Grounded qualification: an emergent approach to assessing sales positioning

For the past eight years, I've worked with helping midsized IT companies sell their products into a maturing telecom market. This is so different from the earlier times of unbounded growth that it doesn't even feel like the same industry anymore.

In the old days (i.e., before 2000), there were so many new telecom companies sprouting up that a company did not have to be a leader to be successful. They just had to be good enough.

Today, telecom vendors circle prospects like hungry dogs around a restaurant dumpster. The biggest and strongest elbow their way to the front, and the midsize guys try to keep from starving.

Some midsize guys do survive, though. They have enough of the right kind of customers, and gain enough new customers to keep making profits. How? The only way is to be very careful in planning and deploying their limited sales resources. Which gets down to a question of qualification.

In a B2B world, companies narrow down their range of prospects by deciding which sales opportunities they wish to pursue and which they don't. This process is called qualification. Strong sales organizations that I've seen are really good at qualification, and poor ones are really bad at it. Successful midsized companies have to be good at it, because they don't have enough resources to compete on all fronts and win. Stretching out their resources by definition is a failing strategy.

Good qualification means that you deploy your sales resources on opportunities that are large enough, profitable enough and winnable enough. In a virtuous circle, deploying lots of resources on good opportunities means that you have more likelihood of winning those opportunities compared to a company that spreads its resources over both good and "bad" opportunities.

One sales qualification methodology I'm familiar with segments the process into the following categories: "is there an opportunity?" "is it worth pursuing?" "can we compete?" and "can we win?" The first two categories are based on objective data--i.e., the company size, defined project budget, identified executive sponsor, etc. The final two are almost entirely subjective--are we positioned well? are our allies powerful? etc.

The challenge for midsized companies is that the subjective answers to the final two categories can make the difference between an opportunity worth pursuing and one to no-bid. Most salespeople, in my experience, hate turning down opportunities and so have an unconscious bias toward over-rating the subjective categories, resulting in lots of weak pursuits rather than a few, well-chosen, strong pursuits.

As a different approach, is it possible to create some criteria that are more observable and objective that nonetheless help answer the "can we compete?" and "can we win?" questions?

I propose the answer is yes, and we can call these items "grounded" qualification criteria. (Grounded theory, from the Wikipedia definition, is "a systematic qualitative research methodology in the social sciences emphasizing generation of theory from data in the process of conducting research.")

What I'm trying to say is this: when a company wins an opportunity, there are reasons why--they may be emotional, logical, cultural. Similarly in a loss. The company can use grounded theory methods to gather winning and losing examples, to sort them out and generate from them several insights as to signals of potential wins and losses. Those signals can then be used as part of the qualification of new opportunities.

By way of example, a former employer of mine had a product that was functionally adequate but which was built on a technology architecture that had fallen out of fashion. It had few references. Not surprisingly, most of our sales pursuits were failures. Yet the company made several strategic sales of this product. (As a middle manager, I was surprised by these wins.) If we'd deeply examined those wins and compared them to our losses, grounded theory would have helped us understand that the company's executives were very well connected to certain telecom ventures, and those connections were vital to our winning that business. Knowing this, we could have planned and evaluated opportunities based on our executives' connections, and possibly found more strategic wins (at minimum, we could have spent less time on sure losers).

Doing a grounded theory assessment means deeply understanding why companies that bought your product did so, and why those that didn't made that decision. (See an earlier post on the value of detailed prospect loss reviews.)

It's important to point out that competitive and market positioning is a complex system (per the Cynefin Framework), and therefore a company's position and qualification rules will shift over time. The grounded evaluation is therefore something that needs to be updated continuously.

One of the benefits of grounded theory is that it can generate new and unexpected areas of opportunity and unveil hidden dangers. Midsized companies need to "rifle shoot" opportunities and put sufficient resources into the very best opportunities in order to be successful. Grounded qualification is a potentially important tool in these companies' arsenals.

(Acknowledgement to Cynthia Kurtz for first exposing me to grounded theory.)