article » The Power of "No"

The Power of "No"

February 6, 2015
3 min read

It can be hard to say no to prospective clients, but doing so can help you refine your company's focus--and maybe even win your clients' respect.

Organizational soul searching--crucial for any company as it grows--can be learned only from being in the trenches and making critical decisions every day.

Chief among these decisions is answering the question of who you are as a company and what it is that you do. Even more important, in my humble opinion, is what you do not do.

Let me explain.

When you're building an enterprise software company, the platform typically does not offer every single feature that your customers might want. Yet those customers are the lifeblood of your organization. They are paying the bills and keeping the lights on. You don't usually start out with scores of clients. Often, just a few large customers make up the lion's share of your revenue. So when they ask for some new feature or some ad hoc analysis, it's extremely tempting to give them whatever they want. This is especially true when they escalate the issue and sometimes even threaten to walk.

But when making decisions about the future of your company, you need to make a very conscious decision about what you are and what you are not. Are you willing to build a specific feature that one client demands or are you willing to let that client look at other vendors? Are you strictly a software company or will you satisfy requests for ad hoc analysis by providing consulting services as well? These questions seem trivial but in a resource-constrained environment where every engineer and analyst is precious, these decisions you make have a tremendous impact not only on how you spend investor money but on your mission, vision, and goals. If you find yourself chasing dollars rather than planting your flag in the ground, you may find that you've built a platform that makes a few of your biggest clients happy but is unsatisfying for everyone else.

I've had the fortune of being a part of two early-stage companies that build people analytics software. I come from an academic background and have a PhD in economics so I was fully prepared for the rigors of being a data scientist responsible for analyzing large quantities of data. What I was not prepared for were the massive cultural and strategic issues that you inevitably face while you're building a new company.

A very smart engineer at one of my previous companies cited the example of Five Guys burgers. When they were still building the company in and around the mid-Atlantic, they received a large delivery order from some very important people at the Pentagon. They politely explained that they don't deliver their burgers as a general policy because they think it would sacrifice the quality. The people at the Pentagon were outraged. Thousands of people work there and Five Guys was walking away from huge volumes of future business if they didn't deliver. It was a difficult decision but Five Guys stood their ground and grew into a massively successful franchise, serving millions of individuals (including many Pentagon officials) for years to come.

What's the point of all this? It's hard to say no to a prospective client--especially when this client has some market power--but it's also critically important to be willing to do so when you are asked to do something that is not what the company or platform was built to do. From my own experience, I've found that current and prospective clients actually respect you when you say, "No, we aren't willing to do this and here's why..."

In fact, I can think of an example where a competitor was willing to do a shoddy analysis based on a small sample size and the customer asked if we'd be willing to do the same thing. I said that we wouldn't because the value of our analytics rests on the credibility of our analysis. I knew that the study they were asking for wouldn't yield robust results and I refused to do it. They pressed me several times during the call and I stood my ground. My bosses were going crazy, putting me on mute and telling me that I was going to lose the business. After the call, I found out that they selected us as their vendor precisely because they respected our commitment to high standards with our analytics.

The upshot? The power of no isn't just something that helps you refine your focus. It can also help you win the respect of prospective clients.

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