In case you haven’t seen the news, the Strip is being completely transformed for the Las Vegas Grand Prix, which will be hosted the weekend prior. My immediate impression? Buckle up for some extra logistical headaches and plan for a lot of extra time getting between venues. But before we go there, here’s my primer for how you can supercharge your AWS re:Invent 2023 experience.

Crunching the numbers, I’ve seen a whopping 2,444 unique sessions across everything from Workshops, Keynotes, Bootcamps, Breakouts, Community Activities, and wait for it… a pickleball tournament?! More on that later. This year’s footprint is similar to last, with sessions spread across the Venetian, Wynn, Caesars Forum, MGM Grand, and Mandalay Bay.

Who is re:Invent geared towards?

Over 55% of the session catalog dedicated to solutions / systems architects, developers / engineers, and technical managers. No major surprises here; the target audience is largely technical.

However, in my role leading Pariveda’s alliance with AWS, I still find plenty of sessions dedicated to things like the Partner Experience track discussing partner-led business development, the APN, ACE Portal, funding programs, and other go-to-market updates that will change in 2024. My recommendation: As straightforward as it sounds, use the ‘Role’ filter to discover the sessions that are catered to what your interests are. I have personally fallen into the trap where a catchy session title pulls me in, but I don’t leave with strong takeaways because I wasn’t the target audience.

Which topics have the most horsepower?

This year, 36% of all available seats in sessions at this year’s conference will be to learn about AI/ML on AWS. The top services represented are things like Amazon SageMaker, Amazon Bedrock, then Amazon EC2 (elastic compute) and AWS Lambda. I actually think this ‘gear ratio’ is the right move for AWS. Despite the elephant in the room that is generative AI, I’m glad to see a breadth of topics covered across domains like DevOps, Security, IoT, and Amazon Connect where there is still plenty of innovation happening and value to uncover.

My recommendation: I’m all in on sessions focused on new product launches and new features. I find that presenters here are typically the most interested in connecting and collaborating early in the innovation lifecycle to support their products. For example, Pariveda has early beta access to Amazon Bedrock, a new product to help administer the lifecycle of generative AI applications powered by LLMs. Lately we’ve been busy helping clients solve problems using tools like generative AI; we figured why not for re:Invent too? So, we had a little fun and launched a AI-powered AWS re:Invent Assistant which is powered by Amazon Bedrock, AWS Lambda, and Amazon API Gateway. Check it out!

👉 Pariveda’s AWS re:Invent Assistant

Where should I take a pit stop for some fun?

AWS re:Invent is a great place to learn and plant the seeds for next year’s project and initiatives. However, make sure to find some time to meet new people, get some exercise, and relax. Here are some recommendations for what to do outside of education-focused sessions.

Play pickleball!

New this year, there is free-play pickleball and a week-long tournament at Mandalay Bay daily from 9am-5pm. I’m actually very excited for this addition. Any challengers out there? Don’t be intimidated… but pictured below are my three crowning achievements.

• ☁️ AWS Cloud Practitioner Certification
• 🏆 Beginner league pickleball champion
• 🏀 6th grade basketball consolation bracket runner-up (mom was proud!)

Will AWS re:Invent Pickleball Champion be next? Probably not!

Join me Tuesday evening at the Mirage for our Social Hour

Pariveda is hosting our annual re:Invent social at the Mirage on Tuesday evening. If you’re interested in joining, RSVP here and let me know.

My colleagues are also curating their top picks for sessions, socials, and other activities at re:Invent here. Thanks for reading, and have a great conference!

· Dana Meadows of the MIT Systems Dynamics Group presents a novel vocabulary to understand Systems as Stocks, Flows, and Feedback Loops
· Leverage Points such as Information Flows, incentives, paradigms, and mindsets are powerful approaches to enact change
· These powerful tools are specifically useful for optimizing the vast sub-systems across Strategic Alliances and Partnerships

The book Thinking in Systems: A Primer had been on my reading list for a long time. It’s a part of Pariveda’s unofficial canon of reading materials, and you‘ll find a copy in every one of our offices across North America.

Let’s be honest, the title itself sounds marginally more interesting than watching paint dry. I had expected it to be dense and overly abstract. However, the reality is that it was a digestible read that leverages visuals to explain complicated subjects.

Thinking in Systems: A Primer was originally written by Donella (Dana) H. Meadows within the MIT Systems Dynamics Group. Born in Elgin, Ill., she graduated from Carleton College in Minnesota in 1963, received a doctorate in biophysics from Harvard University in 1968, and is cited as a a top Sustainability thinker by the Post Growth Institute. Meadows illustrates the fundamental concepts in a non-technical fashion by detailing perhaps the most complex, global systems that we know of. She inspects the interplay of population health, pandemics, drug development, addiction, and the spread of disease. She also uses a systems lens to pose some heavy “what if” questions about the dynamics of politics, oil consumption, global economics, and of course sustainability.

At Pariveda “Systems Thinking” is a core to what it means to be an Architect. It represents the competency to discover, break down, arrange, design and manipulate components and dependencies. Projecting forward to the end of this article, my day-to-day focus is to lead our alliances & ecosystems. This arena is far more bounded and straightforward than the above metasystems that Meadows focuses on. However, she created some fantastic tools that we’ve used to shape our approach here at Pariveda.

In the following article, I’ll lay out Meadows’ core concepts, define the systems in play, and share some results about how we hunt for Leverage Points to improve our Partnerships. The set of systems which I’ll reference in this article consists of generally five primary enterprise sub-systems in the world of services and consulting — Marketing, Sales, Project Delivery, Solutions & Offers (Product), and Talent Development. In the wild, most alliances & partnerships focus is on the Marketing / Sales / Product trifecta. For this article I decided to switch it up a bit and shine a light specifically on the interplay within Talent Development through Certification Programs. For the most part, Software / SaaS Companies do not participate broadly in Certification programs. Instead, they create them! On the flip side, Agencies / Consulting / Systems Integrators are often the biggest participants. Hence, these are undoubtedly a core focus for us and we believe they are a differentiator for us in how quickly and effectively we can grow and deploy the highest-caliber talent for our customers at scale. So, throughout this article you’ll see me refer to Pariveda’s Certification systems as the primary example. However, I encourage you to apply these concepts to whatever systems you primarily operate in or own.

Core Concepts (Stocks, Flows, Delays, and Constraints)

All of these resources — originally created by Meadows — are available over at https://donellameadows.org/.

Stocks and Flows are the foundation of any system. Stocks are the elements of the system that you can see, feel, count, or measure at any given point in time. The most common examples are typically water in a bathtub or the temperature in a room. Differently, a Flow is something either tangible or intangible that changes over time by coming into or leaving a Stock. In the bathtub example, it would be the inflow of water from the faucet or the outflow through the drain.

An applied example of Stocks and Flows is how we manage Partner Certifications and Learning Programs. These are validated achievements that individuals study for and earn by passing exams for Microsoft Expert DevOps Certification, or an AWS Certified Cloud Practitioner.

Certified, knowledgeable teams are the lifeblood of our ability to design and build software systems for our clients and are generally table stakes for a strategic alliance. Firstly, our employees see Certifications as an opportunity for personal growth and learning. Our clients also demand these deep skillsets from us as architects, implementers, and advisors. So, you can imagine this is something we pay close attention to and monitor to make sure we have the right balance of supply and demand. The two main inflows of this type of Stock are experienced hires with existing certifications, and net-new certifications that employees study for and earn.

On first pass, this should seem straightforward with predictable behaviors… and that’s true. However, complexity arises because of scale and magnitude. Certifications come in different tiers and difficulties, which require different training plans. A more realistic look at how you would measure Certification Stock might look like this, representing multiple practices and multiple categories.

Now, I wish I could snap my fingers and have folks learn as fast as Neo learns kung fu in The Matrix. But this is where Constraints and Delays come into play. Constraints are simply limitations, either virtual or physical, like warehouse space. With Certifications, for example, we will never have more Certifications than the number of employees. This may seem inconsequential. However, technology companies will often create what are called “precious metals” Bronze / Silver / Gold programs to tier partners in terms of their depth of capability. They will require a minimum number of obtained Certifications (sometimes 25+ Certifications for the highest tier). This becomes a bigger challenge for smaller / niche partners.

Slightly different, Delays are also critical determinants of system behavior. For our ongoing example, it takes much longer to study for and pass an exam for a Professional-grade Certification than an introductory exam like the Cloud Practitioner. An introductory Certification like the AWS Cloud Practitioner can be passed after about 20 hours of self-study. However, achieving a Professional Certification can take years, and requires hands-on experience. No doubt this is again easy to recognize, but it makes planning and forecasting surprisingly more complicated with diverse skillsets.

There are many scenarios where inserting and controlling Delays can be a huge benefit to the overall System by preventing overcompensation and knee-jerk reactions. This is particularly true with phenomena like the bull-whip effect, a challenge within inventory and supply planning where there can be wide, inefficient swings in inventory based on delays in demand / forecast signals.

Go figure that Jay Forrester, the founder of systems dynamics, was also at MIT Sloan and the Systems Dynamics Group. He coined this term and was a significant influence on Meadows as a mentor. Small world!

Here’s a visualization of Pariveda’s internal training plans we’ve created to guide employees through these different learning journeys. As you can see, there is a wide range in time / effort to complete different Certifications, which needs to be accounted for when planning for the appropriate threshold of Certified individuals we should strive for at any given time. While it may not be applicable to Certifications, the notion of intentional Delays by design is a fascinating concept.

But even with training plans defined, what is the correct / appropriate amount of Certifications (Stock) we should have? How often should we even measure it? How should we define what an appropriate threshold of Stock is, in this case for Certifications? Welcome to 200-level Systems Thinking, where Feedback Loops and Leverage Points come into play.

Feedback Loops

According to Meadows, a Feedback Loop is a closed chain of causal connections from a Stock through a set of decisions, rules, physical laws, or actions that are dependent on the level of stock, and back again through a Flow to change the Stock. Recognizing a Feedback Loop would look something like this, where we are comparing our desired Certification Stock with the actual Stock, recognizing the Discrepancy from our Goal, and doing something to create an inflow of new Certifications.

This is an example of a Stabilizing / Balancing Feedback Loop. This type is goal-seeking or stability-seeking. It takes a constant effort or grind to monitor outflows and manage the inflows of our Stock of Certifications. In this case, the Stock can either go to 0 Certifications, or to its Constraint (the total number of employees). This contrasts with a Runaway / Reinforcing Feedback Loop which is self-enhancing, leading to exponential growth or to runaway collapse over time. This type of feedback loop is found whenever a Stock has the capacity to reinforce or reproduce itself. If only Certifications gained momentum like a ball rolling down a hill, or were as contagious as a cold!

Zooming out, our Goal for Certification Stock is dynamic, which changes over time based on multiple inputs which could be internal, external, or both. There is no right answer, but an example is that an ideal Stock level could be informed by Sales Projections / Demand for a specific set of skills. We could also inform this Feedback Loop with external market forces or intel about the competitive landscape. The possibilities are virtually endless, but the important thing is to keep it simple. We could inadvertently create a Rube Goldberg-esque system with too much overhead and intricate Feedback Loops.

Another great question to ask is, how often should we measure against this Feedback Loop? It all depends on the dynamics of the system. Measuring Certification Stock on an hourly or daily basis is probably overkill and a waste of time. However, if we only measure Certifications every month or quarter, we might not have enough time to react because of the Delays present in Training Plans! A key takeaway is that there is no silver bullet here, and it depends on intimately understanding the dynamics and principles in play within our systems and sub-systems. For example, if we are monitoring the Stocks and Flows of Marketing activity such as Impressions, Clicks, and MQLs… we will certainly take a vastly different approach.

Hunting for Leverage Points

This next part is my favorite. Now that we understand the nuts and bolts of Stocks, Flows, and Feedback Loops… there is one last concept to make note of, Leverage Points. Instead of just defining an existing system, leverage points are the tools we have to tinker with and change systems. More specifically, Leverage Points are approaches to intervene in a system so that we can optimize for the outcomes we want while minimizing unintended consequences or byproducts. Meadows argues that there are twelve archetypal ways to intervene in any system through leverage points. There is some language here that I haven’t covered, and may seem less relevant to Partnerships. Keep in mind that while we are learning about these tools for the purposes of improving Partnerships, the original systems lens comes from global metasystems like ecology, population health and global politics. However, give it a read:

Places to Intervene in a System

(in increasing order of effectiveness)

12. Constants, parameters, numbers (such as subsidies, taxes, standards).
11. The sizes of buffers and other stabilizing Stocks, relative to their Flows.
10. The structure of material Stocks and Flows (such as transport networks, population age structures).
9. The lengths of delays, relative to the rate of system change.
8. The strength of negative Feedback Loops, relative to the impacts they are trying to correct against.
7. The gain around driving positive Feedback Loops.
6. The structure of information flows (who does and does not have access to information).
5. The rules of the system (such as incentives, punishments, constraints).
4. The power to add, change, evolve, or self-organize system structure.
3. The goals of the system.
2. The mindset or paradigm out of which the system — its goals, structure, rules, delays, parameters — arises.
1. The power to transcend paradigms.

Boom. Apparently as the story goes, Meadows simply walked up to a whiteboard one day and wrote all this down as a brain dump. Absolutely brilliant thinking. Certainly there is plenty to consider in terms of the “how” do we safely experiment and implement these changes through mechanisms like A/B testing, rollout plans, communication strategies, etc. However, there is so much goodness here to absorb here with the actual “what” side of things.

Taking this a step further, it seems these Leverage Points actually fall neatly into a hierarchy of component-level, sub-system, and systematic approaches.

What’s a better name… A Hierarchy of Leverage Points, or Porter’s Partnership Pyramid of Greatness? I see you Ron Swanson… ;)

In all seriousness, I recommend giving Meadows’ full article on Leverage Points a read for more details. Frankly, there is so much more to this topic. When is a given Leverage Point most appropriate for a scenario? How do we hunt for the best opportunities to apply a Leverage Point? In my mind it’s far more art than science. To round out this article, I’ll make a few comments on the successes we’ve had with a few specific types of leverage points, specifically information flows, goals, mindset shifts, and self-organization.

Information Flows — The Lowest Hanging Fruit

Information flows are the structure of who does and does not have access to information. We found that we were inadvertently missing several key information flows that could have been driving visibility and behavior change with respect to our Certification systems, with minimal effort. So, we focused on a handful of key personas and communication strategies:

Geographical Leadership — Our offices across North America are competitive. When we started showing a simple Certification Report by Office, we found that this immediately drove buy-in from the top down through project leads, mentors, and local Champions who stepped up to help us drive the effort with their presence.

Peer Groups — Peer study groups became a tremendous way for us to instill accountability and get more people through training programs efficiently. A key information flow we created was to give our folks access to a directory of ongoing study groups, target exam dates, and upcoming partner-led trainings. These have been critical momentum builders for our Certification Stock.

In addition, FOMO is a big driver of behaviors. So, we use information flows to our advantage here as well. We give every newly Certified individual the spotlight to share their unique perspective on what motivated them to get Certified, share something new they learned, and how they plan to use their new knowledge in the future. This new information flow not only fosters a culture of learning and celebration, but the proof is in the numbers. Certifications Earned are up 147% year-over-year by making our folks famous for their achievements.

Goals, Mindset Shifts, and Self Organization

Historically we used rewards like ~$500 to achieve a Certification. While we sometimes use these in a pinch, we saw a noticeable improvement when we de-emphasized this incentive and shifted the goals and mindset of our teams towards personal development, cameraderie, and recognition. Getting a Certification is not just a check-the-box effort. Instead, it is a part of your career growth, finding like-minded peers, and achieving your fullest potential.

By far, one of the most powerful forms of system design is to empower self-organization, which is the ability for a system to structure itself, create new structures, learn, diversify, and complexify. With the right metrics defined and information flows established, self-organization promises to help us evolve to the next level. I’ve seen smaller Certification study groups splinter off to focus on Security, Machine Learning, and cross over into new solutions / offer development. The challenge here is maintaining Feedback Loops, and harvesting the lessons learned.

Conclusion — A Fundamental Mindset Shift is Already Underway in Partnerships

It goes without saying that there is so much more to Systems Thinking than this brief article, but hopefully this quick overview of Stocks, Flows, Feedback Loops, and Leverage Points gives you a starting point with tools that can improve Partnerships across not just training / talent development, but also product, marketing, sales, and customer success.

Much of this is already happening though. For example, we are seeing organizations like Crossbeam and WorkSpan reduce Delays and unlock sophisticated Information Flows of Stocks like Accounts, Prospects, MQLs, and Opportunities between companies. The rules are changing too, with sales and customer success executives given goals and directly incentivized to work more closely with partners of different types.

However, most importantly there is already a fundamental Mindset / Paradigm shift happening in Partnerships. Nobody embodies this voice more than the folks at PartnerHacker. Look no further than their PartnerHacker principles of “The First Giver Wins,” “Build Radical Generosity into your Culture,” and of course “Trust is the New Data.” These are fundamental paradigm shifts within the partner community that clearly favor the collective over the individual. This is all happening through a very-fast growing, and self-organizing community of partnership professionals.

With that in mind… happy hunting for the Leverage Points in your own Partnership Systems! I’d love to hear about which ones you find, and the impact you’re able to drive.

Thank you to Emma Ascolese for the editorial support!

Any Frankie Valli and the Four Seasons fans out there? I sure hope so, otherwise this article might fall flat 🎵. I had their Greatest Hits on shuffle after seeing Jersey Boys (the Broadway musical). Then, I realized that they’re the perfect inspiration for this quick walk-up article I’ve meant to write as my colleagues, clients and I prepare for AWS re:Invent later this December. Cue the music, here’s a quick trip down memory lane with my highlights from re:Invent 2021, hopes and predictions for 2022, and four tips for a great experience if you’ll also be there in person.

🎤 December… Oh What a Night!

If you haven’t been, re:Invent is AWS’ marquee cloud and technology conference, hosted in Las Vegas during the first week in December after Thanksgiving. This show sells out with 50k+ attendees, and sessions are spread across Wynn / Encore, Venetian / Palazzo, Caesars Forum, Mandalay Bay, and MGM Grand. Booked as a true learning conference, this will be the 11th re:Invent. Is it too early for a greatest hits album?

🎤Just too good to be true… a recap of 2021

The list of AWS product announcements last year was longer than the Four Season’s list of chart toppers. Announcements like the release of Amazon Redshift Serverless (intended to go after Snowflake) and major improvements to AWS Lake Formation caught our attention. However, two announcements resonated the most; the AWS Energy Competency, and addition of the Sustainability Pillar to the Well-Architected Framework.

Pariveda is a 2021 Launch Partner for the AWS Energy Competency

Last year, we at Pariveda were honored to be a Launch Partner for the AWS Energy Competency, reflective of AWS’ continued focus on industry solutions through their Competency program. We were honored to also receive the Global Partner Award for Best Energy Solution for our strategic collaboration with AWS and ExxonMobil.

Pictured above — Pariveda Vice President and Energy industry lead, Alan Henson, discusses the importance behind this achievement, and what’s next in the industry. Or, is he doing is best Frankie Valli falsetto?

🎤“Sustainnn…sustainabil-ity baby!” (to the tune of Sherry)

AWS adds a sixth pillar to the Well-Architected Framework, Sustainability.

Werner Vogels (CTO) posed an interesting thought during his keynote on last year: what would the environmental impact be if organizations intentionally designed applications to throttle compute and latency of non-critical applications to reduce energy consumption? This opens up completely new architectural considerations and design considerations. I’m happy to see AWS as a lead voice here and I’m eager to see how this evolves in 2022.

Eyes on the AWS Partner Program in 2022

In 2021, the AWS Partner Network hit a major milestone with 100,000 partners registered globally with their ecosystem, which deserves some major recognition. By the way, Pariveda is proud to be one of the one-hundred chart-topping Premier Tier partners.

Since last year, both Doug Yeum and Sandy Carter (Public Sector) moved on from the senior leadership team. Ruba Borno (now of VP Worldwide Channels & Alliances) has been at the helm for the past year. She brings a diverse background from Cisco and Boston Consulting Group. Reading the tea leaves, my impression is that Ruba will reinforce the newly launched AWS Partner Paths that have clarified the ecosystem design. I suspect there will be focus on distribution, software, and hardware which represent the easiest scaling mechanisms.

🎤“I’m beggin’ you / Beggin’ you / Show some lovin’ to the Training Partners!”

However, I would like to see a focus on addressing the cloud skills gap through AWS Training Partners. AWS has an opportunity to clarify the urgency of this shortage and — according to Gartner — mitigate the risk of a “systematic back-off from cloud ambitions” and the reality that “late adopters may simply not be able to generate enough internal competence to even safely and successfully use outsourced assistance.” As a Services Partner, we have an untapped opportunity to partner up in this space to streamline training and enablement. But, that vision is not fully clear from AWS yet. They will need to turn the mics up in order to get this moving. I am also certainly an advocate for showing more love to services partners.

In terms of product launches, I’m keeping a close eye on Amazon HealthLake. While Originally announced in 2021, it is intended to reduce complexity around storage, transformation and querying of health data. Our teams have recently been working on a POC using this tool. You’ll find me at Brian and Sridhar’s hands-on Workshop on Wednesday.

Lastly, here are some tips for getting the most out of your investment in learning and networking at re:Invent.

My tips for a successful experience

1. The Certification Lounge is the secret track
   Make a point to be in person for the main Tuesday keynote (to be delivered by Adam Selipsky). However, I prefer to start my Wednesday and Thursday from the Certification Lounge. They hand out headsets “silent disco” style for the Keynotes, and broadcast video from the TVs. Plus, they keep the Lounge stocked with breakfast pastries, yogurt, coffee, and juice. It goes without saying that you need to have a backstage pass (aka AWS Certification) to come in.

2. B-Sides: Avoid sponsored sessions and anything below a 200-level.
I prefer to invest in a little prep / research ahead of time and go for the deep cuts in terms of sessions. Advanced session speakers (300–400 level) will often give you enough context in the first few minutes to orient yourself, even if you’re unfamiliar with the topic. As for sponsored sessions, hit the skip button. Instead, set up a personal appointment at that vendor’s booth over in the Sands Expo Hall (aka VIP treatment).

3. Don’t be a solo act; buddy up.
Huge conferences like AWS re:Invent are chaotic and overwhelming but can be missed opportunities to build valuable connections if you don’t plan ahead, and open yourself up to meeting new people. Whether it’s pairing up with coworkers, clients, or introducing yourself to someone at your sessions…you’ll have a much better week by sharing the experience with others.

4. Add Microsoft OneNote Document Capture to your mixtape
It’s an oldie but a goodie, the Microsoft OneNote app has a killer feature that automatically crops and adjusts pictures of slides. Document Capture is great for getting readable photos of slides during sessions, so you can capture all the great content even from the back of the room.

Want to meet up at re:Invent 2022?

Or want to karaoke battle? Shoot me a note on LinkedIn. This year I’m focused on AWS Spatial Computing / IoT / Digital Twins, nailing down our AWS Marketplace strategy, and navigating upcoming changes to APN Partner Programs. My company, Pariveda is also hosting meet-ups throughout the week, including our annual TopGolf event.

It‘s that rad 90s throwback style, no doubt.

Originally published in 1996, The Death of Competition: Leadership and Strategy in the Age of Business Ecosystems written by James F. Moore, was one of the first books I could find that detailed the emergence of B2B collaboration, particularly in the high-tech, telecommunications, and pharmaceutical industries. Ecosystems have been an incredibly hot topic over the last few years, and a lot of that conversation is happening over at PartnerHacker. For example, we have now have Chief Ecosystem Officers, and partner ecosystems are being elevated to the boardroom.

So, I was curious to see how perspectives on business ecosystems have changed over the decades… and if it’s finally time to bring back cargo pants. Sidebar, I’m obsessed with the PH T-shirt, and wore it for about three-days while on vacation getting through this read. Not pictured: bucket hat.

In this quick (yet academic) read, the fundamental argument is that the nature of competition has shifted from rivalry between companies, to rivalry between ecosystems. You need to pick one, or lead one. Moore observes that most business failures result from an organizations inability to sufficiently “co-evolve” within the surrounding business, social, and regulatory environment. This stems from a lack of strategic collaboration between vendors, suppliers, and adjacent market leaders. It’s quite the statement and I think it continues to resonate today.

For business ecosystems, he witnesses a four-stage, cyclical growth model.

Pioneering > Expansion > Authority > Renewal

Throughout these stages, the primary activities, value drivers, cooperative challenges, and competitive challenges change throughout the cycle. This mandates the ecosystem leader will need to consistently shift their strategy and resourcing in order to succeed. The interesting aspect is that there is clear evidence that ecosystems are progressing through stages at faster and faster rates, which presents an even bigger challenge.

Perhaps my favorite aspect of this book is that it starts off with an ecological metaphor, explaining that there are two predominant styles of an ecosystem; Hawaiian and Costa Rican. Both are beautiful, tropical paradises of erupting volcanoes and ecological diversity.

However, Hawaii consists of a remote, yet isolated ecosystem. Intricate co-evolution continues to drive progress but it’s extremely fragile because it’s susceptible to new entrants which may threaten to dominate the existing, defenseless landscape if they are not able to (or interested in) cohabitating.

Differently, Costa Rica’s ecological system has witnessed a constant onslaught of new invasive species from the North and South America for nearly three million years. This ecosystem sits squarely on a land bridge, in the crossroads of two massive continents. Because it has been forced to adapt and change, this ecosystem has proven to be much more robust and resilient. A great example of this in action is how Costa Rica’s Conservation Portfolio has been able to successfully Lower Deforestation, Protect Primates, and Increase Community Participation.

Moore ultimately argues that the same principles apply to businesses. Long-term sustainability and competitive advantage arise from the ecosystem’s ability to maintain open boundaries, facilitate learning and knowledge sharing, but also adapt to the challenges from new entrants.

The book wraps up by making the statement that ecosystem leaders must create a framework participation that encourages and provides structure for diverse, unexpected activity within the economic community. I love this concept of the Open Ecosystem Participation Framework. How fast an ecosystem incorporates new contributions is a function of the openness of the framework for contribution — and of how many new contributors have the motivation and ability to join up. I do wish Moore provided a more concrete explanation and a solid visual for it, but that certainly leaves space for us to invest time and creativity to build this out.

Overall, it’s a solid read that is packed with tools and frameworks that are still applicable today. However, the reality is that we are in a brave new world where the rate of change is accelerating and switching costs are plummeting as technology continues to advance. Jay McBain (the Godfather of Ecosystems) does an unparalleled job summarizing where we’ve come and where we’re going on the technology front. His epoch is roughly the year 2000, which ushered in the decade of direct sales via CRM. In 2010, we entered the decade of direct marketing. Today (2022), it’s the early innings of the decade of ecosystems where we are optimizing against the importance of partners and indirect influence. I think these are very impactful developments that have undoubtedly shaped the very nature of how business ecosystems will operate in the future. With that, a few big questions come to mind:

— Am I participating in a Hawaiian or a Costa Rican ecosystem?
 — How are best practices for Pioneering and Expanding an ecosystem different today than 1996 and what can we learn?
 — What should a modernized Open Ecosystem Participation Framework look like?
— Most importantly… seriously when are cargo pants coming back?

Check out more of my perspectives over at PartnerHacker.

Key Points:

· Misaligned accountabilities and incentives cause internal and external tensions in partnerships
· There is upside in addressing this for customer success / retention and product positioning
· Effective programs capitalize on complementary elements and mitigate conflicting structures of these two dichotomous business models

Unsurprisingly, when you launch a partnership, you’re immediately faced with a two-front battle of influence internally and externally. Looking at the external dynamics (i.e., B2B), perhaps the most significant challenge is to meaningfully address and communicate a core value proposition for the partnership that fits both the SaaS and Services firm. In plain English, that’s the “what’s in it for me and why work with you?” moment.

Examining Complements and Conflicts

I was first introduced to the Business Model Canvas as an Associate here at Pariveda. I took an internal course called Strategic Thinking, led by Susan Paul, one of our Managing Vice Presidents in Dallas. To this day, I continue to reference and adapt this framework, which is a particularly fitting tool to help examine partnerships.

One of the most straightforward ways to get to the root of potential value-add is to simply look at which elements of the business models have synergies, and which do not. For this exercise, I took a subset of the canvas and compared the two archetypal business models for a SaaS Company and a Services Firm.

My observation is that the strongest complements exist between SaaS Companies and Services Firms within Value Proposition, Key Activities and how Customer Relationships are approached.

Looking at Customer Relationships are handles, SaaS Companies are often good at building strong communities, robust documentation, and driving scalable self-service behaviors for their core Personas. Differently, Services Firms are typically good at nurturing long-term, trust directly with individual end-customers who reward them with repeat business. This is a great example of where complementary strengths can be leveraged through a partnership to meet the varied needs of customers depending on the circumstances.

Another great example of complementary strengths is in Key Activities. Successful SaaS companies will thrive if they nail product development (PLC) and network management, enabling them to continuously innovate and release new features to address broad customer needs. Services Firms are often good at digging into customer-specific problems. For example, determining what integrations or configurations should be used, how to restructure accountabilities, or map out what existing cross-functional processes might need to change.

On the other hand, revenue streams and cost structures are significantly different between the two organizations. These differences shape much of the core operations, and the mindset buyers take in rationalizing investment. For example, SaaS companies naturally reap exponential economies of scale. There is no such thing in the Services world, which is more linear. If not mitigated through the partnership model, the discrepancies here can be a major problem.

Overall, this is not an exhaustive comparison, but I want to illustrate that we need to look critically at the business models to align partnerships to value for the partners and, ultimately, the customer. A common pitfall I see in early conversations with potential partners is a tendency to dive right into account mapping. Tools that I use (like Crossbeam) make account mapping simple and secure. However, we won’t be able to build a foundation of trust without a clear value-add for mutual customers, an understanding of the complementary strengths, and recognition of inherent conflicts. The partnership is too often doomed from the start, and client introductions will rarely happen.

Understanding the Trust Equation for Services Firms

Another incredibly important angle is the aspect of trust, which is at the core of advisory work such as Professional Services. A time-tested framework that I really like is the Trust Equation. This comes from the book The Trusted Advisor by Maister, Green and Galford.

Effective partnerships with Services Firms must fill the need for credibility, reliability, intimacy and self-orientation.

Trust Questions

· How do I demonstrate that I am credible enough on this subject and solution?
· How do I ensure that the solution is reliable and does what I say it does?
· How can I give my customers a sense of safety and confidentiality?\
· How do I prove that I am truly focused on the client and not my own selfish objectives or appearances?

Couple the trust questions with the questions regarding the value proposition for the partnership:

Core Partner Value Proposition Questions

· What is the market demand for the product and partnership?
· What potential services revenue exists for me?
· How much utilization will it cost to upskill a practice?
· What current skill sets or practices will I need to displace?

If aligning business models and establishing trust weren’t enough, by creating a competing sales channel, partnerships also need to address internal tensions that arise within the software company itself. You’re essentially instigating a battle with the direct sales team by adding more stakeholders to coordinate (or compete) with. These conflicts threaten to complicate deals, flare up attribution battles and jeopardize your sales team’s ability to hit on-target earnings. Not to mention, new attributes in CRM, extended processes and administrative overhead risk slowing Sales reps down and making them less productive.

Below is a handful of the most common concerns internally:

· What if I was already talking to that client?
· Why should partnerships be my job?
· What if the partner boxes me out, slows me down, or blows up my deal?
· Why should I trust a partner to know our product better than me?
· How do I even work with a partner?

Standing up a referral program for Services Firms generally fail to address any of these questions, conflicts, or complementary strengths.

Recognizing the Cost of Services Gaps

So, this all seems like a whole lot of work, so why bother in the first place? If not to draw out referrals, why does strategically aligning with Services Firms even matter then? Because this Service Gap causes churn. According to Bain & Company, a customer is four times more likely to defect to a competitor if the problem is service-related than price- or product-related.

Price isn’t the main reason for customer churn, it’s due to the overall poor quality of customer service.
– Accenture Global CSR

A customer is 4 times more likely to defect to a competitor if the problem is service-related than price- or product-related.
– Bain & Company

For every customer complaint there are 26 other unhappy customers who have remained silent
–Lee Resource.

Reference
Reference: Customer Service and Satisfaction Statistics for 2020

Furthermore, Defaqto Research finds that 55% of customers would pay extra to guarantee better service. This means that by addressing the Service Gap we can reduce churn, drive topline revenue and unlock a scaling mechanism for the most un-scalable resource-intensive component of the SaaS business model: customer success and professional services.

55% of customers would pay extra to guarantee better service
– Defaqto research.

Americans will pay 17% more to do business with firms with great reputations when it comes to customer service.
– American Express

67% of consumers and 74% of business buyers say they’ll pay more for a great experience.
 — Salesforce

Some immediate questions come to mind for how to quantify the cost of a Services Gap:

· How much churn could I eliminate through Services Partners?
· How can Services Partners help improve retention and scale adoption?
· How will Services Partners help me improve my NPS?
· How can I elevate pricing and positioning through Services Partners?

Focus on the Whole Product

The bigger picture is that a Services Gap is typically a symptom of incomplete focus on the Whole Product, a widely known concept described in Geoffrey A. Moore’s Crossing the Chasm. Moore shines a light on the holistic needs surrounding a generic product, such as training, support, standards, procedures and integration. Failing to deliver a Whole Product often leads to disillusionment and eroded customer relationships.

Services Firms may be a viable solution to address these broader, non-core needs that your customers have. In the final article of this series, I’ll lay out my approach for how to take action, by assessing, design, and managing partnerships through a product-led approach.

Next up:

Part 3: A Better Model for Services and SaaS Collaboration

Revisit Part 1:

Part 1: Designing SaaS Programs to Scale Customer Success through Services Partnerships

Key points:

· Today’s state of SaaS and Services collaboration (i.e., Partnerships) is sparse and unexplored
· Simplistic referral paradigms dominate this landscape but do not sufficiently address the mutual needs of partners and customers
· A product-centric engagement model may be more effective solution to develop higher-order partner ecosystems

The average company uses 137 SaaS products, and it’s safe to say that the Services and SaaS markets are massive.

The SaaS industry is expected to reach a value of $171.8 Billion in 2022. On the flip side, the Consulting industry is no drop in the bucket either, estimated at $132 Billion. Those are both incredible numbers. With two massive markets in mind, how can we design better, higher-order partnerships between Services (Consulting / Agencies / Systems Integrators) and SaaS to ultimately add more value for our customers?

Fundamentally, we’re trying to establish more cohesion between two opposite business models. On one side, the SaaS landscape is highly distributed and decentralized. The average company uses 137 SaaS products, and there is at times 30% churn year-over-year.

Product Strategy within SaaS creates value for customers by specializing in solving a specific problem, typically a horizontal or vertical focused use case. The ability to incorporate feedback through learning loops and market research into product development becomes a competitive advantage for the product. This pairs well with cost reduction through economies of scale, streamlined purchasing, and the beauty of network effects cultivated through influence and community management.

On the other side, the Services and Consulting industry tends to take a distinctly high-touch, case-by-case approach to solving problems for their customers. While repeatability and streamlined operations are critical, the reality is that most Services Firms are best at assessing the unique circumstances that each of their customers finds themselves in, defining a plan, and building a solution to address the need. While I‘m not aware of concrete numbers, based on experience I’d guess that the average company works with a much smaller handful of management consulting, IT, managed services, and staffing firms which is starkly more consolidated than SaaS. This is likely because the switching costs are so high, and there’s a risk of losing rich contextual knowledge that takes time to establish.

With such vastly different models generating so much value for themselves, it is my firm belief that we are only at the beginning of a significant shift in best practices for how these two organizational archetypes work together. I’d be remiss not to mention the strategies in play across massive ecosystem players like Salesforce, Microsoft, and AWS. There is plenty to discuss around how these global companies grew their ecosystems, but we’ll save that for another series. I am more focused on the more pure-play SaaS market (sometimes called ISVs or product-led), where there is an opportunity to deploy more sophisticated partnership practices earlier in the lifecycle.

So, what types of partnership practices do we see today?

Today, the data shows that SaaS companies over-index on building referral channels out of all partners, not just Services Firms. Crossbeam’s 2020 State of the Partner Ecosystem Report indicates that 88% of organizations leverage a percentage of the sale as an incentive, followed by 41% offering discounts on their product.

Full Crossbeam report available here.

My experiences, for the most part, mirror this as well. In their simplest form, conversations are typically something like, “If you’re willing to introduce me to your clients and we close a deal together, I’ll give you a slice of my subscription for the first year.”

This isn’t necessarily a bad thing for all organizations. Mobilizing a referral army and opening distribution channels to drive top-of-funnel demand is undoubtedly critical in many scenarios, which makes none of this unexpected or unreasonable. However, in most cases a referral incentive is unfortunately not a very compelling offer and won’t gain traction with most Services Firms. This is because Services Firms are preoccupied with their own primary revenue streams and maintaining client trust. Most prospective partners in this segment simply don’t see enough value in the incentives. The cost of participation outweighs the benefits, or the referral incentive represents a conflict of interest. The problem is exacerbated when Software / SaaS organizations look at Services partners to fill their pipeline but have not truly established a solid product-market fit through their direct sales teams.

Overlooked Services partnerships are particularly a weakness for SaaS companies selling complex solutions. Things like APIs, new domain-specific languages, altered processes, and consumption-based billing /cost management quickly become an adoption and change management hurdle for end customers. This is the subset of what we call “High Growth / High Solution Complexity” SaaS companies, where we see the most opportunity to evolve past simplistic referral paradigms to truly provide the services and support that end-customers demand at scale.

Examining the dichotomy

We need to understand this Services / SaaS dichotomy more deeply. Throughout a series of articles, we’ll examine the tensions between the SaaS business model versus Services models. We’ll dig into unexplored synergies and address fundamental tensions to better align success. Ultimately, we’ll challenge established roles, accountabilities, organizational structures, processes and incentives to re-design a better approach.

Shaping the future of partnerships

The reality is that healthy partner ecosystems contain a variety of partners and accommodate different business models with competing priorities. Particularly in the context above, partnerships have a significant opportunity to diversify beyond the traditional affiliate and referral paradigms led by the marketing and sales organizations. We firmly believe that the future of partnerships spans across all of Enterprise Architecture. It is anchored in not just the Sales pipeline or even the Customer Journey but also core value streams that overlay the Product Lifecycle, Human Capital Management, Vendor and Supplier Management, etc.

Next Up:

Part 2: The Dichotomy Between Services and SaaS
Part 3: A Better Model for Services and SaaS Collaboration

This article was originally published on Pariveda’s website here.