ORACLE

The Entrepreneur’s Parable

By Doug Samuelson

In one of those link-up meetings after work in a major U.S. city, the panel discussion on how to obtain management support for information technology projects included an unusual individual: not only an accomplished O.R. analyst, but also a successful high-tech entrepreneur and executive. At his turn to talk about his experiences and lessons learned, he started out by saying, “All my fellow panelists have told you how important it is to sell your ideas and your work and so it is. But what about marketing? And how many of you know the difference?” He was rewarded by many curious stares from the audience.

“In case any of you are thinking about being entrepreneurs,” he went on, “this is a favorite question venture capitalists ask. It’s surprising how many aspiring business people don’t know the difference. So, here it is: Sales is selling what you have to prospects you know about. Marketing is determining what you should be selling to whom.

“And,” he explained, “here’s why it’s critical. You’ve heard my colleagues here say, correctly, that you have to stop trying to sell what you want to do and listen to what the customer needs. I’d go even further: most sales opportunities originate with a howl of pain from the executive suite, followed by the detailed, clear, technically specific problem description, ‘Somebody do something about this, now!’ That’s all the technical information you get. But that’s the opportunity to sell a project. With all due respects to Emerson, I don’t think he ever tried to start a business himself. The fact is, building a better mousetrap will only bring you customers if they really don’t like mice and are overrun by them. I’d go so far as to say that if there’s no howl of pain, you’re unlikely to sell them anything.

“But that kind of need isn’t enough to guarantee you a long-running successful business,” he continued. “You actually need three things: the need, as my colleagues here said, and their trust that you can solve the problem, as my colleagues also said. One of the things that really stuck from the sales and marketing training I’ve taken is that the strongest statement you can make in a sales call is, ‘We’ve done that.’ But if you want more than a one-shot opportunity, you also want the customer to be fairly confident that no one else can do it as well and as cost-effectively as you. This is where technical people who have learned about selling still miss the boat. In my own case, I’ve lost more than one follow-on opportunity, after doing what the client agreed was great work, because he thought that now the next part could be done nearly as well by someone a lot less expensive. I guess I made it look too easy and conveyed too much information about how to do it!”

“Claiming you know more than everyone else is the kind of arrogance that will get you into lots of trouble,” one of the other panelists objected.

“True,” the entrepreneur acknowledged. “But I didn’t say you should claim that. It’s better to arrange matters, or better yet to choose what you do, so that the customers will reach that conclusion themselves. This is one major reason why we have professional licenses, accredited educational curricula, certification programs, patents, independent testing labs, trade secret technology and other such forms of exclusivity. The wine makers gave us a really striking example about 10 years ago, when they got international treaties adopted that limit what you can claim about wines. You can’t call it champagne, for example, unless it comes from the Champagne region of France and got produced by the approved method. Wine from just across the border, in Germany, produced from the same grapes in virtually the same soil and climate and processed in the same way, has to be called something else – Sekt, in this instance – and the good ones are quite a bargain, by the way, since many people don’t realize what Sekt is.

“And that’s how you do it,” he said. “You – we — create a niche market that is somewhat difficult for others to enter. And when you are in a niche like that, it’s amazing how much easier all the other aspects of business development become – selling, customer service, follow-on projects. As Damon Runyon pointed out, people will stay with a bad crap game for a long time, without raising much fuss, if it’s the only game in town.”

“Sounds a bit cynical to me,” one of the other panelists remarked.

“Well, maybe,” the entrepreneur conceded, “and I don’t want to encourage any of you to believe that market placement is all that matters, or that you can get complacent if you get that right. But good market placement does make everything else easier, and it does make your customers more tolerant of your faults in other areas.

“A friend of mine who got an MBA from Wharton told me this joke, apparently a big favorite there. This MBA class is back for their 10-year reunion. Joe was the anchor man in the class, a nice guy whose classmates pulled him through the quant courses. Now everyone has heard that he’s the richest guy in the class. Finally someone just has to ask him, ‘So how did you do it?’

“And Joe replies, ‘It’s really quite simple. Widgets sell for five cents each. I found a supplier no one else knows about who sells them to me for two cents each. And you know, that three percent just keeps adding up!’ ”

Doug Samuelson (samuelsondoug@yahoo.com) is president and chief scientist of InfoLogix, Inc., an R&D and consulting company in Annandale, Va.