The CEO Challenge

The World Isn’t Flat: Planning for a New 2011

Jane Adamson — Wed, 08 Sep 2010 01:41:01 +0000

Can you imagine being alive in the late 1400s when Christopher Columbus *didn’t* sail off the edge of the world? After a lifetime of believing the world was flat, would you readily accept that it was round? Or is it possible that you might react as many others do when faced with a new reality …by ignoring, denying, or actively denouncing the new belief?

The World is Different

I’m bringing up this history lesson because fall is the season for strategic planning, and 2011 presents tremendous opportunity and possibility for those companies who embrace the new realities of our changed marketplace. While competitors hold onto old ideas and dream that things will get back to “normal,” agile, creative companies can leap ahead. In fact, Scott Allen, a writer and technology entrepreneur, summed it up nicely when he wrote, “The future is uncertain, and uncertainty is the playing field of the entrepreneur.” Nimble companies (perhaps like yours!) have a huge advantage over older, slower, and/or larger organizations that are heavily vested in the past.

So during this planning season, tap into your company’s entrepreneurial roots and celebrate 2011 with a positive outlook and a real understanding that change = opportunity.

Embrace Change and Win

So how can you recognize and capitalize on new opportunities in 2011? In other CEO Challenge articles, we’ve written about the importance of “thinking like a Chief Revenue Officer” and developing a “revenue strategy” versus a corporate strategy. Those two mindsets embrace the five strategic planning concepts I’ve outlined below, so I encourage you to review them (share them with your leadership team, too!) and incorporate them into this action plan.

Action Plan:
Embracing Change During Your 2011 Planning Process

1. One way to adjust your company’s thinking is to change your vernacular to paint an image of a future filled with purpose, meaning, and relevance.

The right language can make all the difference in the minds of your team and your customers. For example:

CHANGE	TO
Selling our new medicine	Saving lives
New pricing for travel packages	Helping dear friends re-connect
Cutting costs	Building a new growth model
Customer mistrust	Using social media to communicate honestly
Selling	Having a conversation
Positioning	Deep specialization
Reducing channels	Supporting the most passionate partners
Selling bio-diesel plants	Offering self-sufficiency to villagers in Africa

2. Put the customer front and center.

Today, companies that are most deeply in tune with their customers will beat those companies that aren’t. To keep your customers top of mind, help your company visualize and hear customers at all times:

Post pictures of your customers all over a wall in your conference room
Before making any decision, ask the question “What would Fred say?” or “Why would Fred care?”
Bring a stuffed doll to the conference room and address the doll as if s/he is the customer whose passionate approval you need
Break your planning sessions into separate meetings with assignments to talk with customers about your idea before coming to the next session

3. Make sure every member of your team can answer this question: “What’s the problem we solve that no one else solves?”

Answering this question requires an understanding of the high-level business problems your customers face. It does absolutely no good to talk to your customers about features and benefits and cost savings if you don’t understand the broad business issues they are dealing with every day. What you *think* is the problem may just be a symptom, or you may be off the mark altogether.

This question is typically very difficult to answer because true customer problems are frequently unspoken, or only identified through a deep understanding of how your customers use your product/service.

In addition, problems also exist on a personal level with your buyer:

The problem may have to do with ease of use: “They’re a hassle to work with.”
The problem may have to do with confidence: “What will my boss think if I recommend this firm over another?”
The problem may have to do with a fear the customer has: “I don’t know much about this topic and I don’t want the salesperson to think I’m not competent.”
The problem may have to do with a risk the customer doesn’t want to take: “What would happen if my bag gets lost en-route and I have to look good in that important meeting tomorrow?”
The problem may have to do with packaging: “I don’t want people to think I bought something cheap”

Don’t talk features and benefits … solve problems.

4. Get real about execution.

A few years ago, Rick and I facilitated a planning session that concluded with the development of a detailed execution plan. During a casual lunch break, one of the participants commented that a man named Joe was working in a remote office for the next six months.

Rick and I looked at each other and said, “How can that be the case? We just agreed that Joe would drive an important initiative that requires his presence in this office!”

Silence.

It turned out that the team had agreed Joe should drive the initiative because he was the only one with the required skill level. They simply ignored the fact that Joe wasn’t truly available to execute in the way the company needed. They assumed it would all be fine. Unfortunately, that is never the case.

Don’t make the mistake of planning if execution isn’t taken seriously and realistically. That means assigning responsibility, allocating resources, establishing timeframes with regular milestones, identifying and removing obstacles, aligning support requirements, setting metrics, and tracking progress.

Weak execution demoralizes the team and creates a culture of non-performance that cannot be sustained in the market we’re in now.

5. Start now. Doing this right takes time.

Have you noticed that life is speeding up at an alarming rate? It was just a short time ago that companies created five-year plans. No longer. A long-term horizon is now two years and planning takes place in smaller and smaller increments. Six months ago, Arizona companies had never heard of the immigration bill known as SB1070. Now it’s affecting every business in the state.

Planning is a continual process, not an event. Your company can start taking steps RIGHT NOW, even before you’ve launched your official process for 2011. For example, RIGHT NOW you can:

Start recruiting the right players so they have time to come on board and get fully up to speed
Talk with more customers to identify true customer problems
Start marketing early enough to generate leads
Test critical assumptions that your company is making
Start tracking new metrics
Train all members of the revenue chain
Test new messaging

Conclusion

Believe it or not, “revenue strategic planning” should be FUN! It’s all about finding the right mix that will propel your company’s success in the niche you choose to dominate. You’ll talk with more customers and prospects, learn more, try out new ideas, and identify what works.

Don’t abdicate your strength of agility to the larger players. Don’t keep waiting for a “recovery” to the old ways. Never before have we seen such a confluence of forces come together to take small companies to great heights.

Welcome to 2011!

What do you think? Please share your thoughts and experiences with us here!

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The Opportunity Cost of that Special Deal

Rick McPartlin — Tue, 03 Aug 2010 14:50:45 +0000

Based on the conversations I’ve been having recently, I know you’ll recognize this scenario. Your star sales rep has uncovered an interesting revenue opportunity, but it’s off strategy for your company. It might require more customization than you typically provide. Perhaps it’s a new industry for you, or you’ll need to hire new people with different skill sets in order to fulfill it. It may also be a test program with promises of future business if the stars are aligned.

Whatever the case, during difficult times, a CEO is more likely to say yes to these kinds of deals — typically called “bluebirds” because they’re beautiful but very troublesome. After all, it’s revenue, right? Absolutely, and revenue is precious right now. Perhaps this bluebird is really a symbol of a real market trend, so you have to pay attention.

BUT … there’s also an opportunity cost. When you just accept new business reactively, you’re no longer driving your strategy forward. Without strategy, your company won’t be aligned toward specific goals. And when you remove alignment, you replace it with chaos.

So this new off-strategy bluebird deal brings in two things: 1) Some revenue and 2) Some chaos. When the deal is over, the revenue disappears. And guess what? The chaos stays.

So how do you decide whether the opportunity is a real market trend that you should pursue or a bluebird that will do more harm than good?

Opportunity analysis

You don’t need me to tell you to start out by carefully analyzing the opportunity. The first step is to thoroughly understand WHY this company is asking for this solution. As you evaluate, here are some of the things you should keep in mind.

First, is the market really telling you about a different way to create value for customers, or is this a one-time deal? If this is a common problem, other companies in your niche will also experience it. Or you may have discovered a problem in a new niche.

Second, is there a gap in the market? Why has the company come to you to solve this problem? Are your competitors unable to handle it? Why or why not? You may have an expertise that the market is finally recognizing. On the flip side, maybe all of your competitors had good reasons to turn the opportunity down.

Third, how large is the niche, and what would you need to do to compete and win? If you’ve determined that the market is asking for a new solution, size the opportunity. Then decide what your company needs to do to win new business and dominate the niche.

Now consider the costs

The first thing you should evaluate is the cost of failure. Frankly, if you’ve never done it before, there’s a good chance you’ll screw it up. That failure will affect customer relationships, market perceptions, and employee morale.

What about differentiation? When you stray from your brand and core competency, you risk losing your differentiation, which in turn confuses your customers and employees. For more on this topic, check out Jane’s article “What are you selling?”

Bluebirds also create margin pressure because, more often than not, they force you to build a cost model that isn’t scalable. If the deal seems to offer incredibly high margins, be careful … there are always significant hidden costs.

Ultimately, chaos is the most devastating result of strategy deviation. Companies that can’t stick with a strategy encounter problems with misalignment, teamwork, morale, revenue growth, profits, branding and much more. We talk more about the Cost of Chaos here.

Finally, let’s not forget opportunity cost. If you take this deal, you may be investing precious resources in a project that isn’t a great fit instead of pursuing one that is.

Solution

To ease the analysis, I tell CEOs to think about matching up the deal to the existing strategy and infrastructure. Here are the specific questions I’d ask.

Action plan - questions to ask

1. Survival: Do we truly need the deal to survive?

2. Strategy: How far off-strategy will this deal take us?

3. Branding: How far is this deal from our brand and offer?

4. Niche(s): How far right or left of our defined target niche will this deal take us?

5. Problem solved: How far is this project from the problems we normally solve?

6. Expertise: How deeply do we understand the language and needs of this new area? Do we even know what we need to know?

7. Upside: Exactly what is the upside, and what’s the probability that we’ll realize that upside?

8. Cost: What are all of the hard costs and timeframes for each?

9. Investments: What structure / infrastructure will we need to execute this project without sacrificing our brand promises?

10. Buyers: Are the buyers the same buyers we deal with now, and is that an advantage or disadvantage for us in the short-term and long term?

11. Competitive positioning: What do we gain competitively if we succeed and what would we lose if we fail?

12. Tactical execution: Do we have the skills and staffing to execute, and what impact will the project have on them (financially, expertise, opportunity cost)?

13. KPIs: How will they be impacted and how will that affect the company’s progress toward short- and long-term goals?

14. Channel conflict: Do we have partner or channel overlap that makes this deal risky or safe? How do partners feel about the opportunity?

15. Assumptions: What are the key assumptions we’re making, and what risks do we face if our assumptions are wrong?

16. Exit: If we’re preparing for a transaction, exit, valuation or ESOP report, does this deal have any impact?

Conclusion

It’s never easy to turn down a revenue opportunity, especially if the deal may lead to greater opportunities in the future. The key is to instill discipline in the review process so that your company can be confident pursuing the deal or, if necessary, turning it down.

Have you found yourself in this situation recently? What did you do, and did you make the right decision? What other variables did you include in your analysis? Please share your thoughts and experiences with us here!

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8 Ways to Listen to Your Market

Jane Adamson — Tue, 06 Jul 2010 14:50:22 +0000

Look OUT, not IN! If you’re following our CEO Challenge articles, speaking or consulting work, you’ve heard this mantra a lot. More often than not, answers to your most important business questions aren’t inside your organization; the answers lie out there with your customers. As Betsy Morris wrote in her excellent Fortune Magazine article The New Rules, “No business can afford to focus its energies on its own navel. An inward-looking culture can leave firms vulnerable in a business world that is changing at a breakneck pace.”

Tough questions

We constantly stress how you must understand what’s important to your market. What problems are they facing? How is your firm REALLY doing at solving those problems? How do they make decisions? What’s the image they have of your firm versus your competitors? How much value do you really bring? How consistent and predictable is your service? Do you know what your customers wish you did better? And so on.

You’ve all been very eager to follow through on this strategy. As a result, there’s a question that we’re hearing with more frequency and urgency: “How do we gather this research?”

The big question: How?

Fortune 500-size companies, especially those that sell to large consumer markets, spend a great deal of money on market and customer research. They hire expensive firms which employ the latest technology to delve into the minds and buying habits of various segments. They’re armed with statistics, mounds of research data, complex software, and teams of field operatives in the effort.

Small and mid-size companies, however, often don’t have the resources for expensive research, or they may feel that their markets are too small to warrant a formal research program. Are there smart techniques you can use to listen to your market without breaking the bank?

Solution

To answer this question for this month’s Challenge, Rick and I talked with many of our own customers and colleagues including Tim McPartlin, the EVP of Lieberman Research Worldwide. Please enjoy their insights below!

ACTION PLAN: 8 WAYS TO LISTEN

1. Have your own staff talk with, record, track and segment specific conversations with current and past customers on a regular basis.

The danger here is that it’s difficult for your own team to be truly objective. Thus, it’s easy to jump to conclusions based on a single judgment or an isolated incident. Yet you can protect the company from that danger and make these conversations valuable by keeping on-going records so that you can notice trends. For example, one customer complaint about your invoicing system may be a lone voice. Five customers saying the same thing in separate circumstances may be a shout from the mountaintop. Without good records and consistent feedback, you may not detect the difference.

Segmentation is critical so that you can understand and apply what you’re hearing accurately and better identify root causes, strategies and solutions for the right audiences. Common segmentation categories include:

New/old customers
High wallet share/ low wallet share
Regular ordering/irregular ordering
Different buyer types
Different offers

2. Send out short (< 5 minutes) customer surveys via email or postcard to ask a few critical key questions, then follow up!

After each project, one firm we interviewed sends a short survey asking the highest contact to rate their performance on key criteria using a scale from 1 to 5. The firm tracks historical response rates and ratings for each question, and they immediately follow up with any client that didn’t rate them a 5. Why? They believe that a “4″ rating is significantly different from a “5.” In their view, if you want to dominate a niche, “good enough” (a 4) is not good enough.

3. Hire an objective professional to conduct phone surveys with select individuals – current customers, former customers, prospects, or companies in your niche.

By using an outside party, you’ll avoid injecting an insider’s inherent bias into the process. The survey should be about the industry and market in general versus your company in particular; it’s best if the customer doesn’t know who is sponsoring the survey.

4. Send an executive to regular 1-on-1 customer meetings to engage in creative, in-depth, strategic discussions.

There are many benefits to these meetings — information gathering, relationship building, and signaling the importance and value of customers to your organization. It also helps executives mobilize to prevent isolation and inward-thinking in your company.

5. Take advantage of inexpensive and easy-to-use online survey system (Survey Monkey, Zoomerang) to send regular, customized, anonymous surveys to specific audiences.

For example, you can ask:

What is the experience with your company like to a first time buyer?
How responsive is your firm?
How many other companies does your customer use for the same product/service? Why?
What problem does your customer wish you would solve for them?
What is the primary reason your customer uses you?

6. Leverage your trade show participation by proactively meeting with your customers.

Most companies try to take some advantage of trade shows to meet with clients for golf, dinner or a cocktail party. Go further than that. Instead of just trying to sell at the show, set this goal: “What can we learn from our key customers and strategic prospects?” This is an excellent opportunity to talk about bigger business issues, so connect with senior executives to find out what their future looks like. Share with them your plans and discuss how their needs and your new developments support each other. Learn what else you can you do to improve their business. Test your assumptions about what they really value.

By learning about your clients’ big business challenges, you’ll better understand how compelling your offers really are. You can also uncover opportunities to add even more value through focus, process changes and/or new offer development.

7. Employ an outsider to conduct field verification with your clients and/or prospects.

We’ve written about the dangers of making assumptions and the necessity of testing assumptions that, if proven to be incorrect, could have a significant impact on the business. A neutral third party is often the best choice for such field verification testing. In field verification, a 3rd party actually talks with a select number of people in-person in order to learn about a specific issue. For example, this technique is frequently used for:

Launching a new product or service. What value would the new service/product bring to a prospective buyer and what price would they consider reasonable? More importantly, what reasons do they have for not buying?
Discovering why prospects chose not to buy or why a client left. Simple surveys will frequently point to false answers to this question. It’s easy for someone to answer that the price was too high or the need wasn’t there. However, the answer is frequently quite different and a false reading will cause a company to proceed with even more dangerous assumptions.
Learning where true value lies. A common (mis)assumption is often made concerning what the customer does or does not truly value. Frequently, we see what we’ve termed “value creep” where companies keep adding “stuff” in the false assumption that it’s valuable to the client. In other cases, what a customer truly DOES value ( more likely in how something is done rather than what is done) is not understood, not adequately funded, or not expanded upon.

8. Post-mortem meetings are an excellent way to both deepen client relationships and to learn.

The objective of a post mortem is to sit down with all parties in a project and review what went well and what could be improved upon next time. The meeting should take place as soon after the conclusion of a project as possible while issues and experiences are still fresh.

As long as all parties come to the table for the sole purpose of continuous improvement, this methodology is highly effective and instructional for increasing value, reducing defects, and streamlining process. It also positions companies as partners and collaborators as opposed to vendors and clients.

Conclusion

What are your ideas for keeping on top of what’s important to your clients and prospects? Please join the conversation and share ideas and experiences with the other readers of the CEO Challenge.

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Please share your thoughts and experiences with us here!

What are you selling? The answers may surprise you.

Jane Adamson — Tue, 08 Jun 2010 14:35:34 +0000

Pop quiz! Right now, right after you finish reading this article, go to each member of your leadership team and ask them this question:

What are we selling?

For good measure, write down exactly what you hear and from whom. Then, back at your desk, review the results. Are the answers:

A) Inconsistent?

B) Describing a stand-alone product (e.g. solar panels) or service (e.g. web design)?

If either (A) or (B) is yes, then the company has a problem.

How will customers understand?

Inconsistency, (A), is a major problem. After all, if the executive team can’t consistently define what you sell, then how on earth will customers or prospects do it?

If you’re in this boat, you have plenty of company. For example, when we engage with new clients, we send out a survey to the leadership teams that includes that question. And we almost always see vastly different answers. Some responses describe a product or service (“technology services”). Others offer a sound bite that seems appropriate (“end to end software solutions”) while others provide a vague value statement (“a path for lowering your overhead”).

No matter what you sell, customers probably have plenty of options to meet their needs. So if they’re not crystal clear on why they should choose you, then you’ve already lost the revenue game.

In addition to confusing customers, inconsistency also confuses referral sources and partners. Clients and colleagues often ask, “ Why is it so difficult to get referrals?” Well, one reason is that people only refer companies when they are clear about what those companies can do and for whom. If a referrer or a partner isn’t quite positive about how you can help someone, they’ll keep quiet and referral business will continue to elude you.

People don’t buy products.

It’s equally common to see quiz results that are dominated by descriptions of products and services. The problem here is that people don’t buy products. Instead, they buy offers. By that I mean that decisions are never made on the basis of the product alone; they’re made on a combination of factors that include what a company sells and how they sell it.

Here’s a simple example. Think back to the last time you purchased office furniture. The product may have been a desk and chair. But the decision on who to give your money to may have depended on a myriad of factors:

Did the seller deliver?
Was a refund available if the furniture didn’t look good in your office?
Did you see the desk while shopping at a retailer like OfficeMax?
Did the desk appear expensive?
Did the payment terms work for you?
How user-friendly was the website?
What was the image the pieces conveyed? Did you want that image?
And so forth.

Notice that many of these questions aren’t related to specific features and benefits. Instead, they consider ALL of the components of the sale – features, benefits and terms. We call this marriage “the offer.” Salespeople all too often behave and talk as though the features and benefits are the deciding factor in a buying decision, but it’s ALL of the pieces of the offer that count.

Customers don’t buy products. They buy offers.

ACTION PLAN

1. Understand what’s important to your customers.

A friend recently told me about a “fast pitch” competition in which startups had 90 seconds to pitch their companies to a panel of investors who rated their pitches. Interestingly, very few companies described the problems and needs of their prospective customers; instead, they just pitched products. Guess who scored highest with investors? The companies that proved that they knew their customers.

You can replicate this concept in your company through a competitive role playing game. Divide your sales team into buyers and sellers and get them in front of their peers. Then ask the “seller” to talk with the “buyer” for 5 minutes without mentioning your product, features or benefits. The audience handles the scoring by counting the “violations,” and the seller with the lowest score wins.

To increase the difficulty, you can later expand this challenge to a 10-minute and even 20-minute round, or do the exercise regularly at each sales meeting. As a result, your “sellers” will become better listeners by learning to shift their focus to the buyer problems and pain rather than your “stuff.” The seller will get better and better at asking questions and qualifying real buyers on what you are selling versus thinking that “telling is selling.”

2. Ensure that everyone on your team understands the difference between a “strength” and a “differentiator”.

Company strengths are part of the offer, but they’re typically just requirements to play the game. For example, we frequently hear leadership teams describe their “outstanding customer service”. Excellent. Customer service is an important and necessary strength. But it is outstanding enough to be a real differentiator for customers – enough to create a sustainable competitive advantage? That’s a lot more difficult and uncommon.

A differentiator is something specific that your competition cannot claim. Typically it’s a combination of what you do and how you do it in order to create value for your market.

Can’t find a real differentiator? Time to create one!

3. Invest in messages and rehearse!

Now it’s time for messaging so that everyone on the team can answer key questions (like “what do you do?”) consistently. You need a short version (aka the “elevator pitch”) and a longer version for more in-depth conversations.

Messages contain four components in a specific sequence. Everyone needs to know and practice the delivery of the first two parts. The last two parts can be conversational and personalized for the listener as long as the basic information stays consistent.

Part I: The Theme. Captures the essence of your company and elicits an emotional response. Example: “At BMW, we build the ultimate driving machine.”
Part II: The Big Picture. Finds a way to put listeners in the picture so they can visualize themselves with your offer . For example, you might say “If you enjoy the pure pleasure of driving…”
Part III: Value Proposition. Features and benefits personalized for the listener – for example, “This model offers a convertible top, bluetooth enabled …”
Part IV: Solidification & Proof. Provides listeners with the comfort that this offer will work for them. For example, you can note the safety record or financing details.

Notice that the what (features and benefits) comes in parts III and IV of the message, NOT I and II.

Good messages are very hard to develop because they need to be specific, compelling and emotional if possible. You may need help from a professional copywriter. It will be money well spent.

4. Measure and revise.

As your team practices your new messages in the real world, have keep score of how listeners react. Is it creating dialogue? Are people curious to learn more? If it’s working the impact will be measurable in words, physical response, questions / statements, emotion or actions. This is another cased where role playing or shadowing can help. But don’t just measure the results – use the data you collect to improve them consistently over time.

Conclusion

Experience tells us that after reading this article, many of you will be more confused about what your company is selling. Good! Now you have an opportunity to address it!

What is your company selling? What is your OFFER? We’d love to hear about it.

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What do you think? Please share your thoughts and experiences with us here!

Have we entered a New Normal? Hardly.

Jane Adamson — Tue, 04 May 2010 14:48:33 +0000

I have a bone to pick with the phrase “The New Normal” and how frequently it’s being tossed around these days. Yes, we’re emerging from a disastrous global economic crisis. In the aftermath of a tsunami, it’s tempting to look around and call the new landscape “The New Normal.”

My discomfort derives from the implied assumption that there is a “normal” at all. It’s dangerous for businesspeople to be thinking that way. It lulls companies into complacency and blinds them to the constant evolution that takes place in the marketplace every day.

There really is only one normal … change.

Recessions are normal.

We experienced two recessions in this past decade. Over the last half century, we’ve averaged one every 5.5 years. For example, in this graph we see recessions in red and the US civilian unemployment rate in blue. Recessions are regular and normal. Changing employment rates are normal. Just look at the graph:

Here’s another example: the annual change in commercial and industrial loans in the US each year. Over a few short years, the fluctuation can be significant:

I could put up a hundred graphs to that show there is no “normal.” The business environment is constantly changing, and companies can’t afford to be complacent about anything. Executives need to constantly look outward to make sure that their strategies and tactics are evolving with the landscape. Even if your company is small, your customers are niche or your business is primarily local, you must be proactive.

I’m reminded of a meeting Rick and I attended three years ago. A group of housing contractors downplayed the need for a proactive revenue strategy since, as they said, “the phones are ringing off the hook without us having to do anything.” Housing is one of the most volatile industries out there, but they were lulled by the constant phone calls over those few short years. How quickly that environment changed.

Think about it. Have you seen changes in any of these variables in the last few years?

The competitive landscape: How many competitors you have, how they’re funded, their geographic coverage, strategies, technologies, offerings, prices, value proposition, messaging
Technologies used in your business and what’s in store for your products and services, your suppliers and partners, your marketing campaigns, even the way your employees communicate
Needs of customers: What’s happening in the personal lives or business lives of your customers? How does change affect their wants and needs?
Changes in distribution infrastructure, channel players, costs, competitive threats and mores
Suppliers: Are there more or less suppliers available to you? How concentrated is their market power? What will that mean for pricing, delivery times, level of service?
Your target market: How has the size of your market changed? What about the rate of growth (or contraction)? Physical location?
Prices: Are they constant or evolving? What about relative prices including services and other intangibles? In what direction are they headed?
Employee engagement: How is morale? Innovation? The general talent level of your team? Any movement there? (Hint: it’s probably changed a great deal.)

It’s not difficult

Staying aligned or even ahead of change isn’t a difficult task to add to an already-full calendar. Instead, it’s a proactive strategy that is built into the fabric of how you do business. It starts with a desire and a willingness to start the process. And like all worthwhile goals, it doesn’t just happen naturally.

Action Plan

1. Adopt a learning mindset.

It doesn’t matter how you learn – reading, lectures, groups, events. What matters is that you establish habits for keeping yourself informed. Establishing a habit takes away the discretionary nature of deciding whether or not something is worth the time. And there are lots of learning habits you can indulge:

Join a mastermind group that meets regularly
Join some on-line discussion groups that you check in with every morning
Read one non-fiction book a month
Sign up for two webinars every month on different topics
Listen to podcasts and audio-books in the car on your way to work
Join organizations like Vistage where business people get together regularly to discuss leadership issues & hear speakers
Listen to weekly speeches or lectures through YouTube Education
Sign up for thoughtful blogs

What’s important is that learning becomes habitual and continuous. Keep your mind open to whatever is happening in the world marketplace. By setting aside time for thought and reflection, you will naturally start seeing the signals and applying what you learn to your business.

2. Know your customer

A recent study by Ernst and Young showed that less than 20% of medium-sized companies ever call, write or visit their customers to obtain feedback. The truth is, even if we do visit them, it’s likely that we’re visiting them to sell them something, not to learn. How well can you answer these questions?

Do you know how your employees are treating your customers?
Do you know what it’s like to be a customer of your company?
Do you know what frustrations your customers have about your company?
Do you know what your customers wish you did better?
Do you know what your competitors are telling your customers?

We talk a lot about “the marketplace,” but that’s just a euphemism for people. How are people thinking, acting, buying, shopping, and choosing differently than they were last month or last year? Keeping abreast of your customers helps you maintain a valuable relationship and learn how they’re thinking. Do you think General Motors might be in a different position today if they had reacted to their customers’ changing attitudes instead of telling their customers what they should buy?

3. Have conversations, not presentations.

Some time ago Rick and I were invited into a company for a revenue strategic planning session. The company was entering a new market to introduce a creative new approach that could have substantial value for their customers. Before we started the session, the CEO proudly showed us the presentation they were using with prospective customers.

The presentation was a spectacular PowerPoint with beautiful graphics, impressive charts, and lots of bells and whistles. However, what became painfully clear during the planning session was that the company didn’t know their prospective clients at all. They were so busy “presenting” that they forgot to listen.

One of the most important skills to develop in an organization is to teach sales, customer service, and leaders how to have conversations with customers as opposed to presentations. Too often we “present” a solution or an idea before we truly understand. This isn’t as natural as it sounds. Salespeople take a variety of training classes on how to talk but rarely on how to listen. Yes, they ask standard questions, but they don’t often truly probe for understanding. Conversations take time. Conversations require a willingness to be wrong or admit that your solution may not be the best one. Conversations demand creative thinking and sound judgment.

However, conversations also increase understanding, build relationships, and spark new ideas. Start right now by finding ways to turn your presentations into conversations.

4. Challenge assumptions

In the March Challenge article we wrote about the importance of challenging assumptions. We’re adding it again here to put some additional context around the issue.

One of the reasons this recession hit some companies so hard is that they did not have a culture of challenging assumptions in place beforehand. Where would we be if more of these assumptions had been challenged?

Housing prices will continue to rise
Big companies know what they are doing
Smart people at the top are making sure that this will work
The phone will continue to ring
Our clients love us too much to leave
We’re better than the competition

5. Set and monitor external metrics.

Rick talks a lot about external metrics in this post. If you want to spot trends, you need to track, measure and discuss external metrics that can impact your business. Don’t just look at the Business Journal for clues – keep on top of your environment directly and you’ll have greater opportunity to see trends, protect your investments and create value for your customers.

CONCLUSION

The marketplace is always in transition. Don’t get caught up in the notion that things will settle down soon when the “new normal” kicks in. Adopt a more sustainable model of observing trends, truly knowing your customer, and challenging the status quo. Your organization can then be nimble enough to make small incremental changes all along the way instead of being flattened by one giant jolt.

What do you think? Please share your thoughts and experiences with us here!

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Your business model, strategy, organization & execution: A year of CEO Challenges!

Rick McPartlin — Tue, 06 Apr 2010 14:50:08 +0000

It seems like only yesterday that we were throwing around ideas for what would become the CEO Challenge. It’s been a year now, and we’re so pleased with the feedback we’ve received from clients, colleagues and collaborators. Seems we’ve struck a few chords, and that’s great to hear, especially because our messages aren’t always pleasant. “Your business model is Best of the Worst! Your organization is in chaos! You need to think like a Chief Revenue Officer!”

This month, Jane and I decided to revisit the twelve posts we’ve published to date. For those of you who have been reading a while … how many of these Challenges have you accepted? Have you implemented the action plans?

Most importantly, have you made any lasting changes?

Our goal has been to help you think more like a Chief Revenue Officer. We’ve reminded you that consistent, profitable revenue growth doesn’t come from thin air. It isn’t magic or hocus pocus. And it isn’t something that your sales team just delivers. Voila! Rain!

No. It doesn’t happen that way. Consistent, profitable revenue is a reward for delivering value to very specific customers. Period, end of story. And if your company isn’t meeting your revenue goals, look inside. Your business model might be completely off. Your strategy could be weak, or maybe it’s your company’s execution. Perhaps your organization isn’t aligned around the same revenue goals.

In our experience, very few organizations approach revenue generation as a science. It’s shocking. After all, without consistent, profitable revenue, there is no business.

But enough about that. Let’s get to the solution. Below you’ll find a description, links and downloadable PDFs for our first year’s worth of CEO Challenges, or you can download all 13 files in this single ZIP folder (you’ll need to uncompress the files).

BUSINESS MODEL & STRATEGIES

Are you a “Best of the Worst” Company?

In boom times, BOTW companies are enormously confident in and proud of their performance. But then the environment changes. The market sours, the economy tanks, new competitors show up, legislation kicks in, or some other external variable shifts. Sales and profits plummet.

What do BOTW companies do? They blame these uncontrollable external variables for their woes. Then they just try to survive until the boom times return. They aren’t really market leaders; they’re just fulfilling accelerating demand. When that huge demand takes a nosedive, they point fingers because they don’t recognize this painful truth: Their problem is internal.

Read it | Download the PDF

How to Fix a BOTW Business Model

In this article, we discuss how to evolve a Best of the Worst (“BOTW”) business model to Best of the Best (“BOTB”). In particular, we focus on fixing three key issues:

1. Marketing strategies that care most about the quantity of prospects rather than the quality
2. Inflexible cost structures based on random external demand, not the specific needs of a specific, strategic target market
3. The dangerous attitude that customers buy from because the seller and the product is “good.”

Read it | Download the PDF

Have the Courage to Create a Brand!

No brand? You’re no different. In an age where your customers can choose from a huge swell of service providers from around the globe, choosing anonymity is a dangerous decision indeed. If you don’t answer the question of “why me,” a competitor surely will.

Very simply, branding gives customers a reason to buy from you without you having to plead, prod, and cajole a sale because you’re very clear about who you are and what specific customer segment you best serve. Thus, done correctly, branding is discomforting for a small to mid-size company because it requires a courageous and counter-intuitive choice to limit your market. After all, when you’re very specific about your target customers, you leave out other customers that don’t perfectly fit your target. For a small company fighting for survival, decisions don’t get much tougher than that.

Read it | Download the PDF

Thought Leadership is a Business Strategy

Thought leadership is often bandied about as if it’s a marketing campaign. But thought leadership is a long-term business strategy that drives everything the organization does each day and at all levels. A thought leader is an innovator in a very specific niche, and customers in that niche recognize, value, and – most importantly – are willing to pay for that innovation, that leadership position.

True thought leaders can demand substantial price premiums for their solutions because they can clearly articulate a compelling value proposition for a very specific market niche. They also enjoy shorter sales cycles, greater repeat business, and strategic opportunities that their competitors miss.

That’s why thought leadership is typically so difficult.

Read it | Download the PDF

REVENUE GENERATION AS A SCIENCE

“I have people who handle marketing and sales. What’s a CRO and why do we need one?”

You have a sales team and a marketing director, but they’re in constant combat. Your revenue growth is flat. Margins are shrinking. And whether you realize it or not, you’re drastically overpaying for results. It’s a common problem, but the companies who solve it can remove 10-15 points of cost while driving their top line to generate predictable results.

How can you solve this issue? By becoming a Chief Revenue Officer, or CRO. No, you don’t necessarily need to hire a CRO – you just need to add “CRO Thinking” to your own job description and “act like a CRO.”

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“I’m Lying Awake Worrying About Sales!”

When it comes to sleep deprivation, CEOs have plenty of issues to blame. In our experience, the top culprit is typically revenue-related. CEOs are tossing and turning over questions like “Is my sales manager doing a good job?” “Is my star salesperson going to quit?” “Why does one salesperson excel while others struggle?”

This stress frequently stems from two faulty beliefs: First, that consistent revenue generation depends on the talents of a few select individuals, and second, that those individuals operate in a world lacking both structure and predictability.

Good news: Revenue generation is a science similar to other disciplines inside your organization. It can be predictable, profitable, and far less stressful than you ever imagined.

Read it | Download it

“Why Can’t We Hire a VP Sales Who Can Deliver?”

“We need a sales leader who can build our team, lead us into the market and close business,” CEOs will tell me. ”I’ve spent a million dollars hiring, firing, and starting over. How can I stop the churn and hire someone who will deliver?”

Here’s the problem: A great sales VP won’t accept a job where there is no revenue generation strategy, infrastructure or organizational alignment. Top people know that this chaos impedes their success, and they can spot issues a mile away.

Even if they do join a chaotic company, great sales leaders eventually find themselves in lose-lose situations at exactly the time you need their expertise most. They take the blame for organizational problems and leave you to start the vicious cycle again.

Read it | Download it

“We have plenty of leads but can’t seem to convert!”

We hear this problem all the time, and it’s a function of what we call “the desperate pipeline.” You know the desperate pipeline – you’re probably caught in several of them right now. Somewhere, somehow you crossed a seller’s path, and now you receive endless calls and emails trying to sell you something that you will never buy. But you’re still a prospect because you have a name, an email address, a phone number and a pulse.

Don’t be one of those desperate companies. A fat sales funnel has dramatic hidden costs and creates a barrier for consistent, profitable revenue growth. Marketing programs that focus on attracting as many leads as possible are no different from aggressive salespeople who pitch every breathing soul at every trade show, networking meeting and playground.

The solution? Shrink your pipeline!

Read it | Download it

How to Survive an Investor’s Due Diligence

This isn’t a good time to raise capital for your company, but according to this New York Times article, it may be a good time to sell. Even if an exit isn’t in the cards right now, you should consider bringing in outside counsel to evaluate the company from an investor’s perspective. Why? Because outside advice could help you improve your strategy and profitability, leading to a higher valuation if you later decide to take the next step.

But is your business ready for due diligence? Be careful with your answer — I’ve seen many CEOs and small business owners assume that since the company is profitable now, it will continue to be profitable in the future.

Unfortunately, yet buyers and investors aren’t making that assumption at all. In fact, they’re doing just the opposite — they’re looking for evidence that the company CAN’T maintain and grow profitability. Your mission is to convincingly demonstrate that your revenue and profits are repeatable and sustainable. And by “convincingly,” I mean that you need a clearly-defined long-term revenue strategy along with the process and structure to create that reality.

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PROCESS, STRUCTURE & EXECUTION

The Cost of Chaos

A recent AP article proclaimed that “Americans’ job satisfaction lowest in 22 years … if the job satisfaction trend is not reversed, economists say, it could stifle innovation and hurt America’s competitiveness and productivity. It also could make unhappy older workers less inclined to take the time to share their knowledge and skills with younger workers.”

This decline has somber implications for businesses, and executive teams need to address this issue in their organizations. And guess what? It affects your revenue generation and profitability as well. In this issue of the CEO Challenge, we discuss three common examples of organizational misalignment that cause frustration, anger, confusion and, eventually, disengagement. We call this misalignment “The Cost of Chaos.”

Read it | Download it

You know the saying about assumptions. Why are you still making them?

Assumption testing has always been important in organizations. Right now, however, it’s more critical than ever. Markets are evolving so fast that the wrong assumptions can be fatal. Worse yet, an organization’s inability to routinely identify and test assumptions is a cultural defect that can be very difficult to correct.

It’s understandable that colleagues sometimes fail to challenge each other. We live in a multi-disciplined world in which we need to trust the expertise of our colleagues. When those from other disciplines speak, we may not have the direct knowledge to evaluate the intricacies of what they said, let alone establish whether it’s right. As a result, assumptions go unchecked. This problem escalates when power is added to the equation.

It’s naïve and dangerous for any executive to believe that employees will automatically voice anything, especially when that “anything” is negative or challenging. The way to truly create an organization that identifies and checks critical assumptions is to build it into the cultural expectations. Only if it becomes the behavioral expectation in the organization will it become real.

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“We have a great strategy but have trouble executing it.”

Recently you included a wide range of employees to assist in developing a critical new strategy. Employees felt involved and engaged; they had a sense of enthusiasm and ownership. But suddenly it’s been six months and you’re sitting in a meeting struggling with familiar issues … the great strategy you developed is long forgotten or ignored. What happened? Daily tasks, emergencies, and problems diverted your team from its strategic initiatives.

Today, this inability to execute efficiently and reliably is deadly. It may not be sexy or exciting, but well-crafted strategies are useless unless you drive the successful, timely execution of those strategies. You’re responsible for results, and your entire executive team must, must, must focus on execution. And there are two core competencies involved: clarity and consistent discipline.

Read it | Download it

CONCLUSION

Do you have any burning questions that we can address in a future issue of the CEO Challenge? Please contact us here. And if you know a CEO (or aspiring CEO) who could benefit from the CEO Challenge, please forward it liberally!

We also love your comments, questions, and debate, so please share your thoughts with us here, and thank you for taking this journey with us.

You know the saying about assumptions. Why are you still making them?

Jane Adamson — Tue, 02 Mar 2010 15:05:55 +0000

Assumption testing has always been important in organizations. Right now, however, it’s more critical than ever. Markets are evolving so fast that the wrong assumptions can be fatal.

Worse yet, an organization’s inability to routinely identify and test assumptions is a cultural defect that can be very difficult to correct.

Rick and I often see this problem when we participate in leadership meetings held by our clients. During these meetings, we frequently hear executives mistakenly state assumptions as if they were facts. Here are a few assumptions we hear regularly:

This slowdown is temporary - things will be back to normal soon.
This customer loves us, so this deal is safe.
Our clients want X.
No one else can beat us at X.
We have to lower our prices.
We have to invest in X.
We can’t afford to do X.
We tried X before and it didn’t work.

Each and every one of these statements is an assumption. And yet we rarely hear anyone challenge these assumptions. Why not?

ARE WE JUST TOO NICE?

It’s understandable that colleagues sometimes fail to challenge each other. First, there’s the fear of appearing negative, especially during difficult times. Executives need to provide solutions; if a solution isn’t readily apparent, it’s easy to withhold questions or challenges, to indulge the groupthink.

Second, we live in a multi-disciplined world in which we need to trust the expertise of our colleagues. When those from other disciplines speak, we may not have the direct knowledge to evaluate the intricacies of what they said, let alone establish whether it’s right. As a result, assumptions go unchecked.

This problem escalates when power is added to the equation. For example, when a CEO, president, or boss makes an assumptive statement, it’s even more likely to slide by. We’ve watched entire meetings in which a CEO will present assumptions without a single challenge. If we talk with that same CEO privately, s/he will inevitably assure us that s/he invites and encourages dissenting viewpoints. That’s an assumption as well — s/he assumes that the rest of the team feels confident and comfortable sharing that dissention.

Assumptions rarely exist in a vacuum, and they lead to more assumptions that can devastate a campaign, a strategy, or a company.

A CASE STUDY

Here’s a simple, true example of how one bad assumption leads to a myriad more. Let’s say that an organization is attending a trade show with the assumption that the best way to succeed is to attract as many people as possible into the booth and get their contact information.

Based on this master assumption – we must attract as many people as possible — the organization makes all of these secondary assumptions:

The booth needs to be huge and highly visible.
We need sensory devices, contests, premiums and actors.
We’d better be a show sponsor so our name is on the program, the walls and the big banners.
We’ll need plenty of power, labor and technology in our booth so we can electronically swipe contact information and download the data in order to follow-up with everyone.
We need a new booth because it can’t look the same as last year.
We need to increase our tradeshow budget to X.
With this huge budget, the sales team must close $X million in new business from this effort.

This show will now require a significant effort from multiple departments – sales, marketing, finance, operations, and the executive team who banks on lofty results to propel the business toward its quarterly and annual goals.

WHAT IF SOMEONE HAD SPOKEN UP?

What if one person in the organization had been encouraged to challenge the initial master assumption? That person might have brought up these arguments:

Having a lot of traffic in the booth will mean we won’t have time to separate real prospects from tire kickers. We also won’t have time to work with the strategic clients and prospects we’ve invited to the show.
A massive effort to fill our database means lots of pre-show prep and post-show follow-up for a team of sales reps that doesn’t have the resources or budget to absorb an enormous influx of extra work hours.
90% of the names we put in the database won’t be prospective customers, so afterward we’ll need to talk to everyone and find the 10% who are real prospects. This effort will actually reduce sales time with qualified prospects.
We know that 10-20% of the 90% non-customers will ask us to quote or send us RFPs, which will further reduce sales team time to sell strategic prospects. At the same time these extra RFPs will add to the work burden of the various support teams, decreasing their ability to meet their budgets.
Since the post-show marketing program will require a big follow-up effort with limited staff, it will be a long time before we get to the 10% who are the qualified prospective buyers. By that time, many of them will have already bought from someone else. We will be lucky if we can get 33% of that 10% to buy, and we’ll never hit our revenue goals at that rate.

These challenges highlight the fact that “more people” wasn’t the right strategy for the show. And a challenger would have saved the organization many headaches and put millions back into the top and bottom lines. However, since nobody challenged the master assumption, the ramifications negatively affected the company and its strategy for a year.

SOLUTION

If your company’s culture isn’t proficient in identifying, challenging, and testing assumptions … you’re not alone. Therefore, you can gain considerable advantage by evolving into an organization that welcomes and benefits from this kind of consistent, strategic analysis.

ACTION PLAN

1. Make sure your organization supports assumption testing.

There are two tests that demonstrate whether your organization is good at identifying and testing assumptions.

First, when new employees join the organization, find out what they informally learn about the company and its culture. Preferred cultural norms pass from person to person. Listen carefully to what you hear. Are new employees inspired to challenge the status quo? To speak up in meetings? To drive new initiatives? Or are they encouraged to get along and keep their heads low? If there’s any semblance of the latter, you have a serious cultural problem.

Second, observe what gets rewarded and why. When team members question an assumption, what do they receive? A look of annoyance, an eye roll, or a pat on the back? If a company wants a culture that identifies and tests assumptions, it must reward that behavior openly and consistently.

2. Start listening for assumptions. You’ll be surprised by how many are being made.

There are two basic categories of assumptions – those made about the external marketplace and those made about and internal environment of the company. Here are just a few general examples of common assumptions companies make.

EXTERNAL ASSUMPTION	INTERNAL ASSUMPTIONS
Who are our best prospects and clients What’s happening in markets, organizations, industries What our competitors are doing What will happen in the economy Who our best suppliers and partners are and why Which trends are real and the impact they’ll have	What our strategy is and where we want to be in X years How teams, individuals and businesses should be evaluated and rewarded measured The purpose for an existing policy, process, or metric How the organization and teams should work together Roles and impact of different teams and individuals

3. Identify the risks.

In the ideal world, you’d take all of the assumptions from #2 and test each and every one. Unfortunately, that’s not possible or practical. Instead, you can start by requiring that assumptions simply be labeled as such. Separate the known facts from assumptions being made.

How do you implement this step? First, keep a list of assumptions during any important discussion. Then when someone draws on one of those assumptions, ask two important questions:

“What makes you believe that to be the case?” Listen for substantiation. If the answers are vague or hearsay or judgmental, then keep probing.
“If we’re wrong about this assumption, will it cause substantial harm?” If the answer is NO, then move forward, but look for ways to substantiate the assumption in the future. If the answer is YES, then testing is required.

4. Test the most costly, dangerous assumptions.

For those assumptions that will cause substantial harm, focus your team to identify the best and fastest way to uncover the truth and mitigate the risk. The investigation could take numerous forms such as talking to customers or prospects, formal market research, internal surveys, competitive research, “secret shopping,” or even simply asking someone who may have the true facts.

5. Encourage and reward the challengers.

Remember the old adage “Focus on what is right, not who is right.” When there’s a win, credit belongs to the whole team. When there’s a loss, it’s the leader’s fault for not identifying and validating assumptions.

Thus, an important way to encourage challenges is to publicly embrace them. That doesn’t mean you have to engage in long discussion every time someone asks a question, but it does mean that when someone challenges an assumption, it should be labeled, accepted, considered, and appreciated.

It’s also important to establish the difference between negativity and positive assumption testing. Negativity simply shuts down ideas. Positive assumption testing asks questions and forces to the surface thoughtful discussions: What evidence do we have that this is true right now? What will be the result if we’re wrong? What alternatives might we be exploring if this assumption proved false?

Finally, you can include assumption testing as a critical behavior that is expected and discussed during regular performance evaluations. That certainly elevates it from a “tolerated” status to a mandatory action.

6. Identify assumptions (and how you’ll test them) in your annual, quarterly and project-based plans.

Make sure each assumption is clearly identified, and understand how the company will test and react to the results. Then make sure teams are testing and reporting back in real time.

When an assumption is tested and proves to be faulty, don’t punish the team for the original assumption; instead, praise the team for identifying, testing, and preventing expensive mistakes that hinged from that assumption. Point out the importance of the new conclusion and the resulting benefit to the company. The team will now have a new direction based on facts, not assumptions, and that is worth celebrating.

CONCLUSION

Part of the benefit in testing assumptions is greater clarity, completeness and accuracy in cost considerations. Understand why there are different assumptions from different teams, or roles within the company, or from those that impact your success from outside the company (customers, partners and vendors). Understanding their assumptions will help us see gaps, inhibitors, time considerations and cost impacts for all the parties.

We assume you’re going to bring this principle of assumption testing back to your company and put it to work. Is that assumption valid? Let us know!

What do you think? Please share your thoughts and experiences with us here!

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The Cost of Chaos

Jane Adamson — Tue, 02 Feb 2010 14:07:47 +0000

During the first week of the new year, when we tend to gaze optimistically at the road ahead, a headline from the Associated Press announced “Americans’ job satisfaction lowest in 22 years.”

The article then went on to say “That is the lowest level ever recorded by the Conference Board research group in over 22 years of studying the issue. If the job satisfaction trend is not reversed, economists say, it could stifle innovation and hurt America’s competitiveness and productivity. It also could make unhappy older workers less inclined to take the time to share their knowledge and skills with younger workers.”

Well, that got my attention! Of course there are many reasons for the decline, including the worst recession since the 1930s and the fact that downsizing has created more work and more demands on the workers who’ve survived the cuts. That doesn’t change the fact, however, that such a decline has somber implications for businesses, and executive teams need to address this issue in their organizations.

Soft issues, hard impact

Much has been written about the effect morale, culture, and what’s frequently referred to as the “soft issues” have on an organization. If you’ve read the articles or experienced a negative culture, you know that the effects are anything but soft. Lost productivity, poor teamwork, tension, a dearth of ideas and innovation, doing just as much as required and nothing more … all of these problems dramatically impact the bottom line.

Need proof? In their book The New Corporate Cultures, Terrance Deal and Allan Kennedy calculated the average performance of culturally robust companies and their weaker counterparts. They found that

Over a span of 11 years, “culturally strong companies” averaged 571% higher gains in operating earnings than those they deemed “culturally deprived.”
Companies with highly-rated cultures averaged 417% higher returns on investment than their less culturally-robust counterparts.

At The Revenue Game, we frequently use the term “cost of chaos.” This concept came from our work creating revenue strategies and aligning organizations to execute on those strategies. We’ve seen firsthand that the staggering lack of alignment in most organizations has real financial cost. But today, let’s talk about the human cost – the cost of poor alignment on people and their outlook about their work.

Some of you may object to the word “chaos” when we’re talking about organizations that are out of alignment. You may say, hey, we’re not perfect, we have problems, but “chaos” is much too harsh. We argue, however, that the word choice is appropriate and weighted accurately.

The human cost of misalignment

Human beings, especially in today’s economy where the necessity of brainpower is so acute, desperately want to do things because they matter. They want to be part of something bigger than themselves. It’s the motivational driver behind engaged workers, behind innovation, behind passion and commitment. In order to feel that intrinsic motivational pull, employees need to be pulling in the same direction and not at cross-purposes. (On that note, I highly recommend this 20-minute TED lecture by Dan Pink on “The Surprising Science of Motivation.”)

For example, here are three common examples of misalignment that cause frustration, anger, confusion and, eventually, disengagement.

1. Sales reps are judged on and rewarded for bringing in revenue while manufacturing/ engineering/ operations teams are judged on and rewarded for efficiency.

This misalignment directly and frequently impacts a company’s bottom line. After all, when there is no alignment on the type of revenue or projects sales should bring in, reps will bring in anything they can find. Manufacturing/engineering/operations teams end up with a slew of different projects with different expectations from different customers with different needs.

Sales reps walk around patting themselves on the back for the revenue they’ve brought in, but the delivery folks gripe about sales because the projects coming into the company make efficiency impossible. Sales reps become confused and frustrated, and the most talented ones often leave the company for greener pastures. Operations teams become equally angry. And guess what — customers see this tension and eventually take their business elsewhere.

2. The company’s revenue goals depend on a few sales heroes who get all of the recognition, pay, and perks. The support group behind those reps works hard but receives little recognition for contribution.

What makes this scenario even worse is that company leaders will get up in meetings and talk about teamwork, but employees experience a far different reality – one that tells them some team members are better than others. Resentment is rampant.

3. Everyone knows the company’s revenue goals, but the strategy for achieving those goals is either non-existent or known to only a few executives. Everyone does the best they can, but with a limited view of the strategic whole, their efforts are frequently ignored, unappreciated, or even disparaged.

If employees think what they’re doing is right, but then they’re shot down for their efforts without understanding why, the natural reaction is disengagement.

Is it any wonder that job satisfaction is so alarmingly low?

Action Plan

1. Develop a clear revenue strategy that maps out HOW you will achieve your revenue goals.

Every functional area of the company should be represented in the development of the strategy so that each representative understands the rationale behind the strategy, the revenue principles the strategy is based on, and what the key elements to success are. Ensure that the communication then flows from the strategic development team to all corners of the company. The goal is to paint a very clear picture to every single employee of where you’re going, why you’re going there, and how individual employee’s work contributes to the company success.

The plan itself should clarify:

The specific niche the company wants to dominate
A profile of the perfect customer
The promises the company is making to that customer
The problems that customer has that the company’s offer will solve
The offer deliverables to the customer

With that information in hand, individual employees will be able to stay in alignment with the strategy as they make small daily work decisions.

2. Build high-performing teams that understand and want to support the big picture.

It’s not enough to just communicate a revenue strategy and plan at the beginning of the year. Your management teams need to continually communicate the vision and lead your organization to execute on those goals each day.

A big part of that leadership is to break down silos and rally your employees around the customer and solving the customer’s problem. Silos intensify when people either don’t understand dependencies or they’re rewarded on silo-based metrics. It’s up to your management team to monitor silos and address any disconnects immediately.

Remember, humans want to do a good job. The goal is to show them exactly how they help each other — they will make the system even better.

3. Give your team the resources they need to succeed.

Nothing discourages employees faster knowing what the goal is, but not having the resources to achieve it. It’s the root of most accountability problems and many morale issues that – as we said earlier – have human and financial costs for your business.

If your revenue goals are worth achieving, they’re worth the appropriate investments in people, processes and technology. If you can’t justify the investments, then you probably need to lower your goals so they’re achievable.

4. Make sure that your compensation plan supports your alignment.

Comp plans that reward a few sales stars with hefty commission, generous expense accounts and lavish trips can absolutely kill the alignment in your organization. You’re sending a message to the entire team that only a few players in one functional area – sales – are highly valued and that individual performance is more valuable than team accomplishment.

We’re not suggesting that commission and bonuses are wrong. We do recommend that your sales reps are rewarded for profitable, successful projects rather than just revenue. That way, their goals are aligned with the company’s revenue strategy and the goals that all functional areas share.

The same philosophy holds true for other functional areas – make sure their incentives and bonuses are tied to the company’s goals so that they are rewarded for working together rather than in silos. In addition, high performers in all areas should be recognized for their contributions on a regular basis. Don’t let the sales team walk around patting themselves on the back without publicly recognizing the rest of the talent that brings the company’s vision to life. Not everyone wants the stress of sales, but they do want recognition for their achievements.

5. Create positive metrics for your revenue plan.

Your team wants to celebrate success, so structure your metrics so they’re positive, not negative. For example, instead of the negative “reduce our current error rate of 20%,” say “improve our 80% accuracy rate.” That small shift allows you to celebrate small steps as you approach the goal and then surpass it! Celebrate 79.9%, 80%, 80.1%, 80.2%, and so on. The celebrations will motivate, re-energize, and keep people focused on the right things.

Conclusion

Win The Revenue Game by cutting out the “cost of chaos.” Give your employees the joy of being engaged and committed to something they understand and know they can affect. In order for that to happen, employees need to be pulling in the same direction and not at cross purposes. Let’s not let year another year go by without addressing and improving that employee satisfaction statistic!

What do you think? Please share your thoughts and experiences with us here!

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Thought Leadership is a Business Strategy

Rick McPartlin — Tue, 05 Jan 2010 15:14:09 +0000

Last month, Jane wrote about the courage to create a brand, and boy, the word “courage” struck an interesting chord within our community. Branding involves making a difficult choice to go after a niche market with laser focus in order to differentiate your business from your myriads of competitors. (Even if you think you don’t have a lot of competition, you do — more than ever.) That focus means turning down business that isn’t on strategy. Difficult? Yes. Courageous? Absolutely.

This month, I’m intrigued by a similar concept: “thought leadership.” A lot of companies bandy about the word “thought leader” as if it’s a marketing tactic, but many others aren’t familiar with the concept or the strategic benefits that come with it.

The cold reality is that thought leadership is much harder than it appears. It isn’t a marketing campaign; it’s a long-term business strategy. In this month’s CEO Challenge, I’ll outline what the concept really means, the benefits, and how your company – if you’re courageous enough – can implement this strategy in 2010.

What is thought leadership and why is it valuable?

When I talk with companies about thought leadership, they sometimes tell me that “yes, we’re doing that.” They point to their shiny new blog, their Twitter account, their webinar series, their Facebook group. However, any company can implement these kinds of marketing programs, but that doesn’t mean the company is a thought leader. They’re confusing communication tools with strategy.

Instead, thought leadership is a long-term business strategy that drives everything the organization does each day and at all levels. A thought leader is an innovator in a very specific niche, and customers in that niche recognize, value, and – most importantly – are willing to pay for that innovation, that leadership position.

Many companies that launch new products and services have truly high value solutions. They pride themselves for delivering great value and they heap services, support and options into their offering. They’re proactive in sharing knowledge, opportunities and choices. They believe they’re a thought leader because they’re delivering innovation and value.

Yet somehow they find themselves competing with low-cost providers, and they can’t charge what they believe their solutions are worth. The problem is that these companies aren’t thought leaders because the market isn’t following; prospects and customers don’t consistently recognize or understand the value.

True thought leaders can demand substantial price premiums for their solutions because they can clearly articulate a compelling value proposition for very specific market niche. They also enjoy shorter sales cycles, greater repeat business, and strategic opportunities that their competitors miss.

You must consistently lead

If a company delivers value in a stealth way that the market doesn’t clearly understand or value, that company isn’t a thought leader. Why? They have to actually be a leader.

Leadership means a company has followers who recognize and take action toward their intended results. It means the company is absolutely recognized and respected as THE LEADER in a specific niche. It’s not something a company just suddenly decides to do and then implements during a short campaign. It’s a core business strategy that the organization implements at all levels and over many years.

A lot of companies aren’t prepared to make that kind of commitment. Some executives aren’t comfortable getting in front of their industry on a regular basis. Or they think it’s more important to focus on internal issues rather than creating an external voice and face for the organization’s vision and values.

These companies should not even think about the words “thought leadership” because they don’t have the tools to do it successfully.

In addition, some CEOs worry that, by consistently and loudly sharing their vision and value, they’ll invite competition. And they’re right. That’s why thought leadership isn’t short term, and very few companies can do it because they don’t have a sustainable, meaningful competitive advantage that is differentiated and defensible. They also need to commit to continuous innovation so that when copycats show up, they’re always a step or two ahead.

That’s why thought leadership is a business strategy, not a campaign. It’s a commitment to innovation and sustainable competitive advantage over the long term. It’s also a major commitment to consistently communicate that innovation in a way that creates followers who are willing to pay for that innovation.

Solution

Thought leadership is incredibly important for companies that are launching new products and services, particularly those aimed at early adopters. It creates differentiation and changes the way the market views solutions. Yet unfortunately, I’ve found that very few B2B or small/midsize companies have the guts to create a brand strategy let alone make a long-term commitment to thought leadership.

If your company is truly ready to commit to thought leadership as a business strategy, here’s a high-level action plan to get you started.

Action Plan

1. Define the niche for which you can reasonably be THE thought leader. It may be near impossible to become a thought leader for your entire industry, but you can be the thought leader for a very small, highly targeted niche – for example, a specific geography, customer need, or application. You have to deeply understand the needs of your niche and how they will assess the value that your solution provides.

2. Develop a brand strategy and be ready to stick to it. If you don’t have the guts to turn down business that isn’t consistent with your brand strategy, then you can’t possibly become the thought leader in your space.

3. Define a leadership roadmap. How will you show leadership in your niche? It takes time and effort to become recognized as a leader. Create a roadmap that outlines all of the leadership opportunities you will pursue over the years ahead. For example, are there conferences for which you could deliver a keynote address? Publications in which you would need to be featured regularly? Committees that you can lead?

4. Develop your thought platform. You’ll need a compelling vision, stories, data, and market insight to be respected and recognized as a thought leader. You have to tell the world and your your prospective customers that you are the go-to firm. Your thought platform should show deep knowledge of where your industry has been, the problems your customers face, and where you are collectively going. You’ll also need to create intriguing communications vehicles to share these stories and vision – speeches to industry, conference proposals, events, media materials, publishable articles, intellectual property, best practices libraries, your own communications platform, etc.

5. Get your organization aligned. I can’t stress enough how important this step is. Many – perhaps most – companies have a chasm between cost functions (operations, finance) and customer acquisition (sales, marketing). Your senior team needs to align and lead those functions to execute on your brand and thought leadership position each day. Failure to align an organization is a failure of executive leadership and thought leaders are NOT in chaos!

6. Find the right executive. Here’s the reason so many companies don’t successfully achieve thought leader status – they assign this role to a midlevel communications person or to an executive that isn’t comfortable playing such a public role (or who is too busy with internal initiatives to get out there and lead the industry). A thought leader must have deep experience and industry contacts along with a public persona and job description to lead your niche. The rest of your executive team needs to be fully engaged and able to contribute as well – thought leadership has to be part of your culture.

7. Define your metrics. Naturally, you need to know that this strategy is working. The first set of metrics should involve revenue, pricing and profit margins; you need to know that customers are buying from you based on pricing that reflects the value you deliver. The second set of metrics should track evidence of followership. For example, do journalists call you to comment on news or industry trends? Are you invited to speak at important conferences? Do prospective partners, customers, or funding sources reach out to you rather than vice versa? Do employees want to work for you because they view you as the leader? These metrics might be hard to track, but do it anyway – you’ll evolve your figures over time, and they’ll help you establish your progress.

Conclusion

True thought leaders position themselves as THE source of best practices, language, and metrics for their chosen market niche. When they lead the niche in this way, competitors have to adjust and meet the rules and standards the thought leader has established. What a great competitive position!

In reality, few companies have the discipline and stamina to commit to thought leadership as a business strategy. Those that don’t won’t succeed. Those who are successful, however, can command higher prices, enjoy shorter sales cycles, and operate from a leadership position in their niches.

What do you think? Please share your thoughts and experiences with us here!

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Have the Courage to Create a Brand!

Jane Adamson — Tue, 01 Dec 2009 15:20:34 +0000

Branding is a tricky subject to discuss with small to mid-size companies. It’s a concept that’s more easily associated with consumer products, packaged goods, or the Fortune 500. Branding books use examples like Starbucks, Apple or Dell – examples that don’t resonate with midsize service companies, B2B companies, or industrial product companies.

Many of these types of businesses think of a brand as their logo, the look & feel of their web site, or their slogan. Unfortunately, a brand is none of those things. Instead, we define a brand as the combination of what you sell, how you sell it, and to whom. The result is an experience that develops your customers’ trust, and it can create substantial value because the right customers will be willing to pay a premium for that experience. That experience is based on trust and belief that you will be who you say you are every single time and in all circumstances. Not most of the time. Not just with certain people. All the time, everywhere.

A brand is narrow

The very essence of branding is being very clear about who you are and what specific customer segment you best serve. Thus, done correctly, branding is discomforting for a small to mid-size company because it requires a courageous and counter-intuitive choice to limit your market. After all, when you’re very specific about your target customers, you leave out other customers that don’t perfectly fit your target. For a small company fighting for survival, decisions don’t get much tougher than that.

Why should you limit your market and develop a brand? Because the dangers of NOT branding the company carefully, of NOT choosing, are lethal.

No brand? You’re no different.

First, the act of NOT choosing very specifically who you are, what market you’ll serve, and how you’ll serve that market, is in itself a choice. It’s the choice to be like everyone else, to be anonymous, to hide in the chorus of companies and hope that your voice will be heard amongst all the others.

In an age where your customers can choose from a huge swell of service providers from around the globe, choosing anonymity is a dangerous decision indeed. If you don’t answer the question of “why me,” a competitor surely will. Very simply, branding gives customers a reason to buy from you without you having to plead, prod, and cajole a sale.

A brand is a clear promise

A good brand says, “You can trust that I will meet your expectations because I’ve clearly told you what those expectations are.” If a company hasn’t developed a clear brand, then it’s difficult to be clear about the promises it makes to customers.

If a company knows, internally, what it promises to customers, then the entire structure of the organization (including compensation plans, values, reward systems, resource allocation and so forth) can be clearly established to ensure that the company delivers on those promises. Without brand clarity, it’s easy for internal systems to become misaligned, inevitably leading to customer disappointment and overall mediocrity.

For example, online shoe retailer Zappos.com promises no hassle returns, and they successfully deliver on that promise. I returned a pair of shoes last week, and there was absolutely no hassle — no questioning of my return decision, no cost to me, easy instructions, and friendly service. Their business processes are set up to ensure no hassle returns and their employees are enthusiastic about returns. In other words, their organization is aligned to deliver on a clear brand promise.

Branding drives marketing efficiency

A good brand is extremely specific about the profile of ideal customers. Without that specificity, marketing efforts are diluted because they need to appeal to a broad audience. Next, expensive sales time is wasted as sales reps talk with prospects who really aren’t a good fit for the company.

Is your company facing this problem? Check your revenue generation metrics. Are you attracting the right number of prospects for your investments? Are you closing a high percentage of the prospects you do attract? If either numbers isn’t where you’d like it to be, there’s a good chance that your organization isn’t completely clear about your customer profile and you are, unfortunately, wasting money.

Branding drives word of mouth and referrals

There is one true indicator of a good brand: word of mouth. Strong brands are so reliable and rare that people talk about them. This fact is true even in service industries, industrial companies, small businesses, B2B product companies and the like. Regardless of size or industry, a well-branded company enjoys a tremendous advantage in the marketplace because word of mouth and referrals are the best possible form of marketing.

If your company doesn’t have a strong brand, your competitors have a major opportunity to beat you to the punch and gain an enormous advantage.

Action Plan to Create a Strong Brand

1. Focus on the customer problem you’re trying to solve.

As Marty Neumeier says in his excellent book The Brand Gap, “A brand is not what you say it is; it’s what they say it is.” Therefore, you need to start with the real needs of your customers – and those needs typically have nothing to do with your product. Ultimately, your customers need to generate revenue and profit, and your solution has to help them get there. Customers also have needs such as mitigating risk, convenience, personal image within the company, political agendas, technical limitations, and much more.

Be VERY SPECIFIC concerning what problems your customers actually have and how your solution can solve those problems. Become a specialist your customers can trust, not a generalist for everyone.

2. Create a detailed profile of your perfect customer.

Companies often say they have a target customer profile, but it’s typically so general that it’s ineffective. Dig much deeper than top tier characteristics such as company size, geography, job title or industry. The goal is to help the prospect feel like you are talking specifically to him/her. Help your marketing and sales department understand the problems your customers face as well as characteristics like how they make decisions, what’s important to them, what they struggle with, with whom they interact, and how they like to do business.

When the profile is complete, the marketing and sales teams can then identify how best to reach the target group and how to recognize a “good” target customer. A great brand will attract certain types of people. Do not bend to the temptation of responding to prospects that do not fit the profile. Let go. Trying to appeal to different groups will dilute and ultimately crush the brand.

3. Decide, as a company, on your promises.

A promise is a much stronger word than “value proposition.” Value proposition sounds casual and murky and spineless. A promise is real. People are careful about making promises and breaking them is a serious cultural violation. Your brand promises should take on the same solemn quality.

For instance, if a local nursery promises to help customers make informed buying decisions, everything about that company should be set up to deliver on that promise. HR would hire only cashiers with backgrounds in gardening and the different types of shrubs, trees and plants. Training classes would be held on a regular basis so the staff could keep up to date with local planting techniques and watering requirements. Employees would be well versed on all inventoried items. Specialists would be available for detailed questions. The company may even conduct gardening classes for its customers.

A brand promise is a solemn vow. Are you keeping yours? How do you know?

4. Avoid corporate speak.

Great brands speak directly to their client groups in language that they understand and believe. Corporate fluff such as “we’re dedicated to your success,” “we have a full range of products to meet all your needs,” and “we’re better, faster, cheaper” have lost all meaning and credibility. Tell your prospective clients exactly how you solve their problems. Then walk, talk, and demonstrate your dedication to that brand.

A local Scottsdale remodeling contractor I know requires all his subs to clean up a home every evening. He bases his remodeling recommendations on how a family lives their daily lives, and he spends time perfecting every detail of the project even though it may never be noticed. In a city among the hardest hit by the housing crisis, this contractor stays booked, and he enjoys strong word of mouth. He has created an authentic, powerful brand.

The buzzword “transparency” is another way of telling companies to be authentic. In this world of instant messaging and the internet, companies cannot get by for too long without authenticity because the market will unmask the reality and spread the word.

Conclusion

Why don’t more small to mid-size companies spend more time on creating an identifiable brand? The answer is that, like most good things, it’s hard to do and takes enormous corporate discipline and strength of character. Every company has heard the internal plea “we can’t be that specific, then we’ll lose all these other opportunities.” The counter-intuitive pull is tough. Yet when you choose not to create a brand, you’re choosing to be the same as everyone else.

Remember: Your goal is to consistently communicate WHAT you do, for WHOM, and HOW you do it. Make a solemn promise and keep it every time. That’s a powerful brand that can differentiate your company in a difficult, crowded market.

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What do you think? Please share your thoughts and experiences with us here!

The CEO Challenge

The World Isn’t Flat: Planning for a New 2011

The World is Different

Embrace Change and Win

Action Plan: Embracing Change During Your 2011 Planning Process

1. One way to adjust your company’s thinking is to change your vernacular to paint an image of a future filled with purpose, meaning, and relevance.

2. Put the customer front and center.

3. Make sure every member of your team can answer this question: “What’s the problem we solve that no one else solves?”

4. Get real about execution.

5. Start now. Doing this right takes time.

Conclusion

The Opportunity Cost of that Special Deal

Opportunity analysis

Now consider the costs

Solution

Action plan - questions to ask

Conclusion

8 Ways to Listen to Your Market

Tough questions

The big question: How?

Solution

ACTION PLAN: 8 WAYS TO LISTEN

1. Have your own staff talk with, record, track and segment specific conversations with current and past customers on a regular basis.

2. Send out short (< 5 minutes) customer surveys via email or postcard to ask a few critical key questions, then follow up!

3. Hire an objective professional to conduct phone surveys with select individuals – current customers, former customers, prospects, or companies in your niche.

4. Send an executive to regular 1-on-1 customer meetings to engage in creative, in-depth, strategic discussions.

5. Take advantage of inexpensive and easy-to-use online survey system (Survey Monkey, Zoomerang) to send regular, customized, anonymous surveys to specific audiences.

6. Leverage your trade show participation by proactively meeting with your customers.

8. Post-mortem meetings are an excellent way to both deepen client relationships and to learn.

Conclusion

What are you selling? The answers may surprise you.

How will customers understand?

People don’t buy products.

ACTION PLAN

1. Understand what’s important to your customers.

2. Ensure that everyone on your team understands the difference between a “strength” and a “differentiator”.

3. Invest in messages and rehearse!

4. Measure and revise.

Conclusion

Have we entered a New Normal? Hardly.

Recessions are normal.

It’s not difficult

Action Plan

1. Adopt a learning mindset.

2. Know your customer

3. Have conversations, not presentations.

4. Challenge assumptions

5. Set and monitor external metrics.

CONCLUSION

Your business model, strategy, organization & execution: A year of CEO Challenges!

BUSINESS MODEL & STRATEGIES

REVENUE GENERATION AS A SCIENCE

PROCESS, STRUCTURE & EXECUTION

CONCLUSION

You know the saying about assumptions. Why are you still making them?

ARE WE JUST TOO NICE?

A CASE STUDY

WHAT IF SOMEONE HAD SPOKEN UP?

SOLUTION

ACTION PLAN

1. Make sure your organization supports assumption testing.

2. Start listening for assumptions. You’ll be surprised by how many are being made.

3. Identify the risks.

4. Test the most costly, dangerous assumptions.

5. Encourage and reward the challengers.

6. Identify assumptions (and how you’ll test them) in your annual, quarterly and project-based plans.

CONCLUSION

The Cost of Chaos

Soft issues, hard impact

The human cost of misalignment

Action Plan

1. Develop a clear revenue strategy that maps out HOW you will achieve your revenue goals.

2. Build high-performing teams that understand and want to support the big picture.

3. Give your team the resources they need to succeed.

4. Make sure that your compensation plan supports your alignment.

5. Create positive metrics for your revenue plan.

Conclusion

Thought Leadership is a Business Strategy

What is thought leadership and why is it valuable?

You must consistently lead

Action Plan:
Embracing Change During Your 2011 Planning Process