Hypothesis-Driven Growth: How to Turn Data into Revenue

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(01:03): Hello and welcome to another episode of the Duct Tape Marketing Podcast. This is John Jantsch. My guest today is Doug Davidoff. He’s the founder and CEO of Lift enablement. With over 20 years of experience advising small and mid-market companies focused on significant growth, he has directly advised more than a dozen companies that have collectively sold over $1 billion known for his no nonsense approach. He combines real world research with systems design to develop effe-cutive. I just made up a new word, effective Business and Growth Strategies is also the author of a book we’re going to talk about today, the Revenue Acceleration Framework, A Proven Roadmap to Transform and dynamically Grow your Business. So Doug, welcome to the show. John, it is great to be here. Long time Dan, and if it makes you feel any better, every word was made up at some point. Yeah, that’s a good point.

(01:55): That’s a good point. I think I might be onto something though. If I could say it again. It sounded like something I could own and define. Yeah, it’s like right up there with Strategery or something. Yeah, exactly. I wonder if we could start off, if you have your own podcast where you talk about, or at least in the titles, rev ops, right. Let’s start with a definition. What’s the definition or the difference, I should say, between rev ops and marketing? So Rev Ops is really a strategic backstage discipline that’s responsible for looking at how a company generates and sustains revenue, how they allocate the resources. So a strong rev ops function is enabling marketing. It’s going to generate more velocity for marketing. But yeah, so it is really taking that holistic approach and managing those trade-offs so that marketing can do what they do best and sales can do what they do best and success can do what they do best.

(02:54): So you would suggest, I know you do suggest, so I don’t want to put words in your mouth, but that it’s a completely different discipline than marketing. Yes. Yeah, it is. The analogy that I like to give is, if we think about theater, what we want to do as a business is we want a standing ovation. We want people to love what we do, and they can’t help but talk about what they just saw and what gives you that standing ovation, that front stage experience, right? What’s the front stage? Anything that your customers see, feel, or touch? We’ll talk to any actor on Broadway and they’ll tell you the key to a successful front stage experience is a really good backstage and a really good support function behind that backstage. That’s rev ops. Would you say that this is an area that it’s not necessarily a new discipline, but is it one that people are waking up to or do we still have a lot of room?

(03:44): There’s a lot of companies out there that don’t even consider this as something that they need to optimize? I talk about this in the book, actually. It’s funny because the answer to that question is really dependent upon the type of business and the size of the business. So it’s not new at all. IBM’s had sales operations, which is a portion of revenue operations for decades. I think if you take a look at the typical small mid-market business, the vast majority of them do not have a formal rev ops function. One of the things I’d like to point out is you have rev ops, whether you’re calling that rollout or not, it’s just happening in the tech space. Happy to say it’s no longer the top of the hype cycle because AI has pushed everything way past, but I actually think that in the tech space, we’ve seen rev ops become this catchall phrase for, oh, we’re rev ops, or let’s do rev ops.

(04:43): That’ll fix that. So it’s like in that place where it’s still trying to find your question of what is rev ops is still a very relevant question. So when it comes to, or at least in the context of business growth, I know you talk a lot about the difference between speed and velocity. How does that come to play in the context of business growth? So I’ve got to share the story of where I came to understand the difference between speed and velocity. So I was coaching my son’s baseball team. I was the third base coach. We’re playing the first game of the year, and Austin is our number nine hitter. And everything we knew about Austin was, you look at Austin’s fast, and so he’s on first base, there’s no outs. He’s on first base. I give the signal to steel, Austin takes off pitches, thrown catcher throws to second base, and I kid you not.

(05:31): The second baseman is waiting for Austin to get there to tag him out. Inning ends, I go over and everyone’s, what happened? What went wrong there? Did he not get a good jump? I’m like, no, I don’t know. And someone came along and said, you guys are missing, and Austin moves his feet really fast, but he doesn’t really go anywhere. And so that’s when I realized that’s the difference between speed and velocity. Speed is how hard are we working? How fast are we going? Velocity is, are we making progress towards where we want to be? And it’s the old Stephen Coveys that I can take a high speed train from Boston to Los Angeles. It doesn’t do me any good if I’m trying to get to Miami end a few years ago. I don’t hear it as much, but it used to be very trendy to call yourself a full stack marketer.

(06:17): I really don’t know what that meant, but it sounded cool. We’re talking about particularly in marketing, tech stacks are a huge deal. So I guess I should say what’s the right way to do that? Or where do people get that wrong? In terms of applying tech to marketing or Yeah, or to ops in the case, because a lot of what you’re doing is dialing in the technology, and if we’ve got all these disparate parts that don’t talk to each other, that’s probably a challenge. So John, I’m sure you’ve seen this through the years of fads and FOMO that come out. It’s amazing how when a company starts selling something, one of the things that has unfortunately driven the noise around rev ops is a lot of tech companies creating these solutions for rev ops and saying that you need rev ops. And so I think the first mistake is when you view anything through the lens of technology. So we live by what we call the prime directive at Lyft, and that directive is the business process must drive the technology. The technology can never dictate the business process. So it’s important to understand technology is not a solution. Technology is an enabler. It could be an accelerator, but it’s not the solution. So the big mistake that happens is we don’t get clear on what is the job that we’re trying to do? What’s the problem that we’re trying to solve?

(07:43): I deal regularly with tech that is not working. I’ve yet to see a time where the tech wasn’t working, where the issue wasn’t actually an ambiguity, a conflict or a confusion around the underlying business process. And so that’s the place where we get in trouble is tech makes it so easy to make it complicated. We embrace the complication, and this is our fifth CRM system this year, right? Salesforce, Microsoft Dynamics, HubSpot, I can show you 20 companies that tell you it’s the greatest thing they’ve ever had. It’s transformed their companies. And I can find you 20 companies that said that thing was rock. It didn’t do anything. Exactly. So you started to hint at it. And I know a big part of what you just talked about was the jobs to be done theory. I don’t really remember who gets credit for that idea. Clayton Christensen.

(08:37): Clayton Christians. The person who popularized it, at least I knew I’d hear it numerous times. I could remember it was in Crossing the Chasm, or was that Innovators Dilemma? Innovators Dilemma, innovator Solution. Okay, cool. Alright, so that’s a big part of what you just explained. So maybe make it practical. When you go into a company, you obviously open up that toolkit and instead of looking at the tech, you try to find the underlying solution or the objective maybe. So talk a little bit about that, how you apply that. Yeah, and one of the things that I talk about too when it comes to technology is never buy technology. You should only hire it. And if you start looking at the things that you’re doing, I talk about this from a marketing standpoint. I say never implement a marketing campaign. Hire a marketing campaign. So when we’re going to hire somebody, we start off when we say, what does success look like?

(09:30): What is it that the business is trying to accomplish? What’s the gap? What’s the capability? I look at technology, I look at campaigns, I look at strategies and tactics. People. I look at them as capabilities fill gaps. So here’s where I want to be. Here’s where I am. Here’s what I think the difference is. I talk in the book about hypothesis driven growth, always have a hypothesis. We talk about the science of growth. The science of growth is hypothesis, test, learn. And if you take that approach, have a hypothesis, figure out what are the keys, this allows you to be wrong. So I have hypothesis, I do something, I get a result from that. That result is either what I expected or something different. All the learning comes when the result is different than what I expected. Then I draw my next hypothesis and I just bring that cycle.

(10:25): And if you do that, you’re going to find you are going to make progress. Progress is going to be a byproduct of what you’re doing. And that’s why the companies that do that well, and that’s what I talk about in the framework, is they look back 18, 36 months later and they go, we’ve transformed. Wait, we’ve totally changed. Even though through that effort, they never really felt like they were going through all that much change. They felt like they had a lot of stability when in fact they were far more dynamic than the competitive set that was seeking transformation. When you work with organizations and they’re still out there, fortunately they’re changing some, but that still take a very siloed approach because that really, if A is not talking to B and B is not talking to C, things break down. So how do you address that?

(11:12): Do you just tell ‘em they have to stop? What do you do? So I have a little bit of a counterintuitive approach here. I embraced the silo. So you talked about full stack marketers, and that reminded me of the term that came before that was the, you remember this, the T-shaped marketer. Yeah, right. A little bit of this and a lot of that. So the thing for us to understand about silos is we need silos. We need constraints. There is a specialization. If I’m doing social media, there is a specialization and there is a depth to what is going on with social media. Marketing has its role, sales has its role. So it’s not that the silo in and of itself is the, and I think too often we come in and we say we need to get rid of silos. And then someone goes, I don’t know what to do.

(12:00): What I find missing is the context. That’s why I love frameworks is the framework lets us talk to this. And what’s happened with sales and marketing especially, it’s my favorite image in the entire book is I talk about the old way of marketing, which was marketing, then sales. Then the new way of marketing is marketing and sales. In parallel. The right way is sales and marketing are completely intertwined. So when we look at the framework, it serves as that translator. It brings in the context. So where I see silos being a problem, the real underlying issue is there’s no context. We don’t understand why am I doing this? Why are you doing that? This is my job to do. So I like to think of it as manufacturing revenue. So we’re getting to various milestones and basically that’s my one trick, John, is I come in, I go, how do we find interest as a raw material and then implement a manufacturing process to take that raw material and take turn interest into engagement, into conversation, into inquiry, into advocacy, into customer.

(13:11): How do we do that? Where do people play? Where are those connections? And I find that really helps to simplify and bring that alignment that so many people are working so hard to get is your approach. Let’s say you’ve got an old legacy company. They’ve been doing fine chugging along. Everybody knows this is how we do it here. And then the opposite of that, somebody who still doesn’t even know if there’s a market for what they do, they’ve got to really go to market. Do you find that there are totally different approaches for those types of very broad range business? So that’s a yes and a no. I’m a great consultant, right? Exactly. The thing that I’ve learned about uniqueness is 80% the same and 20% different. So there’s an underlying model. There is a consistency. I talk about in the structures section of the book, the different archetypes.

(14:05): So now they’re not fundamentally different, but there are definitely differences between them. But by the way, one of the key things is I come across companies sometimes that are like they’re doing whatever it’s that they’re doing. They’ve been around for a long time, they’re good, they’re comfortable, they’re happy. Okay, you don’t need to change just to change. So there needs to be a why behind that. It tends to be, and I think most companies understand that today change is not particularly optional, but they don’t know what that means. So what happens is people like me oftentimes come and we say, you need to change what you’re doing. And what we mean is you need to change about 20% of what you do, by the way, to be able to succeed. If you need to do more than anything other than just a brand new startup, if you need to change more than about 20 to 25% of what you’re doing, I’m the wrong person.

(14:58): This is the wrong book. You’ve got troubles that need to be fixed. Address those. The thing that I found that’s fascinating is the difference between the companies that are just crushing it and the companies that just don’t seem to hit, they’re doing okay, but the juice isn’t quite worth the squeeze and life gets more stressful every day. It’s like a three to 5% difference, a big change. It’s an underlying structure and an approach that just needs to be tweaked. And by the way, the other thing I’ve learned about successful companies, they’re like successful families. Every successful family I’ve met is dysfunctional in their own unique way. So you show me any great company, I’ll show you a company that’s breaking a rule or two, and we have this tendency, here’s my 13 rules up, and I come in and I apply those 13 rules in the laboratory.

(15:56): I’m right in doing that. I killed the secret sauce again, that’s why I love frameworks. Let’s find out what is it that makes us different? What is it that’s enabled us to be successful? How do we play our game and stop trying to copy everybody else’s game? Yeah, I see that time and time again. Do you bring in this consultant who has a successful case study doing X, Y, z, and they want to apply that case study, but that’s not us. We can’t sell like that. I see it all the time. I’ll tell you, I learned that when I was coaching college baseball is I couldn’t work with this kid the same way I worked with another kid. They were completely different body types. They had completely different strengths and weaknesses. It’s like how do we make the game work for them? How do they play their game?

(16:41): That’s why I’ve always been a fan of yours, John, is I think that’s really the underlying element of Duct tape marketing is we’re humans. We are by definition different and special. Let’s understand that and be consistent to that, and how do we carry that out as the organization grows across what is an increasingly complex environment? That’s probably a better definition for what Rev ops is. So I’ve waited way too late to actually say, so what is your approach? What’s your process? What’s your methodology? Because that’s another show probably, but give me kind of a thumbnail sketch. If somebody calls you in and says, Doug, we need help. I read your book, it’s awesome. What would it look like? Your process, your methodology, I know everybody is different, but on the surface, you’re going to create playbooks, you’re going to audit, you’re going to look for data, right?

(17:30): Well, the first question I’m going to do, the first thing I’m going to do is I’m going to ask what does success look like? I still remember the first time I was doing sales coaching, sales training, someone called up and said, Hey, I’ve heard some really good things about, yeah, we’re looking for sales training. I’m like, oh, really? What is it that you’re looking for sales training for? You ready for this, John? We need more sales. And I said, okay. That takes out about half of my programs. They’re designed for people who want fewer sales. Okay, what does more sales mean? So what is success? Then we’re going to look at what’s preventing, what’s getting in the way. Then we’ll go through, we’ll understand. One of the key things that we do in our audits is really to understand again, what is it that makes you different and special?

(18:11): How do we reinforce that while addressing those areas and those obstacles? And again, what I find is far more often than not, we just reverse engineer success. You’ve had. I get the best compliment I ever got from a two day sales training program that I did was, you didn’t teach me anything new. I’ve done all of this before and I’m curious when you do this, what’s the result? That’s where my best sales come from. What if you did this purposefully each time instead of it after the fact and oh, wait, and that’s all I’m looking to do is where do you have your success? Let’s find what’s consistent about that. Can we get into the invisible part? That’s where I talk about structure is what’s the system design? One of my favorite quotes is, your system is perfectly designed to give you the results that you’re experiencing now. So how do we have to change that underlying system so that the behaviors and things like that follow? Yeah. There’s a great book by Marshall Goldsmith, I think is his last name. What got you here won’t get you there, and I often kid and say, what got you here will keep you here.

(19:25): That’s one you asked me about mistakes. That’s one of the mistakes that I see is we do our best customer analysis and that’s great. If your best customers look like what you want your best customers to be. A lot of times we’ve got to take a look at who are the customers that we’re not working with because that’s what our future best customer needs to look like. Absolutely. Doug, I appreciate you taking a few moments to stop by the Duck Tight Marketing podcast. Is there someplace you’d invite some folks to connect with you, learn about your work? Obviously pick up a copy of the Revenue Acceleration Framework. The easiest place to get the Revenue Acceleration Framework is of course Amazon. My wife and associates tell me I spend too much time on Twitter and LinkedIn. You can get me at Doug Davidoff on Twitter. You can find me easily on LinkedIn. I’m happy to engage. If you have any questions or if I can help in any way share any experiences, I’m more than happy to. Awesome. Again, I appreciate you spending a few moments with us. Hopefully we’ll run into you one of these days out there on the road.

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