Finding the sweet spot of organisational cadence.

Finding the sweet spot of organisational cadence.

Oct 13, 2017 | Collaboration, Customers, Sales

Last week I watched for the first time in many years Stanley Kubrick’s masterpiece, ‘Full Metal Jacket’.

Amongst the many parts of the movie that struck me, were the scenes in the first half where Gunnery Sargent Hartman is calling cadence as the platoon marches and runs.

These scenes sparked a complex series of thoughts about the nature of co-operation, collaboration and authority as it drives performance in our enterprises.

I often talk about ‘Rhythm and Flow’ as being an essential ingredient of any successful organisation, it is one of the three foundations of a successful enterprise I look for when conducting a StrategyAudit.  There has to be a rhythm to the operations in anything bigger than the corner shop, a series of rhythms that together make up the flow that drives the strategic development at the top, down to the daily tactical implementation with customers. In addition every process has a flow, it begins, moves through a set of stages to completion. The less interruption to  the natural flow  the better the process will work, the more efficient it will be.

All manner of things get in the way, and even when working really well, at 100% efficiency, some processes will not be optimised. You can get a flawed process working as well as it can work, peak efficiency,  that does not make it a good or optimised process.

Processes evolved to enable us to scale operations, to do the things that needed doing repeatedly, the same way every time, reducing errors, time taken, and  effectively ‘dumbing down’ the process. While the evolution started the first time someone made any sort of automated tool, it took off when Frederick Winslow Taylor  started developing and testing  his ideas while running the Midvale Steel works in Pennsylvania, first published as a paper called ‘A piece rate system‘  in 1896.

Organizations have almost by definition, a set of procedures, and varying levels of authority, that when bundled together become labelled as a ‘Bureaucracy’. The evolution of bureaucratic processes is what has enabled the scaling of businesses over the last 100 years. Things get organized into silos where there are specialists who can solve problems from the routine to the strategic, and pass the knowledge on in a consistent manner. As a result even the most efficient process had a cycle time as it moved from one level of an organisation up for decision, then back down for execution. That works until the time required to respond to the challenge/problem/opportunity is less than the bureaucratic cycle time, or something out of the ordinary happens, something that has not been prepared for. Then you get the process equivalent of waste, as the opportunities pass by, and problems overwhelm.

This is a reflection of the speed of operation required by the operating environment, in most cases, driven by customers. In Lean thinking terms, is called ‘Takt Time’ which is effectively the cycle time of demand in the market.

Cycle time and Takt time are two ideas from manufacturing whose time has come in organizational development.

The environment in which we operate has been disrupted absolutely by the march of technology. Speed is increasingly the difference between success and failure, so enterprises must find ways to adjust their operating cycle time to less than the decreasing Takt time demanded by the market place.

Optimising a bureaucratic process will not be enough in the future, as it still requires deference to the levels of authority, rather than enabling those at the coal face to use their initiative and intimate knowledge of the situation to be able to play what is in front of them.

At the core you have this paradox of organisation structures being vertical, organised into functional silos for efficiency, while the processes that serve the customer being horizontal and cross functional. As the requirement  for speed increases, the time a vertical structure takes to respond becomes increasingly less satisfactory to customers, they move onto those who meet their time requirements, as they do not give a fig about your  approval processes, they add no value at all to them, but they do suck value away.

The successful  organisations of the future will be more ‘biological’ in nature, with the power to respond in Takt time devolved to the fringes where the intersection with the competitive environment occurs on a daily basis. The challenges of this change to the current management orthodoxy will make most very uncomfortable indeed, and therein lies opportunity for those who can reverse the location of tactical decision making, and put it at the ‘front lines’, where it should  be.

 

 

 

 

8 unfortunate realities facing every small business entrepreneur

8 unfortunate realities facing every small business entrepreneur

Oct 3, 2017 | Customers, Innovation, Small business

Every time I turn around I see another ad touting the ‘laptop lifestyle’. Travel, work occasionally, and have the money rolling in, just because you have invested in yourself and bought a course from a self-styled guru.

Of course it does happen, but very occasionally, and each time it does the person has met a number of key hurdles.

When you think about it the rules of  business apply irrespective of the size or nature of your business.

There has to be a market. Nothing succeeds without customers, and customers do not come to you simply because you are following your passion, which is the usual pitch. I would  love to be able to make lots of money by splitting my time between surfing, tramping through mountain streams in search of that elusive rainbow trout, and drinking lots of expensive wine, but have not found anybody willing to fund me as yet. From time to time, an entrepreneur creates a market, the magic can happen, but if your name is not Steve Jobs, Peter Theil, or Richard Branson, do  not count on it.

You have to create value. Being paid is simply a by-product of creating value for someone else. It does  not matter what the product is, someone will only pay for it when they see that they will get something out of it greater than the cost to them.

You need  to pay the bills. Every business has expenses, some are discretionary, others are overheads, that show up irrespective of any revenue generation. Those bills need to be paid, you need to eat, and the kids need a roof. This reality is the one that stops many from following the whacky advice to ‘follow your dreams’ and luckily so. However, the business management task is to reduce expenses, particularly the fixed expenses as much as possible, while still generating the revenue and absolute margins.

There is a lesson in every set-back. Life is a learning experience, and failing to learn from every situation you find yourself in is short-changing yourself. As a young product manager I also had to cover the sales territories of the NSW reps when they were on leave. Every couple of months I had to take 2-3 weeks out of what I believed was a busy and useful schedule to go around stores and sell to people who really did not want to see me, I hated it, but learnt more in those months than I realised, and now insist that all marketing people I hire have a period ‘on the road’.

Time is your most important asset. Time is our only truly non-renewable resource, and yet it is so easy to waste. Professionals tend to organise their time more productively than amateurs, they spend time practising, honing their skills, so that when the time comes they perform on cue.. We all see ourselves as photographers, as we now all have a camera in our pockets. However you can always tell an amateur shot from a professional one, the pro is better in a whole range of subtle ways, simply because the professional has spent the time to practise, and learn the skills.

Be different and be a master. Success rarely comes to those who are the same as everyone else. It comes to those who are different,  who have a unique take, and who are the masters of  their craft. In the digital world, the mantra I use is ‘pick your niche and own it‘ or as Steve Martin says, ‘be so good they cannot ignore you‘

Evolve and adapt. For most of human history, the past has been a pretty good indicator of the future, change happened slowly. Not so any more, relying on the past to forecast the future is a sure way to be wrong. Owners of small businesses have the power to move quickly, adapt their processes, learn by trial and error while their larger competitors are still at lunch. Of course, they do not have the depth of resources to be wrong too often, so it is a Darwinian process.

There are no silver bullets. We humans usually look for the easy way, and this is the hook used to sell us the silver bullet that turns out to be lead. You can get lucky, who you know does count, but the old adage that the harder I work the luckier I get holds.

Apart from these challenging realities, being an entrepreneur is really a doddle!

3 foundations for B2B revenue generation.

3 foundations for B2B revenue generation.

Jul 19, 2017 | Customers, Sales

Creating a process that delivers consistent and profitable revenue involves a whole range of functional collaboration from the agreement of the strategic objectives to the relationship building that occurs after the early honeymoon of the first sales.

It takes time, effort and commitment from a lot of people, and importantly a process that is sustainable.

The usual metaphor of a ‘Sales Funnel’ is well understood, but flawed in many respects, principally because the behaviour of existing and potential customers is rarely as predictable and linear as a funnel assumes.

However, the sales process can be broken into a series of steps that reasonably represents the sort of activities required to assemble leads and develop them into long term customers.

Prospecting.

To my mind, prospecting has three elements.

  • Building a wider network of relationships within existing customers, focussed on the servicing of existing business, with the objective of increasing the share of wallet
  • Identifying and making contact with those to whom the value proposition has the potential to resonate in the existing market segments
  • Go exploring, seeing where the capabilities you have may be applicable in ways that are not as obvious. I find the 70/25/5 rule applies as much to sales prospecting as it does to the more complicated and holistic challenges of a business turnaround. 70% of a sales prospecting time should be spent finding ways to increase the share of wallet of existing customers, and perhaps chasing those generated who have lapsed, 25% devoted to identifying and engaging with new customers who fit the usual profile of a prospect, and 5% being ‘out there’ exploring.

All three elements recognise the role played by the tools of digital marketing. People are expensive, so it is managements  task to leverage the cost to the maximum extent. Much of the role of the traditional sales rep has been overtaken by digital tools, but it still takes a person to ‘close’ and build a relationship. Such people are not order takers, they are amongst the most important people in your business.

Metrics present challenges, the adage that what you measure gets done is largely true. Therefore prospecting needs to be tasked and measured in meaningful ways that direct the effort made in alignment with the strategy. There is a whole list of elements that are present in a prospecting toolkit, such as: time bound revenue objectives and qualified sales opportunities, conversion rates of leads generated, outbound calls and contacts, Identification and relationship building with new contacts in existing customers, same for prospective customers, understanding  and profiling of a prospects business,

 

Conversion.

Long term revenue generation  requires a mix of repeat business, new business from existing customers, and business from new customers. The mix will be different in each case, and some level of management of these needs to be reflected in the way the metrics are set up. For example, a start-up leveraging new technology will have targets very different from an existing business that operates in a mature industry. Nevertheless, the process of conversion needs to be managed so that there is a steady and predictable as far as possible flow of business. Predictability of  the business coming in is a key to managing a business with as little ‘internal friction’ as possible. When there is predictability, most of the revenue is generated in a semi-automatic way, but when there is little  predictability, everything is a crisis, and crises consume inordinate amounts of management time and attention, leaving the important but not urgent stuff undone.

The sorts off metrics used can be broken into a number of classes:

  • Revenue generated
  • Leads generated and conversion rates necessary to generate the revenue
  • Data base management. This applies to the data on the markets in which you operate, the number and type of prospects in a market, as well as the more common CRM type data that accumulates detail on calls, responses, status of enquiries and what next type information.
  • Quantification of the funnel, how many leads are just ideas, to the hot prospect stage. As noted earlier, customers rarely behave in a linear fashion, but the metaphor often helps to ensure that the right resources are allocated at the right times.

 

Relationship.

Measuring the state of a relationship is never easy, the measures are usually subjective, and only truly evident over time. Like good parenting, we all know it benefits the kids, but the outcomes are really only evident over time.

  • Share of wallet my  personal favorite B2B ,measure  the most useful and often overlooked measure of the effectiveness of a relationship and of the sales personnel involved. How much of the spending of a customer that you could supply, do you actually supply? How much of their available ‘wallet’ comes to you? You can delude yourself in the manner in which you define the wallet, but defining the wallet in accordance to the things you can reasonably supply Vs would  like to supply, is sensible, and leads to the building of capabilities that will get you into other areas of a customers wallet.

How they see you. Are you the supplier of a commodity product, one that relies on price to make the sale, or at the other end of the scale, are you a trusted partner who collaborates for mutual success, and the sales you make are simply an outcomes of receiving an order from a purchasing system. For 30 years, I have used a sliding scale between these two points to measure the state of relationships. You easily create such a scale for yourself, but it does require some objectivity, just asking your sales reps for their assessment on a once off basis usually delivers nonsense.

 

The value of an engaged employee.

The value of an engaged employee.

Jul 14, 2017 | Branding, Customers, Marketing

We all talk about the necessity of ‘engaging employees,’ but rarely truly achieve it, or see it in others. However, when  we do see it, we just know in our guts that we are looking at the way we would always like it to be.

Yesterday I spent 90 minutes in a suburban McDonalds store killing time between appointments, reading the daily rag, drinking an excruciating coffee, and fiddling with the language in a client report. All this time I watched a young bloke in the store make everyone he came into contact with feel special, even great.

He was just a casual employee, whose job it is to clean the tables and mop the floor. He did this, but he also did much, much, more. He opened the door as people were coming towards it, he high-fived the little kids, he helped a lady fold a stroller after extracting her baby, he joked and pranced, and he did all this with a huge smile on his face.

Every single person he interacted with smiled back, and had a word, he threw some light on everyone’s day.

As the store manager delivered a meal to the person at the table next door, I observed to him that this young bloke was worth much more than they were paying him, to which the manager responded, ‘We give him as many shifts as he wants, and we love having him here’

Despite the excruciating coffee, and other sometimes annoying human traits on display from time to time at Maccas, I know I will be back at this one, and hoping to see this young bloke loving his work, and making the day of others again.

 

 

 

How big is the Strategic deficit of Australian FMCG retailers?

How big is the Strategic deficit of Australian FMCG retailers?

Jul 7, 2017 | Customers, retail, Strategy

Strategic deficit is the amount of time, capability, commitment, and energy necessary to bridge the gap from where you may be right now, compared to the most advanced of your current and potential competitors.

A few weeks ago, if asked the question of Australian retailers, particularly the FMCG retail gorillas,  Woolworths and Coles, I would have said several years and more resources than they seem to be prepared to allocate, but more importantly, there is a complete shift in mindset that is required.

Now, if asked the same question, with the news last week of the $US13.8 billion purchase of Whole foods by Amazon, I would suggest the strategic deficit has just doubled, perhaps tripled overnight. Not only has the deficit blown out, but  the rate at which it is accumulating is accelerating given the huge $16 billion investment Amazon made in ‘Technology and Content’ in 2016, the horse has not just bolted, it is over the hill. Not all of that $16 billion will be directly impacting their ability to deliver groceries, but a fair chunk of it will be applicable, and the rest will be learning in other areas that they will be able to leverage over time.

Back in August 2013 when Jeff Bezos bought the Washington Post for $250 million cash, many were asking “What does he know about the newspaper business’?

The Post had been one of the icons of journalistic excellence, one of the true ‘newspapers’, but had crashed into successive losses in the face of digital disruption.

Bezos bought the Post, not for Amazon, but from his own funds, it is a personal investment, and therefore perhaps better even that Amazon itself as a signpost of his commitment and what may come elsewhere.

In this National Public Radio report on progress at the Post, there are some useful signposts that may be applicable to Amazons recent purchase of Whole Foods. However, it can be summarised into a few words:

Technology that makes the customer the absolute focus of every single decision and action is the essential foundation for success.

Now, many of the same people are asking ‘What does Amazon know about the fresh produce retail business?  My response is ‘Wait for the implementation of  Amazons brand of technology directed at the produce consumer, and we will find out”.  I would be pretty sure that Amazon has a range of pretty good ideas to be tested at Whole Foods, that will see the hurdles of home delivery of fresh and frozen food overcome.

I am sure Coles and Woollies will be watching, but so was the newspaper business watching technology eat its lunch for a decade before they had any idea of how to address the challenge, and even now, seem incapable of doing anything about it.

 

5 habits of really successful B2B sales people.

5 habits of really successful B2B sales people.

May 30, 2017 | Customers, Sales

Last week, I was unfortunately the target of an unwanted sales pitch from someone who would not take ‘Not today’ or ‘No thank you’ or  ‘I am not interested’ or ‘Piss off I am busy’  as an adequate response to his ministrations.

Clearly he had been to a sales training course that had at its core,  the ‘ignore any feedback you might get, plough on regardless using this template‘ school of selling. This morning I stumbled across this video on YouTube, that nailed exactly the situation, except I was not in an office.

Sales is the key function in any business, without sales, there is no business.  Why is it then that sales people are often towards the bottom of the organisational totem, why do we allow anyone but our most trusted, intelligent, persuasive, sales trained, and effective employees anywhere near our source of revenue… customers.

Really effective sales people, those who bring in business that sticks, should be well rewarded, after all, they can easily go to your competition.

What sets the great sales people apart? How can you pick them?

Seems to me there are several characteristics that make super salespeople, based on years of watching them.

They speak to you as they would to their best friend.  The bloke in the video above not only worked to a script which did not fit the situation, he was absolutely full of faux enthusiasm, a sure sign of snake oil to come. If you want to engage someone, it pays to be respectful,  to seek their permission to speak, and deliver a message, and do it with humility that implies that you are doing them a favour, as you would your best friend, just because you can.

They build trust. Trust is a vastly overused word in sales training, everyone advises to build it, then sets about destroying any possibility by being assertive and overpromising. Trust is built on performance, not promises, so demonstrate that you deliver. Humans build trust in others by actually seeing evidence that they do what they say they will do, or by having those we already trust assure us of their veracity. This is why testimonials work on websites but they must be videoed, the person specifically identified, and they must be similar to you to be trusted. You would not trust the sales manager of ABC used cars to tell you the truth about their exemplary customer service, but you might trust someone who looks and sounds like you saying that they had great service from ABC used cars.  Your prospects must feel like they are buying from you, not that you are selling to them. The hard sell is out, it can work in some transactional and low value situations, but almost always leaves a bad taste that removes the possibility of a repeat.

Only subtle Anchoring is used. Anchoring is perhaps the most used sales tactic there is, you see it every day, and it screams ‘ hard sell’. Again, it can and often does work, it generates immediacy and urgency, which is why we have legislation that invokes a ‘cooling off’ period in some circumstances. Anchoring is when you see something promoted with words similar to ‘Normally this will cost $300 but if you buy in the next 10 minutes, we will give you this once only offer of this magnificent thingo for only $39.95‘. It does sound like a bargain, only because of the contrast between the so called ‘normal’ price and the deal not because $39.95 is itself a great deal. Anchoring does not have to be about price, although it most often is. Anchoring is about contrast, good vs bad, them vs us, up Vs down, any contrast will do.

They give reasons. When you give a prospect a reason ‘why’ that is credible to them, they will feel somewhat compelled to agree with you. This is the discipline of communicating the benefits rather than the features, and the more personal the benefit the better. A reason delivered with the word ‘because’ is always more powerful. ‘I want you to have this gizmo because it will double your productivity‘ rather than ‘This gizmo will double your productivity’. People are not silly, they know you are selling something, but if they believe that the reason you are selling to them is that you are looking out for them, that it is for their benefit rather than yours that you are having this conversation, they will tend to trust you, just that little bit more. It also puts the onus of making the decision onto them, so they will have a far greater commitment to the decision, than if they feel you pushed them into it.

They sell to the heart, not the head. We all know this, but so often we sell to the head because it seems  easier, and certainly requires less work. It is clear that nobody buys an expensive sports car because it will cover the standing 1/4 in under 5 seconds, they buy it because it tells everyone else that they can. Understanding the emotional triggers that apply in any selling situation rather than relying on the rational ones, which are always more  obvious,  will make you far more effective.

Call me when I can help you be more effective.

Header image courtesy www.gapingvoid.com. I use Hugh McLeod’s insights quite a bit