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Knowledge of Constraints Holds the Key to Process Improvement

May 19, 2017 by David Crankshaw

When we think of constraints in a system, the first image that usually pops into our mind is a physical constraint, like a machine that holds up the workflow. But this isn’t the only kind of constraint. And physical constraints are not usually what cause problems in a sales organization. So let’s learn more about the three kinds of constraints.

The three types of constraints are physical, policy and paradigm. All three of these inter-related constraints exist in any system.

Physical constraints

Physical constraints are resources that physically hold the system back from increasing its throughput.

To locate the physical constraint, Lisa Scheinkopf says we need to ask this question: What is the resource, that if we had more of it, we could increase the throughput of the system?

 

 

 

 

This physical constraint can be internal to the system or it can be external.

Where inputs enter your system, external physical constraints could be due to a shortage of raw materials. If you cannot purchase enough of what you need from your vendors, then you have a constraint.

At the other end of your system, where you release your transformed products to customers, you could be constrained by lack of sales. In this case your constraint lies in the market. You have plenty of raw material and plenty of capacity, but not enough customers to consume what you can produce. Most organizations today are constrained by the market.

Internally, you may be limited by a lack of capabilities or a shortage of capacity inside your organization. We likely first think of being constrained by a machine but today it’s more typical that our constraining resource is people or skills—not enough of the right kind of software engineer or the inability to hire enough quality customer service agents.

Organizations are composed of a system of interdependent resources. The system is designed to perform the process that enable the organization to accomplish its goal. Every organization has one primary physical constraint. If you can improve the throughput of this constraint, you improve the throughput of the entire system.

Many organizations have successfully used the five focusing steps to improve the throughput of their physical constraints.

Policy Constraints

Policy constraints are harder to visualize than physical constraints. They are the rules and the metrics that an organization uses to govern how it goes about its business. You could call them managerial constraints.

Policies define the source of your inputs—who you buy from, how much you are willing to pay, and the terms of your agreements.

They also define the direction of the output of your system—which markets you will serve, how you will compete, and your selling model.

Internally, policy constraints include the myriad of work rules inside your organization.

If you ask anyone in a company, they can tell you about many stupid policies in their organization. No one intentionally develops a stupid policy. People work in groups and through their belief systems they develop policies that seem correct at the time. Once policies are in place, they take on a life of their own and people feel obligated to follow them. We believe that these policies will enable us to make decisions and take actions that will produce the results we want for our organization.

Paradigm Constraints

Paradigm constraints are the beliefs, attitudes, and assumptions that inform the policy constraints we develop and follow. These paradigm constraints cause us to see the world in certain ways and prevent us from considering alternatives. In a famous example, companies that ran railroads viewed themselves as being in the railroad business. They couldn’t see an alternative paradigm until Theodore Levitt pointed out that they could view themselves as being in the transportation business.

Process Improvement

The three types of constraints affect each other. Lisa Scheinkopf says that “paradigm constraints cause policy constraints, and policy constraints result in mismanagement or misplaced physical constraints.”

The five forces have been used widely to manage the physical constraint and improve the throughput in their organization. They are relatively easy to improve because they are easier to see.

Policy and paradigm constraints are harder to see and harder to improve. But they also hold the most opportunity for significant improvement in organizations today.

How to Improve the Throughput (Sales) of Your Organization

May 18, 2017 by David Crankshaw

What is your organization trying to accomplish? What is its goal?

In a business, the financial goal will typically be to make more money, now and in the future. Of course, organizations have additional goals:to hire and retain the best people, to be competitive in their industry, and to bring innovative products to market. But operationally, the financial goal will be to make more money, now and in the future.

Lisa Scheinkopf explains that we connect our metrics to our goal by measuring the primary process of the organization—the inputs, the transformation of inputs into outputs, the outputs—in a way that connects to the goal.

A premise: organizations convert money into more money by adding value

The process begins when we buy inputs from vendors. This is money that we put into the system so that we can convert the money we spent into more money.

We convert this money by transforming the inputs and selling the result to customers at a higher price than the cost of our inputs.

This knowledge allows us to define “value added” as the difference between the amount that customers pay us for the outputs of our system and the amount we paid vendors for the inputs.

If we generate more “value added” than the amount we pay for the ongoing operation of the system, then we make a profit.

The Theory of Constraints defines the fundamental financial components of an organization in this way:

  • Throughput: The rate at which the organization adds value to the system by generating money through sales.
  • Inventory: The money spent on purchases from vendors that the organization will turn into throughput.
  • Operating Expense: All of the money that the organization spends to do the work of turning inventory into throughput. This includes everything spent to run the enterprise—wages and salaries, buildings, equipment, insurance and taxes.

The constraint holds organizations back from increasing their throughput

When we look for the constraint in the system, we are searching for the element in the system that is holding us back from increasing the rate of throughput.

The constraint could be anything in the system that limits better performance in relation to the goal. Improvements that reduce the constraint are measured as increases in throughput.

If we talk to people in the different functions of the company, we are likely to be given a long list of possible constraints. Everyone has their perception of the important problems in the company.

But if we change our view to the system as a whole we can see that the organization is composed of an interdependent collection of resources. Throughput flows through this chain at a given rate. That rate is determined by the constraint in the system.

Like a chain that can be no stronger than its weakest link, the throughput in the system can be no faster than what the constraint permits.

Find the constraint, improve its throughput, and you improve the throughput of the entire system.

Which Problems Are the Most Important to Fix?

May 15, 2017 by David Crankshaw

Imagine I am a new employee at your company and you want to show me around.

You would likely take me on a walking tour, first through reception then to the different departments: sales, customer service, legal, engineering, accounting, and production.

On this tour you would show me the different functions in your company.

Now let’s imagine that I ask people in the different functions about the problems they face each day.

What are the constraints that hold them back from doing their work?

People See Problems Through Their Functional Experience

People in each function will experience and describe a different set of problems. It’s likely that they will conclude that the problems in their function are also the problems that the entire company should be devoting itself to solve.

The receptionist will perceive that the problems lie in people’s unwillingness to answer the phone and return calls.

Sales thinks that the products are overpriced and that lead times to delivery are too long.

Customer service spends too much its time on expediting orders, not supporting buyers.

Purchasing doesn’t have enough lead time to make acquisitions.

Manufacturing is asked to meet impossible goals.

Which Are the Most Important Problems to Fix?

As you hear people in each function describe the problems in the company as they see them, how do you evaluate which problems take priority over others? Which ones are the most important to fix?

Lisa Scheinkopf says that this functional view puts you too close. You can see trees or branches on trees, but you can’t see the forest.

Instead of looking at functions, step back and look at the whole system of the organization.

Scheinkopf quotes her friend, John Covington. When asked how he approached complex problems, he replied “Make the box bigger!”

What did he mean by that comment? He was saying that sometimes we should look at functions in a system and other times we should look at the whole system. Too often we try to solve a systemic problem by looking at one function.

Step Back and Look at the Whole System

But the only way to decide which problem to solve is to find where the constraint is in the system. To do that we have to look at the whole.

We look at the whole because it enables our perspective to change. When we were looking at organizational functions, we saw a jumble of seemingly unrelated activities. But when we step back and look at the whole organization we can see a pattern. We can see a pattern of flow.

Raw materials and inventory flow into the organization. Inside the organization the raw materials and inventory are transformed into products and services. The products and services for customers flow out from the organization.

This output is the means by which your organization accomplishes its purpose.

The rate at which you generate output is the rate at which you accomplish your purpose.

All organizations want to improve the rate of their output because it improves the organization’s ability to accomplish its purpose.

And the way to improve your rate of output is to find the constraint. The constraint is the most important problem to fix.

How Eli Goldratt’s Thinking Processes Enable Improvements in Sales

May 11, 2017 by David Crankshaw

Thomas_Hill_-_El_Capitan

In order to make significant improvements in the sales process, we need a method that will help us to identify what we want to change, the new reality we want to create, and the actions we must take to get there. Eli Goldratt worked with his close associates to develop a set of thinking processes to accomplish these goals.

Lisa Scheinkopf explains that the Thinking Processes are vital when we shift our attention from removing constraints in manufacturing where everything is visible to removing constraints in other departments (like sales) where everything is invisible.

The problems in manufacturing tend to be masked by something you can see, inventory. When every station in a manufacturing plant optimizes on its productivity and quality, inventory builds up everywhere, costs explode, and the root causes of the problem remain hidden. However, when a manufacturing plant identifies the constraint and forces all other stations to subordinate to the constraint, two things happen. First, inventory levels fall because only the constrained station works at full capacity. Second, as production improves at the constrained station, production overall in the plant improves.

These changes are visible to everyone.

However, when we move out of manufacturing into other departments, the deeper constraints in policy (rules) and paradigms (beliefs) are masked by a something much less visible than inventory. When the sequences of activity that cause work to be done in other departments do not run smoothly, people find it challenging to identify the constraint. They simply know that there are problems and that those problems prevent the work from getting done.

To improve the workflow in these departments, we must look under these piles of problems to reveal the underlying policy and paradigm constraints in the organization.

Finding these policy and paradigm constraints is hard work.

How can people make improvements in their department if they don’t have a process to reveal the constraints in their organization, especially the difficult constraints related to policy and paradigms?

Often we don’t know if the change we want to make will improve the situation. How do we know if the change will solve the problem?

We need a systematic way to think about these problem in order to make improvements.

A few of the pioneers in the Theory of Constraints movement developed a thinking process to help people answer three critical questions about constraints:

  1. What to change?
  2. To what to change?
  3. How to cause the change?

Let’s look at these three questions one by one.

What to change? Understand the current reality.

Improvement is most likely in manufacturing when we focus on the system’s physical constraint. Does the same hold true for policy and paradigm constraints?

Think about your organization. How many stupid policies does it have? If you made a list of them, how would you know which ones to change? The ones that get the most complaints? The ones that are easiest to fix?

Is there a process that can help you identify non-physical, weak links in your processes—in your rules and beliefs—that if you made a change you would see dramatic improvement? What is that process?

People have already developed many processes to prioritize improvement projects. Some of them are analytical—root cause analysis, cause-effect relationships, and apply weighting factors to prioritize them. Other processes rely more on intuition.

Neither of these approaches is sufficient on their own. We need a process that combines analysis and intuition. When we can verbalize our intuitions and feelings, then rigorously test our assumptions, we can better see the patterns of our current reality. With this clarity of vision we can then see the leverage points in our systems. Visibility into those leverage points tells where to inject changes, changes which will lead to dramatic improvement.

To what to change? Construct a picture of a future reality.

Once you find a policy that presents a real constraint on the possibility of improving the work of your organization, what do you do, where do you go?

Before you take an action or make any plans, your first step is to discover what you want the new reality to look like.

If you implement a new reality, how will it feel?

Your current reality consists of a set of patterns. If you change to a new reality, what new patterns do you want to put in place?

You’ve probably had the experience where a new solution was put in place and then simply created additional new problems. Or didn’t achieve the results that everyone expected.

Is there a way to avoid this outcome?

Eli Goldratt wanted to develop a process that would enable people to select a solution to a core problem and be confident that the solution would indeed eliminate the problem.

Further, he wanted a process that people could use to identify possible unintended consequences of a potential solution and prevent those consequences.

His Thinking Processes were developed to give us a systematic way to create a picture a new reality.

His method made it possible for us discover what we want the future reality to be, to know why we want to do it that way, and to sidestep unintended consequences along the way.

How to cause the change? Close the gap between present and future.

When you understand your current reality, you can decide what to change.

Next you can construct how the future reality should look.

Finally, you have to close the gap between present and future.

Often we are tempted to jump into action before we consider what we want to accomplish.

How do we know if a specific action will lead to the result we want?

Succumbing to this temptation can lead us to work hard and yet see no significant improvement.

Goldratt and his team developed the Thinking Processes to help us discover the major obstacles between our current reality and the future reality we want to construct.

The Thinking Processes enable us to explain why those obstacles are preventing progress. They help us to define the actions required to remove the obstacles. And finally, they guide us to establish the order in which we should take action.

Building a Scalable Business Machine

April 25, 2017 by David Crankshaw

Recently Justin Roff-Marsh interviewed Doug Voss, one of his clients, about the projects they have done together. Doug is a vice-president and founder at Sayfa Systems in Melbourne, Australia. Sayfa manufactures and distributes height safety and fault management systems for people who work on the roofs of buildings.

Sayfa went through a sharp growth period prior to working with Roff-Marsh. Sayfa’s future growth potential lies less in customer acquisition and more in the innovation of new products for existing customers.

The period of rapid growth revealed that Sayfa didn’t have a scalable business model. Consequently, most of the work with Roff-Marsh has been with new product development, technology, and engineering. They needed better technology to manage the teams and to make the work of the teams more visible.

Doug wanted a “scalable process that could cope with a high velocity of calls and customer service requirements that come through every day.” He wanted to get better control over the scalability of his systems so the company could cope with a high velocity of calls to sales and customer service.

At the solution design workshop with Roff-Marsh they mapped customer service and inside sales. Field sales activities were reduced from “small and spasmodic” to none.

Technology Migration for the Project Sales Team

Sayfa’s project sales team mostly does specification work. The inside sales team subscribes to a feed of specifications for new building projects in Australia. Inside Sales then chases specifications through the project workflow as projects move from architect to builder to installer.

They had been managing their projects in a spreadsheet, one project per row. But the spreadsheets became unwieldy—“teetering, freezing, crashing.” So they worked with Roff-Marsh to move the projects into a CRM application. The CRM application made it possible to associate one project with multiple stakeholders (architects, builders, and installers).

Everyone in project sales uses the CRM. This includes anyone from specification through tender through installation.

Improved Processes in Customer Service

Once Sayfa had moved project sales to the CRM application, they began a project to improve the process for customer service.

Many high demand requests come into the customer service team.  They found it difficult to manage the workloads of the team. Customer service staff struggled to find someone who would take a difficult call when it arrived.

Roff-Marsh helped them to manage the flow and velocity of work through the team.

They made two distinctions in the type of tasks the team performed. The first distinction was between product requests and technical requests. The second was between short lead-time calls and long lead-time calls. They divided the work among team members who specialized in different types of calls.

They also began to measure on-time case completion. When they started using this metric, they completed 60% of their cases on-time. Now they are at 90%. They hung a board on the wall so everyone could see the on-time case completion rate.

When everyone can see the results, Doug explains that  “you get a bit of banter among the team members.” This talk amongst the team causes people to look for ways to help each other to complete their cases and keep the on-time completion rate high.

When we can see the on-time case completion number coming down, we know we need to get some extra resources in or have a quick meeting to understand what is happening. What do we need to do to sort out or jump in and help the team. The team is aware of it, they haven’t become blind to it.

Identify and Exploit the Constraints, One at a Time

At their strategy session, Roff-Marsh and the Sayva team identified two possible constraints, project sales and customer service. They agreed that project sales was the most important constraint to focus on first.

Project sales faced problems with its ability to deliver full value to customers within a committed time-frame. However, this inability was not due to input constraints (they had plenty of new project specifications that they needed to respond to) nor was it due to a critical resource. The cause of the constraint was due to their sales production and planning practices.

In order to exploit the constraint in project sales, Sayva looked at the causes that might be restricting their output and how they could improve sales productivity. They identified problems with their technology, the “teetering, freezing, crashing” spreadsheets, and migrated to a CRM application.

Once they had addressed the constraint in project sales, the next constraint was in customer service. Once again, the cause of the constraint lay mainly with production and planning processes. Since the CRM application was in place by this time, they elevated the constraint mainly by examining the flow of calls into the customer service team. Better routing of calls and the measurement of on-time call completion made it possible to dramatically improve their quality and throughput.

Doug Voss at Sayva knew they had an opportunity to grow through innovation in new products. He also knew that he couldn’t pursue this opportunity until he had built a scalable machine in project sales and customer service. By identifying the constraints (in sales and service) and maximizing their productivity, Sayva was able to improve quality and throughput in both these functions. This improvement now makes it possible to pursue their growth opportunities in new product development.

You’re Shifting to Team-Based Selling. How Should You Deploy Your Staff?

March 28, 2017 by David Crankshaw

California Drum Corps - Huntington Beach

Let’s say you are ready to migrate to a team-based selling model. Now you have to decide about changes in your staff. What adjustments will you make?

The primary goal is to have your field salespeople making four calls a day, twenty calls a week. If you currently have ten salespeople making two calls a week, you don’t need to keep all ten of them making sales calls, you just need two. And since you will pick the two best salespeople to do the selling, they will be very good at the task. And since that is their only task, like heart surgeons who only do one type of surgery day in and day out, they will get better and better.

That leaves eight people who will no longer be selling. What will they do? To answer that question, let’s look at Justin Roff-Marsh’s description of the other tasks in the sales department.

  1. Sales coordinators assume ownership of sales opportunities and plan activities (appointments) into salespeople’s calendars. (A sales coordinator works with a salesperson as does a personal assistant with a senior executive.)
  2. Technical experts (project leaders) assume responsibility for solution design and the generation of proposals. Project leaders also manage the relationship between customers and operations during delivery.
  3. Customer service representatives assume responsibility for the ongoing management of accounts — including the procurement of repeat purchases.
  4. A promotional coordinator interfaces with marketing to ensure that sufficient opportunities are generated to enable the sales coordinator to maintain the salesperson at 100% utilization.

Now that we know which positions need to be filled, how many should be transitioned to each role? Once again, here is Roff Marsh:

In most organizations we convert most of the existing salespeople into project leaders. Typically, the new project leader role is the role most similar to salespeople’s existing job profile. Furthermore, converting salespeople to project leaders tends to improve customer service and minimize the risk of losing valuable team members.

In the chart below you can see the specifics.

 

 

Can Sales Productivity Become Your Competitive Advantage?

March 17, 2017 by David Crankshaw

Spring MeadowAll managers want to see their company grow. Their company’s growth comes from one of three sources:

  • More labor – you can produce more if you hire more people or if you ask your existing staff to work longer hours.
  • More capital – you can seek capital and use it to invest in new equipment, technology, or facilities.
  • Productivity improvements – Through better use of your labor and capital. Increased productivity can come from a variety of innovations in your product, your production, and your processes.  These innovations can include large improvements (light bulbs, shipping containers, spreadsheets) and the myriad ways that each company finds to improve the way it does its work.

Labor and capital increase your costs and require investments which are limited, so the key to long-term growth is always going to be in the search for productivity improvements.

Although firms in the US made rapid productivity improvements in engineering and production over the last century, that rate of productivity improvement seems to have slowed since 1970.

When it becomes difficult to achieve competitive advantage through productivity improvements in engineering and production, companies struggle to separate themselves from their competitors.

However, many companies have overlooked an important opportunity. They’ve failed to seriously address the need for productivity improvements in the sales function. In fact, about 70% of companies in the U.S. are not able to even sell all their production capacity. And that should be the job of sales, right? To sell all of the company’s capacity to produce?

This untapped opportunity for productivity improvement creates an opportunity for companies that are willing to give some serious attention to improving processes in the sales function.

How Much Information Should You Give Away?

February 20, 2017 by David Crankshaw

Glendora-CA-after-the-rain

Scientific and technical companies give away a lot of information. They write articles, give talks at conferences, and publish books.

Why would these companies, whose primary asset is their know-how and intellectual property, give so much away? It doesn’t make sense to give away what they should be selling to clients. If they transfer knowledge for free, why would clients agree to pay scientific and technical companies for their expertise?

To answer this question, first let’s remind ourselves of the type of customer that scientific and technical companies want to attract.

Technology buyers want more than a transaction, they want a relationship with you

Unlike the customers of large consumer companies, technology customers do not just buy a product. They don’t make their decision primarily on price and product features. They aren’t looking to optimize a single transaction.

The customers of scientific and technical companies are more likely to be looking for a relationship with you. Yes, price and features are important. But even more important when they for a complex product that they don’t fully understand is a relationship. These products and services present real risks to their company. They will depend on the relationship with you to mitigate the risks of complexity and unknowns.

If these customers are looking for a relationship, what does that say about their buying process? It’s a buying process that takes time. It involves multiple people. It requires education about the science or the technology that your company offers.

Now you could dispatch salespeople to provide this education. But that would be expensive. And customers don’t want to talk to salespeople this early in the process anyway. They want to find information online and study it on their own.

How do you initiate and cultivate a relationship with buyers?

First, stop thinking about sales. These buyers aren’t even close to thinking about pulling the trigger on an initial purchase.

Instead of focusing on sales, initiate a relationship with your buyers. Do this by creating a marketing model that is based on continuous, automated communication. By initiating and cultivating a relationship with your buyers, you can focus your efforts on maximizing their lifetime value.

What should you include in the content that you send to buyers in your automated program?

Answer this question by remembering the purpose of the content. You want to move buyers from being unaware of the problem to awareness and desire to find a solution. You also want to move them from unawareness of you to awareness and trust. As buyers move forward in their relationship with you, they become ready to take the next step and enter into a sales conversation.

Much of your writing will be educational and do-it-yourself (DIY) information. That doesn’t mean that you tell them how to do everything. Instead, tell them how to get started.

Imagine that a car mechanic writes a newsletter. She isn’t going to write DIY instructions on how to rebuild engines and transmissions. No, that’s what customers bring their car to her to do. Instead her column will be filled with articles on topics like safe driving, changing a flat tire, new battery technologies, and what to look for when you buy a used car. She shares her expertise on topics that are useful for potential buyers of her services, but she doesn’t overwhelm them.

Your content should also tell a story of some kind. You can write stories of customers and how they’ve been able to address the problems that you know how to solve. Or stories of developing technologies and regulations in your field of work. Or even stories of your company and the challenges you face as you work to serve your customers’ needs.

What will you accomplish when you give away information?

Chris Garrett at Copyblogger explains many of the positive outcomes when you give away information to grow your business. Here are a few of the benefits you achieve with free information. It’s worth reading his article to learn the rest.

Free content can encourage sharing your ideas

In addition to attracting people who might become loyal members of your audience, you also want those people to bring friends.

If your content is locked away, then they can say nice things about you, but their ability to share your content is limited. Therefore, your exposure is limited.

Free content can connect you with peers

It’s not just prospects that you want to connect to.

With your ideas, experience, and knowledge out on the web for anyone to consume, you are going to attract industry, networking, and partner contacts.

Free content can inform the audience of your value

What is the problem that you solve? What can you help them achieve?

It’s going to be tough to get people to pay money before they know what you can do for them!

People often put their problems into search engines looking for answers. You want to make sure your solutions can be found when they go searching.

Free content can position you against competitors

Your free content will not just educate, it will also show your uniqueness.

It will inform people why they should connect with you versus other people, and why your approach or solutions have the advantage.

Relationship Marketing is a worthwhile investment

Whether your company includes just a few people or a few hundred, relationship marketing is a solid investment in the process to produce sales opportunities. Your automated program will initiate a relationship with your buyers. With a relatively small investment, you can educate and motivate buyers to become potential customers. The information you give your buyers will distinguish you from your competitors and create a compelling narrative about your work. And most important, you’ll create a steady supply of sales opportunities to pursue and convert into customers.

From Craft-Based Selling to Team-Based Selling

February 2, 2017 by David Crankshaw

What do you think is the key metric that predicts the success of salesperson? Conversion rates? Sales cycle length? Average purchase value or profit margin?

Nope. It’s none of these. The metric that predicts sales success is the amount of time that a salesperson spends in meaningful selling conversations with customers.

Justin Roff-Marsh reports in his book, The Machine: A Radical Approach to the Design of the Sales Function, that a field salesperson should be able to hold four of these conversations a day, five days a week, leading to twenty meaningful conversations each week.

An inside salesperson can conduct thirty conversations each day, which leads to 150 conversations each week.

How Sales Time Is Spent - Alexander Proudfoot

Unfortunately, most salespeople fall far short of this goal. The job requirements of most salespeople simply don’t allow them to spend much of their time in meaningful sales conversations. In fact, a study by Alexander Proudfoot revealed that they only spend about 10% of their time selling.

Why is this? What stops sales professionals from working at their capacity?

It’s simple. Salespeople have many responsibilities in addition to selling. They must prospect for customers, design solutions, complete administrative tasks, and solve problems for existing customers. They are so bogged down with these other tasks that they simply can’t schedule very many sales conversations each week.

Time spent doing anything but talking to customers is the enemy of your salespeople.

The Days of the Autonomous Sales Agent Are Over

But wait? Haven’t sales people always been responsible for all sales-related activities in addition to selling—prospecting, customer service, administration and solution design? Yes, they have. Traditionally, salespeople have been autonomous agents for the company. They worked their territory and conducted all sales-related tasks.

Roff-Marsh explains that those days are gone because of two fundamental shifts in how sales works.

1. Markets have become much more competitive. Selling is harder. It used to be that product development and production released a highly differentiated product at a good price and selling it was more straightforward. Manufacturing was the primary driver of success as companies invested in operations productivity improvement.

As more and more companies have reached the limit of dramatic productivity improvement in product development and operations, they are shifting their attention and their capital to productivity improvement in sales.

2. Customers want custom solutions. Sales must work closely with engineering and production to design these solutions. In the past most companies produced a stockpile of inventory and salespeople sold from this stockpile. This allowed salespeople to work independently from the rest of the company. No longer. The value chain has shifted away from make-to-stock toward make-to-order environments or even make-to-engineer. Nothing is produced until an order is placed. Sales must work closely with production and engineering to customize solutions for customers. They can no longer work as independently as they did in the past.

Transition from a Craft Model to a Team Model—Divide the Labor of Sales Among Many People

If markets are more competitive and customers demand custom solutions, how can salespeople respond and conduct the number of necessary sales conversations each week?

To answer that question, lets look at manufacturing. This organization has seen dramatic increases in productivity over the last several decades. How did they do it?

Manufacturing shifted away from the craft model of production.  It adopted a division of labor model which led to dramatic increases in productivity. The corresponding solution for sales would be to shift from autonomous selling to team-based selling.

This change will lead to massive performance improvements.

Field people will spend 100% of their time in the field, conducting four business development meetings a day, five days a week.

Skilled inside salespeople will produce high volumes of sales activity at very low cost.

Companies can consistently meet customer commitments, complete administrative work on time, and receive sales more frequently and more predictably.

Not only that, companies which have adopted this model have seen improvements in the relationships with other people in the organization.

They’ve eliminated hand-off problems between sales and production.

Marketing works closely with sales to supply them with a constant stream of sales opportunities.

The way companies achieve these results is by shifting from autonomous salespeople to giving the responsibility of sales to a centrally coordinated team.

What Is Standing in Your Way?

What obstacles face a company that wants to achieve these performance improvements by dividing the labor of sales among the members of a centrally coordinated team?

Complexity. Sales continues to increase in complexity. Multiple influencers and decision-makers. Conversations with multiple groups that occur over many months. Too many opportunities arise for a lost sale if you divide the labor of a professional salesperson among the members of a team. 

Is complexity a reason to avoid the division of labor? If it were, then we would expect that the most complex manufacturing environments would avoid the division of labor. In fact the opposite is true. The most complicated production processes—jet aircraft, automobiles, computer chips—all rely on the division of labor and tightly coordinated teams to do their work.

Personal relationships. While many salespeople cultivate good relationships with their customers, Roff-Marsh cautions us to ask which came first, the initial sale or the relationship? In fact, in most cases the relationship came after the sale. It did not cause the sale. And even after the first sale, the relationship is not the reason that customers continue to buy. Companies retain their customers primarily because they meet their customers’ requirements for production performance. They deliver on time, a completed order, with high quality.

Although sales complexity and the tradition of personal relationships shouldn’t stop you from moving forward, that doesn’t mean it’s easy to make the transition to the benefits of team-based selling.

Fortunately we can follow the well-trodden path that has been taken by production to make this transition. 

The purpose of this website is to give you the methods and the tools that will enable you to make this transition. These methods are based on the four principles that Roff-Marsh presents in The Machine:

  • Scheduling should be centralized
  • Workflows should be standardized
  • Resources should be specialized
  • Management should be formalized

If you follow these methods developed by Roff-Marsh, you’ll experience greater scalability and predictability in your business. Your selling costs will go down and your quality will go up.

How Do We Know That Sales Process Engineering Works?

Justin Roff-Marsh has been working for many years to help companies redesign their sales function. He calls them his “silent revolutionaries.” Here are a few of the case studies he has published:

  • This regional lab supplier doubled its sales in less than three years
  • 30-45% sales growth in two years for a midwest manufacturer
  • No additional salespeople, pipeline growth, 20% sales increase

Leadership = Storytelling

January 31, 2017 by David Crankshaw

Piedras Blancas LightStation - Joyce Cory

We learn through experience because we use our experience to create a narrative that we can recall and use in the future. We then share our experience with others by telling our story. The story enables others to simulate the experience, and the simulation teaches them almost as well as if they had had the experience itself.

Our stories don’t just recite a sequence of actions. We create drama in our telling and we frame the experience for the listener. We tell our story with a point of view.

Was that visit to another country a frightening encounter with people we mistrust? Or was the visit an enriching experience of another culture and their ways of life? It was the same event, but we can choose to frame it in different ways. 

The best leaders tell a story because it simulates an experience for their followers and it gives them a point of view.

In a recent interview, Andy Raskin explains why Leadership = Storytelling.  He says that “Leadership is the art of inspiring others to make a story come true. Therefore, if you’re leading people, you’re telling them a story — by definition.”

Some leaders are better at storytelling than others and this gives them an unfair advantage. How do their stories differ from the stories we tell each other or that we see at the movies?

Raskin explains: “The biggest difference is that “happily ever after” hasn’t happened yet. The core leadership story, in other words, is a pitch: Come with me to the Promised Land.”

Raskin goes on to explain how you can develop these leadership stories. And further, he breaks down an Elon Musk keynote speech that illustrates successful storytelling by a leader.

These ideas about storytelling will strengthen your ability to take your followers to the promised land.

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