Changing the World – SONOS Lays Off and Apple Pays Off

I haven’t written a post in the “Changing World” category for a couple months, but it seemed appropriate given the shocking news that Sonos, one of my favorite companies, had layoffs this week that included acoustic engineers, marketing, and human resources personnel. The title of the Engadget post, “Sonos announces layoffs, refocuses on streaming and voice tech” says it all, but what happened? They make fantastic products that “just work,” last for years, and have incredible sound quality. They revolutionized the wireless home music system industry years ago with the first mesh Wi-Fi networking speaker systems. The article mentions that one reason for the layoffs is competition from Amazon’s Echo which is a hands-free speaker you can control with your voice. Maybe, but Echo is a completely different product so the problems seem to go much deeper. Two issues seem dominant: marketing and technical stagnation.

In marketing, Sonos seems to think they have the mass appeal of Apple, which of course, they don’t. Even Sonos’ most recent high profile ad during the Grammies, “Apple Music +Sonos” doesn’t showcase the advantages of a multi-thousand dollar mesh network music system over hundred dollar Bluetooth speakers. Apple on the other hand has focused on marketing the value of their products throughout the life of the company. When Steve Jobs returned to Apple one of his first projects was the highly successful Think Different campaign. I even wrote about it in the post, “Right Intent: Explaining the Unexplainable.” Recently I came across a video, “Apple Confidential,” in which Jobs is speaking at an internal Apple meeting right before the campaign’s launch. He explains that marketing is about values and that Apple has to be very clear about what it wants people to know and remember about them. Sonos has obviously had trouble with this. Later, at 6:34, Jobs goes on to say that Apple’s core value is that people with passion can change the world for the better. A lofty goal, especially for a meeting in 1997 when Apple was very close to going out of business.

Sonos has actually changed their industry dramatically, but has stagnated in recent years. Purists might care about a speaker that adapts its audio response to its vertical or horizontal orientation, but many more people care about Bluetooth connectivity, which Sonos does not support. Their app has no problem streaming from a wide variety of music services, but it was also clear they were stagnating when it took six month to integrate Apple Music. The result was their best year ever in 2015 followed by layoffs in March of 2016. This was clearly not a commitment to changing the world for the better, but more like giving up at the first sign of problems. It immediately changed my opinion of the company and now it looks like they are simply preparing themselves for sale. Even worse, the high end customers they appeal to will certainly be concerned now that Sonos’ long term viability is questionable. With proprietary hardware and software, their speakers simply will not work long without regular software updates.

Apple is not having an easy time these days either, but they are fighting for their values, releasing new products, and generally adapting in the face of competition. Sonos could have done so many things with their world class audio labs and acoustic engineers: headphones, Bluetooth, speech recognition, and simply reducing prices in some key areas. Instead, they just let employees go, dealing a blow to their wonderful reputation and a corporate culture they worked so hard to create. When Apple had trouble with their iAd business, they did “layoff” about 100 people, but committed to “compensate for iAd layoffs with new job openings.”

Companies sometimes fall onto hard times. The loss of a major account or the entry of a major competitor can seem like the beginning of the end. However, to healthy companies, it is an opportunity to refocus on strengths, create new sales and marketing strategies, and in general rise to the challenge. The next post in this series will provide details on how and where to implement this change and don’t worry, you won’t have to “meet your Waterloo” to do it.

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Secrets of the Superbosses

To continue the recent post, “The Power of Silence,” I wrote that some companies I have worked with have no idea what “the silence” is saying about their products and services. The post ended by suggesting that grooming talent that cares about customers’ issues and needs is critical to breaking negative aspects of the power of silence. As so often happens, another example recently surfaced during a conversation at Phoenix Startup Week.  A national sales manager was having ongoing problems with an underperforming sales engineer. The engineer was well educated, well trained, and seemed to be doing all the right things in his large territory, but sales were mediocre. The company’s products were excellent and rapidly gaining worldwide marketshare so that wasn’t the problem. After some analysis, the sales engineer seemed to be better at supporting customers than making sales so the national sales manager hired local sales reps and promoted the sales engineer to a regional manager position. The result, sales were still stagnant. What was the problem?

I’m not 100% sure since I have never consulted for this company, but after this discussion I strongly suspect that the busy national sales manager was being manipulated by his regional sales manager through the power of silence. The employee was visiting customers and supporting the reps, so “no news is good news,” right? The company’s headquarters are in Europe so busy upper management was probably also being manipulated by US management in the same way. By silently avoiding the issue, nobody had to face the real problem of underperformance. What is the solution?

1901 US cartoon from Puck depicting John D. Rockefeller.
1901 US cartoon from Puck depicting John D. Rockefeller.

Like many dysfunctional management problems, immediate solutions can range from coaching and written recovery plans to personnel changes, but the problem never would have surfaced if the employees involved had been hired and groomed properly from the start. The Harvard Business Review (HBR) article, “Secrets of the Superbosses,” is a wonderful glimpse at how the best people make the best company, but only if “leaders follow specific practices in hiring and honing talent.” The article goes on to explain several of those practices such as using unconventional hiring that:

  • Focuses on intelligence, creativity, and flexibility
  • Finds unlikely winners
  • Adapts the job or organization to fit the talent
  • Accepts churn

Then following up that unconventional hiring with hands-on leadership that:

  • Sets high expectations
  • Trusts the team to execute
  • Encourages step-change growth
  • Stays connected

I know from observation (and feedback from their customers) that this European company is utilizing these practices in Europe which is why they are experiencing such rapid growth. Their challenge is to insure the entire worldwide organization is doing the same. If this seems like a daunting task for your organization, don’t despair. This is a long term shift of culture and thinking for most companies, but even the longest journey starts with a single step.

Rethinking Sales: Part 10 – Sales as a Profession

There is much more to be said about the topics in last month’s post “Rethinking Sales: Part 9 – Sales Without Commissions,” but the writing is on the wall. Sales must stop being a black box where commissions go in and orders come out. It is the last part of an organization where a lack of understanding (and management accountability) results in unnecessary commission expenses. Sales managers may be the only people who know if their salespeople are contributing to the organization at a professional level and they ain’t telling. Their compensation is based on sales performance too! I’ve seen mediocre sales people making $200K+ a year after receiving large, unexpected orders from major accounts. Management has no clue whether the salesperson was key to winning those orders or not.

Many people think salespeople work incredibly hard to win those opportunities and sometimes they do. Sales is typically filled with long days full of risk, rejection, and uncertainty. You won’t find Sales on Glassdoor’s “25 Best Jobs for Work-Life Balance” list. Of course, you also won’t find any $200K+ / year jobs on that list. Even highly trained engineers and scientists are not making that much. Which brings me to the point of this post: for many companies and markets, sales needs to become a career like engineering, management, or marketing. Sales professionals need to be trained in a system of selling that is aligned with the company’s culture and goals. A sales degree program would be a good step in this direction. The Wall Street Journal touched on this when it published a recent article “Why It’s So Hard to Fill Sales Jobs” with the subheading “‘Salesman’ Baggage Means Well-Paying Tech-Industry Positions Go Begging.” Even Microsoft is writing interesting articles on the seismic changes occurring in sales as part of the Microsoft Dynamics Blog,  Sales in the Modern Era, and Social Selling eBooks. The Social Selling eBook is not for most high tech selling environments, but does give a good overview of how sales has changed in more traditional consumer selling environments.

If you want to have a moment of fun, try Googling “degree in sales” and just read the first page of results. First is DeVry and the rest are split between sales management and articles on whether a degree is even needed for sales. One link did catch my eye, the Sales Education Foundation has an annual magazine featuring the top sales degree programs so it is possible to get a degree in sales. I’ve never heard of this foundation, but the website was interesting enough to get me to sign up for their newsletter. In the meantime, it’s ten o’clock, do you know where your salespeople are?

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Monthly Recap: Tipless Restaurants, Commissionless Salespeople, and What It Means to Be Great

September was a look back at a series of posts that started in 2013 with an exploration of the idea of eliminating tips in restaurants and how that might be a clue toward eliminating commissions for certain sales positions. Even the BBC recently published an article, “Is This the End of Tipping?,” proving it is definitely a current subject. The post “Following-Up: Amazon’s Fire Phone and Tipless Restaurants” had the details and was soon followed by the post “Rethinking Sales: Part 9 – Sales Without Commissions.” There is obviously a lot to say on this controversial topic so the post “Sales Without Commissions – Some Additional Thoughts” was published three days later.

Along the way, an informational post discussed better writing in “MailChimp Publishes a Guide to Effective Communication,” IOS and Android went head to head in “Some Thoughts About… Android Versus IOS,” and some useful advice for everybody was provided in “Who Knew It Could Be So Easy to Curb Our Cravings for Sex and Food.”

However, back to the big question: Can a sales team be successful without a commission based compensation plan? As usual, “Yes, No, Maybe” is the answer. Yes: In my experience commission motivates salespeople to act in the self interest of maximizing commission, but does not always lead to more or better performance. In specialized markets, salespeople do not seem to perform worse without commission, but pursue projects based on other motivational factors: prestige, interest, and compatibility. No: With a well designed compensation plan, those self interests are aligned with company interests such as maximizing motivation, sales, and profit. Maybe: Examining specific company cultures and sales environments can lead to a reduction or even elimination of commission structures. Human motivation is complex and sales are a company’s lifeblood, the right balance can lead to higher levels of organizational health and success.

As a bonus to newsletter subscribers, here is an articled linked to by Phil Schiller, the senior vice president of worldwide marketing at Apple, “What It Means to Be Great” by Horace Dediu. Horace is known for his analysis of Apple’s business strategy and predictions of their financials, but to me he is more of a technical poet. It is one of the best articles I have read recently. He says:

“Greatness is transcendental. It’s hard to pin down. It inspires debate. It divides as much as it unites. It creates emotions as much as thoughts. It builds legends. It engages and persists. It lives in memory and penetrates culture. It implants itself in our consciousness persistently, to linger and dwell in our minds while we are bombarded with stimuli.”

Here’s to greatness!

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Sales Without Commissions – Some Additional Thoughts

After writing the recent post, “Rethinking Sales: Part 9 – Sales Without Commissions,” I came across the post that started this series “Part 1 – Rethinking Sales: Overcoming Functional Fixedness in Commission Based Selling.” Although it was written over two years ago, the basic ideas are still relevant. If commissions are eliminated and a reasonable (even generous) salary replaces them, there can still be a lack of salesperson motivation. The original post references a TED talk by Daniel Pink related to his book “Drive: The Surprising Truth About What Motivates Us.” The transcript of the talk is a quick read, faster than watching his talk, and a lot faster than reading his book. To summarize, employees prefer activities that include these three characteristics:

  • Autonomy: Control over their work
  • Mastery: Getting better at their work
  • Purpose: Involvement in something bigger than they are

So if you are considering eliminating commissions, careful planning is necessary to transition motivation from the strongly motivating “intermittent reinforcement” of commission checks to motivation based on other sources. To be continued…

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