Sunday, October 25, 2015

Startup Sales into Corporations: Cultivate Gatekeepers

 Major Sales:  Who Really Does the Buying, Thomas Bonoma, Harvard Business Review, July-August 2006

The Theranos story continues to unfold.  Walgreens, their marquee customer, has announced that it will delay expanding beyond their current in-store blood testing center pilot.  Here at the University of Minnesota, the participants in a recent Med Tech Value Proposition Design workshop debated whether all this negative publicity is fair. But the fact is that Theranos has not conducted peer-reviewed studies comparing the results of their technology vs traditional blood testing equipment.  Their stated desire to protect trade secrets by avoiding peer-reviewed publication has undermined their legitimacy in the eyes of key stakeholders.  In other words, Theranos does not seem to have addressed the full “buying center” associated with blood testing. 

Major Sales:  Who Really Does the Buying is a classic Harvard Business Review article about the roles in a complex sale.  Startups often focus sales efforts on end users and high-level decision makers, without addressing the other roles that corporations have in place to ensure quality (does the product/service actually work), efficiency (interoperability with existing tech, effect on standard processes) and cost-effectiveness. But gatekeepers and influencers have important roles to play, and startups evade them at their peril.  

We think of top executives as the ultimate target of a purchase decision:  they have the decider role and if you get their approval, then you’re golden.  But keep in mind that there can be turnover at the top, which has certainly happened at Walgreens since its acquisition of Boots at the beginning of 2015.  As a result, top Walgreens executives who committed to Theranos (an equity investment as well as the blood testing pilot) are no longer with the company.  

Turnover is one reason why corporations depend on structures and systems to maintain standards and retain institutional memory.   One point buried in the October 23 WSJ article is that “The drugstore chain’s clinical-services group typically vets the science and practices of prospective outside medical partners early in the process, but was brought in later with Theranos, according to current and former Walgreens officials.  

In other words, the gatekeepers were kept out of the loop.  You can be sure that Walgreens (and their counterparts) won’t do that again any time soon.

Too often, startups think of gatekeepers as pure obstacles to avoid.  Gatekeepers are often middle managers whose careers have plateaued in unglamorous jobs, so they may be less fun to deal with than excited end users or a corner-office CEO. But gatekeepers may be quite powerful, and it is possible to leverage their self-image as organizational protectors.  Gatekeepers can serve as facilitators of a corporate sale if they can be convinced of a value proposition that fits with their particular set of concerns.