- June 28, 2024
- Posted by: Larry Walsh
- Category: Blogs
Everyone wants data to validate their channel strategies and operations, but the industry is awash in bad numbers that are often out of context or just plain wrong.
By Larry Walsh
Data. It’s what everyone wants and needs in business, and in the channel.
W. Edwards Deming, a famed economist and business theorist, famously said, “Without data, you’re just another person with an opinion.” At Channelnomics, we call Deming our patron saint because we know that no matter how much guidance based on experience we can provide, we must back everything up with data and hard evidence.
While the channel is often defined in terms of market coverage, sales, revenue generation, and technology delivery and support, it’s equally about metrics. Every channel activity produces a wealth of numbers that transform into data, and ultimately into business intelligence. This intelligence, a powerful tool, forms the foundation for decision-making, providing the evidence that Deming emphasized as crucial.
The technology industry — including the channel — is terrible at data generation and analytics. While no manager will make a decision without reviewing data, people too often cling to information that’s out of context, wildly inaccurate, or contrived.
Recently, I was reviewing the corporate strategy of a well-known technology company. It placed the “punctuation slide” — the hard-hitting point for why it wanted to go in a particular direction — early in the presentation. The slide title included a data point from a well-known analyst firm that summarized the strategy rationale: Companies that do this will grow twice as fast as those that don’t.
There were so many problems with this slide. First, the data point was more than four years old and referenced a future point in time that had already passed. Second, the data point was doing a lot of work to justify the strategy. Growing faster is always a good thing (or at least that’s what the business textbooks say). But does embracing this one concept result in hypergrowth?
We picked it apart. What else could cause growth that’s faster than the rest of the market? New marketing initiatives. Embracing new channel partners and partner types. The introduction of a new product or entry into a new category. Compelling sellers to stretch their productivity with performance incentives. Switching from the transactional business model to the consumption-based one. The list of reasons is endless.
In the book, “The Ecosystem Economy,” authors Miklós Dietz and Venkat Atluri say ecosystems represent more than $60 trillion in economic activity worldwide. It seems like a really great way to justify the embrace of ecosystems as a go-to-market model. But step back a little and you realize that – by definition – the number is actually higher and meaningless. By definition, a business ecosystem is two or more companies working together to meet the needs of a common customer, which means that virtually everything (except for source materials) is part of an ecosystem.
Everyone wants to talk about AI. Every vendor wants to be known as an AI company. At event after event, earnings call after earnings call, press release upon press release, everyone is citing the hypergrowth of the AI market. And it seems everyone is eyeing 2027 as the watershed year. How big will the AI market be in three years?
The numbers range from $150 billion (IDC) to $225 billion (UBS) to $297 billion (Gartner) to $407 billion (Forbes Advisor) to $547 billion (another IDC number). At a recent vendor event, a senior executive cited AI market numbers like these in front of a group of press staffers and analysts as the rationale for the vendor’s investments in AI. Guess what? The vendor isn’t an AI company, and its revenue isn’t counted as part of the market trending reports by analyst firms. Moreover, the vendor didn’t source the numbers, leaving many in the audience questioning their validity.
At a certain point, numbers like those AI market forecasts lose their meaning. People who need a number to justify their strategies and plans will adopt one of them in the comfort that even if it’s wrong, it’s big enough to warrant moving in that direction.
In the channel, we see this all the time. Channel teams are woefully under-resourced when it comes to data. Since most channel organizations are overlays to other functions, getting access to the right or complete data is challenging. Many channel organizations must approach their decision-making with data that’s largely “directional,” or representative of actual activity, rather than true. As a result, many of the data points presented in channel strategies and reports are often best described as “based on a true story.”
Author Charles Wheelan echoed Deming when he wrote in Naked Statistics, “It’s easy to lie with statistics, but it’s hard to tell the truth without them.” The channel needs more than better data; it needs better data integrity, with numbers being used in the proper context. In doing so, the channel can better demonstrate its value, and business leadership can make better decisions about their future directions.
Larry Walsh is the CEO, chief analyst, and founder of Channelnomics. He’s an expert on the development and execution of channel programs, disruptive sales models, and growth strategies for companies worldwide.