Day: July 31, 2023

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The Unseen Consequence of Neglecting Sales & Marketing: A Wake-Up Call for Custom Software Development Firms

The Unseen Consequence of Neglecting Sales & Marketing: A Wake-Up Call for Custom Software Development Firms

The year is 2023, and the global economy, relentlessly stirred by fluctuating trends and financial pressures, has dealt a heavy blow to professional service firms—particularly the custom software development houses. These firms, once lavishly blessed with burgeoning budgets, have come face-to-face with the painful aftermath of their own negligence: systemic underinvestment in sales and marketing.

Over the past decade, buoyed by an era of abundance, boutique professional service firms effortlessly navigated the path to their financial targets. This period of corporate wealth, coupled with the world’s relentless march toward digital transformation, catalyzed an unprecedented demand for custom software solutions. But beneath this seemingly golden age lurked a dangerous assumption held by these firms’ technical geniuses: the belief that their good work alone would suffice to attract prospects and keep the pipeline humming. The dogma that “good work sells itself” and that clients would automatically broadcast their satisfaction was almost religious in its conviction.

Herein lies the crux of their arrogance: “Who needs to be good at sales and marketing when there’s a perpetual stream of opportunities?” This flawed assumption has proven perilously short-sighted in 2023. Firms that were once profitable and expanding are now facing contracting revenues, slimmer margins, operational losses, and even layoffs.

Unsurprisingly, these once-cocky founders believe they can abruptly flip a switch and rectify this situation by merely getting “good” at sales and marketing. But a harsh truth awaits them: Excellence in business development is not achieved overnight. It takes years to build a robust sales and marketing foundation—just as it takes years to hone software engineering skills.

So, what is the founder of a boutique professional service firm, particularly in the software development space, to do? Swallowing a sizeable slice of humble pie seems to be in order. They must heed the wisdom of Warren Buffet: “Only when the tide goes out do you learn who has been swimming naked.” The tide has gone out and these founders have been swimming naked. They must commit to a multi-year investment of time and resources to cultivate world-class capabilities in business development. Failing to do so will condemn them to a vicious boom-bust cycle dictated by the economy’s natural expansion and recession rhythms.

Building an enduring boutique professional service firm—one that thrives in times of prosperity and recession alike—requires the ability to consistently and predictably win new business and garner expansion revenue from existing clients. This moment signifies a stark division between the strong and weak leaders.

The weak leader, in the face of adversity, retrenches and relies on the good fortune of a recovering economy to rebound. But such a leader will never construct a great firm; they will merely float with the macro environment’s ebbs and flows.

In contrast, the strong leader invests heavily in a robust business development function during challenging times. These leaders are driven by an intolerance for their future lying outside their control. They aim to build resilient, enduring firms that can weather stormy times as well as they can bask in glorious periods.

Which type of leader are you? A true entrepreneur who bets on himself during times of uncertainty, or a small business owner masquerading as an entrepreneur afraid to do what is required?

Now is the time for a call to action. For many of these founders, a decade-long stretch of prosperity means they have never navigated a recession before. These uncharted waters leave them clueless and desperate. The solution? Join the Collective 54 mastermind community. Surround yourself with seasoned role models, mentors, coaches, and peers who have weathered these storms before and can guide you forward. Here is an example of a member of our community from the software development sector that should inspire you. By joining, you can surround yourself with remarkable peers like this. 

Failing to heed this advice and continue underestimating the importance of a robust sales and marketing foundation could mean the difference between merely surviving or thriving in the demanding world of custom software development. As the economic tides recede, don’t be left exposed. Take control, equip your firm for the long haul, and build an enduring legacy. 

Which approach do you believe is more effective for boutique professional service firms?

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Cast your vote and join the conversation. The insights we glean from this poll will help illuminate the path forward for software development firms and other professional service providers alike. Let’s use this opportunity to learn from each other, adapt, and grow stronger in the face of adversity.

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Episode 132 – How Psychometric Talent Assessments Should be Used by Boutique Professional Service Firms – Member Case by Ted Jackson and Dr. Julie Carswell

Pro serv firms are people driven businesses, therefore, getting the people decisions right is mission critical. As a result, many members are using assessment tools, or have in the past. However, the results have been mixed. In this session, learn from a PhD in organizational psychology how to improve the results you are getting from assessment tools.

TRANSCRIPT

Greg Alexander [00:00:10] Dive all in on the next chapter of your life. Welcome to the Pro Podcast, a podcast for leaders of thriving boutique professional services firms. For those that are not familiar with us, Collective 54 is the first mastermind community focused on the unique needs of boutique processor firms. My name’s Greg Alexander. I’m the founder of Collective 54, and My World Today will be your host. On in this episode, we’re going to talk about assessments. Now, why are we going to discuss assessments? Well, in professional services, it’s obvious that there are people driven businesses and therefore getting the people decisions correct is pretty important. And as a result of that, many of our members are using assessment tools or they have in the past or they’re considering them in the future. However, the results have been mixed. So my hope today is that we can help our members improve the results to getting from their assessment tools and help me with that. We have the leaders from Sigma Assessment Systems members, Ted Jackson and Dr. Julie Carswell, and they’re experts in this area and they’re going to share the wisdom with us. So as they say here in the great state of Texas, welcome. And how are you all doing today? 

Ted Jackson [00:01:36] Thanks, Greg. Doing okay? All right. 

Greg Alexander [00:01:39] Very good. Would you please. 

Dr Julie Carswell [00:01:41] Nice to be here.

Greg Alexander [00:01:42] Provide it. Provide an introduction for the. For the audience. 

Ted Jackson [00:01:47] Yeah, sure. Before I do, I just want to say I’m really inspired with what you guys have created here. 254 I’ve benefited from the podcast from the Office Hours, the expert instructions, and you guys have saved me a ton of time and money, so keep up the good work. 

Greg Alexander [00:02:02] Oh, thanks for saying that. I appreciate it. 

Ted Jackson [00:02:05] Yeah. My pleasure. My name’s Ted Jackson. I’ve been the CEO of Sigma Assessment Systems for, gosh, about 20 years now. I started off as a freelance software developer, mostly working on computerizing performance appraisal systems and then was hired by Sigma to do the same, eventually got involved with sales and business development at Sigma, was promoted to president and eventually took over ownership. And here we are one than 20 years later. 

Greg Alexander [00:02:39] And Doctor, how about yourself? 

Dr Julie Carswell [00:02:43] Yeah. I’m sorry. I’m an industrial organizational psychologist by training, which is an area of psychology that is focused on the science of human behavior in the workplace. We help organizations with selecting, developing and retaining talent, and I have specific expertise in the area of developing assessments to support organizations with those types of activities. I’ve worked with Sigma for almost as long as Ted has been the CEO of Sigma and helping to develop and optimize our assessment solutions and also using assessments as a foundation to support our other services like executive coaching and succession.

Greg Alexander [00:03:29] All right, Well, very good. Well, thank you again for being here. Let me jump into the questions. So some of our members are young growth firms and they may not even know what assessments are. So if you would humor me for a moment and just maybe give us a definition of what an assessment is. 

Dr Julie Carswell [00:03:47] Happy to. So in the context of our business assessments, refer to evaluative tools that we use to support organizations with those hiring and development decisions. These tools can take the form of either tests or assessments. And in our industry, we distinguish between those things. Tests have right and wrong answers, like measures of IQ or cognitive ability, for example, whereas assessments inquire more about preferences and people’s kind of natural tendencies. So measures of personality and career interests would be examples of assessments. 

Greg Alexander [00:04:29] Very interesting. I didn’t understand there was a difference between tests and assessments, so I’m already learning something today. All right. So. So why do leaders use assessments? 

Dr Julie Carswell [00:04:41] Yeah. So when I think about that question, I frame it up as why do organizations want to use assessments, which I think is a similar question. As I mentioned previously, organizations primarily use assessments to support hiring or promotion decisions and talent development. The use of assessments also has several applications and advantages for organizations. So there’s the efficiency factor. For instance, they can enhance the efficiency of the hiring process, particularly when dealing with positions that have large volumes of applicants. Right? So organizations with large applicant pools don’t have the resources to interview every candidate. So this can be a really helpful tool at the front end of the process. 

Greg Alexander [00:05:32] Okay. You know, our members are probably not in that category. Yes, they are quite a few people, but it’s not a large volume type situation. So in that context, like let’s say you’re, I don’t know, a 40 person consulting firm, and through growth or attrition, you might hire 8 to 10 people a year. Yeah, I would I would have to like this be leveraged in a situation like that. 

Dr Julie Carswell [00:05:56] Yeah. Okay. So in addition to that efficiency factor, which may not be as applicable for your audience, assessments can also enhance fairness in the hiring process by adding objective metrics and helping to minimize the role of, you know, those built in cognitive biases that can influence hiring decisions. Right? For instance, we tend to more positively evaluate others who are similar to us, right, in terms of gender, age or background. That’s known as the similar similarity attraction, bias. I like that. So again, yeah, similarity, attraction, bias. And there’s a number of other biases too. But again, the use of assessments to inform hiring decisions can help to minimize the impact of those biases on our decisions. 

Greg Alexander [00:06:46] Yeah, I mean, it’s a great answer. I’ve seen several of our members make that mistake. We tend to like we tend to hire in our own image because we’re projecting ourselves on them. That’s interesting. And and tools like this. Guard against that, how? 

Dr Julie Carswell [00:07:04] Yeah, but as I as I was saying. So these tools have been developed to more bring more objectivity to the assessment process. Right. So when we’re looking at developing assessments, we’re very focused on making sure that the assessment, whether it be a personality or a cognitive assessment, is accurately measuring what it’s intended to measure. Right. And doing so in a consistent manner. Okay. So making sure that you have what we call a really psychometric, rigorous assessment that’s both valid and reliable means that, you know, those scores are accurate indicators of. The underlying constructor concept you’re trying to measure in. In our case, that’s often job performance, right? So just having these more objective metrics to help support decisions rather than, Oh, I really like that person. Yeah, you know, I have good gut feel about them. So yeah, I’m going to. 

Greg Alexander [00:08:03] Yeah, I mean that. But that. 

Ted Jackson [00:08:05] Strong handshake. Yeah, right. 

Greg Alexander [00:08:07] Like a nine handicap, right. I mean that, that bias alone. That’s right. Yeah. Yeah. All right. So there’s a lot of them in the market and our members have been experimenting with a ton of them, and I have a hunch, and I can’t back this up, but I have a hunch that maybe they don’t know the differences between them or which one to pick or should they build their own. So can you help our members think through that a bit? 

Dr Julie Carswell [00:08:32] Yeah, I would say don’t build your own. You can start there. Okay. Not only because that would obviate the need for my job, but because it’s not a good idea from a, you know, an accuracy and rigor perspective. So let me just talk about context first. So different assessments are designed for different purposes. So you need to make sure that the tool you’re using is aligned with the purpose for what you’re using it. Okay. For example, an assessment intended to help with coaching and development or support were designed to support more self awareness or personal insight might not be suitable for making selection decisions. And this is great on this website. So I’m I’m comfortable saying this, but many of your listeners might be familiar with the risk assessment, and that could be helpful in terms of better understanding different styles of communication or behavior within a team. But it has not been specifically designed and developed to help inform hiring decisions. So if you’re not using a tool that’s been developed for that purpose and it’s not an effective predictor of job performance, hasn’t been validated for that purpose, that can expose you to litigation risk. And we don’t want that. Okay. 

Greg Alexander [00:09:57] So you start with what’s the purpose of the tool? And then there’s certain tools that are designed for certain purposes. 

Dr Julie Carswell [00:10:04] Right? Yeah. 

Ted Jackson [00:10:06] I would I would even maybe take it a step backwards and consider what is important for the individual, what is important for the war, How does one need to perform in order to excel in the role? And what traits, knowledge, skills and abilities are important? And then go backwards from there and choose the assessment battery based on that. 

Dr Julie Carswell [00:10:28] Steve Austin Yeah, I agree. I mean, I think if you’re, you know, looking at various tools in the market, you know, that makes, that makes perfect sense to better understand, you know, what are the critical competencies required for effectiveness in this position or what are the critical knowledge, skills, abilities and other aspects of a of individuals like personality are related to success in their role, and then use that as your lens through which you’re making your assessment purchases and decisions. 

Greg Alexander [00:11:08] Okay. And then I guess my last question would be let’s make the leap that we understand the purpose of the tool. We understand the mission critical traits and attributes of the person that would thrive in that position, who in the organization should be using them? 

Dr Julie Carswell [00:11:29] Yeah. And that’s an important question. So some assessments require certain levels of training, experience or or education before they can be purchased and administered. Those are what we refer to as qualifications in our industry just to ensure that the assessment is being used and interpreted appropriately. Right. So be sure to check the qualification levels for various tests and assessments. You know, as you’re looking through offerings from various publishers or solutions for various from various publishers and just making sure that you have an appropriate, appropriately qualified user or someone who can undertake the training that’s required to properly interpret the assessment results. 

Greg Alexander [00:12:21] Yeah, and that is really important. I our membership consists of entrepreneurs and they kind of have a ready fire aim approach. And it’s one thing to use an assessment, spend the money on it, It’s quite another thing to use it correctly and make sure that you’re trained on how to interpret their results. I think that’s great advice. All right. Well, this is all the time we have today. But I want to remind the members that are listening that we will have a private Q&A session with Ted and Dr. Julie. Look for that meeting, invite that comes up and we’ll go into much more depth than we were able to cover in a short podcast, and you’ll be able to ask your questions directly to them. So take a look at that. And then if you’re not a member, but you find this interesting and other topics like this are intriguing to you, consider joining. You can find us at Collective 54 icon fill out the contact us form and someone will get in contact with you. And then lastly, check out our book, The Boutique How to Start Scale and Sell a professional services firm. You can find it on Amazon. But Ted and Julie, I want to thank you on behalf of all of all of the members for contributing today. This is a hot topic and we look forward to your Q&A session. So thanks for being here today. 

Dr Julie Carswell [00:13:39] My pleasure. 

Ted Jackson [00:13:39] Thanks again. Good seeing you. 

Greg Alexander [00:13:41] Okay. Take care, everybody.

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