Selling and Management: How managers can learn and improve by taking tips from good selling practice

To ruin a good salesman, promote him to sales manager. So runs one of the most familiar maxims of management. The implication is that selling is a distinct activity, remote from managing, and of lower status. Even sales management is far down the pecking order - and sales directors rarely, if ever, become chief executive. Yet all businesses, save the tiny minority whose products or services sell themselves, depend for their very existence on the sales function. Moreover, compared to other management activities, selling is far more thoroughly grounded in empirically proven techniques and results-based knowledge.

Do you know, for example, the ratio of orders achieved per arranged customer call? Do you know what will happen if you double the number of visits, or halve them? The answer should be that out of five appointments made by cold-calling, one won’t be kept by the appointee, three will have no result, and one will hit the jackpot. With twice the number of visits, the success ratio will rise, not by double, but by 2.3 times. Halve the calls, and the success ratio declines by two-thirds. And these are self-evidently facts whose importance goes far beyond selling.

If the sales force is under-performing, because it’s not getting enough appointments or is converting them below the 20% benchmark, the likelihood is that marketing effort is running to waste, manufacturing capacity is being under-utilised, and strategy is missing its objectives. The wise executive won’t consider selling as a separate function, like facilities management, say: rather, selling is an integral part of the corporate spectrum, from strategy formation all the way to service - which doesn’t mean just after-sales service. If the before-sales service (that is, selling) is poor, there won’t be any sales: hence, no after-sales, either.

THE ‘LOST’ CUSTOMERS
The ratios derived from selling activity are fundamental in identifying poor performance and pointing towards major improvement. That was vividly demonstrated by the experience of French service guru Jacques Horovitz with one retail client. The ratio that the consultant attacked was the number of people who entered the shops intending to buy, but left without purchasing. It was staggeringly high: 40%. In other words, if these customers hadn’t been ‘lost’, turnover would have risen by two-thirds! Whatever caused the loss was hideously expensive - and every reader of Thinking Managers knows the possible causes.

Either the item wanted wasn’t in stock; or the would-be customers couldn’t find a salesperson; or they found one, but the person was no good. While these are elementary faults, they have profound implications for corporate policy. Out-of-stock could, for instance, trace back to inadequate information systems and poor supplier relationships. Poor selling is a symptom of bad recruitment and ineffective training - which won’t just be confined to the front end. Lack of staff could well result from what’s been described in the Financial Times as ‘corporate anorexia.’

My own recent studies in retail businesses have produced several anorexic examples. Because staff costs are so high in retailing, managements strive to protect margins by constantly reducing headcounts. But service levels are intimately linked with staff numbers - and service is the key to customer satisfaction and is intimately linked with vital customer retention. Hence the familiar phenomenon of the business which cuts back on staff, yet still finds its margins declining. Quite plainly, this is what Gary Hamel and C. K. Prahalad criticise as ‘denominator management’, which aims to improve profitability by acting on costs, but ignores the potential of raising revenue.

Those retail managements would have been far better employed on finding ways in which to raise revenue per employee without cutting their numbers. Often, retail employees not only have no selling skills, but - because of the work overload - have little or no time to sell, anyway. One of the companies I visited had cut staff at a strategic outlet to a level which meant that, at any given time, one person manned the shop - which, for all practical purposes, meant the cash register. One thing was certain - customers wouldn’t wait indefinitely to be served. Why? The shop was in an airport….

Research by Kalchas, the strategic consultants, into 100 major UK companies found that 21% had failed to grow real revenues over the previous five years. This analysis concentrated on how more effective pricing could improve the top line. Over half the CEOs interviewed agreed that not enough attention was given to ‘challenging revenue opportunities’, especially pricing, an area where ’significant profit upside remained untapped.’

PRICING STRATEGY
One internal obstacle to tapping this potential is leaving the responsibility for pricing to the sales department. To quote one CEO, ‘I have never seen a salesman yet who wanted to increase price.’ Selling is thus again deeply implicated with a crucial strategic issue. Give proper training on pricing issues to salespeople, and gear their remuneration to price and profitability rather than to simple volume, and the revenue benefits will flow into the top line, and straight down to the bottom one.

The master clue in that last sentence is ‘training.’ Sales personnel get more and better quality training than any management function in my experience. The facts above about cold-calling ratios come from an Australian author and selling guru named Allan Pease. People like him have brought practices such as cold-calling to a fine art - almost a science - that can be taught as precisely as plastering or running a computer program. It’s an excellent idea to use the phoned person’s name, for example: but no more than five times, after which it becomes counter-productive.

Then, use ‘please’ and ‘thank you’ a lot - but don’t use ‘I’. Smile while you’re talking, even though you can’t see the other person - and match your speaking pace to his or her’s. Nobody, but nobody likes to cold-call: so set aside time, make a list, clear your desk, and don’t stop until you’ve finished the disagreeable task. Note, however, that it isn’t a task only for salespeople - nor do the rules apply only to cold-calling. Phone conversations and other interviews occupy huge tracts of managerial time. But how many managers are trained or skilled in the effective use of these vital activities?

That raises another large issue in which salespeople outscore managers: personal development. They are the world’s greatest enthusiasts for self-improvement and for the commercial use of popular psychology. Managers sometimes get exposed to these approaches on seminars, or read about them in business magazines. When sales trainers use personality typing, though, it’s for practical purposes. Before understanding others - which is the key to successful selling - you have to understand yourself.

So, given a choice between a triangle, a circle, a vertical oblong, a square or a wavy squiggle, which one would you doodle? Try it: the answer will be given later. But salespeople know that, if they score low on the eight attributes of personal effectiveness, they can and must improve: the eight, acording to another author and sales trainer, Peter Thomson, are attitude, self-esteem, goals, time management, balance, appearance, confidence and ‘doing it now.’ All eight are equally important in management effectiveness at all levels. Most managers appreciate their significance, but won’t consciously strive to improve.

UNDER-PERFORMANCE
The consequence, when allied with under-training, is probably under-performance. The most successful managers are those who are most entrepreneurial. I’ve never come across a list of entrepreneurial attributes to match the one, quoted some time ago in Thinking Managers, that derives from a Harvard Business Review study by Geoffrey A. Timmons. It translates into these questions. Do you have…

1. A high level of drive and energy?
2. Enough self-confidence to take carefully calculated, moderate risks?
3. A clear idea of money as a way of keeping score, and as a means of generating more money still?
4. The ability to get other people to work with and for you productively?
5. High but realistic, achievable goals?
6. Belief that you can control your own destiny?
7. Readiness to learn from your own mistakes and failures?
8. A long-term vision of the future of your business?
9. Intense competitive urge, with self-imposed standards?

With management audiences, it’s extremely rare for a single hand to rise claiming more than six of these attributes: in an audience of 300 salespeople, nobody claimed less than six, and several claimed all nine. That’s perfectly feasible, since all the attributes, like Thomson’s eight, can be developed: if you don’t feel you possess them, or have them only weakly, that should never be the end of the story.

That’s true for any personality type - which comes back to the triangle, circle, oblong, square and squiggle. Leaders choose the triangle; the circle denotes people orientation; the oblong is picked by somebody whose life is undergoing change; the square is the detail person; and the squiggle is picked by oddballs - try it with an audience, and it’s amazing how many squigglers have beards. This pop psychology is good clean fun: but it carries a powerful lesson - that understanding your own personality and the personalities you are dealing with is as essential for managing as for sales.

Send a ‘bulldozer’ - a hard-driving salesman - to call on a key account that requires the diplomatic skills of an ‘ambassador’, and the account may well be lost. The same dread result will follow if the ambassador is sent into a hard-selling situation. Sales trainers are fond of simplifying processes like key account management: no doubt, they over-simplify. But that’s better by far than over-complication. Moreover, the habit of reducing issues to clear and easily followed components is useful - often vital - at any level of management. It not only helps to organise thought (and people), but directs attention to opportunities.

Thomson actually uses a matrix under the headline ‘Windows of Opportunity.’ Down the left-hand side you write the names of your customers on each line: along the bottom you list your products. You than place crosses in the appropriate box where, say, Customer 3 buys Product A. When the exercise is completed, there will be several blank spaces - windows of opportunity, in which customers can be offered products they are not currently buying. That’s not all. New windows can be opened either by adding new products or finding new customers or both. Again, a very simple exercise - but if the matrix is much the same between one year-end and the next, the business is heading for trouble.

INNOVATION PROFITS
When Ryuzaburo Kaku was a young man in Canon’s finance department, he spotted that profits rose in any year when the company introduced new products and stagnated or fell in years without innovation. On becoming president, he instigated a constant flood of new products, with the predicted and highly gratifying results - and still kept in his jacket pocket the original graph on which he had plotted this relationship. New is the most emotive word in selling (along with free). So once again the needs of sales management and those of strategic management coincide.

That coincidence has become even more pervasive with the move of service to the fore. Service objectives happen to be exactly the same as the aims of a classic sales operation - where you don’t sell products, but solutions: where you identify and satisfy wants, not needs. Thus, a Danish company selling filters still makes them, but has shifted its marketing platform to selling clean air. The salesman sells a promise. Likewise, company after company these days is making a promise of excellent service. If you make that promise, you’ve got to deliver - you must create highly satisfied customers, whose expectations have been exceeded, who even write or phone to tell you so, and who remain customers.

That won’t be achieved unless the company also creates highly satisfied managers, who exceed the company’s expectations, who are told so in writing or words, and who remain with the company. One of the great Japanese sales directors, Seisei Kato of Toyota, offered advice on sales that unmistakably translates into all management. First developed in rescuing the Osaka sales region from the mire of dismal performance, the principles were later applied to the painstaking, sometimes painful drive that made Toyota the top US import. He stressed five points:

1. Delegate authority
2. Achieve the optimum number of sales outlets and representatives (i.e., organise an efficient workload and appropriate levels of staffing).
3. Monitor efficiency of all activities and improve it.
4. Never fail to reward merit, and never let a fault go unremarked.
5. Promote strictly on merit.

I’ve never come across a better (or briefer) management catechism.

Note the fourth point: another expert sales trainer, Richard Denny, reminds audiences of how good parents use praise and encouragement to help infants to smile and take their first steps - not only in walking, but in everything else. The children are encouraged to take the right actions and discouraged from doing what is wrong. Too much management, though, operates on the Theory X policy of alternating the carrot with the stick: like one door-to-door company that paid salesmen heavy commissions, but automatically fired the bottom man in the monthly league.

This lowly position, of course, was no evidence whatsoever of the man’s ability - as the father of quality management, W. Edwards Deming, would have been first to argue. As he invariably taught, somebody has to be bottom in any group of companies or competitors. If the cause is poor performance, far better to correct it by training and encouragement. That’s not an argument that would cut much ice at Microsoft; any of the software giant’s people who get the bottom rating on a one-to-five scale also get cast into outer darkness. As for encouragement, the living legend, Bill Gates, believes in the opposite technique: witness this quotation from Fred Moody’s I Sing the Body Electronic:

‘A group developing software to drive network printers once got no more than two minutes into a presentation I was watching before Gates started shouting. Their voices soon were quavering, their sweaty hands dropping transparencies and inserting them into their overhead projector upside down and sideways.’

MISSED DEADLINES
It’s no surprise to learn that missed deadlines, ‘although anathema at Microsoft’, are a fact of life: ‘no new product in company history has ever been finished on time.’ The error is to correlate the Gates style with the company’s enormous, billionaire-building success. That stems from relentless exploitation of the amazing deal struck in the company’s infancy with IBM, which not only gave Gates the contract to supply the operating system for its planned PC, but gave him carte blanche to market to anybody and everybody else. For his first meeting with IBM, note, Gates shed his normal jeans and put on a suit: in other words, he played an appropriate selling role - just as a top sales manager would have insisted.

Whatever their position, and whether they know (or like) it or not, managers are selling all the time: and the main commodity they are selling is themselves. You sell yourself, not only to customers, but to subordinates, colleagues, bosses, partners, suppliers - in face-to-face meetings, on the telephone, in letters, and in front of audiences, live and through the camera. For the latter, relatively rare occasions, managers sometimes attend courses to improve their presentation and master the tricks of the trade. The techniques and stratagems of selling are at least as valuable - and just as teachable - for other encounters, formal or informal. But the main lessons that good selling practice teaches are the eternal value of learning and the sovereign importance of its objective - strengthening the top line, revenue, by real organic growth.

by: ROBERT HELLER.

source: http://www.thinkingmanagers.com/business-management/corporate-culture.ph

Business Vision: Closing the the management gap with srategic objectives

For every business and every manager, there’s nearly always a distance between ‘where we are’ and ‘where we want to be’. It’s the crucial divide in management, and you won’t cross that divide without closing the management gap: that between what needs to be done and actually doing it. It’s a more complex process than it sounds. You must first be sure where you are. Then you choose your destination - your vision. Then you must work out the route, and how to check progress all the way. Then comes the really difficult part: doing it.

The ambitious athlete holds obvious advantages over the manager at every stage. For a start the athlete’s ambitions, and thus the performance gap, are much easier to define. When Brian Lara asserted his claim to be the world’s most successful batsman, clear targets were involved: among them, the largest test innings and the first first-class innings to pass 500. But when British Petroleum announced its intention to be ‘the world’s most successful oil company in the 1990s and beyond’, what did that ‘vision’ mean? In many fields outside sports, success is an elusive concept at the best of times. It is especially evasive in business management.

True, business generates more statistics even than American foootball, where every move in a fast-moving game is calibrated. Just as the ultimate statistic on the gridiron is that of touchdowns and goalkicks, so in business the ultimate measure is money. That sounds simple enough: the more money you make, in relation to the opposition, the more successful you are - just like the team that scores more points. Unfortunately, that doesn’t resolve the business issue. What’s the right measure of money?

How should ambition be scored? Is it the absolute amount of profit, the percentage return on assets or sales, or growth in turnover, or the increase in earnings per share, or the rise in the shares themselves, or the advance in shareholders’ equity? Or what? Whatever the choice, it’s clear that financial numbers alone are neither be-all nor end-all. ‘Best’, as in sport, refers to quality as well as quantity: the quality of corporate performance outranks even quantity, just as the long term must outweigh the short.

When a company has been losing money for five consecutive years (averaging about a billion dollars a year), you would expect financial considerations to dominate its strategy. Making a return to profits was indeed very important to Digital Equipment in January 1994, when Vincenzo Damiani arrived to head its European operations in January 1994 (after 29 years with IBM, ending as general manager of Marketing and Services for Europe). He was hailed by the Wall Street Journal as someone who ’spurns vision. The new man, however, instantly drew up ‘The Damiani Agenda’, a succinct one-pager which wasn’t financially-oriented at all. It stated boldly that…

•The overall goal is SATISFIED CUSTOMERS.
• The focus is on leadership and management actions.
• Three Objectives and Ten Action Points form the nucleus.

The three objectives were to create sustainable growth, ‘increase efficiency and optimise customer-focused management systems and processes. To reach Objective One, Digital would (1) focus on small to medium-sized customers: (2) team up with partners and develop alliances: (3) optimise new opportunities for services and consulting: (4) develop specific industry and product markets: (5) improve distribution capability and market coverage: and (6) increase marketing and selling competence.

Objective Two would require (7) optimum sizing of organisation and reduce organisational structures and (8) consolidation of support activities. Finally, to satisfy Objective Three, Digital would (9) focus on processes and process ownership: and (10) ’show leadership, communicate more, and more efficiently.’ To us, that agenda fits all the criteria for a vision statement. Damiani chose the destination, mapped out the route, and left nobody in any doubt over what was required. Most of that requirement was practical and measurable. But note that the words ‘money’ and ‘profit’ don’t occur anywhere in the agenda.

Those words are, of course implicit. Satisfy the customers, sustain growth, increase efficiency and optimise your processes, and if you don’t make profits, you must be in the wrong business. One of Britain’s most ’successful’ managers, monetarily speaking, once rightly told us that profit wasn’t his corporate objective: profit was the reward for doing the right things in the right way. More recently, the same super-manager had changed his mind, or at least his tune: now profit was the aim. It may be a coincidence, but his group’s financial performance has deteriorated since he correctly saw profit as the reward for success, not as the proper ambition in itself.

The great Konosuke Matsushita, founder of the world’s largest electrical group, never changed his mind: he maintained a famous corporate philosophy around the earlier concept - that ‘profit is a result rather than a goal’:

‘Profit comes in compensation for contribution to society. Profit is a yardstick with which to measure the degree of social contribution made by an enterprise…If the enterprise tries to earn a reasonable profit but fails to do so, the reason is because the degree of social contribution is still insufficient’.

That quote introduces two other notions of success: social contribution and ‘reasonable profit’. Many businessmen will deny that profit can ever be ‘unreasonable’: their reaction was once epitomised by a New Yorker cartoon character, shown telling an equally hard-jawed manager that ‘I’ve been in this company man and boy for 40 years, and I’ve yet to see an excess return on capital’. But plainly excess can exist: and excess may well not mean success. Overcharge for a monopoly product, for example, and the competition attracted may well reduce the excess profit to rubble.

Not only is profit alone inadequate as an objective: many companies don’t pursue it, anyway. Some years back, a comprehensive study of printing companies divided them into successes and failures, using every possible criterion to separate the sheep from the goats. The differences between the two were stark on every issue of strategy and tactics - none more so than on the central matter of ambition.

Asked if they aimed at continuity, profit or growth, 53% of the failures plumped for the first, only 4% for profit, and just 14% for growth. The successes plumped equally for profit and growth, at 46% apiece. Note that the figures of the failures fall far short of 100: 19% of the relative flops had no objectives at all. You succeed in winning continuity by driving for and achieving profitable growth: but that achievement rests, in the spirit of Matsushita, on aiming to do the right things in the right way.

This simple formula has become enshrined in what can appear to be a complex business: the total quality discussed before. This measures success, not in financial terms (although the financial consequences are formidable), but in many ways, led by customer satisfaction and absence of defects. Quality is about unceasing improvement on these and other scores. Leading quality companies devote enormous energy to achieving tiny gains in figures that are already highly impressive.

Thus Motorola’s five year-programme for reducing defects in its electronics business 90% by 1986 was followed by seeking the same 90% improvement by 1989 and again by 1991 - with a ’six sigma’ target for 1992: that means at most 3.4 failures per million parts. Getting to 99.9997% of perfection is assuredly another measure of success, more accurate and more specific than most money measures, but also truly lucrative. The difference between that and 99% quality, or 10 defectives out of 1,000 products, may sound very little: but eliminating nine of the faulty fellows, if the profit margin is 10%, will increase profits by a tenth.

What’s more, achieving this success will demand a whole chain of other successes, stemming all the way back to design. The ‘total’ in total quality takes this driving idea through to every activity in a company, from technical manuals and answering phones to internal audits and innovation. Ambition is thus defined as doing the right things better, and then improving all over again. It’s a concept with which all players in all sports are deeply familiar. However good you are, the PB (’personal best’) can always be improved, and only as a result of a chain of improvements in technique and application.

Total Quality Management can be seen as a series of PBs, specific and measurable ambitions for every process and department in the company, which continuously saves time and money by reaching consistently higher standards. This is essentially project-based work - and success in projects need have no financial dimension (other than keeping within budget). Finding a new oilfield, bringing it on stream, getting the oil to market - these are technical and logistic operations of the highest order, whose completion to plan is unquestionably ’success’ and fulfilment of high ambition.

The crucial words are ‘to plan’. In life as a whole, some successes are essentially unplanned, or at least unpredictable: a gambling win, buying a grimy old engraving that proves to be a Rembrandt, backing a friend whose company becomes a Klondike. But in both sport and business management, while luck plays its part, it comes most often, as the French philosopher Pascal wrote, to the ‘prepared mind’. Being dropped (like Lara) at 19 is luck: going on to score a quintuple century is not. The perfect bounce of an elliptical rugger ball into your hands in the perfect scoring position is luck: but what took you into that position?

In oil and mining, outstanding exploration records are created, not just by good fortune, but by experience, expertise and that essential concentration of mind to which Pascal referred. Planned success, though, doesn’t mean the exact fulfilment of a predetermined strategic ambition. That rarely happens, in life, sport or in business. It means the achievement of predetermined objectives along lines decided in advance, but modified, along with the aims if necessary, as events dictate.

In any good business, at all times, multitudinous lesser aims are being pursued in this methodical way in all of its thousands of operations. That’s the essence of TQM, as noted. But the lesson of great success is that these subordinate aims are much more likely to be realised in the context of an overall, unifying thrust: that vision which is the theme of this section. You can call this an ambition, or the focal point of a value system, or whatever you wish. But without this guiding light, companies more easily get lost in the dark.

When the sceptical (or often the neutral) observer looks at the usual collection of words - like the vision statements mentioned in the previous chapter - the reaction is to query the worth of mere words. It’s easy to talk about being ‘best’, or to specify responsibilities to employees, customers, suppliers, the community and shareholders. Credos, written statements of values, differ from company to company, but they mostly strike the same note: and it’s plainly a ’soft’ note as opposed to the ‘hard’ language of profits or defects per million parts.

Thus BP believes ‘in continually developing a style and climate which liberates the talents and enthusiasm of all our people’. That is in complete harmony with jeans-maker Levi Strauss, whose ‘Aspirations Statement’ says :’We all want a company that our people are proud of and committed to, where all employees have an opportunity to contribute, learn,grow and advance…’ What do such qualitative sentiments have to do with the crucial matter of quantified ambiitions and results? A great deal, according to facts reported in the Harvard Business Review. It found that US companies which had lived by written value statements for a generation had grown 32 times faster than the gross domestic product.

The Levi Strauss record stresses the point: from 1985 to 1989, profits rose fivefold. More important, however, the company, which had gone astray in a brief period under public ownership, had recaptured its sense of purpose: to put that in other words, it had redefined its ambitions and had turned the new words into successful deeds. Public ownership need be no obstacle to such success. Value-driven companies as different as Marks & Spencer in British retailing and Hewlett-Packard in American electronics have satisifed both shareholders and the corporate conscience for many years.

The quality process known as ‘bench-marking’ holds the secret: if each aspect of its operations equals or betters the standards of the best competitor, a company is well on the way to an objective which all organisations can share - to lead its competitors or counterparts on economic return to shareholders or its equivalent and on everything else. In fact, the evidence indicates that those companies which rank the interests of shareholders no higher than those of employees and customers far outdo others from the shareholders’ viewpoint.

Sportsmen know the same phenomenon, best expressed in the Zen approach to sports, which emphasises total relaxation as well as total concentration. By the same token, ‘trying too hard’ is a sure way to drop the ball or miss the pot - like the great Steve Davis missing the simple black that would have won his world snooker final against Dennis Taylor, certainly a lesser player. Staying on top is always tough, even for a champion of champions. It’s a tremendous challenge, that vision: ‘to lead competitors on economic return to shareholders and on everything else.’

Completing so ambitious a journey, though, depends on something besides: not only doing things right, but doing the right things. The strategic platform is necessarily decisive: choices like where to invest, or where to disinvest, determine the possibility of ultimate success or failure. Thus, Vincenzo Damiani’s Agenda for Digital in Europe, powerful though it is, can only succeed if the company had chosen the right strategic stance - switching from a supplier of mini-computers to a company whose future revolved around networking microprocessors.

There’s a direct analogy with individuals. Chris Brasher was an ordinary middle-distance runner. Switching to the steeplechase, he won Olympic gold. Companies whose vision is focused on the wrong strategic objectives - like the insurance companies and building societies which weirdly believed that part of their futures lay in estate agency - won’t win any gold. Likewise, individual managers who choose the wrong career in the wrong company are most unlikely to succeed by any standards, no matter how much effort goes into their work.

Successful, ambitious companies with clear visions need successful, ambitious people who can live the vision for both the business and themselves: and who can see that the two go hand-in-hand. That principle was enshrined for 40 years in the teaching of the late American management expert W.Edwards Deming. From his brilliant work in statistical quality control, he observed that successful operations result, not from working harder, but from working more effectively. That in turn was primarily the result, not of individual efforts, but of the system in which the individuals worked. Group success won by raising the performance of the system automatically increased the success of the group’s members.

The analogy with sports teams is self-evident. Buying an expensive star won’t make a bad soccer team good: but a good soccer team which has a vision of excellent performance, and knows how to achieve it, turns mediocre players into star performers. This importance of group vision doesn’t diminish the role of the individual, but enhances it. A system in which individuals can correct defects and suggest improvements in everything - including the vision and its fulfilment - will have higher performance, and more satisfied, better motivated people, than one in which they are confined to obeying orders from on high.

The Deming philosophy hinges on releasing the initiative and ability of individuals to perform better, and to go on raising their game - in short, to make progress, a word which conveys the essence of true success and the power of true vision. The most successful company is the one that has made the most progress along the most ambitiously chosen paths. And the same definition applies to the most successful individual.

Everyone can’t come first. But anyone can advance closer and closer to important goals - and having reached them, can pitch their vision higher still. Again, total quality provides a telling metaphor. For companies and individuals, success can never be total, for progress can always be made. There will always be a gap between the vision and realisation, as between potential and performance. This concept of the management gap is basic, but the process of closing the gap is equally fundamental.

The fact that the gap never closes entirely, and that execution seldom, if ever, reaches perfection, only sets the stage for new ambitions. Vision not only always looks ahead, but moves ahead as circumstances change and landmarks are passed. The higher the aim, however, the greater progress and success are likely to be - and that applies on any measure.

by: ROBERT HELLER

source: http://www.thinkingmanagers.com/management/business-vision.php

Team Leadership: The art of communication

No team bonds more closely than the crew of a racing yacht. And no team depends so vitally on its teamwork. Rounding Cape Horn in 50 knots of wind, the crew members must be able to trust and rely unpon each other. It’s literally a matter of life and death. For Tracy Edwards and her Maiden team in the Whitbread Round the World race, there was an added and compelling dimension. They are all women - the first ever to enter this competition.

They were also the first to enter, period, with one other boat. Entering early and paying the fee gave the crew weekly updates on any rule-changes and stop-over information. Their planning was always completely up-to-date, which kept their training and their mental vision one step ahead of the competition. They also developed an early relationship, even a rapport, with the race committee. As every sportsman or woman knows, a committee can make your life extremely difficult - or ease your voyage significantly, which, says Edwards, happened with Maiden.

The early start and its beneficial consequences bear out her belief that, when all is said and done, good teamwork and effective team-building come down to organisation. Preparation and foresight are vital to team performance: though to many, Edwards must have seemed like a whistler in the dark. When she contact a top British yacht designer, and asked for immediate plans, she was not only far ahead of most other crews, but far ahead of her own finances. In fact, the necessary money was never raised.

The forethought, however, had left plenty of time to buy a secondhand and dilapidated boat, bring it back from South Africa and get it refitted. Moreover, the contact with the designer, including hundreds of pages of weather analysis, brought innovative ideas to Maiden. Finishing the refit in advance of rivals, Edwards had a yacht ready for crew training and preparation before many other crews had even started boat-building. The disadvantage of having a boat that wasn’t purpose-built thus turned into an asset.

The value was especially obvious in the first stage of any team operation: selection. Edwards was inundated with applications from all over the world - over 300 women eager to help her prove that an all-woman crew, not just women helping to crew a mostly male boat, could race successfully round the world. Once the hundreds had been reduced to a manageable short-list, Edwards could use Maiden to help in final selection, seeing how candidates reacted under pressure, and starting the process of team-learning.

The eventual crew had already begun to learn about each other, about the boat, about mistakes and how to rectify them. Warm-up races could also be entered - although, amazingly, some crews in the Whitbread were racing together for the very first time. Teamwork thrives on real-life, real-time experience. Knowing this, Edwards entered her raw crew members in as many races as possible, starting in December 1988 with the transatlantic Route of Discovery race from Cadiz in Spain to Santo Domingo.

Meticulous as ever, Edwards took a thorughly prepared crew to Cadiz. Two days before the race, though, she started to worry. Every boat but her own seemed to be a hive of frantic activity. She felt that something must have been forgotten, that she had overlooked some very basic preparation. But then another skipper rushed over and asked to photocopy some of her charts: as a stream of others did likewise, Edwards relaxed: planning and foresight were again standing her team in good stead.

Maiden came first in its class on handicap and second overall, beating ten other Whitbread yachts in the process. The excellent result, however, counted for much less than the lessons learnt while competing. Edwards had planned to enter another race, starting in Bermuda. Instead, the crew sailed back to England to correct all Maiden’s revealed faults. They had met many situations which would recur in the Whitbread. They took time out to analyse these situations and evaluate their performance.

As Edwards says, they had the luxury of being able to make mistakes and learn from them before the supreme test. Team-learning is psychological as well as practical. The transatlantic race had strengthened, not only the individual confidence of each team member, but the collective confidence which each had in the others. You can’t just throw together a team of individuals, however talented, and expect mutual trust to ignite. A team must perform and learn together over time to develop real trust and confidence in each other.

Perfection of detail is essential to achieving general team confidence. Take safety, obviously a life-or-death factor in a round-the-world yacht race. First, Edwards recruited a doctor and taught her to sail (she actually saved the life on a man who went overboard from another, doctor-less yacht). Second, careful research identified the best safety equipment. Third, the crew practised using the equipment until they were comfortable and confident with it, and all understood how it worked.

Fourth, one of the crew members was appointed Safety Officer: she wrote an abandon-ship schedule, which again was rehearsed. For her pains, the Safety Officer was thrown overboard in the Channel again and again, to be rescued by the crew: they only stoped dumping her in the sea when fully satisfied with the routine. The net result was that Maiden had one of the best safety records in the Whitbread - and, of course, that the team’s confidence was boosted by their trust in the safety equipment and procedures.

If you don’t allow enough time for training and team-building (which are inseparable), you won’t be sure of putting the right people in the right positions. Until that’s done, moreover, you can’t start training for and tackling the team task itself. It’s also important to bring outsiders into the team operations - a lesson which Western managers have taught, after long and costly delays, from the Japanese. Like any business, Maiden had key suppliers. There was time for them to work with the crew and each other.

The sailmaker had time to work with the sail-loft; the rigger had time to work with the spar-maker; and so on. One of the crew members had a mathematics degree, and wanted to handle the boat’s electronics; she became an apprentice with the company which installed all Maiden’s electrics and navigation equipment. Edwards was beginning to assemble the equivalent of the basic unit of modern management: a team of specialists, covering every need, who can also work together as a highly efficient unit.

Another indispensable truth is that team-training, while it must always be relevant, mustn’t be confined to the specific activities of the task. In addition to basic sailing, Edwards instituted a physical training programme, put together by a sports instructor. Here again, thought, planning and innovation paid off. Many of the male crews directed their training towards brute strength: Maiden’s was geared towards stamina.

An all-female crew couldn’t compete with males on muscle. They had to find new approaches - and lateral thinking in many instances actually resulted in superior performance. For example, the Maiden members weren’t strong enough to raise a spinnaker in over 55 knots of wind. Instead, they used a blast-reacher, which worked so well that sail modifications were made. The boat became stabler and easier to steer, which in turn lessened the stress on the crew: Maiden could be pushed to her limits with greater safety than with a spinnaker.

The prerequisite for the cohesion and development of any team is communication. This was an element into which Edwards poured great energy. Weekly crew meetings were held while money was being raised and the boat refitted. The plan was to stop the meetings once the project was firmly established. In fact, they never ceased. The girls badly wanted to be continually updated on the project and its progress, as well as on each other and what was happening generally.

Communication alone, however, is not enough. Honesty is indispensable. If there were problems or differences among crew members, Edwards wanted them aired face-to-face and as soon as possible: there’s no other way to alleviate grievances while continuing to work smoothly as a team. This is always vital, but especially in the cramped confines of a boat, in which people will spend many months in cramped conditions. Grievances left to fester endanger safety, raise stress levels still further, and kead to neglect of duties.

It’s axiomatic that the team leader can’t be exempt from the honesty. Edwards encouraged comments on her iwn performance as the necessary condition for her own honest critiques of the team. In general, she was determined to get input from all the crew. Like any good team-builder, she had set out to select the most brilliant and gifted people she could find. It makes no sense to recruit at this level and then to ignore the ideas and minds of such excellent colleagues.

Because the crew felt able to come forward and offer constructive suggestions in a positive atmosphere, many problems were sold with very little hassle or time-wasting. The vital ability to admit to ignorance without being made to feel a fool can only arise if trust and empathy exist between the team members. Creating that atmosphere is a prime responsibility of the leader. In the atmosphere built on board Maiden, all discussions, thinking and action became focussed on a positive outcome: Edwards herself never entertained the possibility of failure, and her mind-set became that of the crew.

The vision and the mission were especially inspiring, of course, and she was surrounded by people equally determined to suceed. Edwards calls herself lucky in these respects, but the truth runs far deeper. However inspiring the though of winning the Whitbread was to this all-female team, the moments of doubt and stress must have been innumerable. That’s when the team looks to its leader, whose bearing and conduct at such moments can tilt the balance between success and failure. And more than the moment is at stake.

If the members sense that the leader is still convinced and confident about the team’s direction and prospects, the passing moment of doubt will be converted into a lasting boost to morale. Knowing this, Edwards used many techniques to maintain motivation, which wasn’t easy during periods of setback, when their race position was lagging, when day followed day of bad weather conditions, when crew members were sick or suffering the effects of being so long away from home. Edwards used to heep bits of good news up her sleeve, precisely for such moments.

Before the race, rebuilding morale meant taking the girls out for a crew meal, say, or showing them videos of the race. In the obviously tougher circumstances at sea, Edwards tried to keep the end-result uppermost in everybody’s mind. Reading out mileage results was crucial: the crew had to develop enough mental hardness to take the bad news as well as the good. If a team does not receive the whole picture, the credibility of any information collapses, and that of the leader comes into question.

It’s dangerously wrong, to quote one example from our experience in management seminars, for a managing director to put an optimistic gloss on the prospects for bonus payments when he knows full well that none will be made. The natural inclination is to give only good news. Nobody wants to demotivate a management team, or any other group, by telling it the bad news. But that’s one test of team leadership - and a good team proves its goodness in adversity as well as success.

The difficult moments, though, shouldn’t be created by internal inefficiencies. That’s where good organisation - the key, as Edwards notes, to top quality teamwork - plays its crucial part. On Maiden, the crew were well looked after in port: accomodation was good, hire cars were arranged, clothes were ready in their rooms, and toiletries and the right currencies were provided, along with an information pack about the country (including the nearest bars, restaurants and clothes shops) and detailed information about the length of time in port and the work to be done before departure.

All the necessary spares were waiting wherever Maiden docked, thanks to a shore team so enviable that efforts were made to poach them. As it was, the Edwards team helped out many other crews. The excellent on-shore organisation left the crew time for richly deserved rest and recreation. Edwards believed that a happy crew is a fast crew - that the more they enjoyed themselves, the more rapidly the boat would run when they moved off. One yachting journalist seemed to have got this message: he wrote of Maiden, ‘not just smart tarts, but smart, fast tarts.’

Despite their speed, the women didn’t realise their ultimate vision of winning the record. They came second. For the crew, that was a great disappointment, but for yachtsmen (and women) all over the world it was a magnificent achievement, an outstanding team performance. The basic principles to which Edwards adhered were amply proven inpractice, starting with the weight placed on the initial organisation and preparation. That enabled the team to spend ample time on learning, training and re-evaluating.

On that foundation, Edwards could build honest and open communication, positive team focus on the final outcome, high levels of motivation, and organisation at seas and on shore during the race that matched the high quality of the initial approach. The crew exemplified the importance of being confident in your collective efficiency as a highly trained team, but also in your own efficiency as a highly trained specialist. Team leadership is a speciality itself, and Edwards mastered the art in high degree.

Without question, she was helped by her track record in bringing the project into any kind of reality. Every stage presented difficult challenges: distilling a skilled and motivated crew from the 300-plus applicants, raising the sponsorship despite a series of rebuffs, finding the boat, and making so effective a job of the planning and organisation. All that work on providing the foundations for Maiden earned Edwards respect. But once the team was formed, she had to set the standards, and earn respect all over again, by her own behaviour.

In any team, that means taking hard decisions. Very early on, Edwards sacked the second most important member of the crew, her first mate. If the leader believes that anybody on the team has become a disruptive influence, action must be taken. In this case, Edwards also sensed a direct challenge to her authority as leader. That made the decision inevitable, but no less difficult. Taking such decisions reinforces the leader’s credibility: shirking them is even more destructive than the difficult personality who caused the problem in the first place.

Edwards didn’t actually replace her first mate: she restructured the crew to cover the loss. The whole episode demonstrated great strength of mind. Throughout, that mental concentration - whatever the distractions and difficulties - stayed focused on the winning line and the vision of crossing it first. The focus of the leader and that of the team go hand-in-hand. That’s fundamental in the relatively calm conditions of business life: but life at sea in an arduous competition tests the basics to the limits.

In the claustrophic, pressure-cooker conditions of a racing yacht, the leader is as vulnerable as anybody else. Edwards could have become demotivated, demoralised and unfair in her treatment of the crew: that would have guaranteed failure. She stuck firmly to the half-dozen principles of team leadership:

1. Set the right tone, developing mutual trust and bonding

2. Allot specific roles - and make sure that those filling the roles get genuine satisfaction from their tasks

3. Communicate frequently and honestly

4. Involve the whole team in deciding every aspect of the project

5. Keep the team fully informed at all times - whether the news is good or bad

6. Create a blame-free culture: mistakes are made to be learnt from

These half-dozen points are simple enough. They are basics. The cry of ‘back to basics’, though, doesn’t fit the needs of team leadership. The right message is moving forward from the basics. Far too often in teams the commonplace task of being good at basics is not commonplace - which is a good way to fail, but no way to succeed.

by: ROBERT HELLER

source: http://www.thinkingmanagers.com/management/team-leadership.php

Satisfying Customers: Achieving customer satisfaction for stronger business

The concept of the all-powerful customer is nothing new. Peter Drucker wrote long ago that ‘there is only one valid definition of business purpose - to create a customer’. Having created customers, the next step is to satisfy them: ‘customer satisfaction’ has become the great watchword of business as the century ends. This is by no means solely because of management’s shining conversion to the paths of righteousness. External pressures have been paramount.

The first is over-supply. Historically, this was created by over-expansion in boom-time and disappeared after slumps. More recently, abundance has become chronic, partly because of globalisation of markets. When supply of everything from micro-circuits to motor cars can come from anywhere, efforts to control that supply are futile. The sensational, 85% collapse in memory chip prices in 1998 is just one result.

An equally profound cause is the revolution in manufacturing processes. The same old plant, using new methods, becomes far more productive. Moreover, new technologies, including those of production management, allow smaller producers to compete with high effectiveness, often with brilliant innovations that reinforce another decisive factor: segmentation. Innovators have helped to fragment markets into multiple segments. So economies of massive scale have ceased to be reliable barriers to entry. The new entrants not only add to supply, but intensify competition as they seek customers.

The competitive heat has also been turned up by de-regulation. Financial services epitomise the customer revolution. Where once a few oligopolies limited choice, deregulated banks compete with mortgage lenders, mortgage lenders with banks, both with insurance companies - and all are under attack by supermarkets, chain stores, branded entrepreneurs, etc. ‘Product’ variants have multiplied as, once again, over-supply (this time of money) stimulates proliferating competition.

The customer is no passive bystander in all this. Across the world, customers have become more demanding, more capricious, more promiscuous, more volatile. In part, this reflects the rise in disposable incomes fuelled by economic growth. Customers are also responding with a will to the increase in the quantity, sources and variety of supply. Think only of the welter of offerings in consumer electronics. Customers demand choice, and their pressure on producers stimulates variety.

The pressures are also socio-economic. Rising affluence and education have bred a race of highly active consumers. Ralph Nader, with his whistle-blowing on the Detroit carmakers, was seen as a disruptive radical. But consumerism has since become politically powerful, defended even by right-wing politicians who espouse free market capitalism. Consequently public services, too, have had to become user-friendly, to talk the language of consumer goods and to ‘compete’ for public income.

Study the management words, from academic tomes and business magazines to company reports and guru lectures, and this new supremacy of the customer emerges as dominant theme. The preoccupation lies with ‘customer focus’ and ‘value chains’ that start from the satisfied (better still ‘delighted’) customer and work backwards through the corporate processes. Each of the latter is redesigned and re-focused to benefit customers and outdo the competition on every factor that the purchasers hold dear - in theory.

In practice, the production-led mentality that dominated industry post-war more than lingers on. Given half a chance, manufacturers and service businesses alike will do what suits their managements best. Service provides an acid test. It has emerged as the key differentiator: sooner or later, products lose any superiority in specification or quality, and advantages in production methods and costs are equally short-lived. Quality of service is much harder to imitate - but also much harder to achieve.

Companies don’t, however, try hard enough on this vital count. That statement may sound strange, given the fortunes spent on tracking customer satisfaction, and the high proportions (usually two-thirds and upwards) of customers who find service ‘very satisfactory’ or ’satisfactory’. But the usual numbers are meaningless. How many of the ‘very satisfied’ or ’satisfied’ customers are likely to patronise the company again?

HOW SERVICE QUALITY PAYS
The ‘buy-again’ numbers are crucial, since it costs far less to retain old customers than to attract new. That partly explains the clear correlation between higher quality and superior financial results. The linkage is illustrated by Sweden’s ‘Customer Satisfaction Barometer’: ‘Companies capable of increasing [on the CSB] by one point every year for five years improved the average return on assets during the period by 11.33%’.

In other words, virtue - giving the customers what they want in the way that they want it - is far more than its own reward. So why do companies pay ‘customer focus’ lip-service rather than real service? The reason is that customer satisfaction isn’t a separate stage in the value chain. It reaches deep into the heart of the corporation, and any weakness within that core will damage the final outcome. How do companies with genuine achievements in delighting customers manage to do it?

That’s the answer: they really do ‘manage to do it’. An American expert, travel management entrepreneur Hal Rosenbluth, entitled his book on the matter The Customer Comes Second. His paradox is that, to put the customer first, you must put employees first. It stands to reason that discontented employees won’t generate contented customers. This common sense has been vindicated by statistical research: as noted earlier, American retailer Sears found that employee and customer attitudes truly are umbilically linked.

The more favourable the pair, moreover, the better the financial returns. Sears found that employees need to feel good about the company’s future, recognise that needed changes are being made, understand the business strategy and believe that their work is helping the company towards its objectives. Very few managements meet these four basic demands, which require a near-reversal of the traditional top-down, autocratic style. It’s hardly surprising that most managements therefore lag in customer satisfaction - which, anyway, isn’t their top priority.

Consultants Bain & Co, combining with the Institute of Management, looked at the Top Ten management tools used in 1992-96 in Germany, Japan, the US and the UK. Compared to the previous five years, ‘customer satisfaction measurement’ had actually dropped one place globally, to fourth. It was led by strategic planning, mission statements and benchmarking. Only the Germans and Japanese included customer retention, and no list included any people policies other than pay for performance.

You could argue that other tools and techniques, like strategic planning, mission statements and benchmarking, will all be imbued by awareness of customer needs: and that Total Quality Management (sixth in the list) is essentially a means of aligning individual, company and customer aims. But TQM is used by only a minority of companies. And it’s singularly pointless to form customer-based strategies, write mission statements to match, and compare customer responses against other firms without having the means or the will to turn words into deeds.

by: ROBERT HELLER

source: http://www.thinkingmanagers.com/management/satisfying-customers.php