Home | About | Recent Issue | Archives | Events | Jobs | Subscribe | ContactBookmark The Sterling Report


Will the enterprise market spend significant IT budget on Windows Vista in 2007?



Missed the Number? Send Your CEO a Japanese Death Poem

By Angel Mehta, Managing Director, Sterling-Hoffman Executive Search

A Vice President Sales is never as good or as bad as his/her numbers might suggest. Thus spoke Phillip Dunkelberger, CEO of PGP, when I visited him last year.

I was thinking about Phil’s comment recently while reading a book of Japanese Death Poems. Japanese Death Poems are 3 – 4 lines in length at most, and are written by monks on the verge of death. They are scary, and not just a little frustrating. For example, every poem seems to have a line where the dying monks scream: ‘JUST SO!!!’ at the top of their lungs. After some research, I discovered that to a Japanese monk, ‘Just so’ is a critical phrase, indicating the importance of accepting reality as it is.

In other words, after meditating for 50 years about the meaning of life, the Japanese monks in this book finally figured out that the secret to eternal bliss lies in proper understanding of Forrest Gump’s famous insight: sometimes, shit happens.

Japanese Death Poems and Forrest Gump were both on my mind during a conversation I had with the CEO of a $100m application software vendor in Boston a few weeks ago. He complained that his company had turned over its sales force twice in 28 months because the sales people were consistently missing quota. He placed the blame squarely on his Vice President of Sales, reasoning that if the VP Sales was any good, the right software sales people would naturally follow.

My experience indicates that this theory is quite flawed. Certainly, great leaders are more likely to attract great employees. However, the great VP Sales you hire is not the only one trying to recruit those great sales people; your competitors want them also. If a sales rep has had a successful career, he/she will have strong relationships with several former managers. Loyalty to a former manager, then, is only one of many factors involved in determining where a star sales executive will end up. Further, as I have noted repeatedly in previous lectures and articles, great sales people are by default in short supply. Logically, only 20% of sales people can be in the top 20% of sales performers – which means that 80% of the talent pool is less than exceptional.

I gently explained to the Software CEO in Boston that the sales people his company had terminated would almost certainly be absorbed by a handful of other software companies in the middle of their own sales force restructuring. Further, the new sales people he would eventually bring on had almost certainly been purged at some point by other ISVs doing their own house cleaning. Therefore, his strategy of rebuilding the sales force every 12 months until the right one was found was unlikely to yield better results.

Re-shuffling the Cards
At a distance, it sometimes appears as if the entire software industry is engaged in a never-ending game of cards, in which the same old cards are continuously redistributed from the same old deck. And with each new round, every software company hopes to be blessed with a disproportionate share of Aces, Kings, and Queens: sales reps with $400k W2’s… the 200% quota buster… or the VP Sales with a deep C-level rolodex into the vertical of choice. All of this card shuffling is quite literally insane (though wonderfully profitable for myself and the partners of Sterling-Hoffman). On occasion, you may end up with a superior hand; that is, a greater share of the best software sales people. But just as in the casino, the odds are set against you from the very beginning.

Does this mean that software companies should abandon their aggressive attempts to recruit the best sales people? Hardly. It simply means that if the recruiting efforts of other software companies are eventually improved in kind, any significant competitive advantage one software company might obtain by aggressive recruiting of the top sales people will quickly disappear. Geoff Moore articulated a similar concept about the difficulty of maintaining sustainable competitive advantage in his book, “Living on the Fault Line.” With regards to recruiting sales executives, temporary advantage may be gained by retaining a specialty search firm (i.e. one focused on software sales), in order to gain immediate access to a rolodex of sales people that would be unavailable except through an entity that reaps commercial benefit from maintaining such a network.

Recruiter fees, however, are notoriously expensive. Either way, a software company has no choice but to aggressively recruit the best sales executives it can – while accepting that such efforts serve only as the ‘minimum buy-in’ for access to the high roller tables. In other words, attempting to secure your fair share of the best software sales people will serve only to keep you in the game – it will not win the game outright.

It may be helpful, then, to consider what factors (beyond following a great VP Sales) prompt the very best software sales people to join a company. I consulted my colleagues at Sterling-Hoffman while writing this article and consensus seemed to be: ‘easy money’. Jim Maikranz of Bain Capital (former SVP Global Sales at SAP) once commented to me that savvy sales people never join an ISV under the naive assumption that they can sell anything to anyone. Rather, they seek to join software companies that already have significant momentum, and capitalize on the window of opportunity to maximize their earnings while such a window exists. For most software companies, that window exists until a larger vendor (e.g. Oracle, SAP, IBM) succeeds in building a comparable solution that is ‘good enough’ for enterprise customers. At this point in the category’s evolution, a smaller software company’s products become harder to sell.


  Home | About | Recent Issue | Archives | Events | Jobs | Subscribe | Contact | Terms of Agreement
© 2006 The Sterling Report. All rights reserved.