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Simplfy Your Message By Communicating An Outcome to Your Customers

Executive buyer survey reveals hug gap with sellers

Each year, over four years between 2010 and 2014, my team at Forrester Research studied executive buyers.   We designed a study following the assumption that while buyers ultimately vote with their money, they really are in control of the whole sales process by how they choose to spend their time.   If an executive won’t engage with your company or disengages from a sales process, you’ve lost the deal before even presenting a proposal to them.

We created a questionnaire with a mix of multiple choice and open-field questions and submitted the same survey to global executives.   We defined an executive as being anyone from a director to a c-level position.  The audience was equally split between IT and Business executives and had a global focus.   After we collected the survey data, each year, I personally interviewed 100 people from our sample about the data to get their reactions and feedback (as you know, numbers only tell part of the story – you need to also capture the context surrounding it to get the full insight).

As you can imagine, the insights were (and are still) incredibly illuminating.   For example, only 11% of executives found sellers valuable when trying to engage with them.  One of my favorite quotes was by a executive in the energy industry.

When asked about the difference in perspective of what a “solution” meant between him and the sellers he said, “their squirrel is just a rat in pretty clothes.”

The point he was making was that all of the products more or less do the same thing and are more or less at the same price point.

For him, vendors just don’t have an idea about what a solution really means because they fundamentally do not understand his world and challenges.   This is a recurring theme with all executives I speak with to this day.

Just because you say you provide outcomes, doesn’t mean you do

That quote led to about a year of discovery questions both to supplier companies and the buying executive those companies were targeting.  Sales and marketing leaders for those suppliers tended to be adamant they provided outcomes to their customers.  In fact, most were borderline insulted when I asked and completed closed off to listening to the feedback I’d collected from interviews with buyer.

What I normally get as “evidence” from the vendor executive are:

  • data points (basically the metrics they use to talk about their company)
  • the number of customers they have
  • benchmarks about their product performance (lots of this)
  • or quotes from people on why they bought the products. (testimonials)

Not one time do I get the kinds of inputs executive buyers are looking for:  before and after examples for the results a customer achieved from working with them.   I don’t get stories of how they made a specific executive successful or what the impact was for that organization.

You say outome, excutives buyers say “what are you talking about”

When I share what my experiences are from the suppliers, executive buyers always snap back, :”but they don’t at all” (provide us outcomes).   Here are a few quotes:

  • “I bought into their dream, now I am living a nightmare”
  • “All of the smart people are gone once we sign the deal”
  • “Their own people don’t talk to each other”
  • “They don’t know our business well enough to say that”
  • “By outcome, do they mean they got paid?  If so, sure”

From the buyers, no one said any of their suppliers did a good job of helping them achieve an outcome.    My observation from these interviews was that suppliers think the “outcome” event is when the client signs the contract where that is the starting point for the buyer.   The problem is that the goals of the buying executive, the definitions of success, what decisions they are trying to make, what questions they are trying to answer, and what pitfalls they are trying to overcome is so dramatically different – they might as well be speaking an entirely different language than the suppliers.   This is only getting worse, not better.

Executive buyers cannot articulate for you what an outcome is exactly

After enough of this he said (vendors executive saying “of course we sell outcomes”), She said (Buying executves saying “no they don’t) I decided if I could decode the gap.   So, I asked buying executives – “Can you help me define what an outcome is from your perspective so I have something more concrete to share with your suppliers so perhaps they can better service you?”  

Everyone struggled to articulate it.

So, based on many conversation between buyers and vendor executives I syntheiszed this feedback into a framework and then shared that back with buyers to see if they agreed.   Through over two years of trial and error – testing it with sales teams, and then buyer, buyers and sales teams, etc – I’ve codified this understanding into a model that I call “the outcome wheel.”

I’ve had a lot of success using it as reference point to bring various subject-matter experts, marketers, product leaders, and sellers together and create powerful integrated messaging.   The goal is to organize the massive amount of information that a supplier has into a way that is digestible for clients.   Additionally, these pieces of information must bet conneted together and simplified or the executive just isn’t going to understand what’s being communicated.

What is an “Outcome Wheel”?

In a lot of ways, this “outcome wheel” works as a rosetta stone to help translate vendor speak into customers speak.  The rest of his article defines the model.

The point being – in order to give executive buyers what they are looking for – we need away to organize information that is not based on what the vendor wants to do (talk about their products and services) but frame it more from what the executive-buyer wants to achieve (tell me what outcomes are possible working with you and help me understand it).

An outcome (the hub of the wheel) is acheived when six (6) conditions are met.  The message you are communicating (over the lifecycle of your sales journey) must:

  1. Clearly convey an acheiveable end state for your client
  2. Framed through the lens of the perons accountable for that end state
  3. Delivered in a way that customer can see it as an inititive
  4. Has straighforward and simple measurable objectives
  5. Incorporates the various internal stakeholders involved
  6. Provided an overall journey the customer will go through

outcome 1 - wheel

Attribute one:  clear vision of an achieved end-state

In order for an executive to reach an outcome that have to define their existing problem concretely enough, determine the criteria for success, assess their current state against that criteria and have a clear vision for what the world will look like when they are done.   This is how they can determine if your vision matches to what they want to accomplish.

I am often asked, “isn’t this the same thing as a “commercial insight?”

The analysis of “achieved end state” and comparing it to the Challenger method are a great topic for a different paper.  What I can comment is on what I normally see in practice.   Executive buyers are extremely savvy.  When the various people involved with a client are inconsistent with what they communicate or how they behave – these inconsistencies create risk flags.  Too many of these inconsistencies make the buyers think your company is not authentic and then they begin to back out of deals.

The more the end state vision is based on actual real world customer successes and it is presented pragmatically (factoring in the variables they are going to run into being successful) – the more likely those executive are going to cut your team slack in inconsistencies.   My experience with most companies is they begin with the products and services as the inspiration of the “insight” and not the early adopter clients or innovative clients from whom this vision should extracted.

 

outcome 1 - achieved end state

Attribute two:  Through the lens of the executive owner

Most visions that companies promote are abstract like “the internet of things,” “big data, ” or “artificial intelligence” –  they can apply to so many things or relate to so many different people they can become meaningless in conversation.   It’s extremely important to know exactly who is the executive or decision-making group that will benefit most from the achieved end state in order to: frame the discussion correctly, determine where the money is going to come from, create executive-level sponsorship, and make sure all of the messages associated with the vision are targeted correctly.

“Isn’t this just sales messaging?”   Again, it depend.

The key to communicating through the lens of any important stakeholder is to have empathy.  Let’s assume that you are trying to build messaging for a CFO.   It’s really hard to develop emphatic messaging if the person creating the content has never had a challenging conversion with one CFO, let alone the several that would be required to make it legitimate.  In addition, executive-level messaging should always be role played, field tested, and evergreened if is going to be authentic.  How sales people deliver that information should be factored in as well as more of the message is communicated non-verbally.

outcome 1 - executive owner

Attribute three:  Framed as an initiative

Companies create budgets to manage expenses and there are two drivers of a budget.   Ongoing costs (like headcount and people) and initiatives to meet business objectives.

In order to help define the budget and align to how your customers will rally around making the end state a success, you need to frame out your idea in the form of an initiative.   Remember, they are not likely to know what to do because they have never successfully tackled the problem you are helping them with.   There are many different levels of initiatives (each of these levels has different patterns, involve different people, and have different funding models) and most suppliers are just unaware about how complex of an endeavor it is for the customers to drive a business result.   Organizing the information in a frame of an initiative the customer would tackle; rather than describing which products and services they need to buy from you is so much more helpful will leads to bigger sales and shorter cycles.

“Isn’t this just our engagement approach”?   No.  Not even close.

The simplest way to think about this would be to imaging yourself as the project or program owner for the client – open up a book highlighting the PMI approach and them comparing the two.  You are going to see huge differences in the approaches.

outcome 1 - framed and an initiative

Attribute four:  Articulate measurable results

What the executive owner is looking for is some proof points that map to the achieved end state.   Current state our performance was X with total costs of Y, End state performance is X + some improvement and costs of Y-improvement.   The complexity is not is the numbers, its building the connections to show linkages between the effort, the investment, the people and the results.

“Isn’t this just ROI calculators?”  Absolutely not.

The higher you go inside an organization – the value analysis is different, and it get’s simpler.   Providing a C-level executive with tons of ROI type analysis doesn’t match to how they make evaluations and thinking that a vendor provided business case is credible with financial analysts is a huge oversight.   What a supplier should factor in is that depending on the level of authority the ultimate decision will come from will be a different analysis.  Your sales teams will need to figure this out case by case (or you will develop your own value engineering team to do this).  The point here is a high level quantification to help the the executive connect the dots and a high level – make it elegant.

outcome 1- measureable result

Attribute five:   Factoring in impacted stakeholders 

No executive is actually going to do the work – those responsibilities will be delegated. Depending on how complex the initiative is – the responsibility may span across many different functional teams and maybe even across departments.   Executive owners are savvy and know a huge risk to any effort is whether or not their team is bought into the vision and are capable of making it work.   Many deals die when executive owners perceive too much risk in their ability to execute on your vision and direct their attention and budgets elsewhere.  The number of stakeholders sales people have to navigate in order to make a sale in increasing because the nature of problems the buyers are trying to tackle are more sophisticated.  To help scale this understanding. we;ve developed a construct called an “agreement network” that maps to the different initiative patterns we’ve researched.

“Isn’t this just building personas?”   Definitely note.

Let’s assume that persona work factors in specific scope and responsibilities of actual job titles or common roles (which is extremely rare); the real challenge is helping to expose the cross-function friction and groups likely to provide resistance.   It’s 100% knowable the the new idea you are promoting to the customers is going to expose:

1) friction between functions and and also

2) pockets of people who will resist the change.

Helping the executive (and your sales teams) identify and then navigate these situations is critical to achieving success.

outcome 1 - impacted stakeholders

Attribute 6:  Communicated over a life cycle 

While the details and program plans associated with the high-level initiative are extremely important to provide concreteness to what’s being proposed – its just too difficult to manage expectations and communicate progress to everyone.   Therefore, its imperative that in addition to having the program plan and management office to define details and tasks, its equally important to craft the effort into a story that emotively communicates a journey.  This is important to help remind everyone involved of the vision, help manage the expectations of the people who invested in the effort, and provides the core foundation in the change management plan.

“Isn’t this just the buyers journey?”  This is harder for me to answer categorically because there is so much variation with how companies are actually creating “buyer journey’s” that I cannot answer absolutely.   However, in the overwhelming majority of cases – the answer is no.

For starters – this life cycle is not about the customer buying anything.  It’s about having a road map for benefit realization overtime.  Another difference here is this life cycle should be focused on all of the things the client needs to accomplish (their road map) to get greater and greater returns as the scale the vision and work consistently towards achieving that end state and measurable results.   It includes factors outside of what you provide (culture, adoption, possible future organizational changes) to help them stay focused on being successful.

outcome 1 - over a lifecycle

 

So what?

Yes, on the surface, this model is abstract but there are a few important attributes to its design.

  1. It is structured enough that it is repeatable but designed to be highly adapted to your environment.  Each attribute has a series of templates to help you modify this model for your customers.
  2. It is more of a Rosetta stone than a form.  The whole purpose of the wheel it to provide the underlying structure for the requirements needed to coordinate a value communications process over time and across different departments.
  3. It is uniquely designed to scale from an individual client pursuit (and can be embedded into an account planning process, or taught as part of sales skill) all the way to corporate campaigns.

Having a model that is designed outside in helps radically simplify all of the information orchestration required to communicate more value at higher levels within your customers.   The scaleable design of the outcome wheel allows you the ability to start anywhere – (account planning modernization, sales traini

ng, messaging development, playbook creation, corporate campaigns, account-based marketing efforts, etc) and know that work can be extended to other areas for additive benefit.

Your Company is a Value Engine

What is the connection between a firms stock price and sales and marketing?

This is a fundamental question in understanding how to radically simplify businesses and achieve breakthrough performance.

To begin, we need to start with some simple basics about how a company is valued.   A publicly traded company like General Electric (GE) is owned by shareholders.   In this case, one of the largest owners of GE is a company (institution), The Vanguard Group, which owns about 7% of all of the outstanding shares of the company.   Each investor, (be it Vanguard or a doctor in Iowa with 1000 shares) has their own theory to determine when to buy, sell, or hold their share in the stock.

Some factor in market trends, others a variety of technical financial metrics, some make decisions by instinct.    This process of determining a method to determine if they buy, sell, or hold is called “valuation” and there are almost countless methods of calculating a firms value.   GE’s stock price at an given time is a balance across these different valuation strategies.   GE’s value as a business is called its market capitalization and its based on its stock price multiplied by all of the outstanding shares.

GE’s board of directors represents all of the shareholders and they oversee the company to determine if it is doing the right things and or doing things right that drive value for the shareholders.   GE’s management makes a variety of decisions that impact it.  They can buy back shares, offer dividends (a portion of the profit generated from its operations), buy companies, improve execution, etc.   The company can also issue shares or sell shares it has in order to raise cash.

On the other end of the spectrum, private equity and other financial service companies set the price based on other factors.  It’s very easy to get lost in the weeds of all of the different nuances about valuation and those details have very little to do with sales and marketing except theses two points.  1) your shareholders are investing in your company’s ability to create value and 2) from their lens, your company is an assets, a holding, a commodity.

Your management’s job is to convert this investment into value for those shareholders.

There are many things they can do to make their numbers look better that are often referred to as financial engineering.  These things include: taxes, financing, write offs, etc.   In some circles it also includes using other financial instruments (Like equity or lines of credit) to buy companies (and their for their revenue streams).

None of those things have anything to do with sales and marketing so we are only concerned with the parts of valuation related to ongoing operations.  Terms related here are “EBITA” (earnings before income and taxes) or operating margin (revenues less expenses related to running the company).

In this case your company invests cash (from loans, selling of shares, left over profit from last year, etc) to build products and services your customers will buy.

The more valuable those products and services are to customers, the more of those products and services they will buy and also at higher price points relative to other options or competitors.

So yes, there are lots of important details across all of these points ranging from valuation, revenue recognition regulations for different products, pricing strategies, market dynamics, etc; however from an investor standpoint – they don’t care.   They want to see your company yield the most results from its investments.

Therefore, your company is a value engine that converts cash into products and services that are valued by customers.

The more valuable those customers perceive those products and services to be, the more they will buy.

The size of the yield is based on how effectively the company creates these products and services and how efficiently it runs its business processes to build those products and get then to customers.

1 - value engine

An important history of financial regulations and their impact on organizational structure

As basic as that sounds, your company isn’t organized this way.   The basic organizational models most commonly in use today have their genesis from the first half of the 20th century at the peak of the industrial revolution.

In response to the Great Depression, governments in market-based economies established valuation rules and standard account practices.   In the Unites States, it created the Securities and Exchange Commission as a way to regulate banks, investments, and oversee these regulations.   These rules led to a foundation of common terms and definitions which helped connect a variety of accounting principles with emerging management and organizational models at the time.

Over time these principles and organizational models became intertwined.  This blending of standard terms and organizational models allowed for the massive explosion of scale of businesses.

Starting with the post WWII global business expansion – there was tight aliment between: valuation models, financial regulations, and organizational models because:  the pace of business was (relative to today’s standards) slow, we were very much in the peak of the industrial revolution and mass communications age, and “go to market” concepts developed in the 1960’s well reflected the needs to meet customer demand.

During this period, the role of the CFO emerged from the accounting professional and with regulatory reporting requirements, the function grew in power filling in operating details to meet the business needs of the time.

As a result, an organizational model to run companies emerged predicated on roles to manage different assets.  Matrix organizations emerged to create more economies of scale and create hand offs across the core functions.  But, these models still have a heritage in: division of labor, controlling costs, span of control, authority, and departmentalization.

An emerging paradigm shift

Businesses got more and more efficient with management models that grew from the 1940s.   Computers, the internet, and now the ability to track and mange business with mountains of analytics has created an enormously sophisticated management science around running the organization matrix.

However, the nature of business (and thus investment) has changed more dramatically.

Today, we are very clearly in a post industrial revolution world.   At the end of 2016, three of the top 10 most valuable companies in the world exist solely because of the internet:  #2. Alphabet (Google), #5 Amazon.com, and #7 Facebook.  Today’s economy moves as a blistering speed, is fanatically interconnected, customers are more informed and more demanding than ever.

Increasingly, the price elastic curve as a way to understand and quantify how markets behave is being replaced by fuzzy, intangible concepts like  “experience” and “engagement”.

So, while the natural behavior of how a market operates – money will flow to value – is universal; the machinery with which most businesses operate (the matrix organizational model and the complex financial system associated with it) is antiqued.

In order for businesses to optimize their value engines, they need to think outside their current organizational structure and adopt more systems thinking into how they develop more modern approaches to operating and executing their firms.   Systems thinking can be very difficult to understand, but the graphic below simplifies it.

what is a system

The goal of a system is to convert inputs into valuable outputs while using resources optimally in order to get the greatest return on the investment.

You can repeat this pattern at a macro level (think about how sophisticated managing a global supply chain and manufacturing process) or at a micro level (think about actions of a individual seller connecting with his or her clients).

To help identify where the gaps are within sales and marketing, we can conceptualize the value engine into three specialized sub-systems.  1) The value creation process 2) The value delivery process and 3) The value communications process.

The value creation process

The various activities your company does to develop its short and long term business strategy, define plans and set budgets, develop and tune the operating model to manage the overall company, and to communicate overall progress internally and externally are examples of actives all relate to the value creation process.

2 - value engine - value creation

The purpose of these related actives is to determine the right path forward for the company that will produce the most shareholder value and then collect and configure the various pieces of the puzzle to complete that vision.   Taken together, these various activities performing the value  creation process are the “Strategy System” of the Value Engine.

The value delivery process

The first thing a company needs to execute its value creation process are things to sell to customers.   This would include:  development work to innovate new products and services, the formation of business unit or product groups, product development and production efforts, and end when those products and services are delivered to customers.   Taken together, this integrated set of actives are the “Portfolio System” of the Value Engine.

3 - value engine - value delivery

The value communications process

Once a company has set its strategy and built its portfolio – it needs to tell customers it has these products and services.  This is our area of focus because this is the process where a business: understand its customers requirements, engages with them, and tries to complete the value exchange through a variety of interactions with customers.  The functional groups commonly involved in these activities include:  product or marketing groups from the value delivery process, all corporate or segment marketing functions, the various sales organizations and then the corporate functions that support them.   These processes are the value communications process and are the “Selling System” of the Value Engine.

4-value engine - value commications

Going to market connects strategy and portfolio systems

Businesses have developed fairly sophisticated ways to define their corporate strategy, build out its portfolio and then the organization constructs to develop it.   Firms like:  McKinsey,  Boston Consulting Group, and Bain work with corporate strategy groups within businesses to help them identify holes in the market, define the strategy, and help communicate it.

Overtime, techniques have evolved to align:  the portfolio and strategy systems together and organize then into a business unit organization construct that is relatively simple to communicate to investors the linage between market opportunity and how the firm is allocating its assets to realize it.   This also feeds into the tradition operating models the have their genesis in the 1940’s.

8 - value engine - connection between strategy and portfolio

Illuminating the gap between strategy and execution

Using a market model to conceive of a future strategy and link that plan to the companies products and services makes a lot of sense.    However, as mentioned earlier, dynamics in the market place are driving radical changes in the buying dynamic.  Simply put, “go to market” thinking is no longer good enough in order to successfully execute the business strategy and optimize the Value Engine.

“Markets don’t write checks, people do”

In today’s mass customization, experience driven world – customer’s have more power over the value exchange than at any other time in history.

This power shift means that businesses need now to think more granularity about how the “go to customer” and their current organization models does not allow them to do it easily.   The graphic below is from a presentation I gave while at Forrester contrasting the difference  between these perspectives.

4 ps exact slide for first conference

Friction between the strategy and selling systems

Looking at business execution problem through the two lenses of “Go to Market” and “Go to Customer” its easy to see where gaps emerge.  The first one is between the value creation and value communication process.

9 - value engine - gap between strategy and sales execution

Put simply, when a business articulated its market opportunity in the abstraction of a market (like “the internet of things”) and then communicates its growth based a total addressable market number calculated on collections of aggregated data, you can get very weird and un-natural behavior when trying to execute.

It’s not uncommon for entirely new markets to emerge (look at how radically the entertainment industry has transformed over the last 20 years) that create huge opportunities for some (Apple and Itunes, and extinction events for others Tower Records).   However, many business don’t go through steps to identify the specific person who would benefit most from that vision.   Without going through the process of translating that vision into an outcome for a specific person and the total addressable market into how the person will pay fore it, it creates massive amounts of ambiguity for sales and marketing.   As a result, a tremendous amount of generic and unclear resources get created to arm sales people to have vague and confusing conversations that are not targeted to people but more general market concepts.   This puts an enormous burden of connecting increasingly vast amounts of subject matter specific content to customer who are equally confused.

Friction between the portfolio and selling systems

To make matters worse, as businesses add more and more products and services to their portfolio, they tend to organize then into separate P&L units based in many cased with how those products or services revenue is recognized.    For example, a software company might have the following different P&L groups:  consulting, implementation, training, software, and managed services.   Each of these have their own pricing structures, subject-matter experts, order enter codes, contact terms, and even revenue recognition requirements.   Unfortunately, the business strategy is relying on these products and services to be cross-sold together as an integrated story to customers to realize that total addressable market figure (through which should be theoretically efficiently achieve because the firm already has access to these customers and channels to reach them).  The reality is that customers are increasingly demanding a mix of these products and services in ways that meet their outcome, and not the way the company is organized.  As a result, the number of permutations sales people have to sort though to connect the customer need with all of the product is becoming unbearable.

10 - value engine - gap between selling system and portfolio

So what?

The modern economy is only going to continue to rip apart business operating models with design points from the industrial revolution.   Today, most businesses attempt to transform themselves either by reorganizations or major reallocation of assessments (or both).  Neither of these approaches are effective because they do not address the fundamental problem – customers have more information and are more demanding.  When they do buy “products”, so many of them are so good – they choose the least expensive option (which will result in commondization of markets).   What they prefer are “outcomes” and “experiences” which are currently very hard conceptualize, design, and deliver.  It is not practical yet to build an entire organizational model around “outcomes” and “experiences” because there are now proven models that can work at scale.

Therefore, businesses should first define a portfolio of different revenue streams based on common customer types, define an end to end value communications process for each, rethink sales and marketing from expense centers to investments to activate these revenue streams, and create entirely new operating models than can work across the existing matrix organizational structure.

The Science of Value Communications

Nothing says “read me” like – “we need to start with some math”

One of the great challenges related to sales and marketing today is coming up with effective measures that help show cause and effect relationships among investments, actions, results, and how the combination of those move the needle on the income statement.   Modeling these relationships is a fundamental requirement to move away from comparing sales teams (benchmarking) to baselining the performance of your sales force and then being able to perform what-if analysis to determine what the real drivers of sales productivity really are (and what the results would look like in different scenarios).

A common challenge I run into with executive teams is they are so time-crunched and pressured to drive results – they want to get to an answer really fast.   Unfortunately, we’re looking at the sales productivity through the wrong lens and I have to earn the extra time to make my case and I imagine I will need to with you as well.

So, I like to lead with one of my favorite quotes from Albert Einstein.

” Not everything that matters can be measured and not everything that can be measured matters”  

This is relevant because today with CRM systems, sophisticated financial systems, the drive for more analytics, and an increasingly insatiable appetite for greater transparency into the sales pipeline the focus on performance metrics has never been greater – but are we measuring the right things?

Simply stated – no, we are not.   We are collecting mountains of data to track: activity, attendance in courses, downloads of materials, or various cuts of product-based transactions.   Fundamentally – all of this data assumes a few things.  1) That the role of the salesperson is to drive transactions, 2) the value of the exchange rests with the product and 3) that more activity translates into more results.

Essentially, the types of metrics we are collecting assume there is demand in the market for our products and that the salesperson is the primary conduit to fulfill this demand.  This might be true – but, the metrics are so heavily biased to a transactional / activity-based model that you cannot determine the economic contribution of value-add selling efforts.

Thus, in order to effectively measure what the sales force’s actual contribution to the value of your business (and then actually assess the real productivity drivers) is to properly example the role of a salesperson.    The best way to do this is actually to ask the question “why do we have salespeople in the first place?”   The door to door vacuum cleaning salesperson was disintermediated (fancy way of saying “replaced”) by a combination of mass marketing techniques and the expansion of shopping centers.  Today, most of us buy appliances either by going to a store or even going online for them.

There are far more efficient ways for Whirlpool to sell you a washing machine than by hiring a salesperson in your neighborhood to ring your doorbell and try to help you see you need a new one.   Why? Well – you can get whatever information you need for the appliances you need online – or at a store.  The need to have a high touch interaction with a human being with specialized expertise doesn’t make economic sense for a company to invest in if you can get the information you need to make the exchange of money for a toaster.

So, the real reason you have a sales force is that they still play a key role in the value communications process between your company and your customers.   There is some degree of information that those customers require that you cannot provide on your website.   Therefore, in order to determine how productive our sales and marketing efforts REALLY are – we need to understand the information flow that happens over a buying cycle that allows the customer to exchange their money with your products or services.   In other words, salespeople are actually a medium (interpersonal communications) no different from a billboard ad or a TV spot.   The real thing you should be focused on improving is the information flow between your company and your customers.   In other words, you should be focused on evaluating the value communications process.

Let’s start with something simple

I acknowledge that a “value communications process” seems pretty abstract but we need to deal with the reality that the speed, volume, dimensions, and sophistication of what information B2B businesses must share with its clients is exploding.  The primary focal point for a B2B business needs to be the value exchange that results from conversations.

converations to revenue

Conversations happen overtime

Unfortunately, few B2B sales are made with one interaction because the information required has to flow over a period of time  (the cycle time).  Tracking this flow of information is very difficult if you are looking to either control the conversation one-way (ie through a sales process) or only by the end results (ie a transaction).  So, actually determining what the information is – let alone how you would measure is a challenging task.

Fortunately, we have an outstanding body of work that’s already been completed to build upon.   In 1949, Claude Shannon and Warren Weaver published what is widely considered the birth of information theory titled “A Mathematical Theory of Communications.”

Engineers by trade, Shannon and Weaver created the model to describe the flow of information from one source to the other so they could determine ways to complete the circuit.  The concept of “byte” was created for them to provide a common unit to measure electric information.  The researched different communication patterns from drums in Africa to smoke signals in the Americas.

shannon_weaver_model

I’d get the book if you want to know more about the details – its been a great source for me to refine my thinking and test my math as well.  However, there are a few foundational points we need to take away from this model.

  1. Sender:  For us, this could be anyone.   In a B2B environment – a marketer can send a signal to the same person that a sales person (who might be sending a different signal) is trying to communicate with.   Thus, we need to understand all of the people sending out information.
  2. Encoder:  This how we organize information in a way that is meant to be digested.  In this article – the Volkswagen commercial would be an example of “encoding”
  3. Channel:  How the encoded message gets to the target is what’s meant by channel.   Marshall McLuhan coined the phase “the medium is the message” in 1964.  What he meant was that a channel  (print, radio, conversation, TV, etc) and the contents of what’s being communicated are o.   Philosophical concepts aside, for our problem this is very true with sales.  In many cases, HOW the sales person engages with a customer dictates the overall impression that account has of your whole company.  I have a lot of proof for this I will explore in other articles.
  4. Noise:  From Shannon and Weaver’s perspective, noise means anything that could prevent the signal from reaching its destination with clarity.   Think about listening to AM radio and hearing static when you are driving and that interfering.   Today,  and for our problem of B2B communications,  the problem is very different.   The noise problem is about information overload.   We will zoom into this topic with much more specifics later.
  5. Decoder:   When you are dealing with interpersonal communications there are many factors to consider.  One example, each person bring bias to every conversation and reacts different to words.   Because we give our customers so many different things to react to, we don’t know for sure how they are absorbing the information.  In practice, it is really hard to separate the “decoder” from the “receiver” because both are humans.   For the purposes of sales conversations – let’s refer to “decoder” as for how the person translates what we are sharing with them into something meaningful for them.
  6. Receiver:  Shannon and Weaver are referring to any receiver of information (it could even be another machine) but in our case we need to make this much more tangible.   For us, a receiver is a person.   What makes this increasingly difficult is that many sales processes involve many different people.   Tuning and modeling out conversations with each person would create far too many permutations of nuance to calculate, but it is a reality.
  7. Feedback:  From a strictly technical perspective, this would be similar to confirming that the other party received the signal.   That would be knowing the other person picked up the phone, or today – you knowing that I received and opened an email.   However, interpersonal communications are tremendously more complex.   When I say something to you like “value communications process” if you don’t give me feedback on how you are understanding it – I don’t know if the meaning behind it is effectively conveyed.  So, for our communication problem, we have to heavily factor in “feedback” to our model.

The key point is that all of the engineering models behind all of the various forms of digital communications today (wireless, texting, networking, social networking, video, etc) have their technical roots in this core model.

The technology is running far ahead of our tactics…

If you take a step back and contemplate how fast the advances in communications have happened over the course of humanity, I think you will be both astonished and sobered at the same time.   I think this conversation between Louis CK and Conan O’Brien is a great point of reflection about how far we’ve advanced in such a short time.

It really is remarkable and the potential is very exciting. The number of ways salespeople can now have interactions with buyers is practically incalculable.  The richness and power of new media that is fundamentally transforming whole industries  (I am still blown away that Newsweek was sold for $1 in 2010) isn’t being fully factored into how we conceive, design, or measure our sales and marketing efforts.   Shannon and Weaver defined three different levels of communication problems with this first they described as technical (layer one).

Over the past 20 years, there has been an explosion of communication innovations that are impacting how businesses communicate information to their customers and how customers can find it.   In my first sales job out of college in 1992, I sold industrial supplies to various maintenance departments in huge buildings, factories, and government agencies.   One of the products I sold was called the “handy bundler”  and I sold this for $100 each, but the exact same thing could have been purchased for $20 at Home Depot.  That was because I had way more information than my customers.  Today, there’s no way I could get away with it.   Those buyers today would have a simple web-based app to look up the product or service and have it delivered to them the next day.   Think of all of the digital ways sales people can engage and how buyers can find information.

All of this innovation is behind the total explosion of sales and marketing technologies we’ve seen over the past 10 years.   However, one of the core design points companies have when trying to implement and operationalize these platforms is that they expect to drive more sales transactions.  When the expected results fail to materialize, more metrics and demands are put in place.   Unfortunately,  the problem isn’t with the technology its with the two other communication problems that Shannon and Weaver envisioned: semantic problems and effectiveness issues.   In order to understand the effectiveness issue, we need to understand the semantic challenge.

…and we’re increasingly divided by words

A former customer and friend of mine, Tim Lambert used to say that a scene from Seinfeld can describe any business problem and I want to help prove him right.   If you know the episode where Jerry commits to wearing a puffy shirt on late night TV, where he actually agrees to it is an exaggerated example of a semantic communications problem.

A real-world example if this is where your salespeople have no idea what your customers (or sales engineers) are talking about.   In today’s complex buying environment it is not uncommon for buyers from different groups to talk past each other as well.

Why Should You Care?

Am I advocating everyone in sales and marketing learn the Shannon-Weaver model, then develop a variety of engineering level algorithms to model out and accurately measure communications?   Of course not.   I want to establish a few things.

  1. Imagine how silly you would feel if you were the last vacuum cleaner sales force arguing for more coverage and headcount?  Yet, today companies still have a static sales resourcing model tying headcount to revenue.
  2. Look at how quickly the effectiveness of mass advertising improved once they started applying the RIGHT science to the field?  Yet, today sales are still transactions and we try to montoir results based on models developed by accountants.  (Note:  wrong science).
  3. Imagine how much potential there is to STOP viewing sales and marketing as two separate organizational functions and START putting their talents together to find entirely new techniques and methods to communicate by leveraging different forces of communication.
  4. Think about the massive improvements in overall productivity where some value communications processes can be moved to a more streamlined and less expensive model.  Or imagine the efficiency gains with your strategic accounts teams are actually resources and supported well enough to massively expand your footprint within those accounts?   Now – imagine doing both!  It’s possible right now.

But, in order to accomplish that – you need a framework and approach to “see” it, measure it, and help collaborate with other people inside your company.  So – here is a simple Audience, Message, Messenger model I’ve used quite successfully to bring many large organizations together.    Here’s how you do it.

Step one, understand the audience

Since B2B sales (and the whole value exchange between buyer and seller) is so much more complex than other business processes, we need to make sure the semantic communication problems are more predominately factored into the flow.  Since we are selling, we should first model our target customers (I call it modeling the customer’s agreement network) and really understand the information they require in order to see enough value from your company in order to make an exchange.    To make this even easier, I’ve worked with a lot of people to create different buying archetypes to help determine these informational requirements and these are based on 1500 surveys and over 300 interviews with executive-level buyers (shameless plug to capabilities).

1 - value communication - audience

Step two – organize your value messages in such a way that’s most consumable for your audience

Your value message is a combination of all of the products and services a given customer type might buy from you, your pricing strategy, and also all of your positioning messages.   You will then need to determine a common set of reasons that an audience type will by from you, organize the mountains of disparate content that exists across your organization into useful categories for customers, and then make sure all of that information is consistent in tone and voice in order to avoid semantic communication problems.  Some businesses today are still applying a checklist approaches to creating various forms of content.   Because these checklists (for example an old product launch checklist or perhaps an inventory of assets to create from a strategic consulting firm) are following traditional thinking, they don’t factor in the huge communications shift that’s occurred over the past 10 years.   As a result, the volume of resources created following the checklist approach actually creates noise to the sales force in the form of information overload.  NOTE:  The responsibilities to create all of these things are so distributed throughout your organization that it’s going to be impossible to catch the massive disconnects you are sending on to your customers (and salespeople).   I have a variety of tools to help create an inventory for these disconnects, methods to address it, and even have some workshops to help get everyone involved on the same page.

2 - value communication - messages

Step three – determine the right type of messengers who can match audience with the right message patterns to complete the value exchange

Regardless how skilled (or well trained) a salesperson is to have a conversation, it still needs to be about something – so it is very important they have the right messaging strategy and supporting content.   However, even if you have all of the right content if a salesperson isn’t able to artfully connect it to a given audience – the information those buyers require will be either delivered or effectively decoded.   As a result, the value exchange will not occur.   For example, a CMO (audience) who is looking to implement a complex omni-channel digital marketing strategy might be interested in your company’s approach to helping her transform along the recommended path you’ve helped guide other CMO’s through (message).    That CMO isn’t going to be able to hear that message if the salesperson (messenger) is too focused trying to show the features of one of the many products involved in the approach and pushing for a buying decision because he’s got a monthly quota commit.   Interesting enough – most sales assessment models do not factor in the type of conversation they need to have or what relationship they need to build to drive the most value.   To assist here, we’ve developed a sales talent assessment model based on different customer types.

3 - value communcation - messengers

Step four – measure the process over time and the quality of the signal being conveyed

If you know the general decision-making process (NOTE:  NOT buying process)  the audience will go through, have the right messaging strategy and the right sales talent (and developmental plan) you can measure two different things.   The first thing you will want to do is break down the customer’s decision making stages into a handful of binary and verifiable steps.  This will allow you to objectively track how well the messengers (sellers) are engaging with your audience and providing them with the information they require to meet a milestone on their journey to success.  (Note:  I’ve developed a framework for this I refer to as “four selling objectives” that I use to radically improve forecasting accuracy and also massively simplify the burden of sales reporting).

The second thing you will need is a way to measure the quality of the interactions between the sales people and the buyers.   What you want to track is how well the sales people are exhibiting behaviors that help their audience accomplish specific milestones and to the degree the messages resonate.   Both are important to capture and track at both an individual level and across an entire sales force if you are going to create the right feedback loops to provide continuous improvement.   (Note:  This is addressed through a model called the “value equation” which helps provide some common structure to salespeople and their managers and a way to help critique the messages.)

5 - value communication - audience expectations

BOTTOM LINE:  Activate Profitable Growth by Tuning Your Value Communications Ecosystem

Just as the Shannon-Weaver communications model provided the catalysts for explosive growth in communications, the value communications process lays the foundations for accelerated, profitable revenue growth.   Why?   First, by shifting the focus from figuring out what you should communicate based on your products – to understanding what outcomes your customers want to achieve, your company will be far more differentiated.    Secondly, your company is spending as much as 15.9% of its SGA expenses on random acts of sales support.   By having a common model for it, you will be able to significantly cut those costs by eliminating redundancy and also improving the overall quality of those resources.   Thirdly, knowing what the talent profile required to engage with your targeted buyer type makes the whole process of hiring, on-boarding,  managing, developing, and evaluating your sales force so much easier.   Finally, armed with simple, objective, and verifiable metrics to help move customers through decision-making milestones and a measurable way to evaluate how well your messages are received creates a continuous improvement cycle focused on adding value to customers.   As a result, you will win more customers who will pay premium prices; you will spend less money supporting the sales force and it will be higher quality, you will be able to scale your sales force based on market needs, and continuously improve the productivity of its execution.

measurement construct

dashboard - mapping to income statement

 

The Critical Importance of Understanding Valuable Sales Conversations

Transactions are the Atomic Level of an Economy

I know, an abstract starting point – but let me explain.

One of my best friends runs a short desk for a fund.    He and I talk a lot about what drives value and through him I’ve learned how investors look at companies and how that drives CEO and CFO actions which ultimately create gaps between sales and marketing leaders.

I’ve read everything he’s suggested – most of it was extremely out of my ability to understand.  But over several years (yes, years!) he finally shared something with me that I could understand.  This video by Ray Dalio (the founder of Bridewater Associates, a hedge fund that killed it during the economic crisis – so he’s really credible) helped me understand something.

Fundamentally, the economy is based on transactions.  People are behind those transactions.   Yes, a lot of that buying volume happens without much thought – and some are goods we learned were commodities (like tomatoes).  However, my uncle is a tomato farmer – and he relies on his salespeople to get into the stores.   So, sales people are behind huge segments of our economy.

A whole economy is far to complex for me to understand and it is outside my pay grade.   What I can understand is what actually happens at the moment of a transaction because I’ve been a student of sales for at least 20 years.  So, let’s try to tease out different kinds of transactions.

Transactions are exchanges of value

Before we do that, we have to understand WHY a transaction happens in the first place.  Ray’s video explains it pretty abstractly.

Let me get this out in plain speak:  transactions only happen when someone with money sees value in a good or service someone else has.   Those someones can be either people or companies.  This falls into the “no duh” category.

So, as a sales professional, I have a problem with calling these things “transactions” because something or someone made them happen.  When CFO’s look at all of your deals only as transactions – they are not factoring in all of the effort that went into helping the person with the money understand the value of what they are evaluating and also make sure that person spends that money with you rather than something else (maybe not even spend it at all – ie losing to no decision).

So, I’ve learned to talk to CFO’s about the value exchange is what is important and its salespeople who drive the economy, or at the very least – the company.

I realize you might want to “cut to the chase” with how this effects you and your company – but it is important to understand this core concept of value exchange and how it relates to your business.  I use this graphic in every conversation I have with a CFO to help connect the dots between the transaction idea from the video above to the value exchange idea depicted here.

coversations and income statement

Information transfer drives the value exchange

For a grocery store, it might be that impulse decision you made in the checkout line to buy a snickers bar.  Alternatively, United Airlines buying a fleet of 777’s from Boeing is far from an impulsive decision.  It’s an extremely complex decision likely to involve:  government pressure (Airbus or Boeing), specific requirements about the experience that United is trying to create for its customers, sophisticated financing, detailed production and operating schedules… you get the picture.

Well, for Mars to boost sales of Snickers bars and hit the volume it requires – it needs to make these value exchanges happen at scale and the whole buying cycle is going to happen in seconds.   The idea of hiring a salesperson to stand in line with all of the other grocery items is just silly (hence the idea of business to consumer marketing)   Conversely, how would a Super Bowl ad help Boeing sell more airplanes when there are only a handful of carriers on the planet and  each of them have complex requirements  (and thus, the idea of business to business)?

Complexity determines the medium of information transfer

While these are two extreme examples on a continuum the point is that your business has a set of similar value exchange patterns between the different customers you have, the complexity of information required to make the value exchange, and the economics of your products and services.   Regardless of the situation what drives those value exchanges is the type of information that needs to be communicated.

B2C information transfer can happen at scale

So, for Mars the information they want to convey is “we want people who are hungry and want a quick snack to buy our product” so they create a whole campaign around that one idea and get it everywhere.   That’s the information and they hope it will resonate.  The amount of sophistication that goes into identifying that right message is astonishing.  Consider one of my personal favorite commercials of all time – the 2012 “Darth Vader” Volkswagen commercial.  They are now using neuroscience to study how we process information in our brains in order to maximize the information they encode in order to drive the result they want.   What Volkswagen is looking to do is to attach all of its core messages about their product to identify with a specific imagined image and life experience for its target market.   A lot goes into getting it right because they spend millions creating and then distributing the ad.   But, they are trying to get us to have a conversation in our head or with our spouse about their proposition –  buy a modern, nice looking, safe family car, that’s affordable for you.   The medium for this exchange is mass media (either TV or digital).

B2B information transfer happens through conversations

On the other end, for Boeing the issue is different.   The value proposition here is about high quality, reliable, safe, durable, and efficient aircraft that can cost-effectively carry a given load of passengers over a distance threshold.   The amount of information is required to facilitate the value exchange is voluminous and must all be orchestrated to meet United’s own set of complex requirements.   Imagine all of the conversations about maintenance details to determine how quickly a plane can be serviced and made available for a new flight – or how long it can stay in rotation without regular care.   Or the safety records, how well the electronics work, how easy is it to fly, how quickly each aircraft can be manufactured, etc.   Its a cacophony of lots of sets of very detailed information that must also be simplified into ways that United management can fit into is capital expense tables and easily communicated to investors in a paragraph or two in plain speak.  The medium of this transfer of the required information to fuel this value exchange are conversations – many of them, over a period of time.

Conversations are the medium of information transfer that drives the value exchange

Therefore, it is critically important for a business to really understand what their customers are looking for in order to:

  1. Understand who the actual buyer is in the first place
  2. Determine what they consider valuable
  3. Figure out how much and the nature of the information they require
  4. Create and organize the information so it’s more easily digestible by the people involved
  5.  Identify the kinds of skills required to effectively convey that information
  6. Make the process of communicating that information simple enough to where it can be repeated by not too basic so that the required information is not diluted

However, while business to consumer companies like Mars, or Snickers are getting increasingly more granular in understanding their costumers’ experiences and then using science to innovate – business to business firms are not responding as quickly.

The relative investment in sales and marketing to revenues for two contrasting businesses:  Ford (more complex B2C) and IBM (more complex B2B)

Ford Motor

  • 2016 Revenue:  $151.8 Billion
  • Invested:  $12.2 billion on SGA
  • SGA as a % of Revenue:  8%

IBM

  • 2016 Revenue:  $79.9 Billion
  • Invested:  $19.4 Billion on SGA
  • SGA as a % of revenue:  24%

For Ford, the bulk of their customers can be provided the information required to make a value exchange with them through highly leveraged methods (broad-based and omnichannel communications and dealers to complete the exchange).  However, in IBM’s case – helping their customers understand highly complex business issues and the role technology plays to address it requires significant subject matter expertise and a very agile sales team given the rapid rate of change in its industry.   Thus, IBM is spending 3x as much on SG&A relative to Ford.

Conversations are the fuel that drives transactions

Therefore, if your customers require complex information transfer in order to make a value exchange with your company, you need to pattern out what kinds of conversations are required to be successful.    If this is the case, your salespeople are your communications channel and the conduit through which your value proposition is conveyed.   In order to make this communication exchange more efficient and effective (and thus make your salespeople more productive), you need to understand the components of a conversation.

On a simple level – the figure below outlines the various components to that make up an effective conversation for your sellers:

sales enablement is about aligning in the trenches

  1. Content.   They must have the right information required so they can provide it to all of the people involved in the decision.   A less complex value exchange will involve fewer people and require less information.   A more complex value change requires more information.   The more this information is:  timely to the stage of evaluation the customer is in, relevant to the overall goals of the customer and what they are trying to achieve and in context to the roles of all if the relevant impacted stakeholder involved in the decision – the easier it will be to facilitate that value exchange.
  2. Skills.   The sellers must have the right skills to identify the information a customer requires to meet their objective (its often the case that customers don’t know exactly what they need to solve a given problem) and then also help that customer envision how your company will help them reach the objective.   The profile of skill required to effectively connect that content with the customer to help them complete a value exchange will be based on:  how complex the problem is, the altitude level of the wallet owner, the amount of buy-in required from other internal stakeholders, the funding model, and anticipated value realization of the client.
  3. Tools.   Tools are really communication aides to help skillful sellers more easily frame content for customers and covert general information into something specific to the customer, digestible based on their needs, and codified so the customer can more easily share the information internally.   Tools help decode the information you’ve provided into more useful and situationally specific formats that make the internal buying process a lot more effective.

The Problem:  The information flow the fuels the value exchange is bottle-necked

Business to Business firms are struggling with massively inefficient sales forces because they have been too slow to adapt to a radically changing business landscape.  One the whole, the customer’s problem and their expectation of a seller has changed dramatically over the last 10 years and will continue to do so.  In addition, technical innovation has increased the number of communication modes for salespeople to have conversations- from phones, emails, and face to face meetings – we now have a whole slew of different and emerging digital options.  And while sales forces adjust their techniques and skills to these new modalities – they are getting bombarded by a never-ending stream of well-intended: policies, materials, messages, directives, training, processes, resources that (seen through the lens of having a conversation) are random acts of sales support.   The figure below communicates the following:

attempt 5

  1. your company is making it more difficult to allow your sales force to have valuable conversations because all of the changes, new products, and information being pushed to your sales force isn’t designed to with conversations in mind.
  2. This overwhelms your sales force and confuses most of them.   What happens then is either – salespeople don’t know how to engage with new buyers or they revert to old techniques that might not work today or only sell products they are comfortable with that don’t map to your future business strategy.
  3. To make matters worse, your customers keep changing and the more you keep following the beliefs that produce the “random acts of sales support” your company drifts farther away from adding value.

So what?

A failure to address this situation strategically will either create an increased strain on your sales and marketing resources – ultimately driving your organization into a community player and the margin pressures associated with it…. OR your business will be displaced entirely from a new entrant with either a lower cost option or a far more value added value communications process.   Both scenarios involve business transformation (retooling your sales engine to be more cost-effective in a commodity market or divesting whole businesses you can no longer compete) so why not look at transforming how you are enabling your sales force to have valuable conversations with your customers?

 

Changed Economy Example: AMC Movies

This article from the New York Times is a great example of the blurring lines of industries and the forces driving whole scale change in industries.   AMC, a movie chain, has recently hired a CEO from Starwood (hotels) to run its business and now will begin thinking more like a restaurant.   As obvious as these changes seem to us are consumers of AMC’s service (I myself much prefer to wait for movies to come out so I can watch them at home with my kids), imagine how radical they are for people who have always been in the theater business?   Imagine how hard it was to get buy-in from the board of directors to invest $700M in theater upgrades to implement the strategy.    Think about the outcome wheel and what all must be going on behind the scenes.   Also, what type of business is AMC now?   Are they not competing against:  cable and satellite businesses?   HBO, Showtime, Starz?  Restaurants?   Bars?  Mobile devices?

 

Executing with Bi-Focal Lenes

aligning the vision of your business strategy with your organization’s ability to execute.  Perhaps one of the most important is making sure the execute responsible for the results (who that is is an entirely different conversation) is wearing bi-focal lenses.

This is an excellent metaphor I picked up in one of the many facilitated workshops I’ve done (I wish I could remember the man’s name or what company he was from) but it is a great phrase to bring to life a much bigger idea.

Basically, one of the skills an executive who is responsible for the execution engine that is driving shareholder value needs to have is a very fungible sense of time.  What does this mean?   Well here are some “truths” about time.

  1. Valuation is a reflection of the future.   Your firms’ valuation (either it’s market capitalization or what other investors will pay for it) is a reflection of FUTURE value, not current or past.   Let that sink in.   The stock of your firm already factors in “the markets” belief of your value.
  2. The strategic focus in based on where things are heading.  Because your organizations’ primary mission is to increase shareholder value, your CEO, CFO, and maybe your strategy team are far more interested to predict what the world will look like in the future (but not too far out) and then develop a strategy based on that.   In other words, the vision they have is a view of the future.  Not right now.
  3. A strategy is translated into budgets.  Part of the strategy is to set metrics or guidelines of performance.  For example if a CEO believes a) strongly where a market is heading and b) they can improve the overall productivity of the organization (mostly by reorganizing or cost cutting) and capturing these anticipate future revenue streams, they can justify huge gains (For example, an improvement of operating margin from 10% to 20% over three years).
  4. Execution requires a balanced focus on a short and long term. CEOs and CFO’s are very smart people so they will plot out the path from 10% to 20% over a three or five-year plan.  Year one is easily obtainable (say get to 12% operating margin).   Point?  CEOs and CFO’s have an event horizon over a period of time.  Lens 1 – 3-5 year horizon.
  5. Well-intended activities to drive annual number get launched. What happens next is where you start getting disconnects in time.  A massive flurry of activity happens across the organization with annual strategic planning heavy focused on hitting the annual target.   It makes sense, the CEO and CFO cannot afford to miss the “streets” expectations that they set, or the confidence the market has in the firms “future” gets discounted and the stock price might go down.   But, what it means is that firm is now squarely fixated on its annual target.  Lens 2 – Annual target.
  6. Resources are allocated by budgets, not needs.  The money to pay for all of these activities believed required to get to the goal (in this example 12%)  comes from all of the various functional groups and their budgets.  The budgeting process set up is mostly based on allocations and what was spent in the prior year.   So, now the focus shifts between the past year and the present time (right now what your budget will be).   Lens 3 – Past focus; and right now (what budget do we have.
  7. Targets are set looking through rear view mirror.  Goals, objectives, and quotas get established for sales teams and people.  These targets are often set by gauging past performance to predict the future and by making many different assumptions.  What’s worse, it’s typical that the quotas (and associated compensation plans that meant to be an incentive for the right behaviors) are rolled out late.  Lens 4 – past focus to create the targets and then given sales teams less than a year to achieve their annual target.
  8. Forecast and pipeline cadence out of alignment with the buying cycle.   Many firms are moving to set quotas based on quarterly or even monthly performance.   However, if the problem-solving lifestyle for a targeted customer is one year and the salespeople are managed to a monthly target – those salespeople are going to be encouraged to be out of alignment.   Lens 5 – focus on meeting internally created deadlines and not customer oriented milestones.
  9. Past successes versus learning new techniques.   Most business strategies today are differentiation driven and therefore require some degree of change to sales tactics (selling to new buyers, getting ahead of an RFP, cross-selling, providing more of a total solution, etc).  While these changes are stated, the degree of change isn’t well communicated or understood.  What will happen is that sales leaders (under pressure to produce monthly or quarterly results) will revert back to techniques that worked for them in the past (think “proven best practices”) rather than work to develop a new technique.   Lens 6 – Leveraging past success and beliefs when learning approaches and strategies is required.
  10. The immediacy of the fog of battle.   Any human is going to act with intensity when under pressure and salespeople have always been the most accountable roles in any organization.   Feeling the pressure to respond quickly to various customer demands doesn’t put the sales force in a state to thoughtfully consider the future strategy (and with so many unaddressed problems are likely to get more agitated with conversations about the vision).  Lens 7 – being in “the moment” of each minute of each day.  Making the calls, following up, resolving issues, etc.

Bottom Line:  Tightly aligning the business strategy (which drives the expectation and perception of the valuation) with the overall ability to execute in a way that shows trajectory to that vision (which provides evidence your company is on the path) is a lot more challenging today.   Regardless if its: targeting a new buyer, the increased complexity of a market, the need for new sales approaches, goals to combine different products and services into new value for  customers, rapidly changing competitive environments, the accelerating pace of business cycles, the transformative effects of technology, new styles of work or any combination above – organization are going to need to learn new ways to blend the their strategic planning with their execution approaches if they want to compete in the 21st century economy.

Influential Books and The Key Take Aways

I want to share an inventory of the important books that I’ve read, what the key learning was and how it has influenced my thinking.

  • 1984, by George Orwell.   The idea about Newspeak; creating a language to control people, was so shocking and profound it left me open to different ways of thinking about languages.  It softened up my mindset to first be open to the idea of “linguistic determinism” but also to eventually learn there are totally different languages:  computer / machine languages, professional languages (legal, finance, etc), emotional languages (how to relate to expressively to other people), conceptual languages (there is a whole language to how to tell as story) and analytical languages(using mathematical ideas to either understand or communicate complex ideas through an objective frame).   I never would have been open to that if this book didn’t disturb me so much or if I had not kept it in my mind.
  • Micheal Criterion (basically everything he wrote).   I really love to idea of the fallacy of man and all of his stories really bring out the duality of man.   One the one hand the total brilliance (I use the concept of taking frog DNA to “fill in the gaps” of the generic code all the time for a lot of other problem solving techniques) of humanity and on the other end – how our brilliance without temperament for understanding nature (evolution, time travel, the environment, nature, humanity, etc).  I love this balance and factoring both of those dimensions. I was also always impresses with his overall body of work and dedication to learning about the subject he’s writing.  Truly, a hero of mine.
  • Tipping Point, by Malcom Galdwell.  This book was critical to me when I was pulled from the field and given the assignment to build a “sales ennoblement” function (my actual title was VP of Product Marketing and Management) in 1998-2001.   The whole “change” processes that I’d read about (Kotter, etc) made conceptual sense, but didn’t align with my personal experiences of how people behave in the trenches.  So, whats this – a book of just observations about it?  Wow.   Too this day I always consider the 3 “laws”:  the few, context, and stickiness and the 3 “roles”;  the salesman, the maven, the connector.   I’ve built so many thoughts on top of this foundation I would love to sit down with him and unpack it all some time.
  • Chaos Imperative, by Ori Brafman.   When times change, humanities ability to constantly perfect an “operating model” can get in the way of progress.   Examples from how the plague lead to the period of enlightenment, the “surge” in the Iraq war, to techniques for hospitals all make an incredible case for a being more thoughtful about what we are optimizing towards.   These ideas helped me start to codify some ideas of contract between “old way” and “new way” that i’d already had.  What’s more?  It’s written sort of like an intellectual “who done it”. Lastly, this book really resonates with me because my friend Brian Lambert recommended it to me.  It never would have been on my radar screen unless he suggested it.  I love this serendipity.

NOTE:  Adding more as time goes on.

 

How my Family has Influenced Me

My lens of the world, the skills I posses, and the motivations I have are a byproduct of the people in my life, the knowledge I’ve gained, and the experiences I have.  What I am going to do here is attempt to capture one key influence from people in my life and describe why it is so important to me.

  • My Mom.   As a teacher, she’s not only passionate about learning (so I definitely pick up some of that from her) but she has a gift she can’t really describe to take in a lot of information, but apply it to her classes to see if it works.  By blending concepts she’s learned (academically) with “lets see what works and adjust it from there” attitudes in classrooms and teachers (practical); she’s had tremendous success in the education of many, many students.  This is a gift in that she’s provided a blueprint to learning that is different than what I see happening with businesses and how they approach sales training, coaching, leadership development and change management.
  • My Dad.  With a masters in mathematics, my Dad worked on helping to calculate the re-entry windows for the Apollo space mission and then eventually was a sales manger for GE selling computer timeshares.  One thing he always told me (but it has taken me years to really learn) is that math is a universal language.   What that means to me to me now is that just as “English” as a language with rules that as we learn allows us to communicate ideas, math is the same.   For me “English” is the way to ask questions to define a problem convey ideas or answers emotively.  “Math” is the way to fully understand the problem and then provide the way to communicate those thoughts analytically.
  • My Grandmother (Mom’s side).   I’ve recently been diagnosed with ADHD which means I’ve had it my whole life.   It is very common for kids who have ADHD to develop self concept problems because most of the feedback you get is very negative (pay attention, stop misbehaving, etc).   My grandmother was the one person who was best at seeing past my symptoms and look into my heart and highlight the good things about me.  For this, I’ve learned to do that same to others.   While a lot can get in the way of my relationships with people – I still can look past their own insecurities and doubt and see their inner good selves.
  • My  Grandfather (Dad’s side).   An Italian immigrant who dropped out of school before he was 12 to help his family make ends meet – my grandfather was very proud to work his way up and on to the NY police force.  He was passionate about life and had a zeal for it, but there were some things that would drive him nuts.  One of them was the mafia.  No matter where he was (Sicily, Little Italy in New York, or our house in Virginia) you were bound to hear it… for a long time and loudly.   I think this is where I get my passions from injustice and my zeal.   Oh, I also know it isn’t always a good thing -there can be a place and time for it – but, it help provides a fuel to my motivation engine.
  • My Uncle Jim (Mom’s brother).   From my vantage point, my Uncle represents every possible positive stereotype of a southerner rolled into one role model.  In his youth he got into a lot of trouble “boys will be boys”, he’s got a lot of the same friends he had when he was in high school (extremely loyal), and he’s relatively defiant to “establishment” (government regulations and lawyers specifically).  What’s more is that he’s a self made man who started as a mechanic then build up a farm, then a packing plant, and then creating a co-op.