Some channel experts aim to be “book smart,” reading as much business content as they can, while others take pride in being “street smart,” gathering their intel from trade shows and phone calls. In this column, I’m going to apply both book smarts and street smarts (does that make me a member of the Bookstreet Boys?) to the important topic of POS resellers struggling to transition their business model.
Reseller Anecdote #1: My conversation during the first minute of breakfast at the RPOWER Dealer Meeting Sept. 27 in Scottsdale was with a 60-something reseller from the northwest U.S. When I asked what was new with his business he said, “Recurring revenue. I need more of it.” When I asked him what his biggest obstacle to that was, you might have expected him to mention customer objections or a struggle to keep up with changing technology.
Nope. This was an inside job. “My accountant likes when we get those big checks up front,” he said. “She doesn’t want to go from a $7,000 deal to getting a little bit of that every month.”
We talked for several more minutes about how the recurring revenue business model pinches in the short-term but is a healthier long-term investment. He agreed, but his words weren’t moving him any closer to moving from break/fix to as-a-Service.
That dilemma isn’t limited to only this reseller. It’s true many POS VARs are realizing greater profits by increasing their recurring revenue offerings, and that’s great news. But too many of their brethren aren’t moving fast enough. Basically, they’re in a rowboat on a river that’s pulling them towards Niagara Falls, but they aren’t paddling fast enough to break away from the current.
This situation is detailed in Geoffrey Moore’s book Escape Velocity: Free Your Company’s Future from the Pull of the Past, which was recommended to me by a former reseller who successfully repositioned his company. Let me offer 10 quotes from Escape Velocity before sharing one more reseller anecdote with you:
- Your prior year’s operating plan is the pull of the past. That plan exerts a gravitational force that pulls inexorably at any investments that seek to depart from its inertial path. The larger and more successful the enterprise, the greater the inertial mass, the harder it is to alter course and speed.
- There is a path that can achieve the escape velocity required to engineer a genuine change in course. Begin with a highly structured set of dialogues around vision, strategy, and execution that tee up future opportunities and risks in a way that allows them to compete more effectively for resources against our existing franchises.
- Once a year, ask the question, “What does the world really want from us?”
- Uncritically following a course leads inevitably to dilution of differentiation, erosion of competitive advantage, waste of innovation resources on things that don’t matter, and failure to achieve sufficient competitive separation on the things that do matter.
- Your company must differentiate to such a degree that your offers are simply unmatchable. That means you have to allocate resources in a radically asymmetrical way.
- Companies unable to achieve escape velocity have almost always fallen into the cadence of manage first, lead second.
- Have a strategic dialogue prior to resource-allocation decisions. You have to nominate the favorites, fight fiercely about which ones are truly deserving, and drive yourselves to the edge.
- Experience has taught us there is always someplace else to go. It’s just that you have to jettison a lot of baggage to get yourself under way. The longer you stay at the fair, the more baggage you have to jettison and the weaker you are when you start out.
- To free your company’s future from the pull of the past, to escape the gravitational field of your prior year’s operating plan, and to complete the round-trip by returning with next year’s operating plan, you need to apply a force that is greater than the inertial momentum of current operations.
- Every company has a strategy to be different. What ingredient is present in the few that actually do get to escape velocity? The answer, I submit, is leadership.
Reseller Anecdote #2: This conversation happened with a high-initiative, growth-oriented reseller who chats with me every 60 days or so about where he’s steering his business. He doesn’t just sell POS systems today; he now offers cloud POS, website hosting, email hosting and more, and he’s laser-focused on a niche retail market. He’s constantly testing new ideas and morphing his business to remain relevant.
I really liked how he explained his mindset: “There are small business owners, and there are entrepreneurs. Small business owners do what they’re accustomed to doing while entrepreneurs are comfortable switching to the next thing. If something more appealing comes along, the entrepreneur will take advantage of it.”
So maybe that answers the question that headlines this article – Which POS resellers will escape the pull of their past? – and leads to one more question as you begin planning for 2018.
Are you a business owner or an entrepreneur?