The Speed of Innovation Is Outpacing the Speed of Adoption—Who You Gonna Call?
B2B high-tech vendors like Salesforce, Microsoft, OpenAI, and Nvidia have a problem—they are innovating at a much faster rate than their customers can adopt. In other words, there is a backlog of trapped value in their own product lines because they aren’t being deployed and used at scale fast enough. This is putting real pressure on their Performance Zones. So, if you are Marc or Satya or Sam or Jensen, who you gonna call?
More sales can’t solve this problem—that just shifts the backlog over to the customer, where it sits as shelfware, ready to churn out at the next renewal. More products can’t solve this problem—that just puts more cars onto an already jam-packed freeway—better to use metering lights instead. So, who you gonna call?
It has to be some version of Customer Success—but not the one that we are used to, not the one that we fund after the fact, not the one we treat as a cost center, not the one that doesn’t get a seat at the table. This time, customer success is the shortest path to Performance Zone success—so, make way for the NEW & IMPROVED Customer Success!
In the pre-chasm early market, the New & Improved Customer Success organizes around FDEs—Forward Deployed Engineers. They are connected both at the customer site and to the development teams back home in order to do whatever it takes to unleash the potential of the new technology. The goal is to create a showcase application with a brand-name customer, one the press can’t help but write about, and thus one that can put the technology on the map. FDEs are what make this co-innovation and co-development possible. The teams have to be world-class, meaning they are hard to recruit, there are never enough of them, and they can never scale. In short, they are pioneers, not settlers. The latter belong on the other side of the chasm.
To ignite adoption on the other side of the chasm, the New & Improved Customer Success must field UCTs—Use Case Teams. These are organized around a product implementation expert and a use-case domain expert, and they typically work at the departmental level with a process owner to reengineer a seriously underperforming process. Departmental leaders never get this kind of service from their own IT organizations, so they are over the moon about their experience and brag about it to all their friends. That’s what creates the viral word-of-mouth that drives rapid adoption within the target market segment.
UCTs do scale via playbooks, ones that make them more productive in the short term, and in the long term, can be used to recruit third-party service providers to continue to serve the target segment once it is time for the vendor enterprise to move on. That moving on is initially directed to related use cases in adjacent target market segments, which we call the bowling alley. After a few of those pins start to fall, it’s time to keep a lookout for the tornado.
Sadly, however, most enterprises seriously underperform in the bowling alley. Burdened as they are with a backlog of product innovation, they become impatient with target market segments that look too small, with early wins that do not immediately translate into high volume and thus do not materially impact the quarterly earnings, and with delays in the ROI they promised their shareholders when they made their latest (very expensive) acquisition. So, instead of surgically attacking the barriers to adoption, they try to break through by brute force—typically consisting of highly discounted high-volume sales deals—and end up losing momentum rather than gaining it, depleting both their resources and their brand reputation long before the category gets to the tornado stage.
When the tornado does come, its winds will be driven by a killer app, the first truly horizontal application that customers from all industries want and need as the world transitions to a new infrastructure. Thus, for the first time, when vendors knock at the prospect’s door, they discover that there is already budget allocated for the category, and all they need to do now is win it. In this context, the Customer Success organization must forget about helping to create demand and put all of its energies into fulfilling it. Typically, this is organized around a professional services offering focused specifically on deploying the killer app, executing to an ever-improving playbook, one that delivers success while earning better and better margins along the way.
This version of customer success doesn’t need to be new and improved—we’ve been doing this well for years—but it does need to be managed properly. Here again, technology vendors often go astray. Attracted by the material revenue contributions that professional services can generate when demand is great, they lose sight of the fact they are participating in a once-in-the-life-of-a-category market share land grab. Once shares are grabbed, category profits over time distribute across competing vendors following a power law in which the leader gets the richest portion by far, numbers two and three make out just fine as well, but everyone else is left scrabbling for the leftovers. To maximize market share capture, it is critical to enlist third parties to maximize market coverage during the tornado phase. This means foregoing some profitable revenue in the short term. When enterprises hold professional services leaders to stretch revenue or margin targets instead, they are eating their seed corn (said the author who has never actually set foot in a cornfield).
When category tornadoes subside, we are on to Main Street, hopefully for a decade or two. Given our newly digitally transformed world economy, once again we need a New & Improved Customer Success organization because increasingly enterprises are now turning to consumption pricing. This form of pricing works well once goods and services have commoditized, good/better/best price levels have been established, and a baseline of consumption has been established. Prior to that, however, it can create some nasty surprises both for the customer and the vendor, both of whom are looking to the other for guidance. When that happens, who you gonna call?
A New & Improved Customer Success team, of course. This one needs to be armed with real-time consumption monitoring tools that can be shared with the customer and used to set expectations and establish norms. The goal is to create maximum transparency in order to build lasting trust. In that context, Sales and Legal need to introduce a “grace period” clause with price caps into the purchase agreement to give time for Customer Success to help get things sorted out. Once the norms are established, then the goal is to motivate increased consumption by targeting additional sources of trapped value. Some of these the customer will find on their own, but other opportunities will get missed because the value trap has been there so long the customer takes it for granted. A New & Improved Customer Success team can facilitate trapped value analysis workshops to surface such bottlenecks and then connect them to the proper consumable services that can address them.
To sum all this up, when the speed of adoption lags the speed of innovation, vendors need to rebalance their market coverage, taking resources from sales and marketing and putting them in the customer success services. Once momentum picks back up, a subsequent rebalancing will be warranted. The typical mistake is to assume that the market will sort itself out on its own and to press on with your current resource allocation. At some point, the market will indeed do so, but it is not likely that you will be a meaningful participant.
That’s what I think. What do you think?
