Of all his good tips, what stuck with me were his percentages. He and his VCs spend 80 percent of their time on the top companies in their portfolio, just 5 percent of their time on the worst performers.
Here’s the bitter lemon part: Each of their portfolio companies is required to prune the workforce by 10 or 20 percent every year. Decisions about who ranks at the bottom are made in October and November, and they are announced “at the worst time of the year,” Martinson admits, at Christmas. These cuts are spread out on all levels, not just junior staff.
Well no wonder Edison companies typically grow over 40 percent a year. If you knew that you might lose your job at the end of the year, you’d work really hard even in the dog days of August.
On the upside, when you cut your workforce you can upgrade your team at all job levels, and in 2009 you will have great opportunities to hire “stars” at bargain prices.
And Martinson likes to boost morale with increased commissions and incentives. ‘It thrills me, he said, “when very successful salesmen swagger around because they make a half million dollars.” Incent everybody else to find revenue as well. “It’s amazing what they will deliver.”
Another tip: “Sell what’s ‘on the truck,’ which may not be what the customer is asking for.
Don’t assume your potential customers can’t buy. Send unsolicited bids – you may have just what they didn’t know they needed. Leverage their compliance fears that they might not following regulations. (15 percent of Edison’s companies’ revenues come from software that helps financial and pharma companies stay compliant, and it’s the difference between 25 percent and 40 percent growth.)
Those are a half dozen of the three-dozen excellent tips Martinson gave, but his main message is that savvy leaders take advantage of the down economy. Competitors are weaker, top sales talent is available, and success is sweeter.
Most of the attendees were lawyers, accountants, insurance agents, and other service providers, but there were a couple of dozen CEOS, and a raised-hand poll showed, indeed, that most of them had a growth year last year and expect to grow this year. I wonder how many of them are prepared to fuel their growth by firing two or three of their 20 employees – and then replacing them with “stars.”
It’s a good thing I don’t run a company. Success may be sweet, but that recipe for lemonade might upset my digestion.