1 very simple question to radically improve performance.

1 very simple question to radically improve performance.

Do not ask who, ask why.

Piles have been written about changing culture as the means to improve performance.

Most of it misses the point.

Learning organisations, teams, mutual obligation, and all the rest, but when it comes down to it, the core is about people wanting to, being able to, and being acknowledged as doing a good, and worthwhile job.

It does not matter if you are the managing director, or the cleaner, both are there for a set of pretty common reasons, and high amongst them is to do a good job.
Nobody, not even the most militant and unreasonable ‘rabble-rouser’ ever went to work to do a bad job.

The task of the organisation is to organise to get the best, most cost efficient, most customer value specific job done and delivered, and in most cases that requires people.

Therefore the task of management, and everybody involved should be focussed on removing the impediments to getting that job done, and having an engaged and responsive work force that gets the job done better than  competitors.

Only then can you be commercially sustainable.

Years ago, (mid eighties) involved in the early production of a new dairy plant which amongst other products made yoghurt, we used to watch the huge waste bins being carted away, several a day, day after day, a seemingly  intractable set of quality problems was costing millions.

Even worse, the office and management staff could see the waste, and lost confidence and heart.

In the midst of the turmoil, I watched one day as bad product was being pumped out of the batching tanks into the system that mixed in the fruit components, and was then sent to the form & fill packaging machine to be packed, to be sent to the waste bin.

When I raced around to get the machine stopped before it was mixed with the fruit, I was told to nick off, the system could not be stopped mid stride, there was  no choice but to knowingly add substantial cost to a poor product that would cost us to throw out.

After some heated exchanges, the whole system was closed down, and I presided over an impromptu meeting I convened almost by force on the factory floor to figure out the cause of the problem. As I was the marketing and sales manager, this was theoretically way outside my formal jurisdiction, but I was the one taking all the customer calls about bad quality and short delivery, and a key KPI was margin, so the bad product was really hurting the formal measures of my performance.

The production manager and supervisory people were seriously pissed, as their KPI’s were all about throughput, nothing about quality, customers or cost.

The meeting was a very unpleasant finger pointing exercise, nobody was to blame, and yet, everyone was to blame, but it was the beginning of an improvement process that led to the plant becoming a world class plant over the following couple of years.

At the core of the improvement was the conversion of the previous procedure of blaming a problem on someone other than yourself, to investigating and fixing the causes of the problems at source.

The tool used extensively was a version of what has become known as ‘5 why’. It replaced what we began to call the failed ‘5 who’ with the genuine investigation and remediation of  the root cause of problems.

The lesson, always Ask why, not who.

 

5 Psychology strategies used to increase sales

5 Psychology strategies used to increase sales

Success in sales is not just about getting the other person to like you, and trust you, although that helps.

It is about how you employ human psychology.

Robert Cialdini articulated 6 rules in his seminal work ‘Influence‘ in 1993, Reciprocity, Social proof, Commitment and Consistency, Liking, Authority, and Scarcity.

Imagine you gave someone $30 for completing a task, and then because it was completed satisfactorily, you gave them another $20. Compare that to someone to whom you offered $70 to complete a task with an impossible deadline, and then took $20 away because they missed the deadline, although completing the task satisfactorily in all other aspects.

Which of the two would be happier? In this case, you have framed the situation to ensure that one saw the outcome in a positive light, rather than a negative one.

This sort of basic psychology is at work every time you negotiate in any way, it just happens. Thinking about the process with a little sensitivity the basic psychology can make you considerably more successful.

Some simple examples.

Part of a group.

Humans are herd animals. We tend to do what those around us do, to follow the lead of the group. Suggesting that others with whom they relate are doing ‘A’ will increase the likelihood that they will do the same, as demonstrated in Cialdini’s research in 2008 articulating his 7th principal of influence, the Unity principal. This leads us to be influenced by others the more we relate to them. This was the subject of his famous towels in a hotel project, where he demonstrated that guests could be significantly influenced simply by the persuasive power of telling them what others were doing.

Foot in the door.

This is not the old fashioned door to door technique of not stopping until you call the police, it is far less intimidating, and is a widely used tactic in digital marketing. The offer to try a product free for a month before paying for it is a foot in the door, as is the one that offers a free book, you just pay for the freight, or the one-time .97 cent offer, to get to the first level of a normally more expensive course, or club. The psychology is that once your hand has gone in your pocket once, you have made the purchase decision the first time, the second time is way easier.

Create a decoy

Potential customers seek value, defined in all sorts of ways, but when making a choice, they always look at the options available and ascribe a value to each, then make the choice. By making your preferred item look great compared to the alternatives you offer, you can significantly influence the outcome, Again this is used extensively in digital sales. On almost every sales page for a software product, there will be lists of comparative tools you are given for different amounts per month. Usually it will be three options, as option overload leads to confusion, and potential customers walking away, choosing to buy none, but when there are three, there will be the first with a few tools available, for free, or a small price, then there will be the $29/month with an extensive list of options, and a third with the same extensive list and a few more that might be important to a few, for $59/month. The vast majority will look at the value delivered by the $29 option, and opt there, as it offers the best value, the few who opt for the expensive one, well, they are the cream, and those that take the freebie or very cheap version are ripe to be upsold at a later time.

Sell time.

We all understand the old adage, ‘Time is money’ so saving time with a purchase, time that can be used in other ways that will benefit the purchaser, is a powerful motivator. This technique is used extensively when selling services. Most of the so called ‘Business coaches’ out there use this technique, weaving pictures of how great it would be for small business owners to have the time to play golf every day, or run their businesses from the beach between diving expeditions on the reef.

It is also used in reverse, putting a time limit on the availability of a product. ‘Available only at this price until 5 pm tomorrow’ often accompanied by a clock running in reverse is similarly a strong motivator.

Quality = Price

In a market where the knowledge of many buyers is limited, like wine, consumers have over time recognised that price is a fair indicator of quality. When you understand the perception levels of a category in a consumers mind, they can be significantly influenced in a purchase decision by the ticket price.

The foundation of all this is of course that you have a very clear picture of your ideal customer, so can anticipate which of the techniques, and they are often used in tandem, will work, in your set of circumstances.

It also remains true that people love to buy, but hate to be sold to, so selling is really the wrong word, it is more about persuasion, and we all understand that psychology plays a huge role in persuasion.

PS this post was put up yesterday with a different headline, and redefined the dead cat bounce. I thought it was better than that, so polished it up a bit, to see what happens.

 

 

How to understand the answer to a question.

How to understand the answer to a question.

I ask questions for a living.

No, I  am not a policeman, journalist, or a head-hunter, all of whom need good questioning skills, but in some regards I am a detective.

My job is to see what can be done to improve the performance of businesses, and to do that effectively I need to understand with clarity what is holding  the current performance back. Therefore I need to be able to analyse and understand the current performance through an independent  lens, a perspective  that is different to that of those who are paying me, and which leverages the experience and domain knowledge I bring to the table.

As a consultant, especially one that works in a space usually over-filled with clichés, emotion, personal prejudices and views presented as facts, the real skill is in asking the right questions, and knowing when it has been answered satisfactorily, then following up with the next one that further opens the oyster.

Asking the right question is a matter of experience, domain and technical knowledge. Knowing when it has been answered is all about being a good listener, and entirely different set of skills.

As I listen, I try and break down more than what is being said, and why it is being said, it is just as important to see what is not being said, and to be able to follow up with the question that gets to the area of discomfort, that is best left unsaid, in their minds.

So here are the things that in one way or another I do when listening, apart from observing the old adage that evolution gave us two ears and one mouth for a reason.

What is being left out. Where are the gaps, the inconsistencies, and the evasions, as they will tell you a lot about the person. An HR manager I once worked with used to spend what I initially thought was an inordinate amount of time on the sequence and timing of stated jobs in an applicants resume.   Then I realised he was just looking for the gaps, and he almost always found a few, which usually told us more about the person than they had included.

Where are the contradictions? As with gaps, contradictions can be well hidden, and are often unconscious. They are not just contradictions about timing and  ‘things’ that matter, it is more about contradictions about their personality. I had a product manager working for me a long time ago who  told anyone who was listening that his personal credo was honesty and transparency, but then took staplers and pens home from the office supplies cupboard. A little  thing perhaps, but a contradiction that told me something about him that proved useful.

Why are they telling me this, and not that? People can go on and on about ‘stuff,’ the words fill a hole in the conversation, stuff that really does not matter. Wondering why they are telling you this ‘stuff’ and not something useful or that adds to the ‘picture’ you are developing can be enlightening.  This is particularly so when you know of something that perhaps they are unaware you know, but is relevant to the conversation. I recall the lawyers adage of never asking a question of someone giving evidence without knowing the answer in advance.

What about this makes it relevant to the question? People like to talk, usually because they like to be listened to, and so can go on and on about things of limited or no relevance to the question, simply because they have the floor. Generally we are polite, so do not interrupt the flow, but it can be useful sometimes, particularly pointing out the irrelevance of the tsunami of words that just emerged.

What are the facts? There is a huge difference between facts, things that are demonstrably true, and opinion, suppositions, and the outcomes of ‘managed’ data. The last of these is often the most tricky to tell from the real story, as they purport to be facts, as evidenced by the data. It is just the data or the interpretation of the data that is dodgy.

Did they answer the question directly.  Listen to any politician talking on any night, and you will most likely hear them answer a question in a manner that bears little or no resemblance to the information being sought. Unfortunately it seems to be the standard state of public office, but in a commercial environment, I dismiss it with the contempt it deserves. To be fair, politics gets played pretty hard in many commercial environments, and so is sadly, little different.

Tone of voice. Body language and tone of voice also delivers a message. Just think of the myriad of meanings the word ‘bastard’ has in Australian vernacular, all are conveyed by the same word, with entirely different meanings dictated by tone of voice and body language.

At the end of an answer to a question, I often repeat what I have heard and understood from the answer to offer the opportunity to correct and modify my understanding as necessary. It is also a good tactic when  seeking to assess the truth of an answer.

 

 

Budgeting: The crappiest time of the year

Budgeting: The crappiest time of the year

It is that time of year again, budget time.

In most businesses around Australia, at least those that will be around in a year or two, people are wondering where they will find the time to do the budget preparation for the coming fiscal.

To make it easier, following are some simple guidelines to apply to your thinking.

Where are you  now.

Before you set out on the planning of any journey, it is useful to know the starting point. This tends to avoid a lot of wasted effort and cost, and unnecessary frustration. Having a very clear picture of your current position is vital, but if you have left the development of that picture to the planning sessions pre budget, it is probably too late. Developing a deep understanding of your current situation, and most importantly the drivers of that outcome, needs to be an incremental and inclusive process that is happening in real time, all the time.

Where is it you want to go.

Again, obvious, but often overlooked. Good businesses have a strategic framework in place that delivers clarity and priority to the long term outcomes being sought, so the annual budget is just another step along the path. However, in the absence of a strategic framework that makes sense, a disturbingly frequent situation, set yourself some goals to be achieved, and the annual budget is the operational plan to get there.

How will you know when you get there.

Measurement for measurement’s sake is dumb, but having the few key measures of performance that really tell the story of your progress towards the end point is essential. Knowing what ‘success’ means is a core part of the planning process, but again, when that is left to the planning sessions, it is too late.

1/10 is not enough.

Another of the mumblings of my old Dad who used to say, ‘Son, you get 1/10 for  the talking, the other 9 are for the doing’. In a business context, the planning is essential, but of no value unless it is implemented. Just like a holiday, you can have some fun planning it, but the real fun is when you are actually on the holiday.

Profit is a two way street.

To make a bob, you have to sell something to people who really want at a price that is more than it costs you to produce and deliver it. Pretty sensible, and pretty simple, but understanding your costs and really understanding the value your product delivers to the specific target markets is a touch more complicated.

Everyone is in marketing.

The days of marketing being relegated to the back office are gone. Customers now have all the power, and they are exercising it in all sorts of ways not contemplated just a decade ago. Highly sensitive, fragmented, and focussed communication channels are being used by everyone, and amplification happens at the stroke of a social media pen. Everyone who comes into contact with your products can have an influence, and everyone in your business  is an agent of marketing. For heavens sake do  not leave it to the kids who have marketing in their title, thinking they have it under control, because nothing could be further from the truth. The most valuable asset you have is the position your product holds in the minds of your customers and potential customers, commonly called your ‘brand’. It is not normally listed on the balance sheet, as the accountants cannot agree how it is to be valued until a business is sold, when it is called ‘goodwill’ but it is the leverage that enables you to be able to stay in business.

Count outcomes before dollars.

Financial results are just that, results. Dollars are just easy ways to count the outcomes of more complicated stuff. Spending time understanding the drivers of the outcomes being counted is a far better way to invest your planning time that just manipulating the variables in spreadsheets. What is it that persuades someone to buy from you and not the opposition, how can you reduce the hidden transaction costs in your business, how can you increase your stock turn and reduce your working capital, and thousands of other questions that need your time and attention before the budget profit and loss is locked away.

The smartest people are not in the room.

No matter how big you are, and how much money you spend on expertise, the vast majority of the smartest people, and those who could influence your outcomes are working somewhere else, some of them for your competitors. This simply means that you have to find ways to be sensitive to the competitive, strategic and regulatory environment in which you are operating, and feed that intelligence back into the way the business is run. From going to local networking events, to travelling to leading markets and suppliers, to hiring expensive consulting knowledge, to ensuring the operators in your business have a voice at the table, all serve to add to the store of ‘education’ the business has to call on at budget time.

When you have done all that, it becomes time to go and punch the spreadsheets, not before. One last point, seems to be a common last point in my various musings, look after the cash. It is the lifeblood of the business, if you do nothing else, look after it as you would your first born.

 

Consider the moment of Opacity

Consider the moment of Opacity

We are all familiar with the ‘lightbulb’ moment, that time when suddenly, all seems clear, the idea that has been buried in the depths of your brain, unable to be born, suddenly sees the light.

Ever thought of the opposite?

The moment of Opacity?

That moment when you suddenly realised that something you had accepted as the norm, the way things were, a certainty, was suddenly revealed as a Furphy?

This is not something many of us think about much, if at all.

Perhaps it is not fashionable, but the moments of opacity are as important as the lightbulb moments.

My job is working with businesses to facilitate change, to move from the status quo, to something new, something that is almost always considerably outside their comfort zone.

To do that, I have to create those moments of Opacity, when my clients recognise that the way forward is different to the way they have followed to date.

Usually they are not moments, that is just a convenient metaphor.

Change is normally a process of recognising and revising the assumptions and behaviours that drive activity and priorities to accommodate a new reality, small bit by small bit.

Einstein is reported to have said something like ‘The most powerful force in the universe is compound interest’  and the legend of the chessboard is a well known example of just how powerful compounding really is.

Change is no different.

Small changes, compounded over time make a huge difference in time. The hardest bit is getting started, generating some momentum, but when that has happened, compounding can become an unstoppable force.