NAGASA - The Compass - Spring 2000

• ARCHIVES Winter '98 Summer '98 Fall '98 Winter '99 Summer '99 Fall '99 Winter '00

  Navigating the Channel
• Importance of the CEO in Dealer/Reseller Growth
• Half of Accounts Receivable Collected Within 30 Days
• Internet Opportunities: Linking Customers, Dealers and Manufacturers
• Breakfast Meetings Promote Member Networking
• Forum Fund Contributors

Importance of the CEO in Dealer/Reseller Growth
Excerpts from the Forum 2000 White Paper by Keynote Speaker Bruce Stuart of ChannelCorp

ChannelCorp undertook research on the role of the CEO in promoting dealer/ reseller growth to enhance an under-standing of dealer/reseller growth. We wanted the end result of this research to help answer two critical questions:

• What decisions do I have to make in order to grow my company?
• If I work with another company or companies in a partnership or alliance, or if I merge with them or acquire them, do they have what it takes to meet the growth program requirements?

The focus of the work was to examine how various functions in reselling organiza-tions change as the organization pro-gressed through a variety of stages. The assignment of companies to various stages of growth was “neat and clean,” but it was not, however, very useful in meeting our research objectives. It became clear to us that the change we wished to examine was primarily growth-induced.

Furthermore, we confirmed that growth was not a constant or linear process but rather more like a squirting, surging or hopping process. Growth companies seemed to move from bottleneck to bottle-neck, opening space for themselves as they went. During the course of the project it became clear that:

• To sustain growth, resellers required a solid set of foundations, and
• These foundations required a solid set of functional underpinnings to support them, and finally,
• The functional underpinnings and foundations were sometimes late, sometimes early, and in some cases not even in existence.

Our research reinforced that growth drives reseller success. The resellers that we reviewed and the individuals whom we interviewed clearly told us that without growth there was no success. Research also indicated that high growth resellers:

• Generated 5-10 times the returns for investors than slow growth companies
• Developed new services and introduced new products 1.5 to two times faster than slow growth resellers.
• Innovated more frequently than slow growth resellers.

Additionally, high growth resellers clearly had a set of attributes that set them apart from moderate or low growth resellers, including a:

• Focus internally on improving, updating and modifying businesssystems and processes
• Focus on client retention – formal quality control processes and ongoing customer satisfaction research
• Focus on client acquisition — new/improved products sold to new/existing clients
• Focus on business/financial planning to ensure adequate capital to grow
• Focus on employee training to ensure talent to grow
• Focus on creating financial flexibility — more sources of capital/more permanent capital
• 50% permanent capital; 25% semi-permanent capital; 25% non-permanent capital
  (Source: Founder to CEO — Critical Transition, ChannelCorp presentation)

Growth Companies Are Different

In its comprehensive study of the 200 fastest growing companies in the world, Deloitte Touche Tohmatsu International found that “the winners have created integrated business systems to drive sustained growth and have planted them deeply in their organizations.” The study also found that regardless of industry or country of origin, there were five foundations that allowed a company to sustain growth (Figure 1). Not only had growth companies invested in these foundations, sustained investment in these foundations had resulted in sustained growth over the longer term.

Our research and experience was consistent with the findings of this research. When we explored this topic further we discovered that down below the five foundations are a set of Functional Underpinnings that need to be in place for a reseller to achieve sus-tained growth (Figure 2). If these functional underpinnings are not in place, or are added too early, or are added too late in development, the continued growth of the reseller is put in jeopardy. A Growth Plan that needs to be clearly communi-cated to the organization in turn sup-ports the functional underpinnings.

The Driver of Growth

It became clear early on in our research that the key driver of growth, and therefore the key driver of success, was the CEO of the reseller. The high growth resellers had at their helm CEOs who were constantly asking the question of what the business needed at the particular stage of development that it was in. The develop-ment of appropriate foundations and the correct functional underpinnings were crucial to growth. The high growth resellers had CEOs who would create and articulate a growth plan and put the required Foundations and Functional Underpinnings in place at the right time. We’ll examine growth drivers and other key topics at Forum 2000.

This White Paper is available at www.nagasa.org as a PDF file in the Members-Only section. Members may request a complimentary printed copy. The cost to non-members is $15. Voice 202-328-8441; Fax 202-328-8441; E-mail: information@nagasa.org