3 Steps to Change Your Behavior and 1 Thing to Avoid

One of Spotlight’s portfolio companies, cFive, is introducing a new platform for behavior change called Catalyst (“Be a Catalyst for change”). Although it’s focused on a fairly narrow segment, it got me thinking about behavior change and new habits.

Most people have some behavioral patterns they’d like to change. I’d personally like to be better about going to the gym. And eating right. And writing more frequently. These are activities – and when they’re considered over time, as part of my life, they are behaviors.

I can go to the gym once, or eat a healthy meal occasionally, but that’s not what I want to change. I want to change the regular action – my behavior. This is possible, but it’s hard. People do change behaviors – but the vast majority revert back to where they started.

Why are some people able to change their behavior, while most aren’t?

Successful behavior change requires focus on three things:

  1. Setting clear goals that clarify the behaviors you want to change.
  2. Creating new habits.
  3. Replacing existing habits.

And requires avoiding the one thing that most people get stuck on:

  • Trying to simply stop existing habits.

Habits are key

Behavior – the way we act on a day-to-day basis – is driven by habits. If we want to change our behavior – or someone else’s – we need to ignore the behavior itself, and change our habits, the individual tendencies and practices that make up our behavior.

Stopping a habit is virtually impossible.

The key thing to recognize with changing habits is that it’s very difficult – virtually impossible – to simply stop a habit. The more you resist, the more you think about it, and the harder it is to resist. “Thought suppression has counterproductive effects on behaviors.”

Instead, focus on (1) creating new habits, and (2) replacing existing existing habits.

Don’t Confuse Product Knowledge with Market Knowledge

I frequently hear an in-house expert on a company’s product or technology described as a “market expert,” or as having great “market knowledge.”

As an investor, this is a dangerous thing to hear or say!

It conflates internal technical knowledge – the knowledge of how a proprietary product or technology works – with market knowledge – the knowledge of customer needs, market problems, and overall trends, and implies that existing product knowledge is a good substitute for market knowledge. It’s not, and conflating these can lead to overconfidence, poor strategic decisions, and lower returns (or worse).

Any software company is likely to have experts in the technology the company sells – at how to implement it, how to use it to accomplish different things, etc. But that knowledge is MUCH different than the knowledge a market expert or leader has, especially when selling a non-technical product.


Understanding TAM/SAM/SOM

When I work with investors and companies on market analysis, one the things everyone wants to know is “what is the total addressable market (TAM)?” This is an important question, but is just the tip of the iceberg, especially because many entrepreneurs (and investors!) focus on identifying the biggest number possible.

When a company stays focused on the giant number, it doesn’t give any real strategic guidance – “we’re playing in a $3billion market” doesn’t help much sense when you’re selling $10m worth of software. Instead, it’s important to dive a little deeper and be more rigorous in your analysis.

I usually break this out into a “TAM/SAM/SOM” analysis.

This does a few things:

  1. It gives potential investors a vision for your businesses’ potential.
  2. It gives discerning investors a sense of how rigorous you’ve been in your thinking about your business, your market segmentation, and competitive dynamics.
  3. Smart thinking here will provide guidelines for your team’s product and GTM strategy.

TAM – Your Total Addressable Market.
This is the entire revenue opportunity that exists today for a type of product or service, assuming unencumbered access to it.

For example: I’m selling an amazing $8 espresso drink. My TAM is all coffee drinkers.

It’s nice to have a giant number here – set the vision for your investors and employees. Give yourself something to grow into.

SAM – Serviceable Addressable Market.
Your SAM is the revenue opportunity that exists given your specific product’s current capabilities and your company’s ambitions. What segment of the market are you addressing today?

In our example, not everyone who drinks coffee likes espresso. And not all espresso drinks want to pay $8. And I’m based in San Francisco and don’t plan to expand. My SAM is everyone who would be willing to pay $8 for a cup of amazing espresso in San Francisco.

SOM – Serviceable Obtainable Market.
Finally, your SOM is what you can reasonably expect to achieve given your current operational resources (or the operational resources you expect to get) and the competition.

In our example, I’m competing against the chain stores like Starbucks, Petes, and the little boutiquey coffee places that are all over SF. I’m not going to win all that business, but with proper marketing and sales execution and great operations, I can win 20% of the time (this is where my silly coffee shop example falls apart, but hopefully the point is clear).

Using TAM/SAM/SOM to drive strategic decisions.

The TAM/SAM/SOM analysis doesn’t just exist to look good on an investor pitch deck – done right it should drive strategic decisions about your operations. Pull different levers and you can increase or decrease different numbers:

  • Increase your TAM by adding features or functionality that fundamentally broadens your scope or increases your price. Add pastries to your coffee shop. These are typically cross-sell opportunities, add-on opportunities, or simple price increases. 
  • Increase your SAM by appealing to different segments within your main market. Often this is geography – expanding internationally, for example. But it can also be product-based – by adding a feature or two you can appeal to a new vertical within the same basic market – or sales/marketing-based – depending on the market, you may need to establish key partnerships to effectively service a market.
  • Finally, you can increase your SOM through a variety of execution methods, including organic methods (better marketing and sales execution, better positioning, gaining a market leadership position) or inorganic methods (e.g., acquisitions of key competitors).

A simpler way of thinking about this is:

  • Increase TAM: Can we sell more?
  • Increase SAM: Can we sell to more people/accounts?
  • Increase SOM: Can we win a greater percentage?

Putting it into action.

I like to present the full TAM/SAM/SOM analysis to the Board along with options for expansion that we’ve brainstormed beforehand with the executive team. This gives you an opportunity to enroll your board in the journey with you, solicit new ideas in a structured fashion, and gain useful feedback and guidance. 

Culture eats strategy for breakfast

This really deserves to be a longer post, but I'd like to get it out there.
One of the services Loud Dog offered was a value and culture practice (this was part of our branding practice – a well-defined corporate culture is a cornerstone of a sustainable corporate brand). Although I no longer do this, our portfolio companies still have to address this, and I figured I'd document Loud Dog's process in brief.

Culture eats strategy for breakfast, aka Execution is 80% of the battle.

Why focus on culture? It's simple, really. Success is all about execution, execution is conducted by people, and people work in the millieu that is culture. Without a good culture, you won't have a functional team, won't execute well, and won't succeed.
Every company has a culture. It may be fragmented, it may be dysfunctional, or it may be amazing, but like a brand, it exists, even if it hasn't been defined. An organization consists of people working together, and that inevitably leads to a culture.

Your culture isn't what you think it is.

Our projects were usually initiated by the C-Suite. The challenge many companies face is that the executives think they know what their culture is. This is especially the case in SMB, and especially the case with he CEO. If you ask any CEO of a small company if they have a strong culture, and they know what it is, they will say that they do.
They don't.
For a variety of reasons, executives at larger companies are less inclined to make this claim, but it still happens.
Because of this, we began every culture project with confidential employee interviews. We wanted to uncover what the real culture was. Each interview lasted about 35-45 minutes and dove into how the employee described the culture, the values, etc.
This was all documented in a report for the executive team (all answers were anonymized) that described what the real culture was.

Culture can be defined.

Although culture often occurs organically at companies, it doesn't have to. You can define what you want it to be and shape it.
We'd conduct a values exercise with the executive team to define what culture they wanted, using a series of exercises.
In the end, this took the form of a series of value statements.
Some of these values would match what we discovered with the employees. Some would not. A simple gap analysis reveals shortcomings.

Now make it real.

Most companies stop at defining their values. It's great. Maybe they define value statements that describe what the values mean in the context of the company. Maybe they'll even print out some big signs and hang 'em in the cafeteria.
However, that's not good enough.
To make culture real, we'd work with the executive teams to define specifically what they'd do to make these values real in the organization.
For example, if "collaboration" is a defined value, what will a company enforce to make that real? How will they measure how collaborative they are? How will they make sure executives are encouraging collaboration and being collaborative themselves?
A colleague conducted a values project at a very large company that will remain unnamed. The executive team defined "respect for others time" as a value. But after a while, it was clearly not taking hold. Follow-up interviews revealed that the COO was consistently 30-45 minutes late to meetings. You can't sustain a value if you aren't willing to live up to it yourself.
Getting back to our example, a company that wanted to create a culture of collaboration might have periodic teamwork exercises that require cross-functional teams to collaborate to succeed.
The company should define a number of specific ways they intend to make each value "alive" within the company, to promote it and incentivize it.

In summary

  1. Determine your real culture
  2. Define your aspirational culture
  3. Conduct a gap analysis to identify areas of work
  4. Define specific methods to cultivate your aspirational culture, focusing on the areas highlighted in the gap analysis.

The 3 Types of Webinars

I group webinars into three categories: lead generating webinars, product demo (sales) webinars, and customer success / expansion webinars.

Lead generating webinars

Lead generating webinars appeal to a broad audience and are intended to attract people earlier in the sales cycle, convert anonymous people into leads, and help establish the company as a leader in the industry.

These play a similar role as whitepapers, etc., in terms attracting new leads and building marketing lists. These are typically higher-effort than some of the other materials, because they require good content and presentation skills, and are less able to be outsourced, but can be great.

One benefit of webinars is that they are date driven, which can be both a marketing boon and an extra challenge. Unlike a whitepaper or other lead gen piece, when you commit to doing a webinar, you need a solid marketing plan as well. Even though it’ll be available as an on-demand webinar after, to take advantage of the time pressure, you want to have as many people in the initial audience as possible.

Key things to consider for lead generating webinars:

  • Consider bringing in an external expert to help out. Sometimes this is a customer, or partner consultant, or an analyst.
  • Customer stories tend to perform very well, if the customer is from a recognized name.
  • Consider partnering with another company on the webinar – share list access.

In my experience, webinars are most effective for an audience that’s already somewhat engaged with your company – your existing marketing list. They ask for a relatively high commitment from your audience, which is often too high for brand new names.

Product demo webinars

Product demo webinars are just that – demos of a product or an aspect of the product. These are typically for people later in the sales cycle.

Every company should do these, if possible, on a standing, periodic basis. I love the idea of having a monthly 20-min demo of the product led by sales reps/SEs. It forces the company to really nail down demos, and get the sales reps good at giving them.

Promote these as part of your outbound lead gen efforts, in SDR email signatures, as a lower-commitment option for people earlier in the sales cycle.

Customer success product webinars

The final big bucket of webinars is aimed at current customers and generally focus on helping customers optimize their use of the product. We always want our customers to maximize their use of the product and leverage all its features – the more they use, the more committed to the product they are, and the lower our churn is.

There’s plenty of overlap between these categories, but they have specific and definite audiences, different marketing requirements, and different goals.

As companies grow and begin webinar programs, it’s important to have clarity around the goals and audience to ensure its success. Hopefully this helps.