Compensation Showdown: Why Ecosystem Teams Struggle to Find Their North Star (Pt 1)
After a brief break to explore related topics and conduct our first full Thrum meeting, I’m excited to get back to discussing the challenges facing ecosystem teams. At some point, I’ll go deeper into the early stages of this journey, but for now, I have nothing but gratitude for the traction and enthusiasm Thrum is generating.
The Elusive North Star of Ecosystem Teams
This week’s focus is one of the more complex and persistent issues: why creating a fair and effective compensation structure for partner and ecosystem teams is so difficult. What started as one article has evolved into a two-part series, as I realized two distinct issues are at play—both of which need to be fully understood before we can work toward solutions.
The first challenge, which we’ll tackle in this article, is the difficulty of designing compensation structures for ecosystem teams. The second, which we’ll cover next, involves examining common methods for measuring and paying these teams, the flaws inherent in those models, and how they can create internal conflicts that hinder long-term success.
Before we dive in, let me lay out a foundational belief: compensation drives behavior, behavior drives action, and action drives outcomes. I think most people would agree with this premise, so let’s jump into the specifics…
If you talk to someone in sales, marketing, customer success, or product development, it’s usually pretty clear how they’re compensated. While the details may vary, most roles have a well-defined ‘North Star’ that guides their efforts. Sales aim for closed/won deals, marketing focuses on pipeline, customer success targets revenue growth, and product teams deliver on roadmaps.
However, for ecosystem and partnership professionals, no such North Star exists. Depending on the organization’s structure and reliance on partnerships, the ecosystem team might report to any one of the GTM functions—or none at all. This variability means the metrics tied to ecosystem teams often depend on the department they fall under, creating immediate misalignment between teams pursuing different goals.
The Compensation Conundrum: Misalignment and Its Consequences
Imagine two hypothetical partner teams—BlueCo and GreyCo—working together. BlueCo’s team, reporting to the revenue organization, is measured on the short-term net present value (NPV) of sales-ready leads that can be closed quickly. Meanwhile, GreyCo’s team, which reports to marketing, is focused on long-term lifetime value (LTV), delivering a higher volume of earlier-stage marketing-qualified leads (MQLs).
While this might not seem like a significant hurdle, consider how it impacts the types of programs each company runs. BlueCo seeks highly targeted, strategic opportunities to engage GreyCo customers who fit BlueCo’s ideal customer profile (ICP), while GreyCo favors high-volume programs that drive early-stage leads.
Although it’s possible for both teams to achieve their goals, it’s incredibly challenging—especially in a broader ecosystem context.
In this scenario, mutual frustration and eventual failure are more likely outcomes. Despite the best intentions, the two companies will often find themselves working at cross purposes, or one will succeed while the other struggles because the programs disproportionately favor either LTV or NPV.
Nobody wants misalignment, but how ecosystems operate today makes it nearly inevitable. And this misalignment is deeply connected to compensation structures.
While other GTM teams work with clearly defined metrics, ecosystem teams are often left at the mercy of the organization’s interpretation of what constitutes “ecosystem success.”
In my career, I’ve been held accountable to dozens of different KPIs, from opportunity creation and influence to integration adoption, marketing opportunity identification, and customer retention. I’ve reported to the CEO, sales, marketing, operations, and briefly, product.
The Hot Potato Effect: Why No One Wants to Own Ecosystem Teams
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Because ecosystem strategies require touchpoints across various departments—and because there’s no standard for measuring success—the ownership of the ecosystem team often becomes a ‘hot potato,’ passed from one department to another as they try to shape it to fit their KPIs.
The lack of consensus on what defines ecosystem success is a significant reason for the staggering 90% failure rate—yes, I repeat this stat often because it’s the Mt. Everest we must overcome. This failure rate is also a key reason why the ‘hot potato’ phenomenon persists.
Think about it: If you’re an executive who has watched ecosystem teams struggle—both at your company and elsewhere—why would you want to take on a team likely to create more headaches and deliver questionable results? Even executives who believe in the potential of ecosystem strategies hesitate to take on the responsibility of managing a team that often feels like a black box.
Whether by choice or executive decree, leaders who take on ecosystem teams face the difficult task of designing a compensation structure that reflects the team’s contributions while dealing with the reality that ecosystem metrics often overlap with other departments. This leads to the familiar cycle of compensation adjustments that every experienced ecosystem leader knows well.
The Inevitable Shift: From Holistic Metrics to Narrow Focus
Typically, the ecosystem leader will push for success to be measured across various KPIs, combining hard metrics like sourced opportunities and direct revenue with softer targets like pipeline influence and integration development.
Initially, they might win this battle, particularly early in their tenure, when they have a reservoir of trust and goodwill. But inevitably, executives push back on the softer metrics, citing a ‘need to simplify’ and forcing changes that prioritize the hard metrics they’re more comfortable with.
This shift happens regardless of how successful the team is with the firm metrics. If they’re successful, executives want more and focus only on that. If the team struggles, leaders assume the softer metrics are a distraction and double down on the firm ones.
Ultimately, this shift is almost inevitable.
Returning to the premise, compensation drives behavior, behavior drives action, and action drives outcomes. When ecosystem professionals are incentivized only by narrow, firm metrics, they stop doing the wide array of activities necessary to achieve those metrics. Instead, they morph into roles more closely resembling sales or marketing, neglecting the behind-the-scenes work that creates the conditions for success.
In short, comp structures attempt to shoehorn non-linear ecosystem teams into linear incentive models, crippling their ability to deliver results.
Predictably, this makes it even harder to hit the firm metrics. As a result, ecosystem teams are seen as failing, further widening the credibility gap and leading to 90% of CEOs claiming their ecosystems provide ‘no significant value.’ Ouch.
This problem is real, widespread, and frustratingly persistent. I promise we’ll discuss solutions soon, but if we don’t first break down this complex issue into its component parts, we risk missing something critical—and any attempt to solve it will fail.
In conclusion, this issue is one of the biggest factors contributing to ecosystem failure. We need a better way to understand, measure, and incentivize ecosystem teams. But before we get to solutions, we must first thoroughly dissect the problem and ensure both ecosystem teams and executives can align on a clear ‘North Star’ that leads to success across the entire ecosystem.
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