Consulting

Continuous Improvement, Growth Mindset, and an “Attitude of Better”

Posted on Updated on

This was originally posted on LinkedIn.com/in/chipn

When I had my own company our focus was on providing the absolute best services in a few niche areas. Our goal was to succeed in the spaces that were important yet underserved. We identified those areas, validated the need, evaluated the competition and our competitive positioning, determined the market potential, and then made an informed decision based on that data.

Continuous Improvement. An image of stairs moving upwards with a man standing on a wall near the stairs and overlooking a city scene.

But, this was not a plan for winning. It was a roadmap to places that we could win, but nothing more.What would our strategy be? What specific problems would we solve? How would we create awareness around the potential impact of those problems? And, how would we position ourselves as being the best candidates to address those business needs? In short, what was our real purpose or raison d’etre?

Recognizing that void led to a couple of powerful revelations –

1.    It is great to have a goal of being the best at something, but don’t use that as an excuse to procrastinate. Learning and improving is an iterative process, so that goal by itself was not good enough.

2.    Adopting an “Attitude of Better” turned out to be a game-changer. We set our focus on continuous improvement and winning. We became customer-obsessed, driven to provide a better service and better results for each and every customer. We gauged our success by customer satisfaction, repeat engagements, and referrals.

3.    But, it wasn’t until we adopted an intentional Growth Mindset that our business really started to evolve and improve.

·      We leveraged each and every win to help us find and create the next win.

·      Our team was constantly pushing each other to raise the bar of knowledge, expertise, and performance.

·      Just as important was what occurred next. They became a safety net for each other. Failure for one meant failure for all and nobody wanted that. They became a high-performance team.

·      We created standard processes and procedures to ensure consistency and maintain the highest levels of quality. This applied to everything we did – from working on a task to writing trip reports, status reports, and proposals. It also reduced our risks when we chose an outsourcing partner to help us take on more concurrent projects.

·      Whenever possible we automated processes to maintain consistency while increasing efficiency, repeatability, scalability, and profitability.

·      We measured and tracked everything, analyzed that data, captured lessons learned, and continuously worked on improving (and documenting) every aspect of the business.

·      A byproduct of this approach was that we could offer leaner pricing based on accurate estimates having very small margins of error. Our pricing was competitive, we could fix price much of what we did, and our profit margins were very good. This allowed us to invest in further growth.

Our “attitude of better” also came across as confidence when selling to and working with new customers. Not only could we tell them stories of our success that included tangible metrics, most of our customers became references willing to talk about the value we added. Their stories included discussions about how much better things became as a result of our work.

Better became the foundation of what we did as well as the basis of those customer success stories.

Could a New Channel Model Lead to Sales Amplification?

Posted on Updated on

Over the years I have helped both successful companies and start-ups improve and strengthen their Channel and Strategic Alliances programs. Those companies do a great job closing deals but usually have concerns about not generating or receiving enough new business leads. Or, they develop strong relationships with one or two vendors, only to find later that a key vendor has been sending deals to a competitor. You may not have experienced this yourself, but if you have please read on.

Word cloud for strategic thinking.

Most traditional channel models support Distributors, Resellers, OEMs, and ISVs. Business mainly flows upwards to the main vendor. If that vendor has popular and widely used products then business can be good because there is sufficient demand. But when that is not the case your sales pipeline usually suffers.

Doing something the same way as everyone else may not be a bad approach when there is enough business for everyone and your growth goals and aspirations are aligned with your competition.

Sales Channel business is usually not the main source of revenue for most companies, but it does have the potential to become the largest and most scalable revenue source for nearly any business. Just think about the money that is being left on the table by not adopting a growth mindset and executing a new and better strategy.

In the summer of 2016 I attended the “Sage Summit” in Chicago. It was impressive to see the Sage Group’s efforts to build, strengthen, and protect their community of Customers and Channel Partners. They made the effort to foster higher levels of collaboration between the various types of partners – implementation services, consulting and staff augmentation services, complementary product vendors, etc. They had created their own highly successful Business Ecosystem, which is an excellent proof point.

When designing a channel partner program my personal focus has always been on finding the balance between promoting and protecting the business of partners with helping ensure that the end customers have the best experience possible (and have some recourse when things do not work out as expected). There are a variety of methods I have used to accomplish those goals, but the missing component has always been the inclusion of a systematic approach to seed relationships between those partners and facilitate an even greater amount of business activity.

Nearly a year ago I began working with a management consultancy run by Robert Kim Wilson, which has a business vision based on his book, “They Will Be Giants.” I will provide links at the bottom of the post for this book and other relevant resources. Kim asserts that Entrepreneurs with a Purpose-Driven Business Ecosystem (PDBE) are more successful than those without one and provides examples to prove his point. Having experienced Kim’s own PDBE I see how purpose fosters trust and collaboration.

As I did more research I have found that, especially over the past two years, there has been a lot of focus placed on Business Ecosystems and Business Ecosystem Organizers (such as Sage in the earlier example). Those findings reinforced the PDBE approach, and external validation is always a good thing.

Just as important from my perspective is that this concept applies to businesses of any size, and it is especially helpful to small to midsize businesses. The fun part for me is exploring a specific business, analyzing what they do today, and quantifying the benefits of adopting this new strategy.

So, how does this new type of Business Ecosystem work?

  • The Business Ecosystem Organizer expands the overall network, vets new “Business Ecopartners,” and provides a framework or infrastructure for the various Business Ecopartners to get to know one another, exchange ideas, and discuss opportunities.
    • This can become an incredible source of sustainable revenue for companies willing to invest in the necessary components to grow and support their own Business Ecosystem.
  • Business Ecopartners will have access to trusted resources that can augment existing business and take-on new, bigger projects by leveraging the available expertise.
    • Suppose that you have products or services that work with commercial CRM (Customer Relationship Management), ERP (Enterprise Resource Planning), or SCM (Supply Chain Management).
    • You have seen a growing demand for functionality that relies on highly specialized technologies like:
      • Cryptocurrency support.
      • Blockchain for both financial transactions and things like traceability in your supply chain or IoT data.
      • AI (artificial intelligence), ML (machine learning) to detect patterns and anomalies – such as with fraud detection, Deep Learning/Neural Networks for image recognition or other complex pattern recognition.
      • Graph databases to better understand a business and infer new ways to improve it.
      • Knowledge Graph/Semantic databases to assist with Transfer Learning and deeper understanding.
    • It would not be practical or cost-effective for most businesses to build these practices in-house so partnering becomes very attractive to your company.
      • This type of business can also be very attractive to a Business Ecopartner because someone else is handling sales, billings, account management, etc.
  • Other Business Ecopartners could leverage your products or services for their projects and engagements, thus becoming another source of revenue.
  • By leveraging this network your business can essentially compete on imagination and innovation – something that could become a huge source of differentiation from your competition.

Value realized from this New Business Ecosystem model:

  1. These new sources of business and talent can become a real competitive advantages for your business.
  2. This becomes the source for Sales Amplification because your business is extending its reach and expanding its growth potential – directly and indirectly.
  3. The weighted (based on capabilities, capacity, responsiveness, and Ecopartner feedback) Business Ecopartner network model could lead to exponential business growth over time – and that is a winning strategy for any business.

References:

What are you Really Selling? (hint – solutions)

Posted on Updated on

It is interesting to see Sales and Marketing people still focusing on features, performance, cost, and even value without creating linkage to what that means to a company from a business perspective. Once you understand what your prospect is buying and why they need it, you can then connect with them in a meaningful way to increase your win rate.

Pot of Gold

A sales adage from the 1940s (source) asserts, “No one wants a drill. What they want is the hole.” Today, that basic understanding of why people and companies buy is still often lost in sales and marketing messages. Sales success is all about solving problems and satisfying needs.

Several years ago, my team and I were selling a new Analytics Database that was genuinely different. Still, our message was identical to every other database vendor – “70% – 100% faster than every other product.” It is nearly impossible to differentiate your product using a non-differentiated message. Don’t treat your product or service as a commodity if it is not one.

I flipped the messaging to focus on business needs. We created a weekly webinar focused on Why Fast Matters. Query response time is important, but responsiveness to customer needs and requests is essential. What if they did not need to wait a week or two to have new indexes created or a month to have a Star Schema updated? They could just run queries as-is, maybe wait a minute instead of a second or two, and have what they need then and there. That message resonated, and we sold the first 50% of that product globally. When the Australian team began using our messaging, their sales also increased. Funny how that works.

Effectiveness is all about results and intended outcomes. Efficiency is about achieving those results with the least amount of time and effort invested. It doesn’t mean that we are looking for a lazy approach to find a win. Instead, it is about identifying repeatable patterns of doing the right things that circumvent unnecessary activities, accelerate the sales cycle, and minimize related costs. 

The way to help yourself understand what you are selling is to view things from your prospect’s perspective. What struggles are they likely facing? Where are the greatest opportunities to help their type of business? Are you analyzing data to attempt to assess their unmet needs? Your insight can become a huge differentiator, especially if you can teach them different and better ways to do something (ala the Challenger Sales Model).

What is the difference between your prospect company and its main competition? This analysis requires a general understanding of the problem space and a more specific understanding of the prospect company, its history, and 2-3 of its main competitors. It also requires an honest account of how your company and products compare to the competition so that you can play up your strengths and limit your investment in areas where the fit is not as good.

The next item to focus on is messaging. Below are a few examples from my career –

  1. Analytics & Big Data – The focus here is often on data volume, the currency of the data, speed of queries, cost, maintenance, and downtime. Those things become essential later in the sales discussion, but initially, companies want to know what problems your product or solution will solve.
    • Some of my fastest deals sold because I demonstrated ways to make better decisions faster and/or identify minor problems before they were had the chance to become major problems. Avoiding problems and unplanned outages were critical elemants of the messaging.
    • In one case, I closed a significant deal in less than three months by focusing on how a company could provide five years of transactional data for their customers. Those customers could use the data to make better purchasing decisions in less time than it took the current system to analyze six months of data. Their sales increased after implementing this modernized system. Helping their customers make better buying decisions faster was the winning message.
  2. Embedded Products – While many companies focus on APIs, features, or cost per unit, I would focus on how the product I was selling made things better and easier to manage for improved Customer Support and Customer Satisfaction.
    • I closed a $1.1 million deal in less than two months to a medical device company by focusing on the life cycle of those devices (often 10-15 years) and how their customers needed consistency from machine to machine. Consistency over time was the winning message here.
    • After being approached by a Defense Contractor for a relational database product for a new Flight Simulator system, I changed the discussion to the complexity of flight control systems, the need to correlate 30+ operational systems in real-time, and the importance of taking a verbal command and translating it to specific commands for each related system. That led to the sale of a NoSQL product that was ideally suited for this complex environment. The idea of letting our software handle the highly complex workload helped win this deal.
  3. Consulting Services – These were not contracting or body shop services (commodities), but actual Business and Technical Consulting services with high visibility and high impact. In these cases, expertise, experience, and having a track record of success in different but demanding scenarios provided confidence. These were often multi-phase engagements to prove our value before making a significant commitment.
    • In a bid against two well-established competitors, we won a deal with a large Petroleum company worth nearly $500K. The proposal included information that we uncovered about the system and use case and later verified with the prospect, a section on our people and some past projects, and a high-level project plan with firm-fixed pricing. We won the bid, and I later found out that our cost was $50K higher than the largest competitor and more than $100K more than the other competitor. The customer told me, “Your proposal demonstrated the understanding of who we are and what we need, and that confidence provided the justification to select your company and pay a premium to have the job done right the first time.”
    • My first million-dollar deal was with a company where we demonstrated our ability to solve problems. They knew they needed assistance but were not exactly sure where. I created a “Pool of Days” concept that provided flexibility in the work performed (task, deliverables, and scheduling) but had minimum monthly burn rates and an expiration date to protect my company. The winning messaging this time was that flexibility and the ability to accommodate changing needs without introducing significant risk, or additional cost were better ways to buy consulting services. This approach led to many other deals of a similar nature with other companies.

The common theme is helping companies solve their specific business problems from these examples. Even when technology was central to the message, focusing on better outcomes for that prospect and their customers was essential. Value matters, but positive results and better outcomes matter even more for most purchasing decisions.

Nobody wants to be responsible for taking a chance on a new vendor and be responsible for a high-profile failure. Helping instill confidence early on makes a huge difference, and following through to successful implementation results in happy customers who become loyal customers that provide references and referrals.

Success starts with selling what you know you can do from a business perspective for your Prospects. You are solving their problems with solutions they need and avoid getting lost in the noise of the unfocused messaging coming from most of your competition.

Good Selling!

Are you Visionary or Insightful?

Posted on Updated on

Having great ideas that are not understood or validated is pointless, just as being great at “filling in the gaps” to do amazing things does not accomplish much if what you are building achieves little towards your goals. This post is about Dreaming Big, and then turning those dreams into actionable plans.

Let me preface this post by stating that both are important, and both are complementary roles. But, when you don’t recognize the difference between the two it becomes much harder to successfully execute and realize value/gain a competitive advantage.

The visionary person has great ideas but doesn’t always create plans or follow-through on developing the idea. There are many reasons why this happens (distractions, new interests, frustration, lack of time), so it is good to be aware of that as this type of person can benefit by being paired with someone who is willing and able to understand a new idea or approach, and then take the next steps to flesh out a high-level plan to present that idea and potential benefits to key stakeholders.

The insightful person sees the potential in an idea, helps others to understand the benefits and gain their support, and often creates and executes a plan to prototype and validate the idea – killing it off early if the anticipated goals are unachievable. They document, learn from these experiences, and become more and more proficient with validation of the idea or approach and quantification of the potential benefits.

Neither of these types of people are affected by loss aversion bias.

A picture of a road at night, with headlights illuminating the center of the road. The part of the road closest to the viewer is marked common sense, because it is right in front of you. Further down, in the center, the road is marked insight. It requires focus to be insightful. To the upper left in a darkened section just off the road there is writing that states,

I find it amazing how frequently you hear someone referred to as being Visionary, only to see that the person in question was able to eliminate some of the noise and “see further down the road” than most people. While this is a valuable skill to have, it is more akin to analytics and science than art. Insight usually comes from focus, understanding, intelligence, and being open minded. Those qualities are important in both business and personal settings.

On the other hand, someone who is truly visionary looks beyond what is already illuminated and can therefore be detected or analyzed. It’s like a game of chess where the visionary person is thinking six or seven moves ahead. They are connecting the dots for the various future possibilities while their competitor is still thinking about their next move.

The interesting thing is that this can be very frustrating situation for everyone.

  • The person with the good idea may become frustrated because they feel that they are misunderstood or ignored.
  • The people around that visionary person become frustrated, wondering why that person isn’t able to focus on what is important or why they fail to see / understand the big picture.
  • Those visionary ideas and suggestions are often viewed as tangential or even irrelevant. It is only over time that the others understand what the visionary person was trying to show them – often after a competitor has started to execute on the idea.
  • The insightful person that wants to make a difference can feel constrained in environments that are static and offer little opportunity for change and improvement.

Both Insightful and Visionary people feel that they are being strategic. Both are focused on doing the right thing. Both have similar goals. That’s what is truly ironic. They may view each other as the competition, rather than seeing the potential of collaborating.

This is where a strong management team can have a positive impact by fostering a culture of innovation and placing these people together to work towards a common goal. Providing a small amount of time and resources to explore an idea can lead to amazing outcomes. When I had my consulting company I sometimes joked, “What would Google do?”

The insightful person may see a payback on their ideas much sooner than the visionary person, and I believe that is due to their focus on what is already in front of them. It may be a year or more before what the visionary person has described shifts to the mainstream and into the realm of insight – hopefully before it reaches the realm of common sense (or worse yet, is completely passed by).

My recommendation is that people create a system to gather ideas, along with a description of what the purpose, goals, and advantages of those ideas are. Foster creative behavior by rewarding people for participation, whether or not the ideas are used. Then, review those ideas on a regular basis. With any luck you will find some good ideas – some insightful and possibly some even visionary.

Look for commonalities and trends to identify the people who are able to cut through the noise or see beyond the periphery, and the areas having the greatest potential for innovation. This approach will help drive your business to the next level.

You never know where the next good idea will come from. Supporting efforts like these provide opportunities to grow – people, products, and profits.

The Importance of Proper Pricing

Posted on Updated on

picture showing several bundles of money

Pricing is one of those things that can make or break a company. Doing it right takes an understanding of your business (cost structure and growth / profitability goals), the market, your competition, and more. Doing it wrong can mean the death of your business (fast or slow), the inability to attract and retain the best talent, as well as creating a situation where you will no longer have the opportunity to reach your full potential.

These problems apply to companies of all sizes – although large organizations are often in a better position to absorb the impact of bad pricing decisions or sustain an unprofitable business unit. Understanding all possible outcomes is an important aspect of pricing as it related to risk and risk tolerance.

When I started my consulting company in 1999 the plan was to win business by pricing our services 10%-15% lower than the competition. It was a bad plan that didn’t work. Unfortunately, this approach is something you see all too often in businesses today.

In our case we only began to grow once we increased our prices (about 10% more than the competition) and focused on justifying that with our expertise and the value provided. We were (correctly) perceived as being a premium alternative, and that positioning helped us grow.

Several years ago I had a management consulting engagement with a small software company. The business owner told me that they were, “an overnight success that was 10 years in the making.” His concern was that they might not be able to capitalize on recent success so he was looking for an outside opinion.

I analyzed his business, product, customers, and competition. His largest competitor is the industry leader in this space, and products from both companies were evenly matched from a feature perspective. My client’s product even had a few key features that better for management and compliance in Healthcare and Union environments that his larger and more popular competitor lacked. So, why weren’t they growing faster?

What I found is that competition was priced 400% higher for the base product. When I asked the owner, he told me their goal was to be priced 75% – 80% less than the competition. He could not explain why he did this, other than to state that he believed that his customers would be unwilling to pay any more than that. His lack of confidence with his own product became evident to companies interested in his solution.

In many cases he lost head-to-head competition against that competitor, but almost never on features. Areas of concern were generally on the size and profitability of the company, and the risk created by each for prospects considering his product.

I shared the graph (below) with this person, explaining how proper pricing would increase their profitability and annual revenue, and how both of those items would help provide customers and prospects with confidence. Moreover, this would allow the company to grow, eliminate single points of failure in key areas (Engineering and Customer Support), add features, and even spend money on marketing. Success breeds success!

Graph showing revenue relative to the life cycle stages of a successful business venture
Source: Entrepreneurial Finance by Leach and Melicher (3rd Ed.)

In another example I worked with the Product Manager of a large software company who was responsible for producing quarterly product package distributions. This work was outsourced and each build cost approximately $50K. I asked a simple question, “What is the break-even point for each distribution?” That person replied, “There really isn’t a good way to tell.”

Graph showing cost volume profit analysis
Sample cost-volume-profit (CVP) analysis

By the end of the day I provided a Cost-Volume-Profit (CVP) analysis spreadsheet that showed the break-even point. Even more important, it showed the contribution margin and demonstrated there was very little operating leverage provided these products (i.e., they weren’t very profitable even if you sold a lot of them).

My recommendations included increasing prices (which could negatively impact sales), invest in fewer releases per year, or find a more cost-effective way of releasing those products. Without this analysis their “business as usual” approach would have likely continued for several years.

Companies are in business to make money – pure and simple. Everything you do as a business owner or leader needs to be focused on growth. Growth is the result of a combination of factors, such as uniqueness of product or services provided, quality, reputation, efficiency and repeatability. Many of these are the same factors that also drive profitability. Proper pricing can help drive profitability, and having excess profits to invest can significantly impact growth.

Some customers and prospects will do everything possible to whittle your profit margins down to nothing. They are focused on their own short-term gain, and not on the long-term risk created for their suppliers. Those same “frugal” companies expect to make a profit on their own business, so it is unreasonable to expect anything less from own suppliers.

My feeling is that, “Not all business is good business” so it is better to walk away from bad business in order to focus on the business that helps your company grow and be successful.

One of the best books on pricing that I’ve ever found is, “The Strategy and Tactics of Pricing: A Guide to Profitable Decision Making” by Thomas T. Nagle and Reed K. Holden. This is an extremely comprehensive and practical book that I recommend to anyone responsible for pricing or who has P&L responsibility within an organization. It addresses the many complexities of pricing and is truly an invaluable reference.

In a future posts I will write about the metrics that I use to understand efficiency and profitability. Metrics can be your best friend when it comes to finding ways to optimize pricing and maximizing profitability. This can help you create a systematic approach to business that increases efficiency, consistency, and quality.

At my company we developed a system where we know how long common tasks would take to complete, and had efficiency factors for each consultant. This allowed us to create estimates based on the type of work and the people most likely to work on the task, and fix bid the work. Our bids were competitive, and even when we were the highest priced bid we often won because we would be the only (or one of the few) companies to guarantee prices and results. Our level of effort estimates were +/- 4%, and that helped us maintain a 40%+ minimum gross margin for every project. This analytical approach helped our business double in revenue without doubling in size.

There are many causes of poor pricing, including: Lack of understanding of cost structure; Lack of understanding of the value provided by a product or service; Lack of understanding of the level of effort to create, maintain, deliver, and improve a product or service; and Lack of concern for profitability (e.g., salespeople who are paid on the size of the deal, and not on margins or profitability).

But, with a little understanding and effort you can make small adjustments to your pricing approach and models that can have a huge impact to the bottom line of your business.