Your morning commute with Jonathan Lerner.

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Episode #2: The Golden Thread of Value

Jonathan is a strategic-oriented executive with over two decades of experience in running global organizations and serving as a board advisor. He has a passion for delivering predictable, profitable journeys to the cloud and moving customers from "lights-on" to innovation technology investments. As a customer-centric, visionary sales leader, he brings a consultative approach and expertise in hybrid and multi-tenancy cloud infrastructures, AI, ML, SaaS, mobile, on-premise and on-demand services, enterprise information management (EIM), and application lifecycle management (ALM) solutions.

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Transcription:

Tim Page:

Welcome to episode two of Driving Value Your Morning Commute. Our goal in driving value is to connect with different people across sales, marketing, and customer success functions. We're gonna highlight a number of leaders over the next several weeks across organizations who understand that the key to making an impact in their organization is by leading with value, talking value to the customer. So today I'm excited to have Chris Dowse again, who's vice president of customer outcomes at Smartsheet. Jumping on to help me co-host the next few episodes. Chris and I chatted in episode one. If you haven chance to listen that to that yet, I recommend you go back and listen to it. So, Chris, thanks for jumping on again.

Jonathan Lerner:

Thanks for having us here.

Tim Page:

Sounds good. And also want to introduce Jonathan Learner. Jonathan's been known in the industry tus for quite some time both having several leading go to market functions and is now CEO of Intervision. And Jonathan, I think maybe to kicked off, maybe you could bring it through a little bit of your background and how it relates to discussion of value and your, some of your career through sales and now as CEO of company.

Jonathan Lerner:

You bet, Tim, thanks and thank you. It's great to be here, Great to meet Chris. Always interested in what's happening formally, cuz we're practitioners. At the end of the day, I'm an old bad carry in seller who came up through the ranks and earned the right about a year ago to, to actually take the tough job. Toughest job. Tim, I'm sure, as you know, as CEO there's, there's nobody to blame but yourself in the role, but I've been very fortunate, frankly, to have great mentors, great coaches. And I've had, I just thought back here, over three decades, I've sat in seven different roles really on the customer facing side of the business since my old days I began life as a trader, commodity trader. And a hundred percent of my time was international. I was, my office was in Singapore and South America and Europe.

And boy, I had to get off the road where my fiancée at the time was gonna leave me. So I got into the software and the, the good folks at PTC, parametric technology gave me a shot. And when I look back at the seven roles that I've had, four of them actually have involved DecisionLink and value management has been a constant, I'd say that golden thread across a lot of those different roles that I've had and working my, my way up the organization. But I I went from, from PTC where I, I really learned that was I think where I got the true essence of value selling and carry that onto sap. And then from SAP to, to, to five places now in kind of three year sprints where always on the solution side definitely on the software side and the software and software related services.

Now where I am now, it's, it is more of a we are, we are a, a services, a cloud services and security services focused company. But always with that key theme of starting with the outside in, right? Starting with the customer's perception of value and trying to differentiate around that as the constant. And I think that that is that what drove the golden thread of not just value engineering, which in its early hey days was a, was a differentiator in itself. But I think it drove that full wheel discussion that, that we've often talked about of value engineering value measurement, and then value optimization to get to realization, right? And that virtuous cycle is a circle rather than a straight line. And I, I think we, we still, my teams live it today. So that's kind of a, a little, that's in a nutshell, 32 years and seven stops along the way.

Chris Dowse:

This this interesting thing, Jonathan, to, to that I would be interested to hear from you. Yeah. So seven roles, multiple companies. Yeah. You know, you've seen the value space change with the C level perspective. Which function do you have sort of the most challenge with in sort of bringing the, the value dialogue to the surface with customers? Is it, is it in in the sales, Is it in product? Like, I'm just curious, what, is there one group where, you know, you struggle more than the others?

Jonathan Lerner:

You know, it, it's a great question and it's actually been more difficult in my current role than I've ever sensed or had before. And, and here's why. I'll tell you why. It starts with the when as opposed to the what, right? So in my current role, we, we've grown up from being a two and a half decade old company that really led with feature function and product. And by design that means addressing known demand. And I think the key to differentiation in, in that virtuous sales cycle that talks about that transition to value from the customer's perspective is engaging earlier.

That's been our biggest I think our biggest challenge, but it's our, our biggest area of reward when we do that. So it, it's definitely on the execution side about leading the conversation. And I think that's the trend as well. It's about, you know, Dan Heath calls it upstream thinking or trying to prevent the problem before it occurs. It's about insight selling. It's about engaging in a value conversation before it's identified and bringing insight to the conversation as a seller or as a provocateur and actually showing up to that strategy conversation with insightful lead, not only on what you're gonna talk about as a differentiator, but how do you get there and how do you measure the impact of getting there and getting on that wheel of of, of value selling over and over. Cuz it is a return ticket if you punch it in the right way early.

Chris Dowse:

Yeah, that, that makes sense. And, and I think I said to you before we started, we were gonna hold your passwords against you. So here we go. You had talked about the buy now, why now, you know, sort of you're competing against status quo and that, that I think that's still sort of the, the, the biggest competitor in sales process for for for any of the sort of companies I've worked with. So I'm curious, say in the past six months, have you seen anything different about how that conversation needs to work in in your business?

Jonathan Lerner:

Absolutely. Is the short answer. So I'll give you an example cuz I love, you know, when storytellers are specific around use cases, I think it's really, you know, for your, for your drivers this morning, right? I think it's, it touches home when you can tell a story with a a specific example. So and I'll take one of our COEs, our centers of excellence communications it's in itself has emerged in the last six months driven partially by covid, but the realities of work anywhere as a, a a cemented foundation for attracting good talent. Yeah. and what I mean is, is you know, that conversation of companies addressing what used to be a communications challenge, How am I speaking with my people and how does that translate in the end to be around a better customer or consumer experience? How do I get to a CX outcome through my employees, et cetera.

 in the last six months, we've morphed how we're positioning because of that work anywhere communications has evolved into talent and collaboration. Because if you think about it now, now that whole go to market, we are able to bring insights to our customers about compelling events that used to be, you know, my phone system is antiquated and therefore I can't communicate well to how do I gain a strategic advantage in CX as a different in customer experience as a differentiator. And it's about work anywhere. It's about consolidating real estate and making the work anywhere reality be about what's the return and the, and the recurring value of consolidating real estate space, of attracting a diverse workforce. Because I can truly encourage work anywhere and DEI initiatives that give me an advantage to my brand. So we're seeing that how you position value and how you can actually have value based insightful conversations is expanded beyond, you know, traditional ways of, of satisfying known demand.

And, and, you know, why are you demanding? Well we're, we're, we're offering a chance to redefine how you compete and how you're strategy evolves. That's a very, very different conversation from even six months ago for us around what are the tools or what are the systems that are enabling you to communicate to your ecosystem, right? So and, and, and that's translated directly to four or five of our customers where, what's the impact of that? We're reaching new buying centers, we're actually honing new new, new new persona talk tracks to attract a diverse buying set and a more, you know heterogeneous influencer set on the buying, on the buying journey. So we're, we're, we're having to mature that and we're, I think we're being, well, I know we're being rewarded for that by engaging early with a broader conversation that, that leads to value based. How do I quantify it? How do I build the case for change? And then how do I go back and measure and optimize that in that wheel? It's opening up doors for us and we're, we're, we're addressing new buyers we never had before.

Chris Dowse:

Yeah, makes sense. And that's interesting cuz you know, I, we just did our customer user event at Smartsheet last week. And so really how you show up in reimagining the workplace, which is what you're describing that is absolutely the, the the same type of theme and messages that we were seeing in our customer base. Yeah. you mentioned new talk tracks that's interesting to me. And, and, and Tim, you and I sort of started to touch on this in the past conversation, but Jonathan, when you think about different sources of value, right? So you've got your hardcore economic, you've got the, the psychological aspect. I've seen seen you mentioned that. Are you seeing sort of the, the, the business cases or the dialogue sort of spill more over into the sort of the, the human factors? And, and, and especially as it relates to when you think about employee engagement as an example, things around trust, control, belonging ownership are, are you seeing that getting more into your value dialogue or, or, or, or is that sort of not showing up at all?

Jonathan Lerner:

Well, it's, I think it's sort of a rhetorical absolutely is, right? Whether it's, and it's not just it's not just the fill in the blank generation of younger influencers, right? Yeah. Right. We've been, I think we've been guilty of saying, well that's, that's sort of a trend in the, it's not, it's, it's actually a trend across creating that differentiated experience, right? And the, the I think the personal side of, of understanding the consumer and addressing that in your corporate culture and how that actually finds its way into your talk track of your differentiation for your consumer, I think is very real. And it is it's increasingly an element that we think about in how we address talk tracks and how we we, we, we add to the KPIs that we would like to measure. And we're, we're, we're, we're sort of on the search, we're constantly searching for organizations that have, have actually achieved faster than we have. Where have you seen those KPIs and metrics and how do we, how can we draft on that work to quantify and qualify? Some of those used to be ancillary benefits that are kind of moving their way up front in the buying journey, right? Those are, they used to be extra points, you know what I mean, on the decision.

Jonathan Lerner:

Right. And I think if, if you're, we used to talk about a formulaic version of, of a consumer experience, it's really your employee experience raised to the digital level. So CX equals, you know, ex raise to the dx. And I think that there's, there's a human side of it. I don't know where, where that equation works, but that, that human side of, of how do I elevate with an understanding of tying that experience to, to, to humanity. You know, we talk about it in D.E.I. around around not being exclusive to any groups, but I think there's an element to how can we grasp that. And there's a lot of CFOs, there's a lot of c HROs that are looking for give me best practice KPIs and how do you help me? Cuz I know empirically that I can quantify it. I just, I think we're still, and and tell me if I'm wrong, but I think we're still at that earlier stage of helping, you know, value based that metrics conversation.

Chris Dowse:

Yeah, I definitely think it's fair to say, and Tim you would have an opinion too that the value management space is still young, right? So we, you know, we've, we've maybe 10, 15 years in different pockets, but you mentioned a wheel before and, and I interpreted that as a full customer life cycle of value, right? And so you, everything from marketing, presales all the way sort of validating the value. So I still think there's a lot of evolution. And, and then you mentioned formulas, <laugh>, so, you know, you know, long time since I had to work with algebra, but we, we do actually use it when I was at Service now, we always had sort of targeted returns and, you know, a 20 times size business issue. As value realization has become, you know, more and more important and then definitely in the current emerging macro environment even more important. I'm just curious, do you have a sense of, you know, and maybe this question to you also, Tim, of, you know, what scale of value to spend ratio are customers expecting these days? Are you, are you seeing sort of a specific piece of math there or, or how's it changing?

Jonathan Lerner:

You know, I'm definitely not an expert. I'm gonna let Tim talk to this one because boy, you know, I think I'm learning a thing or two here, like I always do, right? Talking to you guys. But, but Tim, why don't you lead in cuz I'll, I'll I'll draft off your messaging on that. I, I I look at old school a little bit, right? I look at I, if I'm, if I'm capturing the right way that a CFO or line of business leader is, is going to be objectively measuring the value return and then that's my baseline for measuring. I'm kind of I'm bringing my experience sheet on our value calculations in terms of the KPIs. But otherwise I'm leaning on the customer. But what to maybe you've got a perspective to share on.

Tim Page:

I don't think anybody knows. We're literally ad-libbing this, which is great. <Laugh>. So Chris, you would think this is a tee up because as I'm listening to you guys chatting I'll give you, I'll give you a minute on what I think cause I'm now pretty opinionated. I was not a year ago. I now am. I haven't been in this seat for a year. Sure. And then Jonathan will lead into a question based on background of kind of what you're seeing from your previous roles in this role. But I'll preface it when you kicked off by saying my view of, and I started engineering ops sales and then back in the position I am today, right? So when I hit sales, I had, you know, a lot, a lot of a lot of time and product to learn to start way back in the day going, why are we building this?

What use case is it for? This was before E R P was really out, right? And so when I hit the sales function, it was automatic for me to go, why somebody wanna buy this thing, right? And then the best of the business I started getting, unfortunately didn't have the honor you did to work at PTC with John McMann, John Kaplan and those guys. But I, I since ended up hiring a bunch of PTC people and then kind of learning the methodologies that they taught. And I think John's got what, 33 CROs that have made it big and all that kind of stuff. Yeah, that's a big deal because I think it was early on to the process. So, you know, fast forward to what Chris is talking about today in this seat the most important thing you ask any CEO is to retain and upsell customers, number one.

Number one, number one, number one, right? Number two, quickly behind it is gaining new customers. So you want happy customers. Yeah. On the value realization side that org is, organizations are so immature, they use all different types of disparate tools that don't talk to each other in it. So that's where we've put our focus and I think we're just newly out. That will help build models for the front end into why customers bought, which will equate to the front end of why, you know, why they would sell. And so let me end with the question on that when I was listening to you. So you having gone from trading to hardcore, top of the top elite selling between PTC and sap. Sure. Right? And now in your position is, you know, you don't wanna build product, less people are gonna buy it and you solve in pain that they're gonna, that they're gonna realize.

Because that retention piece and upsell piece is so big for so many SAS based companies, I'm talking tech, right? But then how did, how did that also change your mindset when you came into a CEO role? And you've gotta have, you've got services and product and packaging and, you know, you can waste a lot of time doing those things in the wrong way if you're not focused. And Chris, you can probably answer it too cuz you, you're part of the same thing.

Jonathan Lerner:

You know, I, I would, let me start by morphing what I think I heard you say, Tim, because you know, part of the questions you never really let go of your CRO hat. And that's not why our, my, my PE brought me in because of my CRO pedigree frame.

Tim Page:

That's right.

Jonathan Lerner:

Yep. because this was about moving from startup to scale up in our case. But the questions we ask or I ask is, you know, not just why, why'd you buy? Definitely why do you stay and why do you grow? Mm-Hmm. <affirmative>, and that can be around upsell, but in my case, you know, as an inventor as well, we, we are actually, we've gone from you know, I liken it to my four car garage. I want to have a Ferrari in each of the bays, <laugh>, I'm about cross-selling as well. So, and that's not just in product, it's also in services and managed recurring. So, so as a, as a solution provider, an outcome provider, right? We gotta think about from the customer's lens back in, I'll say it again. You know, why did they buy, why did they stay? And then why do they grow with you?

And that's, it can be around that recurring base, right? Which is, you know, hyper important. And that is where we create value for stockholders or for shareholders as well as for employees, right? But, but that's clear. But you gotta, you gotta come in with that, whether it's, whether you're on the product development side, whether you're on the service delivery side, whether you're on the selling side, it's that, you know, the intellectual curiosity to kind of ask those questions on a recurring basis. And I think specific to this discussion, I think the better you are at, at having that concrete and especially in the economic cycle we're in Yep. Concrete value driven, numerically measurable and confident of here's where I've done it before. And here's going back to those questions, why do, why did I buy, why do I stay, why do I grow?

I want to have established that every touch, right? Because your customer base for me, I have 1500 customers. If I never attracted one more, but I sold every one of my, I would be a hero. Yep. Would, I would literally quadruple my, my enterprise value just by satisfying my existing base. But I'm not satisfied there cuz without even trying, I don't have a hunter group, but I'm adding 250 customers to 300 customers a year without having a hunter base of sellers. That's great. So, so, so that discipline around the next evolution of offerings it really revolves around that same consistent model. If you're gonna scale, you have to have that repeat model that says, I'm gonna, I'm gonna force you Mr. Or Mrs. Customer to measure the value I'm delivering. Because then I, in a tightening economy where only two of those 10 projects are gonna get funded, I know I'm more likely to get those dollars.

My CFO is gonna be on board, my, my, each of my line of business heads, my c that that growing heterogeneous influencer wheel will be more akin to a track where I've got that I can quantify and qualify. So, so I think that's my challenge to all of my departments, all of my, my leaders is with that same discipline. Think about it from the customer's lens. Why did they buy, why do they stay and why do they grow with us versus the competition or, or a no decision somebody, I think Chris mentioned the no decision as the biggest challenge. I think that's increasingly so right? With that skinny amount and this economy for sure. <Laugh> and inflation and, and of course, yeah, I think tighter money supply, I think that benefits the more discipline, repeat qualified, quantified, prepared sell selling team. Chris, how do you guys drive that feedback loop?

Chris Dowse:

Well, I, I'm on my third go with a different company of building usage telemetry based feedback. So that, that's powerful. And it, and it's, I I think it'll be, that'll be table stakes. But I like something Jonathan said about curiosity because I do believe that there's a natural propensity for the buyer to sort of not share with you all the value that they're going after or fully explain to you why, Right? And so that, you know, there's a natural barrier there in terms of price and, and, and also their account personal accountability on the other side back, you know, having, having done value work for buyers as well. So I think the curiosity in the why do they stay in the post deploy value is absolutely where all the magic happens. And you know, I've found that it's not just sort of the expansion as Jonathan mentioned, but it's also sort of elevating the conversation because if, if, if, if you can truly get the customer and, and your champion to go on the record for a certain level of value achieved and you're able to explain a gap in their potential value achieved, that, that usually is of, of much interest to the next level in your buying stack.

So I, I've found that not only is it sort of a usage based, telemetry based sort of becoming increasingly table stakes for, you know, on time renewals or, or, or a right for upselling. But if you can get a great story going get your champion to own it, then it, it really is a sort of a CXO ladder. Because that they want to know sort of, well how can they get more value without spending more? And then, then that's where you lead into, well, your expansion, your expansion play versus your peers. Sure.

Jonathan Lerner:

Yeah. Yeah. Cause I think that applies to, you know, that that 105 to hundred and 10%, right? No one, no one is looking at a great service experience, even if we can quantify it as, as standing still at a hundred percent, right? Everyone is looking at growth even if we're not cross-selling, even if we're, we're upselling, right? So mrr success and I think that tied to measured outcome, even if it's it, it is a challenge. I would agree. Sometimes customers are a little less likely to share, right? Cuz it, it almost feels like they're putting themselves on the back foot with procurement, right? If there are two, if they're two above board on the results that we drive, it's still you know, it's still clear that we have to, you know, good service has to equate to 105 to hundred and 10 to 120% organic growth.

We can't, no one's here to renew at at same, right? Whether it's cost of employees or cost of labor or inflation, right? It's just the reality is we have to be rewarded by doing better and by measuring those outcomes, right? And if we're committed to it then we have to hold our customers accountable to those those business cases for change and those real results, we gotta stay close. And it's not at the end of that cycle that that process begins. So back to that whim, right? A lot of, I think, I think of anything, the mistakes my teams often make is, Oh, we're, we're within the window of renewal, so let's go and sell.

Tim Page:

Yeah.

Jonathan Lerner:

It's that constant revolving evolution of the time's, not at, at expiration to have the renewal, the conversation, right? It's not, it's not about it's an ongoing, it's almost like a, a perpetual calendar to stay close to your customer, right? To continue to bring that insight, to continue to earn the right to be close to the measurement, right? Even if you have it, you actually have to deploy it. You have to stay with that discipline in your motion from a go to customer motion, right? I think that's totally, that's essential.

Chris Dowse:

Yeah. Totally agree. And then, and I've also found that there's something in the human brain that clicks over when you do it in quarter as well. So if you, if you do it a quarter before you know, we're having a business conversation. If, if you're doing it the month before we're renewing, it's, it seems a little bit more suspicious in the back

Jonathan Lerner:

For sure. Yeah.

Tim Page:

Yeah. It's amazing. Hey, great conversation. I could keep going down another couple PAs just listening to both of you. But Jonathan, thanks for joining in credible conversation. And Chris, again, thanks for thanks for helping host this and some more to come. Appreciate the insights that you both have gleaned over the years in various backgrounds. But thanks, I appreciate you joining driving value today and we'll chat again later.

Jonathan Lerner:

Great to be with you. Thanks. Good to see you, Chris.