Friday, December 17, 2010

Forest or the trees?

You have heard the expression, “can’t see the forest for the trees,” but what if the problem is really that you are too focused on the forest?

The business world is full of consultants that use buzz words such as visioning and terms like mission statement. The idea is to get business people to understand the big picture and to think long-term. If you have attended many workshops you have undoubtedly heard the story about the three stone masons.
The building site did not look like much. The land had been excavated. Foundations had been prepared, and the first courses of stone had been placed. In several places the walls rose higher than a man’s head, and the building was beginning to take shape.

One of the elders of the town visited the site, and he saw three masons working on different parts of the building. He asked one of them what he was doing. The mason replied that he was building a wall, and it was back breaking work. The elder asked another mason what he was doing, and he replied that he was building a wall that would become part of a grand building that would last for generations. The elder then approached the third mason and asked the same question. The third mason replied that he was building a magnificent and mighty cathedral to glorify God.
The story is told to encourage people to value their work by the contribution that they are making to the ultimate goal of the organization. Each of the masons gave an accurate response. The first focused on the activity. The second took a broader view, and the third took a still broader long-term view. In the terms used by planners, the responses were about activity, mission, and vision, respectively.

That is a nice story, and it makes a good point. It emphasizes understanding the mission and working to achieve the vision. However, it ignores the simple truth that all three of the masons were doing the same thing. They were building a wall. Trainers using this story often add extra detail about how the first workman was unhappy. Then as they move to their descriptions of the second and then the third interview, the workers become happier. It is true that perspective matters, and it is true that having a sense of purpose is important. However the act of selecting stones, cutting them to fit, and building a wall is difficult and sometimes dangerous labor. Laborers, craftsman, and crew leaders finish the work day exhausted and sore. No amount of knowing that they were building a cathedral that would stand for the ages and glorify God is going to ease aching muscles and soothe calloused hands.

I’m not implying that moral of the story is wrong. However, I think it is time to refocus attention on activities. Paradoxically, the best way to accomplish the mission and achieve the vision may be to understand the activities of a business and to perform them well. We see this in sports. Consider baseball. As exciting as it is too see home runs or double and triple plays, those are not the things that win games. Teams win because they consistently get hits. Base hits put men on base and drive in runs. Football provides another good example. While the playing field is 100 yards long, the objective play after play is on moving the ball 10 yards in four plays for a first down. Teams that are able to do that over and over again win football games. Teams that focus on winning games or getting touchdowns lose. Teams that focus on moving the ball get first downs and win.

If you want to succeed in your business, you need to understand the activities that comprise your business. In the context of the story about the three masons, it does not really matter whether the mason is building a majestic cathedral that will stand for the ages if the stones are not selected with care and placed properly. While there may be glory in working to achieve the vision, success is dependent on the activities or tasks. While it is possible to get so bogged down with operational details that you forget the ultimate objective (not seeing the forest for the trees), it is also possible to become consumed by the big picture and the long-term objective. It is important to notice the trees. Without the trees, there would be no forest to see.

How to see the trees
Business owners have been thoroughly schooled in how to see the big picture and how to adopt a long-term view. They have participated in visioning exercises and learned to write mission statements. The idea of focusing on operations and activities may not be as exciting as strategic thinking, but it is time to return to basics.

One difficulty faced by companies trying to evaluate their operations is trying to find comparisons. Companies, particularly successful companies, tend to think that they are unique or that they have some sort of special recipe or secret sauce. While it is true that their success is probably due to some sort of competitive advantage, it is not true that they are unique. They may be faster or more efficient. They may be better. They may do some things differently, but they are probably not unique. The problem with believing that they are unique is it blinds them to the simple truth that most of the basic processes they use are similar to the basic processes of other businesses. This makes it nearly impossible for them to benchmark. Benchmarking is the process of comparing your processes to some sort of standard (or benchmark).

If you want to really understand your business, then understand the activities and details by figuring out the basic processes and then analyzing each step in the process. If you compare yourself to accepted benchmarks, you can evaluate how successful you are at each step. Consider sales. The typical sales cycle looks like this.
  • Prospect: Identify likely customers.
  • Contact: Approach customers and connect with them in some way.
  • Qualify: Evaluate how likely a customer is to purchase your product.
  • Present: Offer your product to the customer.
  • Close: Complete the deal. Deliver the product, and get paid.
  • Referral: Ask your customer for referrals.
Wholesale or retail, expensive or inexpensive, long cycle or short, online or brick and mortar does not matter. These are the basic steps. Attention to the details in each step is what will set you apart from your competition.

You can apply the same logic to your supply chain and fulfillment processes. The basic steps are similar for all businesses. How you handle details is what gives you a competitive advantage. How big an inventory do you maintain? How do you manage supplier relationships? How do you ship products?

You can deconstruct your processes even when they are not as obvious as sales or supply chain or fulfillment. Does your business rely on inbound calls? Do you have several people working phones? If so, then that activity can be compared to a call center. Does your business require a lot of transaction processing? Compare your business to other businesses with high volumes of transactions. Do you ship a lot of product? Measure yourself as a distribution center. Do you store and manage a lot of data? Benchmark yourself against data storage companies. Do you maintain a large physical inventory? The function to evaluate in this case would be warehousing.

Forests grow in natural cycles. The first things to grow on open land are fast growing grasses and other small leafy plants. The next things to grow are shrubs. The first trees are softwood trees, and in time the softwood trees give way to hardwoods. The types of plants and trees in a forest are also determined by climate, soil type and water. There are many things to see in a forest, and if you want to see them, you have to look at the trees.

Wednesday, December 8, 2010

Do you need sales training?

I’m not sure what I expected when I left the relative security of a salaried position for a sales job that paid a commission. I had an idea that the life was not really the one Arthur Miller depicted in Death of a Salesman, but I did not know if it would be better, or worse. I was going to sell financial services. I read a few books about sales. Harvey Mackay’s Swim With the Sharks Without Being Eaten Alive helped, as did the concepts in Dale Carnegie’s How to Win Friends and Influence People. It was a strange new world for me. I wondered about taking some sort of training class, but any doubts that I had were quickly dispelled by my new boss who informed me that he would teach me everything I needed to know.

I set out to make my fortune. Under the tutelage of my boss and a few other sales people that pitied the new recruit, I began a new career in sales. I had no idea what I was doing. I learned great bits of wisdom such as, “If they aren’t saying no, they are saying yes.” I struggled to accept that every “no” got me one step closer to “yes.” I discovered the value of being a persistent, professional pest, and as much as I like to talk, I recognized the power of silence as a negotiating tool. My boss taught me to “up sell” and to direct prospects to products with higher commissions. I picked up the so called secrets of selling fairly easily and quickly. I was on my way to being a salesman. How could I go wrong? My boss would teach me everything I needed to know.

Unfortunately, I was not on my way to being a successful salesman. My boss was a fine man. He was thoughtful and kind. He did a good job of organizing the sales territory. He knew the customer base and the product, and he seemed a “natural” salesman. He was patiently encouraging. He learned his craft over many years, and he had many teachers. Unfortunately, as with many people who do something well, he had no idea why he was successful. (This happens in other fields also. Great athletes do not always make great coaches.) The reason this was unfortunate, is that there was no way that he could teach me everything I needed to know.

Ultimately, I did manage to learn to be a good salesman. I learned how to consult with clients and understand their needs so that I could provide a solution instead of simply pushing a product. I learned how to provide value to the customer. I learned the importance of developing long-term relationships so that I could continue providing solutions and customer value through repeat business. It took me three years, and I ultimately changed jobs. That was when I learned the value of sales training.

My first experience with sales training came about six months into the new job. A major shakeup of senior management resulted in a new CEO and some reorganization. The new CEO decided to hold a company-wide meeting. One day of the meeting was set aside for sales training. This was the first formal sales training experience for much of the sales team, and all of us were skeptical. I had finally become an excellent sales person after three years of on the job training, and I was certain that there was nothing new for me to learn. This sentiment was shared by many of the high performers. Fortunately we kept an open mind. We learned a lot, and as a result of that experience my perspective on sales changed.

No matter your experience or your sales teams’ ability, sales training can help. Like any skill, sales can be taught. The quality of instruction will make a big difference in how well or how quickly sales can learned. Good training and practice can help novice salespeople learn the basics. The same training helps experienced and successful salespeople by confirming that they are doing the right things and helping them make adjustments if necessary. Sales training can help build a common vocabulary for your sales team and it helps standardize processes. Common vocabulary and procedures make it possible for teams to function smoothly. Sales training also helps support the idea that selling is an activity that can be studied and practiced. Training helps reinforce the importance of planning, and it serves as an important reminder to pay attention to detail.

There are many different types of training programs. Whether you are an experienced salesperson or just learning the ropes, training may be able to improve your sales skills. Give it a try.


Bank Local

Bankers are not very popular these days. Neither are they considered very trustworthy. A quick search on Google or Bing brings up quite a collection of articles about declining trust. Here are two examples.
A healthy mistrust of banking is very trendy. Distrust of large financial institutions is as American as apple pie. The second and third Presidents of the United States were both leery of banks. President John Adams was no friend of banks when he said,
Banks have done more injury to the religion, morality, tranquility, prosperity, and even wealth of the nation than they can have done or ever will do good.
Thomas Jefferson also had some scathing words.
I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs. 
The problem with the universal condemnation of banks and bankers is that it is misplaced. There are several banking systems. Adams and Jefferson were writing about a national bank. The recent financial meltdown was caused by another type of bank, the “too big to fail” banks and financial institutions. These are the banks that consumer guru Clark Howard calls “giant monster mega-banks.” However, locally owned and community based banks still deserve our trust and respect. If anything good comes out of the financial meltdown and the near collapse of the big banks, it may be a return to banking at locally owned and community based banks. If this happens, then it is part of a larger trend of doing business locally.

Many modern banks and financial institutions are primarily transaction processors and speculators, but those are new roles for bankers. Banks, especially in small town America, used to be the institutions that helped start small businesses and made it possible for people to buy homes. When little boys and girls saved their allowance or paper route or babysitting money, they dutifully took it downtown to the bank, and the friendly banker put it into an account and marked the deposit in a passbook. Banks encouraged people to put money away for a rainy day or to save for big purchases. Before the days of MasterCharge (now MasterCard) and BankAmericard (now Visa), banks encouraged customers to save for holiday shopping with Christmas Club Accounts. Now banks encourage customers to take on high interest rate debt. It is hard to say which came first, the rise of giant banks or the change in social mores from planning and saving to debt. In either case, too much debt is a huge part of the morass in which the world finds itself today. It turns out that easy credit had consequences.

The solution is to return to banking as it used to be. If you know where to look, you can still find a friendly banker. There are still places where children can deposit their allowance into passbook accounts. You can still find bankers that will discuss your business plan and work with you to help your business succeed, and there are still banks that will lend you money because the loan committee knows you personally, and they consider your character as important as your FICO score. A community bank  in Central Texas runs an ad where the banker asks, “Who is your banker?” He’s not asking the name of the bank. He’s asking the name of the person at your bank that knows your name. Do you bank where someone knows your name?

Local and community banks in your town also support neighborhood business. They have a vested interest in the success of the local grocery or pharmacy or hardware store because they shop in those stores. When the banker lends money to someone to open a new restaurant, it is not simply another loan to generate profit for the bank. Instead it is a new business for the community and another place that families, including the banker's family, can go out to eat.

Neighborhood bankers don’t just want local business to make enough money to repay their loans. They want local businesses to be successful so that the community is prosperous. When local banks make a profit, the money stays in the community and supports local business.

If you long for the days of a friendly banker that knows your name and not just your account number, if you want to do business with someone that will take the time to learn your business and wants you to succeed, if you want to bank with someone that is part of your community and not just a branch of some giant corporation, then it is time for you to start banking with the locally owned banks in your community.

Thursday, December 2, 2010

Why Groupon Succeeds

Have you ever used Groupon? Groupon is a service that sends out a daily email with coupons for local businesses. Most of the deals are pretty good. If you don’t have any idea what I am talking about, ask around. One of your friends probably subscribes to Groupon or has used it on Facebook. Business owners that have used Groupon to promote their business have reported that doing so resulted in a lot of sales. Groupon is a new company, and it appears to be successful. According to recent speculation, Google may even be considering purchasing Groupon.

The whole concept and implementation is innovative. Even so, there must be some secret to their success. Do you wonder what it is? Do they have some sort of super-efficient way to manage their vendor and customer relationships? Could it be cutting edge technology?

Well? The answers are no and no. The secret is their attention to detail and the quality of their writing. Groupon does not rely on business offering deals for ad copy. It has a writing staff. It may not be off-the-wall like this product description I’ve added to the end of this post for a wool coat from the J. Peterman Company, but according to CEO Andrew Mason,
. . . having well-written, engaging content is a key part of convincing users to keep reading about new shops that they might never have never heard of.
Creative writing was a hallmark of J. Peterman whose ad copy was so well known that it even ended up as part of the plot line on the popular TV show Seinfeld.

Groupon works because Mason and his team understand the importance of branding and of articulating a value proposition to customers. Groupon recognizes that it has two customer groups: the vendor with the product and the customer looking for a deal, and it offers value to each group. Groupon’s brand represents good deals for consumers and an easy approach to product promotion using online coupons to for vendors, and the company avoids the trap of being another coupon clipping site.

Check out this blog article about Groupon. DEMO: The secret of Groupon’s success is … good writing?

J. Peterman Company product description:
North Woods Know-How
Men who wear jackets like this know things.
  • How to start a fire in the rain.
  • Measure a cord of wood.
  • Build empires.
Like Samuel Bingham. Started out as a saw-filer and eventually became “The King of the Cascades.” At 60, he was still showing the greenhorns how to untangle log jams on the Gatineau.

Or J.R. Booth. Started out as a carpenter with $9 in his pocket. Worked well into his 90s and left a railway empire estimated at $33 million.

Clearly two men worth emulating.

Wool Zip Jacket (No. 2833). Both rugged and handsome, it’s made of a 90% Melton wool blend that’s brushed so the warp and welt yarns aren’t visible. 2-button adjustable cuffs. Side slits. Front and back yokes.

The front yoke is unique in that it covers the pockets, making them the perfect place to keep maps, a deed, or your GPS unit. Extremely warm but not bulky.

Every North Woods estate should come with one of these jackets and a black lab. Imported.

Men’s sizes: S, M, L, XL, XXL.

Colors: Navy, Red.