Common Sales Myth #3 – Sales is all about Relationships

It’s a Relationship Business!

That four-word phrase is probably the most common statement we hear when we talk to sales people about their business.  It is even more common than the statement, “It’s a Price-Driven Market” – though more often than not those two statements travel closely together.

Relationship

Do You Have Brothers and/or Sisters? The Limits of the Relationship

To challenge the assumption that businesses are primarily relationship-driven we ask salespeople the following questions.  Here they are, with the typical answers.

Q.  “Do you have a brother and / or a sister?”      A. “Yes.”

Q.  “Do you have a good relationship with your brother or sister?”     A. “Yes”

Q.  “If your brother or sister tried to sell you something that would be detrimental to your business, would you buy it?”     A. “No (expletive deleted) Way”

Q. “What if they threatened to would tell your Mom that you refused to buy from them, would it change your mind?”    A. Laughter.  “No”

Here’s the point: All relationships, even good ones, have their limits

Relationships are based on trust.

Any activity that violates trust, violates and detracts from the relationship.

Let’s look at the Trust Equation, developed by David Maister, Charles Green and Robert Galford in their wonderful book “The Trusted Advisor“.  According to Maister et al,  Trust equals the sum of= (Credibility + Reliability + Intimacy) divided by (Self Interest).

 T = (C + R + I) / SI

Anything a sales person or their company does to lower Credibility, Reliability or Intimacy, lowers Trust and damages the business Relationship.  As you can also see from the equation, anything that blatantly demonstrates your, or your firm’s, Self-Interest also damages Trust and thereby the Relationship.

Nothing in the equation can affect Trust more than the amount of your self-interest perceived by the customer.  The higher the Self-Interest perceived, the lower the Trust.

Here’s the point. Depending on the Relationship alone can be perceived by the customer as inherently demonstrative of high Self-Interest.  In Relationship terms, “They want me only for my money.”

What Relationships Can and Can’t Do

Relationships can:

  • Get you an audience to make your case
  • Buy you some time and patience when you or your company screw up
  • Get you early, but not necessarily exclusive, notice of a new opportunity at an account

Relationships can’t:

  • Make up for a significant competitive shortcoming in your product or service offering
  • Repeatedly cover for your operational team’s inability to deliver
  • Make up for poor product or service quality
  • Find and win completely new accounts
  • Provide you more than a few percent price premiums
  • Make up for poor market targeting
  • Make up for fundamentally slow market momentum
  • Fix functional short-comings in your products

Here’s the Point: Don’t get complacent because you have good relationships.

Don’t Shoot Yourself in the Foot

Believing that your relationships give you enormous power is, for the most part, fallacious thinking, and can actually ill-inform you on what you and your company need to do. Here are some examples:

  • If it’s all about relationships, what impetus will your engineering team have to design better products?
  • If it’s all about relationships, why should your firm ever reduce prices or negotiate terms?
  • If it’s about relationships, why should operations need to worry about quality? Or delivery?

Here’s the point: Bragging about the customer relationships you have can simply provide unjustifiable cover for others in the organization to not execute their job as effectively as they should.  Remember, it’s still a very competitive world out there.

One More Point: The Fallacy of the Rolodex of Relationships

More often than is advisable, a client will enthusiastically recruit a sales person based on the contacts that sales candidate has amassed during their illustrious sales career.  Sales people treasure and protect to the death, their sales contacts and consider that list as a strategic personal asset.  It becomes a key feature in the personal selling proposition they use in seeking a new job.

Rolodex provides a great tool for managing those.  However, even the best list of Rolodex or CRM-managed contacts, can rarely, for the long term make up for business shortcomings in product, service, delivery, quality, competitiveness and value.

Let me illustrate.  In 1970, General Motors had roughly a 50% share of the US auto market.  That market share was supported by an incredibly, well-established national network of dealers and sales people.  Everyone knew everyone.

Since 2000 General Motors had lost roughly 50% of that 50% share.

Here’s the Point: Relationships aren’t everything.

Recommendations:

As much as has been written in this blog about the fallacies and dangers of dependence on customer relationships, let me make a final few points.

  • You must continue to develop your business relationships
  • You must continue to nurture those relationships based on paying close attention to each of the key elements of the trust equation
  • You must not, for a moment, let the rest of your business team off the hook by bragging and convincing them they only need to depend on your ability to develop and maintain good customer relationships

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Copyright 2013 The QMP Group, Inc.   All Rights Reserved

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Common Sales Myth #4 – It’s a Price-Driven Market

I truly sympathize with sales people who are dealing with commodity managers in large corporate purchasing organizations.  Those procurement specialists can be brutal in negotiation.  More and more they are driven by corporate edicts to “source overseas” or “reduce commodity purchase costs by 3% per year” or to “reduce the number of suppliers by 20%”. 

The truth is, classifying what they do as “Negotiation” is not fair to Merriam-Webster’s definition of the word – or to anyone for that matter.

Can it get any tougher for manufacturers? The RockiStock_000011042796XSmall

These days, sales people and their parent manufacturing companies commonly find themselves confronting a series of “non-negotiable” buyer requirements that would be laughable, if they weren’t so real and becoming more common:

–          90 day payment terms

–          Guaranteed cost-downs

–          The lowest cost – period!

–          The highest possible on-time delivery

–          Impeccable quality

–          Unlimited time frame on returns

–          “No-questions asked” returns

–          No-charge, collaborative up-front engineering and/or marketing cost sharing

–          Transparent margin calculations

–          And the requirement to keep a buffer inventory of finished parts in the factory – owned, of course, by the supplier

 The not-too-thinly veiled threat hidden among those requirements is, “If you can’t meet these terms, we can always find someone else to supply that part/service in Mexico, Asia, Brazil, India” or even, “We’ll build those parts here – ourselves, inside”.

We talked about the Rock above.   Here’s the Hard Place.  

 In the banker’s office the CEO and CFO of the small manufacturing firm are hearing:

–          Your cash flow is slowing

–          Your margins are slipping

–          Your credit line needs to be reduced and renegotiated

–          We need to see your financials, monthly

–          We need to tighten up our loan portfolio because of the lending debacle of 2008

–          and… “No, you can’t have any more leeway”.

So, between the banks pushing for higher prices and margins on your products to improve cash flow (or you lose your financing), and your big customers pushing for lower and lower prices, what’s a small manufacturing firm to do?  And, how does a sales person make a living if he isn’t price competitive.  Isn’t some margin, albeit low margin, better than losing a customer?

What Price Competition Really Means

Price-driven competition means that one or more of the following statements are true:

  1. The buyers in your target market perceive no meaningful performance or value differences between products from different suppliers – including yours
  2. Your product offering actually has no real and meaningful differentiation compared to your competition for those customers in that target market segment
  3. You, as a sales person, or your marketing team, are doing a very poor job of communicating your meaningful, market-specific differentiation to customers in that market
  4. You are unable to economically quantify the value your product can deliver to customers in that market
  5. You are aimed at the wrong market and customers – a market for which your differentiation does not actually deliver meaningful, economic, emotional or physical value

We have seen all of these situations in our client engagements – typically disguised and drowned out by the sales person’s pleading and cries to “drop the price”.

So What Can Be Done About This Kind of Situation?

The simple, yet most effective answer is: Decide which of the five statements above are true – then set about fixing them.

It is actually easier than you might imagine.

A Case in Point 1: Wrong Market Targeting

A client of ours had a new product that wasn’t selling well.  It was price disadvantaged by a factor of 3 over competitive offerings in the general market!!  In spite of this, the new business development team was hustling to set up general distributors across the country.  They were counting on a major price reduction they were politicking for with corporate to spur sales – when in fact corporate was quietly considering shutting the product line down.

We were asked to determine whether the product line was worth saving.

What little sales there were, were focused in two very narrow markets.  Simply by asking customers that bought the few units that were sold in each of these markets why they bought this “over-priced” alternative, a set of inherent, here-to-fore un-promoted competitive advantages were revealed.

Then simply by pivoting the sales team to focus on the market in which the most compelling benefits were revealed the following results were realized:

–          Not only did the price not have to be reduced, the market’s desire for added features quickly brought the average selling price of the top model to 4X the original price!

–          The single largest order for this product had been $20,000 – now with focus and a re-promoted and re-emphasized set of market-specific benefits the largest order from a customer exceeded $1,000,000

–          The number of new customers buying this product quickly rose from 2 to over 150

–          Price reductions were no longer discussed

–          The effort to saturate the market with distribution outlets was no longer considered necessary and saved a ton of money

Case in Point 2: Poor Economic Benefits Communication

In another instance a client was puzzled by the slowness with which their new product, designed specifically to help customers save substantial amounts of money, was not selling better.  The root cause was discovered to be the distributor sales manager who simply “.. did not believe the economic argument” and refused to promote it – in spite of the customer testimonials to the effect of the savings realized.

A rapid individual re-education was required, followed by a re-training of the distribution sales force, and the product’s sales turned up shortly afterwards.

Case in Point 3: The CEO Gap

I once asked a group of 12 B2B CEOs to take out a blank sheet of paper and write down what they perceived as their best product offering, the product that they thought customers should appreciate the most. I also asked them to identify an ideal customer for that product.

I then asked them to identify the factors and calculate what economic benefit that ideal customer was likely to receive from that product. They stumbled. None of them could do it in the 15 minutes allotted.

If they can’t do it – can their sales people? 

The Point:

Price-driven markets and situations are often a symptom of; a) misdirected market targeting or b) a lack of understanding of, and poor ability to communicate, market-specific economic, emotional or physical benefits of your product offerings to potential customers. 

Customers buy for their own reasons, not yours. No matter what you have convinced yourselves about the value customers should see, they saw what they were looking for when they decided to buy.  Sometimes it’s not what you want them to see, but if it worked it is delivering real value.

So, if your sales people are screaming for price reductions and you have customers buying when you are not the cheapest price – those customers are seeing something you are not. You need to find out what that is and why. And if they are not buying when the economic case is real, independent of the price, your communication is broken somewhere along the line.

Oh yeah, one final point. If price was truly the ultimate deciding point for decisions, we’d all be driving Versas.  If it helps, here’s a link to Car and Drivers article on the 10 Cheapest Cars

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If you’d like to learn more about dealing with price-based competition call Jerry Vieira, CMC at 503.318.2696 or email to jgv@qmpassocites.com. The QMP Website is at www.TheQMPGroup.com and more insights can be found at The QMP Insights Blog

Common Sales Myth #6 – The Biggest Accounts are the Best

Here is the last in the series of Six Common Sales Myths.

For small to mid-size businesses, the decision to commit resources to target a large account should considered carefully. The primary considerations are: “What are the implications of winning?” and “How, should we go about it?”

So let me provide you both sides of the story.

 

Why the Largest Accounts are NOT the Best Sales TargetsWhale

The Competition is the Highest: Sales managers and sales people almost universally drool over the thought of landing the big account. Some folks call them “Whales”. With these whales come visions of top line revenue waves carrying on their crests big commission checks and bonus trips to Bermuda for exceeding sales production quotas. The bad news is that every competitor’s salesperson is striving for that same, beach-front room in Bermuda.

It Reduces Your Negotiating Power: Have you ever been presented with 90-day or 120-day payment terms by your large customers? Have you been confronted by corporate edicts from your large customers to buy overseas, or forced to share your product cost models or had to make a pledge of cost-downs (targeted and contracted cost reductions delivered directly to the customer). All of these can be relentless.

You May Become Too Dependent on Them:  Bankers, these days, have tightened their requirements for business loans. One of the things they look closely at is the vulnerability associated with one customer presenting too large a proportion of a firm’s business. Having a hefty chunk of business from one large customer may also make one complacent.

 

Under What Circumstances Can Large Clients be Good?

When You Are Selling a Unique Value Proposition That Is IP Protected: This greatly relieves the pricing pressure and competitive threats – but it is likely short-lived.

When you are adding desperately needed capacity to overheated market demand for your product/service commodity: When there are overall industry shortages of the product or service commodity you deliver, because of very high market demand for your customer’s products, those large “whales” swim a lot farther to find the krill they need to survive.  They also become a lot less demanding. Again, this somewhat relieves the discomfort associated with working with large customer accounts – but heated up industry demand does not last forever. 

When Your Large Customer is Enlightened: Enlightened means they have embraced the concept of true partnership – recognizing the need for mutual investment, mutual trust, mutual innovation and mutual ROI.

When Decision Making is De-centralized: De-centralized decision making increases the probability that you will find either: a) an enlightened decision maker in one or more of the myriad divisions of the “whale” or, b) divisions and circumstances to which you can deliver significant value from your company’s specific combination of value proposition and differentiation.

When They Spur You on to Innovation or Breakthroughs: The promise of a big payoff, with lots of business from a large customer, can spur creativity and product innovation. What it should not encourage is gambling. By gambling, I mean taking a long-shot that requires stretching beyond reason the laws of physics or the organization’s overall capabilities. Such gambling can quickly destabilize the financial safety net of the firm.

 

How to Eat a Whale

Yes, yes. No surprise. The answer is one bite at a time.  But where you bite first is the real question. Here are some guidelines on selecting where your bite will be most productive, profitable and nourishing.

There are 6 basic strategies in war and business – 3 F’s and 3 D’s, and no, these F’s and D’s in no way reflect my 6th grade report card. Here are the strategies, by name:

–          Frontal

–          Fragment

–          Flank

–          Defend

–          Depart

–          Develop

The subject of strategy is simply too large to cover in this blog post, so suffice it to say that 5,000 years of military history and 75 years of marketing science have demonstrated, unequivocally, that the most productive strategic combination from the list above is the combination of Fragmentation (segmenting) & Flanking (differentiation). History and research have also demonstrated that frontal assaults can lead to disaster even in the case of great initial success. Remember Napoleon in Russia, Lee at Gettysburg, the English at Gallipoli, the German army in Russia and the Charge of the Light Brigade in the Crimean War.  Or, in business terms, think Texas Instruments’ frontal assault on the watch market, Raychem in fiber optics and IBM in PCs. All were frontal assaults by large, highly confident organizations with huge assets behind them. All failed miserably. 

By Fragmentation we mean, finding a business segment or Division of the “whale” to which your value proposition provides disproportionate economic value compared to its cost.  By Flank we mean identifying, matching, communicating and demonstrating your differentiated value to the fragmented business segment that gets the most value from it, in effect, multiplying your overall value proposition.

 

A Case in Point:

Long before I was a market strategy and sales consultant, I was involved in a business that sold factory automation software. The division was attempting to sell this software solution to some of the largest, multi-site, multi-divisional manufacturers in the United States. We were spurred on by the knowledge that every large manufacturer we spoke with had active, funded corporate programs to find solutions to the common manufacturing challenge extant in all their manufacturing business units.

Talking with these corporate types, our software team energetically began to design and add capabilities to our system to assure we could handle all of the needs they had identified. 

Unbeknownst to us, a competitor had been making inroads with what we perceived as a vastly inferior, inconsequential, less complete offering.   They were selling low level, simple solutions into the divisions where decisions did not require corporate “influence”.  They were, in effect, fragmenting the account -taking lots of little bites of the whale.  By the time we had developed our comprehensive solution, the low level competitive solution had penetrated so expansively, in so many fragments of the business, that retrofitting was out of the question. 

This is just one example of how subversive fragmentation can be used to penetrate a large account – one small bite at a time.

 

The Take-Away:

Large accounts are not inherently good or bad sales targets. They are good or bad sales targets depending on:

  1. the strategy used to penetrate them,
  2. the “enlightened partnership nature” of their corporate procurement,
  3. the centralized or decentralized nature of their decision making,
  4. the strength of your IP and the economic value proposition it delivers, and
  5. whether or not you are adding industry capacity to overheated market demand

 That’s the long and short of it.

 

For more information regarding QMP’s Sales Process and Skills Improvement Workshop or Sales Improvement Consulting Services, call to 503.318.2696 or connect through our Contact Us page.

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Revitalizing Stalled Sales

 

As the economy continues to bounce along, (some say showing signs of a small movement off its bottom while others disagree), business owners and managers are getting impatient to find ways to boost revenue.  Not only are we seeing evidence of this within our own client base, but also our “Insights” blog post on “Diagnosing Stalled Sales”, published in June of 2011, has re-surfaced recently as the top-read posting on the all time QMP blog popularity-list.  The second most popular blog on that list is “The Marketing and Sales Audit”.  Business leaders are looking for revenue answers.  Standing idly by and waiting for the economic recovery is no longer a reasonable option.

As I re-read that “Diagnosing Stalled Sales” post, I realized that it was too diagnostic and not prescriptive enough.  After all, what good is a diagnosis without a treatment? Apologies to those readers who came away from that post less than satisfied. This post makes up for that shortcoming. 

Deciding What to Do

The first thing to recognize is that all revenue increases must come from one or more of the following four sources: 1) introducing new products, 2) stealing market share from competitors (new account wins in your current markets), 3) the natural momentum of your current markets or 4) penetrating new markets.

New Products:

If you have a new product-development initiative in the works, good for you.  But pursuing this option for increased revenue typically takes time and money.  Both are in short supply these days for small to mid-size businesses, exacerbated as our clients currently relate, by the challenge of tightened banking requirements.

New product development initiatives typically fall into one of three categories: a) improving what you already offer, b) meeting some new customer requirement or c) launching a breakthrough.

Meaningful overnight revenue upsides are rare from new products as it takes time to develop, tool, test and introduce a new product.  It then takes time for the market to become aware of it, understand it, change their old ways of doing things (and who they may be buying from) and begin to adopt your new product.  There are ways of accelerating this adoption rate, but only if the product is a breakthrough – something that fundamentally turns the market on its ear.  Even in that case, time is the challenge.  Twenty-five years into its existence, I still meet educated people who don’t own a personal computer, and it took 50 years for the automobile to be completely adopted by consumers.

Don’t get me wrong, new products are strategically important for a firm. I strongly encourage new product development, particularly if the product fills some need the customer didn’t even know they had – a real breakthrough.  Breakthrough products typically bring sustainable growth, give customers a meaningful reason to change and provide higher margins.  (More on this subject in a future blog post on the subject of Innovation).

So, keep developing; keep considering new ideas; just don’t expect the heavens to open and revenue to come raining down quickly.

Stealing Market Share from Competitors:

One of the fundamental principles of military strategy is, “The hardest ground to capture is the ground that is occupied. It typically takes anywhere from 3 to 6 times superior resources to take over a position from an occupier.  Interestingly, most of the initiatives that small to mid-size companies attempt (unwisely) to increase sales fall into this, the most challenging category.

These days, there are a number of popular marketing initiatives that are all the rage – search engine optimization, the use of AdWords, re-branding, social media and database marketing – to name a few.  These are not inherently bad or good.  However, the key to achieving significant growth with any of them is to assure their use in a focused way combined with growth options #1 (Introducing New Products) or #4 (Penetrating New Markets).  Using them in a focused way assures maximum return for minimum investment.

Some of you may decide that this option, stealing share from competitors, is the only one available to you and that you don’t have time and money for new product development or to try to penetrate a completely new market.  If you do, the road will be difficult and certainly take more resources and time than you anticipated.  If you can’t be dissuaded, here are some tips to make it easier:

a) Try to fragment your competitor’s market: Find and target sub-sets of customers that have a common dissatisfaction with the competitors’ offerings.  The Japanese didn’t attack the US auto market all at once on all fronts.  They focused first on the most vulnerable and receptive set of customers with a quality small car offering.  After establishing this foothold they expanded based on their proven quality reputation.

b) Tailor a market-specific benefits story to the customers in the specific target market fragment you wish to penetrate.  You may even wish to set up a separate website for that specific market. At minimum you will need a focused sales presentation.

c) Focus your sales team on that segment and train them to tell that market-specific story.  Make a concentrated effort for 90 days with frequent feedback from the sales team to see if the story is gaining traction.  The test of traction is a growing sales pipeline.

d) Never lead the penetration effort with pricing reductions.  You’ll hurt yourself.

The Natural Momentum of Your Markets:

This is the primary problem most small-to-midsized businesses are dealing with. It is true that all boats rise and fall with the tide.  That doesn’t mean that some boats don’t move around the bay faster than others, whatever the tide situation.  There are always segments of a market that trend opposite, or move faster than, the overall economy.  If the economic momentum of your primary target market has slowed, and doesn’t look like it will return quickly, then it’s time to consider growth option #4 – penetrating new markets.

Penetrating New Markets

The requirements for a successful penetration of a new market are: a) a good set of target market attractiveness assessment criteria, b) a high degree of focus in your attack on the market and c) rapid feedback and re-targeting process to use as required. You need not make a big, costly production of launching an initiative at a new target market.  Assessing attractiveness, focusing and gathering intelligence about receptivity (basically validating the market’s attractiveness) is not a big deal.

For each of the following questions, start with the phrase, “To what degree..” and score on a scale of 1 to 10.

… does this market exhibit sustainable economic, demographic or regulatory momentum?

… do customers in this market have a compelling problem that can be solved by our product?

… does our product offer a clear competitive advantage in solving that problem for the customer?

… does solving that problem reap a meaningful reward for the customer – economically, emotionally or physically

… is there a competitive leadership position available in the market?

… can we easily reach customers in this market?

… is there strong intra-market communication between peers in this market?

… can we sell into this market profitably?

These criteria will provide a starting point for a relative attractiveness assessment. You may wish to use more, or different, criteria.

Doing it:

It is common in slow economic times for sales teams to increase their activity in trying to sell to a wider range of prospects, try to penetrate large accounts that competitors own, campaign for price concessions to win new business and chase opportunities that are a marginal match for the firm’s capabilities.  As driven by the survival instinct as these activities may be and as resourceful as they may appear on the surface, they are typically non-productive.  In fact, they can be hugely counter-productive.  The results of such efforts are typically depressed profitability, unsustainable success and trapping the firm into businesses and/or products it cannot maintain.  Such activities can also dilute customer support resources, jerk around product development and operations resources, damage the firm’s quality reputation, start price-wars and cause a distraction of the business from what it does best.  It can take many years to recover from the negative consequences of impulsive sales actions taken in the fever and panic of an economic crisis.

I state the case in a dire scenario because the real key to success is focus and feedback.  Focus means staying focused on the target market you decided upon using the criteria above.  Feedback means monitoring progress, receptivity and success frequently and adjusting quickly.

The discipline of a limited number (one or two) highly focused initiatives targeted at specific new markets, followed by rapid sales feedback, has consistently produced good results.  When followed-through with discipline the results have been significant.  Our subject firms have won new clients, avoided price competition, found new ways to provide additional value to customers, increased selling prices, reduced the hysteria associated with trying to respond to every quote that comes within 100 yards of the door, achieved double-digit increases in win rates and made rapid strategic adjustments that saved them from economic disasters.

The approach we suggest requires the adoption of three basic process disciplines: 1) rapid market assessment, 2) rapid and focused launch initiatives and 3) disciplined and frequent field sales feedback.  While these disciplines may be different than what your organization has used in the past, they are easy to learn, cost-effective to deploy and yield a higher probability of success – in both challenging and healthy economic times.

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We invite you to read our related blog posts “Diagnosing Stalled Sales” and “Finding New Markets

Getting Things Moving: What to do when progress is stalled

Program delays challenge management in all types of enterprise – profit, non-profit, public and private. Stalls, stumbles, delays and barriers seem to randomly and inconveniently attach themselves to all types of organizational initiatives. Whether a firm is struggling with a critical initiative intended to dig its way out of a stuttering economy or dealing with the challenge of quickly responding to unprecedented growth in customer demand for its new product, all initiatives hit roadblocks.

Pulling Out Hair

Some suggest that roadblocks are simply a way of life in business – inevitable. That may be true. But if these banes are inevitable and ubiquitous, shouldn’t the management tool kit and training programs of the firm include an effective method for dealing with them?

I am not going to tell you that I have discovered some magic formula for the total avoidance of stalls, stumbles, delays and barriers. Rather, I will share a process and 12-point checklist for rapidly discovering their root cause and overcoming them.

From a Fiddler, comes insight

My insight into this common challenge came from the following scene in the movie Fiddler on the Roof.

Tevia, a poor Jewish farmer in Czarist Russia, is attempting to deliver fresh milk to the townspeople from his farm on the outskirts of town in time for the Sabbath. Tevia is pulling a heavy, wooden two-wheeled cart ladened with cans of milk, the harness around his own neck because his horse has come up lame. He is determined to fulfill his obligation to deliver – leaning forward and pulling in the summer heat on a dusty, gravel-strewn road.

I pondered Tevia’s circumstances. Should a pebble in the road find its way into the path of one of the cart wheels, progress would immediately come to a halt. Tevia would be faced with a choice – either attempt to lift a 400-pound cart over the pebble, or, simply remove a pebble.

The business insight?

Discovering and removing pebbles is the true challenge in making progress on a stalled business initiative ~ not pushing harder or lifting.

A process for discovering and removing pebbles:

The process we offer has four parts: 1) the nurturing of a Culture of Immediacy and sense of urgency around identifying, diagnosing and fixing delays 2) the discipline of having frequent Checkpoints, 3) immediate Confrontation of the stall and 4) a Checklist of 9 C’s for quickly diagnosing and overcoming the real barriers to progress.

All steps begin with the letter “C”.

Culture: An organization’s culture usually reflects the CEO’s vision and personal example. A disciplined drive to get things done, supported by a culture of immediacy and a sense of urgency will keep the momentum going.

Checkpoints: Frequent Checkpoints is the second most important “C”. Checkpoints are not micro-management. The purpose of a checkpoint is to discover and address barriers and enable progress – not target and fix blame. Barriers and pebbles are discovered quickly and time loss is minimal with frequent Checkpoints.

To punctuate the point, we recommend clients change the company vocabulary by striking the words “Meeting” and “Review” from all company communication and replacing them with the words “Working Session” and “Checkpoint” respectively. These new words imply a strong need for, and set the uncompromising expectation of, the active participation of all members of the team to drive to make progress. These changes in lexicon create a new cultural baseline if this drive didn’t exist prior to the vocabulary change and reinforces it if it did. Participation replaces passivity. Passively sitting back and watching someone present becomes forbidden.

Managers and leadership must demonstrate hands-on participation in these working sessions. They must lead problem solving, knock down barriers and be decisive. Working sessions should end with the following questions: Who is specifically going to do what, by when, to remove the discovered pebbles? Does anyone see any additional barriers or pebbles immediately ahead of us in the road? When is our next checkpoint?

Confrontation: Confrontation does not mean argument. It suggests immediacy, persistence and determination in overcoming a barrier. It means seeing a discussion through until a solution or path-to-a-solution is agreed upon – and not giving up until it is.

People are not confronted in working sessions – barriers are. A combination of objective tough-mindedness and social courage is required to confront a delay discovered during a working session.

In 20 years of consulting, I have found the lack of these two C’s (Checkpoints and Confrontation) are extremely common at all management levels. If the CEO or leader demonstrates a lack of discipline for checkpoints and a reluctance or fear of confronting barriers, the organization will reflect that “looseness” of good management discipline and process.

The 9 C’s Checklist

The list below identifies the most common root-causes of delays in business initiatives.  Once you have identified the correct root cause “C”, you can jump to the only “C” that is not on the list – Correct It.

Communication: The importance of this first “C” cannot be over-emphasized.  Communication-related delays   occur because someone has overlooked the need to communicate something that needed to get done, when it needed to be done and why.  It’s difficult to communicate too much.

Capacity:  Insufficient personal or organizational time available to complete important tasks can cause delays.  Most of the time critical task delays that are laid on the doorstep of Capacity are really related to inappropriate or misaligned priorities.

Capability: Occasionally a team member’s lack of understanding of how to tackle the task at hand creates a delay.  In such a case, outside expertise or training will break through the barrier.  This is a particularly nefarious “C” because individuals rarely want to admit that they simply don’t have the skills or knowledge to get around the problem – which brings us to the next “C” – Courage.

Courage: Progress often requires personal behavioral change.  We all know how difficult it is to accomplish behavioral change – personally and organizationally.  Personal courage comes into play most often, when an individual does not have Capability but is afraid to admit it.

A second type of Courage is organizational.  We have a good historical example from the 1980’s – the adoption of Total Quality Management disciplines by most major manufacturing firms in the country.  This change represented a major shift and courageous commitment made by executives.  One of its primary tenets was to first “drive out employee fear”.  Honest, open communications, generated from data and fact, and rewarding people who identified and overcame barriers earlier rather than later, helped drive out the fear of enable the desperately needed change.

Co-operation:  Typically, what appears as a delay caused by a lack of cooperation, either from an individual on the project team or from a support department, is actually caused by a priority misalignment.  Management Clarification and Communication quickly overcome these barriers.

Cognition: Ever been caught in a “deplaning jam”?  It’s the experience of de-boarding quickly from an airplane only to be jammed-up in the terminal by Grandma hugging all her six grandchildren right in front of you?  People scurrying on their way to catch a cab or to baggage claim start crashing into one another as they stop short – preferring that collision to crushing Grandma and the youngest granddaughter wrapped around her leg.  Grandma has stopped and stalled progress – oblivious to the consequences of her behavior.

Sometimes people simply don’t know they are in the way of progress by their inaction or that what they are doing is counter-productive.

Criticality: The negative economic implications of delays (and the positive economic implications of rapid success) should be visible to all members of a project team.  Creating and sustaining a sense of urgency is essential by the manager ultimately responsible for the P&L impact of the program.  When a delay is on the critical path it must be confronted immediately.  Again, sometimes people just don’t realize the critical nature of a task assigned to them.  Setting deadlines helps punctuate criticality.

Credibility: Do the team members really believe there is a need for the change initiative? Do they trust the judgment of the management team?  Has the management team’s judgment proven itself in the past, demonstrated by a good track-record of success?

Trust doesn’t happen overnight and a lack of trust may linger just beneath the surface, as a pebble that is difficult to see – perhaps buried in a small puddle of passivity.  In such a puddle, you can’t see the pebble, but you can feel, see and hear its effect.  You may be afflicted by a Credibility pebble if you hear the phrase, “Program du jour”, notice a roll-of-the-eyes in the ranks of the team when the objectives are described, or recognize a blasé attitude..

Capital: Sometimes funding is needed to overcome a barrier.  In some cases there is an ingrained philosophy, or unspoken rule of not asking for funding.  To overcome this hesitancy, set expectations at the beginning of an initiative to make capital-related issues visible immediately.

Example: A Persistent Barrier Falls to 3 of the “C” Questions

A number of years ago I was working with a client to rebuild their weak sales pipeline.  When I asked the sales manager what he thought the barriers were, he answered, “Time”. In our vocabulary that “C” is Capacity.  He continued, “We have to baby-sit every project opportunity from birth to death – including project coordination.  This makes us too busy to look for new business.”   I suggested that they document the customer engagement process, divide it into phases and assign different phases to different departments– freeing up their time to engage more new customers and new projects.  Stunned silence was the response.  No one had thought to solve the bottleneck by looking at it as a process capacity issue instead of a sales problem

I asked, “Is there anything else in the way? He said, “Training. We don’t know how to use the pipeline management system.” In our vocabulary that “C” is Capability. We scheduled training for the next sales meeting.

“Anything else”, I asked?  He said, “The CRM system isn’t designed for our business”.  They ordered a new, easy-to-deploy system that fit the business better.  It could be installed in the next 45 days in time for the next sales meeting and would cost only a few thousand dollars.  That “C” is Capital.

Anything else? “Nope”

I then suggested a series of working sessions, (Checkpoints), over the ensuing several weeks to assess progress on these pebbles and identify any new or additional barriers.

These pebbles had been jamming their cart wheel for more than two years.  In one hour, using our list of “Cs” we identified and began the process of removing them.  You can too – if you have the Commitment and the Courage to Confront them.

*****

Learn more about a QMP program for deploying a culture of Performance Excellence and Getting Things Done

Don’t Give Up on the Top Line (no matter how tough things get)

 

The Most Common Reaction to Economic Turmoil: Expense Reduction

There’s a line in the Willie Nelson tune “Nothing I can do about it now” that goes like this:

I’ve survived every situation
Knowin’ when to freeze and when to run.

Two years into the current economic downturn, there is plenty of evidence that companies are trying to do both. Firms continue to take aggressive steps in reaction to reduced demand. Cisco just announced layoffs of 6,500 employees. Other big name firms such as Merck, Lockheed and Boston Scientific also announced staff reductions.  Borders finally threw in the towel, closing its last 400+ stores.  It once had 1,200 outlets, employing more than 35,000.  And most recently, HSBC indicated it will let go between 25,000 and 30,000 employees.iStock_000009708062XSmall

Small to mid-sized company layoffs typically don’t make a lot of news. But a quick informal survey at the other end of the corporate spectrum, showed that smaller firms, particularly those without an international earnings contribution to their performance, have experienced a down-turn in revenues of anywhere from 25% to 40% from their peaks in 2007 and 2008. They’ve aggressively cut expenses and conducted layoffs as well.

Of course, there are exceptions. Companies with specialized innovations targeted at niche market problems are doing much better than firms depending only on their traditional products and markets. But by-and-large, corporate “economic adjustment” initiatives focus on operational expense reductions.

Instability in Europe continues, the DOW is down more than 1,500 points since July 1, unemployment and underemployment in the U.S. remain high, Asian demand for US exports will decline as a reflection of reduced US demand for their imports, and the US Congress is mired in finger-pointing politics vis-à-vis problem solving. Under these economic conditions, can you blame anyone for immediately reaching in the first aid kit for the expense reduction tourniquet?

Taking a Second Look at Revenue Upside Options:

Stemming the bleeding is crucial under these economic conditions. However, in the frenzy to cut expenses, the potential for revenue upsides gets short shrift. Why? Expense reductions can be swift and easily seen in reduced cash outlays. Revenue upside strategies, on the other hand, even in good times, carry with them risk. Financial executives and conservative CEOs will opt, almost every time, for the less risky, faster impact, sure thing. Revenue-upside options fall to the side of the road.

Nonetheless, there are a handful of strategies for realizing revenue upside in a down economy. Due diligence and responsible managerial behavior should compel managers in serious economic times like these to, at least consider the revenue-upside options that follow. An impulsive, headlong rush into any one of them would simply be unwise. Rather, we suggest a serious vetting exercise, followed by execution of the best.

Upside Potential #1: Market Focus

Focus is typically rejected, out of hand in tough times. When the business is hurting why would anyone in their right mind “narrow” their focus? Shouldn’t we be casting the net further?

Not necessarily.

Spending time to reconsider the market segmentation of your customer base and the unique conditions extant in each of those segments helps you identify areas that might benefit from additional focus and re-deployed resources.

Not all the market segments served by your business are affected equally by the economic winds. Not all market segments have adopted your products and services to the same degree. Not all market segments are afflicted with the same competitive infestation. And most importantly, not all segments of the market receive the same economic value from your product offering.

For example: Let’s say that, in general, customers in a particular market segment garner a 10X economic benefit from your product in a relatively short time frame. That is, the economic return on what they buy from you is 10 times more than they paid. In other segments, the return may be less. It is more likely that focusing additional effort in the market for which your product yields the highest return to the customer would have a higher probability of success than expenditures in other areas where that return is less.

In contrast, broad-brush marketing initiatives intended to expand a firm’s reach are less efficient because they: a) dilute resources, b) dilute the economic return differentiation of your brand, c) begin to encompass more competition in each new segment and d) don’t adequately leverage your greatest successes. Focus is likely to be more effective and profitable.

Upside Potential #2: Pricing

This alternative has two options: 1) holding prices and 2) increasing prices

Holding Prices: The competitive nature of tough economic times inevitably presents opportunities for price cutting, particularly as a means to close hotly-contested deals. The reasons for this are many. First, weak, undifferentiated competitors are starting price wars. Secondly it’s the easiest option for the sales person and requires the least amount of sales effort. Third, it typically doesn’t make much of an impact on sales commissions, unless the commission is tied directly to the profit margin of a deal. Fourth, sales people are not trained or disciplined enough to sell on value. Fifth, in tough times customers (particularly purchasing managers) know they can request price concessions and “work” one vendor against another. Finally, owners and managers frequently don’t have enough good first-hand information or a well-enough established relationship with the key customer decision-makers to mitigate price discussions.

The truth is, allowing price cutting, even in tough economic times, is really an admission of several foundational weaknesses. The product is may not be providing a differentiated economic value to the customer (wrong target customer). Management may be out of touch with customer decision makers. The strategic market segment focus is one that has too much competition. Or managers don’t understand how to direct their sales team on how to avoid price-based competition.

In a mini-workshop, I asked CEOs of small to mid-sized B2B firms to imagine their best product being purchased and used by their best customer. I then asked them to pencil out what they thought the 3 year economic impact would be on their customer – that impact being the amount of profit their product would drop to the customer’s bottom line. For example, if their product was of very high quality, what would the economic impact be to the customer for purchasing the high quality product vs. a lower quality product from one of their competitors?

In this 15-minute exercise, not one CEO was able to arrive at an answer. If the CEO can’t describe it, how can they expect their sales people to? If the sales people can’t explain it, how can price-based competition be avoided?

Raising Prices: A number of years ago we were working with a client whose new product adoption was stalled, gaining virtually no traction in the marketplace no matter their continuing effort to increase distribution agreements. It was priced 3X higher than the most popular competitive approach. Of course, the sales people thought their job was futile and continually pleaded for significant price reductions.

A brief assessment showed that a certain portion of the tiny installed base went to a segment of the market whose needs were unique. Only this product could meet those needs, for a myriad of reasons. (Interestingly, initially the market had found my client, not the other way around.)

Rather than reduce prices we suggested the business refocus their efforts to this one segment, highlighting to potential customers the unique fit and match of the product to their unique needs. After focus and redeployment of time, money and energy (no increases), adoption took off, with no accompanying price reduction.

Now some people would call this just another version of Revenue-Upside, Option #1 – Market Focus. That’s largely true. However, the rest of the story is that while focused and penetrating this particular segment, customers began to request additional features and functions – which in turn led to increased selling prices. In the end, the average price point rose to 4X its original. (Remember, the original was 3X the competitive approach).

At no time was there a need for a price reduction and the business turned completely around, growing much faster than anyone had anticipated. By focusing on market segments where the economic value and unique characteristics of your products are understood, the opportunity exists for improved performance products at increased prices.

Upside Potential #3: Fragmenting Offerings

Sometimes fragmenting your offering into more affordable pieces makes it more digestible for clients. Increased revenue accrues when decisions that otherwise would have been delayed can be made with smaller financial commitment by the customer. This provides your firm at least a small amount of revenue vs. none. It also sets the groundwork for follow-on purchases.

When fragmenting your offering, selling prices of the fragmented pieces need to be set so that the sum of all the pieces of the fragmented offering sum up to more than what would be charged were the product/service sold all at once. Is this “sum-of-the-parts pricing” gouging? No. The costs of doing business associated with the planning, coordination, administrative management and handling of multiple orders justifies the increased pricing – and you can be honest with customers about that price penalty. They understand that it costs more to do business that way and might even be encouraged to buy larger chunks to avoid paying that premium.

Depending on the type of product or service, fragments or phases might be identified as any on the following list: planning, design, testing, tooling, manufacturing, test, integration, set-up, training, service and/or recycling. The bottom line is that fragmenting your offerings should make it easier for customers to buy something rather than not buying a more costly nothing.

Upside Potential #4: Adding Services to Product Lines

Have you noticed that, these days, nearly every durable-good purchase comes with an offer to buy a replacement or service contract? Last week I bought a 16GB PC thumb-drive for $27.99. The checkout clerk asked if I wanted to buy the replacement warranty. I declined, but certain types of renewable service warranties can be very profitable add-ons.

Upside Potential #5: Acquisition or Licensing

Opportunity to acquire businesses and intellectual property during major economic downturns increase as companies struggle and values are depressed. However, as with any acquisition at any time, there is reason to be cautious.

Buying a competitor’s business to capture their customer base (barring SEC denial) is not necessarily a coup, even at a bargain price. Your competitor’s customers may be receiving a technologically obsolete, poor quality or functionally inferior solution. In such a circumstance, you would be wiser to boost investment in your own product development effort vis-à-vis buying your competitor.

Opportunities for acquiring intellectual property may arise more frequently in tough economic times as well, as challenged companies look to find sources of cash. Turning IP (purchased or licensed) into products and then into cash, however, doesn’t typically happen quickly. A better way to ensure a speedy IP-to-cash transition is to acquire IP that can be integrated quickly into your current product offerings, increasing their functionality, their value to the customer and their selling price.

Just Don’t Do Something, Sit There! Think!

In most businesses the ratio of execution-driven people to strategic-thinking people is low. Of the two roads to survival in a downturn, expense reduction and top-line, the expense reduction road is best travelled by the tactically driven, the top-line by the strategy-minded.

The strategy-minded are often those at the top of the organizational pyramid. So, it’s only self-discipline and personal values that will compel people at the top to consider revenue upside.

George C Scott in the movie Patton said this to his troops.

I don’t ever want to hear we’re holding anything. We are advancing all the time.”

Be brave. Seriously consider the revenue-upside options in the face of adversity.

*****

Learn more about the QMP Marketing and Sales Engine and how it can revitalize both top and bottom-line growth

The Big Deal: Sorting Fact from Fiction in the Sales Pipeline

 

The Big Deal

Every sales manager, business owner, general manager and CFO, at some point in their careers, have been entertained by the overly-enthusiastic sales person describing the “Big Deal” that was about to close. And unless those managers were completely naïve and inexperienced, a twinge of skepticism should have arisen. Was what they were hearing, in fact, real?

When hearing about a “Big Deal”, managers must confront the challenge of what to do about it – ignore it, or prepare. Preparation may comprise some or all of capacity planning, inventory commitment, equipment capacity increases, cash planning and workforce planning. Failure to anticipate these factors can result in an inability to deliver to the customer what they want, on time, should the deal actually break. On the other hand, a knee-jerk financial commitment based on the potential of the deal, can leave the firm with a lot of unusable inventory should the deal fail to materialize.

So, how does a manager judge the reality of the “Big Deal”?Contemplative Businessman

Here’s an old joke that serves as a guideline for the most skeptical.

Question: How do you know when a sales person is exaggerating?

Answer: His lips are moving.

While this approach may appear easy, it is not dependable. There is a better way to sort through the reality of the “Big Deal”.

 

Ask Six Basic Questions:

The likelihood of closing a “Big Deal’ can be assessed by answering six basic questions. As you answer these questions, keep in mind is that the answers to the first five are only valid from the customer’s perspective.

 

Question 1: Compelling Need

To what degree is the prospective customer confronted with a real, compelling problem or challenge that needs to be addressed quickly or can the customer do nothing?

Research has shown that between 30% to 50% of all opportunities in a sales person’s pipeline never actually close. The customer simply never buys anything. These are called “No-Decision” outcomes.  The sales person seems to be the only one convinced that there is a customer compelling need that will result in a buy. No matter how convinced your sales person may be that the customer has a need, the only opinion that counts is the customer’s.

To further pursue this line of inquiry, you might continue by asking: Is there a deadline by which the customer problem must be fixed? Is there a significant economic penalty, safety consideration or other obvious consequence if the customer problem isn’t fixed? Another revealing question is, “Can the customer do nothing?” Or, “What is the economic or other consequence to the customer of doing nothing?”

The lack of a compelling need, leads to the large number of “no Decisions” in a sales persons pipeline.

 

Question 2: Economic Benefit

To what degree is there a significant economic benefit to the customer if the problem / challenge is resolved or the need filled?

Businesses, too often evaluate the economic value of a sales opportunity only from their own perspective. How much revenue or commissions will it bring to us? While this is a good way to evaluate attractiveness in terms of the bottom line, how much money your firm can make is completely irrelevant to the likelihood of the deal closing. In most business-to-business environments, decisions to buy are made by customers based only on the degree to which “they” believe that “they” will make money. In other words, there must be a significant economic benefit in their favor, well beyond the cost of purchasing your product or service, for the deal to close. The economic balance must be disproportionate in favor of the customer. This is the basis or all ROI.

 

Question 3: Match

To what degree do your capabilities (products and services), precisely and completely meet the needs of the customer?

As convinced as you may be that you have a significantly well matched solution which solves every dimension of their challenge, you only score closing points if the customer believes it.

 

Question 4: Competitive Position

To what degree does the customer believe your solution is the best of all the alternatives available?

While a number of competitors may provide a reasonable match to the problem or need, all alternatives are rarely equal. Let me repeat for emphasis. Convinced as you may be that you have a significantly advantaged solution, you only score points if the customer believes it with the same conviction. And unless you can translate that differentiated position into a differentiated economic benefit to the customer, you miss a great opportunity to solidify your advantage in the customer’s eyes.

 

Question 5: Champion

To what degree do you have a high-level, influential and authoritative decision maker believing your solution is best?

A “Champion” is a person in the customer organization that likes your solution, believes it is in the best interest of their company to select it, wants it to win and is working toward that end. All Champions are not equal. The only Champions that really count are those with the highest composite score on three dimensions: Influence, Power and Affinity.

Influence is the degree to which they can influence a decision. The degree of influence may arise from technical expertise, seniority, family influence, organizational rank or some other source. Authority is the degree to which they can unilaterally make the decision and Affinity is the degree to which they are attracted to your solution.

Champions that are likeable, who like you, and are always willing to have lunch with you, are not “real” Champions unless they score high on the Influence-Power-Affinity scales.

 

Question 6: Leverage:

To what degree does winning this opportunity bring additional benefit to your company?

This is the only one of the six criteria that; a) doesn’t increase (or decrease) the credibility of the opportunity and b) is only important from your perspective, not the customer’s.

Leverage may exist in several forms: straight out earnings, a new first-time market capability, a first-win at a new account or a technological breakthrough that can be leveraged to other customers.

Even though it’s not customer-centric this factor is good to evaluate, so you can assess the benefit of concentrating and/or redeploying assets to winning this “Big Deal”

 

Getting to Reality:

The word confrontation can have a bad connotation, but for purposes of analyzing the “Big Deal”, let’s agree that confrontation simply means getting to the reality of it in a respectful, yet determined, way.

Some managers find it difficult to confront a sales person about the reality of a “Big Deal”, particularly when others are in the room. Presumably this is out of respect, to avoid the embarrassment of seeming confrontational, or to avoid appearing not to trust an employee. One way or another, these emotional barriers to assessing reality need to be overcome.

A highly respected local CEO was participating in panel on Performance Management recently. He was asked how he avoided hesitating and how he handled the discomfort associated with confronting these and other kinds of important issues. His response, “I was always more afraid of the consequences of not confronting the issues.”

There’s typically a lot riding on a “Big Deal”. The six areas of inquiry listed above will help you and your organization stay focused, concentrate where the opportunity is truly best and allocate scarce resources appropriately.

*****

Learn more about the QMP sales process for accurately qualifying and closing sales opportunities.

Looking in the Performance Excellence Mirror

 

A Performance Excellence Culture is the Nutrient-Rich Soil that Enables your Business to Grow and Thrive 

Between 1986 and 1996 the Evergreen Research Project was undertaken to identify business practices that were common to high performing firms.  A team of 50 leading academics and consultants compiled data on dozens of companies and the 200 most common business practices used.  The objective: find those few practices that truly made a difference.

The findings were published by William Joyce, Nitin Nohria, Bruce Roberson and McKinsey & Company in a book entitled, “What Really Works: The 4+2 formula for sustained business success” published by Harper Collins.

The conclusion:  High performing firms adhered to four common behavioral imperatives, plus two behaviors from another secondary group of four.Two sides of getting ready in the morning  Success was demonstrated by a 15X greater Total Return to Shareholders than companies not practicing these business behaviors.  Not only was their performance better, it was sustained over a longer period of time.

The four essential practices are:

  • Make your strategy clear and focused
  • Execute flawlessly
  • Build a performance-based culture
  • Make your organization fast and flat

You’ll need to buy the book for the rest. But here’s my point: The bottom three essential practices all relate to performance excellence.

Good soil yields good crops

A culture of performance excellence is like highly nutritious soil.  Business initiatives are seeds.  Even a marginal seed planted in excellent soil will yield a crop – maybe not a great one, but at least something.  On the other hand, an excellent seed planted in depleted spoil will yield nothing.

If you must work at anything in your firm, it is most imperative to work on fortifying the soil by building a culture of performance excellence.

Taking a quick look in the mirror

If you’re wondering whether your business culture is nutrient-rich, take the organizational performance excellence self-assessment that follows. For each of the bulleted items, ask yourself, “To what degree is this performance discipline practiced consistently across our business?” Rate each on a scale of 1 to 5, with 5 being the highest rating. When you are finished, total the results.

  • Goals and Objectives Setting: Our goals and objectives are clearly understood by all.  They are strategically-sound, economic and quantitative.  Everyone has several goals.  They are specific, coordinated and aligned.
  • Project Planning:  Our project plans are detailed.  They have timelines, milestones and adequate funding.  We consider team member selection carefully based on skills not simply availability.
  • Ownership/Leadership:  The ownership of each of our major business initiatives is clear.  There is a single point of project manager responsibility and authority.   Our project managers exhibit good project leadership skills and resourcefulness.
  • Sense of Urgency:  Meeting deadlines is a cultural imperative in our firm.  Meeting commitments is critical.  People work late and on weekends to assure they don’t miss a deadline.
  • Expectations:  Individual performance expectations are clear, documented, measureable.
  • Accountability:  Individual rewards and consequences are clearly understood.
  • Measurements / Metrics:  Both process and outcome metrics are measured in all important aspects of our business.
  • Checkpoints / Feedback:  Our business initiatives are characterized by frequent and productive team working sessions vis-à-vis presentations, reviews or ineffective meetings.
  • Personal Performance Management:  Individual goals, targets and roles are clear.  People’s performance evaluations relate directly to achievement of goals and the way in which they were achieved or not achieved.
  • Training Programs:  We have standard training programs across the firm for all critical roles.   Training is expected.  People are not assigned to a task without being trained, tested and qualified.
  • Process Consistency:  Our critical business processes are consistent across the firm as are the tools and systems used for executing them.
  • Priorities:  There is high level of clarity amongst our employees regarding priorities.  They know how to determine the difference between urgent and important.  They consistently follow-through on tasks to completion.

It is not uncommon to find a struggling business scoring (if the assessment items have been rated honestly) in the mid 20’s.  But whether the core is 23 or 38, imagine the economic benefit of driving either score to something closer to 50.

Changing the Culture

It’s not hard to imagine the concern a small to mid-size business owner might feel after taking this look in the mirror.   Embarking on a cultural change that would move the company from, say, a score of 23 to 48 might well seem daunting.  What will his people think?  Will they head for the door?  Will they embrace the initiative?  Will they understand how important it is?

A well-respected and successful CEO, once told me that when faced with the uncertainty, consequences and fear associated with making critical decisions,  he was always spurred on to make those tough decisions by the uncertainty, fear and consequences of not making the decision.

Like every major quest, if considered as a mountain it appears impossible to climb, but as a series of small, guided steps it is achievable – and worth it.

How much is it worth?

If you are a small to mid-sized business owner and can achieve a 15 times greater total return to shareholders than your competition, how much more will your business be worth when you sell it?  And how much more will you be worth in the years between now and then.

And what would the consequences be if your main competitor did it first?

*****

Learn more about a QMP Performance Excellence cultural transformation