Newsletter Articles

Service Sells Value: by Robert Stohlman

Thu, 16 Jun 2011 17:44:00 GMT

CLICK ON THE COMMENT BUTTON BELOW TO READ ROB STOHLMAN'S insights.

How To Strategically Beat Your Competition: by Peter Zafiro

Thu, 16 Jun 2011 17:47:00 GMT

CLICK ON THE COMMENT BUTTON BELOW TO GET PETER'S insights on how Mutual Action Planning can help put an organization ahead of the competition.

Creating a Business Outlier: Strategic Thinking and Execution

Wed, 01 Jun 2011 05:20:00 GMT

This edition’s video covers the strategic thinking culture of GAM Gear. While you have to marvel at what Craig Van den Avont and his team at GAM have accomplished in terms of staying ahead of the curve, doesn’t it make you think “Why don’t more people do it?”

Here are two passages from pages 38 and 39 of the book, “The Outliers” by Malcolm Gladwell:

“The problem with this view is that the closer psychologists look at the careers of the gifted, the smaller the role innate talent seems to play and the bigger the role preparation seems to play.”

“The striking thing about Ericsson’s study is that he and his colleagues couldn’t find any “naturals”, musicians who floated effortlessly to the top while practicing a fraction of the time their peers did. Nor could they find any “grinds”, people who worked harder than everyone else, yet just didn’t have what it takes to make it to the top ranks. Their research suggests that once a musician has the ability to make it to the top of music school, the thing that distinguishes one performer from another is how hard he or she works. That’s it. And what’s more, the people at the very top don’t just work harder or even much harder than everyone else. They work much, much harder.”

Let’s face it- strategic thinking and execution takes a lot of hard preparation work- and that is something few organizations or people do- otherwise the “Outliers” wouldn’t be outliers. In their industry, GAM is an Outlier- which is why they have averaged 28% growth the last ten years. What are you willing to do to be an “Outlier” in your industry?

Looking for Closers

Thu, 06 Jan 2011 05:57:00 GMT

Fifteen years ago we were working with a client in the industrial automation industry. They were struggling with sales- albeit during the mid-90’s and a robust economy. Our client’s executive sales team told us they had one major problem with their sales team: they didn’t know how to close a deal. We identified their problem: Their hiring criteria were based entirely on hiring people with technical knowledge and industry sales experience. Since the entire industry focused on hiring engineers, industry sales experience was achieved by hiring someone that did a good job interviewing or was “liked” by the interviewee (whatever criteria the interviewee uses to “like” someone). No vetting on sales skills in the interview process. Consequently, while the automation industry as a whole had a lot of salespeople with good technical knowledge that could expound ad nauseam on their product’s technical capabilities, it suffered a severe shortage of closers.

But what is a closer? Where do you find them?

A few weeks ago I had the privilege to lunch with one of our client’s aspiring sales executives. The reason I say aspiring is I believe her management has failed to recognize the full breadth of her talent. She did not have “sales experience”- she came from another department within the company. They brought her in to manage a new sales and marketing development project. Watching this project unfold, I came to one conclusion: She gets stuff done where others in the department have either failed or come up considerably shorter in performance. That, to me is the sign of a closer.

Back to our lunch- and this is where the story gets rich. As we talked, she told me about her newspaper route she had when she was a kid. Three things here: One, this paper route job was in the mid 80’s. Paper routes were already well on their way to extinction by then. Two, a female on a paper route is not the norm. Three, she was nine years old. What nine year old do you know of now (or even back in the 80’s) wanted a job???

It gets better. First, there were the objections. The newspaper had a specific policy that they didn’t hire paperboys/ girls until they were ten years old. She sold her case that her birthday was within the employment year and got permission from her parents to take the job.

Once she started her job, her selling skills really kicked in. She noticed on her route that this one apartment building with sixty apartments, but only two paper customers. She knocked on a door and asked someone why they weren’t taking the paper. The response was: “Because the paper boy leaves them in the downstairs lobby of the apartment building and I have to go down three flights of stairs to get it. I don’t want to do that. I want it delivered to my door.” She then set the hook: “I’m the new papergirl for this area. If I bring the paper to your door, will you take a subscription?” She sold over fifty new subscriptions to that one building.

And it gets better. At that time, the newspaper was running a sales incentive program- they would give a paperboy/ girl a new bike for every fifteen new customers brought in. She brought in over 60 new customers- four bikes worth. She kept one, gave one to her mom, and sold the other two.

Looking for a closer? Talk to people sometime and find out where they’ve been and what they’ve done besides getting some degree in college.

FADAL Engineering: Competing in a Tough Economy Without Outsourcing

Thu, 06 Jan 2011 05:54:00 GMT

FADAL stood for Francis Adrian Dave And Larry. Francis de Caussin started a machine shop back in the 60’s. He brought in his three sons- Adrian, Dave, And Larry- to help. In the late 70’s, they grew tired of watching the Japanese take over the U.S. auto, television, electronics, and machine tool markets. They decided to do something about it. They designed and manufactured an entirely U.S.- sourced vertical machining center, and launched the product in 1981 during the worst machine tool recession to hit the U.S. To give you an idea of how bad that recession was, the U.S. machine-tool market 1981 sales were 45% of their 1980 numbers. Machine tool companies that were sending customers to Hawaii in 1980 were closing their doors by 1982.

FADAL would eventually grow from making one machining center (approx sell price $50,000 each) per month to making over 300 per month in ten years. What makes the FADAL business success story even more amazing is they were based in the anti-business climate of Southern California.

My first encounter with FADAL was in 1981 as a potential vendor (another story). It was exciting to watch and participate in their growth. Their story is quite the opposite of watching so many business train wrecks.

Fadal Engineering of Northridge, California, was a very successful start-up from 1981 and became a full blown major manufacturer. They maintained incredible simplicity during the entire journey. They had a superb credit rating. Their employees were well paid and they had good benefits. Their vendors were always paid promptly. If a payment slipped one day past the net 30 it was due, it was sent overnight. They grew from $1 million in sales as a machine shop in 1981 to over $200 million in annual sales as a machine builder in 1995. With all this financial activity, they had no accounting department. They had one bookkeeper.

Fadal’s owners didn’t have a secretary. They had the same reception area and the same number of receptionists — one — for over ten years. There was no corporate or front office. The owners had more than an open door policy. Their offices didn’t have doors!

Their customer base doubled every other year for ten years. They knocked all foreign competition out of the machining center market in the U.S. and exported 25% of their product. They were the innovative leader in their market. They had no marketing department.

There were no meeting rooms. It was impossible to externally distinguish top management from factory floor workers — they all worked together. Workers and management took breaks and ate lunch together. They shipped $500,000 of product per year per employee, over five times the industry average. Their inventory turned monthly — three times the industry average. They had no middle management.

One other thing I’ll add here: FADAL had a hard-working culture. You went there to work, and there was no pussy-footing about that aspect of the culture. But they weren’t slave-drivers. They paid their people well and gave them generous benefits. They even helped some of their own employees start their own businesses by allowing them to buy FADAL machines, set them up in their garage, and make parts for FADAL as a vendor. Simply put, FADAL had the right culture to compete and succeed. While many businesses and executives struggle with how to “fix” the bottom line with a magical system or by outsourcing, they fail to realize what they really need to do is create the right workplace culture. FADAL Engineering is a case study that proves the right culture can compete successfully in any business environment.

Tough Choices: Face Reality Now or Pay for it Later

Thu, 06 Jan 2011 05:50:00 GMT

A senior executive of a company told me that they would have to outsource some functional elements of their organization overseas. He said their company was under substantial pressure from stockholders to perform better and one of the solutions was to outsource a major functional element of their business to an off-shore organization that could do it at less than half the cost. If someone offers to do something at less than half the price of what it currently costs you and assures the quality will not suffer, then you are compelled to do it- or your competitor will.

Let’s look at this problem a bit differently from the traditional “don’t ship our jobs overseas” viewpoint. If this company implemented only 50% of the changes they talked about instead of just the 10% they implemented over the past five years, they would be profitable and this conversation would not have taken place. Furthermore, they refused to hold executives and managers accountable for completing projects. Worse yet, they never had the nerve to hold tough- but necessary- conversations with personnel while the writing was on the wall.

In our consulting work we focus on behavior because that is usually the biggest problem in most organizations. It’s not the technology. It’s not the product. It’s the behavior. We don’t prescribe pills (systems)- we prescribe change in behavior which requires effort - conscientious effort.

The fear is that change is confrontational and it is going to tick people off. Managers don’t like to tick their people off- they like to be liked. But it doesn’t have to be confrontational. It can be influenced- just like in sales. You don’t sell someone, you get them to buy. Make them think it is their decision- or at least they are a part of the decision. At least explain the dramatics of the inevitable if people don’t buck up and get to work. But management doesn’t think this way- they are worried about being liked, so they can’t even see influencing change as an option. When it comes to making necessary change, managers stick their head in the sand and ignore the elephant in the room.

How could this overseas dilemma have been prevented at our client? Here’s an amazing observation: The reason most companies have to lay off people, close departments, divest divisions, and outsource work is they are afraid to confront employees and managers to get work done to begin with. This is astonishing- the willingness to fear short term pain under the guise that the problem will go away on its own someday- “when the economy turns around”.

It’s as though you know you are going to be late on shipping something to a customer, but you don’t say anything about it to the customer. It’s not like they aren’t going to find out. Too many people think choices are between a good thing and a bad thing. This is a false belief and poor management thinking. The choices we face are often not between a good thing and a bad thing, but between a bad thing and a worse thing. It’s a bad thing to tell the customer you are going to be late on a shipment- it’s a worse thing to let the customer find out on their own when you miss the shipping deadline.

The same applies for confronting people in the workplace about putting in some effort when the competitive writing is on the wall. It’s bad to confront them, but it is far worse to close the department or factory.

I cannot tell you how many times – with this client in particular- we advised them to do A and don’t do B- and they did B. Why? Because A required them to confront people to make change, while B was to continue the status quo and not do something that might “upset” the person(s) required to make the change. Train wrecks are so painful to watch, especially when there are many, many careers are on that train.

For a case study on how companies can create workplace cultures that can compete, be profitable, and not have to ship jobs overseas, see the case study article on FADAL Engineering.

The Laws of Sales/ The Attributes of Good Salespeople

Thu, 06 Jan 2011 05:32:00 GMT

The Laws of Sales:

Nothing happens until a sale is made.
No product sells itself. Salespeople can book orders all day long for products that don’t exist, but no product has the ability to move itself.
Orders fix everything:
- You know what customers want- they ordered it.
- You know what they are willing to pay- they ordered it.
- You know if your salesperson is selling.
- You can project your short-term cashflow.
No one has 100% market share. There is room to grow.
Only 5% of your customers will be “perfect”. The rest are customers that have to be managed.
The customer is always right.
Axiom I: Customers can walk on you, but they can’t stop and wipe their feet. If they don’t pay their bill- fire them. If they create an unprofitable relationship- fire them.
Axiom II: The salesperson isn’t always wrong- but the customer doesn’t need to know this.
You haven’t been in sales long enough until:
- The slam-dunk deal falls apart in your face.
- A huge deal falls in your lap.
- They all even out in the long run.

Successful Behavioral Attributes of Salespeople:

What characteristics make a successful salesperson?

They are strategic thinkers- they see the Big Picture and connect all activity to the Big Picture. They know the object of the game.
The self-discipline to get up and get out every day without adult supervision rain or shine.
They make commitments- and honor those commitments by showing up on time and prepared for the call.
The ability to manage time well.
Effective communicator: The ability to send pertinent information to appropriate parties and to take the time to comprehend information received – especially during a sales call- and take appropriate action.
Bounce-back capability: They get back up off the mat after getting knocked down.
Driven to improve their skills by sharing best practices with other salespeople and by getting training/ education related to the sales profession.
They don’t sacrifice integrity for greed.
They don't have to be A+++ personalities to succeed in sales.

Getting To "Yes" With Your Lawyers: Guest Column by Attorney Leslie Marell

Thu, 30 Sep 2010 03:42:00 GMT

GETTING TO “YES” WITH YOUR LAWYERS:

It’s not an oxymoron…..It can be done!

Leslie Marell, a business friendly attorney

Many business people complain how long it takes their lawyers to finalize the contract.

As a former in-house attorney and currently in private practice, I’d like to offer some suggestions on how to expedite your legal review process.

Before I do, I want to show you a typical email from a client:

Leslie,

Please review the attached contract and provide us with your major legal issues. The company is coming in next week and we want to be ready to finalize the contract.

John Client

When you read this email, do you know what the deal is about…or what John and the other company agreed to?

Did you answer “NO” to these questions?

I’ll let you in on a secret:

I DIDN’T KNOW THE ANSWERS TO THESE QUESTIONS EITHER!

These answers are important because I can’t (nor can any attorney) analyze a contract in any meaningful way without understanding:

The deal
Your issues/ concerns about the deal/ the other side

You may not believe this, but we attorneys are looking for direction from you, our client!

To explain what I mean, here’s a story “Jim”, an attendee of one of my seminars (on understanding and negotiating contract terms) told me:

“I received a supplier’s objections to our contract. I’d been with the company a short time and asked a colleague which attorney needed to review the supplier’s changes.

He told me the lawyer to contact and said: “Don’t expect to hear back from him soon. We refer to him as the “black hole”. Our requests go in, but they never come out.”

I did what I always did when working with legal departments. I wrote a memo explaining the deal, what we’d agreed to, and what problems I had (and didn’t have) with the changes. I asked to set up an appointment.

I sent this email in the morning. That afternoon, I received a reply from the attorney who gave me language suggestions and some ideas on how to respond.

No one could believe that I’d received such a quick response. Someone even suggested that I must have bribed him.”

While Jim’s department may have been surprised, I wasn’t.

I know that Jim’s lawyer is inundated with requests from other clients who mostly never explain the deal.

I know Jim’s lawyer is thinking: “Finally, a client who gives me the necessary background, has read the contract, tried to make sure the contract language lines up with the deal, and helps focus my attention.”

Jim helped make the lawyer’s job easier.

So, how do you expedite the legal review?

Help your lawyer help you!

Before you involve your lawyer:

Discuss the major issues with your customer before negotiating the contract.

Make sure the contract includes the deal points you’ve agreed upon.

If you don’t agree with/ understand a clause, ask for an explanation.
- Your questions will lead to information about your customer’s concerns.

Discuss the business aspects of all clauses…even the “legal” clauses.
- The limitation of liability clause boils down to “who pays the money”
  - Example: In the sale of capital equipment, discuss limitation of liability in exchange for providing no or low fee monthly preventative maintenance. Talk in real world terms with real world approaches to address your customer’s issues.

Once you get your lawyer involved:

Don’t just “hand off” the contract. Stay in control.
- Provide your lawyer with a “term sheet” explaining the deal/ your issues.
- Set up an appointment to discuss these issues.

Encourage your customer to stay involved in a similar way.

MORE TIPS:

You must understand the meaning of your clauses and your customer’s clauses to assist in contract finalization.

Even “legal” clauses such as “Limitations of Liability” and “Indemnity” boil down to “who’s going to pay the money.”

Invest in effective training to help you and your sales team understand and negotiate contracts and work more effectively with your lawyer and customers.

Leslie Marell has been practicing business and commercial law for over 25 years. She has extensive legal experience counseling companies in the areas of business contracts, purchasing, sales, technology law, real estate, employment law and day to day legal matters. Leslie has presented seminars throughout the country to thousands of sales, marketing, and purchasing professionals on business law, contract law and intellectual property law. Her clients include companies such as Apple, Applied Materials, Eastman Chemical, FMC, Goodrich, Hanes, Hewlett Packard, John Deere, Texaco and Unum

For information regarding Leslie’s seminar “INK THE DEAL! Understanding Your Customers’ Contracts”, please visit www.inkthedeal.biz

Mutual Action Planning: Thawing the Cold War Relationship Between Field Sales and the Home Office

Thu, 30 Sep 2010 03:42:00 GMT

At times the relationship between the home office and field sales is like a Cold War. An Communications Iron Curtain is drawn.

The threat of hostility exists- “You’re fired for not performing!”- “I quit because you’ve built a wall around us, restricting our independence!” Regardless of which “side” someone is on in the relationship, the thinking is the same- “They are the problem because philosophically they don’t “get it” when it comes to understanding us. We’re not going to do anything to thaw the relationship until they make up for past transgressions.” This sales cold war is a productivity killer.

The major cause of the Sales-Home Office Cold War is lack of trust. The big difference between the historical Cold War and the home office/ field sales relationship is the home office and field sales are on the same side. Thus, two groups on the same team are struggling against each other trying to grow the business.

Interestingly, the lack of trust is more of a perception issue. “Out of sight, out of mind” therefore translates to “blind insanity”. The home office is paranoid that the salespeople are golfing and drinking three- martini lunches. They don’t trust field sales is “doing their job”.

The more amazing belief from management’s perspective is that some members of their field sales team do not know how to sell. The “fix” is to require reporting on account activity to force better sales habits. This creates some good fictional writing on the part of field sales, except for the top performers who are excused from this exercise because- ahem- they are top performers. Or they quit and go somewhere else when forced to comply with the nanny-exercises.

On the flip-side, field sales does not trust the intentions of management when management requires field reports. The thinking is management will hound sales into making unrealistic sales projections (forecasts or “budgets”). Then management beats on field sales to bring home the coerced commitments.

Ironically, field sales does not feel management listens to them when field sales does provide management with field updates. The reports are labored over, sent in, and nothing happens.

While we don’t advocate a silver bullet mentality (one thing that does it all) for any problem or solution, we do think that the Field Sales- Home Office Cold War can go through a substantial warming trend via Mutual Action Planning. Mutual Action Planning helps tear down the walls of the home office- field sales cold war by creating real business activity instead of assuming inactivity. Over time, the repeated iterations, candid conversations, and team accomplishments created by Mutual Action Planning become a habit. This habit eventually creates something more important: trust in the relationship.

The objective of Mutual Action Planning is not to force salespeople to conform or to change sales behavior. It’s to create a collaborative management- field sales growth culture. Mutual Action Planning provides the strategic means and tools to dynamically engage field sales with management to ensure that the activities executed by the team are in line with management’s strategic vision. At the same time, management commits to providing the team with the necessary resources to execute the mission. Through Mutual Action Planning, communications continuously flows, verifying that each party’s actions are in line with the objectives and agreements. Finally, it provides for necessary contingency plans due to assumptions that proved to be wrong, unforeseen threats, or unexpected opportunities.

In plain language, Mutual Action Planning gets management and the ground forces operating from the same playbook on the same page with the same game objective in mind. Mutual Action Planning does not tear down the Iron Curtain between field sales and the home office. It erodes it, until finally the Iron Curtain is dissolved and forgotten.

Leadership Book Quotes- Sage Advice from Various Works

Thu, 30 Sep 2010 03:00:00 GMT

Following are selected leadership quotes for review/ thought/ comment.

Steven Covey in The Seven Habits of Highly Effective People writes about the differences between identifying the objective as a leader and managing the process to get there:

“The managers are behind them, sharpening their machetes, writing policy and procedure manuals, holding muscle development programs, bringing in improved technologies and setting up working schedules and compensation programs for machete wielders.

The leader is the one who climbs the tallest tree, surveys the entire situation, and yells, “Wrong jungle!”

But, how do the busy, efficient producers and managers often respond? “Shut up! We’re making progress.”

As individuals, groups, and businesses, we’re often so busy cutting through the undergrowth we don’t even realize we’re in the wrong jungle. And the rapidly changing environment in which we live makes effective leadership more critical than it has ever been.”

Alan Weiss, Best-Laid Plans:

“Many firms think they foster innovation, but they don’t- they foster problem solving. Now, problem solving is a noble activity and is needed in every organization, but not at the expense of innovation.

In problem solving, something (or some person or some process) goes wrong and you fix it. Good organizations do this all the time. However, the best result of effective problem solving is that you are as good as you used to be! You’ve restored the performance to the way it was before, acceptable to be sure, but no better than that. In innovation, you are setting new standards, and that is the hallmark of leading organizations. Successful strategy implementation requires that people are looking to improve performance constantly- by small, incremental changes that create dramatic results.”

Some leaders must challenge the popular will of the people. Alan Axelrod, author of Elizabeth I CEO, writes:

“And let’s face it, most business organizations are not democracies and cannot be run as such. We may espouse various systems of participatory management, team structures, and flexible hierarchies, but when it comes down to it, managers are not elected by the employees they lead, and sometimes- maybe even often- managers and other business leaders must make unpopular decisions. They must be willing to “discontent a number”.

For most of us today this reality of leadership is harder to accept. But an effective leader must be willing to embrace this basic dilemma of leadership: that what the majority desires is not always or necessarily what is good for the enterprise. Moreover, each leader must be prepared to formulate strategies for dealing with this dilemma; that is, each leader must create an environment that allows him to make unpopular decisions and still remain viable as a leader.

It is important for the modern manager to accept the necessity of making unpopular, decidedly undemocratic decisions, at least from time to time. Yet it is equally important for the manager to separate those decisions from his relationship to his subordinates. That is, he must build among his subordinates confidence in the good faith behind his actions. Like Elizabeth, the effective business leader must create the room required for making all necessary decisions, including (and especially) the unpopular ones.”

In a February 1991 article in Inc., Sally Tassani shared her experience in dismissing an employee because Tassani’s company had surpassed the employee in its level of sophistication about the business.

At this point, Tassani realized that her role was changing as her company grew. “The challenge was to be a good boss,” she said. But she also had to anticipate what a job would look like a year down the road when the company was different.

Tassani determined that, regardless of the sense of loss she would feel when employees left the company, “faced with a choice between an individual and the business, I will always choose the business because it supports everyone else.”

From In Search of Excellence, 1981, Tom Peters, Robert Waterman

“Leadership is many things. It is patient, usually boring coalition building. It is altering agendas so that new priorities get enough attention. It is being visible when things go awry, and invisible when they are working well. It’s building a loyal team at the top that speaks more or less with one voice. It’s listening carefully much of the time, frequently speaking with encouragement, and reinforcing words with believable action. It’s being tough when necessary, and it’s the occasional naked use of power.”

Compensation Systems That Work

Thu, 30 Sep 2010 02:40:00 GMT

Good salespeople are competitive. No matter how well they did yesterday, they want to do better today and still better tomorrow. The same applies to their compensation system. It must be competitive with the various compensation systems offered on the job market. Furthermore, it must reward growth, not punish growth. There is no such thing as doing “too good” in sales with the right system in place. This is probably the single most glaring difference companies have that successfully attract good salespeople versus the ones that are struggling with sales force turnover. Unsuccessful companies implement restrictive and punitive compensation systems- they punish success by cutting territories, raising the bogey to achieve bonus, or creating “house” accounts.

So, what works? What’s the formula? Realistically, there isn’t a formula. As much as the companies mentioned previously have great sales teams that earned substantive payouts for their efforts, every one of them has different size territories, different commission structures, different sales cycles, different products and markets, and a different approach to the market.

If you put ten successful sales executives in a room and ask them to detail their sales compensation systems, each one would be different. However, the common elements of these systems would be:

They hire the right kind of people that can work in a performance-based pay system.
They hire salespeople who are business-savvy. They know how to bring in profitable deals (not just revenue) and manage the differences between local and corporate strategy to mutually beneficial outcomes.
Everyone has to stretch, but whatever they are stretching for is reachable.
Success is not only rewarded, it is never taken for granted by either the sales force or the company.

Given these criteria, however, it is not that simple. You don’t solve a problem merely by throwing money at it. There are a few more details that need to happen in order to make this work- like corporate behavior and sales behavior.

Corporate Behavior:

The corporate behavior must be such that it embraces the sales function as a constantly challenging, in-the-line-of-fire profession that few do well and for good reason: it’s very hard to do.

The other aspect of corporate behavior that’s critical to the success of performance-based pay is to understand that the pay does not drive sales behavior or results. This is a bad management assumption- that commission will force people to go out and sell. It is equally bad to assume that big checks mean happy salespeople. Successful salespeople still need to be managed and they still need to be stroked.

Salesperson Behavior:

On the sales side of the equation, while salespeople should be able to earn more than the person signing their check, they also need to always resect the signature at the bottom of that check. The tail should not wag the dog, and in the case of a belligerent, obnoxious, arrogant salesperson, the tail should be removed, no matter how big it is.

Successful Sales Compensation packages are as varied as the companies that administer them and markets they serve. Although a perfect package does not exist, there are those that are very successful. They reward the right types of sales behavior and back it up with the right corporate behavior. These packages also elevate the sales where it deservedly belongs among the organization charts in all businesses: as a respected, well-paid profession.

The Value of Feedback On Leadership Effectiveness and Employee Productivity

Thu, 10 Jun 2010 04:40:00 GMT

Managers and executives get “blind-sided” by pieces of factual information that cripple their effectiveness as a manager/ leader.

The executive ponders many things- “How did I not know about that? Why wasn’t I told?” Or they go nuts when they hear about the “wild” rumors that float around the workplace. Why? Well, it starts with communications. Or, more precisely, the lack of it. Unfortunately, it is not the lack of it on the employees’ part. It is the managers and executives who are not communicating.

It seems we are getting less productive with all this wonderful communications technology that is supposed to improve productivity and performance. When it comes to employee- manager- executive communications, the track record of late has been poor, and seems to be trending downward. Why? The excuse- and that is precisely what it is, an excuse- is that there are too many emails and voicemails to reply to. That’s bunk.

A few years ago, I was facilitating a PTRA (Power Transmission Rep Association) meeting in San Diego. There were both manufacturers and the independent PTRA reps in the room- about 250 plus. Guess what the “heated” topic of discussion was? Communications. What was the #1 key issue? “They” don’t return my phone calls or emails. The problem is “they” turned out to be the manufacturers in the eyes of the PTRA reps- and, ironically enough- the reps in the eyes of the manufacturers. What was the excuse- by both parties? “We have too much email and voicemail to return them all”.

Then a gentleman raised his hand and made a sage comment. This gentleman was rep attorney Mitchell Kramer. Mitchell said, “If you return your voicemails and emails with a well-thought response, then the number of emails and voicemails you get on a daily basis goes down.”

I don’t know how many people in the room “got it”, but it was a profound statement. Think of it this way: if you- as an executive or manager- don’t promptly return a voicemail or email, what happens? People start making decisions and doing things (or not making decisions or not doing things) that may or may not be in the best interest of the business. Does that help things, or make them worse? And what happens to the number of emails and voicemails when problems get worse??

Executive coaching guru and author Marshall Goldsmith did a study on 8,000 managers and executives. The study surveyed the managers’ and executives’ employees. It centered around communications feedback as it relates to leadership effectiveness. Survey scoring was based on a – 3 to a + 3 range. There were eight total different scenarios for management feedback, and five are summarized here:

No feedback at all: most leadership effectiveness scores were in the -1 to -2 range, not a good sign.
Feedback with action promised, but action not delivered: Scores were lower than case 1, averaging in the -2 range.
Occasional feedback with occasional action: Leadership effectiveness scores moved up to the 0 to + 1 range.
Frequent feedback with significant action: Scores were in the +1 to + 2 range.
Constant valued proactive communications, feedback, and action: Leadership effectiveness scores were the highest here: in the +2 to +3 range.

As you can see, feedback is directly proportional to leadership effectiveness- and a significant argument could be said that leadership effectiveness is directly proportional to productivity. Check the article on the Gallup findings in the 1Q 2010 Engaged Executive Newsletter on that subject. Finally, one other bit of paranoid information for the executive/ manager that doesn’t return email or voicemail: What do you think your people will start doing when you want information if your example is to blow them off? What is their work ethic going to be if they don’t matter? How productive will they be when they no longer care because they don’t matter?

Street Smarts Trumps Industry Knowledge

Thu, 10 Jun 2010 00:07:00 GMT

Why do we have salespeople that can’t hack it? How do people who don't belong in sales wind up running a multi-million dollar territory for a company?

We have discovered the most prevalent hiring mistake was the poor performers were hired for their industry knowledge. Conversely, we have found that the majority of the top tier salespeople in most organizations have experience in at least one other industry or another company department. They are real salespeople- whether selling a product or a new way to be more productive in their department. What they sell is just a detail. Sales ability trumps industry knowledge more often than not in sales performance. Much more often than not.

Why do businesses hire people with industry knowledge? The theory is that industry knowledge- which includes knowing the industry language, players, and trends- can be transformed into instant sales without any appreciable training because they already “know” the business.

In order to get away from industry experience hiring bias, you have to approach the hiring process different than your industry as a culture does. You have to look for real sales talent. You have to look for people who know how to sell before they walk in your door. With no standards or formal development programs for salespeople, you have to think differently about finding real sales talent. A stellar book written about effective hiring practice was not written specifically for that purpose. Nonetheless, Michael Lewis’ Moneyball (2003 by WW Norton) is a gem when it comes to thinking about who to hire. Moneyball shows how Major League Baseball’s Oakland Athletics do a better job drafting quality players than most other teams in baseball- and they do it with one of the lowest payroll budgets in baseball. They make the playoffs more often than teams with much, much larger payrolls. And the point here is NOT to reduce pay to get good salespeople. It’s how to define, evaluate, select, and develop real talent versus perceived potential talent. The basis of the Athletics’ success is the non-traditional player selection philosophy of their General Manager, Billy Beane. Following are some excerpts from the book with narrative comments:

First, Billy tears down the conventional industry-skills thinking of the traditional-thinking baseball scouts.

…On the white board closest to Billy, the Big Board, there is space for 60 players. One by one he takes the names of the players the old scouts have fallen in love with (the ones with the “tools”) and picks apart their flaws. The first time he does this an old scout protests. “The guy’s an athlete, Billy,” the old scout says. “There’s a lot of upside there.”

“He can’t hit,” says Billy.

“He’s not that bad a hitter,” says the old scout.

“Yeah, what happens when he doesn’t know a fastball is coming?” asks Billy.

“He’s a tools guy,” says the old scout, defensively. The old scouts aren’t built to argue; they’re built to agree. They’re a part of the tightly woven class of former baseball players (industry people).

In every industry we hear the same things from all the old scouts who have been in the business for a long time. It doesn’t matter what industry- banking, healthcare, electrical distribution, systems integration, industrial automation, print advertising, or food service- the “old scouts” of each industry think the same. Take, for example, industrial automation. Working with sales managers in industrial automation, we’ll ask, “What are your hiring criteria for salespeople?”

They respond, “First, they must be technically competent- they must be engineers.” (The guy’s an athlete, Billy.)

Then we ask, “What’s your biggest challenge with your sales team?”

“They don’t know how to close.” (They can’t hit.)

Then we ask, “Are you going to train your salespeople this year?”

They respond, “Yes. We’re going to give them product training (make them a better athlete). “

Us: “Are you going to do any sales skills training?”

Response: “No, we don’t have time or the budget for that.”

So, at the end of the year, the salespeople will be even more knowledgeable about the products they already know (better athletically), but still haven’t learned how to dig up, engage, and close a deal (hit). It’s so ironic, because they aren’t paid to engineer, they’re paid to hit (get orders).

…..”My only question,” says Billy, “is, if he’s that good a hitter, why doesn’t he hit better?”

“The swing my need some work. You have to reinvent him. But he can hit.”

“Pro baseball’s not real good at reinventing guys,” says Billy…..

By the time a corporation hires a salesperson, that person has gone through the most influential era of their life already and their habits are formed- good and bad. They either have a passion for sales already or they don’t. If they have a passion for sales, they get up and get out every day without adult supervision, they dig up new opportunities, find ways around obstacles, work on self-improvement, and pull themselves back up off the deck after getting flattened. These people are hitters- they don’t get mad when they strike out- they wonder how it happened and fix it the next time.

As far as hiring the Industry Specialists (the guys with “the tools”) is concerned, consider this: maybe they’ve been in the industry so long because they actually couldn’t sell in any other industry. In other words, they aren’t salespeople. Real salespeople have sales instincts, street smarts, a hunger to learn, and are the consummate road warriors. What industry they come from has nothing to do with their sales ability.

Avoiding the Corporate Obesity Death Spiral

Wed, 09 Jun 2010 23:59:00 GMT

“96-97% of companies larger than $15 billion fail to grow at the rate of inflation. Big companies die because they use a decreasing proportion of talent of the enterprise to solve increasing complex problems” Joe Kalkman, Best Buy VP Leadership Development and Training.

This was not a statement made during the current economic downturn. It was made when the economy was strong, in June, 2007.Regardless of the current economic conditions, there was a brewing problem that was hidden by a strong economy. That problem is most large organizations forget how to grow on their own merit- via organic sales. They are too dependent on “the economy” to pull them along- or to avoid bankruptcy. Why?

As many organizations get big, they simultaneously lose touch and get lazy. They lose touch- get disengaged- at the executive level with what is happening at the customer level. They get lazy because it is easier for them to have “big meetings” with “big people” than it is to get involved with the day-to-day grunt level work of sales and customer service. That work is delegated to others. Disengagement at the sales and customer service level leads to a slowly dying (growing slower-than-inflation) enterprise.

The amazing thing about death-by-stagnation in organizations- especially large ones- is that the people know they have a problem, but don’t do anything about it. Why is nothing done? Several reasons follow:

Denial. This is as bad at the executive level as it is at the rank-and-file level. They see the problem coming (not enough new business), but refuse to acknowledge it because they hope it will go away on its own by some miracle (when the economy picks up).
Complacency. It’s much easier to stay the course instead of changing because change is just too much work. Complacency is a polite term for lazy.
Selfishness. Some executives want to suck the lifeblood out of an organization and leave the “problem” to the next generation.
Entitlement. Some folks think that because they are big, they are good, which in turn leads them to some sort of invulnerable (too big to fail) entitlement mentality. They will succeed because they are big- like the steel and automotive giants (which aren’t so giant anymore). Look at what is happening as some large businesses and governments are forced- by economic reality- to re-negotiate their unrealistic pension packages- which were negotiated during a strong economy.

What’s the result? Incompetence inertia and corporate obesity which leads to death-by-stagnation. Incompetence is slowly bred into the DNA of organizations because of reasons one through four above. This leads to corporate obesity. When organizations grow strictly on revenues (add weight), but not profits (muscle), they add on layers and layers of personnel (fat) to “manage” and “administer” the added workload. Then they hit the revenue growth plateau, but are choking on their fattened payroll. Do they exercise and diet? No- they buy a larger size wardrobe to cover it, claiming to go on the diet “next quarter”.

They get away with this as long as the economy is expanding. In fact, since they are still alive and breathing, they cycle back through another round of reasons one through four above- and gain more weight and buy a still larger wardrobe!

How do you get an organization off this death spiral?

Recognize and admit there is a problem. This overcomes the denial stage. Hoping things get better on their own is not a successful strategy when tough choices have to be made.
Engage a posse that understands the pain of stasis is greater than the pain of change. No one can do it alone when it comes to overcoming complacency. Some may call this (creating the posse) politicizing an organization. In this case, creating a revolution of change from within is still healthier than letting the forces of external change, like a government take-over or hostile acquisition, crush the stagnant organization.
Develop a solution- a new course. Look at the big picture and realize there is an entity (the business), a mission (its customer-driven purpose), and resources (employees) to serve, not the other way around. And serving these things includes making necessary, “tough love” decisions.
Believe, know, and deliver the message. When you know and believe the message, you can deliver it concisely, with conviction, and with an impact that will resonate. They’ll “get it”- and those that don’t “get it”, will depart.
Lead by example. Nobody will believe what you say unless you hold yourself accountable to the expectations you have for the organization. Lighting up a cigarette while telling someone not to smoke is not a convincing message. Any actions that contradict or don’t reinforce the message deem all messages as not believable.
Expect resistance. Avoiding change is an incredibly strong force. Change is not going to occur by clicking a remote; taking a pill; or through some quick-fix. It’s always involves suffering short-term pain. It also requires the self-discipline and focus to take action realizing the fix is not instantaneous.
Leadership is a contact sport. You have to stay in touch with employees on the factory floor and in the field as well as customers and prospects. Be actively engaged in the mission and vision at all levels.

Final note: Never stop challenging the cultural norms- organizations fall back to bad habits when you take your foot off the gas. Silos, complacency, entitlement, ignoring the elephants in the room- all of these things are like viruses that constantly mutate and reappear. There is no cure for them other than to continuously work on good business health practices to keep them from spreading and taking over the entire organization. A continuous commitment to innovative change eventually creates an organizational culture of real growth for the right reasons. It starts with the self-discipline and determination to diet and exercise by keeping in touch with customers, prospects, and the front-line people servicing them.

Road Warrior: Communications Technology- Productivity Boost or Bust?

Thu, 10 Jun 2010 00:03:00 GMT

Have the advances in communications technology and availability of more information through communications technology increased sales productivity?

Probably not, although the techie “addicts” will beg to differ. But isn’t technology becoming a distraction? Even Oprah has launched a campaign on the dangerous consequences of texting and driving. For further reference, read this website’s article on "The Brain Can NOT Multi- Task".

And it’s getting worse. Why? Because all the communications technology has overloaded the capacity of the human brain to cognitively comprehend and respond to any one piece of information. In some cases pieces of information actually get sent to the wrong parties or put in the wrong reports. Wrong information creates further errors downstream resulting in bad strategic decisions. Bad strategic decisions are huge productivity killers. It also creates errors in outcomes, resulting in quality issues. Quality issues result in downtime and costly repair scrambles. Information sent to the wrong people results in at least an embarrassing moment and in the worst case in the hands of a competitor. All of which leads to a decrease- not an increase- in sales productivity.

In the sales world, bad information going to a prospect, a customer, or a boss does not have a pleasant outcome. Worse yet is the information intended for one party that winds up going to another. One fatal error in the clicking world can lead to information not only going to the wrong person, but getting into a competitor’s hands (or hard drive).

The bottom line is the various means of communications, business information flow, and social networking results in one thing: noise- lots of noise. When it becomes noise, it gets irritating. When it gets irritating, it isn’t too long before it gets turned off. Then what happens to productivity?

What’s the solution? Take a tech break. Face it- the world worked fine and communicated well BEFORE cell phones, the internet, or Twitter. In fact, the argument could be made that there was significantly more sales productivity prior to technology. That’s a pretty blasphemous statement, considering our company is an advocate of using the internet and technology to send messages, educate people, and provide information. However, we don’t shove it down people’s throats and don’t do it ad nauseam. In fact, we do everything possible to get technology out of the way and make sure it is a communications tool, not a sales management solution.

We have lost the ability to manage our technology- and that is where the advent of technology is killing sales productivity. There are too many people in sales and sales management that are too dependent on technology to make or break their month. As a salesman in the automation industry, one of my mental preparations for every demo or technological presentation mishap was “You’re not a real salesman until the technology fails during the presentation and you still get the order”. The show must go on. The addition to technology by sales managers and salespeople is creating a sales force that lacks a key ingredient every salesperson MUST have to be successful: self-discipline.