Monday, September 22, 2008

First Rule Of Management: Stop Whining, Take Responsbility.

Jeffrey Pfeffer has a very nice column in the Wall Street Journal: Woes? Executive, Blame Thyself. There are several very interesting points:

1. It is typical for executives to blame outside-uncontrollable causes (the economy, etc.). Research shows that companies that blame poor results on internal controllable factors see greater subsequent stock appreciation than those who blamed their problems on external factors. Apparently the market appreciates executives taking responsibility for identifying and addressing challenges.

2. Pfeffer identifies the First Rule Of Management: Don't act like a victim. There are always things you can do to make things better. So stop whining and take responsibility.

The article goes on to examine issues about identifying what the real problem is and how to address them, providing examples of both good and bad practice---using the usual suspects. It's good to read!

Friday, September 12, 2008

The Future SalesForce --- A Consultative Approach???

Imagine my surprise to receive an email from CRM Magazine with this article featured: "The Future SalesForce -- A Consultative Approach." I was under the impression that a consultative approach to selling has been the hallmark of sales professionalism for the 25+ years that I have been a sales professional.

Now I have to apologize, I don't like to bash the work of other consultants and professionals, particularly some that I respect, as in the case of the authors of this article. I also realize the constraints a short article puts on an author in expressing ideas on very complex topics.

However, the authors display a bias and a lack of understanding, that I also once had, about the Commodity or Transactional Sale. I think it's a bias that any one who comes from a complex selling environment, particularly those of us from the cowboy environment of high technology sales.

They mis-characterized the Commodity --- Transaction Sale as the following:

• Simple product or service—perceived as a commodity by the buyer
• One or two calls—perhaps telemarketing
• One or two apparent decision makers
• Low risk
• Relationships less important—buyer views the sales professional as vendor
• Technique selling
• Price quote
• Price and availability more important

By contrast they characterized the Complex Sale as:

• Complicated product or service
• Multiple consultative calls, demonstrations, and presentations—perhaps technical sales support
• Multiple decision makers—executive committee or board-level decision
• High risk
• Relationships very important—buyer may view the sales professional as a business consultant
• Value-based selling
• Proactive sales proposal or response to a Request for Proposal (RFP)
• Return on investment (ROI) very important or required

In the past several years, I have worked extensively with organizations selling commodity products in transactional processes. I have come to respect the complex issues and processes involved in selling commodity products and services. A consultative approach is every bit as important in these processes as in the complex sale, but the process and the manner in which the sales professional creates and communicates value is different.

I agree with the authors that a commodity sale involves a product or service that is largely undifferentiated from the competitive alternatives---at least when focusing on the product itself.

After that, I disagree with virtually everything the authors claim characterizing commodity sales. Most of the organizations I work with are dealing with very large transactions, typically in the $10's of millions, sometimes in the $100's of millions. While some telemarketing (by the way, professional telesales is neither distinguished by the complexity of the selling process or the value of the deal--I have seen extraordinary telesales organizations selling very complex solutions, executing difficult transaction sales, all of high value). I have seen many of these large commodity transactions take many calls --- all with rigorous discovery, solution development, and business justification.

The majority of these deals have very high risk to the customers. Imagine, buying a commodity product--something that may be a component of your own products and not getting the deliveries on time. The whole revenue stream of a company may be at risk. Or imagine quality problems and the impact they have on customer satisfaction, profitability, and revenue. As a very real example, consider the plight of most of the major Notebook manufacturers with the battery problems they have faced. Those problems had tremendous costs--financial, reputation, and other wise. In fact one of the major considerations in many of these commodity transactions is second sourcing because customers cannot afford to put their companies at risk in case a supplier fails for any reason.

The authors also characterize the relationship as less important---they view the sales professional as a vendor. Any sales professional that does not create value for their customer, regardless of a commodity or complex sales process is a vendor. Relationships, establishing trust and confidence with the customer is critical in any sale. Making sure that you are creating value and addressing the customer needs is the hallmark of any sales professional--regardless of whether it is a commodity or transaction sale.

Perhaps the area where I disagree the most is the authors characterize the commodity sale as "technique selling" where the complex sale is "value-based selling." Are we to believe that sophisticated buyers of high value, important commodity products are more susceptible and willing to be closed on the "puppy dog approach" than by sales professional who demonstrates real ROI on the transaction.

This is one of the most misunderstood part of value based, consultative, or solution selling. The sales professional must ALWAYS create VALUE. What customers value will vary from customer to customer, deal to deal---regardless of whether it is a commodity or a complex sale. In the so called commodity sale, things like quality, timely delivery, management of the supply chain or logistics processes, facilitating and improving the procurement process and many others are critical elements of value in the commodity sale.

Pricing is important in commodity sales just as it is in complex sales. Building a business case that produces superior return at acceptable/manageable risk is mandatory for all sales cycles.

I can appreciate the mis-impression the authors have about commodity -- transaction sales. I suffered from a similar ignorance until some valued clients showed me how mistake I was.

There are complex and commodity selling processes. They are different, they buyers and their needs are different. Each carries its own challenges, success in each requires great sophistication on the part of the sales professional in building relationships, understanding the customer needs and presenting solutions that represent real value in addressing those needs.

Mailing It In! Bad Sales Performance

Linda Richardson has a nice article on EyeOnSales, "Discussing Vs. Sending Price."

She covers the topic very well, I won't repeat it. I am constantly amazed, however, about the number of sales people that are too busy or too rushed or too sloppy to present their solutions, pricing, and value to customers.

It's never the customer's responsibility to figure out what value they will get from a solution and to develop the ROI themselves.

It's the obligation of the sales professional to demonstrate and prove the value of their solution to the customer. Not doing this is not only sloppy and unprofessional, but it demonstrates tremendous disrespect for your customer.

The job of the sales professional is to help customers achieve their goals, objectives, and solve problems. If you don't take the time to help them understand how they will do this, then you haven't earned the business.

Tuesday, September 09, 2008

Corporate Culture Trumps Everything

There is a great article at IMD's site on "An Unpopular Corporate Culture." It's a must read.

I think many people underestimate the importance of corporate culture in executing strategies and driving change. Culture is one of those "soft" things---it's hard to define specifically, it's hard to develop specific action, worse yet it involves connecting with people in a genuine fashion.

It's so much easier to deal with the "harder" issues like developing strategies, executing programs and action plans, and so forth.

Having been involved in a number of turnaround situations and clients facing major challenges, culture can trump everything. Harness the culture positively and you can dramatically accelerate things, accomplishing things the organization never believed possible---Oh, and by the way reinforcing and strengthening positive elements of the culture. Ignore it, dismiss it and accomplishing anything can be painfully slow or impossible.

Even worse, for change agents, become seduced by it overwhelms you and makes you ineffective. Years ago, I was involved as a senior executive in a major corporate turnaround. My boss, the CEO, and I were reflecting on the progress we were making and the challenges in continuing to move aggressively in changing things. He taught me a great lesson, he stated: "One of the most difficult things about change is underestimating the impact of corporate culture and being seduced by it---when it leads you in the wrong direction. If you succumb to it, you have failed."

One of the greatest challenges leaders face is learngin from and harnessing the corporate culture in a positive manner. One of the most difficult things to correct is a bad culture. Bad culture outlasts managers and shapes the company far longer than we ever guess.

Read the article, it's worthwhile!

Tuesday, September 02, 2008

Seven Ways To Fail Big

I'm still rolling the conclusions of Paul Carroll's and Chunka Mui's HBR article: Seven Ways To Fail Big, around in my mind. The article is very interesting, based on research they have done on 750 business failures.

They claim that nearly half could have been avoided (not surprising), and that the avoidable failures were primarily the result of flawed business strategies, not poor execution (somewhat surprising).

They summarize seven key reasons: The Synergy Mirage, Faulty Financial Engineering, Stubbornly Staying The Course, Pseudo-Adjacency's, Bets On The Wrong Technology, Rushing To Consolidate, Roll-ups Of Almost Any Kind. Each reason is accompanied with case studies illustrating the point.

The article is provocative and stimulates thinking. While, it is worth reading and there are good lessons to be learned, I questioned the research methodology somewhat. It appears to be primarily based on secondary research (news coverage, case studies, other document) rather than primary research (interviews and in depth original research).

For several of the cases they highlight, we have some insight that would not be readily available in public information. In those cases, extremely poor execution, lack of commitment to the strategy, and other factors were also key factors to the failures. However, I may be nit picking with a "chicken-egg" argument.

In spite of being slightly troubled with the analysis, the article is certainly worth reading.