Monday, May 30, 2011

Organizational Culture and Company DNA – What Makes a Successful SaaS Company.

“No people come into possession of a culture without having paid a heavy price for it” (James A. Baldwin)

It was always clear to me that success with SaaS was not about technology, but about execution. This week I got a clear reminder.

The SaaS CEO Forum
For the past few months I have been running a SaaS CEO Forum that meets every six weeks or so, each time hosted at a different SaaS company, by a member of the Forum . The forum consists of a select group of successful SaaS companies, that have been selling their service for a number of years and are dealing with issues such as growth, operations, sales, marketing and customer satisfaction. Every meeting has a theme such as running a fabulous inside sales teams, SaaS Service Operations, knowledge-as-a-service, etc.. Yesterday the forum was hosted by Avinoam Nowogrodski, founder and CEO of Clarizen, a fast growing, market leader on collaborative project management. Beyond the very interesting review of the company’s clockwork marketing and sales operation, Avinoam gave a presentation on what makes a SaaS company successful.

Successful SaaS Company
No one can argue with the success of Clarizen, having grown 400% year over year, with an ever-growing community of happy customers, so it was worthwhile listening to Avinoam’s credo.

Clarizen’s CEO was talking about managing a company where execution is paramount and where Customer Success always comes first. He has been careful selecting an executive team that he regards as ‘A’ players and nurturing a culture of Respect, Modesty, Openness, and Accountability.

Among the factors Avinoam mentioned was “checking your ego at the door”, willingness to take risks, and acceptance of mistakes as part of the ever changing environment and conditions. Delegating Authority, Hands-on in your domain, Transparency and above all – Measure, Measure, Measure every aspect of the company’s operation; sales, marketing, conversion between each stage of the pipeline, responsiveness, costs.

The SaaS Angle – Fast Forward
While I agree wholeheartedly with all the above criteria being critical for a successful company, I asked for the SaaS angle. The answer was obvious even before I finished asking the question: “Pace”. In a SaaS company everything is fast-forwarded. The cycles in almost every aspect shorten and therefore the margins of error are ever so narrow. In a company that caters for the SMB in a low-touch model, the sales cycles are measured in days, not quarters, the software releases are shortened to weeks. The discovery of bugs usually occur within hours (or minutes) after a new version is introduced. Hence, Openness and Transparency are paramount and there is no time for ego games or controlling vital information (I have written about these aspects in the past: Transparency & Communications).

To reiterate – in a fast-pace, ever-changing, 24X7 environment, the need to feel the operational pulse, the need for responsiveness and open communications, the need for a listening ability and accountability are vital for success. Time spent on BS, on analysis-paralysis, on political games, on territorial squabbles, is time spent away from making sure your customers are successful, and that will be evident on the company’s bottom line and eventually, on the quarterly bonuses.


Elaine Blechman said...

Thank you Dani for a very thought-provoking and informative post.

Ram Prasad said...

Very accurate. I experienced a SaaS company come back from the brink of failure as soon as they resolved the transparency and communication issues