podcast | June 15, 2015
Case Study: How a CEO Drives Strategy Execution Through the Functional Leadership Team
So, how does a CEO drive strategy execution?
The key? Functional leadership alignment. By listening to this podcast, you will hear how Mike:
If you work for a company who has the right strategy, but needs to improve the execution of it, click here, and hear from a CEO on how to do this.
Case Study: How a CEO Drives Strategy Execution Through the Functional Leadership Team
Speaker: Welcome to the SBI podcast offering CEOs sales and marketing leaders ideas to make the number.
Greg Alexander: Good morning, good afternoon, good evening. This is Greg Alexander, cofounder and CEO of SBI, a sales and marketing consultancy dedicated to helping you make your number. This is the SBI weekly podcast show. Today I’ve got a great guest. Let me introduce him to you. Mike Ellis is the CEO and president of ForgeRock, a private San Francisco based software company which is the fastest growing provider of identity relationship management solutions in the world. The company helps its customers build secure customer relationships across any app, device or thing. They were founded in 2010 and is backed by a who’s who in venture capital with firms such as Meritech capital, Foundation capital and a few others. Prior to this role Mike spent almost 30 years inside of technology companies and management consulting firms at stops at companies such as Apple, Oracle, i2 and SAP. He also received his education from the University of Minnesota Twin Cities. Mike, welcome to the show.
Mike Ellis: Thank you very much Greg, it’s a pleasure to be here.
Greg Alexander: Great. All right, let’s dive into the conversation. Today’s topic, since we have a CEO on the show, will be how the CEO can drive the execution of the company strategy through the functional leadership team. This is a meaty conversation, let me try to unpack this a little bit. Let’s provide the audience some context. Mike, could you briefly describe ForgeRock’s strategy maybe by starting with what markets you compete in?
Mike Ellis: Sure, thanks Greg. ForgeRock at a core is focused on a market perspective at filling into large enterprise, middle enterprise and government worldwide. We are unusual because our footprint as only a 5 year old company in high-tech software. We have a broad penetration in international markets in Americas, so very unique. In fact, we do about 50% of our revenues outside of the Americas, so a very unique view. It’s mainly focused at the large enterprise, some mid enterprise and government and core to those territories, but also importantly non-vertical or industry-specific. The solutions that we bring to bear in the market drive value across industry segments and consequently make the conversation in a very high dialogue at high levels in the organization.
Greg Alexander: Okay. For the audience’s benefit, what is the value proposition? What problem do you solve for the customer?
Mike Ellis: Yeah. Broadly speaking we are a company that provides high-value software solutions in the identity management area. Interestingly in the past historically, identity management has really been focused on behind the perimeter, behind the far wall employee security for large companies. We actually can solve that problem, but more importantly we drive a much more high-value conversation around the whole phraseology of digital transformation. We’re really helping large enterprise and government with their external facing identity problems and value opportunities by providing a high-value identity platform for not only people made up of most corporations’ most value asset, which is their customers, but also their communities, their suppliers and their employers.
Also more importantly, or not more importantly but equally important, Internet of things. We do a lot of work with identity as a technology enabler at the device, the machine, as well as the cloud level in terms of deployment. Long story short, we drive a very high value proposition to the CIO, CTO and frankly CMO, CEO dialogue around helping them provide a much more enriched dialogue and transaction that’s also highly secure with their most important asset, their customers.
Greg Alexander: Okay, very good. If I got a little academic on you here and forced you into choosing one of the following 3 choices from a strategy perspective, would you define yourself as a company that competes on product differentiation, a company competes on being the low-cost provider or a company that competes on having a deep customer relationship?
Mike Ellis: Yeah. It’s a great question. If I were to prioritize one of those three, it would be on the solution, solution differentiation. We are an open source platform, we’re very unique in that we’re the only open source platform for identity in the world, and the breadth of our solution is extraordinary from the standpoint of capabilities and functionality. It creates an immediate differentiation for us in the market, i.e. because we’re open-source, we have large enterprise and government executives that can download our software and immediately ascertain that our capabilities have the depth and breadth of very big, large, let’s call it legacy vendors, yet are much more nimble and agile and open sourced in its deployment of great technology. I would lead it with the solution itself makes our name.
Greg Alexander: Okay. The people that are buying this solution from you, is this something they’re buying for the first time or are you replacing legacy competitors and this is a replacement buy?
Mike Ellis: Yeah, great question. It’s a little bit of a mix. The identity space in a security space, we are firmly affixed in the security marketplace as a category, if you will. The identity area within that has been around for a long time. You have very large legacy vendors that have had identity suites that they brought to market. As I said before, mainly focused at the employee security and partner in their problem. Certainly we do replace them based on a customer’s needs. More importantly though, we augment those platforms. When a large customer is looking at how they want to deploy next-generation, again, that important phrase of digital transforming types of interaction with their customer base and importantly also aggregate that view to a single customer.
As an example, most large enterprises have multiple instances of identity systems that interface with their customer applications. We solve that problem and we solve it in a period of 100 days, not 2 or 3 years like many of the legacy vendors. It’s a long answer to your question, but we augment typically the environment that’s in place today so that we can drive a very fast market, fast value equation for large corporations and government. Then over a period of time, they start to replace some of their older technologies, their legacy-based technologies with our next-generation solutions.
Greg Alexander: Okay, got it. Classic open-source disruption to a category that’s been around a long time. It’s either augmentation or over time replacement, okay. I think we have an understanding.
Mike Ellis: Yeah. Very well said.
Greg Alexander: Okay, now that we know your strategy and what it is, let’s discuss how the function of leaders drive execution. This is a problem that a lot of our clients are dealing with right now. I imagine many that are listening to this podcast, when this gets released into the market it will be roughly mid-year. At that point there was a new strategy heading into the year. We took our body blows and we know what’s working and what’s not. We’re struggling with execution or maybe even thinking about the news strategic planning process for the upcoming year, and functional execution here is key. Let’s start at the top, product. You probably have a CTO or someone who’s in charge of product management. He or she understands your strategy because you just articulated it very clearly to me. How does the leader of the product group drive execution of this strategy and stay in alignment with you?
Mike Ellis: Yeah. We do have a CTO. That CTO and the office of the CTO here is responsible for, let’s call it really forward looking innovation. What you’re asking is a really critical question because it’s where a lot of both young companies and old companies miss the boat. We have done a very good job of creating a connection between that PTO office of innovation and leadership thinking to our head of engineering and all of our engineering organization, as well as our product management organization about how you create these innovative streams that are also tied closely to what your next-generation sprints are around the current engineering and feature sets that you’re building up in product as an example from this year. Also importantly how it’s aligned to that innovation thinking coming out of the CTO office about how you create a, let’s call it a multi-pronged approach that’s tightly interwoven between that next-generation worldview of innovation thinking coupled with the components and feature sets that you’re delivering today in your current products that you’re bringing to market.
The ability to create that synergy is the magic. Of course it comes down to not only a common well communicated plan across those teams, but also a tightly interwoven communication process that’s a weekly and a daily process, not a monthly process. Between those organizations about sharing those plans, sharing the trends in the innovation thinking that’s going on, but also importantly on the other side of the house on the engineering side, also sharing where and what is being built out and how that’s being affected by that innovation. Keeping that 360 cycle if you will tightly interwoven and well-functioning weekly.
Greg Alexander: Let me pick on this a little bit. Our firm is focused on helping CEOs grow their companies but we do it from the perspective of improvements in sales and marketing capability. Sometimes we see when growth results aren’t there, the sales and marketing teams get blamed, and sometimes the blame is appropriate. Other times they could be highly functioning sales and marketing teams but the product just isn’t, it’s being built on what the engineers think it’s cool versus based on the problems of the target audience. In your 30 years if you look back on it, maybe speak more broadly than just ForgeRock, if you had to put a percentage on it, when the revenue gets number missed, is it typically because of poor execution and sales marketing? Or is it typically because there’s a product problem?
Mike Ellis: Overall if there’s a real product problem, it’s a multi-quarter experience that’s usually negative. What I would coin it to is that there is a tightly connected view of what’s relevant to your customers and what’s going to be relevant for the customers based on your discussions and connections with them. You will build the right products. You will then exercise and sell in the right way to get those products sold, frankly because you have good customer input. One of the things that we do at ForgeRock is we have a tight cadence with our sales engineering leadership that’s in the field. Call it pre-sales, call it engineering, what have you that are extraordinarily well versed in our products at a very deep way.
Identity is a complex technology, yet you can deploy it in a very rapid agile way if you have the right set of capabilities and the right suite. Our ability to create as part of that 360 view I just talked about between the CTO office and the engineering, a constant input from our field engineering or sales engineering teams about what’s relevant and what’s getting asked for. What are the value drivers from the technology and feature set level that inform those product plans that also inform those views on innovation. For us that’s a consistent process much like that dialogue with engineering and CTO that that field engineering teams have to have input weekly to the CTO office and engineering about what’s working.
Because we’re a young company, we’re in range of 300 employees today, we have a constant cadence that involves the sales engineering teams, the field engineering pre-sales folks with what our feature set and build plan is around product. As an example as we readied our product plans for 2015 at the end of 2014, the heads of field engineering organization had active input over multiple weeks around those feature sets and how they align to the dialogues that we’ve had with customers and how they align to the general trending that we’re also seeing in the market. It’s very interwoven. Where I’ve seen it in other companies in the past fall apart is that breakage between that communication cycle where either there’s an organizational problem or they’re frankly not even reaching into the field for input and the age-old problem of the field engineers out there and not being listened to. It’s a critical problem.
Greg Alexander: Brilliant. Weekly voice of customer coming back from the field from the sales engineers, it’s a great idea.
Mike Ellis: We actually call it customer lifecycle. We all talk about this in our industry, but a sales rep goes in and sells a great solution, a team comes in and implements. Where does it end up after that? Because we’re an annual subscription and licensed type of company, that customer value lifecycle is an ongoing relationship with that customer. We never lose that connection to the customer in terms of their health, their success or their products and that type of dialogue.
Greg Alexander: Okay. We’re going to take a quick break. I want to make the audience aware of the new SBI magazine which is a quarterly publication. The one that just came out is an article with Perry Offer who is also a CEO like Mike Ellis in a fast growth technology company called Dialogue. He discusses strategic alignment in that article as well. If you’re listening to this podcast and you’re not subscribed to the magazine and you’re wondering how, here’s some information for you.
Speaker: Why is it that senior executives, CEOs, CFOs have magazines focused on their success but sales and marketing leaders don’t? General business magazines such as Fortune and Forbes almost never write about sales and marketing issues. At SBI, we know sales and marketing leaders have needs that have gone unmet until now. Introducing the SBI magazine, the premier magazine dedicated to helping sales and marketing leaders be more successful. Read captivating articles written by professional journalists about how sales and marketing leaders are making the number. Go to salesbenchmarkindex.com and subscribe.
Greg Alexander: Okay. Welcome back everybody, this is Greg Alexander, CEO and cofounder of SBI. I’m joined today by Mike Ellis who is the CEO and president of ForgeRock, a identity management solutions provider. Right before the break we were having a robust conversation around functional execution of a CEO strategy. We were talking about product and the product group and making sure that engineering is building things at the marketplace once. There was some really insightful concepts there. Let me pivot the conversation now and move to the next link in the chain if you will, which to me is marketing. Mike, describe for me how now that you have this very well articulated corporate strategy, you’ve got this robust agile product development group. Now you move to the next link which is marketing. How does marketing stay connected with and aligned with the strategy and drive the execution of the strategy into the marketplace?
Mike Ellis: Yeah. Marketing is the launching pad if you will of how we convey and communicate ourselves to the marketplace. They are also frankly, I look at it as marketing’s customer is sales and the rest of the organization. Marketing never, as most CMOs know, marketing never has an easy job. They have multiple customers and they have multiple constituents to make happy in some way, shape or form. I look at marketing as number one a really well-functioning, well-oiled marketing organization is doing a couple of really critical things.
Number one, everybody knows on this call because it’s sales and marketing focused. We’re looking for them to create several things around market presence and brand awareness. We are looking for marketing to help us create a lead generation engine and machine that really drives the funnel, the pipeline. Lastly we’re also looking for them to also create a whole series of product marketing capabilities as well and inform our customers in unique and transformative ways about the product.
Again, three core areas tied to our strategy, number one, brand awareness and overall communication skills around, who is ForgeRock in our case, and what’s the relevance of that in the market. Number two, lead generation itself and the lead engine, the machine, the motion, how do we really create demand and help our customers understand us. Thirdly, the whole component around product marketing itself. How do you convey in crisp ways the differentiation of what our products do for the market.
Greg Alexander: I’m curious as to the cadence between yourself and your CMO. It’s rare for me to have a conversation with a CEO like this one where they can rattle off the top of their head. I didn’t give you these questions in advance but you were able to tell me three things you want marketing to do for you. Brand awareness, lead generation and product marketing, literally on the spot. That tells me you’re communicating very frequently with your CMO. How do you manage the CMO? What does the cadence look like?
Mike Ellis: It’s very much aligned with those three categories that I just described at a very base level.
Greg Alexander: Is it daily, weekly, monthly?
Mike Ellis: Daily, yeah. It’s a daily measurement of, as an example, the most specific round numbers is lead gen. Marketing generated leads and then how that conveys to sales accepted leads and ultimately what gets entered into your pipeline as deal opportunities. That whole funnel of how you create that. The other components of around brand awareness and corporate communications, a little more fuzzy obviously but we believe we feel that obviously market presence, PR, are mentioned in both social media as well as corporate communications and press is extremely important to getting the brand name out there. As a 5 year old company, it’s very important to us to create a buzz in the market if you will, for deals because of awareness of who we are. Then the third component is easy, it’s product marketing. You’re looking for transformative messaging around the product itself.
Greg Alexander: For the other CEOs of fast growth software companies, I hope it wasn’t lost on you that Mike is literally looking at the funnel metrics daily and communicating with his CMO. It’s not passive involvement with the marketing team, its active involvement, which is outstanding obviously. We advocate for that, but unfortunately it doesn’t happen as often as we would like. Let’s pivot now to sales. If we’re moving along our supply chain here, we started with the corporate strategy, the next link was the product strategy, then we just talked about the marketing strategy. Now we get to the sales guys who have to turn a lead into a customer and get an invoice paid. Tell me how your sales leader stays aligned with your strategy and quite frankly the strategy of his other functional partners. What is your active management of the sales strategy itself?
Mike Ellis: I’m in a unique situation here at ForgeRock in that I’m the CEO but I’m also in essence the head of sales. I have three SVPs, senior vice presidents that report to me that run each of the core regions, Americas, and APJ, Asian-Pacific Japan. Those three senior vice presidents are very very well-tuned executives around driving, building culture, selling the process, the programs, the management therein and making high-level sales calls themselves at the CXO level. I’ve been in sales and marketing all my life and CEOs in previous companies.
That mixture is organic for me that I’m going to be involved not only in the weekly I’ll call it management of the pipeline in our progress, but also at a, let’s call it evangelistic selling motion with CIOs and CTOs and CEOs. As a young company that’s driving transformative solutions and software, that really changed how companies go to market. It’s a great conversation for me to have as well as my SVP’s to have at that C level, and the evangelistic motion that you have to take as well. I’m very tightly tied to that whole sales management motion.
Greg Alexander: Okay. This decision to be both the CEO and the head of sales and have basically very senior executives at the GO level running sales reporting it to you, that’s uncommon. I love it, because it gets you closer to the business and gets you closer to the number. Normally when we see the types of investors in a company like the ones that are in your company, they’re very focused and building out their leadership team which includes the chief sales officer. You guys decided not to do that. Was that just situational, was it by mistake, was it deliberate? What was the thought process that went behind that?
Mike Ellis: The thought process was you see a wide variation of founder CEO types in the software marketplace, technology marketplace. Many companies start that way obviously. Then they bring on additional executive management, et cetera. In our case our cofounder, one of our cofounders is our CTO and runs that whole innovation center for us. It’s somewhat of a natural for the CEO, me in this case, to also run all of sales. That being said, we are getting to the size because of the three large geographic theaters that we are selling into that I will be at some point in the near future adding a head of global sales just because of the scalability required across those three major continents.
Greg Alexander: Okay, got it. We’re going to take another quick break here. I want to draw the audience’s attention to a recent podcast with Brian Walker who is the CEO of Herman Miller. I think everyone’s familiar with Herman Miller, couple billion dollar company in the office furniture business. That podcast talks about strategic alignment, a lot of the stuff we’re talking to Mike about today. It’s a different perspective because it’s a different industry. If you’re listening to this podcast you’re aware of it, but I would encourage you to subscribe to it. If you do, you get these types of podcast pushed to you. If you’re interested in how to subscribe to the podcast, here’s some information for you.
Speaker: You need to make your numbers and you want to hear how others are making theirs. You go online to find out what your peers are doing but can only find sales consultants selling you. Sound familiar? Then the SBI podcast is for you. Each week hear directly from a peer how they are making the numbers. Go to iTunes, search for sales benchmark index podcast and subscribe today.
Greg Alexander: Okay, welcome back everybody. This is Greg Alexander with SBI, I’m here today with Mike Ellis, CEO and president of ForgeRock. We’re having a conversation around executing the CEO strategy through functional leadership. We just walked along the functional leadership work chart if you will. We went from product to marketing to sales. Last up would here be service. You guys are in a subscription business. The relationship with the customer never changes and customer success is critically important to you. Do you have a leader of customer service, customer success, and how do they execute your strategy?
Mike Ellis: We do. We have a senior executive that’s responsible for global customer success. He is responsible for all of our support, all of our customer services, our university if you will training and education for customers as well as partners. Very much tied to the success of our business because as I mentioned earlier, we are a company that bases our commercial transactions on a annual license type of subscription. It’s extraordinarily inherently important to the value of our company that customer success is paramount and top of mind and top of thinking in terms of how we go to market. This individual in our case is an extraordinary performer, he is a cofounder, one of the cofounders of the company. Has extraordinary deep technical knowledge but also huge customer people skills as well and has a global purview across all three major continents and regions that we go to marketing.
Greg Alexander: Are you as hands on with him as you are with marketing? Are you reviewing things like churn and renewal rates and stuff like that regularly?
Mike Ellis: We are, yeah. We review the whole churn and renewal aspect of the company, not daily but probably weekly. We talk about our customer go lives every week in terms of how we’re servicing them and how we want to make sure. As I mentioned at the beginning of the call, much of our focus is on helping customers interact in better ways with their customers. It’s pretty mission-critical to the businesses. This whole responsibility for global customer success is an extraordinarily big responsibility for us. We take it really seriously and we’re lucky that we have a senior executive of that caliber for us.
Greg Alexander: All right. I think I got a pretty good understanding as to how you’re doing is there. By the way, it’s amazing to me how tight you all are on this, which is great. Let me throw a curve ball at you. Let’s say you wake up tomorrow and you want to make a strategic shift to the company. I don’t know, maybe it’s enter a new market, bring out a new product, who knows. Then you got to cascade that through your functional leaders and make sure that they all stay in alignment. If you think about it, you’re dropping a pebble in the pond there and the ripple effect is massive and it causes all this disruption, because all of your functional leaders have their own strategies that they’re trying to execute through their teams. When you make a shift, how do you bring everybody along?
Mike Ellis: Yeah, that’s a great question. A couple of things that we do and I’m sure most companies do is we have a global management call, because we have executives across the world in terms of location as opposed to just most younger software companies are mainly Americas based. We do have a global call that’s biweekly. It’s hours long and it’s all about each of the core areas of the company, where we’re heading and what we’re doing. When we are thinking about a inflection, a big shift, a transformative change in the strategy, et cetera, we actually start to formulate it in those strategy meetings. These are the top 10 leaders in the company worldwide for us.
I pull them together biweekly, they have strong communications with them around what the thinking is. Introducing a major shift like that would start usually in those management calls. We do get together every quarter in person for a multi-day session. That really reviews and reflects on the business, but also importantly it’s looking forward and trying to understand how do we not only meet the demands and the needs of the market, but more importantly how do we actually need those energies. How do we be the leader in the marketplace around what’s happening out there? For us, as you can tell, it’s a pretty organic movement. It’s something that we do week in, week out and allows us to make actually very strategic moves. We’ve done it in the past that started in the formulation in these meetings.
Greg Alexander: Yeah. You talked earlier about agile development, it strikes me that you’re agile at the company level. You’re literally running an agile business. The amount of communication that you have and how quickly you can pivot from one thing to the next is just fantastic.
Mike Ellis: It’s the amazing thing of next-generation software platforms as well as how you manage it, much like you just said. Agile management coupled with agile development and engineering is an amazing opportunity for companies. We’re adding feature sets today, even though it’s April, two releases that are coming out in the fall. It’s because of that agility, that sprint based development, agile development focus that not only excites us and helps us be really on time and relevant in the marketplace. To our customers, they perceive it as we’re serving them in a way that’s extraordinarily agile and respectful and relevant to the needs that they have, as opposed to many older legacy software companies are reactive and they’ll take the need specs that come out of their customer interaction. Maybe, just maybe they’ll be informed in a release that comes up two years from now.
Greg Alexander: If they get to it.
Mike Ellis: If they even get to it, exactly.
Greg Alexander: All right. We’re going to take one more break. When we come back from the break, Mike and I are going to do our best to package this up into an action plan that the listeners can implement. The purpose of this break is to introduce a new exciting piece of content called SBI TV. We’re releasing on a monthly basis a 30 minute webcast. This particular show that I’m pointing everybody to is with the president of Mitel, gentleman by the name of Joe Vitalone. If you’re interested in watching that show and learning more about SBI TV, here’s some information for you.
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Greg Alexander: Okay, welcome back everybody. This is our concluding segment with Mike Ellis, CEO and president of ForgeRock. This is Greg Alexander of SBI speaking. We’ve had a wide-ranging conversation with Mike today all around execution of a CEO strategy. We talked about each functional leader’s responsibility. What I learned from Mike today was how communication plays such an important role and how being responsive to the needs of the marketplace is really what dictates the cadence of all this, the pace of change, et cetera. If you’re looking at it from that perspective, keeping everybody aligned is actually an organic process, to use Mike’s words, versus this disruptive waterfall based once in a while approach. I think that’s the reason why ForgeRock has been successful. Mike, if you could speak directly to the audience and say, hey, if I was a CEO of a fast-growing software company and I was trying to do the things that you’re doing and maybe I’m not there yet, what are the two or three things that you would advise him or her to do immediately?
Mike Ellis: Yeah. It’s a great question and a broad question. You hear this all the time out in the marketplace and you read about it everywhere. It is the core to success of really great fast-moving innovative companies. It comes down to people and it comes down to culture. If you’re hiring amazing people that also are in the same boat with you around the strategy of where the firm is going and the future vision of where you know the firm can be, then you build that culture together. People and culture. The ability to put in these organic processes are fairly straightforward like so many things, be it sales or executive management, et cetera.
It comes down to the two most to basics of basics. It’s hiring the best and brightest and great people, but also those same people have to be the right cultural fit for what you’re trying to do as an organization. From that comes the easy processes frankly I think, because they’re organic. Setting up these communicative meetings in a nonpolitical agenda to create collaborative dialogues across the organization about what’s important and the processes and getting there. As we also read in some of the other areas of the world about media, it’s okay to fail. Having a culture that allows mistakes to occur, yet knows that that’s how innovation also is part of that process and that strategy is key to a nonpolitical, highly innovative, highly agile company. It always starts there. It’s the people and it’s the culture. From that comes building out the processes and the programs that allow you to really execute on something.
Greg Alexander: Well said. This topic, the functional execution of a CEO strategy is so rich we could go on and on forever. Unfortunately we’re out of time. Let me offer those in the audience who want to learn more about this some resources. Go ahead and visit our site, salesbenchmarkindex.com. Click on the about us section and then our services. There you’ll see a section called organic growth, which offers all of our frameworks for driving the functional execution of a CEO strategy, there’s quite a bit there. Cherry pick the things that are most important to you. They’re all free and available to you, so hopefully those are helpful. For those that are listening, want to thank the audience for giving us some of their time. I hope you got as much out of this as I did with Mike. Mike, on behalf of all of our subscribers, behalf of everybody here at SBI, thanks a bunch for coming on the show and generously giving of your time and teaching us all a few things.
Mike Ellis: Greg, it was my pleasure and thank you very much for inviting me and thinking of ForgeRock.
Greg Alexander: Okay, take care.
Mike Ellis: Bye-bye now.
Speaker: This has been the SBI podcast. For more information on SBI services, case studies, the SBI team and how we work, or to subscribe to our other offerings, please visit us at salesbenchmarkindex.com.
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