Before he graduated high school, Scott Etzler became somewhat of a entrepreneurial celebrity in his southern Indiana hometown. He held three or four jobs, but the biggest was his own junk-collecting business that he started by picking up trash outside Salem’s city limits.
By 1970, he was working about 20 hours a week, at $25 an hour, bringing in $500 a week. In his words, he was “living large.”
Though he got out of waste management and into providing conferencing and collaboration services, his level of success hasn’t changed.
He joined InterCall as president in 1998 when the company had less than $50 million in revenue. He led the company through double-digit sales growth each year to 2009 revenue of more than $1 billion. In that time, the company has also evolved from simply offering operator-assisted calls to providing and managing advanced audio, Web, video and event services, and even unified communications.
“If someone says, ‘Well, gee, you’ve done pretty well for a kid from southern Indiana,’ I’m like, ‘Oh, because I know how to execute,’” says Etzler, who sold the company to West Corp. in 2003 and now runs it as a subsidiary.
The secret to his successful execution lies somewhere between a guess and a math equation but really, it’s a lot of research and disciplined decisions. Etzler must listen closely to his 900 meeting consultants and 2,800 other employees in 83 sales offices worldwide, along with the customers they serve, to understand and assess opportunities in the marketplace.
“Anybody that tells you that it’s a classic formula that’s run through a meat grinder, I question that,” Etzler says. “There’s always a lot of unknowns because the markets can change and there’s some subjectivity on how big the market really is. … That’s what makes it fun, to see what happens.”Listen to the market
The ability to identify opportunities begins with understanding the marketplace. Etzler takes the market’s pulse by putting out as many feelers as he can.
The first one goes out to customers, both directly and through your team.
“You need to listen to your customers, which will tell you how you’re doing right now,” he says. “You need to listen to your salespeople … and that gives you a great pulse on what the market is doing and a little bit about what the market’s going to do.”
Look for information from them to fuel both your short-term tactical and long-term strategic approaches. Begin by asking them questions, then dig deeper into their responses.
“From the tactical perspective, how are we doing and what can we do better?” Etzler asks. “Where are (customers) spending their money today and how can we improve our share of that spend? Then you … assess how big that market is, how much of that’s addressable from our perspective, at what cost, and try to put a business case together to figure out how to expand in the short term.”
Sometimes, ideas will come directly out of customer feedback. As InterCall’s customers expand into China and India, for example, they request services there, pushing the company to expand geographically. They also bring ideas about improving services and, of course, keeping costs low which pushes the company to improve technologically.
Though the later validation is an extensive process, ideas often come from a simple question.
“We’re constantly asking our customers what they want, and then we try to assess how big that market’s going to be,” Etzler says.
To further feed his view of the marketplace, Etzler also looks at macro trends and forecasts. He reads multiple industry trade publications to learn analysts’ predictions. His involvement with the Economics Club and the Executives Club of Chicago puts him in contact with other leaders, supplementing his view of the broader business world.
“Strategically, when you think of where the market’s going, that gets broader and a little less specific,” Etzler says. “Of that broader market, what do we think is our best space to attack first and how big is that addressable market and what’s that going to cost us to do that?”
Both industry and general business peers can provide valuable perspectives into the marketplace. For example, Etzler attends the executive sessions of Salesforce.com, a public company of similar size, to learn about new technologies it’s pursuing.
When possible, take advantage of the information available on public companies in your field. At the very least, learning about your competitors’ core competencies can help you strategically leverage your own.
“We’re continuing to go, ‘How big is that going to be?’” Etzler says. “‘Which piece of that do we think we can we address? Which piece of that will Microsoft probably take? Which piece will Cisco take? How much will be left over?”Assess the potential
Once you identify opportunity in the marketplace directly from customers, through trends or from gaps in your competitors’ offerings you need to assess the potential.
“It’s kind of like that disclaimer on the securities: ‘Past performance is no guarantee of future results,’” Etzler says. “But it’s constantly just touching those three areas sales, marketing and industry analysts and seeing what they all say and then just making your best guess.”
Actually, it’s more of an informed guess. To get information on how internal capabilities match external possibilities, Etzler brings together a team of senior executives who represent the entire product process. It includes vice presidents of product management, product development, infrastructure IT, marketing, finance and customer service.
“So you have literally the whole life cycle of how does it come in, how is it executed, what’s the market and how do we bill it?” Etzler says.
Those varied perspectives will help you understand each step of the internal process for getting an idea to market. The group is especially helpful when you’re considering ideas that are outside of your core offerings.
“The first thing is, ‘How much revenue [will we get] from that customer?’ and the second thing is, ‘How replicable is that service; can we turn it into a product?’” he says. “And if we can, it’s a lot easier answer. And if we can’t, you’ve got to decide, well, if we don’t do it, what’s the risk to the customer?”
Basically, you need to determine how badly customers want it and what it will take you to provide it. Use your customers to test the need in the marketplace as well as the potential revenue it could bring.
To some extent, you can do background research. For example, InterCall comes out with more expansion services than brand-new offerings, so Etzler can simply look at who’s already using the service he’s expanding and what they’re currently paying. Then he can look at customers from other similar companies of comparable size to extrapolate who else may be interested.
But the research doesn’t replace communication, even though your goal through communication is to land on a number.
“The discussion that usually drives a new product or service, 90-plus percent of the time, comes out of our global marketplace,” Etzler says. “We go to the global executive team and go, ‘If you think we need to do this for XYZ Co., we’re not seeing it in other areas. You better get your sales folks out and ask some of their peers, at least in the vertical, ‘What do they think of this and is this going to be useful?’ and then we need to try to put a number on it.’
“You always try to wrap a number around it. To me, that’s part of the discipline of putting a stake in the ground. Instead of going, ‘Hey, it’s going to be really big,’ you go, ‘No, no, no. That’s good to know, but how big is it going to be?’ ‘Oh, it’s going to be a $100 million market.’ ‘Really? Well, how much of that’s addressable to what we’re talking about here?’ You try to just keep funneling it down to get as specific as you can.”
That’s the key for Etzler. He needs someone to champion the idea and uncover the business case behind it.
“The biggest red flag is if no one’s willing to put a stake in the ground of how much revenue we can drive, … who’s going to buy it and when,” he says. “If you can’t get something specific around the upside and the price points, if you can’t put it in form of an ROI, that’s a real red flag.”
Getting those specific numbers requires back-and-forth communication from your team. The sales executive may present the ROI for a certain product, then the IT executive may reply that it will take five additional people to handle the billing. So then you have to subtract that cost from the return.
“Not only do you have your cost of doing that, but … you only have so much of a resource,” Etzler says. “So then you’ve got your opportunity costs that you have to weigh against the request, because if you’re doing project A, that means project B or C or D [is] not getting done. … There’s always a push-pull because you only have so much resource, but you just try to measure where the market’s going tactically and where it’s going strategically.”
That prioritization of projects is a function of basic business. It’s easy when one project yields 10 times the revenue of another project. But, because of subjectivity, some projects can start to look pretty similar. So while boiling down ideas into numbers can help you make decisions, it’s not that simple.
“If it were just a math problem, it’d be easy,” Etzler says. “Then there’s the subjective questions of, ‘Well, how much can we really sell?’ and, ‘How upset are they going to be if we don’t do it?’
“It’s not as much if we’re right; it’s that someone’s willing to put their credibility on the line and give that number. Even if six months later, we go, ‘Wow, we sure overevaluated that,’ we at least have something that’s concrete on which we base our assumptions.”Keep questioning
Sure, you could get it wrong completely, but that’s not usually the case.
“(It’s) not a matter of if some of these market trends are going to happen,” Etzler says. “It’s the when they’re going to happen.”
He gives the example of WebEx, the only still-successful Web conferencing company he can name from the original pool of 50 or 100 companies that invested in it but timed it wrong.
“Most people have guessed wrong,” he says. “They were way too early so they had spent all their (money) by the time they really needed it. They had spent all their money on marketing, all their money on technology, and there was not enough people adopting and they went out of business.”
That’s why it’s so important to continue communicating with customers in your pipeline to keep gauging the need. That communication shouldn’t stop when you decide to launch a project. You need to keep monitoring and keep questioning the information you receive.
For example, Etzler expected one of InterCall’s new services to flourish by now, but he hasn’t seen traction in terms of revenue. In those cases, it’s a matter of following up with customers who indicated desire and making sure that the forecasts you founded your decision on actually happen.
“Instead of trusting the pipeline, we are having folks even I, as well as the senior vice president of marketing talking to that pipeline specifically to give them a little adult supervision to make sure that it will happen,” he says.
When you collect projected numbers ahead of time, you have something to track progress against later. Etzler measures revenue and margins both overall and for individual products. That way, he can quickly see if the margin is only a fraction of his expectations and put effort into picking up the slack.
“Part of the fun is I’ve got to make sure that we do what we say when we say it,” Etzler says. “So you really try to have some rigor around: Is this really what’s going to happen?”
How to reach: InterCall, (773) 399-1600 or www.intercall.com