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.

 

 

Steps to Becoming a Disciplined Disruptor: Innovation

Some companies lose themselves in trying to grow too quickly. In the fight to get ahead, they forget where they came from – the core tenets that made them unique, and gave them the ability to compete and win.

This can be particularly true for start-up executives, who often find challenges in discovering their company’s true advantage. As they attempt to grow, they sometimes have a tendency to want to branch out beyond that advantage. In many cases, this approach to growth lacks discipline and does not take into account what actually makes their company special – its offerings, yes, but also its core philosophies. If this is the case, the growth process can lead down uncertain paths that include the creation of disparate product offerings, unhappy employees, and disenchanted customers and a lack of competitive advantage.

The business landscape is littered with large and small companies that started doing one thing and then got distracted by bright, shiny objects – the concept of “Hey, wait a minute – if we can do THIS, then certainly we can do THAT, too!” Startups will often try to reach beyond core capabilities, but, unfortunately, in far too many cases this means diluting the focus that initially made the business great, to the point where mediocrity reigns across the board.

Then, there are organizations like Atlassian, a Sydney-based software company. Its website describes the corporate culture and make-up as “geeks, beer drinkers, nerf herders, fraggers and Wolverine-wannabes.” And that could very well be. But Atlassian is also very, very good at creating issue tracking and collaboration software. That’s the company’s focus, and it’s committed to doing it well. It’s why Atlassian has grown from a handful of employees in 2002 to more than 400 today.

There are, of course, examples of larger companies that have done well by applying a laser-like focus and disciplined approach. Over the past five years, Apple has been extremely focused on delivering quality content through the iPad, iPhone and more. Its M.O. is to deliver attractive, cool devices that are fast and user-friendly. While its primary rival Google is intent on offering many services and products in a multitude of areas, getting further away from its core service offering (search), Apple seems content to provide a singular, focused experience. Needless to say, the approach has worked well for the company.

Contrast that with companies like Research in Motion (RIM) or, going back even further, Digital Equipment Corporation (DEC). RIM’s troubles within the mobile space have been well documented, but they stem from one common mistake made by many companies: not listening to the customer base. At one point in time, RIM was an innovator; it provided businesspeople with communications devices the likes of which had never been seen before. But when customers declared they wanted a better browsing experience and applications, RIM balked and stubbornly refused to provide either. The company moved away from a core aspect of its business – providing innovative mobile devices – and have since stagnated.

DEC’s an even more cogent example of a company that had everything yet lost its way. DEC started off by focusing on the microcomputer market, eventually growing into one of the biggest technology organizations on the planet. But the company strayed from its roots, incorporating new and varied products, different distribution models, and more, to the point where DEC became a behemoth without focus, one that could not support its own weight. Slowly, the company that once proudly announced that it had never undergone a layoff began breaking apart until, in 1998, the remaining assets were sold to Compaq – a sad end to a once-promising company’s epic decline.

But for every DEC, there is a Red Hat. For every RIM, there is a SalesForce.com. And for every startup’s inspiration, there is an Atlassian and others like it. All of these organizations have successfully found the sweet spot between growth, discipline, and differentiation by not only identifying and honoring uniqueness, but by also keeping customers happy.

The good news is that discipline is an attitude that can be fine-tuned and adopted.

Kevin B. Thompson

Kevin B. Thompson is president and CEO of SolarWinds (NYSE: SWI), a provider of IT management software. He has served in that role since March 2010. Prior to that, Mr. Thompson was the company’s COO, as well as CFO and treasurer. He has also held positions at SAS Institute and Red Hat,, and serves on the board of directors of NetSuite.

via chiefexecutive.net

 

5 Ways to Hatch Your Next Business Idea

In his book "Maverick Startup," serial entrepreneur Yanik Silver lays out his "X Factors" for turning your big idea into a profitable business, without taking on debt, partners or even a business plan. In the following excerpt, Silver guides readers through X-Factor No. 1: Developing a big idea.

If you don't have a big idea, you simply fade into the background like every other "me too" product or service. It's not always about having a proprietary product or service. This is really more about positioning and a prospect's immediate reaction to your product.

That's one of the key elements of the big idea -- gut reaction. With our world being busier than ever, people usually don't have time to explore absolutely everything about a product or service. We use shortcuts for our decision-making. The more clearly you can distinguish your product or service, the better you'll do in the crowded marketplace.

Working on your big idea is critical and means the difference between a "base hit" or a "home run" product. What follows are five major things I keep in mind when coming up with a big idea or hook.

• Give them the fish. I can't overemphasize this idea. People are lazy; cater to it. Everyone knows the saying: "If you give a man a fish, you feed him for a day, but if you teach him to fish, you feed him for life." 

Let me give it to you straight: People want the fish handed to them on their plate,   grilled perfectly with some seasonal vegetables on the side. Look at Home Depot, the world's largest "do it yourself" company. It started buying up companies to provide services for consumers, and their CEO thinks the "done for you" services will eclipse their current sales. 

I've had big success with "giving people the fish," including my first online product, www.InstantSalesLetters.com. The whole hook is in the headline on the site: "In only 2½ Minutes You Can Quickly and Easily Create a Sales Letter Guaranteed to Sell Your Product or Service. . ." That hook has been responsible for my first million-dollar idea with a little $40 to $50 product.

• Make your promise specific. Specifics are so important but usually completely overlooked because it's much easier to make a generic promise. However, a specific promise or a specific target market makes your marketing that much more powerful.

One of my winners has been an e-book called "33 Days to Online Profits," which I co-wrote with Jim Edwards. I believe that brand has been kept alive because of the very specific hook in the title. Each day you are given a homework assignment, so it's a day-by-day course for 33 days.

At first we'd planned to call it "30 Days to Online Profits," but decided on "33" because it was specific and credible. If the title had been "30 Days to Online Profits," it wouldn't be as successful since 30 is a "normal" number.

• Go in the opposite direction. I love this. However, I don't suggest being different just for the sake of being different, but there is a lot to be said for zigging when others zag.

My biggest example of this is the "Underground" online seminar concept I developed. Every year I bring in unknown speakers who were really succeeding online. It's not the usual suspects you'd see at other seminars. And each year the event has sold out weeks in advance.

Think about when Volkswagen Beetle first came to the U.S. with their "Think Small" campaign in 1960. It was the era of big cars and automakers were trying to outdo themselves by building bigger and bigger cars. But the VW Beetle quickly became a blockbuster because it went in the opposite direction. The campaign was so powerful that AdAge magazine named it No. 1 in its "Top 100 Advertising Campaigns" list.

• Move to a new application. Many times you can create a great hook by simply taking one successful hook and using it elsewhere. For example, the time-shares concept has been successfully applied to private jets, exotic cars, luxury second homes, yachts and even vineyards.

• Be first. Sometimes the most important thing you can do is to simply be the first. Time-shares and Club Med were the very first in their category.

If you are moving into a crowded marketplace, you can slice off a piece of that market to be first. Hedonism took Club Med's concept of all-inclusive resorts and geared it toward singles. Sandals resorts niched the all-inclusive concept again, this time for romantic couples.

If you start thinking about these points for creating the big idea or a hook, you’ll begin to notice ideas everywhere. Plus, you’ll see how successful products and services are, in many ways, takeoffs on other successful concepts that came before them.

via entrepreneur.com

 

Food Cart Design That Doesn’t Block Airplane Aisles

The Orbit Aircraft Food Delivery System by Heather Dunne is a space-saving solution that solves a common and annoying problem on airlines.

 Orbit is a concept system for delivering food on commercial aircraft by UK designer Heather Dunne. The space-saving solution improves upon the traditional airline food cart by making it slimmer and longer, so passengers can get around flight attendants. The design also allows food to be easily loaded and unloaded and can hold more than the current cart.

At 8 inches wide, Orbit is 4 inches thinner than traditional carts, which allows passengers to move past it in the aisle. It is able to hold up to 60 meals as it is longer than the current design, which holds around 35-40. Bio-pac food packages can be taken from the top using a pressure shelf system. Once one layer of packages is removed, the ones underneath move up, allowing flight attendants to deliver food to passengers without having to bend down. Orbit locks into sunken tracks in the aisles, with a motor that propels the wheels forwards or backwards. They can also be locked into the tracks during turbulence so it doesn’t lift off the floor.

Orbit

via psfk.com

 

Why America is "Bleeding Competitiveness"

 

 

In the face of a likely double-dip recession, there's a lot of free-floating anxiety about American competitiveness. As both a tech  entrepreneur, a journalist, and an  academic with appointments at Duke, Harvard Law, and UC Berkeley, Vivek Wadhwa has a bracing perspective. "America's the most innovative country in the world," he says, "but we're bleeding competitiveness"--not because of our education system, but because of policies that cause talent to flee the country. 

It's a myth, according to Wadhwa, that our classrooms are subpar--or even if they were, our frat houses make up for it. "America’s education system is by far the best in the world. India and China’s is really bad! The ability of Americans to think outside the box, the fact that our children go and party, they have social skills, means they can innovate. They understand marketing, how to interact with people. These are skills India and China don’t have." That's why, Wadhwa argues, Chinese and Indian students are enrolling in US colleges in record numbers (Indians have shown more preference for the UK in recent years, but the US is still the most popular choice with over 100,000 Indian students.)

The problem, Wadhwa says, is that the overseas talent doesn't stay here. "It used to be my [international] students at Duke would stay. Now the vast majority return back home. They have great opportunities so they don’t have to put up with visa problems. One of my Duke grads said, why should I join the 15-year queue for a green card when your friends back home are becoming managing directors?"  Restrictions on the H1-B visa for skilled workers began after 9/11 and intensified with the stimulus package passed in 2009. The consequences, he said, are likely to be long-term and severe.

"This whole anti-outsourcing, anti-immigrant paranoia---it’s hurting America like you don’t believe. If you go to Bangalore or Shanghai you see thousands of startups that could have been in Silicon Valley. Between 1995 and 2005 50% of our startups were founded by immigrants. Between 2010 and 2020 it’ll be a much smaller number. We’re exporting our talent." 

The Startup Visa, introduced in this Congress by John Kerry and Mark Udall and backed by a group of VCs including Brad Feld and Fred Wilson, aims to stanch the bleeding. It offers a stay in the country to entrepreneurs who have investment offers in hand and promise to create at least 10 US jobs. via fastcompany.com

 

Jeff Bezos on the next web innovation

 

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.