*Those who’ve worked it through include a multi-billion dollar powerhouse, a two-person lifestyle business, and some pre-revenue start-ups.

For the strategy worksheet, I took the extreme position that every employee of every IT vendor should have at least some idea of the answers. In this case, I won’t go quite that far. But I will say that most IT vendors will find most of these questions to be of great importance. So no matter what your role in the organization, you might find it helpful to see how much of this stuff you actually know.

And if you’re the CEO, you should score 100%.

Once again, for reasons of length, I’ll summarize up top and comment on each question below.

Marketing and business development

Relationship development: We invest ____________________________ in building personal relationships with ______________________________.

Awareness: Beyond that, we build awareness by ____________________.

Our people responsible for social media are ___________________.

Lead generation: We get leads by _______________________________.

Repeat marketing: We market in support of repeat sales by ___________.

Sales

Qualifying prospects: Our prospect qualification criteria are ___________.

Sales cycle: The length and effort of our sales cycles is about __________.

Sales productivity: A sales team can generate ______________________ in sales annually, after a ramp-up time of ___________________________.

Repeat sales process: Our repeat-business sales process is ___________.

Technology and delivery

Development (weaknesses): Our plan for fixing our technical weaknesses is ________________________________________________________.

Development (strengths): Our plan for extending our technical lead is __________________________________________________________.

Support: Our support organizations look like ________________________.

Manufacturing and/or service delivery: We make our stuff by _______.

Finance and human resources

Cash flow: We expect to spend _________________________________; our operating cash intake could be as low as ________________________.

Investment: Our plan for getting investment is _____________________.

Hiring: Each hire consumes _____________________________ resources.

I’ll explain some of what I mean.

Marketing and business development

Relationship development: We invest ____________________________ in building personal relationships with ______________________________.

Suppose you’ve done everything right in strategic messaging, and come up with an awesome story that people will believe. How do you cash in?

It all starts with personal relationships — with (potential) investors, with (potential) partners, with prospects, with influencers of all kinds. As I noted in the strategy piece:

Few people get their impressions about you directly, mainly:

• Core influencers with whom you maintain significant personal relationships.
• Existing customers whose impression of you comes almost solely from how you perform in their account.

Almost everybody else gets their impression of you refracted through influencers.

Given that, influencer-relations is a make-or-break challenge. Often, several categories of influencer (for example partners, press, analysts, and self-appointed evangelists) are central to the business mission, perhaps for several different reasons.

Awareness: Beyond that, we build awareness by ____________________.

But business isn’t just done one-to-one. You need to build broader awareness, if for no other reason than to prime the pump for future one-to-one interactions — such as sales cycles. Advertising (especially online), trade shows (ever less), mailing lists — even the abominations that are press releases — all can have their place.

Prudence is a virtue when building awareness. Cost-effectiveness is key. So is not-screwing-up; there are a lot of ways that careless marketing can undermine your story, your image, your messages, and your chances of success. But don’t take prudence to the too-common extremes of blandness, mushiness or neglect. Marketing is an arena in which fortune favors the bold.

Our people responsible for social media are ___________________.

Companies are confused about how to use social media. That’s the smaller problem. The bigger problem is that, even when they understand approximately what to do, they don’t muster the resources and staying power to do it.

My biggest social media tip is this: Empower multiple, selected (or self-selected) employees to engage in social media for you. By “social media” I mean blogs (your/their own), blog comments, forum posts, and Twitter, to start with. By “empower” I mean:

• Actively encourage or even recruit them.
• Don’t burden them with approval processes and the like.

The most fertile ground to recruit bloggers and the like may be in your pre-sales support group, since pre-sales support people are professionally required to:

• Know how to communicate clearly.
• Be knowledgeable about specifics.
• Be credible.
• Know the limits of what they are or aren’t permitted to say.
• Know how to avoid giving offense.

If you leave social media to senior executives and/or marketing staffers, it’s probably not going to happen to nearly the extent it should.

Lead generation: We get leads by _______________________________.

For most sales models, it is necessary to generate leads. Lead generation overlaps heavily with a subset of awareness-building, but it is emphatically not the same thing. It’s more reasonable to say:

• Lead generation starts with the part of awareness building that can capture information about potential customers …
• … and then adds machinery for tracking and follow-up.

Please note that leads aren’t just measured by quantity. Quality is a much more important metric — the point of a lead is to kick off a sales cycle that has good chances for success.

Repeat marketing: We market in support of repeat sales by ___________.

Repeat sales are a whole different animal from initial sales. If nothing else — by definition, there’s only a limited universe of potential repeat buyers.

Sales

Qualifying prospects: Our prospect qualification criteria are ___________.

Most sales cycles die before they start, and that’s a good thing. A crucial sales skill is “qualifying” prospects — i.e., determining which are worthy of the large investment a full sales cycle takes. Your qualification template is a filter for sales cycles; those that get through should, on average, produce revenue well in excess of their cost.

Sales cycle: The length and effort of our sales cycles is about __________.

Enterprise sales is a process, which goes through a typical series of steps, which have predictable delays. An experienced sales manager coming to a new start-up might mis-predict average sales cycle length by a factor of 1.5-2. She will not, however, be off by a factor of 5.

Sales productivity: A sales team can generate ______________________ in sales annually, after a ramp-up time of ___________________________.

One of the key metrics in running an enterprise IT business is sales productivity, which equates roughly to

(Win rate) x (Revenue per successful sales cycle) x (Sales cycles per team per year).

Also important are the cost and composition of a sales team, and how long it takes them to achieve their expected level of productivity. When I encounter management teams that don’t understand these basic concepts, snark can ensue.

Repeat sales process: Our repeat-business sales process is ___________.

A large fraction of an IT vendor’s business comes from repeat sales. So does an even larger fraction of profits, where by “larger fraction” I mean a number that can easily exceed 100%. So it’s crucial to do repeat sales well.

Key differences between repeat and initial sales include:

• Repeat sales may require buy-in from more customer personnel, or from less enthusiastic ones, than do initial sales. Fortunately, you also have a lot more in the way of an account relationship to help you work toward that approval.
• Repeat sales cycles are heavily informed by your customers’ experience with your products … and with your support organizations … and with the match or lack thereof between your promises and your actual deliveries.
• The best salespeople to “hunt” new accounts are often not the best to “farm” established ones.

Technology and delivery

Development (weaknesses): Our plan for fixing our technical weaknesses is ________________________________________________________.

Some competitive liabilities, what not precluding initial success, inhibit you from expanding your market footprint past a certain point. So what you do in sales and marketing is hostage to your efforts in technological catch-up.

Please note that catch-up may be a different kind of engineering, requiring different kinds of management, than is needed for initial creation of something cool-but-fragile. What’s more, the schedule of problem-fixing can be hard to predict — if you knew everything about how to fix your product problems, you wouldn’t have designed them in in the first place.

Development (strengths): Our plan for extending our technical lead is __________________________________________________________.

Few IT vendors are blessed with truly stupid competitors, and so your biggest technical advantages won’t be as big forever. Software vendors may try to act on multi-year forward-looking development plans while still allowing for reactive catch-up. Hardware vendors more typically build and finish discrete product lines. But no matter what you’re developing, you have to be sensitive to a lot of other people’s priorities and timetables.

Support: Our support organizations look like ________________________.

An IT vendor has to be good at post-sales support. Period. An IT vendor that isn’t tiny also has to be efficient at support. And you have to be flexible with respect to just what it is that you’re good and efficient at, for reasons including:

• Pre-sales support is commonly crucial.
• Post-sales support can provide key insights for repeat sales, and for sales and marketing in general.
• Business models for post-sales support can change over time.

This all just becomes more true in the open source world, where the software itself is commonly free.

Manufacturing and/or service delivery: We make our stuff by _______.

Support aside, “How exactly are we getting the results of our engineering to customers?”
may not be a big question for software products vendors. But it’s indeed major if you’re offering hardware, appliances, and/or some form of SaaS (Software as a Service). Going completely inhouse is rarely the best choice — but no hosting solution is ideal, and neither is any hardware OEM or contract manufacturer.

Finance and human resources

Cash flow: We expect to spend _________________________________; our operating cash intake could be as low as ________________________.

A basic rule of business is “If you run out of money, you’re out of business.” So you need to plan for your reasonable worst-case cash flow. Cash flow, of course, equates to the difference between cash in and cash out; of the two, incoming cash is usually the harder to predict.

Investment: Our plan for getting investment is _____________________.

If you don’t need money, and never will, congratulations. Otherwise, little is more important than getting it when — or preferably before — you need it.

Hiring: Each hire consumes _____________________________ resources.

Hiring is a huge part of what you do. It consumes substantial time for sure, especially but not only from management. It may also consume significant cash. And once somebody is hired, training is a big deal as well.

If you don’t have a hiring and training plan, then you probably don’t have a growth plan at all.

*E.g., consulting via the Monash Advantage and predecessor services. Every question on the list below has arisen recently in the course of my work, most of them many times over.

If you run an IT vendor, help run one, or aspire to do so, then I encourage you to give these questions a whirl. If you don’t think the answers are all knowable — either now or for the foreseeable future — it’s still advisable to make working guesses. Flexibility is a virtue — but even so, having a tentative strategy is far better than having no strategy at all. Strategy is to execution as design is to coding. The best time to fix software bugs is before you start coding; the best time to fix a bad strategy is before you’ve committed yourself to executing it. Yes, both the design and the strategy will need to be changed over time; but a smart, internally-consistent strategy is a lot better than a contradictory one, than an obviously hopeless one, or than no strategy at all.

This is a really long post, so I’ll summarize it up here. Explanations of each point follow below.

Positioning, messaging (and product)

Category: We make a _________________________________________.

Core value proposition: It is especially good at/for ___________________.

Architecture/commitment: It achieves this excellence because (we) ____.

Markets and use cases: If you ____________________, you should buy it.

Buyer universe: We sell to ____________________________________.

Competition: They perceive their alternatives as _____________________.

Competitive strengths: Our stuff is superior with respect to their alternatives in terms of _______________________________________.

Competitive weaknesses: Our stuff is inferior with respect to their alternatives in terms of _______________________________________.

Influencer perception: Influencers perceive us as ___________________.

Investor perception: Investors perceive us as ______________________.

Sales

Difficulty of adoption: To use our stuff, buyers also have to ___________.

Pricing: Buyers willingly pay us ________________________________.

Sales process: Our sales cycles are managed and closed on our behalf by _______________________________________________________.

Deal-breakers: In some accounts, _______________________________ will prevent us from winning, almost no matter what.

Team

Personnel: We hire people with the characteristics ___________________.

Competition for personnel: People join us because __________________.

Location: They are located _____________________________________.

Technical allegiance: Our offerings are dependent upon ______________.

I’ll explain some of what I mean.

Positioning, messaging (and product)

Category: We make a _________________________________________.

As I’ve described via the layered messaging model, a company actually needs and has multiple marketing messages. Still, there are times you also need a one-sentence description of what you do or make, imprecise though it necessarily will be. If you don’t have this, there will be many situations in which you can’t communicate well, or in which influencers of various kinds can’t pass your story onwards.

Core value proposition: It is especially good at/for ___________________.

This corresponds to the middle level of the layered messaging model. You need to envision generic situations or use cases in which your product excels, perhaps due to its superior features or performance metrics. If you don’t have that kind of excellence, how can you compete at all?

Architecture/commitment: It achieves this excellence because (we) ____.

This corresponds to the bottom level of the layered messaging model. You need to have an idea as to why you’ll have a sustained advantage in meeting your core value proposition. If you don’t have a sustainable advantage, why will you succeed?

Markets and use cases: If you ____________________, you should buy it.

This corresponds to the top level of the layered messaging model. You need to identify specific use cases in which your core value proposition has obvious benefits.

The most natural form these can take is by application; hopefully you can identify applications at which you shine and also particular vertical markets in which those applications are important. Specific, sharply-defined technical use cases can work too. (“If you need to do many-way joins scanning large parts of a 50+ terabyte database, our system rocks!”) But without some kind of easily-identifiable target use case, how can you have effective sales, sales qualification, or marketing?

Buyer universe: We sell to ____________________________________.

To sell effectively, you need to know who will buy. That means types of company or other organization, and it also means job descriptions (even if not titles) within those enterprises. Within the customer enterprise, “who will buy” includes at least who will want to buy, who will pay for the purchase, and who else will have to approve or not-veto it.

Competition: They perceive their alternatives as _____________________.

If you don’t know who or what you’re competing against, how can you be sure you’re doing anything right? Competition can include any or all of:

• Reasonable marketplace alternatives.
• In-house solutions.
• No decision/action at all.

Often your top competitor, especially in the early days, is a combination of all three, as your target customers make do by hacking around existing technology as best they can.

Competitive strengths: Our stuff is superior with respect to their alternatives in terms of _______________________________________.

Be realistic here, or you’ll lead yourself astray. Note that the answers you provide may have different force in different use cases, markets, etc.; that may provide a good guide as to where you have the best competitive chances.

Competitive weaknesses: Our stuff is inferior with respect to their alternatives in terms of _______________________________________.

Be realistic here too, or you’ll lead yourself astray even faster. Once again, note that the answers you provide may have different force in different use cases, markets, etc.; that may provide an even better guide as to where you should focus your efforts.

Influencer perception: Influencers perceive us as ___________________.

Hopefully, the way you describe yourself and the way you are perceived are aligned. Even so, what people think of you is likely to be only a subset of what you think of yourself. The part of your messaging that other people accept is the part that actually aids your business success.

Few people get their impressions about you directly, mainly:

• Core influencers with whom you maintain significant personal relationships.
• Existing customers whose impression of you comes almost solely from how you perform in their account.

Almost everybody else gets their impression of you refracted through influencers, where by “everybody else” I mean prospects, the people who originally bring you into customer accounts, other influencers, and more. Even those whom you talk with directly, such as sales prospects and press, can be strongly affected by what other press and analysts (or at an earlier stage angels and venture capitalists) have to say.

Investor perception: Investors perceive us as ______________________.

At a minimum, investors (including VCs) and stock analysts are influencers. If you like to have money, they may be more important than that. Different kinds of investor and investor-influencer are most important at different stages of your company’s life.

I’ve seen companies get literally destroyed because the strategy they felt they had to pitch to VCs was different from the strategy they actually believed in executing. Don’t go there. Find the investors that match your strategy, not the other way around.

But the need to get investment can add a degree of difficulty to your messaging and your influencer outreach. And if you can’t figure out what kind of investor would believe in your strategy — well, maybe the whole investing world is correct, and your strategy isn’t really that good after all.

Sales

Difficulty of adoption: To use our stuff, buyers also have to ___________.

If you sell a $10 product that costs $1 million to use, your selling costs are likely to reflect the $1,000,010 total cost of adoption. No doubt they will be a lot more than $10/deal. This is not good.

Cash cost of adoption isn’t the only issue, of course; there’s also time, risk of failure, need for buy-in from other departments, and occasionally even regulatory approval. But in any case, you should:

• Think about what is truly being bought when your customer decides to buy from you.
• Make sure your sales and marketing resources are in line with the magnitude of the true sale.
• Make sure your revenue expectations from a sale are in line with its cost and difficulty.

That you may need to get some of your initial customers and references by selling at a pittance doesn’t undermine this general point; eventually, you do want to make a profit.

Pricing: Buyers willingly pay us ________________________________.

So what can you charge? The answer depends on, among other factors:

• The value your buyers believe they will get from using something like your product.
• Your product’s differentiation versus alternatives.
• The total costs of adopting and owning your product.
• Your customers’ general attitudes toward paying for stuff.

Also, it’s important to consider how customers are used to paying for products they’ll regard as analogous: Purchase? Subscription? Priced per user? Priced per terabyte? You want pricing to appear to them as sufficiently simple, fair, and free of risk or surprise.

Sales process: Our sales cycles are managed and closed on our behalf by _______________________________________________________.

If you can’t describe a workable and repeatable sales model, you don’t have a strategy. Please note that “we’ll sell through the channel” is very rarely a complete answer, at least in enterprise IT. Almost always, you’ll need something that resembles a direct sales force, field or inside as the case may be. Even if you have partners who are collecting leads, managing sales cycles, and signing contracts, nobody else cares as much about selling your product as you do. Nobody else knows as much about how to sell it either.

And the partners who are exceptions to that general rule? They’re typically market specialists — such as vertical market application providers — to whom you have to sell much as you might to traditional enterprises.

Deal-breakers: In some accounts, _______________________________ will prevent us from winning, almost no matter what.

Enterprise IT buyers typically go into a product selection process with certain rules or strong inclinations, in areas such as:

• How proven a product or vendor must be in the market (references, financial strength, etc.).
• Which platforms or architectures they want to support.
• What kinds of vendor lock-in they will or won’t tolerate.
• Which specific features they absolutely insist on having.

If there’s something — company size, product features, architectural philosophy, whatever — that dooms you in certain accounts, then you’re not in the business of selling to those accounts until you get the objection addressed. (At some accounts, you never will.)

Team

Personnel: We hire people with the characteristics ___________________.

If you don’t know who you’re trying to hire, and why, you’re unlikely to build a winning team. The answer to “Who?” should always come in at least three parts:

• Character, personality, and approach to work.
• Skills and knowledge.
• Resume demonstrating tests of the skills and knowledge in situations like your own.

All three areas are important, but they’re listed in declining order. If you’re very sure of a match in the first two, the third is unnecessary; if the third area is critical (and it often is), it’s mainly to validate what you think or hope in the first two respects.

Competition for personnel: People join us because __________________.

You don’t just need to know who to hire; you have to be able to hire them. Part of that is telling an inspiring story, and one they think will lead to project and corporate success. Part is corporate culture. Part is terms and conditions of employment. Part, of course, is just finding them in the first place.

Hiring people is every bit as important and difficult a sales job as selling product is.

Location: They are located _____________________________________.

Yes, this really is a core strategic issue. Building your company in the wrong place can doom it.

Some kinds of people are extremely hard to find outside certain geographical areas. For example, a large fraction of the people in the world who’ve done DBMS marketing over the past 20 years did it in the San Francisco area. To a lesser extent, that’s true of DBMS development as well, especially if you add Boston to SF.

Of course, you can operate in a distributed manner — but that puts its own kinds of constraints on the people you can hire and expect to be productive and effective.

Technical allegiance: Our offerings are dependent upon ______________.

Your team doesn’t just consist of your employees and outsider advisers. Even more important may be the outside vendors and projects upon whom you choose to become dependent. If your stuff doesn’t work unless your customers buy a specific other vendor’s stuff too, then that vendor’s strategy — in terms of technology, pricing, positioning, and everything else — pretty much becomes your strategy as well.

OK. That was long. I have an equally long list of more execution-oriented questions outlined as well, but for now I’ll defer turning them into an actual post. Of course, if you’re a client and would like to see my rough notes, I’d be happy to share them.

Meanwhile, as long as this list is, I’m sure there are still other worthy items I left out. What did I miss?

• To get a sense of how much investment there has been in its development.
• To judge how much “skin” the vendor has in the game, as a clue to how committed the vendor (and, if relevant, investors) are to future development.

People further like to know how much success a product has had — both for social proof and also as a clue to the product’s financial status.

Indeed, such social proof is a key aspect of one version of the layered messaging model.

And if you don’t disclose information in line with people’s minimum expectations, they:

• Suspect you of hiding something,
• Tend to assume the worst about you, and
• Generally get annoyed with the unnecessary hassle you put them through when they have to get the information  the hard way.

Hence, for example, my recent tweak of McObject, for not being willing to quickly run through basics such as:

• Age of company.
• Level of outside investment.
• Number of employees (the one they definitely stonewalled me on).

Why do people insist on knowing the number of employees, especially developers? Well, it’s a reasonable proxy for level of development effort (give or take outsourcing and the like). What’s more, it can’t really be kept secret, except at companies so weak that they aren’t interviewing anybody for new staff position. Hence it’s something routinely disclosed, even at companies that wouldn’t dream of being forthright about actual revenues and products. And so companies that don’t disclose headcount become suspiciously-regarded outliers.

The other metric that the community pretty much forces out of vendors is customer count. DATAllegro managed to fool people into thinking they had more customers than they did, and parlayed that all the way into an expensive Microsoft takeover (that hasn’t exactly worked out well for the buyer). But as a general rule, vendors are pretty forthright about customer success if pushed, with my recent post on columnar analytic DBMS customer metrics being an illustrative example.

Recently, I got into a flap with EMC Greenplum. I blindsided them on a story; they retaliated for the story by, among other things, screwing me over business-wise. Why did I blindside them in the first place? Because I believed that if I didn’t, they’d put me under intense pressure not to publicize news I’d obtained. (Given the punishment they dished out for my running it, I imagine my belief was quite correct.)

Meanwhile, here are excerpts from a post I drafted last year, but never ran: 

It’s getting ridiculous. Two different large companies have accused me in internal communications of breaking embargoes this year, and in neither case did they give me any kind of briefing with the information! In one of the two cases I published something I’d been told by a competitor of the company’s. In the other case I simply posted a link to a public story. These weren’t cases of getting information from the companies and having it reproduced by outside sources; I got information from the outside sources, period, without the vendors’ cooperation.

Now, the flip side of such stories is that I have good enough relationships with those companies to discover the internal lies. And business must go on, which is why I’m not naming the companies in question. Still, I can’t imagine any benefit to these vendors from internal dishonesty. And I have to wonder about the wisdom of putting untruthful people in jobs that involve gaining outsiders’ trust.

And I could have drafted a similar one the year before that, with “NDAs” in the place of embargoes.

Of course, it’s not just news — companies get upset by people who offer opinion as well.

When news is minor enough, that’s unavoidable. But in this case and others I would have willingly been briefed (scheduling just got a bit awkward this time). The two lessons here are:

• Brief the people who will be called for quotes before you brief the press, and therefore …
• … know who the press is likely to ask for quotes.
  

If a marketing activity does not create a lead for you, then it doesn’t belong in your marketing machine.

Or to rephrase that: Storytelling doesn’t matter.

Well, if you believe and execute on that, your company will die (at least if it’s in some area such as enterprise technology). I really mean that. It’s why I tell people that the “Red Hat” approach would doom most companies, and they should never hire a marketing VP whose main claim to fame is Red Hat experience. I’ve been telling people for a few months that I don’t expect VoltDB to succeed, because I expect VoltDB to execute on the kind of belief quoted above.

The three fundamental functions of marketing are:

• Promote a desire to purchase things in your product category.
• Promote your view of what’s important within your product category.
• Promote actual purchases of your product.

A funnel-centric approach to marketing is useful mainly for the third of those three parts. As part of your marketing strategy, it’s great for anybody. It can even work as the whole thing if you’re just pushing a commodity, such as a Linux distribution (Red Hat) or an early-generation application server (JBoss). In those cases, your job really is to get people to switch from the “default” alternative (expensive incumbent and/or do-nothing), and give you money instead. It might also work if you truly don’t have any direct competitors, and are competing mainly for share of mind/share of wallet.

But in most enterprise technology markets, customers pick among multiple alternatives, each with its own appealing story. If you don’t tell your story too, you’ll fizzle and die.

Choose one.

Asking for an embargo on information already in the public domain is really lame.

*By the way, that means an intriguing New England startup needs a new PR firm. By tomorrow it should be obvious who I mean.

It started as an ordinary kind of bad pitch. The PR rep emailed offering a briefing with a mystery company. I immediately deduced that the company was one I was in fact set up to talk with today, and had indeed been writing about since 2009. Besides being annoyed that I’d had to scramble to set up my own last-moment briefing with a company I’d led the way in writing about, I also bristled at the fact that the pitch included quotes from a couple of my competitors, whom I shall unimaginatively refer to as Dave and Merv.* So far, no big deal.

*Both personally and professionally, they’re two of my favorites. Even so, I dislike being told that I should use them as authority figures to be copied in my own view formation.

But then it occurred to me that those quotes probably weren’t approved, but instead were just lifted in an unauthorized manner from conversations, and indeed probably didn’t reflect the analysts’ precise views. So I messaged Dave and Merv. Shortly thereafter, the PR rep emailed me:

Neither David or Merv have authorized the quote for publication.  It was sent in error to you, as I had believed you had agreed to the sharing of confidential information.

The bulk of my response to that — and the essence of this post — was: 

… there are quite a few problems with that response. You didn’t even tell me the name of the company you were writing about, let alone that the information was supposedly confidential. Indeed, by using the “if you agree to an embargo” formulation, you if anything implied that the contents of what you’d told me so far were non-confidential.

What’s worse, even if you had had assurances of confidentiality from me, your unauthorized use of Merv’s and Dave’s quotes was unethical for several reasons. Since you didn’t ask them for permission, you had no way of knowing whether those were their reasoned opinions — as opposed to, say, off-the-cuff comments or even a bit of flattery. Thus, you created the possibility of making them appear to hold opinions they in fact do not, which would be harmful to them, and also of giving me a false impression. What’s more, analysts can be picky as to who they give their opinions to, and what’s said to a company is not necessarily to also be shared with, say, one’s closest competitors.

It got even worse from there, e.g. when we figured out that similar unauthorized quotes had gone in email to the press, or that Merv had been explicitly asked for permission to use his quote (denied as per company policy). Such flourishes just make the incident even more epic in its awfulness.

And that, kiddies, concludes today’s class on how NOT to do analyst and public relations.

Monash’s Third Law of Commercial Semantics

No market categorization is ever precise.

The reasons this is true may be flippantly summarized as:

• Bad jargon drives out good. That, of course, is Monash’s First Law of Commercial Semantics.
• Hard cases make bad jargon. I borrowed that one from the law dictum “hard cases make bad law.” Replace “hard cases” with “edge cases” and “make” with “lead to,” and you should see the point.
• Nothing concise is ever precise. This principle applies far beyond the marketing domain — for example, it’s why reasonable judges can reasonably disagree.

A more sedate set of reasons goes something like this.

A market category usually will have both core members and non-core. A faithful description of the core will fail to cover some outliers. But try to include the whole thing and you’re apt to be unhelpfully vague. Whichever choice you make, the categorization is imperfect. For example, my recent proposal of “Internet Request Processing” is awkward in those relatively few cases where wide-area networks are not accurately described by the term “internet.”

Market categories often merge due to deliberate product integration. This is particularly true in the software industry. For example, through the early 1980s, accounts payable, purchasing, and inventory applications were three separate things — but developers then noticed that all three should really be driven by the same vendor file or table, and it became rare to see them marketed separately.

Even absent deliberate integration, products often pick up desirable features from other categories. Examples may be found anywhere a “low-end” product adds a few “high-end” features. Others may be found in the way DBMS both old (Oracle) and new (SAP HANA) are extended in the hope they will be all things to all people.

The issues aren’t just on the vendor side; users’ technical strategy decisions may not map well to vendors’ product categories. In part, this is another version of the product integration point; users like to reduce the number of vendors they use, and hence may place exaggerated weight upon the alleged integration and completion of various product lines. Beyond that, as my consulting experiences consistently show, organizations interweave use cases in really interesting ways. Thus, user and use-case categorizations are no more accurate than product-oriented ones.

And last but not least, marketing claims are commonly exaggerated. Categorizations based on reality are somewhat different than those based on what vendors — or sales-driven analyst firms — claim.

I jumped into an #ARchat on Twitter Tuesday, and set off a discussion about the subject of analyst quotes in press releases. Since that chat has been blogged, starting with a partly accurate* paraphrase of my views, I figure I may as well state those myself. 

*I don’t know what the “own marketing team” part refers to.

Our write-up of Monash Advantage terms and conditions states that membership includes:

Eligibility for press release quotes, subject to our usual integrity requirements (we write the quotes ourselves, and only on subjects we feel sufficiently favorable about). We do not charge for these.

Actually, you don’t have to give us money to get a quote from me, as this Tokutek example shows; but if you’re not a client, then you have to make the process very easy. For example, I dictated that Tokutek quote while in a car to the airport, at no cost to my workweek.

Other analyst firms have different approaches to quotation pay-for-play. Does this all mean that analysts are more likely to be seen as endorsing companies who pay them? Frankly, yes. But truth be told, analyst pay and implicit endorsements are partially linked no matter what.

The real issue, in my mind, is that analysts should only give quotes that truly reflect their research. I had a Twitter exchange once — with an analyst I basically like and respect — that in effect went:

• “Why do you think X?”, where X was a quote in a press release that:
  • Sounded like it had been written by a marketing department.
  • Was on a subject that analyst wasn’t particularly expert in anyway.
• “What do you mean?”
• “You said X in company Y’s press release.”
• “Uhhh … I don’t really know what you’re talking about.”

Obviously, the analyst had just approved a quote routinely, whether to be nice or to get press visibility, without seriously reflecting on what it actually said.

I find that appalling.