One of the best team-building exercises that I have participated in was as a Board Member for the Children’s Hospital Foundation of Wisconsin. We were going down a path that led to a decision on whether or not to invest $150M in a new addition. The CEO at the time, Jon Vice, wisely determined that strong teams were needed for each committee in order to thoroughly vet the idea from every possible perspective.
The process started by being given a book to read (“Now, Discover Your Strengths” by Marcus Buckingham & Donald O. Clifton, Ph.D.), and then completing the “Strengthsfinder” assessment using a code provided in the book. The goal was to understand gaps in perception (how you view yourself vs. how others view you) so that you could truly understand your own strengths and weaknesses. Then, teams were created with people having complementary skills to help eliminate weaknesses from the overall team perspective. The results were impressive.
Over my career, I have been involved in many team-building exercises and events – some of which provide useful insights, but most failed to pull the findings together in a way that was concrete, had context, and offered actionable recommendations. Key areas that consistently omitted were around Organizational Culture, Organizational Politics, and Leadership. Those three areas have a significant impact on value creation vis-à-vis team effectiveness and commitment.
When I had my consulting company we had a small core team of business and technology consultants and would leverage subcontractors and an outsourcing company to allow us to take on more concurrent projects as well as larger, more complex projects. This approach worked for three reasons:
- We had developed a High-Performance Culture that was based on:
- Purpose: A common vision of success, and understanding of why that mattered, and an understanding of specifically how that was defined and measured.
- Ownership: Taking responsibility for something and being accountable for the outcome. This included responsibility for the extended team of contractors. Standardized procedures helped ensure consistency and make it easier for each person to accept responsibility for “their team.”
- Trust: Everyone understood that they not only needed to trust and support each other but in order to be effective and responsive the others would need to trust their judgment. If there was a concern we would focus on the context and process improvements to understand what happened and implement changes based on lessons learned. Personal attacks were avoided for the good of the entire team.
- Empowerment: Everyone understood that there was risk associated with decision making, while at the same time realizing that delaying an important decision could be costly and create more risk. Therefore, it was incumbent upon each member to make good decisions as needed and then communicate changes to the rest of the team.
- Clear and Open Communication: People on the team were very transparent and honest. When there was an issue they would attempt to resolve it first with that person, and then escalating if the two people could not reach an agreement and decided to seek the consensus of the team. Everything was out in the open and done in the spirit of being constructive and collaborating. Divisiveness is the antithesis of this tenet.
People who were not a good fit would quickly wash out, so our core team consisted of trusted experts. There was a friendly competition that helped raise the bar for the entire team, but when needed the other team members became a safety net for each other.
We were all focused on the same goal, and everyone realized that the only way to be successful was to work together for the success of the team. Win or lose, we did it together. The strength of our team created tremendous value – internally and for our customers that we sustained for several years. That value included innovation, higher levels of profitability, and an extremely high success rate.
This approach can work at a Business Unit or Department level but is most effective when it starts at the top. When employees see the leaders of their company behaving in this manner it provides the model and sets expectations for everyone under them. If there is dysfunction within an organization it often starts at the top – by promoting or accepting behaviors that do not benefit the whole of the organization. But, with a strong and positive organizational culture, the value of strong teams is multiplied and becomes an incredible competitive advantage.
This should be the goal for any business, regardless of the products you sell or services you provide. The idea is to create a mutually beneficial relationship that motivates people to want to continue working with you, despite the availability of competitive products and/or the possible concerns or objections of others (e.g., those pushing for a “Corporate Standard” involving another product.)
The best part is that this concept applies to all companies and all Product Life Cycle stages. Whether your company is on a rapid growth trajectory towards ‘Unicorn status,’ your offerings are mature and may be viewed as ‘less exciting,’ or your products are on the decline and you are seeking the ‘longest tail’ possible – this will help. At each phase there are credible threats from competitors that seek to grow through the erosion of your business.
Several years ago I was responsible for two product lines in two major geographic regions (Americas and APAC/Japan). Our attrition rate (“churn”) had traditionally been slightly below the industry average. We began seeing an increase in churn and a corresponding slight decrease in organic growth. Both were indicators that something needed to change.
After discussions about tactical approaches to address this, our small leadership team agreed that this was a strategic issue that we needed to address. The result was an understanding that we needed to create ‘Customers for Life.’ Everyone agreed with the concept, but due to a variety of differences (culture, who our customer was – end customer vs. channel partner, buying patterns, etc.) we agreed to try what was best for our own businesses and share the results and lessons learned.
My approach was to focus on developing strong relationships that fostered collaboration and ultimately led to growth and success for both parties. The basic premise was simple:
- People tend to buy from people they like, respect, and trust. Become one of those people for your customers.
- Helping companies achieve better outcomes leads to greater success for both our customers and us.
How did we do it? It was a systematic process that included the following:
- Develop simple profiles for each customer (e.g., products used, date of first purchase, size of footprint, usage and payment trends, industry).
- A minimum size – based on either the size of the product footprint, annual amount spent with us, or size of the company, was used to prioritize companies and organizations having the greatest potential impact.
- Make contact multiple times each year, and not just when you wanted money.
- These “out of cycle” contacts turned became very important.
- Ask questions about key initiatives, milestones, and concerns.
- The responses were documented, and that helped seed following conversations and demonstrate interest in what they were doing.
- Request meetings to understand how they are using our products and get a brief update on what our company has been doing.
- Meeting people face-to-face is always good.
- Learning more about their business, systems, goals and challenges created opportunities to really add value.
- Look at what they were doing with our products and offer suggestions to do more, do something better or more efficiently, call out potential problems and offer suggestions and discuss best practices. Often, I would have a technical expert follow-up and provide an hour or two of free assistance relating to those findings.
- Look for opportunities to congratulate them.
- It demonstrates that they are important enough that you are paying attention.
- Google Alerts made this easy.
- Regularly ask our customers if there is anything that we could do to help them.
- They would often reciprocate, which led to an increase in references and referrals.
- Continual improvement – Analyze the results and refine the process as needed.
As I met with our Customers and Channel Partners I would explain what ‘Customer for Life’ meant to us, and the potential benefits to them. Prior to the meeting I would check to see if we had (or they wanted) a NDA in-place so that they could speak freely without having concern that this information would be shared with potential competitors. It was a good step towards developing trust and helping them feel comfortable in disclosing information that would help us understand their situation.
Prior to the meeting I spent an hour or two researching the company, their history, major events for that company and within their industry, identify their top 2-3 competitors and then contrast our customer with those competitors. This is where my consulting background really came in handy. Showing interest and understanding created credibility, allowing conversations to progress to substantive issues in much less time.
Over the course of two years my team and I helped our customers innovate by providing different perspectives and ideas, modernize (e.g., move to spatial analytics to get a more granular understanding of their own business), improve their systems and grow their businesses. We also received feedback that helped us improve a variety of processes – something that benefits all customers. Collaboration and success created strong relationships with many of those customers.
From a business perspective our customer churn decreased by 50% over the same period, and organic growth increased slightly more than 20%. We had achieved our objectives and improved our bottom line. The concepts behind Strategic Account Management, Voice of Customer, Customer Loyalty and Customer Success had blended into a practical approach that was not burdensome and provided a great ROI.
One of my biggest lessons learned was that adopting this mindset and creating a repeatable process is something that can be done anytime, and should be done sooner than later.
Every day that you are not creating your own ‘Customers for life’ there is a good chance that your competition is.
A while back I wrote a post titled, To Measure is to Know. That is only part of the story, so please read on.
The other side of the coin is that what you measure defines how people behave. This is an often forgotten aspect of Business Intelligence, Compensation Plans, Performance reviews, and other key areas in business. While many people view this topic as “common sense,” based on the numerous incentive plans that you run across as a consultant it seems that is not the case.
Is it a bad thing to have people respond by focusing on specific aspects of their job that they are being measured on? That is a tough question. This simple answer is, “sometimes.” This is ultimately the desired outcome of implementing specific key performance indicators (KPIs), but it doesn’t always work. So, let’s dig into this a bit deeper.
One prime example is something seemingly easy yet often anything but – Compensation Plans. When properly implemented these plans drive organic business growth through increased sales and revenue (both likely items being measured), as well as drive steady cash flow by constantly closing within certain periods (usually months or quarters). What could be better than that?
Salespeople focus on the areas where they have the greatest opportunity to make money. Presumably they are selling the products or services that you want them to based on their comp plans. Additionally, certain MBO (management by objective) goals are presumably focused on positive outcomes that are important to the business, such as bringing-on new reference accounts. Those are forward looking goals that increase future (as opposed to immediate) revenue. In a perfect world, with perfect comp plans, all of these business goals are codified and supported by motivational financial incentives.
Some of the most successful salespeople are the ones that primarily care only about themselves. They are in the game for one reason – to make money. Give them a plan that is well constructed and allows them to win and they will do so in a predictable manner. Paying large commission checks should be a goal for every business, because when they are doing that their own business is prospering.
But, give a salesperson a plan that is poorly constructed and they will likely find ways to personally win in ways that are inconsistent with company growth goals (e.g., paying commission based on deal size, but not factoring in the overall impact of excessive discounts). Even worse, give them a plan that doesn’t provide a chance to win and the results will be uncertain at best.
Just as most tasks tend to expand to use all time available, salespeople tend to book most of their deals at the end of whatever period is being used. With quarterly cycles most of the business tends to book in the final week or two of the quarter – something that is not ideal from a cash flow perspective. Using shorter monthly periods may increase business overhead, but the potential to significantly increase business from salespeople working harder for that immediate benefit will likely be a very worthwhile tradeoff.
What about motiving Services teams? What I did with my company was to provide quarterly bonuses based on overall company profitability and each individual’s contribution to our success that quarter. Most of our projects used task oriented billing where we billed 50% up-front and 50% at the time of the final deliverables. You needed to both start and complete a task within a quarter to maximize your personal financial contribution, so there was plenty of incentive to deliver and quickly move to the next task. As long as quality remains high this is a good thing.
We also factored-in salary costs (i.e., if you make more than you should be bringing-in more value to the company), the cost of re-work, and non-financial items that were beneficial to the company. For example, writing a white paper, giving a presentation, helping others, or even providing formal documentation on lessons learned added business value and would be rewarded. Everyone had the right motivation, performed work and delivered quality work products as needed, and made good money doing so.
This approach worked very well for me, and was continually validated over the course of several years. It also fostered innovation, because the team was always looking for ways to increase their value and earn more money. Many tools, processes and procedures came out of what would otherwise be routine engagements.
Mistakes with comp plans can be costly – due to excessive payouts and/or because they are not generating the expected results. Back testing is one form of validation as you build a plan. Short-term incentive programs are another. Remember, where there is not risk there is little reward, so accept the fact that some risk must be taken to find the point where the optimal behavior is fostered.
It can be challenging and time consuming to identify the right things to measure, the right number of things (measuring too many or too few will likely fall short of goals), and provide the incentives that will motivate people to do what you want or need. But it is definitely worthwhile work if you want your business to grow and be healthy.
This type of work isn’t rocket science, and therefore is well within everyone’s reach.