and requirement possible, and fulfilled the key requirements to ensure that the customer realizes the potential value of our solution?” If an AE lists a deal as “Determination” but begins talking about pricing, that’s a red flag. How could the customer possibly be willing to pay the maximum possible price if the customer doesn’t yet know what the real value of the solution is?

One of the most challenging aspects of sales is to orient EVERYTHING through the lens of the customer. This post just touched on one component of view: stage naming. Terms like “Demo” and “Negotiation” are actions that the sales organization does with the buyer. But those actions don’t represent where the buyer is in their buying process. The EISS provides the framework that sales organizations should use to map all actions and descriptors through the eyes of the customer.