culpability

Maybe it’s them; but could it be you?

culpabilityWe love to help sales people fulfil their potential, but the key to success is not always what you might at first think. Getting better performance from your sales team will probably involve helping them individually with skills and techniques but it will usually also require better leadership and management.

So what is the difference between leadership and management?  This is one of those things where asking a number of people will typically produce a wide range of often contradictory answers.

Perhaps a good place to start is with a view from the great Peter Drucker who after many years of pondering concluded that

“Management is doing things right and leadership is doing the right things”.

If this definition sits well with you then you can start to see why both leadership and management are necessary disciplines and also how they might interface; the leader decides what is to be done and the manager ensures it is done.  Put another way the leader decides the strategy and the manager deploys the tactics to implement the strategy.

For many years Drucker had been uncomfortable that people bestowed the term “leader” upon themselves motivated by pride or ego, believing that “leader” in some way made them superior to managers; it is clear from the above quote that he eventually felt comfortable that both roles had their place.

Leadership and Management in Business

Why business?  Really just to define the scope of what we will cover as these disciplines can be found in the armed forces, police, education, in fact all public services and in professional sport.  To further refine the scope I will use sales and selling as the context for this article.

I have been in leadership and management roles in business for the past 40+ years including the last 14 years when I have had the privilege of working in other people’s companies helping them to make their businesses more successful.  While the primary focus of what we do is performance improvement in the areas of sales and selling our starting point is invariably the leadership team and their strategy for the business followed by extensive work with the leaders and managers responsible for implementing the strategy across the sales operation.

Leadership

A key aspect of good leadership is the ability to clearly articulate the strategy in a form that everyone can understand, can feel motivated by, and above all, can see what part they play in delivering the strategy.  If a strategy is high level and is expressed in language e.g. “improve the ROCE” that most people cannot relate to they will simply return to work and continue doing what they have always done in the same way they have always done it.  Communicating the strategy must make it clear to each employee how doing their job on a day-to-day basis will contribute to achieving the objectives of the business. Cascading the strategy and the KPIs as in a Balanced Scorecard helps in this respect.

For me a key to good leadership is the recognition and acknowledgment that the leader is there to serve the business not the other way around.  In smaller companies where the leader, often the owner, is also the manager of some functions such as sales or production, their primary challenge is to recognise which hat they are wearing on each occasion, and to allow for the effects of their privileged position when judging the corresponding performance of their employees fulfilling the equivalent function.

  • If the leader starts to get involved in day-to-day activities they risk usurping their managers and confusing their teams; I refer to this leader as a Meddler.
  • If they stand up at a company meeting to present the strategy for the next 12 months it is not the time or place to get into operational details. The company meeting should be followed by specific meetings with each operating unit where they can dive into the detail.

Management

While you can lead people, management is a discipline for creating and maintaining the environment that supports the people succeeding in their work, whilst minimising unnecessary diversions.

When considering a management style, the starting point has to be a definition of the purpose and objectives of the business as a whole as well as the various activities the manager is responsible for.  For me a key objective should always be, the creation of staff who can think for themselves, finding new and creative ways to deliver the required results while coping with ‘non standard’ situations.

A poor manager, who doesn’t know how to act through their people as opposed to on their people, will probably resort to ‘micro-managing’; telling them what to do on every occasion and in minute detail.  For sales managers this is evidenced when they focus on relatively low level activity, for instance, pushing to make more calls in order to make more appointments, where what is really needed is better quality contacts or conversations to generate meaningful appointments.  Invariably the drive for quantity is coupled with a fall in quality and a resultant fall in the very thing the manager was looking for; more customers and more orders.

work smarter not harder.”

The problem with micro-management is that it amounts to supervision and just one brain doing the thinking; it stifles creativity, adaptability and evolution in the way of doing things. There is rarely only one way to achieve an outcome, so if the framework within which staff are required to operate is too tightly defined they are unlikely to give of their best.  Supervision styles such as ‘my way or the highway’ rarely lead to improved performance, and they also eat time, constraining the capacity of the ‘manager’ to focus on their complete role. If, as suggested earlier, your purpose is to help people become independent thinkers resolving most of their issues on their own initiative supervising their every move will not deliver the desired outcome. Supervision may be applicable in support of inexperienced people but even here a coaching style will always deliver a better long lasting outcome.

“… teach a man to fish …”

 The risk of becoming a ‘micro-manager’ is at its height for newly promoted managers especially when they take up a post running the team they inhabited.  It is common in sales that the best sales person is made the manager but this is often done without a proper process of selection that would look at the suitability of the person for the role of manager; the result is typically diminished sales results and a demotivated team.  The other common issue is that newly promoted managers rarely receive adequate training or support for their new role leaving them to find their own way; which may be out of the business and back to doing what they’re good at – selling.

Coaching

When working with sales managers who struggle with the idea of ‘managing’ their people, the conversation quickly turns to coaching.  This is a very powerful tool that sales managers should use to help their people avoid or solve their own problems and issues that impact on their performance.

I mentioned earlier that this article was focused on business as opposed to, amongst other disciplines, sport.  However, sport provides an excellent example where coaching is used extensively to enhance and improve performance.  Professional sports people who are at the top of their game have to look for small marginal gains to get that edge over a competitor.

The role of the coach is interesting in that the person they coach will invariably be better than they are at the discipline which begs the question “how can the coach help them?”  Put simply; it is hard for any of us to see in ourselves small blemishes that are clearly visible to others.  Even if we can see those blemishes it may be hard to admit them or perhaps as they have become a part of us we cannot see how to deal with them.  The coach is able to stand back and focus on specific points that need to be improved looking both at the practical and emotional aspects of dealing with the issue.

Everyone who is responsible for the performance of others needs to consider coaching as a key weapon in their armoury.

Considerations for leaders and managers

  1. Style. People will look at their leaders and managers as role models and conclude; if they do it that way, think that way, have those beliefs; then it is OK for me as well.  A business needs a culture of shared beliefs and values that everyone can subscribe to when doing their job.
  2. Beware creating a cult of personality. Strong charismatic leaders and managers tend to recruit and promote in their own image which comes with a number of risks. People will mimic to be accepted but may not be able to deliver within the acquired persona. Those who do not feel comfortable with what they see may feel excluded and above all the team will suffer due to a lack of diversity and variety in its make-up.
  3. Communication must be two-way.  There are points when leaders and managers need to “tell” but there are far more occasions when they need to listen.  Most answers to everyday business issues can be found within the team and involving them will also aid morale, motivation and commitment.
  4. Lead, manage, coach, but don’t supervise.  Lead and coach the people and only manage the environment such as the sales and selling processes.  If you are supervising you will not get the optimum result from your team.
  5. Accountability. Leaders and managers often talk about being responsible but of greater importance they must be accountable – the buck really does stop with you!
  6. Micro-managing – don’t do it!  Recruit properly then train and coach your people so they can use their own creativity, initiative and other personal resources to do a really good job day in and day out.
  7. Don’t allow the urgent to overrun the important.  It’s simple; if you leave the important things as you are focused on the urgent everything becomes urgent and is dealt with reactively which leads to short-term fixes that will see the same problem come round again and again.  So be wary of rewarding the firefighters if you truly wish to cure problems, as this will often reinforce the practice.
  8. Deal with poor performers.  Having tried all you can to help someone improve there are occasions when you have to acknowledge that for whatever reason they are not going to respond and once that point is reached you need act decisively and fairly. But first ensure that the organisation itself is providing the necessary support.
  9. Change is a constant.  Successful leaders and managers accept change as an inevitability and design their organisation to accommodate changes imposed from outside while also continually looking for internally driven changes that will benefit the business.
  10. Be a learning organisation.  Make a key part of the culture the assumption that you can never know everything so learning should be part of the regular routine across the business.  Consider creating a Learning & Development function, or a Knowledge Base to facilitate information sharing and process evolution.

In many of our customers the CEO/MD, who may also be the business owner, also functions as the head of sales; they wear multiple hats and sales can never be their 100% focus.  If it is impractical to have a dedicated sales leader it is even more important to be mindful of the need to lead and coach rather than manage and supervise the sales people.  Initially it may seem that leading and coaching requires a larger time commitment but quite quickly the approach will require less time from the leader as the sales people will have gained confidence from being trusted and will have learnt to function independently.  Ensuring that there is a defined framework in place to specify the aims, essential outputs, quality criteria and control gates will make it easier for the sales leader to monitor performance and decide when proactive intervention might be required; but remember don’t waste time measuring low level activity.

 

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Radar screen

Are subtle changes slipping under your radar?

Are you like the frog in boiling water?

It is said that a frog in water, that is slowly heated, will not notice the effect of the warming and will get to a point where the heat makes it impossible for it to escape from the water.  On the other hand if you drop the frog into the already heated water, it will react immediately and do everything it can to climb out.  We quote this idea as it is commonly used by business commentators and observers rather than as an exact reference to actual medical experimentation done in the 1800s.

The point of our little story is to draw a parallel with what can happen in a business where small changes increase the “temperature” progressively making things too hot.

Common things that can happen in any business to “make the water feel hotter” are:

  • Costs slowly increasing over time tend not to be noticed
  • Revenue growing more slowly than planned
  • Margins slipping over time as discounting is used to bolster flagging revenue
  • New competitors arrive shrinking the appeal of your established solutions
  • Bad publicity damaging public perception of your industry

This slow and insidious process eventually makes the water so hot that it becomes increasingly difficult for the business (the frog in our story) to climb out.  Where ever you look there seems to be a source of heat making it difficult to decide where to start to dampen the fires.

One way to go about tackling this problem is to look back at changes you have made in recent years to see if there may be clues to the cause of current issues.  Many businesses were forced into actions by the economic turmoil that commenced in 2008 so that might be a good place to start looking.

To assist this journey of exploration we have shared a few of the typical heat sources that we see in businesses that we work with:

  • If you had cut investment in marketing and selling, but have yet to return to your pre-recession levels, this could contribute to slow revenue growth.  Also the focus of the investment may need to change so explore both the level of spend and where the money is going.
  • If, as many businesses did, you cut recruitment budgets you may now be missing some skills that the business needs to address the 2014/15 business environment which is quite different to that which prevailed in 2008.
  • A lot of companies have outsourced HR and recruitment and while that might have been the correct decision then, and it may still be correct now, you should investigate how much is now controlled outside the business.  Outsourcing the administrative areas of these functions is probably still a good thing but you should still own your staffing strategy in-house.  The subject of bringing services back on-shore and/or back in-house has received growing media coverage in recent years and just this week the BBC News had an item on “Re-shoring”.
  • Training is another area where budget cuts are often used as a survival mechanism but this can evolve into an entrenched habit of spending little or nothing on training and development.  Investing in the continual development of your staff is a sure way to keep the business sharp and strong.
  • If you have flattened your hierarchy and cut back on management headcount, if those that remain no longer have time to develop and coach their direct reports it will almost certainly be having a negative impact on the overall performance of the business.

It will not have slipped your notice that some of these steps will involve additional expenditure. Many businesses used cost cutting to survive the early ravages of the recession but cost cutting is just a survival strategy so to thrive, the business will need to return to spending on key areas that can leverage healthy growth.

While we would not recommend chasing the latest business fad or fashion we would also suggest that putting faith in if it ain’t broke don’t fix it is not a great formula for success either; after all, the steam engine ain’t broke, but it ain’t competitive neither.  Consider a mix of; keeping what is working well and is relevant, repair & overhaul where required, and upgrade or add new where there are gaps.

So; how do you decide what to change in your business?

All business functions and practices benefit from a regular review and if required overhaul; not as a reaction to an external force but as a calculated assessment of the return being gained from the activity and how that might be changing over time.

This process of review and assessment should be applied both at project level and at least once per year for the business as a whole.  In a recent article we talked about a zero based approach  where you question everything you are doing and ask; is this still necessary and if it is then can it be done more effectively?  If there are factors in your business “making the water too hot” then by zero basing everything it will help you to identify what needs to be changed and how.

Two areas where there have been significant changes since 2008 are marketing and selling.

  • The world of marketing now provides many new options to raise awareness and pique interest in the minds of those who might one day become a customer for you.  While this is of course good, the wealth of marketing choice available today makes careful planning all the more important.
  • The world of selling has been impacted by two opposing forces.
    • Firstly, courtesy of the Internet and Social Media, potential customers apparently have access to a plethora of information leading some to believe that they will make much of the journey to a buying decision without directly engaging with potential suppliers.  So, this means sales people need to be savvier about the prospects’ business issues and they need to be more courageous ensuring they proactively engage with prospects early in the buying cycle.  To do this they need to be able to focus on true prospects, understanding why customers really buy from them.
    • The second and opposing force is that the availability of fully qualified professional sales people has been dwindling for many years and this has been compounded by savage cuts in training and development budgets since 2008.  Gone are the days when it was a sellers’ market, the skills of a true sales professional are once more essential if the supplier is to succeed with the discerning buyer.

One of the things you may need to do differently is to put in place the means to grow your own sales and selling talent.

Through the quality manager’s eyes

When I write an article or a blog or make a comment on a LinkedIn discussion I always come at it from my area of expertise which is sales, selling and marketing.  So we thought it might be refreshing to provide a different perspective to the issue.

SPC Control Chart

Identifying Randomness

Di Woodcock, co-founder of Performative, was attending a recent meeting of the Chartered Quality Institute in which the subject of decision making was looked at through the eyes of sales management.  One very important conclusion drawn was that when actions don’t always produce the desired effect, maybe the basis for the decision was flawed, especially if the choice of action misconstrued fluctuations in results and outcomes as something more than a one-off.  Statistical Process Control is not just for manufacturing, it can be valuable for all aspects of business; the use of visual trend analysis based on what actually happens in the business helps you to avoid reacting to randomness by providing statistical evidence of your KPIs to support your decision making.

BTW No frogs were injured in the making of this blog!

Acorn creating mighty Oak

Is 1% improvement in anything worth having?

At first view probably not, but to illustrate the value that can be gained from small but continuous improvements in business performance we have chosen three key areas to consider; revenue generation, gross margin, and cash collection.  There are also lessons to be learned from looking outside these conventional areas of the business into the world of IT testing and data quality.

So is 1% improvement worth having?

A 1% improvement on annual revenue of £100,000 would be impossible to spot as it could easily be swamped by normal fluctuations in customer activity.  However, what if you were able to improve your revenue position by 1% every month; now you would be looking at a 12.5% compound increase for the whole year – worth having?

Acorn creating mighty Oak

From little acorns …

From a different perspective, it is likely to improve confidence in pursuit of an improvement if you set a SMART objective of 1% increase per month rather than an annual 12.5% increase.

Following on from a LinkedIn thread referring to Dave Brailsford’s successful approach to Team Sky, we explore a number of key areas where the approach can be used in business to gain real benefits from small, incremental/cumulative changes.

We have also looked outside the usual areas of a business where people seek to make improvements as we think there are good lessons to be learnt elsewhere; we look at the world of IT testing and the cost of bad data where the focus is the other side of the coin; reducing waste.

Revenue Generation

Everything starts here; without revenue there is no margin, profit or cash, in fact; there is no business.  Whether your business is turning over £100,000, £1.0m or £100m per annum the same basic principles apply; it is easy to visualise and bring about small incremental increases in revenue which quickly add up to something significant.

  • Be more selective, at an earlier stage in your selling cycle, when deciding which opportunities you will pursue.  Avoid time wasters, tyre kickers and those who are just interested in a low price.
  • By spending more time on fewer better quality opportunities you will increase the chances of closing more business.
  • From the same amount of marketing and selling effort you will gain more revenue and yes that could easily be a 12% increase in a year.

Gross Margin; improvement and protection

Margin can suffer in two main ways.  Firstly, if you feel obliged to reduce your quotation without also reducing the amount of effort you will put into delivering the result.  Secondly, reducing your price, even if you reduce the amount of effort, will result in a reduction in margin.

  • Having been more selective in the opportunities you choose to pursue you will have removed at least some that would have dented your margin.
  • From the earliest stage, when engaging with a potential customer, demonstrate the value that you deliver and avoid being sucked in to talking about price; value is what matters.
  • By demonstrating the value you deliver you make it harder for the customer to justify to themselves pushing down on your quoted price.
  • Quote the real price for the amount of work that needs to be done; don’t delude yourself that you can “make it up later”.  Along with death and taxes one of the givens is projects always take longer and cost more so you won’t be able to make it up later.
  • Once you have the deal you can avoid margin erosion by delivering exactly what you quoted for and the customer contracted for.  Don’t be tempted to undertake “added value” work as it will dent the margin and the customer probably won’t know or appreciate what you have done.

If, for example, you have revenue of £100,000 on which you make a margin of £20,000 then to gain an increase of £1,000 on the margin you will require an increase in revenue of £5,000.  Alternatively, you could keep the revenue at £100,000 and employ some of the above tips which could easily add that extra £1,000 or probably more to your margin.  You get the same or a better result without additional effort.

Cash Collection

Whether you are funding your business from your own resources or a line of external finance then every day a customer has your money in their bank account it is costing you interest and it is also reducing the funds you have available to invest in your business.  Here are a few tips to help you get your money faster:

  • At an early stage in the engagement with a potential customer discuss contractual terms, including payment terms, don’t leave it until the end as you will have far less negotiating power.  Don’t allow the desire to win a piece of work get you bullied.
  • Don’t be shy, ask for what you need.  Always ask for some money up-front and if you are delivering projects ask for staged payments making sure those stages align with the outgoings you will have on the project.
  • Make your payment terms short; seven or 14 days.  The customer will try to negotiate up and even if you let them you are more likely to get 21 or 30 days than you would have been had you started at 30 days.
  • Discuss your terms with the decision maker and get them to agree; don’t assume that because they have signed a contract with your terms that they will have taken the internal steps required to get you paid when you expect.  If the customer wants to use their terms you do not have to accept everything as presented; it is called an agreement not a dictat.
  • As soon as the agreement is signed call the customer’s finance department, introduce yourself and let them know they will be getting invoices from you.  Ask them what you can do to make their lives easier; should invoices be posted or sent electronically, do they have specific days for processing invoices, do they work part-time, etc.
  • When you raise an invoice, send copies to both the sponsor/budget holder and the finance department.  After a few days call to make sure they have it and ask when it will be processed.  Call back again just before processing date to confirm it has indeed been authorised and will be included in the payment run.  Don’t be shy, it is after all your money!

Even small reductions in your debtor days will improve your finances easily delivering a 1% improvement per month.  But more importantly, you will have greater financial certainty and your money will be available sooner for you to invest or spend.

Lessons from other worlds

It has long been recognised by those in software engineering, that the cost to repair an issue escalates the longer it remains undetected in the lifecycle.  Typically a 1:10:100 type ratio is applied to correction costs, and that excludes the additional cost of impact if the issue “escapes” into the wild (production).

If you search the web for “1:10:100 rule” you will notice that this basic ramification is being applied to the cost of bad data also.

The world of software engineering is much more precise than the world of sales and marketing or business management but the same principles of early detection can be beneficially applied to all areas of the business.  If your first meeting with a new potential customer tells you; “we are unlikely to win this one at a good price” then qualify it out there and then.  Or you could do what many businesses do; invest a lot of time and effort bidding for the work only to find you don’t win or worse still you do but at a very poor price.

Be brave; qualify early, qualify hard!

What Holds Your Business Back?

It has always been our purpose to find answers to this question, to find more and better ways to improve business and selling performance for our customers.

One mechanism involves tracking surveys seeking to identify “What holds your business back?” conducted amongst CEOs, MDs, other board members, key shareholders and special interest groups such as trade body members.  Albeit it in different words, the things that such surveys always rank as the top four issues are:

  • Not selling enough to grow the top line
  • The sales cycle is too long
  • Not converting enough leads into orders
  • Sales forecasts are not accurate enough.

We were amazed when these very things came out as the top four issues in a recent AberdeenGroup report looking at “Sales Performance Management 2012” which was published at the end of 2011.  Here we are 11 years down the line and businesses are still reporting the same issues.

We were also interested to read a quote from Andrew Goodwin, a senior economic advisor to the Ernst & Young Item Club, who said; “Businesses are waiting for the economy to pick up before they start spending…”.

Keeping expenditure under control is always a good idea but it is risky to lump all types of expenditure into one big bucket.  We think that now is a very good time to spend money growing the top line which is the only real way to increase profits and improve cash flow.  If you do it now, while your competitors are still holding back, you will steal a march on them.  By the time they notice what you have achieved, you will be driving the bandwagon and they will be trying to jump aboard.

Don’t let your business be held back – call us to find out how to get moving in the right direction.

mantix, business performance improvement