Using your sales force to jump-start growth: Innovation

There’s a reason it’s called a sales force. Here are four innovative ways companies can use their sales reps to drive growth.

 

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There’s no escaping the impact of the sales force on your company’s growth trajectory. This is the frontline group best placed to gain an intimate understanding of existing customers, to observe the forces at work in an industry, and to identify potential new business. During the past year, we interviewed about 100 sales executives around the world, across a range of industries, to identify the critical elements that distinguish true sales leaders from also-rans. This article highlights four intriguing ideas the executives described for leveraging the sales force to jump-start growth. Together, these suggestions offer practical insights for sales groups, as well as a starting point for discussions among CEOs and other senior managers hoping to get more from sales and marketing investments.

Look over the horizon

The sudden arrival of a truly disruptive technology—one that upends markets in ways few anticipate—presents obvious challenges to industry incumbents. Yet it’s also a huge growth opportunity. One supplier of parts to high-tech manufacturers has created a team of “speculative market analysts” to better identify the emergence of disruptive technologies and to predict their business implications. The team helps the company to position itself as a supplier that’s ahead of the curve and to enjoy superior sales growth while competitors scramble to catch up.

The full-time team cuts across all business units and draws on a variety of internal and external sources: the sales force provides insights into the technology initiatives of the company’s customers while continually pressing them for feedback about its shortcomings and the efforts of competitors. In addition, the team closely scrutinizes all reports from competitors and customers—easier said than done, given the sheer volume of market information emanating from countries such as China. It even fosters close ties with venture capital firms and provides up-and-coming companies with funding and “sweat equity” to convert innovative concepts into realities. Together, these efforts have helped the company’s sales force to get ahead of recent major disruptive trends, including the boom in tablet devices and e-readers, as well as the growing fields of LED lighting and solar technology. What’s more, the team’s efforts are generating an estimated annual return on investment that exceeds 12 percent.

Hunt and farm

It’s easy for organizations to fall into the habit of seeking sales growth only through existing customers. Even though the sales force is typically best placed to find and approach potential clients, individual reps may shun the uncomfortable task of cold-calling in favor of selling to customers they know well. Yet there’s only so much each customer can buy, so finding new business is critical for growth.

One large distributor of auto parts tried tackling this problem by separating these activities. Its sales leader designated some reps as “hunters,” who focused exclusively on finding new prospects, while “farmer” reps concentrated on existing customers. The model succeeded initially but later foundered as hunters became discouraged by the time and effort required for their relatively scant wins, as well as the perception that they were second-class citizens compared with farmers.

As attrition rates among hunter reps grew, the sales leader changed tack. To demonstrate the importance of finding new customers, he designated one day a month as a “hunting day,” whenall reps would exclusively chase new prospects. The rest of the time, they could focus largely on existing customers. The result was astounding: in a single day, the company signed up as many new customers as it normally did in two months. Setting aside one day a month for hunting new business is now an ingrained part of the company’s sales practices.

Motivate with more than money

The basic remuneration model for sales reps is simple: a base salary offers security; commissions and bonuses provide incentives to perform. Most companies work endlessly to optimize the balance. Yet what if money isn’t the thing that actually matters most? One financial-services company tried all manner of compensation plans before determining that while carrots and sticks did influence the sales performance of its financial advisers and sales managers, the results were short-lived.

As the company explored alternatives, its sales leader observed something important: the most successful advisers often spoke passionately about the sense of fulfillment that came from helping clients realize their dreams. Fundamentally, that was why these men and women had become financial advisers. The realization that money was just one of the factors driving performance prompted the sales leader to work with managers and individual advisers to develop specific goals that would help the advisers feel they had genuinely helped customers. Maybe it was prioritizing quality over quantity by working more intensely with fewer clients. Perhaps advisers needed a wider range of financial products to ensure that they had all possible options to meet their clients’ investment goals. At the same time, the company identified and laid out steps for overcoming potential bottlenecks, such as a lack of coaching, training, financial-management tools, or appropriate products.

The company knows that money remains critical to its sales team but now recognizes the benefits of identifying other, deeper motivations. The attrition rate among financial advisers has fallen sharply, and they not only have become more successful at winning business but also have found that clients are entrusting more of their wealth with the company. These goals have been met with no increase in the compensation of advisers.

Boost sales without slashing prices

Companies experiencing flat or declining sales often elect to cut prices to spur demand. Yet sometimes, averages lie: a decline across a market doesn’t mean that all market segments are weakening. A North American logistics company learned this lesson the hard way when it empowered sales reps to lower prices to meet management’s goal of boosting volumes. Because the price guidelines were set without taking into account the competitive dynamics of each specific market segment, only some reps recouped the cost of the price cuts with higher volumes. The company’s overall competitive position deteriorated.

Top management decided to recalibrate its approach. The characteristics of each of the company’s various market segments varied wildly. Some were growing fast in the wake of continuing property construction, population influxes, and investment; others were flat-lining. The sales reps got new price and volume targets based on each segment’s characteristics. These targets incorporated metrics such as the economic growth rate in geographies where particular industries were heavy users of the company’s services, the strength of the company’s operational assets relative to those of its competitors, and whether the company was losing or gaining customers at accelerating or decelerating rates.

This granular view of each sales territory led to new sales approaches. In higher-growth markets with limited competition, sales reps aggressively sought new business and raised prices where possible. In declining markets with stiffer competition, reps were authorized to cut prices to prevent customers from defecting. This market-by-market roadmap allowed the company not only to reverse several years of declining market share but also to secure an overall average price increase of 3 percent. via Mckinsey Quarterly

About the Authors

Maryanne Hancock is a principal in McKinsey’s Atlanta office, Homayoun Hatami is a principal in the Paris office, and Sunil Rayan is an associate principal in the New York office.

 

 

How The Missing Link in Innovative Research Cultivate New Scientific Insights

Despite continuous growth in R&D spending, many senior leaders remain deeply concerned about their organization’s ability to innovate. For example, the pharmaceutical industry has more than doubled its spending on research and development during the last 10 years, but its success rate in finding new drugs has been disappointing. Yet new research by Booz & Company points to an unexpected and unheralded source of potential productivity: midlevel managers in the R&D function. Companies can significantly raise their R&D productivity by recognizing and activating the unique impact of leaders in the middle of the organization’s hierarchy.

Our research with pharmaceutical companies reveals that leaders in the middle of the hierarchy have a singular ability to identify the company’s most creative bench scientists — and to help them cultivate new scientific insights and connect with the most promising external sources of innovation. These midlevel managers are an underused asset. They can nurture and navigate promising ideas through complex organizational decision making, reinforce an environment of top-quality science, and keep the brightest minds engaged day in and day out. Better use of the midlevel cohort can be a critical factor leading to breakthroughs in innovation effectiveness — not just in the pharma industry, but in sectors such as chemicals, energy, and aerospace and defense.

Bigger Companies, Less Success

By nearly all measures, new drug discovery and development has been declining for more than a decade — even as R&D spending by the largest companies has more than doubled. Why?

A wave of consolidation in the pharmaceutical industry over the past two decades has created larger companies with bigger product portfolios. But almost across the board, that wave has saddled R&D units with diseconomies of scale and too much bureaucracy to be effective. As a result, the capacity to generate new insights and make shrewd investment decisions has not grown proportionally, and has even declined. The rate of new drug discovery over the past 10 years has been so poor that the head of one big pharmaceutical company has dubbed it the “lost decade.”

In an attempt to reverse this trend and increase productivity, innovative R&D organizations have deployed a range of different management, technology, process, and structural solutions:

• Earlier commercial involvement in project decision making, in an effort to enhance focus on commercially relevant compounds

• More rigorous procedures for portfolio management and more stringent criteria for the adoption of new projects

• Clearer guidelines for the handover from discovery to development, and for the integration of basic laboratory research with clinical trials and other applied research

• More sophisticated and comprehensive incentive and reward structures

• New structures that enable more external partnerships for discovery and the outsourcing of “non-core” activities

Some large R&D organizations have begun to create smaller, more accountable units, but that alone has proven insufficient. In 2008, GlaxoSmithKline PLC, as reported by the Wall Street Journal on July 1, 2010, divided its research and development function into small groups of up to 80 scientists in an attempt to create the innovative atmosphere and close working relationships of a biotech startup.

Although these approaches have contributed to more efficient research and thus deserve attention, they have not been able to promote and nurture the new insights that can lead to more effective drug discovery. In most R&D efforts, breakthrough insights come from the work of individual scientists who connect their own deep expertise in one domain with ideas from another discipline. Most notably, in a speech delivered in 1922, “How I Created the Theory of Relativity,” Albert Einstein credited his insight to his discussions with Swiss/Italian engineer Michele Besso, with whom he did “battle against that problem.” The most creative scientists will propose new ideas based on their expertise and input from other disciplines, recombining facts and ideas into new insights. (See “How Aha! Really Happens,” by William Duggan, s+b, Winter 2010.) via strategy-business.com

New Solutions to Attract and Retain More Customers

Jim Woods is president and founder of InnoThink Group; a leading Strategic Management and Innovation Consulting Firm in Denver, Colorado. He is an author, speaker, and a strategic innovation and hypercompetition expert to profit, non-profit organizations and municipalities. He advises clients with an objective view of their competitive capabilities and defines a clear course of action to maximize their innovation return on investment to achieve profitable growth. Build a capability for ongoing competitive innovation across your company. Call 719-649-4118 or complete our form: contact us for more information on hiring Jim to advise or speak for your next event.

Emil Kolawole: Failure or success: Which better inspires innovation?

 

VIEW THE GALLERY: See past innovators of the week.

It’s Friday, and that means it’s time, yet again, for you to cast your vote for the Innovator of the Week. If you are unfamiliar with the series, you can read through the archives and cast your vote in past matchups.

This week, in light of the death of Apple co-founder Steve Jobs, we decided to take a more conceptual approach to the matchup, pitting failure against success as a driver of innovation.

Both failure and success have been cited as drivers of innovation. Here we present both for you to determine which is the greater innovation driver.

Success: It drives people to want to repeat the experience and achieve again. Not all success results in the next groundbreaking idea, but it goes a long way toward inspiring the confidence to take subsequent risks — and, in some cases, provides us with additional resources to embark on new, more demanding challenges.

Alexander Fleming’s discovery of penicillin revolutionized medicine, as did the successful completion of the human genome project. Both achievements allowed for a number of subsequent discoveries. From the wheel to the pulley system, success has moved innovation forward. Imagine what the animation film industry would look like without the advent of Pixar, or what computing would be without the successful creation of Linux. What would our social networks look like today without the creation of MySpace or Friendster?

Failure: It can be painful and, at times, disastrous, but failure is often cited as one of the leading catalysts for innovation. “Failure’s capacity to teach is exactly why venture capitalists often look for managers to run start-ups whose résumés include experience with a flop,” reported Post On Leadership blogger Jena McGregor in a 2006 cover story for Bloomberg Businessweek.

“The wise recognize failure is an unavoidable part of innovation — and the faster and more aggressively a company, or industry, pursues big changes, the greater the risks they take on, in exchange for greater access to the possible rewards,” writes author and lecturer Scott Berkun.

But failure, like success, is relative. High school students who fail to be admitted to the college of their choice see failure far differently from repeat entrepreneurs who fail on their second venture after selling their first for more money than they plan to spend in a lifetime.

And finally, one individual or organization’s success can precipitate another’s failure — for example, Coca-Cola’s success coming at the cost of its competitors. But which is better at inspiring innovation is a decision we leave to you. via washingtonpost.com

Need an Innovation Speaker or Advisor? Jim works confidentially with start ups, governments as well as profit and for profit enterprises.  

Jim Woods is president and founder of InnoThink Group. A global management consulting firms specialized solely in helping organizations of all sizes in all industries catalyzing top line growth through strategic innovation and hypercompetition. Jim has over 25 years consulting experience in working with small, mid size and Fortune 1000 companies. He is a former U.S. Navy Seabee and grandfather of five. To arrange for Jim to speak at your next event or devise an effective growth strategy email or call us at 719-649-4118 for availability. Subscribe to our innovation and hypercompetition newsletter.   

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Glenn Donovan: What is Social CRM? | Business Process Innovation

Social CRM is what I call a “bucket term” – people throw all kinds of things into it. In order to define what it might mean, it helps to look at it even more fundamentally. One of the reasons that “social” technology is so interesting is that it allows connections to be established and maintained between individuals without respect to hierarchy or other externally imposed limitations. Social platforms in fact are about driving those interactions/connections, which are necessarily a “bottom up” versus “top down” down phenomena.

Accordingly social platforms try to support collaboration between individuals with similar interests and other characteristics indicating compatibility or like-mindedness, in permission based relationships that often times have a notion of role. They all use publish/subscribe models to allow users to express what they wish to accomplish and also facilitate user generated content that makes the entire experience valuable in the first place. So forget Facebook for a moment and think about what social really means in a business context.

 

Case management could be considered a type of “social” interaction in a CRM context, in the sense that the case is simply a collaboration point and container of data, with a state, that allows different people and processes to interact with each other about the case. Business oriented social platforms, like say Salesforce’s Chatter, allow one to register interest in various objects in the system as well as other users, and you are then notified of activities and communication from those things/users you subscribe to.

But the bottom up focus goes even deeper. Traditional systems development obsesses over object/data modeling, trying to anticipate the correct classification of and relationships between all data elements you might ever want to use in an application ahead of time, optimized for performance/technology considerations. Frankly, much has changed in the past 10-15 years to make that approach less than ideal. Some of you will have already noticed the phenomena of “tagging” data on the web? And that Google uses these tags (among many other things) to figure out what a web site is about and how to organize your email?

Tags are both system and user based categorization that provide for interactive sifting and sorting, and how you register and classify your interest in something. In terms of using the resultant “tag clouds”, check http://www.infomous.com/ where you can see how to today’s classification engines can make sense of very complex “clouds” of tag data so a user can quickly find relevant information – all without some database architect having to figure it out ahead of time.

This approach allows users to classify data and, in a very meaningful way, to create new information. Where “social” picks up then is to facilitate collaboration and connection with other participants who share that interest area by tag usage, and publish/subcribe mechanisms. In any organization beyond just a few people ,particularly in knowledge-worker-centric settings like B2B service, sales or PLM, you see very complex patterns of interaction emerge. Most role based systems fall apart when trying to anticipate things like a person from one business unit having two different roles on a project, across two other business units. Think this isn’t meaningful? In large global organizations trying to unify customer experience management, collaboration regularly crosses national boundaries, organizational boundaries and corporate boundaries. By simplifying data rules greatly and allowing a ‘publish-subscribe’ model, communities of interest can form organically, without IT having to do a thing.

The other change that allows this is the incredible breakthrough in the performance/cost of data management technology. Whether it’s transactional or analytical data needs, today’s software/hardware systems can easily accommodate the compute requirements of supporting an evolving data model and ad hoc sifting and sorting of such data that a bottom up, social approach entails.

Put in a more global context, someone once said “The first 10 years of the internet were about us all getting connected to it and the next 10 years will be about us all getting connected to each other”. Companies that support this kind of collaborative, social model of engagement must have an approach that supports it organizationally and technologically. As I see it, the only way we can get complex organizations to work is by empowering individuals to collaborate with one another effectively as needed. Social CRM holds the promise of delivering on this idea. And there you have my contribution to the “Social CRM” bucket.

via blog.cordys.com

Speaking 

As the CEO and founder of InnoThink Group, Jim can help your organization enhance the strategic innovation and competitiveness of your business policy and strategy, with an emphasis on increasing top line growth.   

 If you’re interested in having Jim speak at your next event, simply use this form to send us your details and speaking requirements, and we’ll be in touch shortly. Or you may call us at 719-649-4118. 

This Matters: How Microsoft grew into a giant

The tech giant was a no-name startup when it launched its MSDOS operating system in the 1980s. But the open environment it created with developers fueled its explosive growth.

By John Hagel and John Seely Brown, contributors

Microsoft chairman Bill Gates in 1986

FORTUNE -- Microsoft was still a no-name startup based in Redmond, Wash. when it launched its operating system, MSDOS in the early 1980s. From the beginning, however, the company believed that this was not your average product launch. MSDOS's design allowed it to adapt easily to different hardware, reducing entry costs for potential users. And Microsoft encouraged participants to tailor MSDOS for particular environments, meaning that the product could actually improve over time.

Like any good platform, however, MSDOS was only as valuable as its network. While it did not have a large user base in its early years, Microsoft (MSFT) soon negotiated relationships with tech giants like IBM (IBM) and Intel (INTC), fueling growth expectations and motivating more early adopters to sign on. In this way, the platform was able to quickly gain critical mass and achieve network effects -- that wonderful position when the value of the network increases for all participants as more members join. This growing value helped to attract even more participants. By relying on growing economic incentives to attract and engage participants, Microsoft significantly reduced the overhead costs that often slow, or even limit, the growth of more conventional business networks.

Perhaps even more important than its network size was how individuals interacted with and tailored the MSDOS platform. In some respects, the common platform leveled the playing field among participants, creating incentives for them to "protect their turf" by improving their own performance. As the number of participants continued to expand, both competitive pressures as well as the spoils of success increased, perpetuating a cycle of continuous innovation around the standard platform.

MORE: Games: A job recruiter's new best friend?

In many cases, different participants teamed up to make the network better, while others chose to work on their own. Without any intervention from Microsoft, these interactions among participants evolved into complex webs of collaboration, where the interactions were not just one-to-one, but among groups of different players. This resulted in an explosion of experimentation.  Many of these promising ideas were quickly adopted by other participants, and those that failed served as collective learning material.  In this way, each participant, and the ecosystem as a whole, learned much faster than they would have on their own. 

The first release of the Microsoft platform may seem like ancient history, but it illustrates the powerful potential of what we call "web ecosystems." In nature, the webs we discover can inspire awe and defy explanations. A well-constructed cobweb, for instance, can span a seemingly impossible distance from its central point and remain intact even in heavy rains and wind that send neighboring leaves and branches to the ground. It is no wonder, therefore, that this image of strength and subtlety has become an oft-referenced metaphor in so many other domains (yes, we're speaking of the World Wide Web, among others).

As we researched ecosystems (gatherings of business participants engaged in some form of collaboration), we found that the well-worn term perfectly characterized the nuances of MSDOS and other webs.  These ecosystems are particularly interesting because of their scalability -- webs have the potential to mobilize hundreds of thousands, even millions, of participants.  More than just scalability in numbers, webs also support a much broader range of innovation than other kinds of collaborative ecosystems. Just as intricate patterns emerge on the edges of spiders' webs, so too can distinct and exciting innovations emerge from different pockets of a given ecosystem.

MORE: New evidence that going green pays off

Web ecosystems often rely primarily on economic incentives to mobilize its participants. Platforms of some sort are usually involved in catalyzing and growing web ecosystems, but the platform developer often tries to expand participants' abilities to work with each other rather than tightly specifying what they can and cannot do.

Consider the differences between Apple's (AAPL) iOS app store to Google's (GOOG) Android marketplace. Apple's app platform, though highly profitable, does not constitute a web ecosystem. Apple's structured development regulations and rigorous screening process limit the scope for experimentation and require a significant level of interaction between the platform developer (Apple) and the participants. It offers the benefit of more reliability for its users and an adherence to certain quality standards.

By contrast, the largely open Android platform does represent a web ecosystem. Android offers more freedom for developers to experiment and test potential applications. The relaxed and flexible structure means that a greater number of "amateur" applications are available, but it also creates many opportunities for collaboration and innovation.

Though many of today's examples come from technology companies, the applicability of web ecosystems extends further than this domain. Consider the story of Malcolm McLean, a truck driver in the 1950s. After seeing the need for greater coordination between different groups working in shipping, McLean developed a standardized shipping container and made the standards available industry-wide.  By encouraging port authorities, shippers, and crane companies to invest in new equipment and practices to support this standard, McLean, much like Microsoft, was able to speed up adoption and quickly reshape the global industry.

We expect these web ecosystems to become more prevalent in the future. Big Data, for example, may become fertile ground for new web ecosystems. As certain companies accumulate richer and more detailed profiles of customer behavior, these bits of data can be used to create a "platform" that participants can use to develop innovative products and services. Government 2.0 projects, which make available data accumulated by various government agencies, represent another promising web ecosystem.

Web ecosystems have meaningful implications for many industries today. For starters, we would single out health care, financial services, media, and the energy industries ripe for disruption. But let's not stop there. Is your industry ripe for change at this scale? What would a web ecosystem need to look like in your field? Like stumbling across an ornate and resilient spider web, the results might surprise you.

Posted in: Company growth, Ecosystems, Hagel and Brown, Microsoft, Strategy

via management.fortune.cnn.com

Speaking 

As the CEO and founder of InnoThink Group, Jim can help your organization enhance the strategic innovation and competitiveness of your business policy and strategy, with an emphasis on increasing top line growth. 

 If you’re interested in having Jim speak at your next event, simply use this form to send us your details and speaking requirements, and we’ll be in touch shortly. Or you may call us at 719-649-4118. 

How to Identify New Business Models #Innovation #Strategy

By Joseph V. Sinfield, Edward Calder, Bernard McConnell and Steve Colson 
Organizations traditionally pursue growth via one or more of three broad paths:

• They invest heavily in product development so they can produce new and better offerings.
• They develop deep consumer insights in order to offer new and better ways to satisfy customers' needs.
• They concentrate on strategy formulation to grow by acquisition or by moving into new or adjacent markets. 

Each of these paths usually involves devoting considerable time and resources to developing a corresponding organizational competency. For example, to build product capability, companies typically invest in in-house research and development departments and/or technology-sourcing expertise. Establishing customer insight capability often requires creating in-house market research units and implementing robust feedback links between the sales force and the developers of product or service lines. And creating a strategy capability generally involves setting up dedicated corporate strategy units and merger and acquisition groups or engaging consultants.
Recently, a fourth path has emerged, one that we might label "business model experimentation": the pursuit of growth through the methodical examination of alternative business models. At its heart, business model experimentation is a means to explore alternative value creation approaches quickly, inexpensively and, to the extent possible, through "thought experiments." The process sheds new light on potential competitors and lowers the risk of taking the wrong or a lesser-potential road — all for an initial investment that is typically quite small relative to what can be gained Research conducted in the last 10 years has established a link between business model innovation and value creation.1 To our minds, this research points to the need for organizations to build a competency in business model innovation — that is, in the process of exploring possible business.
Article available for purchase at MIT Sloan Management Review

via innosight.com

Jim Woods is president and founder of InnoThink Group. A global management consulting firms specialized solely in helping organizations of all sizes in all industries catalyzing top line growth through strategic innovation and hypercompetition. Jim has over 25 years consulting experience in working with small, mid size and Fortune 1000 companies. He is a former U.S. Navy Seabee and grandfather of five. Jim is board president of a charter school located in Colorado Springs whose sole purpose is to prepare otherwise disadvantaged students more competitively for college. To arrange for Jim to speak at your next event or devise an effective hypercompetition strategy email or call us at 719-649-4118 for availability. Subscribe to our innovation and hypercompetition newsletter.   

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