4 ways Direct Selling companies can improve their strategic planning for technology

Executing on a great strategy is challenging for all companies, but without technology at the heart of planning, it’s often impossible in direct selling. Here are 4 principles to help direct selling companies optimize their strategic planning for technology in 2022 and get the best return on their investments.

Focus everyone on ‘Should be’ and ‘Could be’ - not ‘As is’

Let’s first address this all-too-common hiccup in the planning process: your current technological capabilities should never dictate your strategy for moving forward. Too many companies, especially direct selling companies, let a great idea barely get off the ground when someone chimes in that “our system won’t allow that”, or “our platform isn’t able to do that”. System limitations are real, and need to be addressed. But they cannot dictate strategy, because your strategy, by its very nature, assumes that some changes are going to have to be made.

So as you begin your planning process, make it a ground rule for everyone that, at least for this period of time, we will not let our current limitations dictate our future plans. Keep people’s worries at bay by assuring them that there will be a time to reconcile all of that, but make it clear that now is not that time. Instead, give the floor to those team members that help push the whole team to think about a broader, more exciting future state.

Involve your technology leaders from the beginning

Most of you may be saying “Well of course I involve my tech leaders in strategic planning!”. But the reality is that many companies, with the well-intentioned goal of keeping strategic planning sessions tight and focused, don’t give their technology partners an early enough seat at the table. In doing so, they can miss major opportunities or blindspots, and stunt ‘future opportunity thinking’ within their technology group.

So as you “plan your planning” make sure your tech group is involved early and rewarded for bringing their best ideas. Being at the forefront of innovation and technology often translates into increasing growth and revenue as well as reducing costs.

Align on a success matrix for your technology organization beyond launching specific projects

Too often during strategic planning, when it comes to technology investments, direct selling companies focus exclusively on the exciting “banner” features- enhanced connectivity or launching a multiexperience feature for the field. Often these aren’t just cool tech- they have easy and exciting ROI attached- X% increase in auto-ship orders or Y% increase in new distributors. And while everyone in the planning group implicitly acknowledges that some portion of the budget will go towards tech “maintenance”, they neglect to talk about quality, future-proofing, or efficiency for technology. Thus the implicit message to tech leaders can become “Success this year means getting these projects out, even if we’re barely scraping by with the rest of our technology”.

The fact is “tech debt” and missed opportunities for major increases in technical efficiency are largely unseen until there’s a problem. Until your system is toppling over and outages abound. Until you realize you can’t ship new features because your stack has become so difficult to build on. Until people start quitting and even external partners don’t want to work on your tech because it’s risky and clugey.

But there is a way you can avoid this, starting from the foundations of how you plan. As part of strategic planning, align as a company on success factors for your technology organization beyond just meeting launch dates and keeping the lights on.

For example, here are 4 key factors we helped a large company align on:

  • Scale
    • Projects that enable us to scale to X orders per day without an increase in Y
  • Risk-mitigation
  • Increased engineering efficiency
  • “Intangibles”:
    • Retention of engineering resources - internal and/or with external partners

Presenting success in this way encourages a whole new type of thinking among both your technology leads and partners, and your entire exec team.

Beware the “black box” tech project

This comes in many forms and disguises, but ultimately takes the same shape. New technology should be defined in terms of outcomes, whether it’s ROI or measured by efficiency savings, so any ask must come with a substantial jargon-free justification. Although Quantum Computing or Artificial Intelligence may excite your technology team, and the next great ‘x-as-a-service’ is the dream solution for your marketing team, without a solid business case and relative transparency the executive team will never fully appreciate, understand and by extension maximise the ROI. Left unchecked and without clear articulation of the problem and the solution (and the scrutiny that comes with that), tech projects can lead to a myriad of problems in terms of integration, development and on-going maintenance.

All of this feeds back to the need to have clear alignment to maximise your chances of making the best business strategy decision. Whether it is marketing, human resources or technology, the correct framework needs to be in place so that the right people are included at the right time. Clear discussions need to be had on the firm financials, ensuring that the intangible costs and potential risk factors are addressed and understood. As Nick Tudor put it, “like any business decision it’s, what are the reasons for doing this, both financial and intangible and what are the costs of doing this? And what’s the opportunity cost related to it?

Recognize that your technology investment needs to align to your growth patterns

Many executive teams use a flat percentage of annual revenue or profitability to get a ballpark of expected tech spend. Keeping that the same each year can work if you’re a steady state business without much tech debt, but for many direct selling businesses, that’s not the case. A company at $50 Million, growing 10% a year, for example, is very different from a company that’s at $50 Million but was at $10 Million the year before and is now targeting $100 Million.

Ultimately the more rapidly you’re growing, the greater the percentage you’ll need to allocate because you’re putting in systems and processes to support a very different, much larger organization. So for example, there may be things you’ve been able to do manually in the past that now have to be automated and done in higher accuracy, lower risk ways. When you don’t budget accordingly for scale, customer service costs escalate, dissatisfaction increases and ultimately you see the effects in missed revenue and consultant and customer churn.

Alternatively, it may be the time to “right size” your technology spend for lowered growth expectations. For example, the company may have successfully invested in building a key (but expensive) tech product when your business was at a peak 5 years ago and continuing to grow. However, today the company is facing stalled field growth and rising costs. If that tech is no longer serving you well enough because you’re not at scale, and it’s more than your business should or can afford to maintain, it’s time to let it go. Direct selling is defined by its peaks and valleys, and the long-term winners are the ones who have a vision for the future, while facing current realities head-on.

Openness and innovation drives growth

It is vital, however, to recognise that however you proceed should be viewed as a process in of itself. As you increasingly include your technology leaders in this process, both they and the rest of the executive team will embrace openness, innovative thinking and a readiness to change. And by being open to adjustment in the process itself, organizations that include their technology leaders at the right time, and within the right framework can drive exceptional organizational growth.

Whether you’re looking to integrate some of these technologies into your existing system or considering a platform change, Paragon provides customized solutions to leading direct selling companies based on our extensive knowledge of the unique needs of this industry.

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