Category Archives: Management

10 Observations on What Makes a Great Leader

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Many books have been written on Leadership. I haven’t read most of them. But that does not mean I haven’t worked for and with both good and bad leaders.

Based on my observations from a combination of working in both small private and Fortune 100 NYSE corporations, and as a consultant to industry executives over the last 20+ years, I would like to offer my readers, a profile of an outstanding leader.

Vision:

A great Leader must provide a simple, clear and optimistic picture of where the organization is headed, namely, its Vision. It must be succinct, clear and frequently communicated by the Leader both publically and privately. It must make sense, yet be emotionally charged and energizing. People must clearly recognize it as relevant to both their own and the group’s best interest.

Decisiveness:

Participative management notwithstanding, whether folks agree with a decision or not, a decisive Leader generates the most respect. In fact, research has shown that decisiveness is the single most admired characteristic of a Leader.

Rapid and Accurate Problem Solving:

There is little that can erode confidence in a Leader more than that Leader’s confusion as to what the problem is and how to work their way out of it. Followers appreciate rapid and accurate assessments and succinct repair plans.

Energizing:

Closely related to Rapid and Accurate Problem Solving is the ability of a Leader to get things moving when the organization has become lethargic or bogged down.

Relevant Experience:

Leaders who have come up through the ranks are more respected. The perception is that they have the ability to better relate and understand both the situations and people at the lower echelons in the organization. They recognize that these people are the “Drive Train” that keeps the organization moving forward. If a solution doesn’t work for them, it won’t work for anyone.

Insight:

The ability to cut through all the extraneous clutter and focus in on the one critical issue that needs to be addressed first. This is slightly different than the Rapid and Accurate Problem Solving factor, which is more related to crisis situations.

Clear Headed Thinking:

… particularly in a crisis.

Care:

A great Leader has to demonstrate to people she/he sincerely cares about them, their families and their future. Selfish motives are quickly recognized by followers. Hypocrisy is not as quickly revealed, but eventually shows its embarrassed and humiliated face.

Field-Proven, Sound Judgment:

Followers are more likely to respect someone who has been through a major struggle and survived based on their instincts, judgment, brains and resourcefulness.

Visibly Engaging and Listening:

Followers need to see their Leaders in real time and know those Leaders are not fearful of mingling, engaging and, most importantly, listening.

Final Thought:

Not all managers in your company are, or will be, great Leaders. Not all managers need to. But all managers must periodically lead to one degree or another and, in such a role, they must act as highly visible examples of your corporate values, its culture and expectations.

As a CEO you might consider asking yourself the degree to which each individual manager is managing, leading and setting the example you want – and if they are not, what you are going to do about it. A great Leader would not do nothing.

Remember, your followers are consciously measuring you against the same 10 factors listed here. If you fail to behave and model these Leadership characteristics you leave yourself strategically vulnerable to those of your industry competitors that do.

*****

Copyright The QMP Group, Inc. 2015   All Rights Reserved

Jerry Vieira, CMC is President and Founder of The QMP Group, a Portland, OR based management consulting firm specializing in Market Strategy and Marketing & Sales Organizational Transformations. Jerry can be reached at 503.318.2696 or Jerry@qmpassociates.com

Discovering the Gold Within Easy Reach

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I am always amazed at the cost and relative uselessness, for small to mid-size B2B firms, of formally published market research reports. Certainly, strategic business decisions must not be made in an informational vacuum, but expecting meaningful, actionable information to come from a general market research report, read by dozens, if not hundreds, of competitors, is delusional.  

So, where should small to midsize B2B firms look for accurate, current, meaningful and actionable market data to support their strategic breakthroughs?

 

The Free Source of the Most Valuable Market Research:

Few small-to-midsize B2B businesses avail themselves of the hidden army of market researchers already at their disposal.  That army comprises any and all of their employees that have regular interaction with customers or, their customers’ markets. That team includes the sales and marketing team, product designers, quality people, customer service, their suppliers and their procurement people. This army is already there and on your payroll. Take the simple steps to mobilize it.

 

How to tap that resource?

There are several low-no-cost actions a firm can take to extract gold from that untapped resource.

  1. Make the expectation for discovering, recording and reporting market intelligence explicit and universal. And reward it!

The most significant growth breakthrough I have personally witnessed was identified by my client’s CFO who discovered, through a casual comment made by his next-door neighbor, an unexpected market for their product that no one had anticipated.  A quick investigation revealed that the economic benefits received by the single customer they already had in that market were so significant that simply by refocusing the sales force on other similar customers in that market, the firm’s sales more than doubled.

The great business thinker Peter Drucker suggested that firms should pay particular attention to, what he calls, the unexpected success – no matter how small they may appear on the surface.  These unexpected successes can signal huge growth potential.

To get the market intelligence gathering collection process started, some firms simply add a section to their employees monthly or weekly reports, entitled “Market Intelligence”.  And it helps to provide public recognition and perhaps a surprise bonus for the most fruitful information provided.

  1. Train the team on what to look for and how to ferret out key information

What to look for may encompass: bits of competitive intelligence, customer and user data, any information about the growth, health and what’s driving the customer’s markets, and, most importantly, applications and uses for your products that are innovative, provide high customer value and that you hadn’t thought of yourself.

Train and expect your team to develop heightened awareness, keen curiosity, ask lots of questions, and dig deeper into customer motivations, benefits and markets.

At another client, a very small volume, but rapidly growing, part they were supplying to a customer, was discovered to be an early indicator of healthy growth in an emerging strategic market.  As in the previous case, a simple partial refocus of the sales team to that sector created multiple years of strong double-digit, very profitable growth.

  1. Create a standard business process for collecting, analyzing and making decisions based on that information

A small company may have, when all hands are tuned on to market intelligence gathering, a dozen or more people regularly feeding their observations into an analysis and clearing house function.  One individual, equipped with a good set of analysis tools, is all it takes to assess that data – and it’s not a full time job.  But the rigor and discipline associated with that analysis must be maintained and acted upon for the results to be resalized..

That analysis tool kit must enable the sorting and validation of hidden customer value, target market attractiveness, competitive positioning opportunities and untapped market potential.

The only thing standing between you and reaching out for that gold that is within your reach, is simply the decision to do it.

*****

For more information on how to tap into market data gold laying there in front of you, call Jerry Vieira at 503.318.2696 or email to Jerry@qmpassociates.com

The Big Squeeze

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I commiserate with the owners of privately-held, small to mid-sized, business enterprises.  They’re getting a raw deal.

Consider this. That classification of business firms accounted for 64 percent of the net new jobs created between 1993 and 2011.  In creating jobs, small firms make an invaluable contribution to the well-being of, not only their employees and their families, but also their suppliers, and the communities they live in.

So why have we, as a nation, squeezed small business into a vice?  Why are we making it so hard for them to succeed, thrive and fulfill their purpose?

 

A Generational Impact Too

Amongst the ranks of small business owners are a good number of Baby Boomers whose dreams of a comfortable retirement have foundered on the reef of The Great Recession.  For years they worked hard, looking forward to a reasonable reward for their risk, a return on their financial investments and justification for the family sacrifices that were part and parcel of starting and running a small business.

The Baby-Boom owners I have spoken to also want to leave a legacy. They wish to pass on a vibrant firm that continues to provide employee and community value – beyond their own retirement.  And while the current state of economic affairs may be particularly hard on these BBBBs (Baby Boomer Business to Business) owners, the situation is largely the same for all owners – independent of age.

So, I stand with these men and women. We should appreciate them more – and give them a freakin’ break.

 

A break from what?

Small to midsize B2B business owners are currently trying to find the elbow room they need to achieve their goals. But they are gripped in a five-jawed vice – each jaw bringing its own unique and undeserved pressure from a completely different angle.

 

Jaw 1: The Economy

The economy is still underperforming.  A GDP growth projection of 2.7% for 2014 seems to be the best we can muster and low GDP growth has been chronic since 2009.  There is no coasting possible.  All progress must be self-generated by slogging through the economic swamp.  There is no tail wind and the swamp bed is mushy

The chart below shows the meager U.S. GDP growth from 2001 through 2013.

Year GDP Growth Historical and other mitigating events
2001 1.0% Bush 43 became President. Recession worsened by 9/11 attacks and War on Terror, but helped by Bush tax cuts. Fed started lowering rates.
2002 1.8% Bush calls for regime change in Iraq, creates Homeland Security.
2003 2.8% Unemployment at 6%. Fed lowered rate to 1%. Iraq War began.
2004 3.8% Fed started raising rates.
2005 3.4% Hurricane Katrina cost $250 billion in damage.
2006 2.7% Fed funds rate raised to 6.75%. Swine flu epidemic.
2007 1.8% Dow reached new high of 14,164.43. Inflation at 4.1%. Fed dropped rate 3 times, to 4.25%, to ease banking liquidity crisis. LIBOR rose to 5.6%.
2008 -0.3% Stock market crash of 2008 led to global financial crisisand $350 billion spent on bank bailout bill. Fed lowered rate 7 times to 0%.
2009 -2.8% Obama became President. Dow dropped to 6,594.44.Obama Stimulus Act spent $400 billion, reversed downward spiral.
2010 2.5% BP oil spill. Bush tax cuts extended. Obamacare and Dodd-Frank passed.
2011 1.8% Japan earthquake and Mississippi River floods. 10-year Treasury yield hit 200-year low. Iraq War ended.
2012 2.8% Presidential campaign and fiscal cliff created business uncertainty. Super storm Sandy hit East Coast. See U.S. Economy 2012
2013 1.9% Slow growth thanks to sequestration. Low nominal GDP growth thanks to low inflation.

 (Sources: Bureau of Economic Analysis and www.About.com for the historical notations and links)

The last year for which GDP growth exceeded 4% was 2000. Even our dual wars in Iraq and Afghanistan didn’t help much.  After fueling defense-related industries for the last 10 years, we are now watching that sector have to adjust to the ends of those conflicts – and simultaneously deal with sequestration.

And if these low growth figures weren’t enough, adding insecurity to the frustration of slow momentum these businesses continue to be susceptible to random bursting of economic “bubbles” – housing, mortgage-backed securities, banking regulation, stock prices, commodities and the occasional international crisis that threatens exports.

 

Jaw 2: Banks

In 1999 two key provisions of the 1933 Glass-Steagel Act were repealed leaving banks free to trade risky securities. Abetted by “bundling” and complicit rating agencies, they screwed up by investing too heavily in mortgages and mortgage based securities. The house of cards collapsed, the stock market crashed, financial institutions started to hemorrhage, retirement portfolios lost huge sums, and Congress was compelled to provide a $350 Billion bailout to keep the economic system functioning. The price to pay for the bailout? Bank regulations were tightened.

But, this crisis-based bailout gesture had the unintended side effect of turning the screws tighter on the most vulnerable of the banks’ commercial customers – small business owners.

Dodd-Frank attempted to fill the regulation vacuum.  But it still hasn’t come into full effect, and certainly hasn’t re-established the separation of commercial and investment banking. The banker-bonus drug is still too powerful to cut off cold turkey. The earth under the feet of banking is still quicksand and no one has, of yet, replaced the warning signs or chained off the path to that repeated trap.  Think about the repeated banking crises of 1890, 1927, the 1980s and 2008. It seems like small business is forced to go along for the ride.

Banks are tightening credit lines and covenants for small business, and often simply declining to lend – even when the business comes to the bank with purchase orders in hand needing cash to buy raw materials.  If you accuse the banks of being unreasonable, they blame the regulations and the regulators. The regulations may have been designed to avoid bubbles, but they didn’t prevent conspiratorial manipulation of the LIBOR rate or the potential to continue to risk banking crises from investment speculation. We still have banks too big to fail… and still have to catch them when they fall. No real accountability exists.

Feels like blackmail. No relief from the banking jaw any time soon for small business.

 

Jaw 3: Large Mega-Customers

Larger companies are in a merger and acquisition frenzy. This gives them more and more purchasing power – and their small-business suppliers less and less power. There is little negotiating in these relationships. Pricing must be bare bones. The information regarding manufacturing costs must be shared. Payables policy must be extended to 45 or 90 days. Small firms are basically financing their huge customers with these unreasonable payables policies. It’s brutal.

Jaw 4: The Government & Politics

Government and Politics are not the same thing – though, of course, they are co-dependent. Politics is the manipulation of power to achieve some legislative end, while government is the deployment and enforcement of that legislation.

In the last 10 years, our leaders saw fit to commit two trillion dollars on two wars, and another trillion dollars on tax breaks. Think about it. What could three trillion dollars have meant to infrastructure spending during the Great Recession? How many of those construction workers furloughed when the housing bubble burst might have been absorbed by infrastructure projects – railroads, highways, bridges, water systems?

Politics and government has conceived, designed and currently maintain the road we, as small business owners, must travel. Politics is the R&D group that can invent better, or more difficult, ways to help us travel that road by either removing the bumps and pot holes in our paths, straightening the curves and loops that delay us, widening the thoroughfare so more of us can get to where we wish to go and/or inventing better transportation machines.

Is there anyone reading this that thinks that in our current political environment, our congressmen are likely to collaborate and accomplish any of those goals? Let’s not hold our breath.

 

Jaw 5: The Clock

Baby Boomers are not getting any younger. That repetitive, faint clicking sound they hear is not the machinery in their factories – it’s the clocks on their walls.

 

What does it all mean?

In the bigger picture, as we continue to make life difficult for the most productive of our people, other nations of the world are blowing by us in quality of life, health outcomes, education, innovation, public transportation, high speed internet access and infrastructure.

Michael Porter, Harvard Business school professor and well-known business author, has developed and done research on a worldwide comparative model for Social Progress, as measured by a Social Progress Index. The United States ranks 16th in the world overall.

It just seems another example of us being are our own worst enemy.

The irony is that, in general, no matter your political leaning we usually agree on the outcomes we’d like to see; a higher GDP, a lower unemployment, healthier citizens, higher educated citizens and a higher quality of life.

Clearly, crunching one of the main contributors to those beneficial outcomes, the small business, is not the answer.

*****

Copyright 2014 The QMP Group, Inc.   All Rights Reserved

For more information about working with the QMP Group, call us 503.318.2696 of through our use our Contact Us page.

The Key Components of a Thorough Marketing & Sales Audit

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iStock_000009708062XSmall

The word audit can strike fear into the heart of almost any person or organization that is its target. “Audit” conjures up images of someone in a position of authority digging through paperwork and records looking for evidence of malfeasance, mistakes, incompetence or non-compliance.

However, when a business performs an audit on their marketing and sales function, they typically just want to answer two basic questions:

  1. What can we do to improve our sales results?
  2. What can we do to improve our marketing and sales ROI?

At its purest intent a marketing and sales functional audit should not conducted to uncover incompetence, to fix blame or to penalize, but rather to discover opportunities to make both marketing and sales more effective. If the motivation of an audit is solely to find a scapegoat or assign blame, the problem is not in the firm’s marketing and sales function, but rather in its culture and leadership.

Step 1: A Quick Starting Point – The Self-Audit

We, at QMP use an 8 dimension, quick 50-question self-audit or self-assessment approach to determine whether there is need for deeper investigation. The output is a simple spider graph which illustrates the impressions that the executive team has of its marketing and sales organizational capabilities and effectiveness.

Figure 1

 

 

Copyright The QMP Group, Inc. 2012 All Rights Reserved

The shape of this figure provides a general idea of where performance gaps are perceived to exist. However, this is a chart which reflects executive impressions and personal observations – not a formal, detailed analysis of processes and capabilities. If the chart reveals high capabilities, but sales performance is actually poor, there is strong misperception among the executive team. But if both the chart output and the firm’s performance are satisfactory, the need for a detailed audit is probably not compelling.

(Click here to request this free self-assessment tool)

Step 2: The Detailed Audit:

If a detailed audit is indicated, the model in Figure 2 provides a framework for conducting that audit. Each of the 8 dimensions of the spider graph will be evaluated within that model.

Figure 2

he Marketing & Sales Engine™

Copyright The QMP Group, Inc 2002 All Rights Reserved

All gears must turn efficiently and together for optimum revenue generation. If any gear is broken or stuck, the engine stalls – and it can only turn as fast as its slowest gear. If a marketing and sales audit is going to identify opportunities for breakthrough or discover where things are malfunctioning, an audit must assess the systemic working of all the gears – even the little ones. One must even include in the audit the oil in the oil pan – which we call Performance Excellence, or the Culture of the firm. A healthy corporate culture can grease, or an unhealthy corporate culture grind to a halt, the firm’s marketing and sales engine.

Auditing the Gold Gear: Market Strategy:

“Even the best soldier becomes a casualty when engaged in unwise battle strategy.”

Audits of Market Strategy often lead to the greatest sales breakthroughs. It is common that a strategy audit reveals a lack of market focus. And though it may seem counter-intuitive to consider narrowing rather than expanding one’s market range, a redeployment of resources to a more tightly-defined, more economically lucrative market segment, almost always results in accelerated growth and less cost.

In one case, prior to a strategy analysis, a rather smug marketing and sales executive said, boasting “I don’t care who buys them (his products) or for what reason. All I care is that they buy a lot.” His attitude reflected itself in the highly unfocused efforts of his sales team. This manager did not expect significant impact, nor did he believe much would be revealed, from a strategy audit. In actuality, the audit triggered a strategic market re-focus which triggered strong double-digit growth for a handful of years while enabling price premiums along the way.

Opportunities for sales breakthroughs are available by looking into other aspects of the firm’s strategy as well, not just its strategic focus. Breakthroughs can be found in analysis of the channel-to-market, pricing policy and the alignment (or rather misalignment) of all the components of the strategy together.

Auditing the Blue Gear: New Business Development

The Business Development gear comprises what most people consider to be classic, tactical marketing. It includes the firm’s e-commerce process, web presence, advertising, sales tool kit, lead generation process, print collateral, trade shows, branding, press relations, publicity and social media. Contrary to the intuition of many – more emphasis on this gear is not always better. Conflicts arise when the strategic intent is to focus while the tactical marketing team is hell bent on “getting our name out there” to as many people as possible.

A Business Development audit can reveal such things as: a) misaligned messages and focus, b) opportunities for shifting resources from expensive promotional efforts (trade shows, advertising) to more effective and less expensive targeted publicity and press relations, or c) a poorly conceived sales tool kit.

One of the most common gaps in a firm’s Business Development program is the lack of a “Thought Leadership” program. In general, thought leadership is the process of building a highly visible industry presence and reputation for your firm and your people, as industry experts. When people look for a solution, they often seek out the experts first – most of the time these days, with an internet search. Thought Leadership is typically the role of technical specialists, marketing spokespeople or senior executives of your firm – the people with enough technical or industry knowledge to be considered experts. “Thought Leadership” involves public speaking, writing and publishing articles, writing blogs, participating in industry association panels, conferences and committees and even involvement in community issues. That activity is heavily reflected in internet presence.

Auditing the Red Gear: Sales Process Disciplines

Within the sales function, the audit checklist is long. Here’s a sampling:

  • the reality, quality and current value of the sales pipeline
  • the usefulness of the sales tool kit
  • the relevance, effectiveness and currency of the sales training program
  • overall sales process effectiveness
  • the discipline of providing, and quality of, market intelligence feedback
  • the sales person’s understanding of the value proposition, differentiation and ideal customer profile, particularly for new products
  • the alignment of the compensation plan to the strategy

Something as simple as re-establishing focus on the Ideal Customer Profile can achieve rapid and significant results. While running a mini-audit, one of our clients discovered their sales people did not have a clear idea of the types of opportunities they should be pursuing. Sales sent in everything they dug up for a bid, swamping the quote department.

We took the client through a focus exercise and profiled the ideal opportunity. It took only a couple of hours to formulate. Within 9 months of this re-focus, their win rate had increased by more than 15% while the number of quotes generated decreased by nearly 33%. They won more of the right kinds of profitable opportunities. It was that simple. Less waste. More success. No blame.

Low-to-no-cost adjustments to issues discovered in an audit are common and can significantly increase sales productivity.

For example, research has shown that 35% to 50% of the customer opportunities in a sales person’s pipeline will never reach a “buy” decision. These are costly, unproductive investments of sales and support resource that have ended up in the “No Decision” bucket.

The likelihood of an opportunity ending in a “No-Decision” is inversely proportional to the degree of the “Compelling Need” a customer feels about solving their business problem. If a customer is not faced with a compelling need to fix their problem they will not buy any solution – yours or your competitor’s. A quick audit of the sales opportunities in the “No Decision” bucket brings cold reality to bear on the need to do a better job of qualifying customers.

Auditing the Soil: Performance Excellence, aka the Culture:

Think of a company’s culture as its soil. At its best, it is nutrient rich and encourages growth. Think of strategy as the seed. Even a genetically perfect seed will not grow in nutrient starved soil. On the other hand, a genetically inferior seed, planted in nutrient rich soil, will at least yield some crop. Culture is everything.

The nutrients in a firm’s culture are its values and its behavioral norms. In our experience, the best cultures exhibit the following characteristics:

  • the setting of clear expectations
  • individual and organization accountability
  • clarity of ownership of initiatives and results
  • measurements and metrics
  • rewards and consequences tied to performance
  • honesty and openness in communications
  • periodic progress checkpoints (at minimum, monthly)
  • a sense of urgency to deal with barriers and challenges to progress
  • teamwork
  • a creative problem-solving orientation focused on solutions not blame

 In our engine model the culture is the oil in the oil plan pan in which the gears move. The culture lubricates and sustains a healthy engine. Without oil the engine seizes up. Without a solid culture of performance excellence, your business seizes up.

Conclusion:

A marketing and sales audit is simply a periodic analysis of what’s working and what’s not. It is a discipline that requires digging into the marketing and sales process to look for opportunities, barriers, bottlenecks and trends. We know from experience, that initiating an audit and analysis, with the discovery of root cause as its objective can spark sales breakthroughs and improve marketing & sales ROI.

A Final Note: A Marketing & Sales Organizational Self-Assessment is not the same as a Marketing & Sales Audit

A Self-Assessment is an organized compilation and scoring of your perceptions about the capabilities of your marketing and sales organization and processes. An Audit is a validation or invalidation of those perceptions from a deep dive into weaknesses and root causes of performance gaps. Self-Assessments record perceptions. Audits discover reality.

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Copyright 2010 The QMP Group, Inc. All Rights Reserved

Learn more about what kinds of growth opportunities a QMP Marketing and Sales Effectiveness Audit can reveal. Or, request a free QMP Marketing and Sales Organizational Capabilities Self-Assessment through our Contact Us Page. We’re here to help.

PinPoint Change: Reducing the Frustration of Slow Process Improvement

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What is Pin-Point change?

Pin-Point change is a simplified, three-step approach for affecting high-leverage, rapid business process improvement.

A pinpoint change comprises; 1) the identification of the single most critical and ineffective business process preventing the firm from achieving its objectives, 2) the identification of the specific process change needed, and 3) focusing, laser-like executive attention and decision-making on the few key people in the organization that must quickly change their behaviors to fix those ineffective processes. This does not necessarily mean removing or replacing them – unless, of course, they simply cannot or refuse to quickly learn and adjust behaviors.iStock_000005918667XSmall

What’s different about this approach to change is that to achieve the most rapid positive result, change is only required of a few strategically positioned people in the organization that are key links in the ineffective process – not the whole organization. Focus permits rapid change. Once the success of the change is proven, the rest of the organization typically falls in line, encouraged by both the initial success and the management intensity applied to the execution of the change. As a result all organizational change is faster.

 

An example:

The sales manager of a small, innovative health care products firm was convinced that the fastest road to sales growth was quickly setting up as many distributors as possible. He had charged his independent reps with the task of finding those distributors and directed the whole customer service team to respond quickly in setting up these new distributors when they called – credit checks, registration, setting them up in the system, getting them sales materials and servicing their other needs.

The number of distributors exploded – rapidly jumping into the hundreds. The customer service folks were overwhelmed servicing distributor requests, responding to inquiries and processing extremely small orders. In spite of this intense effort, sales results, as measured by sales per distributor, were poor.

The channel strategy and channel management process was broken – running wildly, un-steered and developing no traction.

Reversing this strategy by creating a single, national master distributor to which to send smaller distributors and distributor wannabe’s allowed the sales and customer service team to focus on the most important larger distributors, large end-user sales, lucrative growing market segments and most profitable products. After the channel strategy and process change, customer service productivity improved and revenue quickly turned upwards.

Changing the mind of just one person in this critical distributor management process was the key. The sales manager had to be convinced that his direction, process and behavior needed to change.

The ineffective process was channel strategy. The single person that needed to change behavior was the sales manager. One process, one behavioral change and one strategically positioned individual made the difference between success and failure.

 

The “Drive-Train” of any business:

A drive-train is the series of mechanical parts of an automobile that actually make it move. It starts with the engine, which in turn is connected to the transmission, which in turn is connected to the drive shaft, which in turn is connected to the read-end differential, which in turn is connected to the wheels through the rear axle. All this energy transfer goes on, beneath the visibility of the driver. All the parts of the drive train have to work together for the car to move. If any one of those segments of the drive train breaks, the car can’t move. The energy produced by the engine is lost before it gets to the wheels.

In most business units, the drive-train is the sequence of processes and people that makes the business run. In small to mid-size businesses, process-specific drive-trains typically operate two levels below the visibility of the business owner or executive in charge – yet these people-process drive-trains are the connections through which most business activity takes place.

The majority of day-to-day activity goes on beneath the awareness and visibility of executives. That’s actually good news – for the most part. It means the executive can get the flu on Sunday, stay home for the week, play golf on the weekend and return to work on Monday and notice the business hasn’t collapsed. The bad news is that processes in this chain, when broken or inefficient, continually produce weak or bad results. The executive sees less than optimum results in her business dashboard, but doesn’t know where the process is broken. It’s like the driver of a car, not understanding, when she presses down harder on the accelerator, why the car doesn’t seem to be move any faster.

 

A Typical Business Drive Train:

A typical business drive train might look like this. A sales person finds an opportunity. That sales person links to the inside sales and/or estimating team that produces a quote. That part of the drive-train, in turn, connects with the order entry people, who, once the customer decides to order, accepts the order and enters it into “the system”. The system then informs the production planner, the materials person, purchasing and the final link, operations – which in-turn builds and delivers that order. Then the “system” takes over and spits out an invoice. When the invoice is paid, accounts receivable enters the receipt into the “system” and deposits the check in the bank.

Each step is a mini-segment of the larger business process. But, because these drive-train links are more-or-less serial, one persistently ineffective segment will continually plague and corrupt the whole business.

In a small to mid-size business, at its most fundamental level, each drive-train segment comprises, the combination of a basic process and a key person.

 

Fast Change – Rapid Improvement:

The fastest three-step route to positive change comprises 1) the rapid identification of the inefficient or broken process in the business drive-train, 2) the identification of the specific process change needed and 3) the focus of management attention on the one individual through which behavioral change will be crucial.

I am continually amazed at how effective “the one process-one change-one individual” approach to improvement can be.

The steps of PinPoint change are straightforward:

1. Discover the broken process,

2. Identify the behavioral change needed,

3. Find the key individual whose behavior must be the first to change

 

One final consideration:

The one person that is critical to initiating all rapid behavioral change in a small-to-mid-size firm is the executive in charge. The speed of a drive-train change is only as fast as the decision on the part of the executive-in-charge to direct that change. A much higher probability of success exists, when the executive in charge, knowing what process is broken and what change is required, quickly identifies the key individual in the process and clearly communicates the expectation of what needs to be adjusted. An uncompromising insistence on the three-step approach is essential. Executive indecisiveness can hold it all back.

My advice to executives: Do not let the discomfort of insisting and confronting the need for behavioral change of a few key people in a critical drive train process jeopardize the well-being of all other employees and stakeholders.

It’s that fundamental.

Copyright The QMP Group, Inc. 2013    All Rights Reserved

*****

Click here to learn more about Marketing & Sales Organizational Tranformations led by Jerry Vieira and The QMP Group

The Need for Asset Optimization Discipline

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When the going gets tough …  

… most business executives cut expenses.  Consultant services are among the first to go.  In tough economic times we consultants too-frequently hear some variation of, “Your proposal is great, but we simply don’t have the cash at this time to move ahead with it”.  And lest you consider this blog posting an appeal to businessmen to hire consultants, let me assure you right-out, it is not.  It is an appeal to businessmen to adopt an asset and investment optimization discipline and thus create a powerful force for growth, in both good and bad economic times.

By asset optimization I mean a process for assuring that every dollar of cash, every employee and every hour of time is aligned and consistently targeted at the best possible opportunity for growth – and if it isn’t, to re-target it.  A process for executing that optimization exercise follows and is offered for you to consider. Contemplative Businessman

Step 1: Make an initiative attractiveness wish-list

Identify 6 high-yield, high-probability-of-success bottom-or-top line growth initiatives you could embark upon if your organization had the cash, talent and/or the time.  Next to each item put the name of the best talent available to execute that initiative along with an estimate of the amount of cash and time (calendar months) it would take to execute that project.  Rank the initiatives on the list from highest to lowest in terms of most attractiveness.  Keep this list fresh by updating it no less than once a month.

Step 2:  Search internally for assets (time, talent and cash) to reallocate

Identify currently committed assets that are the least productive in your company.  I have found that a large percent of managers and owners do not want to confront this step, largely because it forces a look at non-productive employees, legacy initiatives and pet-projects.

As an example: If an owner has 100 employees, is it likely there are two that are marginally productive?  Assuming for the moment that their cash outlay is $40,000 each, eliminating their positions would free up $80,000 for alternative investment.

There are certainly other sources of potential asset re-allocation and making employment decisions is emotionally difficult, for certain.  Nevertheless, barring the emotional pain of confronting this particular an alternative, the list of potential resources that could be reallocated should be identified for each initiative.

Step 3: Make the tough asset re-allocation decisions

This step is why owners and GM’s get paid the big bucks – to make decisions on asset utilization.

A general on the battlefield does this all the time.  He is constantly looking for points in the line at which to target his battlefield assets.  He continually sends out patrols to discover opportunities to exploit to generate breakthroughs.  Assuming his orders are not simply to hold, the good general always knows which segments of his line to hold and at which to launch an attack

If there is anything I would wish for owners and managers it a decisiveness gene

I recently experienced a client who delayed a critical asset-reallocation decision for a year, only acting when an emergency arose.

Why is such an approach is not used more often?

Through the years I have discovered three primary reasons that small-to-mid size business owners and managers don’t practice this discipline: 1) they simply never thought of it, consumed by day-to-day crisis-driven issues, 2) they want avoid having to make the tough decisions it points them to and 3) no one has held them accountable for working through such an exercise.

A consultant can only help them with the first.

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Learn more about the QMP Group and how it can transform your organization into a powerful engine for growth

Why Employees Don’t Always Do What You Ask

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Are you pleased?

Pulling Out HairIf you are consistently thrilled with the responsiveness and results of important tasks you assign to your direct reports, there is no need to read on. On the other hand, if you are like the majority of business owners and executives we have worked with, you are probably frustrated at times by the lack of understanding, speed of response and quality of the results of those requests.

There are two major ingredients to getting what you request done well. The first is Motivation and the second is, what I will call the Assignment Dynamic – which of the two is much more complex but, actually, easier to manage.

 

Motivation: The Vroom Expectancy Theory

Many books have been written on the subject of motivation, but my favorite model was created by Professor Victor Vroom*, called the Expectancy Theory. It states that people are motivated by the product of three considerations: a) if they attempt something they will accomplish it, b) if they accomplish it there will be a reward and 3) the reward will be relevant to them. If any of these are “zero” there is no motivation. Before giving an assignment, particularly if the assignment is a major challenge, 10 minutes of thought on this motivational model might help,

 

The Assignment Dynamic:

The Assignment Dynamic takes over from the point at which the assignment is given. This Assignment Dynamic is shown in Figure 1. It has 3 major steps. The 3rd step delineates the 9 common barriers to progress.

Figure 1.

The_Assignment_Dynamic

1.   Clarity:  Be clear about what you are asking for. Describe clearly the acceptable form the answer or solution must take. Clarify the timing for the completion, the importance/urgency of the assignment and the priority of the request. If the result is numerical, collaboratively set the number.  Just this first step goes a long way in improving outcomes.

2.  Checkpoints:  Let the individual assigned to the task know you will be checking on progress on a scheduled basis. Set the schedule.

3.  Confronting Delays and Diagnosing Barriers:  During a checkpoint, if satisfactory progress hasn’t been made, don’t be afraid to confront it. I know, “confront” is such a hash word. In this case, however, “confront” simply means addressing the delay directly and professionally to discover the barrier-to-progress as quickly as possible, rather than simply letting it go with an “OK. I’ll check with you next week.”

The root causes of the lack of progress can almost always be found in the list below. When confronting a delay, discuss directly with the employee the potential barriers to progress. The following 9 items can be used as a barrier identification checklist.

  • Communication:  Stalls and delays can occur simply because someone failed, or forgot, to tell someone that something had to be done. All of the components mentioned in the section on clarity apply throughout the chain of all the people required to fulfill the request and achieve the goal and an objective is communicated.

Just hours before the attack at Pearl Harbor a small crew manning a newly installed radar site on a mountain near the harbor noticed a large swarm of blips. They did their job by discovering them and thought they had communicated it to headquarters. In actuality, due to breaks, oversights and inefficiencies in the communication chain, the note was not received by the harbor until the day after the attack.

  • Capacity: “I’m too busy,” is often the cry for why something is not getting done. In this case, managers must be clear about the priority of the task requested, and if the employee is simply at capacity, be specific about what needs to fall off the tailgate and be delayed in order to make time for this task. Capacity, more often than not, typically means unclear priority.
  • Capability: Occasionally an assignment isn’t completed as hoped because employees simply do not know how to accomplish it.
  • Criticality: “I just didn’t know it was that important,” is the response to a delay caused by this item. This can be avoided if the first step, “Clarity” is done well.
  • Courage: Some people, who have been asked to do something they have never done before, simply do not have the courage to attempt it. Fear of failure, and its consequences, is typically the reason.
  • Cooperation: If the employee is unable to elicit cooperation from other employees, departments or customers the manager can assist in breaking free that logjam.
  • Capital: Occasionally, funding is needed to enable the completion of a task. If this is the reason for delay, management simply approves the funding or the original task yields its first position to the enabling task of developing the economic justification for the investment.
  • Cognition: I don’t understand what you are asking me to do.
  • Credibility: Credibility means the person assigned the task doesn’t believe that the task is worthwhile, meaningful or will have the desired outcome.

Here’s a real example:  When asked how the economic benefit story for the firm’s new product was being received by customers and the distribution channel, Bill, a lead sales person, said he wasn’t telling the story, because he didn’t believe the numbers. This new product had a compelling economic benefit to customers and the company had collected customer testimonials confirming it. The management was perplexed by this lack of willingness and compliance to tell the economic story to prospects when selling this new product. A little bit of sales person re-education, coaching, clarification and re-explanation of the economic benefit was required to change his belief.

It changed. The result was a 28% increase in sales, in a year when the general economic activity in that sector declined 15%.

Conclusion:

To some, this organized approach to doling out assignments might appear a bit formal and cumbersome. However if the task is truly important, something that really needs to get done, the approach and checklist can prove a very useful tool.

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Jerry Vieira, CMC is the President and founder of the QMP Group, a Portland, based management consulting firm specializing in marketing & sales organizational transformations. For more information on how to use this Assignment Dynamic model call him at 503-318-696 or email to Jerry@qmpassociates.com.

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* In 1964, Victor Vroom developed the Expectancy theory through his study of the motivations behind decision making. His theory is relevant to the study of management. Currently, Vroom is a John G. Searle Professor of Organization and Management at the Yale University School of Management.[4] Source Wikipedia

Lazy Due Diligence: Improve the Analysis, Improve the Outcome

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Too often, acquisitions don’t deliver the results expected

You are probably as perplexed as I am, at the repeated difficulty that acquisitions have in delivering on their promises of growth.

The title of a June 2006 survey report from Accenture says it clearly, “Executives Report that Mergers and Acquisitions Fail to Create Adequate Value”. The subtitle was, “Deals Often Come Up Short on Delivering Anticipated Revenues, Expected Cost Savings and Successful Integration of Information Technology”, caps the point.

When asking acquirers what causes these shortcomings, there are usually a handful of common responses.Sales_Failure

• “The integration is not going smoothly.”

• “Their market took an unexpected dip”

• “Their new product isn’t coming out as fast as we’d like”

Few will admit that the culprit may have really been an inadequate due diligence process – one that failed to reveal some fundamental weaknesses in the market position or capabilities of the target company.

The “Dead Man in a Canoe” Model of Acquisition Due Diligence

The canoe model begins with the premise that even a dead man in a canoe will make great progress downstream, if the current is flowing fast enough. In fact, a dead man in a canoe will make even more progress than a live man rowing backwards. But, if the water level in the stream is so low that the bottom of the canoe is hitting the stream bed, no one – a good rower, a dead man or a backwards rower – will make any progress at all, no matter how much someone paid for the canoe.

Five factors can be used to asses the reality of the growth potential and the marketing and sales capabilities of an acquisition target.

• How does the acquisition select their target markets and where to invest their development resources? (How did they select the streams to put their canoes in?)

• What is the fundamental health and momentum of the primary markets they participate in and depend on? (How fast are the streams flowing that they currently have canoes in?)

• How valid are both their claimed value proposition and competitive advantage? (How good are their canoes?)

• How healthy (really) is their sales pipeline? (How fast are they moving downstream?)

• How talented and capable are their people? (How strong are their rowers?)

Few investment analyses dig deeply enough to understand these factors. Yet, they ultimately portend long-term success or failure.

The Five Under-Acknowledged Assessment Factors

1. What process do they use for selecting their target markets and investments?

Most smaller acquisition targets simply don’t have their own good process for selecting markets to target. If the acquisition target is currently successful, it may have been through rapidity, responsiveness and informality in the organization that allowed quick adjustment when a market was not responding. Rapid trial and error eventually resulted in the discovery of a “savior” market before cash ran out.

If the acquisition target does use a good target market selection process, then it is probably being validated by their growth history. But, if their growth is temporarily stalled, take it as a red flag. Putting the acquisition’s markets through your own process for identifying lucrative target market opportunities provides a quick sanity check.

If the acquisition target doesn’t have a good process, then that upgrade is the first thing to do when, and if, the acquisition is completed. Leaving this upgrade incomplete after acquisition, assures future stumbles.

2. What are the health and momentum of the primary target markets the acquisition participates in and depends on?

Market demand and momentum are driven by a combination of three fundamental factors; demographics, economics and regulation. There isn’t much anyone can do about the first. However sometimes simply shifting market focus from one segment of the market to another catches a subcurrent of demographics that accelerates demand.

For example, the number of hospitals in the U.S. is declining. The Philips defibrillator business can keep trying to sell into emergency rooms in a saturated hospital market or move to the consumer/commercial market fueled by the demographic of aging baby boomers and government mandated emergency preparedness initiatives.

The economics factor is more complex than demographics. There are macro trends, micro (market specific) trends and, what I’ll coin as, nano-economics (the economics associated with the individual customer sales transaction). If all three are flowing in the right direction, the results are positive. However, streams usually slow down top to bottom. First, macro economics fail, then micro, then nano. For the experienced executive, finding and evaluating the macro and micro level momentum factors should be relatively easy.

Too many acquisitions are bought for product reasons (complementary offerings, new technology, brand name et al) vis-à-vis solid market momentum reasons. Market momentum covers up a lot of inadequacies, at least at the beginning. Its better and easier to have market momentum on your side when the inevitable challenges of acquisition integration arise than not.

3. How valid are both the acquisition’s value proposition and their competitive advantage?

Here’s a sad, but not surprising, story. At a mini-workshop for a group of a dozen CEOs and owners of small-to-mid-sized B2B businesses, they were given a simple challenge. They were asked to imagine their ideal target customer prospect and match it to their best product or service offering. Then they were asked to calculate the typical five year economic benefit that the ideal customer would receive from that offering.

Not one person in the room could do it in the 15 or so minutes available!

In an article by this author published in the December 2007 IndUS Business Journal entitled, “The Seven Laws of Performance Excellence”, the first is the Law of Economic Value. It states, “The source of all economic value in any business is a customer’s belief that they will receive favorable economic, emotional or physical value in return for the cash they are willing to spend with your company”.

There must be a customer-perceived imbalance in the economic, emotional or physical value equation, in favor of the customer. It is what drives nano-economic momentum. This is the true nature and reality of the acquisition target’s value proposition. It drives new product adoption. How well it is delivered vis-à-vis competitors is the true measure of competitive advantage.

A number of years ago, I was asked by a capital equipment companyto review their acquisition rationale for a target firm. I asked, “Can you state how the acquisition of this firm will ultimately provide increased economic value to either your, or your acquisition target’s, customer base?”

Stunned silence answered the question.

If an acquiring company cannot somehow tie its target acquisition investment to the Law of Economic Value, the natural selection forces of the marketplace will ultimately depreciate the value of that investment. Value to a customer ultimately rules.

4. How healthy is the sales pipeline?

Does the acquisition target have, and use, a good disciplined sales process?

Sales opportunity pipelines (or, as some call them, sales funnels) are common support documents in the due diligence process. Rarely does an acquiring firm have a good process for assessing its validity.

Here are six suggested criteria for assessing each major opportunity in the pipeline:

1. Compelling Need: To what degree does the customer have a critical need to solve the problem that the company’s product addresses? Is this awareness from the customer’s perception or our own? Can that potential customer do nothing? Sales research shows that between 30 to 50% of all pipeline opportunities are lost to “nodecision”.

2. Match: How closely do our capabilities match that customer’s need?

3. Economic Equation: How strong, from the customer’s perspective, is the economic value proposition for fixing this problem? Has this value been demonstrated to, and believed by, the key customer decision makers at this account?

4. Competitive Position: How do the firm’s competitive capabilities compare, from the customer’s key decision-makers’ perspectives, with other possible solutions?

5. Champion: How strong is the internal champion at the customer account? How politically powerful, influential, receptive is the champion in the decision process?

6. Leverage: In addition to a sale, what else is gained if the account is won? Does the opportunity open up a new market or help develop a new capability? Does it provide a referral and great testimonial?

It may seem that this kind of effort for each of the target customer’s sales people and each major opportunity in the pipeline is a lot of work. Well, it is called due “diligence”, isn’t it.

The truth is that, if you use a pipeline validation process like this, pipeline “fluff” falls away quickly and the real value of the sales opportunity pipeline is revealed.

The second factor to be considered in sales function assessment is whether the acquisition target has, and utilizes, a good sales process.

A good sales process is recognizable by its ability to not only win a high percentage of opportunities in the pipeline, but also do the following:

• Produce frequently updated, easily visible pipelines

• Create accurate bookings forecasts

• Help formulate sound account opportunity strategies and action plans

• Collect, communicate and process account, competitive and other market intelligence • Sell economic value, and

• Optimize a sales person’s time

5. How talented and capable are the marketing and sales people?

When embarking on an acquisition and beginning to meet the people at the acquisition target, those employees can usually be sorted into three types.

The first are the “fearful-skeptics”. These people are simply trying to keep their jobs, stay under the radar and do whatever it is they need to survive the acquisition integration.

The second type are the “hostiles”. They fear loss of power or influence, the coming discomfort associated with an upset of the status-quo, exposure of their incompetence and/or visibility given to their lack of progress.

The final types are the “eager-embracers”. They are the ones that usually say something like, “I’m looking forward to this. I can really see the benefits. I’ve been formulating some innovative ideas for some time, that I’d like to share with you. How can I help?”

These last are the few who will already have developed their own process, who continually want to see things improve and who simply can’t stand ineffectiveness, slowness and inefficiency. Just a few of this type is critical to have in a good marketing and sales organization.

In assessing the people and talent there should be two key roles represented.

One Good Marketing Strategist: One good, talented marketing strategist can create programs that launch firms into incredibly rapid growth opportunities.

A Few Good (Sales) Men: In sales there should be a few very good and influential sales people that can act as internal opinion leaders. In this role they provide support for the transition with peers and customers, and, through their example, help other sales people learn how to manage the acquisition integration and its incumbent changes.

Conclusion:

There are many reasons for acquisition.

Venture Capital and private investment firms look to discover and increase value for extraction at some future pointand commercial businesses typically look to acquisitions to accelerate growth, capture IP, open up new channels or gain rapid entrance into a new market.

Independent of the type of acquiring firm or the ultimate purpose of the acquisition, those embarking upon the due diligence process are encouraged to adhere two basic principles:

• Be cautious not to violate the Law of Economic Value — the negative consequences of violation may not be immediate, but they are inevitable, and

• Put more “diligence” into the due diligence process when it comes to the evaluation of the marketing and sales functions of the acquisition target.

One final point: Should the good revelations outweigh the bad in this 5-factor analysis and the deal close anyway, by virtue of having dug deep enough to discover the acquisition target’s weaknesses, the acquiring firm has already laid out before them the roadmap for improvement.

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To learn more about the QMP approach to due diligence click here.

Lean Marketing and Sales: The Art of Optimizing both Customer and Company Value

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“Lean is the process of maximizing the value delivered to customers by eliminating any wasted activity or expense marketing or sales process that does not create, communicate or enhance customer-received value.”

In this QMP Insights blog we offer an approach for improving both top and bottom-lines through the application of “Lean” principles to six key areas in the marketing and sales function of a firm.

 

Getting Started with Lean in Marketing and Sales:

iStock_000023705897XSmallThere are three foundational principles that must guide any application of lean principles to the marketing and sales function

First, the law of economic value is always at work. That law states: All economic value accruing to your firm has as its source, the customer’s perception that they will receive more value (economic, emotional or physical) from your product or service than it costs them (economically, emotionally or physically) to purchase, acquire, set up and use.

Second, avoidance of the application of lean concepts creates growing breaches in your business that competitors will exploit. If there is any place in your product or service offering, customer service process or sales approach that customers consciously or subconsciously perceive as not providing the highest value possible, that gap will be the place you are most vulnerable to competitive attack.

Third, when assessing the relative importance and value of deploying a specific lean initiative, use the first and second guiding principles above. Considering the deployment of lean principles in your product and service portfolio or your marketing and sales function only as an opportunity to reduce costs can result in customer backlash. Bank of America felt that backlash recently when they instituted debit card user fees and we all feel the frustration when we can’t reach a real person in customer service.

 

The Six Targets for Lean in Marketing and Sales:

Market Focus

Face the facts. Your product or service offering does not offer the same set of economic, emotional or physical values to all market segments equally. Lean means focusing on those market segments where the value-received by customers is the highest. If that situation exists, the law of economic value is satisfied and research shows that the following benefits accrue to your firm:

  • the ability to garner price premiums
  • faster market penetration
  • higher customer satisfaction
  • more peer-to-peer, word-of-mouth customer communication of that value proposition
  • higher interest in your product from channel partners
  • higher probability of achieving market share leadership in that segment
  • reduced marketing expense
  • improved sales win rate and faster time to close
  • reduced product design costs and a clearer product evolution path as a keener awareness of the customer needs in that specific market are revealed
  • greater returns from focused social media and website investments

Market focus is Lean in action.

 

Market Communications

The wisdom of lean and focused market communications is the toughest principle to convey to marketing and sales teams. The common fallacy is that, “more marketing expenditure is better than less”. Marketing and sales teams typically will fight tooth and nail to avoid reductions in this sacred arena. They believe that more marketing dollars across more expansive markets means more customers. Not so.

Research (Everett Rogers, “The Adoption of Innovations”) shows that communications of a new idea is best accomplished through opinion leaders in a target market. Peer-to-peer communications, accelerated by opinion leaders, is 13 times more effectively than mass communications. Focused marketing communications programs to reach those opinion leaders, with focused value propositions achieved through market-focused product design is as effective as can be achieved. Social media can help – as long as it is focused.

Focused marketing communications is Lean in action.

 

Channel to Market

Your business will begin to erode if your channel-to-market provides value only to you and not your customers. Marketers must be vigilant to assure their channel continues to deliver real value to customers and clients. Let’s take Amazon.com as an example.

Amazon.com is, at its most basic level, merely a channel-to-market. They do not write books or build any product. Even the manufacture of the Kindle is outsourced. Amazon’s growth was the result of tapping into an under-satisfied customer value (convenience) and leveraging an emerging technology (the Internet).

By building an on-line bookstore coupled with an efficient order fulfillment process, Amazon stole the customer segment of the book market motivated by convenience, not couches. Relevant value to that segment is: browsing at home, saving gasoline, saving time, the use of peer reviews and comments to facilitate decision-making, fast customer service, the opportunity to contribute reviews and comments, and avoidance of the “out-of-stock to be supplied by another store across town and we’ll call when when it’s in” situation. The introduction of “Whispernet” (the wireless purchase and instant delivery of e-books to the Kindle) further enhanced this basic value set. And taking this value proposition even one step further, Amazon has now added free, unlimited on-line storage of your complete media library (music, books, movies) in the cloud with the Kindle Fire®. Wow!

All this value provided by basically a channel-to-market. Amazon understood how to find untapped needs and use technology to meet them efficiently. This is Lean in action in the channel-to-market

 

Sales Process Discipline

An oft cited statistic claims that 30% to 50% of the opportunities in the average sales person’s pipeline won’t close because the customer makes a decision not to buy anything. The sales person has, in effect, wasted time and money pursuing something that was destined to never result in a sale. How can one really know if a specific opportunity will actually result in a purchase?

The answer has several parts.

First, if Lean principles are applied in the previous steps (strategy, channel and communications), there is a much higher probability that a purchase will occur, because the value proposition and its communication are more efficient, focused and aligned with customers that are likely to receive the greatest value from your product or service.

Second, if the firm has developed an ideal customer profile that describes that buyer type, it enables the sales team to quickly identify a good potential prospect and politely decline continuing involvement with a poor prospect.

Third, there is a simple set of 5 criteria that can improve a sales person’s ability to quickly qualify an opportunity.

  • intensity of the customer’s need or problem,
  • degree to which the product offering can meet that need,
  • degree of the economic, emotional or physical value the customer will receive by using the product or service,
  • customer perception of the relative competitive advantage of the product or service solution
  • the existence of a customer champion for the solution

These principles put Lean in action in the sales process.

 

Market Intelligence Feedback

Market intelligence is critical to success. Sound market strategy depends on current and valid market intelligence. That intelligence may comprise some or all: competitive intelligence, customer satisfaction, barriers the sales people keep running into, the health of the customers’ markets, usage idiosyncrasies and a host of other informational tidbits. The sales team must be at the forefront in gathering this data, because the sales team is company asset that is in the most frequent contact with the customer.

The most efficient way to gather market intelligence is through weekly or monthly sales reports. Contracting market research firms to gather market intelligence from the same customers the sales people talk to each month anyway, is admitting to un-Lean practices and indicative of other organizational or culture problems.

Here are some thoughts about making your Lean market intelligence gathering:

  • make a bullet-point market intelligence section a required part of your sales person’s weekly or monthly report
  • train your sales people how to question and observe – not just spew the benefits of your product
  • include providing market intelligence in the sales compensation plans and sales position descriptions
  • provide the ability to award spot bonuses for the most timely and important pieces of information that come your way
  • read the market intelligence reports; think about and acknowledge them by calling back the sales person who provided the information, thanking them and getting more information

Listen carefully when sales people talk about gaps in the customer’s perception of your product’s value delivered. The first comment is inevitably pricing-related. Pricing-related value gaps are more about market targeting, product design and the customer’s perception of value received than actually about pricing. Pricing is only a symptom of a bigger strategic problem.

 

Conclusion:

The application of Lean principles to marketing and sales is easy and inexpensive. A firm of any size and market can deploy Lean. Lean principles assure that customers get the best value they can – and in return, consistent with the law of economic value, your business optimizes its own economic return.

Click here to talk to QMP about Lean Marketing and Sales

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The Basics of Foundational Marketing

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“You can’t build a durable building on a weak foundation.”

 

We’d like to share an insight that has helped executives and business owners sort through all the hype and claims over the last several years about an ever growing list of “gotta-do” new marketing and sales techniques.

If you’re a General Manager, business owner or C-level executive, your marketing team probably approaches you annually with a laundry list of funding requests to support their critical marketing and sales programs for the coming year. Those requests may include any or all of; a website upgrade, a branding program, a social media expansion program, a blog, a publicity and PR program or maybe even a new six-figure trade show booth – not to mention the additional staff to help manage it all. How do you decide what to approve? How do you sort through all the hype and enthusiasm about each program and decide what will truly give you the best return for your investment?

The graphic below illustrates an alternative approach to selecting marketing initiatives.

Foundational-Marketing-JMost people think of marketing as one or more of the items listed on the right side of the graphic — in the grey, typical-marketing circle. Stop a moment and consider the list. Is this what you think of when you think of marketing? If yes, join the majority club. If not, join the other group. It has fewer members – but they are the ones who have found the secret to getting greater return on their marketing buck.

Before those of you in the smaller, enlightened group get smug, remember “typical marketing” programs aren’t completely useless. Let’s be realistic. These days, unless you operate a lemonade stand that will only be open for two weeks in August, everyone needs a website. So let’s agree that, to some degree, typical-marketing expenditures are necessary – and in fact, required, once the foundational marketing base is laid.

But, back to the point – the hidden secret about marketing and what the people in the smaller group know that others may not is this; Rarely will any typical marketing initiatives produce truly breakthrough results — and they can tie up a lot of money! What really sets up top and bottom-line breakthroughs is Foundational Marketing. Foundational Marketing is the stuff in the oval on the left. Foundational Marketing is inexpensive and the primary, required ingredient in every major success.

For any typical marketing expenditure to be productive, Foundational Marketing must be done well. In our experience, foundational marketing tools and techniques have produced remarkable results. For example:

  • A software firm earned 1,000 new clients in just a little more than two years
  • A fledgling medical product landed 150 hospital placements in its first two years, with some orders exceeding $1M. Prior to using Foundational Marketing techniques, this product was in only two hospitals, with the largest single order only $20,000.
  • An electronics firm achieved a 50%+ growth rate for six years straight
  • A components firm increased their win rate by 15% while investing 33% less quoting time
  • A wholesale distributor generated a 47% increase in regional sales in 1½ years

None of these breakthroughs required a significant investment in typical marketing.

To contrast the effectiveness of the two types of marketing even further, in one of those cases above, after the success had been achieved using Foundational Marketing techniques a new management team invested in a mid six-figure re-branding typical-marketing program that didn’t move the needle a bit – losing the discipline of Foundational Marketing along the way.

Why don’t more firms adhere to Foundational Marketing disciplines?

They don’t know what they are: B-school educators are fantastic at teaching principles and concepts, but in general, weak at delivering a practical approach to moving those principles and concepts into practice. I speak from experience as, at different times, both an MBA student and MBA-level university instructor. Concepts and principles education does not equate to skills, tools and process disciplines. Most B-school graduates do not come out newly-minted with a honed skill set and tool kit.

They haven’t developed a standard tool kit: You are more likely to find a dozen carpenters that use the same field-proven tools and processes for their trade, than a dozen top B-school graduates that use the same tool kit and process for strategy development. Coming to the job site, most marketing practitioners have to create their own tools and processes, convince the executive team to learn, trust and use them and support the execution discipline to see the resultant strategies through to success. Not to place all the blame on the practitioner, many firms simply haven’t developed a Foundational Marketing process and tool kit.

It’s tougher to do: Typical marketing programs are an easy way out – particularly if everyone in the industry is “doing something”. They can be delegated and the deliverables are easy to see: a new web site, a new logo, a bigger show booth.

They don’t have the discipline to do the Foundational work first: Unless the top-dog insists that Foundational Marketing receives first priority and is the right way to do marketing, it won’t get done. Foundational Marketing is a “think-before-doing” approach.

They think it takes too much time: Building a good foundation doesn’t take long if you have the right tools. We have witnessed strategic decisions made in a few days with execution and success in as little as 90 days.

They don’t believe in it because they’ve never seen it work: Using and trusting Foundational Marketing principles does take some faith and practice, but the track record is proven.

Under the Hood of Foundational Marketing:

Practicing Foundational Marketing is really not difficult if you have the right tools. Good and sound foundational marketing tools are based on empirical marketing science. Even non-marketing people can learn and succeed using them. In a way, a good Foundational Marketing tool is like a cell phone. You don’t need to be an electrical engineer with an understanding of electromagnetic field and communications theory to use a cell phone. All of that has been done for you and integrated into the cell phone. Good Foundational Marketing tools have already integrated sound empirical marketing science into them.

Success with Foundational Marketing does require – and this is the difficult part – transforming the way your organization thinks and the way your team executes marketing and sales. It really comes down to a battle of the mind – more than a battle of the wallet. When your organization understands Foundational Marketing – and begins to use its tools and techniques, both the probability of success and the return on investment of your marketing programs skyrocket.

A complete Foundational Marketing approach has four components:

· Market Strategy: A proven and steadfast way to decide what market segments to focus on and what differentiated position to carve out for your firm and each of its products.

· Business Development Initiatives: These are about how you will approach the segment(s) of the market you have decided to target. While components of tactical (typical marketing) are included, emphasis here is on specific customers to target, specific messages to communicate, the customer’s buying process, channel-to-market decisions and leveraging the intra-market customer-to-customer communication network in the target markets of choice.

· Sales Disciplines: There are two parts of the sales disciplines component of Foundational Marketing. Both require training and consistency. First, an effective, consistent sales process is a must – one which qualifies, discovers needs, proposes good solutions, and wins/sustains long-term clients. The second part is a differentiated sales story that is meaningful to customers – one which assures that your unique benefits story is told consistently through all channels to all target customers. It’s a story that emphasizes the economic, emotional and physical benefits in the right priority, for the right customers, in the right market. Sounds obvious, but many clients actually fail in these two fundamental requirements.

· A Performance Driven Culture: Think of the components of Foundational Marketing as the gears of an engine, the culture of a firm is the oil in the oil pan. (See the figure below). To consistently achieve your goals, the organization’s culture must encourage teams to communicate, execute, adjust, think, make decisions and lead in an honest way. A culture of performance excellence is defined by: accountability, clarity of expectations, measurements and metrics, ownership, open and honest communication, fact-oriented, sense of urgency, rewards and consequences, frequent checkpoints and the ability to quickly and constructively confront barriers and problems. With a culture of performance excellence lubricating Foundational Marketing, the engine hums. Without the oil of a culture of performance excellence, the gears seize.

Can Foundational Marketing fail?

Foundational Marketing programs do fail – for one of three reasons: First, if an organization does not have the discipline to execute and follow through, any program will fail. Foundational Marketing programs are no exception. Secondly, it is possible that some firms are too far gone to be saved by a Foundational Marketing program. However, in 20 years of consulting, we have witnessed only one firm in the second category. They required a complete change of their business model to survive. They did survive, but at a much lower revenue level.

Finally, we have witnessed firms that have relapsed. Relapse is characterized by success with Foundational Marketing, followed by a reversion back to sole dependence on those items in the typical marketing list. Relapse is very costly in money, time and lost opportunity. A relapse typically occurs when a new, uniformed marketing and sales or C-level executive enters the picture.

A Final Word:

A good example of the need for foundational discipline is in the weight loss arena. The basis of all weight loss programs is discipline: discipline to eat better, discipline to exercise more and discipline to adhere to a healthy lifestyle. The latest exercise machine does not obviate the need for discipline.

So it is with Foundational Marketing. Good tools and processes are needed – but organizational discipline fuels the best results. Foundational Marketing, supported by a culture of performance excellence has proven again and again to lower marketing and sales costs, increase market share, achieve more rapid adoption of new products and increase significantly the firm’s return on investment.

To learn more about Foundational Marketing call the QMP Group at 503.318.2696, email us at qmp1@qmpassociates.com or connect with us through our Contact Us page where you can detail your challenges.

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