Category Archives: Value

Business, Customers, Sales, Value

They Don’t Have to Buy

Sales is a very interesting profession. It may not require a specific type of person, but I think it requires a specific type of mind-set. It has been shown that people more readily buy from people that they trust. You have to fully believe in and be committed to what you are selling in order to gain that customer trust. You must be the first to be convinced of what you are selling, before you have any kind of a chance of convincing a customer. If not, you have a tendency to come off as an archetypal used-car salesperson, and no one seems to trust them.

There was some research done some time ago that showed that there actually was a “smell of fear” that could occur. When scared the body does emit chemicals that that can be sensed by others. (https://www.telegraph.co.uk/news/science/3545435/The-smell-of-fear-is-real-claim-scientists.html)

I think that there probably also exists a “smell of insincerity”. Just as it may be possible to sense fear in others, it is probably also possible to sense insincerity in others. And for a sales person, insincerity is probably the worst thing for a customer to sense. There is that trust thing again.

That means that the first person that a sales person must convince of the benefit of the product or service that they are selling is themselves.

Having been in sales I can vouch for the fact that it is difficult enough to sell anything in the face of competition, let alone sell a product that you are not fully convinced of or believe in. And if you don’t fully believe in what you are selling, you will come across as insincere. And as I said, like fear customers can sense insincerity.

So, why am I going into all this discussion regarding sincerity and trust, and whether or not a sales person has convinced themselves that they believe in the benefit of the product or service that they are selling? There are a couple of reasons. The first is as I said good sales people are convinced of the benefit of their product or service. This is a good thing.

The second is that just because the salesperson is convinced of the benefit of the product or service they are selling, does not mean that the customer will be convinced of the value.

First, let’s do a few definitions. Today’s source will be the Merriam-Webster dictionary:

Definition of benefit: Something that produces good or helpful results or effects or that promotes well-being (https://www.merriam-webster.com/dictionary/benefit)

Definition of value: The monetary worth of something (https://www.merriam-webster.com/dictionary/value)

So, while the first step in a successful sales process is convincing the sales person (or sales team) of the benefit of a product or service, the second step is convincing the customer that the benefit of the product or service is at least worth the cost required to obtain it. That would mean that the monetary worth of the benefit is greater than the amount that they are paying for it. This is the value.

Too many times I have heard and seen sales people who have been convinced of the benefit, and who have communicated this benefit to the customer, believe that their job is then done. This point in the sales process is usually denoted by when the salesperson utters the phrase:

“They have got to buy.”

This phrase is usually accompanied by qualifiers along the lines of:

“The customer’s competition is doing…” or

“The market is moving or responding…” or

“The technology is ready…”

These are all non-commercial, or non-value related reasons as to why a customer should make a positive buying decision. Let me illustrate with an example:

Let’s say you are looking to buy a new car. You have your own set of reasons for wanting a new car. Perhaps your old car is worn out. Perhaps you have decided you now need a sedan instead of a coupe. What would your response be if you heard the following when you went to the car dealership:

“All of your neighbors are buying exotic sports cars.”

“The car market is moving toward and responding to exotic sports cars.”
“The technology associated with exotic sports cars is the best and highest available.”

I’m guessing that unless you were going to the dealership with a specific interest in buying an exotic sports car, it really wouldn’t mean that much to you, and depending on the approach and ferocity of the sales person, it might actually dissuade you from buying anything from that dealership.

Yet it is an approach that many marketing people and teams create for their goods and services, and it is belief that many sales people and teams seem to adopt.

The point I am making is that no customer has to do anything. Just like the car buyer in the example above doesn’t “have” to buy a car. (My guess is that they used a perfectly viable car to get to the dealership in the first place.) Most customers are looking for something that they deem, using their specific product priorities, to be better than what they currently have.

However, the “better” or the benefit of the new product or service buying decision is still only half of the Cost – Benefit equation, which results in value. Just as exotic sports cars may be able to go twice as fast as other cars, there may be question regarding their value if they cost ten times as much as those other cars.

There will be a market segment that is interested in going twice as fast as everyone else. These will be the customers that will look at the twice as fast for ten times as much value equation and find it acceptable. But just because this segment sees the value does not mean that the rest of the car buying market will as well. That is why there seem to be so few high-speed exotic sports cars on the road.

It is very risky to extrapolate market niche applications into market wide acceptance.

With most products, it is usually technology and its evolution, that drives new products into the market. The idea that the new technology can create greater benefits can be a significant market force. But just like the new car replacement question, new technology must replace and supplant the existing technology in the market.

This means that there (usually) already exists a viable product and technology in the market. The new technology must create a greater benefit at a price point that makes sense for the customer, or they will not make the positive new buying decision.

This is not the case for “new” product-technologies with no existing capability or analog. Examples of this would be items such as Ford’s Model T (replacing the horse), Sony’s Walkman (possibly replacing the boom box – now there is an old phrase), Apple’s iPod (replacing the Walkman), or more recently Cellular Phones (replacing radio phones). These are products that created new markets, but once created they followed the technology evolution path with a good example being the iPod’s displacement of the Walkman as a personal music listening platform.

Much has been written about this technology evolution-replacement-benefit relationship. Roy Amara was an American researcher, scientist, futurist and president of the Institute for the Future best known for coining Amara’s law on the effect of technology. He coined what has become known as Amara’s Law. It goes:

“We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.” (https://en.wikipedia.org/wiki/Roy_Amara)

This law has become known as the basis for what has been called the “hype cycle”, as coined by the Gartner Group, to represent the maturity, adoption, and social application of specific technologies. The hype cycle provides a graphical and conceptual presentation of the maturity of emerging technologies…. (https://en.wikipedia.org/wiki/Hype_cycle) It is depicted as follows:

Circling back around to sales people and their selling of products, it would seem that they are the first group to go through the Hype Cycle since they are the first group that must be “sold” on the product or service before it hits the market. They are the first to see the benefits and experience inflated expectations. But since they are selling instead of buying, that is all they can truly define as they do not initially have good information on the relative costs and values of purchase in the customer value equation.

Unless it is a new market defining product, all defined benefits are “relative”. That means that the existing product in the market already has established a baseline of customer benefits. Each new iteration or generation of the product (hopefully) brings incremental benefits. The value equation for each customer is the balancing of the incremental benefits of the new product versus the incremental cost of obtaining it.

Sometimes the value of the benefit outweighs its cost and buying occurs. Sometimes it does not. Regardless, it is a very rare instance where a customer “has” to buy a product.

With this in mind, I would suggest that most buying decisions can probably be delayed by all customers for an extended period without their experiencing much if any deterioration in their market position. In today’s economically uncertain business environment, I would not be surprised if significant purchases of any kind are delayed, even if only for a little while. This may be due to the realization by customers that in today’s environment they do not have to buy every iteration of new technology to remain competitive.

I suspect that I too will probably be delaying on my desire to buy a new car in the near future as well, mainly because right now I don’t have to buy one.

Creativity, Customers, Finance, Leadership, Sales, Value

Would You Like To Buy The Brooklyn Bridge? – An Infrastructure Sales Story

I have been thinking a lot about infrastructure lately. There are many different types of infrastructure out there. While I am primarily in the High-tech infrastructure environment, almost every other industry has its own type of infrastructure (think oil, airlines, brewing, etc.) and for me, it is hard not to think about things like the Brooklyn bridge when you start talking about infrastructure. I think by way of analogy, I’ll stay with bridges in general and the Brooklyn bridge in particular for this discussion, because it enables me to make the general points I want to make about infrastructure sales and business decisions, and there are a ton of very cool facts that I was able to discover, and hence would like to share.

“The Brooklyn Bridge looms majestically over New York City’s East River, linking the two boroughs of Manhattan and Brooklyn. Since 1883, its granite towers and steel cables have offered a safe and scenic passage to millions of commuters and tourists, trains and bicycles, pushcarts and cars. The bridge’s construction took 14 years, involved 600 workers and cost $15 million (more than $320 million in today’s dollars). At least two dozen people died in the process, including its original designer. Now more than 125 years old, this iconic feature of the New York City skyline still carries roughly 150,000 vehicles and pedestrians every day.” Or so says History.com. (http://www.history.com/topics/brooklyn-bridge.)

I find this to be very interesting. Here is some infrastructure that was built 135 years ago and is still in service. In fact, it could be said that based on its load and traffic, it is doing more now than it was doing 135 years ago when it was put in service. It cost $320 M in today’s dollars, but probably could not be built for fifty times that ($15 Billion) today. It was basically designed to last 100 years, but at 135 years it is still going strong.

Please note these facts. I will be getting back to them.

When it comes to selling infrastructure, there is one man that historically stands out, head and shoulders above all others: “George C. Parker (March 16, 1860 – 1936) was an American con man best known for his surprisingly successful attempts to “sell” the Brooklyn Bridge. He made his living conducting illegal sales of property he did not own, often New York’s public landmarks, to unwary immigrants. The Brooklyn Bridge was the subject of several of his transactions, predicated on the notion of the buyer controlling access to the bridge. Police removed several of his victims from the bridge as they tried to erect toll booths.” (https://en.wikipedia.org/wiki/George_C._Parker.)

What this teaches us is that if you are going to sell infrastructure it is important to identify the proper customers.

What this also shows is that George was a man who was way ahead of his time. If he was selling infrastructure today he probably would be incredibly successful selling infrastructure to those that are actually in that business, and would not have to spend the last eight years of his life behind bars in Sing Sing prison.

It is also important to understand the engineering associated with some of the existing infrastructure (at least in the US, and probably elsewhere – look at the London Bridge for example), as people go around trying to make a case to replace it. The engineering associated with older infrastructure usually far and away exceeds the stress requirements that were to be placed on it. This probably cannot be said today. As costs have skyrocketed, engineers are now designing and building structures as close to the required loads and specifications as possible in order to keep those costs low. That means they also do not last.

In other words, in the past infrastructure was usually built to last. In addition to old bridges, think about all the pictures in magazines (and on the web) of the old copper pot stills being used at the various breweries (my personal favorite), and bourbon and scotch distilleries. I am sure that all the manufacturers of commercial distillery equipment would like to replace them, but I suspect that also isn’t going to happen any time soon.

Again, looking at our favorite infrastructure example: “(it employed) a bridge and truss system that was six times as strong as was thought it needed to be. Because of this, the Brooklyn Bridge is still standing when many of the bridges built around the same time have vanished or been replaced.” (https://en.wikipedia.org/wiki/Brooklyn_Bridge.)

For comparison sakes, a newer piece of infrastructure, the Tappan Zee bridge was put into service, in the same area, about 70 years after the Brooklyn bridge: “As another example, the original Tappan Zee Bridge was opened in 1955, and construction of its replacement is now underway. A 2009 New York state report on the original bridge described its design as “non-redundant,” meaning that one critical component failure could result in large-scale failure; the bridge was featured in a History Channel show entitled “The Crumbling of America.” The new bridge is being designed with a 100-year lifespan; info about the “New NY Bridge” is available” here. (http://www.mondaq.com/unitedstates/x/287844/Building+Construction/Lifespan+of+a+Bridge+Span.)

And there is also: “After years of dawdling while the bridge crumbled, state officials say they are rushing to complete a review of the most feasible solutions to the problem of the Tappan Zee. But a decision is still two years off and a new bridge would require eight additional years and as much as $14.5 billion to build, they say.” (http://www.nytimes.com/2006/01/17/nyregion/a-bridge-that-has-nowhere-left-to-go.html.)

“The bridge was built on a very tight budget of $81 million (1950 dollars), or $796 million in 2014 dollars.” (https://en.wikipedia.org/wiki/Tappan_Zee_Bridge.)

This would indicate that more recent infrastructure is usually neither designed to last as long as some of the older infrastructure, nor is it as reliable and cost effective as some of the older, over-engineered variety.

This would lead many to the position that for some of the older infrastructure, it would be much more economically feasible to repair it, upgrade it, maintain it, than it would be to replace it. This is despite what many of the current infrastructure suppliers might want or even indicate. If it is working and can still continue to work, why would anyone want to build another bridge, right next to the still working one, to carry the same traffic.

However, just because it was initially built well doesn’t mean that it shouldn’t or doesn’t need to be maintained. Infrastructure requires continued investment in order to maintain it: “The repairs, ordered quietly last October by the city’s Department of Transportation, are intended to fortify the concrete-reinforced steel-mesh panels beneath the bridge’s traffic lanes, which were found to be deteriorating by construction crews at work on a repaving project last July, officials said yesterday.….. the city’s Transportation Commissioner, attributed the problems to ”normal wear and tear” on the 115-year-old bridge…..He added that the steel girding and concrete that must be repaired, which were put in place during a 1954 repaving project, ”were installed with a life expectancy of 60 years,” and had therefore fulfilled most of their engineering mandate.” (http://www.nytimes.com/1999/02/05/nyregion/as-concrete-falls-city-moves-to-fix-brooklyn-bridge.html.)

And of course, 20 years later more maintenance is needed on the Brooklyn bridge, only now, the cost is climbing: “The cost of repairing the Brooklyn Bridge is expected to hit $811 million — a roughly $200 million increase from estimates made only last year, The Post has learned. When the mammoth project to renovate the 133-year-old span began in 2010, the price tag was even lower — $508 million.” (http://nypost.com/2016/11/11/brooklyn-bridge-repairs-expected-to-cost-811m/.)

So, where does all this bridge information leave us when it comes to selling infrastructure?

I think the first thing to note is that unless the infrastructure is at risk of immediate failure, such as the Tappan Zee bridge is deemed to be, it is going to be very difficult to replace. You may be able to add to it. You may be able to augment it. But the financials usually do not make sense for a full replacement. It is going to be a tough sell to get a customer to buy something that does much the same as the thing it is trying to replace.

It also looks as though capacity is going to be the prime driver for infrastructure expansion and augmentation. The more cars that want to get across the river, the bigger the needed bridge, or the more bridges that are needed. New features and elegant designs of bridges are pretty cool, but the objective is to still get cars across the river as efficiently as possible. Form is nice, but it is function that predominantly drives infrastructure acquisition.

And I think finally, there is an excellent business to be had repairing, maintaining and improving the existing infrastructure. As we see above, even incredibly expensive bridge repairs are economically preferable to what would be the exorbitantly expensive cost of replacing the infrastructure. The Tappan Zee replacement bridge is expected to cost between $4 Billion and $15 Billion. The original Tappan Zee cast $81 Million. The financial math becomes pretty obvious, pretty quickly.

Focusing on how to improve the existing infrastructure, extend its life and help it to be used or run more efficiently are going to be keys to a customer first mentality that the good sales teams are going to need in order to be successful.

I think this is going to be especially important as customers are rapidly learning that the new infrastructure they buy today is not going to last as long as the old infrastructure they already have today.

If you don’t believe me, just look at the bridges.

Customers, Sales, Solutions, Value

Sometimes You Don’t Sell

Sales people are an interesting lot. So are customers for that matter. When you put the two of them together there is no telling what will happen. Many times sales people have been conditioned to try and sell the next new shiny widget as the solution to all customers’ problems. Customers usually have a whole raft of out dated, earlier release, vintage, dull clunky widgets that could be the source of their current issues and unhappiness, which they had previously bought from the same, or other sales people. They might even have some earlier generation doo-hickies and possibly a thing-a-ma-bob or two. It will be the wise sales person that recognizes when yet another product purchase may not be what the customer wants or needs.

Widgets, doo-hickies, thingamabobs and even whatchyamacallits are all recognized product terms in the high tech business sector. It took me quite a while to master this vernacular. Pay close attention and you too could end up being technology prosaic master.

We all seem to have been conditioned to the idea that new products, new equipment or new technology are the answer to all customer issues that are usually the result of the old products that they previously bought. It is conveniently forgotten that the old products were the answer to the then previous issues. And so on and so on back in time.

Now I can see where a new product might be an answer to a customer request. I want a new car, or I want a new house might be one of those customer requests that fit this description. I don’t think I have ever heard a consumer say that they want a new electrical generating plant. They may not even want more electricity. They want to run their refrigerator or possibly their air conditioner (a particularly high level requirement for hot summers here in Texas). They don’t usually ask for a new phone system. They want to play “Words with Friends” (or some such other application) on their smart phone.

The point is that customers rarely request for a specific product or a new technology. They ask for a solution. These requests are normally phrased in the form of: “I need to do more…” or “I need to spend less …” In many instances it may in fact be a new product that is the answer to their needs. Something that runs faster, or reduces operational expenses is almost always available in the market.

But what happens when the customer already has plenty of capacity? They don’t need to go any faster. They may not want to buy another product because the products that they currently have work just fine. Still, they feel they have a need. If they feel they have a need then they do have a need.

When it comes to customers, perception is reality. Even if their perception does not match anyone else’s.

Sometimes sales people need to take a step back from trying to sell the next shiny widget, and get back to solving the customer’s problem.

I have talked about value many times in the past. Customers will exchange their money for something that they perceive to have value for them. All too many times sales people associate that “value” with some sort of physical product. However customers will only associate value with a product if it solves their problem. And sometimes it is not a new product that solves their problem. Customer value lies in the solution that is provided to them, whether it has a product or some sort of associated equipment or not.

Successful sales is based on the precepts of trust in the relationship between the buyer and seller, as well as the belief in the expertise of the selling entity in the solving the buyer’s issues. Vendors who focus solely on the sale of the next shiny widget eventually find themselves supplanted by someone else whose focus in on solving the customer’s problem or need. This inevitably comes about when the customer no longer trusts the vendor to be looking out for the customer’s best interest, but rather is focused on closing the next sale.

It is too easy to say the next release, next generation or next product is the solution that the customer needs. After all, it is most likely what the competitors (both incumbent and non-incumbent) will be saying. It is more difficult to look beyond the equipment sale and look at customer need and solution, but that is where both the customer trust and customer value are built.

Sometimes a customer may just need to be shown how they can better or more efficiently use the widgets that they have already purchased. At other times it may be issues associated with how the previously purchased widgets have been applied. Sometimes the current widget just needs to be fixed instead of replaced.

The approach here is for the sales person to make their customer’s problem their own problem. This can be done figuratively where they put themselves in the customer’s shoes and do the right thing for them, or it can be literally where they take ownership of the customers issue outright in a legal transference of responsibility for the source of the customer’s issue and thereby solve the customers issue by taking it away from them. In the figurative solution the sales person solves the problem as if it were their own problem. In the transference solution the sales person makes the customer’s problem their own problem and then solves it.

Sometimes when you put yourself in the customer’s shoes, either literally or figuratively you find that selling them something may not be the preferred or even desired solution. In this case the value that the sales person brings to the customers lies in the expertise that they bring to bear on the customer issue. Sometimes the solution is to externalize the issue (from the customer’s point of view) so that they don’t have to solve the problem. From a customer’s point of view having a problem taken away from them, either figuratively or literally means that they don’t need to worry about it anymore.

I have found that in the longer run customers will pay much more for the value that this peace of mind brings them, than they would for any specific product that may be the next shiny thing in some sales person’s kit bag. If a sales person can figure out how to actually remove an issue from their customer’s business, they will find that they don’t really have to sell any specific products, as the solution will be all that matters to the customer.

Analysis, Risk and Return, Self Analysis, Strategy, Value

Big Deals

Leave a comment

I try to avoid starting off by asking a question, but sometimes I just can’t help myself. Is it just me or does it truly seem that in many instances it is possible for business egos to get in the way of business IQs as the size of the business opportunity increases? This big deal blindness is a phenomenon that I have encountered several times in the past. As the magnitude of the numbers being considered for whatever purpose (sales, costs, scope, merger, etc.) increase, there seems to have been some instances in the business past where the momentum of the deal takes over and the basic principles of business analysis and management appear to be forgotten.

This type of behavior does not seem to be confined to any one company or industry, but rather emerges unexpectedly for a while in one place and then just as quickly goes dormant again. But not until after some sort of a business millstone has been placed around the corporate neck. It then takes all of the business’s senior leadership to formulate the path back to recovery. Meanwhile the general process is that those responsible for “the deal” have already declared victory, taken their bows and then very quickly exited stage left.

I am not specifically talking about Mergers and Acquisitions here (M&A) when I talk about things such as the magnitude of the deal, but rather more along the line of basic internal business conduct. However, I think some of the lessons that have been learned by some of these humongous M&A failures of the past can equally be applied to business situations that are more related directly to the operation of the business.

Here are a few lessons for business deals that leaders ought to take into account, at least in my opinion, before they start looking at the next big opportunity, at least in my opinion:

• Unlike the Bob Dylan song (Times They are a Changing), the times are not changing. The same basic rules apply to big epic opportunities as they do to the smaller ones. Profitability still matters. Core competencies still matter. The magnitude of the deal disproportionately increases the risk of the deal if the probability of success is based on a significant change or transformation away from what has been the business’ norm is associated with the deal.

The success of the deal is usually associated with doing something that you already know how to do, to a great extent. Growth and expansion by necessity mean that you need to take on some new aspects and scope with each deal, but unless you are relying at least in large part on your known core competencies, the big deal that is supposed to be a game changer or entry into a new market is usually an even bigger risk.

• In too many instances it seems that management may have felt the need to make a big, bold, landscape shifting, game changing sort of deal. This may be as a result of a desire to get into a new market or in response to some sort of internal or external business pressure. The idea appears to be to make a dramatic market statement or splash in order to signal some sort of new direction.

Few businesses do the new, big and splashy right the first time. Unfortunately if the deal is big enough and as a result generates a situation that is bad enough, there may not be the second opportunity to do it right. Change associated with business core competencies or structure takes time. It can’t be forced as a result of a big deal. A certain amount of ego is essential for leadership. Too much ego results in deals where the mouth has written a check that the brain can’t cash.

Deal success usually comes about as the result of doing the basics well. This capability evolves from doing similar types of deals on a regular basis, understanding what your deal or market sweet spot is, and maintaining a stable business approach. If you have been successful doing smaller deals in one area, the chances of having issues with a larger magnitude deal outside of your knowledge area are significantly increased.

• Sometimes deal momentum takes over and supplants common sense. When a large opportunity or deal is first noted, it begins to appear in the various business forecasts. It doesn’t matter that it may be exploratory or of initially low probability. The longer it stays visible, the more it becomes part of the expected fabric of the business. Eventually it becomes expected and sometimes even counted on as part of the business results.

It is very seldom that any amount of caution, qualification or warning can stop this progression. It eventually evolves that big deals that have been around for a while become deals that “cannot be lost”. Once this mentality has set in it leads to a set of seemingly logical steps that culminate in an illogical deal. Costs can be shaved, schedules can be condensed and onerous terms accepted all in the name of getting the game changing big deal done.

This type of deal behavior would normally result in a difficult environment for success if the opportunity was associated with a core competency of the business. When it is associated with a new market or an unproven capability the performance and results are usually not so pretty. The budgets and the schedules are usually the first items to be impacted, with the profitability and customer’s satisfaction very close behind.

Perhaps again we are seeing another business manifestation of one of C. Northcote Parkinson’s Laws, specifically Parkinson’s Law of Triviality, from his 1957 book “Parkinson’s Law”. In it amongst other topics, he examines the amount of time and attention that businesses spend on smaller (trivial) items as opposed to the larger, more complex and more important ones. In summary:

“He dramatizes this “law of triviality” with the example of a committee’s deliberations on an atomic reactor, contrasting it to deliberations on a bicycle shed. As he put it: “The time spent on any item of the agenda will be in inverse proportion to the sum [of money] involved.” A reactor is used because it is so vastly expensive and complicated that an average person cannot understand it, so one assumes that those that work on it understand it. On the other hand, everyone can visualize a cheap, simple bicycle shed, so planning one can result in endless discussions because everyone involved wants to add a touch and show personal contribution.”

Big deals are an important aspect of any business’s growth plan. They require a significant amount of discipline as businesses seem to get more anxious to close them, the closer they believe they are to closing them. (Perhaps this can now be cited as Gobeli’s Big Deal Corollary (BDC) to Parkinson’s Law if Triviality.) This phenomenon can result in final agreements that are far from the original big deal concept and far from beneficial to the business. The risk associated with the big deal increases rapidly if it is outside of the business’s normal operating area, or is associated with senior management’s plan for the transformation of the existing business or business model into something else.

Big deals are quantum events that must be given at least the same amount of deliberation if not more than that associated with the standard business conduct, regardless of the business’s desire or dependence on their closure. If you are going to try to successfully change the business, it is also probably better to not start the change, or make it dependent on a big deal.

Accountability, Management Style, Problem Solving, Value

Towards Trouble

Leave a comment

When I was a kid it seemed that I was the only kid that got in trouble. My parents used to say that it got to the point that if there was a problem they would just come find me because it saved them time and energy in the long run. As I got older I learned that this was only the case in my house. My brother and my sister seemed to have been graced with the capabilities to either totally avoid getting in trouble, or if implicated they always seemed to have a plausible story as to why it was actually my fault and not theirs. This could possibly have been because most of the time it might actually have been my fault, but that was just details.

The point of all this is that when we are younger we usually learn to deal with trouble as it comes to us. When we found ourselves in a situation where we might have been considered to have potentially been involved in something that could have been construed by the unenlightened as possibly a source of pending trouble we did the only things we then knew how to do; We either ignored it and hoped it would go away or denied our involvement and hoped it would go away.

Does this method of dealing with trouble sound familiar in business?

Since this is the way most kids learn to deal with trouble from a young age, and for the most part unless you are one of the select few who actually had to confront trouble, either your own or somebody else’s, this method might have worked occasionally. What I later learned was that the only time this method of dealing with trouble worked was when my parents decided it was more trouble to confront me about the trouble than the original trouble was worth, so they just ignored it. I didn’t realize it then but my parents must have been kids once too.

I think this learned childhood behavior may be the basis for the methodology that most managers today use for dealing with the issues that arise during the course of conducting business. In business we no longer have trouble. We have issues. Issues are the adult business equivalent of childhood trouble. Chances are today as an adult if someone actually comes up to you and tells you that you are in trouble, it’s probably time to find a good attorney and hope they don’t put the cuffs on too tight.

In business today it seems that either ignoring the issue and hoping it will go away or denying involvement and again hoping it will go away is the preferred issue resolution process. Those of us who grew up dealing with trouble have a tendency to look on at this business process now with wonder. Then we start moving toward the source of the issue.

What I learned was that if I waited for the childhood trouble to come to me, (and it seemed that it inevitably would) I would have to deal with it on somebody else’s (usually my parents) terms. I would be playing defense. I would be explaining. The same goes for the business issues of today. If you are trying to ignore the issue or deny involvement in it you are playing defense. Not much progress is to be made in business from a defensive position. In this process the issue manages you, not you solving the issue. If you want to make progress with an issue, either solving or resolving it, you have to confront it and move toward it.

Business, and I guess several other aspects of daily life today, seems to have evolved to a point where having problems confront the business instead of the business confronting the problems is now the acceptable norm. It may be a subtle or even semantic difference, but in can mean a great deal. If you are not confronting the issues you are coping with them. Instead of removing or solving the issue, you are modifying your behavior or process in response to the issue. This is usually not the optimal solution to an issue.

I have stated in the past that businesses provide their customers value by taking the customers’ issues (sometimes these are issues that the customer may not have even been aware that they had), internalizing them within the business, and presenting the customer with a solution. If done properly this process will result in the customer giving the business money.

Again the key here is taking the customer’s issue, internalizing it, and solving it. The ingrained ignoring and denying response to issues won’t work here as it doesn’t provide any value. This means that if you want to provide value to your customer, or your business, when you see an issue you need to move towards it.

Despite several other managers’ most fervent belief that if left alone most issues will just somehow sort themselves out, the only way to solve an issue is to acknowledge and confront it, and to apply work and effort to its resolution. The only way to do that is to become fully engaged in the issue. It may be that the ignore and deny managers do such a good job of ignoring and denying the issue that they do not see the work and effort being done by those who are engaged in solving the issue, and hence when it is solved it just goes to reinforce their position of ignoring and denying.

No one likes to have trouble. I didn’t particularly enjoy it as a kid, and I am not real fond of its issue equivalent in business. As a kid I seemed to have developed a sense of when trouble was coming, and what I would need to do to deal with it when it came. This sense usually occurred right after I did something that could get me in trouble. I also learned to recognize the actions of other kids that could get me in trouble and what I would need to do in those instances as well.

Now in business I use this experience in recognizing issues (trouble) to prepare for them as well as to how resolve them. I have learned to move towards trouble in order to deal with it and resolve it on terms that are most beneficial to the business instead of ignoring or denying it until a point where the business must react. Acting on an identified or anticipated issue is always preferable to and more optimal than reacting to a known or expected issue that has eventually presented itself.

Even a kid knows that.

Communication, Humor, Style, Value

Eschew Obfuscation

1 Comment

The topic for this post was suggested to me by a good friend over in Europe, Codrin. I don’t know why I hadn’t leveraged his input for my own continuous improvement in the past. He indicated that there was a synergy of our ideas where I could take advantage of some low hanging fruit and get some quick wins. Since he considered himself a stakeholder and influencer in my blogging process he thought I should outsource some of my ideation process whereby a consensus for topic creation could be leveraged. This could in turn create a new best practice and benchmark for future cross functional team blog topic empowerment.

Goodness, this could be worse than even I suspected.

This is going to be something of an interesting analysis as far as topics goes. Some of you may look at that introduction and say that there is nothing wrong with it. The rest of you will probably have had the needle on your Business Jargon Overdose meter pegged at the “red line”, and quite possibly could have broken the meter all together. Whenever I find myself in a business jargon overdose state I find that the best cure for me is to go listen to music (usually either alternative rock or jazz, depending on my frustration level) until my fists unclench. As this condition seems to be occurring with ever greater regularity I seem to have acquired a significant music library.

For the purposes of the remainder of this discussion I will use the terms Business Jargon and Business Slang (BS) interchangeably. Being a product of the business technology acronym generation I find myself being a little more comfortable and potentially more accurate, in referring to the latest business technology generated buzz words by the acronym “BS” rather than by their jargon related acronym counterpart.

Business, especially the high technology business used to be ruled by the use of the acronym. There were financial based acronyms such as ROI (Return on Investment) or NPV (Net Present Value) and there were technology based acronyms such as CPU and RAM and PROM and the like (I know I have dated myself through the selection of technology acronyms. As I have said many times, I am somewhat “old school” in orientation.) The point here is that these acronyms meant something. They were shortened names for actual formulas and physical devices. They represented real things and as such had a real value.

When we fast forward to the business of today we seem to have replaced our quantitative value acronyms with the much more malleable business jargon, lingo and slang of today. As such it seems that the value of our business communication has also decreased in accordance with the utilization of these BS terms. I’ll pick on a few of my favorites.

Synergy. Really? I understand the concept where the combination of multiple elements creates an end state that is greater than the sum of the individual elements. I got it. I think everyone else gets it too. However, we were all taught early on in our school careers that one plus one does not in fact equal three. To hear people talk today it seems that all we need to do to improve our business, increase our profits, reduce costs or cure baldness is combine some disparate people, jobs and functions and we will miraculously get more out of it than we put in. Not every combination creates synergy. Some things do, others don’t. As an example, I like beer and I like ice cream. I don’t think I will create synergy and get something I like even better if I combine beer and ice cream.

Wait a minute. That one might actually work.

Cross Functional. Come on. This one along with consensus, empower and transformative combine to make any written communication appear both longer and more important. Mostly just longer. It seems it is almost impossible to see only one of these words used in its literal form in any form of communication. That would be the metaphysical equivalent of hearing the sound of one hand clapping. What we now seem to end up with is: “We need to empower a cross functional team to reach consensus on our transformative plans.”

Can’t we just say that we need to get together to figure out what to do next?

Customer Centric / Focused / Voice / Satisfaction: Incredible. The last time I looked just about every business on the planet was in business to sell some sort of goods, products or services to a customer. Now the definition of whom or what a customer is can vary from business to business, but the concept of providing a customer something of value and in return the customer giving you money is the basic precept of business. Everything that the business does needs to be focused at providing the customer something and getting them to give you their money. There is a definition for people in businesses that are not directly involved with either providing the customer their desired “something” or getting the customer to give you money. These people are called “overhead”. They are also the ones most prone to using these types of customer related phrases.

Anyone who uses the phrase “customer centric” is usually not.

Paradigm Shift: I don’t even know what to say here. This one seems to be utilized along with such ideological jewels as Best Practices, Benchmarking and Continuous Improvement. Everyone from Charles Darwin in the Origin of Species (things evolve and change, to paraphrase) to Woody Allen in Annie Hall (things, like sharks keep moving forward or die, again a paraphrase) has said that things change. Things that were once done one way are now done another. This is the essence of the meaning of a “paradigm shift”. Nothing ever stays the same. We might like it to, but it won’t. If we just get used to this fact perhaps we can do away with these repetitively redundant descriptions for change.

Robert Heinlein said: “We live and learn, or we don’t live long.” I guess this applies to businesses as well.

As difficult as it may be to believe I have actually been accused of not being either politically correct or a team player. It could be because I don’t normally seek a transformative transparency in looking to create consensus. I don’t think that we probably need to incentivize employee stakeholders and influencers when we are looking at the value add of any presentation or proposal. It seems that my problem may actually be that I do not know how to fully leverage the cloud, fully take advantage of virtualization or deliver anything as a service.

On the other hand it could be that I don’t believe in utilizing the current iteration of Business Slang that is being passed as intelligent and useful business communication.

I think we need to remove the BS (Business Slang) from the business vernacular, and get back to simple ideas of making things, selling things and delivering things when we communicate with each other. It will help get things done.

In other words, let’s eschew obfuscation.

Marketing, Meetings, Value

Trade Shows

Leave a comment


I don’t know why it has taken me so long to address the topic of trade shows. It must have something to do with the number of them that I have attended and the somewhat painful (read “aching”) memories they engender.  I can remember my then excitement at being assigned to attend my first trade show and to man my specific technology aspect of the corporate tradeshow booth. It has been many years, and many many trade shows since that first trade show. For whatever reasons I don’t seem to go to them nearly as often anymore, but that won’t stop me from discussing their usefulness to both the displaying company and attending individuals.



Trade shows are really expensive undertakings for businesses. There are registration fees, and floor space rental fees (usually by the square foot), and then there are the costs associated with the creation of the booth or display. If there are live products or demonstrations in the booth there is the cost of that equipment that must be added to the bill. There are the communications and connectivity requirements and costs. There is also the travel and living costs associated with the people who will man the booth as well as the salaries that they are paid while at the show. Finally there is an opportunity cost of what other things you could have been doing with all the money and people that were applied toward attending the trade show.




When you add it all up, like I said it gets very expensive. If you are going to spend that kind of money and commit those kinds of resources, one would expect that there would be a significant return on those investments.




At first I thought attending a trade show as an exhibitor was going to be an interesting business experience. Then I attended one. When I was contemplating the prospect of attending the show I had forgotten that I was going to have to stand on a concrete floor for eight to ten hours a day without the ability to sit down, dealing with the people who came into our booth, who may or may not have been customers or potential customers, or who may or may not have been competitors looking for information, and all the time look like I was enjoying myself.  This may be possible for the first day. It is very improbable to do for the entire second day. And darn near impossible to do for almost any part of the third or any subsequent days thereafter.




Then once the exhibit hall is closed for the night you would think that would be the opportunity to rest and recover for the next day’s ten hour booth march. That would be wrong. In most instances there was a corporate hospitality suite that you were expected to spend time in and be available for questions and inputs from executives or the sales team when they actually had a real customer available that wanted to discuss your product. This too could go on for quite a while, but at least there was usually a chair available where you could sit down from time to time. There was also usually food and drinks available, but like when your parents threw a party when you were a kid, it was supposed to be for the guests.




After you had done your time at the hospitality suite, and the crowds had begun to thin out, you could then go back to your hotel room. If you were lucky it was at the same location as the exhibit hall or hospitality suite. More than likely you had to go to another more distant location. You could then look forward to doing it all over again the next day. It was not quite as glamorous as I had initially thought it would be.




In looking at the relative value to the business of attending a trade show, it usually came down to what kind of a show it actually was. If it was an industry forum or association that was sponsoring the show, then the value was basically that of being an opportunity to use the forum as a platform for whatever product or business announcements that the company wanted to make. The actual number of “customers” that attended these shows was minimal and in fact most of the booth traffic was competitors strolling around looking at the competition and collecting each booth’s “trinkets and trash” that were being given away, and the industry press and writers strolling around asking a few questions so as to justify their attendance as well as collecting the trinkets and trash giveaways. The only way that a large exhibitor would be noticed at one of these shows would be if they decided to save the money and not attend. They would then be conspicuous only in their absence.




The more focused trade shows, be it regional or business aspect in nature were those where the exhibitors and attendees had more in common than just being in the same industry, seemed to have a little more value to the business in that the one incremental level more of specificity assures that there are attendees on both the demand and supply side of the trade show topic. These are typically the trade shows where business is actually conducted as opposed to the larger industry shows are basically announcement forums.




The bottom line was that it seemed that the larger the trade show, the less valuable to the company or its customers for business, but more the value for visibility. The smaller the trade shows the better for customers and companies to do business. The question for all companies and large tradeshows is: How valuable is visibility? What can companies now afford to spend just for “being there”? It is interesting to look at the reduction in the number of large technology industry trade shows over the years as companies have come to grips with this question.




For the individuals manning the booths at either of these types of trade shows, the value truly lies in the opportunity to network with people in the same industry. Making contact with suppliers, competitors and customers within both the appropriate technology and market segments may not provide immediate benefits but it will provide them longer term.




It took me a long time to learn this fact. Just trading and collecting business cards is a waste of time and your business cards. If you are going to make the effort to trade business cards, make the effort to follow up and reach out to make contact. It really doesn’t take that much effort. I wish I had learned this fact in time to put it into execution then. I didn’t, and those new contact opportunities were lost.




There is also the opportunity to reestablish connections and relationships with old friends and past business associates. In today’s business environment it seems that more of our friends move on to new opportunities with other companies. While industries may be considered very big, they are in reality reasonably small and tight knit when it comes to relationships. The ability to maintain older contacts and gain new ones has to be the primary value to individuals who attend tradeshows. That, and learning the ability to stand on your feet, smile and try to have intelligent discussions for ten hours at a time.




It’s been a while since I have actually attended or manned a booth at a trade show. It could be said that it has been so long since I have been at one that I might actually look forward to attending one in the future. I didn’t say that was the case. I just said that it could be said. Trade shows are much more work than anybody who has not been to one would believe. They are not the two drink minimum professional equivalent of a fraternity all-nighter that many have believed them to be. Maybe they are for some; it’s just that I never seemed to have the ability or where withal to be able to stand in a booth all day and then go out all night at one of these venues. However by understanding the value to both the business and the individuals who attend the trade show you will be better able to quantify the benefits to both by attending.

Organizations, Roles, Value

Ruthless Simplification

Leave a comment


There seems to be a significant amount being written these days regarding simplification. It’s difficult to go through the news and not see some article regarding how people see and feel the need to simplify their lives and what they are doing to simplify their lives. The same seems to be true with businesses. Businesses are always trying to simplify the way they perform their work. There are usually all sorts of programs, processes and initiatives focused trying to simplify the business. When you net them all out, they can usually be summed up in a simple statement: In order to simplify, you need to ruthlessly stop doing work that provides no value to your customers.



On the surface this sounds easy, but in practice business inertia makes this activity a little more difficult to accomplish. In these times when any discussion turns to the topic of no longer doing specific work or tasks, that activity is translated into preparation for staff reductions. The stakeholders in the current process will almost always generate some resistance to changes of these types. While reductions can be a potential outcome it should not be the focus. Over time businesses accrete tasks associated with the way they work. As the business needs change, new tasks and objectives are added to meet them. Businesses usually have very good processes and methods for adding new work, but rather poor processes and methods for discontinuing tasks that have either outlived their usefulness or no longer provide direct value to its customers.




Most simplification processes start out as methods of re-categorizing existing tasks and then grouping like work together in an effort to glean some efficiency from having similar tasks performed by similar groups. This simplification approach doesn’t reduce the amount or type of work being done. It assumes that all work currently being done in the business is critical to the business. I think that is the major fallacy of this simplification approach.



Almost every business will have functions and tasks that remain from previous products, processes and programs. The incremental value to the business of this work will be suspect at best, but unless active measures are taken to remove it, it will continue to absorb business staff and resources. The objective of all simplification projects should be to identify and remove work, and more specifically work of questionable incremental value to the business, from the business. With this objective in mind business simplification should not try to enable a business to do more with less, but rather simplification should target having the business do less, but being able to do the remaining work much better.




Now the question that arises is: which work should the business look to simplify? At the risk of sounding a little trite, there are basically three functions that a business must perform. A business must create products and services for customers, sell products and services and deliver products and services to customers in order to be successful. If the tasks in question do not directly contribute to one of these functions it is a candidate for further review. That doesn’t mean that all tasks outside of these functions should be eliminated. There are some functions, Finance, Human Resources, etc., that do not fall into these categories, but are a business requirement. It is also very probable that there are tasks within these specific functions, meetings, reporting, reviewing, etc., that do not directly contribute specific value to the function that may need to be simplified if not eliminated.




A further guiding principle should be: does the specific task provide value directly to the customer? If a task cannot be identified as directly providing a value to a customer, it is adding a cost to the product or service that is providing value to a customer. If the product or service can be provided to the customer without the incremental costs associated with the identified task, then the task is a very good candidate for simplification.



The idea here is to identify work that must be done in order to provide value to the customer. Customers will pay for goods and services with which they associate value. If there are tasks that are creating costs, absorbing resources and providing minimal value to the customer, they are the potential targets for simplification. Businesses have a tendency over time to create tasks and structures that are designed to provide perceived value internally to the business, not externally to the customer.




Examples of these types of non-value added tasks can be: business reviews that occur regularly where information / presentations / discussions are provided, but where no action items are given; or business requests for information and data, where resources are expended fulfilling the requests, but no business information or actions are provided in return. There is a long list of resource absorbing, non-value adding tasks, which on the surface appear useful business, but when viewed from a business requirement and customer value point of view can and probably should be simplified.



Resources are too precious to allow them to be wasted on tasks that are not directly providing value to the customers, and through the customers, value back to the business. They need to be ruthlessly protected. There is always more valuable work that needs to be done then there are resources to perform it. This is where the ruthless simplification of the tasks that do not provide customer value can strip away the drag on the business, as well as free up the resource to provide the incremental value adding work that needs to be done.

Reports, Time Management, Value

Report by Exception

1 Comment

 

Have you ever attended an operations review or a monthly review meeting and at the end of it wondered why you were there? As competition continues to grow fiercer, and we are asked to provide more capabilities with fewer resources, we still seem to find the time for review meetings. Whether we are calling the review, or just attending the review we need to be much more aware of one of our most precious business resources, our time.



Limitations to our travel budgets as a result of increased cost consciousness have reduced the number of face to face reviews. In response to this we have seen the significant growth in the number of conference calls with associated NetMeeting or LiveMeeting visual or chart content. The value of the review can still be there, but the cost has been reduced.



As we look at other ways to continue to drive the cost out of the business and efficiency into it, we should start looking at both the content and the needs associated with the review itself.




If the business is on track and performance is within acceptable control boundaries, is a review even necessary? If only part of the business is off plan, does the entire business need to present? Are there other scheduled shorter interval reports that are in place designed to track performance that can be used?



The numbers of people and the associated man-hours spent at reviews are significant, but they are just the tip of the iceberg. The number people and associated man-hours spent preparing for and generating the information and presentations associated with the reviews are enormous.




We need to be rigorous in asking ourselves if each activity we are performing is providing value to the business. If our businesses are on plan, will standard interval activity and financial reports be sufficient? I would think they should be. How much time can be saved and returned to the actual running of the business if just one operations review can be avoided in a business year?




Please do not misunderstand me. I believe in the value of reviews, when they are called for, and have a defined and focused objective. We need to evolve the standard general review away from the usual progress report to management for the entire business, and transform it into a session designed to generate solutions to performance issues for those aspects of the business that are in fact off plan.



Controls and reports within the business should enable issues with performance, or deviations from the plan to be made visible before the review. The purpose of the review then changes from everyone reporting their issues, or lack of issues to reporting on the solution to the issue. Those aspects of the business that are not experiencing issues should not then be required to expend the resources on the creation of review materials. It becomes exception reporting instead of general reporting.




The result should be a shorter meeting with fewer presentations, and a greater focus on the exceptions to expected performance and the solutions to issues instead of the reporting of them. The time and effort that usually is expended on the preparation for the review can be reduced and the time returned to the business for greater value activities.

Relationship, Reports, Self Analysis, Value

Survey Says…..

Leave a comment


I got another survey today. That’s not too unusual. We all seem to be getting them more frequently.  We get them from various political entities, consumer product manufacturers, software application manufactures and just about anybody that you have bought something from that requires some sort of product registration. We get them at the office from our various suppliers and vendors, other groups from within our own organization that provide us support or a service and even our own companies will periodically survey the employees for their opinions. In short, we seem to be asking each other a lot of questions.


 


We need to remember this the next time we have the urge to send out a survey to anybody. If we want to survey our customers, understand that they are also customers of other companies who also want to send out surveys. If we want to send out a survey, we need to have a very clear set of goals for both the survey itself and the use of the information we are to gather. Like anything else in the organization, we need to have a very clear set of objectives for a survey for it to be of any use. We also need to demonstrate to the surveyed entity that we will do something with the information we gather that will be beneficial to them.


 


What is it that we want to know (that we don’t already know). Why do we want to know it. What are we going to do with it after we know it.


 


Too many times I have been surveyed, and then never heard another word from the surveyor. I answered the questions but in return got no value for my time. My information went somewhere, but no outward manifestation of a response was provided. Eventually I have gotten to the point where I respond to fewer and fewer surveys. Maybe that is why I seem to be getting more and more of them.


 


Too many times surveys become isolated onetime events where a great deal of attention seems to be showered on the entity being surveyed, and then just as quickly disappears with no specific results communicated or acted upon. If the surveyed entity recognizes that characteristic, then the survey becomes just another time consuming event for them, with no recognized or expected value.


 


Surveys will only have value if the surveyed entity believes that there will in fact be action taken that is hopefully beneficial to them as a result of the survey.


 


If you are going to survey the employees of your business (again), explain to them what the results were of the last employee survey, and what actions were taken as a result of their previous input. If you are going to survey your customers, explain what actions were taken as a result of the last survey, or if it is the first time the customer is being surveyed, explain what you have found from other customers surveys and what actions you took as a result of that information. Without this closure of the feedback loop before each new survey, and the demonstration of a response to the input, all the survey becomes is an academic fact finding activity that provided the respondent no value.


 


Surveys need to quantifiably provide some sort of meaningful value to those people who respond to them. That may be  why we now see so many market survey requests accompanied by some sort of product discount or payment offer. If the surveying entity isn’t going to somehow remunerate me for both my time and opinions associated with their survey, I am not going to waste my time by answering it.


I think the same is true for both employee and customer surveys. If you are not, or cannot demonstrate to the surveyed entity that you place a high enough value on their opinion to act upon it by changing your business or method of interaction with them, then it will be very difficult to get them to respond in any meaningful way, if at all.


 


Business relationships with customers and employees are the result of ongoing dialogs and activities. It seems that too often we take this daily interaction and feedback for granted and want to rely on the survey for our management answers. It also appears that all too often our customers and employees provide us daily feedback and opinions that we do not act upon in a timely manner. We then survey them for information, but neglect to close the loop back with them to verify what we “heard” and then explain what we did as a result of this information, even if we did take measurable action.


 


When no feedback is provided or visible action is taken as a result of a survey, each successive survey increasingly loses its value. The willingness of the surveyed entity, be it a customer or an employee, to respond goes down and eventually all value associated with the survey is lost. You then become just another survey amongst the numerous surveys that we all seem to get, and don’t bother to respond to.