Money Buckets and Account Based Management in the Time of COVID

We are now starting to emerge from the pandemic chaos, yet it seems likely we are going to be in it for the long haul. The crisis has driven a new kind of digital divide, especially in the B2B space, separating businesses that deliver physical goods and services—manufacturing, travel, hospitality—from those that deliver virtual goods—software, financial services, consulting. The former are in for a long tough slog, the latter are actually growing faster than normal. Both are the result of digital transformation hitting a tornado of adoption, driven by the COVID crisis.

Regardless of which group you are in, however, in times of crisis, businesses get their best results from doubling down on their established relationships—their best ecosystem partners and their installed base of customers. Within the installed base, the bigger enterprises typically represent better targets because they have more resources to redeploy, should they choose to do so. And there’s the rub. COVID has likely given them reason to do so, but our sales and marketing teams are just as likely not to know what they are. How can we get them focused quickly and successfully?

The answer is, map out the “money buckets” and then decide which ones make the best targets. Money buckets fall into three types:

• The established budgets, typically organized around line functions. These are likely under pressure for cost cutting, which is bad for any new entrants, but can work to the advantage of incumbents, specifically those in position to consolidate a bunch of orphan best-of-breed products into a one-throat-to-choke suite of offerings. Here the trapped value is in total cost of ownership, given all the specialized maintenance required, not to mention the ongoing integration needed whenever any new capability is introduced. In a consolidation scenario, purchasing wants to get buying power, so the price you pay for being the consolidator is heavy discounting, but that price is amortized across a much larger portfolio of products, and can result in significant market share gains that you can exploit elsewhere.
• Problematic use cases, typically consisting of broken mission-critical business processes, the result of a COVID-related disruption. Here there is no formal budget in place, but there is a pool of money that is currently being used to address the broken process as best as possible, but nowhere near good enough. You map these to the problem process owners. When the entire process is local to one department, these are pretty easy to go after. But the big wins typically come from cross-functional processes that are going to need a whole new platform. Normally, the sales cycles here move at glacial speed, but during a crisis, they often get compressed from the sheer urgency to act now. Detecting these opportunities and pursuing them requires the use-case-based go-to-market approach discussed earlier in this blog.
• Transformational projects, typically caused either by a change in ownership, as when a struggling enterprise is taken private, or an M&A event that can move the fulcrum of competitive advantage if properly executed. Here the money bucket is based on trapped value that has been in some way institutionalized, and relief comes in the form of corporate capital allocated to reengineer the business in some dramatic way. These are board-level decisions, and the best way to detect if they are under way is to simply to ask a board member. They won’t say much, but they will say enough to point you to the right executive person to follow up with.

The key point here is that Account Based Management in these times needs to map target enterprises around money buckets first rather than org charts first. Both are important, and in normal times, the org chart takes priority, because most money is spent through pre-allocated budgets. But in disrupted times, those budgets get frozen or even whacked, and if you are not careful, you spend a lot of time barking up the wrong tree. Money buckets, which form around trapped value, are a more reliable basis for mapping and targeting your efforts. 

That’s what I think. What do you think?

Follow Geoff on LinkedIn | Geoffrey Moore Mailing List

______________________________________________________________________

Geoffrey Moore | Zone to Win | Geoffrey Moore Twitter | Geoffrey Moore YouTube