A business seeks to create customers. Therefore, to borrow from Peter Drucker, a business has only two basic functions: marketing and innovation. Most startups understand this simple concept but fail to execute on it. The problem stems not from the acknowledgement but rather from the interpretation. So, here, I’d like to spend a few minutes on the correct interpretation.
Marketing is not …
… the concentrated and organized act of all selling functions
… product marketing that creates datasheets, white papers, content, etc.
… marcom (marketing communications) that spits out nice, glossy materials and cool website design
… PR that generates “buzz” and the “awareness”
Marketing is a basic function of the business. For a startup, it is critical to early success. Marketing is the time-consuming and ongoing process of figuring out who your customers are today AND tomorrow. I’m citing the above examples as “non marketing” because they are merely slivers of concentrated effort that represent operational parts of a marketing objective. And, marketing objectives, are by definition extensions of a sound business strategy.
Let’s turn to innovation. Innovation for a business is not …
… an invention
.. a technology term
… an engineering goal
Innovation is the ongoing process of figuring out how to deliver a value to customers both today AND tomorrow. Innovation exists not only in engineering but also in manufacturing, marketing programs, selling (or, distribution), financing, and so on. Having an “invention”-mindset kills startups precisely because what the market demands is innovation. Inventing a new widget and selling it to customers is very expensive and risky. Creating buyers of a new widget by identifying customer needs and using innovation to deliver a value against that need is a much better way of doing business. As Drucker points out, inventing a replacement for the refrigerator is high risk. Innovating a new use for the refrigerator by selling it to Eskimos who need it to keep food from freezing is much better. And, of course, innovating a better way to allow customers to use refrigeration to keep food cold is ideal – just make sure the improvement isn’t incremental but rather game changing (i.e., exponential). Only a game changing alternative will justify the time of mainstream customers although early adopters will be interested in incrementals. Remember ... both today AND tomorrow should be well thought out.
There’s a trait about business innovation and marketing that is subtle but very powerful. Both marketing and innovation needs to occur in an expanding market. This is a critical concept to understand and one that I lived through at a startup that reached healthy success. I’ve also been at startups where a refusal to grasp the criticality of marketing and innovation resulted in continual losing streaks.
While working together, I’ve heard Raj talk about building a beachhead quickly and going after big, expanding markets a lot over the years. It requires intense discipline to make both focus and vision stick when you’re at a startup struggling for mere survival. It’s very hard to look past the few inches ahead of you in a dark room – and, believe me, a startups world is very dark with pitfalls and uncertainties everywhere. Maybe Raj is a fan of Archimedes who exclaimed, “Give me a place to stand on, and I can lift the universe off its hinges.” The place to stand on refers to the beachhead or area of concentration. The universe reflects the expanding market – big, very big.
I love startups that are founded by two people – one is the innovation guru and the other is a marketing point man. These founders can be engineers or MBA or (like me) marketing people by profession. It doesn’t matter. I love people who have an intense passion for understanding customers and staying up worrying about meeting their demands, needs, and realities. These are the market-minded people who will focus on building a beachhead based on realities versus assumptions to get off the ground. Conversely, these are the innovative people who will be able to expand from the initial position because they will go where the market pulls them to – whether discovering unintended uses or accidental customers.
Marketing is not a skill or function that comes after engineering builds the product and sales people are hired to sell the product. Along with innovation, marketing is a basic function of a business. It either exists in the beginning or it’s just invisible rhetoric.
It’s a lengthier discussion not best suited for a blog entry but here’s a short version of what I consider the proper hiring order for any technology startup …
1) Technical founder or CTO. Without the technology innovator, there is no company. Startups without a technical founder are doomed to fail mainly because they will never be able to adequately assess technical risks and limitations in meeting a customer need even after the need is identified.
2) Business-minded founder or CEO. Without innovation beyond technology, there is little chance of building a company. The CEO needs to outline the fundamental strategy of the business and concretely set out key objectives around marketing, innovation, financial resources, human capital, physical resources, productivity needs, and profit requirements. In other words, the CEO wears a lot of hats.
3) Engineering head or VP/Director of engineering. Things are best when the CTO is customer and market-oriented while the engineering VP is development oriented. Whereas the CTO is focused on what is possible and what is best, the VP of engineering cares about building the product … in the right way, on the right schedule, for the right reasons. If the CTO is serving a dual role as CTO and VP of engineering, you should hire a separate VP/director or products. If you have both #1 and #3 separately, your CTO is really the de facto product manager and a dedicated PM can wait until post-prototyping period.
4) Engineers. This one is self-explanatory. Coders needed. Help wanted!
5) Jack of all trades guy. I call this the low wage grunt worker. IT issues, equipment needs, space needs, Cokes, mailing, and so on. All the little things that no one wants to handle but still need to get done. You really don’t want your CEO or CTO doing this type of stuff. If needed, save money and get either #6, #7, or #8 to do this until they need to do their day job. Or, hire a recent graduate to do it. Point is … hire somebody, anybody …
For startups that are adequately funded, the next series of hires are critical. And, you need to hire these people before you actually “need” them.
6) Product head or VP/Director of product management. Skip this step if you already have it (see #3 above). I’m not a big fan of “product management” as a description. The PM function varies so widely from company to company. Rather, my strong preference is for a “product guy.” This person wears a lot of hats in the beginning then gets more specialized as the company gains momentum. Hire a product lead who shows a diversity of skills – from setting market/product requirements to product marketing to project management to competitive research to (even) selling trials to customers. This person needs to be highly technical in background. This person is the voice of the customer. Everything revolves around building and delivering the right product. This is the “what is sold and why” guy.
7) Marketing head or VP/Director of marketing. Your product guy is focused on helping engineering build a demand-driven product . Your marketing guy is the voice of the market. All revolves around everything required to sell effectively – market positioning, corporate identity, messaging, basic sales tools, customer marketing programs, website, buyer profiling (research), influencing market influencers (analysts, press, partners, etc), brand building, demand generation, product launch(es), and thought leadership. In the beginning, you can’t really justify hiring an expensive sales executive. Use the marketing head to do some selling along with his other duties. You’ll reap future benefits on two fronts – a marketing guy who deeply understands the sales cycle intimately (and, directly) for your products and a sales guy who is properly equipped to actually sell. This person is usually not a product marketing specialist. Get a top notch marketing generalist who has spent his career dealing with publics (ie., a wide range of outside world constituents) and hands-on with all marketing sub-functions or disciplines (ie., marcom, PR, AR, web, direct/channel, SEO, content, product reviews, market research, customer sourcing, and so on).
8) Sales head or VP of sales. You have a business strategy that is tested and re-tested. Your product is developed. Your market is defined or at least assumed using customer research and results from your initial demand generation and outbound efforts. Now, hire that expensive sales executive because it’ll pay off big. Your go-to-market should be baked although not hardened. The sales VP will come in and recruit the sales force needed to productively sell. Remember that you need the business strategy before you hire a sales executive. It’s not the other way around.
Finance was probably outsourced up until now but you need a professional head of finance now as finance (credits, contracts, fundraising), productivity (processes, policies), and profitability become ever important. HR needs to be in-sourced because managing outside recruiters becomes more expensive than hiring someone full-time with all your growth. You need an operations lead to manage manufacturing, IT, facilities, contracts, etc.
Why am I covering hiring order in a blog about innovation and marketing? Well, proper structure is both an enabler of execution as well as a sign or reflection of the company's market-driven DNA (or lack thereof). Asking a startup how and why it hired in the order that it did will reveal more than you think about its mindset, attractiveness, and potential for success.
- John
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