Archive for April, 2009

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E-Book Available on selling through the slump (I contributed)

Thursday, April 30th, 2009

I was honored to contribute to a new e-book, “Selling Through A Slump” (free-registration required). Some of my favorite people (and friends of this blog), such as Dave Stein and Jill Konrath, also contributed.

It’s organized by industry and covers 11 industry groups, including health care (Anneke Seley), insurance (Mike Wise), services (Jill Konrath) and telecom (yours truly).

One of my favorite experiences during this project was polling the best salespeople* I know to get their viewpoints on the question. Their contributions greatly improved the chapter and I thank them very much for sharing their expertise.

*Robert Wiesheu, Brent Harris, Jeff Fraser, Bill Rogers and Ford Harding

Download “Selling Through A Slump” (registration required)

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Posted in sales | Comments

“Need Cash?” teaches you how to improve working capital use, but be careful

Tuesday, April 28th, 2009

I have mixed reactions to the article “Need Cash? Look Inside Your Company” by Kevin Kaiser and S. David Young in the May Harvard Business Review. There’s no doubt that better working capital management can help lots of companies get through this difficult environment. At the same time, offloading your problems to your suppliers is a recipe for long-term difficulties.

I’m speaking of the practices around accounts payable management. The authors identify a mistake companies frequently make: assuming that receivables timelines and payables timelines are symmetrical. If I get paid net 30, I should pay net 30. Instead, they assert, each company should assess its environment, power over suppliers (or vice versa), and from there determine how it should pay/be paid. It may be possible to get paid by customers net 15, and pay suppliers net 60. This has a huge beneficial impact on a company’s working capital.

However, paying suppliers terribly late has nonfinancial costs. While a supplier may accept lengthy payment terms, there may be resentment, that can cause difficulties when contracts are renewed or new business contemplated. Suppliers may prioritize the needs of other customers who pay more timely. Other terms, such as delivery, might be tightened, which has impacts.

Worse than all this, though, is trying to changing payment terms unilaterally, or even invisibly. This is the old “hiding the invoice in the desk” trick, the “I didn’t get your invoice, please resend” trick, or the “phantom dispute” trick. In this case, the supplier negotiates net 30 terms but ends up getting paid at the whim of the customer. These kinds of techniques might be needed when you are truly distressed, but be prepared to be treated like a distressed company if you use them.

My experience, in account management, sales and executive leadership, has been overwhelmingly as a collector. Knowing that my company treated invoices from its suppliers as serious commitments helped me hold customers accountable to pay timely.

The authors are correct that companies should negotiate payment terms based on their strength in the situation and try to create an environment where they pay late and collect early. However, companies must live up to those negotiations. Don’t ignore payment terms or mess vendors around when their invoices come in.

Your collectors will thank you for it.

Related post:
If your key suppliers are in trouble, so are you

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Posted in alliances | Comments

NFL’s Patriots use “Discovery-Driven Growth” formulas

Monday, April 27th, 2009

Despite an overfull schedule and helping get the house prepared for our 8-yr-old’s first Communion next Sunday, I watched bits and pieces of the NFL Draft as it unfolded. It’s a fascinating spectacle and completely dependent on speculation–by the teams, the announcers and fans. Which selections will be great players, which will be OK, and which will be busts? Will the first pick, a quarterback, live up to his signing bonus?

There are two flavors of strategy that teams deploy in the draft. One is the standard approach. Try to pick the perfect star or the perfect player to fill the gap you have in your roster. Exhibit A: The Washington Redskins (who rely on expensive free agents more than the draft). Exhibit B: the New York Jets–who usually draft high and who always disappoint. (Honorable mention: Dallas Cowboys.) Teams in this model often have salary-cap difficulties, given the large contracts their stars command.

The other approach is gaining traction but is still principally practiced by three teams: the New York Giants, the Pittsburgh Steelers and especially the New England Patriots. They eschew high picks and expensive free agents. Instead they stockpile talent, especially in the lower rounds of the draft and with low- and mid-priced free agents. These teams run into salary-cap difficulties much less frequently, and can often keep a stronger team together because they are not devoting a disproportionate amount of their salary cap to a few players.

It occurred to me this weekend that the Patriots’ approach is very much in line with the principles of “Discovery-Driven Growth” by Rita McGrath and Ian MacMillan. The Patriots presume they can’t perfectly identify which players will turn into great pros, so they make a host of small bets and expect some (many) of them not to work out. Yet some will, and some of those will turn out to be good or great players (say Matt Cassel and Tom Brady, both very low-round picks).

This year the Patriots traded their first-round pick for a lower first-rounder, then traded that one for a second-round pick. The Patriots ended up with no first-round picks but four second-rounders.

As prescribed in “Discovery-Driven Growth,” the Patriots are also ruthless in separating from players who aren’t paying off. It’s not nice, but it’s effective. They also experiment with shifting a player’s position, in order to find the best place for a particular talent. (Dan Klecko, a Patriots draftee at defensive line, started at fullback for the Philadelphia Eagles last season.)

All the above is dependent, of course, on the Patriots having a strong vision of the kind of players that work in their system. For example, they look for athletes on the offensive line, even if they lack football experience (Stephen Neal, a former wrestler, or this year’s pick Sebastian Vollmer). Within that system, though, there are many different types of players that can excel.

The Patriots cast a wide net, make lots of cheap bets, don’t stay too long with something that’s not working. What do you say, Rita? Are they a “Discovery-Driven Growth” exemplar?

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Posted in innovation | Comments

B2B Buyers’ Purchase Decisions Hinge on Emotion, Not Facts

Thursday, April 23rd, 2009

Jon Miller over at the Marketo blog summarized the results of a study Marketo conducted along with Enquiro Research to delve into how B2B buyers make decisions.

The results will not surprise readers of this blog. Rational B2B buyers are a “myth,” and negative emotions drive the buying decision:

The Enquiro research shows that B2B buying decisions are usually driven by one emotion: fear. As a result, B2B buying is all about minimizing fear by minimizing risk. There is organizational risk, which can often be dealt with rationally, and personal risk, which is usually unstated and hidden from the rational process. Yet personal risk is a huge factor in B2B buying.

This irrationality and desire to mitigate risk and complexity leads purchasers to return to an old-school tool for making decisions: the recommendation. The post suggests, among other things, that B2B marketers capitalize on what I would call the “fellow traveler” syndrome–generating positive references from people elsewhere in the buyer’s company and industry is a significant help for vendors seeking to overcome buyers’ fear instincts and win new business.

(Hat tip Futurelab blog.)

Related posts:
Complex sales: it’s all about the negatives
Another kind of value proposition

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Posted in Customers Are Talking | Comments

“Story banks” for dispersed collaborative communities

Wednesday, April 22nd, 2009

The Mistake Bank is a project that continues to surprise and delight. A couple of blog posts from Scott Berkun and Nat Torkington on O’Reilly Radar brought a few hundred new visitors and several dozen new members over the past week.*

This shows, I think, that the idea of story banks–collections of stories on a certain topics which users can read, comment on and share–has legs. And over the past few weeks, in part due to spending time with the New Tech Meetup of Central PA and meeting the folks from Symbian at CTIA, I’ve been thinking that story banks are a powerful tool that distributed development communities can use to share tips, tricks, even mistakes/dead ends/failures.

The story bank I’m thinking about combines the experience I’ve developed curating The Mistake Bank with a story-bank platform like Cynthia Kurtz’ Rakontu, deployed in a company or development community (like Symbian) as a way of sharing deep lessons among people who aren’t anywhere near each other physically, and at the same time developing a shared culture and values through the stories they tell and retell.

I’m looking for companies/groups who might like to pilot the idea. If you want to get in on the experiment, email me at john (at) caddellinsightgroup (dot) com or leave contact information in the comments.

*Ajeet left a great comment on the Radar blog to the effect that the Mistake Bank is the only bank guaranteed to grow into perpetuity. How true!

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Posted in collaboration | Comments

Creative Destruction? #4

Tuesday, April 21st, 2009

32nd and Market Streets, Camp Hill, PA, 21 April 2009

The reports that Rite Aid was building on this corner were true; the old buildings are down and excavation has begun.

Carlisle Pike, Silver Spring Township, PA, 21 April 2009

Nothing happening at the old LB Smith dealership. Seven months of vacancy and counting.

Prior posts in this series:
Creative Destruction?
Creative Destruction? #2
Creative Destruction? #3

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From “The Catalyst” – a different kind of speed

Monday, April 20th, 2009

This is (I think) the last post on the new book “The Catalyst: How You Can Become an Extraordinary Growth Leader,” by Liedtka, Rosen and Wiltbank, which describes the mindset required to effectively grow new businesses within established organizations, and a lot more. In surveying the behavior and practices of effective new business developers, the book touches on many of my favorite subjects and engages with the tension between the human-ness of organizations and the mechanical inclinations of an embedded culture.

Chapter 7 of “The Catalyst” discusses the need for speed. The authors neatly contrast the kind of speed required for the execution of a standard process with the speed required to build a new business unit–scan the environment, spot opportunities, collect resources, probe and move ahead toward a solution. As an example of the first type of speed, they refer to fast-food preparation. For the second, the TV show “Iron Chef.”

[In]…Iron Chef…competing chefs are given just an hour to create a unique multicourse meal, improvising around a set of ingredients they are given to work with. Achieving speed in this world requires elements very different from those at work in fast food. It relies on repertoire, deep knowledge of ingredients and how they work together, and the ability to improvise. Preparing the mind to see opportunity, as well as the talent to act on that opportunity quickly, is the key.

“Catalyst” speed reminds me of Kotter’s arguments in “A Sense of Urgency” and the Cynefin framework. Fast-food processes are stable, repeatable; they reside in the Known/Simple domain of Cynefin. “Iron Chef” processes are emergent–in the Complex domain–they depend on the ingredients of the moment, inspiration, and a “sense of urgency” to put them to use quickly.

This is a very useful way to think of new business development. Speed doesn’t mean the fastest, most efficient execution of each step. It means, instead, that capabilities are assessed quickly, first steps are taken without delay, and that missteps are recognized quickly, stopped and other avenues tried. It also means, a la McGrath & MacMillan’s “Discovery-Driven Growth,” that as much work as possible should be done on paper rather than in the real world, and that tests be well designed and small-scale.

In simple processes, speeding up each step necessarily speeds up the whole process. New business processes, the elapsed time from start to success is most important, and can’t be improved by focusing on optimizing one step at a time. It’s a different kind of speed, and companies need to look at it that way.

Related posts:
Thinking about processes as science and art
Talking about the Cynefin framework
On “Discovery-Driven Growth”

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Posted in innovation | Comments

Good customer service is an investment in your business: 2 examples

Sunday, April 19th, 2009

1. This article in the Wall Street Journal that discusses Delta pulling its call center back to the US from India.

2. This post by Felix Salmon (off his usual topic): “How To Succeed In Customer Service.”

Here’s my preferred customer service strategy, in a nutshell. For basic information and services that customers can easily access on the web, put it there and make it easy to use. For everything else, invest in good, human, customer service. For people who call and want web-available information, give it to them over the phone, but perhaps offer to walk them through the website to find it (perhaps you’ll learn that your website is not as easy to navigate as you thought). And, if they don’t use the web, treat them like kings instead of annoyances.

[And don't, like Comcast did today, make me listen to a commercial before you even let me navigate your IVR system! Frank, your folks need to know that is a bad strategy.]

Find other metrics of service levels than average handle time–say, first call resolution. And, of course, gather calls and listen to them to find out what’s going on directly between you and your customers (to get the insight discussed here).

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Posted in Customers Are Talking | Comments

The value of immersion in the details

Sunday, April 19th, 2009

Caution: sports-related material ahead.

Managers prize the ability to “look at the big picture” and there’s value in that. But there’s value in looking at the little picture as well.

What I mean is illustrated by a quote from a New York Times article today (”Ravens form NFL Draft Team That Has Game Plan“) on the drafting prowess of the Baltimore Ravens football team. The Ravens are perennial contenders, which the Times story attributes to their ability to find strong players in the later rounds of the draft. Here’s the part that I found most compelling:

They are one of the few teams in the league that do not subscribe to scouting services that provide a packet of information on players before the February scouting combine. The Ravens’ scouts do the legwork in gathering the background and the measurable statistics that would be in those reports. It takes eight grinding weeks after the draft, when the scouting department devotes itself to looking at tapes of juniors and calling their universities. But it also produces deep insight into future prospects.

In other words, the Ravens’ scouts immerse themselves in the details of their drafting prospects. They don’t rely on written summaries, charts or secondhand assessments.

In many ways senior leaders are like the teams that rely on scouting summaries. The reports, dashboards and presentations they receive cause them to feel as if they have an understanding of issues, but they lack “deep insight” that immersion in the details can provide. Of course, senior leaders can’t deal with the broad scope of their responsibilities by homing in on every detail of the business. They can, however, set processes in place to harvest and sensemake large collections of information about their business, such as customer stories, complaints, surprises, even some everyday banalities. With this information collected, they need to spend some time every month immersing themselves in those stories, participating at a detailed level in the lives of their customers and their front-line staff.

And stop relying on the “big picture” to tell them everything they need to know.

Like my friend, now a senior executive at a large insurer, once said to me, “Whenever we listen to the customer service calls, it’s always shocking.”

Related posts:
Dealing with what customers tell you online
Are 200 customer stories more useful than 2,000,000 data points?
Opening your company up for customer dialogue
A method for using customer intelligence from your front-line staff
Reading between the lines

[Photo: Adalius Thomas (now with the Patriots), a sixth-round pick of the Ravens in 2000 who has been to two Pro Bowls]

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Posted in Customers Are Talking | Comments

There is joy in repetition

Friday, April 17th, 2009

Prince sang that, almost 20 years ago on the “Graffiti Bridge” soundtrack. (In fact, he sang it over and over on that song.) The expression came to mind today, as I was enjoying one of my favorite tracks from a SxSW band this year, “To All Tiny Creatures” (mp3 via sxsw.com) by All Tiny Creatures out of Madison, Wisconsin.

It’s an electronica song, with no vocals, and it’s pretty repetitive. My wife wouldn’t like it. “Those electronica songs go on and on, and sound the same.”

She’s right, but there is pleasure in the small changes that present themselves in songs like “To All Tiny Creatures.” For one thing, the song slowly builds, without changing tempo, from a spare song to a driving, full orchestra. I love this in songs. One of my favorite examples is a song from the great late ’80’s band The Silencers, titled “Answer Me.” The singer starts alone, but soon he’s accompanied by thundering drums and a steady aggregation of sounds, and the song has become an anthem.

“To All Tiny Creatures” has that. A few minutes in, it’s moved on from its minimalist start to a real driving beat that has my head bobbing every time I listen to it.

Then, at its fullest, synthesizer lines wash in and out, making each chorus slightly different. And these lines have their own arcs. As a children’s book my kids like says, “It’s different… but the same.”

People praise originality, but music in particular thrives on repetition. Whether it’s the recurring themes of a Bach’s “Goldberg Variations,” or Springsteen singing “Hiding on the backstreets” a few dozen times, or “To All Tiny Creatures,” it’s good to know that redundancy in our music suits us just fine.

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Posted in music | Comments

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