Category Archives: Revenue Risk Management

Is Collaboration Overrated?

Wednesday, 04 December 2013 16:26
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How many prospects does it take to buy a light bulb?

More than ever it seems, thanks to social networks and a plethora of great collaborative software solutions. Maybe the question should be “how many committees does it take to buy a light bulb?” At least the number will be smaller.

The benefits of ubiquitous collaboration are undeniably clear, including more democratic decision making. Thanks to technology, we have the ability to ask anyone, anywhere, any time, “Hey, got a minute?” Click to collaborate! How good is that? But every new solution creates new problems. When do business processes become engorged on 24/7 collaboration, and implode into a digital morass of bypassed Outlook meeting requests and defunct online communities?

I don’t know the answer. In the blink of an eye, “Let’s run this up the flagpole” has morphed into “We won’t make a decision until the team has the chance to meet . . . and meet, and meet, and meet, and meet . . .” Today that means talking with Ryan, Jennifer, Rohit, Colin, Gbenga, Prashant, Nigel, Lillian, Ohad, Chi Wei, and dozens of others in multiple time zones. The same thing happened when FAX machines were introduced. “We instantly transmit documents all over the place because we can, not because we need to.” Someday it will settle down, but I don’t see it happening anytime soon. The people who sell collaborative technologies are that good.

Still, some are beginning to question the answers. In an article in The New York Times, Susan Cain writes (The Rise of the New Groupthink, January 15, 2012), “solitude is out of fashion . . . most of us now work in teams, in offices without walls, for managers who prize people skills above all. Lone geniuses are out. Collaboration is in.” But she cites an emerging problem. “Research strongly suggests that people are more creative when they enjoy privacy and freedom from interruption. And the most spectacularly creative people in many fields are often introverted, according to studies by the psychologists Mihaly Csikszentmihalyi and Gregory Feist . . . Solitude is a catalyst to innovation.” Apple co-Founder Steve Wozniak wrote in his memoir “I’m going to give you some advice that might be hard to take. That advice is: Work alone . . . not on a committee. Not on a team.”

Yikes! All this time, we’ve been showering salespeople and others with accolades for being team players. Thanks to Susan, I’m learning that we’ve been inhaling our own smoke. Remember the exercise that the Teamwork Facilitator de jour used to trot out at the annual sales kickoff? “Your plane has crashed in the Himalayas. Fortunately, you and six others survived. You have the following items . . . rank them in order from most important to least important for your survival. . .” For reasons that I’ll charitably describe as self-serving, the facilitator demonstrated that the answers you alone provided on the first pass were not as correct as those communally formulated with your assigned team. Score! Works every time! Payment terms are net 15 days. You know where to send the check.

And the point is . . . ? The point is, as knowledge workers, we’re more knowledgeable when collaborating than when we’re not. And, by extension, we’re assuming more effective, too. Heaven forbid if I were the only person to survive the crash. I was adamant about keeping the straight pins, which the expert survivalist considered nearly useless.

But if you’re a salesperson collaborating with buying teams, you know just how irritating all that knowledge sharing can be. And if you’re on a collaborative selling team collaborating with a collaborative buying team, multiply that irritation by five. Case in point: many years ago, my colleague and I met with a 12-person team to discuss a fairly prosaic need for a factory shop floor data collection application. Two hours later we left the plant with no consensus, and no decision. We both remarked that the meeting would have gone much more quickly had VP Steve just said, “This is what I want. Let’s do it.” If collaboration has a point of diminishing return, we found it that day.

As Susan Cain and Steve Wozniak point out, collaboration and innovation aren’t always compatible bedfellows. And with selling and innovation so closely connected, it’s counter-intuitive that collaboration has gained such prominence in buying and selling today. But it has. At what cost? As Daniel Hannan wrote in The Wall Street Journal (The Lessons of the Turnpike, January 19th, 2012), “the success of any economy depends on the velocity of commerce.” And the velocity of commerce depends on the velocity of decision making.

In a world where economic systems are interdependent and knowledge-based, there are compelling reasons to use collaborative technology, but at a certain point, less is more. It’s just hard to know when we’ve reached that spot.

Six Sales Risks That Should Not Be Overlooked

Wednesday, 04 December 2013 16:23
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When you watch Super Bowl XLIX this coming Sunday, plan to witness at least one celebration following a big play. Don’t worry if you miss the spectacle. You can watch business executives perform them any day of the week.

Guess the company that made this statement. Bonus points if you know the year:

“Our brand is recognized in every corner of the earth. Our technology is the envy of our competitors. Our leadership is experienced, capable and bold . . .”

A) Apple
B) Eastman Kodak
C) Microsoft
D) Federal Express

Less than one decade after the company’s CEO performed this solo verbal tango, his company filed for bankruptcy. On January 19th, 2012, The New York Times reported, “. . . the company — which since 2004 has reported only one full year of profit — ran short of cash.”

By now, you know the company is Eastman Kodak. The year was 2004. From bravado to bankruptcy in just eight years! How did it happen? If you’re inclined to probe for insight by delving into Kodak’s financial statements and operational statistics, I can save you the time. Running short of cash is a sales failure. And behind every sales failure is management that ignored risks or made poor assumptions. Usually both.

“Well, Kodak just couldn’t survive the fast adoption of digital technology,” someone recently told me. A point that will stoke discussion for many years in B-School strategy classes around the world. Not that Kodak CEO Daniel Carp and COO Antonio Perez didn’t know about the forces of technology. They paid considerable homage to the word digital in their 2004 Letter to Shareholders—forty-six times, in fact. But equally significant is that the words risk, trend, and opportunity, were mentioned zero, one, and two times, respectively. What did still-thriving archrival Fujifilm Holdings executives do that Kodak didn’t? Manage risks.

“The whole philosophy of risk management is moving from reactive to proactive.” according to Steve Culp, managing director of Accenture. “Companies with even slight advantages in detecting and managing emerging risks can obtain significant competitive opportunities,” he said.

Amen. We’re all more comfortable when we can plan strategies using logic and reason, instead of using fairy dust and wind. Power to the naysayers! They can call out risks without being branded “not a team player.” Culp’s statement casts risk management in a better light—more Moneyball than Chicken Little.

In adrenaline-charged sales organizations, risk management performs an indispensible duty that might seem mundane and prosaic: planning. Our risk awareness explains why sales funnels taper from top to bottom, why sales pipelines require specific multipliers, and why forecasts contain probabilities.

But there’s a powerful difference between risk-aware and risk-savvy. In a 2010 survey I conducted with CustomerThink, sales professionals responded that the greatest threats to revenue attainment are economic and competitive. Yet, a survey that Accenture conducted revealed that “57% of companies do not now measure political risk, 44% do not gauge reputational risk, and 50% do not measure emerging (unexpected) risk.” For most companies, those three expose a huge, unprotected backside! And in their last Kodak moment in bankruptcy court, Kodak executives more resembled the Coppertone girl.

Over the next several months, we’ll learn more about the missteps Kodak made. One thing is certain: overlooked or underestimated risks will be on the list. Here are my top candidates for often-overlooked risks that are the most consequential for other sales organizations:

Hubris risk: Also known as arrogance risk. Had Kodak executives not played their own music so loudly, they could have better heard the roar of the technology trains that combined to hit them full on. Warning signal: Management consistently responds to sales issues by saying “sell what we’ve got!” or “bring me solutions, not problems.”

Information risk: As organizations continue to depend on data and information for the raw material of their CRM systems, data quality control will become more important. But with the explosion of data, quality cannot keep pace, and uncontrolled data will lead to a major backfire. Warning signal: Prospects don’t have a clue why you’ve contacted them.

Strategic risk: Also known as choosing the wrong strategy. In their letter to shareholders, Netflix executives demonstrated this risk most compellingly: “We believe that DVD’s will be a fading differentiator given the explosive growth of streaming, and that in order to prosper in streaming we must concentrate on having the best possible streaming service. As a result, we are beginning to treat them separately in many ways.” Oops! Warning signal: management proclaims the company’s strategy is “spot on” before customers do.

Tactical risk: Also known as executing the right strategy the wrong way. In the article, McDonald’s Twitter Campaign Goes Horribly Wrong (January 24, 2012), McDonald’s Social Media Director Rick Wion provided this explanation: “Last Thursday, we planned to use two different hashtags during a promoted trend – #meetthefarmers and #mcdstories. While #meetthefarmers was used for the majority of the day and successful in raising awareness of the Supplier Stories campaign, #mcdstories did not go as planned. We quickly pulled #mcdstories . . . With all social media campaigns, we include contingency plans should the conversation not go as planned. The ability to change midstream helped this small blip from becoming something larger.” Warning signal: actual outcomes aren’t anywhere close to intended outcomes.

Ethical risk: The flip side to a “revenue-focused” sales force happens when just three words are added: . . . no matter what. Without ethical boundaries, revenue focus will foster many behaviors—not all of them trust-enhancing. And no business calamity is more corrosive to shareholder value than broken trust. All this would be easier, of course, if ethics had global ANSI standards, but they don’t. “What is considered ethical in India may be different than in China or in the United States,” said Tom Zara, of Interbrand. All the more reason to pay attention (see Hubris Risk). Warning signal: Management says, “We don’t need written guidelines . . . that type of thing could never happen here.”

Reputation risk: Merck, Penn State, BP . . . there’s a long list of once-proud brands that have recently fallen in the mud. But there’s plenty at risk for companies that haven’t crossed the ethical line. According to an article by Joe Mullich in The Wall Street Journal, January 17, 2012, “A survey by the Federation of European Risk Management Associations (FERMA) . . . found that reputation risk from social media was cited as ‘a material risk’ by nearly 50% of European companies—making it one of the greatest cyber threats that organizations face.” Warning signals: no defined corporate social media strategy, deer-in-the-headlights expressions after reading a Tweet from an unhappy customer.

What makes all these risks riskier is the effect of rapid change. In my research for this blog, I discovered the irony that a Kodak engineer, Steve Sasson, invented the first digital camera in 1975—almost forty years ago. It would be easy to say that Kodak had ample time to plan and strategize for a future devoid of photographic film. But we know that the combination of hundreds of inventions and technology innovations along the way eventually contributed to Kodak’s demise. Kodak’s outcome was the byproduct of keeping their heads in the sand for many years, but rapid change in the last eight catalyzed the company’s fate. Pity. “Ran short of cash” is not an elegiac summation, considering the company’s many contributions to our culture.

Companies that survive rapid change manage risks remarkably well. They don’t run away from them, or dismiss the messengers with condescension. They bring risk management principles to every planning meeting. The ability to recognize risks is a great beginning. Using the insights strategically will separate sales winners from losers.

Human Talent or Party Animal? When an Employee’s Social Media Behavior Becomes a Legal Liability

Wednesday, 04 December 2013 16:20
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Everyone at your company loves the sales candidate you want to hire. He has a great resume, and is so money-motivated, he makes Joel Wolfe look like a pansy. With a jawline like cut granite, and sideburns white as the driven snow, he could double for Mitt Romney. When he walked in for his interview, he had everyone at “hello.” Make him an offer quickly, or your arch rival competitor will snatch him.

Not so fast! Your HR director just learned about a crude rant he wrote on his personal blog, where she also discovered some zesty photos that would make his mom blush. Hire him, regardless?

Some managers would have little compunction, according to an online conversation I participated in that posed this question: “if your absolute best candidate had a ‘questionable’ Facebook wall, would you hire him anyway?” One commenter wrote, “If the person is a great fit for the position, then hire them, but mention that they should make their questionable (Facebook) profile private . . .” Of course, one person’s questionable is another person’s normal, and another person’s appalling. Still want to make that offer? What are your risks?

More than you think. In a blog, Kenneth Liu, an intellectual property and Internet attorney at the law firm Gammon and Grange, wrote “In the social media world, the line between one’s personal life and professional life is becoming increasingly blurred. This ambiguity increases the risk of an organization being held liable for the online posts of its employees.”

Ambiguity brought about because 24-7, not 9-5, now marks business time, and mobile technology has obliterated the now-anachronistic notion that workplaces are anchored to specific physical locations. Exactly when employees are “on the job” isn’t as easy to figure out as it once was. “Sure, I sent a raunchy Tweet on the way back from the sales meeting. But it was 11:30 pm, and I was at the bar, waiting for my connecting flight in Dallas.”

That situation creates a thorny issue, not just for employers, but for the courts, as well. The legal definition of “within the scope of employment” leaves much room for interpretation. As Liu wrote me in an e-mail, “One of the $8 million questions that courts are wrestling with now is whether statements made by employees in social media can be attributed to the employer, and there is a lot of gray area.

“The key point to note is simply that it is possible for employers to be held liable for employees’ social media statements that cause harm, even if made ostensibly off the job. But whether liability actually will be imposed in any particular situation is hard to predict. Employers need to be aware of the risk and take steps to mitigate that risk by setting up appropriate policies to guide their employees’ online actions,” Liu wrote.

Excellent advice, even if you believe every employee should be entitled to partitions between his or her professional and personal lives. Should’s often don’t resonate with judges, especially ones who are ruthlessly pragmatic interpreters of the law.

Liu offers the following recommendations:

1. Direct your employees not to post anything that they would not want to see on the front page of The New York Times or to hear on the witness stand.

2. If you’re not allowed to do it in the “real world,” you’re probably not allowed to do it in a virtual world. Those prohibitions include misusing or misrepresenting any organization’s intellectual property or trademarks, making harassing, discriminating or defamatory statements, or providing false information.

3. Implement a social media policy to govern use of social media by employees. Put the policy in writing, and tailor it to your organization’s mission and your community’s needs.

4. Instruct employees to use only official organization social media accounts for conducting business. Personal accounts create confusion with customers because it’s unclear whose voice is behind a post. Would your prospects understand why there are Tweets announcing your new product release, followed by several ranting about the long line at the dry cleaner? In addition, organizations that maintain ownership of social media accounts have the ability to claim the content and communities when employees leave.

Strategy development of any kind requires risk assessment, which begins with asking “what goes wrong?” and “what could go wrong?” – followed by planning for the scenarios. As always, due diligence, and trust in your instincts must prevail. And please – everyone!, – if something doesn’t seem right, it probably isn’t right. It doesn’t matter whether you’re talking about dark alleys, or the social media posts of a job candidate or employee.

Next time you’re anywhere, and tempted to Tweet or post something that might be construed as questionable, you should confirm whether you’re technically “on the company clock,” and whether your employer’s name is on the Twitter account you’re using. And if you’re not sure, don’t share. In today’s litigious world, you can’t be too careful with social media.

“Stop Selling!” – A Trendy Idea, But Bad Strategy

Monday, 02 December 2013 22:04
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“You shut your mouth when you’re talking to me!”

Any analysis of this line from the movie Wedding Crashers would only dull the effect. It’s just plain funny.

But just for grins, let’s beam this comedic irony to a sales context. Let’s hire salespeople to sell our products, and assign them a quota. We’ll put some of their compensation at risk by paying revenue commissions. Even offer a bonus carrot for outstanding performance. Finally, just to liven things up, let’s castigate them for selling.

For some reason the irony fails to raise even a halfhearted chuckle. Stop selling, experts urge salespeople. They do it through blogs, training sessions, and “motivational” speeches. Here’s a sampling:

Want to Sell More? Stop Selling, Start Engaging.

Stop Selling—Innovate the Sales Experience

Stop Selling (and start listening, helping and connecting)

Stop Selling, Start Listening

I’ll stop at four because there’s not enough space. If you wanted to express slightly more disdain, you’d only need to substitute the word stealing for selling.

How did Selling become something to get rid of, like an old smelly rug? Clearly, many people who write about selling are conflicted, or self-loathing. There’s rationale. “Customers don’t want to be sold,” more than one person has told me. A popular sentiment, but if you really think it, one that’s totally illogical. The marketing equivalent of attempting to prove that the angles in a triangle don’t total 180 degrees. I’ll get to the reasons in a moment.

To be fair, there’s nothing wrong with engaging, innovating, listening, helping and connecting. But these activities are the fabric of selling, not oppositional forces. Effective selling consists of all the activities associated with acquiring and retaining customers. Stop selling? No wonder salespeople are confused. Managers, too, for that matter.

What’s happened is that an innocent participle got hijacked, and became stained with the image of the stereotypical aggressive salesperson, with his nonstop, jargon-filled product prattle, bad breath, cheap suit, Timex watch, and transparent drive to make a buck. That’s wrong. The better message is stop selling the wrong way. Stop selling only means quit, which is fine, if that’s what you intend to do.

I would be less irritated by Stop Selling confusion if I didn’t see it lead to bad strategy. Great listening skills are fantastic. Who shouldn’t do more listening? But salespeople also have to articulate messages—by talking and writing—that tie customer need to potential value delivered. Call that essential skill making a sales pitch. Call it persuasion. I don’t mind. And in today’s collaboration-fueled business environment, building and engaging communities would make the top of anyone’s sales strategy list. But if there are no mechanisms to close the deal, to get a signed order, to execute a contract, or to swipe a credit card, there’s no buying. And there’s no selling. Sure, we have empowered customers, but call me a sales chauvinist pig: nothing gets bought without a vendor facilitating the transaction.

If you’re reading this blog on an iPad, it was likely one that you bought—and Apple sold—through a complex orchestration of product development and support, distribution, retail savvy, staffing, supply chain logistics, application development, pricing strategy, point-of-sale technology, and social media. If you liked the experience of buying it, chances are that the selling processes worked synchronously. You appreciated the delighted feeling you had when you walked out of the Apple store, or when you opened the box after it was delivered.

Your joy was no mere accident. For Apple, Selling is not only desirable, but deliberate and fine-tuned with more precision and attention to detail than most customers will ever know. No bad breath. Selling—embraced, not expunged. “Customers don’t want to be sold”? That’s surely not what you were thinking when you fired up your iPad for the first time and started using it. And over in Cupertino, Tim Cook hears the Ka-ching! as clearly as if you were right next door.

Buying and selling are reciprocal for customers and vendors. That exposes the logical fallacy in the admonition to stop selling. One doesn’t exist without the other. So the notion that customers don’t want to be sold means logically that they don’t want to buy. In that sense, even the term customer is misapplied. You get the point.

Stop selling the wrong way. I buy that. But not stop selling. No commercial enterprise has been successful long term without being really, really good at it.

Six Exciting Opportunities at the Edge of Sales

Monday, 02 December 2013 21:57
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Travel on an interstate highway almost anywhere in the US during Spring break and you’ll see a curious seasonal motif. Late model car, dad driving. Next to him, mom, pondering a Sodoku or reading a map. In the back, a teenaged kid, wearing a hoodie, listening to music through headphones. If the painter Norman Rockwell were alive, he’d capture the scene down to the last, splendid iconic detail: the college tour road trip, circa 2015. Our second rite of passage will be coming up soon, to visit engineering schools.

The teenaged kid in the back seat barely knows that the best part of her past still remains in her future. To those of us now middle aged, that’s an enviable naiveté. For now, all the teenager has to do is endure twenty-seven hours in the car with her parents and younger brother. Four colleges in five days. i-Tunes playlists queued up, earbuds in place. “I think I can do this!” she says to herself, and bravely rolls north with The Fam. Younger brother has his earbuds in place, too.

Each school proudly touts its quirky uniqueness. At Tufts, students follow hallowed tradition by slathering paint on a landmark canon, while at Carnegie Mellon, they slather it on a fence, installed for that purpose. At MIT, traditions involve less paint, but offer other thrills, such as roof hacking, in which large objects such as police cars find their way to the dome of MIT’s famed Building 10.

Aside from these obvious differences, the same crystal-clear statement was embedded in every admissions office sales pitch: The most exciting work in engineering isn’t being done in traditional disciplines. “It’s at the edges—where you find the junctions between materials science and civil engineering, between medicine and mechanical engineering, between information technology and robotics,” said the Cornell admissions Dean, who also told us about his school’s breadth of programs for work and study abroad.

Inter-disciplinary studies are the new collegiate Red, White & Blue. Disparate academic concentrations become conjoined when the words majoring in and minoring in complete the phrase. “I’m majoring in Industrial Labor Relations with a minor in Asian Studies.” Today, companies value a workforce steeped in cross-functional knowledge, and higher education has heard their call. Inter-disciplinary curricula produce positive outcomes beyond simply protecting legacy liberal arts programs and tenured faculty.

“At Olin College, half the students create interdisciplinary majors like Design for Sustainable Development, or Mathematical Biology,” wrote Tony Wagner in a recent Wall Street Journal article, Educating the Next Steve Jobs. He added, “Though expertise is important, Google’s director of talent, Judy Gilbert, (said) that the most important thing educators can do to prepare students for work in companies like hers is to teach them that problems can never be understood or solved in the context of a single academic discipline.”

Another article by Melissa Quinn in FastCompany, What Both MBAs And MFAs Get Wrong About Solving Business Problems, points out “Marketing classes should teach a deep reverence for the user in context and the power of observational research methods. Finance classes should teach the art of storytelling and information design. Strategy classes should teach systems thinking and synthesis. If the goal is to create great hybrid thinkers who will have real impact, design should not be tacked on to existing business education, but infused throughout it.”

You would expect hybrid thinking to involve the s-word, selling, but it doesn’t. “Modern economies are built by people agreeing to buy and sell for mutual benefit, but there is near-universal disdain for the sales process itself—including the people doing the selling,” writes L. Gordon Crovitz in his Wall Street Journal review of Philip Delves Broughton’s book, The Art of the Sale.

He continues, describing Broughton’s observation that at Harvard Business School, “. . . as a category of business activity, sales were largely ignored. The curriculum focused on apparently less grubby topics, like finance and leadership . . . Many people in business ‘are clueless about one of the most vital functions, the means by which you actually generate revenue.’ Salespeople are viewed as some sort of breed apart . . . They must be ‘goaded to perform and reined in when they sell too hard. They are patronized as feet on the street by those who prefer to imagine that business can be conducted by consultants with dueling PowerPoint presentations.’” Plenty of ugly in that prose. But well stated.

This knowledge gap—call it an appreciation gap—that Broughton writes about so compellingly, spells opportunity. And, if nothing else, salespeople are unrepentant opportunists! Just as the excitement in engineering lives at the edges, so it does in sales. Inspired by our college road trip, I explored the edges of Sales, peered over, and found these exciting junctions:

1. Sales and uplift modeling Predictive analytics meets pick the low-hanging fruit. Uplift models predict the influence on customer behavior gained by choosing one marketing action over another. Using statistical tools to identify prospects most likely to change behavior opens great possibilities for increased sales productivity.

2. Sales and software usability User testing, eyetracking, and field research to improve the odds for online merchants that when a prospect sees “click to buy,” he clicks. And you thought customers had all the power.

3. Sales and social entrepreneurship Did I just pledge $250 because I was passionate about providing medical care for children who can’t afford it? Or because an organization had sophisticated processes in place that made it easy for me to do so? Only their Development Manager knows for sure.

4. Sales and Enterprise Risk Management Pipelines, funnels, and forecasts remind us there are loads of risks—known and unknown—on the road between Identifying a Prospect and Having a Customer. Strategic planning works best when sales risk knowledge is integrated into corporate functions.

5. Sales and Linguistics “Sales is like dating,” someone told me—or maybe it’s the other way around. “To predict dating success, the secret’s in the pronouns,” according to a story about a study that recently aired on National Public Radio. The Linguistic Inquiry and Word Count program “has an ability to peer into massive data sets and discern patterns that no human could ever hope to match.” Inside sales and telemarketing will never be the same.

6. Sales and higher education. According to the edx, a joint venture between Harvard and MIT, “It’s interesting to see technology being used to make teaching more efficient. But platforms like edx could also help institutions such as MIT and Harvard identify and nurture the smartest students from anywhere in the world.” Some of them will be salespeople.

SellingPower‘s Gerhard Gschwandtner wrote in a recent blog, Seven Steps to Sales Transformation, “to win in today’s environment, sales must be aligned with marketing, service, finance, HR, and legal.”

Alignment is a step in the right direction, but it’s not enough. Alignment doesn’t break sales from the black-hole gravity of its silo. As the Cornell Dean said, the greatest excitement—and opportunities—exist at the edges—where you find the junctions.

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