Do not to overcomplicate the simple or oversimplify the complicated.

I was going to write about what the vision of a market-driven value chain is, but I have had another line of thought related to my last post. I gave some really basic examples of how to measure process performance and urged companies to start measuring. I wonder if I set a too low level on what I wrote or if I hit the right low level to help companies from being discouraged from making measurements.

My thought is: “In a complicated world and in complicated companies, how do we make the numbers simple”. In IKEA simplicity is a virtue and it has definitely rubbed off on me in the years I spent in the company. Simplicity cannot be a goal in itself; simplicity is something you need to put in your company culture as a natural way to see things. The advantage of simplicity is that it forces you to strip a question down to its core in order to provide a straight simple answer. There is a drawback though. If you try and see everything in a simple way you lose out on some beautifully complicated possibilities. The trick is not to overcomplicate simple possibilities or oversimplify complicated possibilities.

So I gave you some simple ways to look at numbers and measurements. With this you will get far in steering your internal processes.

Now, what about the beautiful complex issues when it comes to data and measuring?

Big Data is emerging and I brought this up in an earlier article, my message was, prepare before you implement. Looking at complex measurements, Big Data will present some fantastic opportunities. Only your imagination is setting the limits to what you can try and find relationships/trends/correlation. The trick is to know what it is you are looking for and what the data you collect actually is telling you….

Example: In retail you could start measuring your customers purchase patterns, not only the basic measurement that customer X bought article Y in store Z at date and time Q. You can measure the time when customer X reads the offer you sent out electronically for articles ABC, you can track the geographic movement of the customer to see if they entered one of your stores, how they moved around in the store, what did they buy, if they didn’t buy anything and finally you can see if the visited your competion before/after they came to your store. If you can analyze this and improve the offer and move more customers from just browsing to actually buying something you will have a better ROI on your campaigns. Is this science fiction? Hardly! The big data issue here is the geographic positioning, the rest you should either have or secure that you can start measuring.

Companies will need special departments that make these complicated analyses. Avoid putting this complexity on the process that secures the basic flow. Make clear briefs to the analyst department what you want and unleash them on the net and get either a report or an interactive tool that is continuously updated, depending on the assignment. Handle it like a complicated issue…

Another possibility that is popping up is finding data to make a valuable benchmark against other companies. Wouldn’t it be nice to know that you have an average hit rate on turning offers into deals in the same business segment, or that you have a low hit rate but by comparison, but you only have half the amount of sales people? If you have not found the possibility on your own, sign up on our website and make it possible: http://salesscenario.com/register/

Start measuring your process today; you’ll need to know tomorrow

In my last blog I wrote about the natural way of working in process, now I will follow up and writ about how you can measure the process.

Time, money and units. That’s it. In theory this is simple. You want to measure the effectiveness, cost or contribution of a single event or a series of events and you choose one of the three. Or all of them.

At the same time it is really difficult to collect data and format it so that you can present something that makes sense. If the work in a process is scattered across multiple locations across the globe and the work is split on numerous items, you will need to find some shortcuts.

  • Tip1 Don’t go bananas, find a couple of areas and add data gradually and find the data at the lowest possible level, like sales of item X in store 123.
  • Tip2 Keep all the raw data in one place and find ways of trimming it, putting this information in a secondary place, to ease analysis (keep a summery log of what you are trimming to continuously check that you have made the right assumptions).
  • Tip3 Top level numbers are not always the sum of the lower levels; make sure you know when they are not.
  • Tip4 KPI’s are important from a management point of view, but OPI’s can be more helpful in the short run and help make the right operational decisions, find a way to balance both with the time you have on hand. In the best of worlds one will support the other.
  • Tip5 Try some versions before settling for what will be your standard.

So, related to tip5, what measurements should the raw data support? We need to know how effectiveness, cost or contribution is spread across the process (steps A to G in the figures bellow). We need to be able to see the relationships between the processes and we need to see development over time

Visualising each steps cost or contribution and how it accumulates through the process
Visualising each steps cost or contribution and how it accumulates through the process

We also need to know the change between two points in time; or different periods can be summarized in an index change. The index number is easy to understand as anything under 100 is a lowered result and anything over is an improved result.

How is the change in cost or contribution over time.
How is the change in cost or contribution over time.

The value you are looking at can be measured as an average, you can look at max and min values, the standard deviation or the accumulated value. The advantage of one number is of course simplicity in in communication. This number can also be powerful if shown over time to see development and trends.

Different ways of measuring data over time.
Different ways of measuring data over time.

We used a lot of index numbers in IKEA and it made communication a lot easier. The most popular index was last year’s result vs. this year. In some cases it was irrelevant but in cases like accumulate year result vs. accumulated current year result it was crystal clear if you had a tough road ahead to reach you goals or not. What we started to improve was to communicate the index between planned and executed. This is a crucial index, but was not used much. For me it says a lot about the business.

It is also important to find a way of measuring the change that occurs in a process step (IN vs. OUT) in order to find the contribution of the step or to see if there is a buffer effect; i.e. that there is an over capacity to be able to catch up in this step or not. This can be seen as a good thing or you can see it as just having too many resources in this step. In the same way you can see if one step continuously is lagging, then you might need to add resources here. One thing that can be devastating is variance in a process step. This is the level of unpredictability and needs to be managed either by building in a buffer in the process or as safety stock, either way, it is what costs money.

Simple measurements  to compare what goes into a process step to what comes out if it.
Simple measurements to compare what goes into a process step to what comes out if it.

The thing is, if you know what you want to measure you need to get started, NOW, don’t sitt around. Because, unless you start measuring it, you’ll never be able to analyze it. You might have to rethink how you measure, but sitting around thinking about it will get you nowhere. Waiting for perfection is just another way of failing.

So now, off you go! Get it done already! You’ll be happier a week, a month or possibly 6 months from now, depending on what you decide to do…

Side note:

You can of course also measure culture, but does not really relate to what I write here. There is an article by Mark Graham Brown in Business Finance  on the topic.

Who is doing the farming in new sales?

While New Business sales focus on signing the potential customer as quickly as possible, key account management’s target is to expand existing customer engagements. How can you combine these two opposite momentums for better profitability?

Hunting and Farming differences

When first finding a potential customer, obviously they have got some type of need or problem. The qualification process evaluates type of need, when the business may take place, if there is a budget, our type of solution to their problem, if we may identify decision makers and so on. If all goes well sales management keep pace pressure on to close the deal in line with defined KPI’s so the sales rep can start focus on the next opportunity.

Hold on for a sec. Two questions;

  1. Was it the right customer need the sales rep went for?
  2. Didn’t the potential customer have more than the initially identified need?

The point is if there was any other need to fulfill that contained a higher business value for us.

Did the rep really take his time investigating the complete picture? Were notes taken about additional but more vague and indefinite needs or problems?

Unlikely.

Sure, I definitely agree the blood flow in Hunting is pace and focusing on closing. The process for hunting is really focused from the initial segmentations; through the dating to the opportunity stages, just like the picture:

Hunting process

My point is that we don’t leave enough space for reflection in the hunting process. The KPI’s binds us to go on even before we are able to think clearly about our possibilities we actually have on a new potential client. By qualifying the need that comes up first so easy, it fits perfectly into the established checkboxes in our sales funnels and our VP Sales Management nods encouragingly when the opportunity quickly passes through the funnel to closing stage, valuing the reps’ expensive sales time to be spent on the next opportunities.

Unfortunately, of all life blood you have poured into the funnel, only one droplet is signed as an order. Stressed by the KPI’s for the individual sales rep, we are too blinded seeing the right opportunity – the one that end up our potential customer being an A-customer, not a B or C.

And we won’t let anybody else in. It’s my opportunity and potential client. There is no room for anybody else exploring any eventual larger possibility.

In Farming, it’s the opposite. The only thing important in farming is to expand the customer engagement in order to increase business volume. And it’s vital, since there obviously are no other engagements established than the initial one. The result is that the farmer, named as Key Account Manager, starts from scratch since there was nobody doing the farming in new sales. After kick-off the process starts with hand-over, usually digitally (but still no notes about any other needs!)

Farming process

I think this is one of the reasons we sometimes combine the new sales and key account management in one role. The thought is good, however, it’s a poor compromise. A good hunter doesn’t have the mindset or patience needed for “administer” farming and the farmer isn’t equipped with blood taste in his mouth or new client radar in prospecting.

Going back to the theme of this blog post; what happened with all other needs or opportunities you may have been able to see, but not had the time or interest to act upon, during your first sale to a new customer? How can we have the “farming job” in new sales done? If the hunter already has been doing some of the farming job in the hunting process it would be a kick start for the Key Account Manager building his customer development plan.

Tightening the gap

Tightening the gap between the hunting and farming processes will expand your business value on the acquired client, which is a prerequisite for better profitability.

What’s also obvious is that New Sales is not measured in opportunities they aren’t focusing on. If there is no effort than just taking some notes, I don’t really see the point of not doing the farming job in new sales?

Some steps that are easy to start with may be:

  1. Make it easy to catch needs or opportunities, a simple form in a mobile device is a good advice – with very little effort needed
  2. Take time evaluating which of the needs that will be the first (quick) sale; note all other needs
  3. Hold the New Sales responsible for planning and performing the hand-over meeting. Don’t pay any sales bonus until the meeting is held
  4. Base one part of the customer development plan on the simple list in (1)

As always, it’s all about communication.

Best Regards,

Stefan Johansson

Processes organizations are a seamless series of events that delivers a result.

Living in a small town has its advantages. I take the bike to work every day, it takes about 10 minutes. The other day, my morning routine was disrupted by a flat tire, so I had to walk. That was probably the best thing that happened to me in while because it gave me a valuable gift, time to think, time to reflect. Don’t get me wrong, I think all the time, even at work, but not like this.

So what did I reflect about?

I thought about why I was worried about the buzz around Big Data, I thought about the future of sales roll in companies and I thought about the Supply Chain being stuck in price and margin box. I also reflected on the latest writings about CMO’s rolls in companies and the ideas around what their responsibilities are on today’s organizations. Ok, this is a lot, but I have had two walks and it takes about 20 minutes in each direction, so I have had an hour of undisturbed time.

Then, this morning, I found a link on LinkedIn to a webinar on the topic “Leveraging Analytics for Market-Driven Success” with Lora Cecere and Charles Chase, and all the pieces came together and I can see that I am not alone in thinking about this. I actually got some concrete tips on how to explain what the current problems are and what the way forward is. I really need to read Lora’s book “Bricks Matter“, it’s on my to do list.

The key areas boil down to organization and analytics. It is a vision of having one chain supporting the market. I will come back to analytics and the vision of a market-driven value chain in another blog. Let’s take a look at organization.

Connecting to Stefan’s blog about the Strategy Myopia I would like to peel down a layer to an area that I see as the main contributor to Strategy Myopia: the organization. In my view Strategy Myopia is the result of organizational inefficiency. Sure, people are moved, management shows some muscle by adding or subtracting blocks in the organization, but the core of how the business is created, how it struggles, how it enables, how it suffocates and how it blinds managers from the truth lies in how the company is structured. Silos, process or possibly a confusing mix of both (I have experience here)? Silo organizations are an artificial structure that derives from the industrial revolution. Seth Godin summarized this really well in his TEDTalk. There is no gain in sticking to this. I know from experience that the shift to process is a political battleground and there will be casualties, but when the smoke clears you will find yourself in a better place.

Process organization is like a flow, a flow is a natural movement. I used to ballroom dance and it was all about learning micro detailed technical moves and placing them in a flow. In the flow you used your energy, transformed it, to show off the techniques you work so hard at perfecting. In a competition, if something unexpected happened, like another dancer moving into your planned direction, you had to change tactics and do something spontaneous to keep the flow without knocking anyone around you over, or end up looking like a moose in heat, because you lacked the ability to be spontaneous and got lost outside the routine. Dancing also taught me an important lesson. Each move flows into the next, one move is not a dance; it is a series of events that seamlessly interact, in motion.

The first process descriptions? Here you can see the different flows and how they interact. Quite beutiful.
The first process descriptions? Here you can see the different flows and how they interact. Quite beutiful. Source: Unknown

A well designed process allows for perfection and spontaneity. It is a seamless series of events that delivers a result. Another thing to consider about processes; if you cannot explain the basics of what it delivers to a 6 year old (remember Einstein), then you are probably over complicating things.

Once you have set up your processes you need to pinpoint all the points in the process that are clear handover points (ok seamless might not be the case) so that you can measure the efficiency of parts of the process. The silos are gone, but you still need to lead different parts of the organization. What you don’t measure cannot be improved. Once you have identified the measure points you need to decide what it is you wish to measure and find out and what data to collect in order to do this.

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