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Reseller business model transformation pivots on cultural change
MNJ Technologies, a once fast-growing VAR, found its sales were stagnating. Here's how it got back on track with its effort to push beyond the reseller business model.
It's rare that a channel partner doesn't embark on a business model transformation at some point -- it goes with the territory.
MNJ Technologies Direct, based in the Chicago suburb of Buffalo Grove, Ill., fits the pattern of a partner in transition. The company, founded in 2002 as a traditional value-added reseller (VAR), grew rapidly for a number of years. But by the mid-2010s, hardware commoditization, shrinking margins and new IT buying patterns caught up with MNJ. Sales slowed and then plateaued.
MNJ's principals, President Sue Kozak and COO Paul Kozak, looked outside the company for new ideas to reinvigorate growth. To that end, the company hired Ben Niernberg in April 2017.
Niernberg had previously directed business development at a real estate title insurance company and managed sales strategies for Canon Business Solutions in the Chicago area. While something of an outsider when it came to VARs and IT services, Niernberg had experience with turnarounds.
Niernberg, now senior vice president at MNJ, helped institute a program of cultural change at MNJ that has already produced results: commodity hardware sales grew 8% year over year in 2018, while services grew in excess of 20%. For 2019, Niernberg said he anticipates at least 10% growth in MNJ's hardware business and is looking at 45% growth in services.
How did MNJ kick-start its reseller business model transformation and reinvigorate growth? Niernberg pointed to a few key steps.
Start with the sales team
MNJ's vision is to transcend its transactional IT supplier origins to become a trusted advisor that can address customers' business challenges rather than sell a box. But that business conversation proved to be a stretch for salespeople more accustomed to talking about technology and pricing. So Niernberg retrained the sales organization, educating them on the types of conversations they needed to have with prospective clients.
"You can't tell [salespeople] to have financial and business discussions if they don't know the difference between a P&L [profit and loss] and a balance sheet," he said.
Focus on cultural change
Saying you're a company that solves business problems is one thing, but making that statement a reality is quite another. Niernberg said the key is changing the climate and culture of the organization as a whole.
Ben Niernbergsenior vice president, MNJ Technologies
He said MNJ's cultural change project revolved around the theme of being the difference. That is, employees -- from forklift drivers in the warehouse to front-line salespeople -- are challenged to become change agents, whether they are resolving an internal conflict or addressing a customer's business problem.
But Niernberg said being the difference to a colleague or customer goes beyond problem solving. The approach extends to "being kind to each other, communicating in different ways and looking for ways to continue to improve" the company and the customer experience, he said.
Niernberg said communication has become a lost art as people hide behind email and texting.
To improve employee communication, MNJ brought in ImprovTalk, a company in the Chicago area that runs workshops on communications skills and team building. MNJ's workshop featured Jim Mecir, a former major leaguer turned corporate trainer who pitched for the Oakland A's during the 2002 Moneyball season.
Business model transformation advice
Niernberg acknowledges that MNJ's cultural shift is a work in progress and is continuously evolving. But he has some advice for channel partners working their way through a business model transformation.
Watch your speed
"The pace of change is just as important as the change itself," Niernberg said, attributing that sentiment to the late organizational guru Warren Bennis. "If the pivot is too quick, you can not only lose business, but people as well."
Instead, a company should pivot to the future while remembering what's keeping the lights on, he said.
Don't be afraid to fail
Try something new, determine whether it's working and, if it isn't, move on, Niernberg said.
Keep an open mind
Niernberg said companies in transition need to listen to smart people, from salespeople to customers to recent hires.
"Don't close yourself off to other suggestions or ideas," he said.
Move to edge computing
Part of MNJ's transition is "understanding the world lives at the edge now," Niernberg said. Edge computing presents customers with a range of bandwidth, security and reliability challenges, he noted.
Accordingly, MNJ now provides a managed SD-WAN offering and associated security services to address a growing need among its clients. Other service providers have also bought into SD-WAN as a managed service.
Connect the dots
Holistic selling is another aspect of business model transformation. MNJ offers a number of services, including network design, security assessments, cloud services, unified communications as a service (UCaaS), collaboration technology and desktop virtualization. Such offerings can become siloed, Niernberg said.
A recent MNJ sales meeting, however, emphasized how the company's services are all connected. For example, a salesperson starting a client with Microsoft Office 365 is encouraged to also ask about other aspects of the client's plans, such as its UCaaS strategy and security approach.
"It's not just a cloud strategy, a telephony or collaboration strategy," he said. "It's all tied together."