Billion-dollar analyst mistakes

I’ve been building and running analyst relations (AR) programs at multi-billion dollar companies since 1999 -- including most recently at Amazon Web Services (AWS) where I drove AR for nearly seven years for the company's No. 1 priority: its security and identity programs. Although excelling in the industry analyst business (think: Gartner, Forrester, IDC and others) is sometimes art and sometimes science, it’s always about achieving business outcomes.

Yet, I’ve learned over my 20+ year tech AR career that people consistently have similar misperceptions about how the analyst industry works -- including what’s effective and what isn’t. These misperceptions form certain easy-to-identify patterns making them worth studying for two reasons:

1. Big money is at stake. Major contracts can hinge on a placement in a major evaluation such as a Gartner Magic Quadrant, a Forrester Wave or IDC MarketScape -- even whether an organization is named a “Cool Company” by Gartner. Millions or even billions can be at stake. It’s that serious.
2. You want to continuously improve. Making the same mistakes (whether you know it’s a mistake or not) just doesn’t work in today’s competitive atmosphere. In this piece, I’m going to call out these mistakes and help you both know they exist and help you avoid committing -- or worse, repeating -- them.

Classic misperceptions

To start, here are some classic analyst-related utterances I’m sure you’ve heard before:

• “Why don’t analysts just get what we do?”?
• “We have much better technology than [insert-competitor’s-name-here], yet our dot placement stinks!”
• “How much money is it gonna cost to get us into the Leader’s Quadrant?”?

But, it’s precisely those misguided attitudes that lead corporations down a slippery slope of ignorance that pours rocket fuel generating even more bad analyst outcomes.?

This missive aims squarely to address those ignorance-fueled corporate grievances and bad outcomes by doing three things: 1) unpacking the top mistakes companies make with analysts and analyst firms; 2) providing you with a blueprint for success; and 3) giving you identifiable proof points to ensure you’re on the most productive analyst path.

Here we go.?

Misguided investment in analyst relations

There’s one mistake that far too many companies consistently make: they don’t invest in the analyst relations function -- or, they don’t invest enough in it, which is even worse. There’s simply no reason to do analyst relations half-way. Nothing good comes of it, and it’s better to direct resources elsewhere (i.e., Vegas) if dabbling with AR is your company’s plan.

I recently spoke to Frank Dickson, program vice president at IDC, whom I met while at Amazon Web Services. Dickson verified this lack-of-AR-investment-claim by noting: “Investing in analyst relations (AR) is a crucial measure of bandwidth and priority. If you under-resource AR, you’ll lose the relationship and the responsiveness.”?

Remember: relations is the second word in “analyst relations.” Getting serious about investing in the AR role is crucial to getting analyst attention -- and deep AR experience matters. The AR game is a long game; it is not transactional.?

Added Dickson: “A good AR person can ensure proper evaluation scores, preventing under assessments by as much as by 25 percent. A seasoned AR person with the right relationships simply understands what’s involved with both the company’s product and the analysis, which can tip the scales on the final outcome.”?

A good AR person can ensure proper evaluation scores, preventing under assessments by as much as by 25 percent.

-- IDC's Frank Dickson

Amazing. The AR person -- given enough experience, understanding and gravitas with analysts -- can impact poor scores by 25 percent. If your company is “on the bubble” between being viewed as a Challenger (Gartner), Major Player (IDC) or a Strong Performer (Forrester), the AR person can have a dramatic impact -- potentially moving their employer into the Leader’s Quadrant.

Experienced and strategic AR people simply understand all the forces at play internally (at their company) and externally (with the analysts). They know how to provide context when outcomes are not as expected. They also know how to orchestrate and marshal resources internally to: 1) appropriately and productively push back on existing scores; 2) help their organization think and act differently for the next iteration; or 3) hold various executives responsible for different segments of scoring -- optimizing their company for success.?

Another thing a good AR person can do is to strategically plan far in advance. For example, while most companies simply wait around for the analyst firm to spoon-feed them the final inclusion + exclusion criteria for the next major evaluation, a competent AR pro works 12- to 18-months in advance seeking to actually impact how those criteria will be written, optimizing for success before the criteria even hits the inbox months down the road.

Finally, AR pros also are able to land key briefings with the right analysts simply for the asking -- providing they have earned a trusted relationship with the analyst. Dickson concurred, adding: “Look, my time is precious, and any extra briefings I accept means I’ve gotta make up for the time on the weekends. I don’t have to take briefings. But, if I have a good relationship with the AR person and know they have a history of respecting my time, I’ll immediately accept a briefing from them sight-unseen. I don’t even need to know the topic.”??

Startup + smaller company mistakes

Startups and smaller companies tend to think every analyst firm is the same and, as a result, they often use the same sales pitch deck as their analyst deck -- a huge mistake. Others simply expect the analyst to parrot their core messages -- often without offering any critical feedback. They narrowly think of analysts as an extension of their marketing arm, which is flat-out wrongheaded.

The solution here is to research in enough detail what the analyst’s needs are -- their pressures, priorities and research agendas. Sometimes companies want to brief an analyst on, say, IoT security, but then, without doing any research, they ask the cloud security generalist for the briefing. By not doing some basic homework, you’ve now wasted your time and the analyst’s, and, more importantly, you’ve diminished trust.

Another startup and small company mistake is appearing to only want to engage so as to seek a friendly mention in a report. Don’t be that company. Success with analysts is not about just getting an analyst to feel great about your solution and scoring a friendly mention in a research note. Rather, companies need to engage early and often with the analyst as a partner who can identify their blindspots, help them with their messaging, strategy, value proposition and thinking while also sharpening their go-to-market approach.?

A good analyst engagement is relational, not transactional (as previously noted), and analysts can see right through you if you’re acting transactionally. Know that analysts are most willing to work with companies genuinely seeking critical feedback and who are open to the analyst’s critical advice. At Amazon Web Services, we thought of analysts as business partners. Analysts -- at least the reputable ones at the major firms -- have zero interest in being inaccurate. So, if an analyst has given you a less-than-favorable score, placement or utterance, yes, you can and sometimes should push back. But even more important than pushing back is learning from the experience.

The you’ve-got-to-be-kidding problem of focus

One of the most common mistakes I’ve had to correct is when companies are in love with their technology. When this happens, they often lead by only discussing their solution, instead of trying to provide the analyst first with the problem the industry is experiencing along with their unique and differentiated way to solve that problem.?

Related to this is the 30-, 40- or 50-slide deck where companies go into exhaustive detail about market conditions -- boring the analyst to tears. Look, two things: 1) in a 280-character world, nobody has time for this much information; and 2) the analyst already knows what’s going on in the industry. That’s their job. If you want to send a ton of slides to the analyst as an appendix after the briefing, that’s fine, but you should be able to get all you need done in 10 slides -- 15 at the absolute most.

Blueprint + proof points of success

To recap, the patterns of the above misperceptions are both predictable and informative, and they all lead to a few conclusions that should be heeded by any organization seeking success in the analyst arena. Here are five you should consider.

1. Invest in the analyst relations function. You probably know your technology inside out, and you probably love your solution and think you’re saving the world (or your corner of it). That confidence is a good thing, a necessary thing -- to a degree. But understand that your technology exists in a greater context, and industry analysts can accurately give you that context and provide you counsel regarding the context, including the competitive landscape and trends you might not even know exist. The analyst game is a long game, and this long game takes investment -- not only in dollars, but also in time, energy, and analyst relations expertise. Remember that IDC’s Frank Dickson stated a good AR pro can make a 25 percent difference. Proof point of success: staff. You’ve committed to hiring at least one seasoned pro on your staff with the strategic chops to not only handle the blocking and tackling of analyst engagements, but who also impacts how your organization behaves and communicates. This person also will be able to mentor more junior staff and orchestrate cross functional activities -- all geared toward achieving the organization's business objectives. Proof point of success: resources. You have committed to investing about $500,000 annually into each AR role -- covering salary, benefits, analyst seat licenses, T+E and other incidentals. Also, you’ll need to get the organizations’ commitment to a minimum of 500 human hours for each major evaluation.
2. Chunk it up. Yes, you need to see the big picture in terms of where you stand in the marketplace, how solid your tech is and what you believe to be your vision, but then you also need to break things down to their core elements. Translated, that means you need to know the differences in the major analyst firms (that Gartner often talks to end-users and that IDC talks to vendors 80 percent of the time), while also knowing inside-and-out of the analysts you’re targeting -- including their coverage areas, biases, and upcoming research agendas.?Proof point of success: analyst firm matrix. You’ve done the homework to know which analyst and analyst firm excels in which area, and you’ve aligned and prioritized each toward your organization’s goals. For example, you leverage Gartner to understand what end-users are saying, and you leverage IDC for quantifiable competitive and total addressable market information. You also know what the different elements of Gartner (i.e., Gartner TSP, ITL, GGM and others) do and how they can or can’t help you toward your strategic goals.?Proof point of success: external vendor relationship. To keep all this information straight and to be able to easily pull progress reports, you’ll have to invest in a solution like ARchitect, which empowers AR professionals to optimize knowledge sharing and manage workflows.
3. Be humble. C.S. Lewis was quoted as saying “Humility is not thinking less of yourself, it's thinking of yourself less.” While confidence is a business advantage, there’s an equal (if not greater) advantage in humility. When at AWS, one of Amazon’s corporate mantras was that of being “vocally self-critical.” Know that your corporate baby (or parts of your corporate baby) just might be ugly, and that -- gasp -- you and your solution have room to improve. Being open to critical analyst feedback is anything but a weakness: it’s a huge advantage and a strength. The sooner you get there -- and don’t think of analyst relationships as transactional -- the better off you’ll be. Proof point of success: executive commitment mechanism. You actively seek out critical information from analysts, and you’ve built a mechanism to address such feedback -- obtaining executive-level commitment to address each major area of criticism. For example, if analysts consistently state your messaging, IoT and database security aren't where they're supposed to be, you’ll request specific executives in each of those areas to be outwardly committed to addressing them or provide a business justification approved at the VP level as to why they’re not going to commit. The key is no surprises, and this approach shows that the analyst team has thought through every reasonable outcome, and has informed and equipped the organization sufficiently and in advance regarding expected outcomes.
4. Understand that less is more. Well, actually, it’s not only that less is more (it is), but you need to know how to prioritize your thinking, too. This is especially true for startups. Don’t overburden the time-starved analyst with scores of sales- and technical-related slides exposing your love of your technology.?Proof point of success: Concise communication methodology. You’ve trained -- even certified -- your key spokespeople to handle both routine and difficult questions about the company and their specific area. And, you’ve reduced your narrative down to its core elements in about 10 slides, starting first with the industry problem you’re uniquely solving, your belief statement, maybe some executive vision utterances and then a few easy-to-understand slides or comments on why your tech matters in achieving that vision in uniquely solving that problem. That’s enough. Then, leave the deep technical details in the appendix and be open to critical feedback. If you can’t do that, there’s no reason to be in the room with the analyst. Finally, remember to not inform the analyst about the market -- the analyst already knows about the market (that’s their job).?
5. Value the analyst’s big-picture vision. Know that part of the analyst’s job is to give you context -- the big picture -- along with your place in that picture. They’re hearing not only from your customers, but also from your competitors’ customers. They have a uniquely valuable perspective that’s different from yours -- and that difference in perspective (and not pure alignment with your perspective) should be what you crave to help inform your investments, messaging, product strategy and go-to-market vision. Proof point of success: feedback mechanism. You’re regularly communicating to those who need to know internally regarding the key trends that analysts are saying about the competitive landscape, your context within that landscape, and how to address important issues -- including issues you can’t even see. You have trained your organization to not be in love with its technology, but rather, to actually value this raw analyst input as helpful to achieving your organization’s goals.

If you’d like to talk in greater detail about how to avoid these five analyst-related mistakes (and others -- including working earlier in the lifecycle with analysts), I’d be happy to help you think through your strategies, implementation, messaging and engagement plans. I’ve counseled CISOs at multi-billion dollar organizations (from mainframe to the cloud) on analyst relations, led the AR + PR efforts of a cloud pioneer through its IPO, written crisis management plans at AWS and elsewhere and even media trained CEOs in virtually all aspects of corporate communications -- and I’d love to help you. Thanks for reading; hope you found it valuable.