Business Drivers - Why Customers REALLY Spend Money
On a quiet afternoon, early in my career, I was asked to step into the office of the President and CEO of the regional distributor where I worked. I had been the IT Manager for a couple years and he and I had developed a rapport that eventually evolved into an unspoken mentor-mentee relationship. I was twenty-seven and he was close to retirement. I was very good with technology but understood less about business; he was the reverse. Our 'lessons', which were neither scheduled nor formal, focused on business topics such as negotiation, sales, inventory, and management techniques. He would see me in the hall, invite me in, close his door, and we would talk. It always ended with a homework assignment.
On this particular afternoon the topic was, "Why does an organization spend money on things that aren't products they're selling?" My initial answer was, "because they need them". He smiled and prodded me, "but why?" The conversation was interesting; he walked me through the justification for recent company purchases such as a new delivery truck, some shelving in the warehouse, and a recent server upgrade. Over the course of our conversation I noticed two identical paperback books on his desk. One was brand new and the other had obviously been read. I knew where this was going; I was about to get some homework. The conversation lasted forty-five minutes and as we concluded he handed the me an unread copy of Necessary But Not Sufficient by Eliyahu M. Goldratt. He asked that I read it over the next couple weeks and return when I was ready to talk about it.
For context, this was just after Y2K, was early internet days, and cell phones were becoming more ubiquitous. It was an era of endless technology innovation. As a technologist I was all about the new gadgets, faster computers, better software, and whatever was new and shiny. The book and our conversation were my first real introduction to the concept that, despite my passion for technology, there must be business drivers that governed it's acquisition.
What I took away from the book (which every SE should read) and subsequent conversation is that even though technology is a necessary tool in running any organization, it is not the purpose of the business. You might think that should be obvious but to a young engineer who was myopically focused on the various tools I worked with every day it was a new concept that required me to conceptualize my work at a higher level. In the words of the author from a lecture given years after its publication, "for technology to bring benefit, the technology must diminish an existing limitation". In SE terms, customers don't buy our product just because it is the newest, latest, or greatest. There must be a business driver. Sometimes, particularly in technology, we forget this. However, the best SEs not only remember it but they keep the customer's business driver top of mind.
An Example
Several years ago I led a team of SEs that sold various types of technology in the southeastern United States. There was an initiative by one of our manufacturers to tie the technology we sold to the business drivers that justified each purchase. They even linked part of our partner incentive to it. Every SE and Account Manager should have been able to do this, and should have already been doing it, but the financial incentive drove more complete adoption of the process. Suppose that a tire manufacturer wanted to upgrade the wireless network in one of their buildings. We needed to understand why. The fact that they wanted it and were ready to cut a PO wasn't enough. Rather than take the money and run, we took the time to find out, "why is the business willing to spend this much money on this right now?"
As a result of intermittent wireless outages the barcode scan guns that are used to check in and check out inventory frequently don't work. Without working scan guns we have to manually enter product codes and quantities. Manual entry takes 40% longer than using the scan guns. This additional time decreases the volume of product we can ship each day which directly impacts the profitability of our division.
They lost actual real money when the wireless didn't work. Taking it to the next level we tried to tie an actual dollar amount of profitability loss to this project by asking something like, "what is the target daily, weekly, or monthly profitability of your division?" With that we could see that a $50,000 investment now would pay back the business in a matter of months.
When done properly it was always a clarifying exercise for both us as the technology partner as well as for the customer's IT staff. They often didn't realize their own business drivers which meant they couldn't communicate the value of one design over another and frequently just bought the least expensive one. I found, over the course of several years and hundreds of these conversations across my team, that customer's business drivers always fall into one of three categories:
1. Make them more money, which makes them more profitable
2. Save them money, which makes them more profitable
3. Decrease their risk, which ensure continued profitability at a certain level
Success in a for-profit business is measured in profitability. Even when working with non-profit entities, government agencies, or educational institutions you'll find this same pattern though it is often disguised in different words that measure their version of success. These might be 'service level' or 'taxpayer satisfaction' or 'student experience'.
All SEs should understand the concept of a business driver. Top tier SEs should be proficient at discovering those business drivers and working with their Account Manager to drive home the value of the solution they are proposing. Without this understanding the SE is simply a really good engineer who can explain their product, nothing more. Without a solid understanding of business drivers the SE cannot contribute holistically to the sale.
