The Subscription Economy Group of Death

By Aarthi Rayapura June 12, 2014

Group of Death

 

Gabe

 

 

Gabe Weisert

Content Marketing Manager

 

The United States is doomed. At least as far as the World Cup is concerned. Their three opponents in Group G are Ghana, Portugal and Germany. This is the Group of Death.

 

If you’re a casual soccer fan and the Ghana game strikes you as a possible win, note that they have eliminated the United States in the last two World Cups. Throw in a ridiculous 9,000 mile travel schedule, the worst of any team in the tournament, and the chances for the USMNT making it out of the knockout round are minimal at best.

 

What represents the Group of Death in the Subscription Economy? Judging from the discussion at last week’s Subscribed Conference, it’s the multi-headed monster of organizational bias.

 

A recurring theme from this year’s conference was that institutional inertia is one of the biggest threats to companies trying to reinvent their business models. People are people. Sunk costs lead to deeply embedded biases against change. If it’s not broke, why fix it? Witness the persistence of Outlook.

 

To paraphrase David Wadhwani, SVP of Adobe, “I found no lack of clear explanations as to why a move in any direction would cost me twenty million dollars.”

 

Here’s the Subscription Economy Group of Death:

 

Marketing likes the idea of cheaper costs and quicker installations, but has no concrete pricing and packaging plan, and can’t communicate downstream. A product story is fairly straightforward, but what does a product over time story look like?

 

Finance is risk averse by nature, and has no interest in handing over the keys to the safe. Comprehensive revenue overhaul sounds about as much fun as open-heart surgery.

 

IT spends half its time keeping the lights on, and the other half shopping for light bulbs, and is still suffering from PTSD from the last “turn-key solution.”

 

Sales sees its up-front commissions dropping off a cliff and freaks out accordingly.

 

But attitudes are shifting. As Mark Fields, the CTO of Thermo Fisher noted, in many cases it’s not the departments that are asking to move away from legacy systems, it’s management. The question of “How do we move to the cloud?” is becoming secondary to “How do we change our business?”

 

Marketing teams are becoming much more sophisticated about establishing value-based pricing tiers. IT and operations understand that they don’t have to throw out their legacy systems entirely, they just have to augment them. Finance groups are finding value in predictable, long-term recurring revenue. Sales teams are getting used to the idea of gradual growth versus quick bumps.

 

Hope springs eternal. Go USA.

 

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