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Go-to-Market Innovation at the Intersection of Business and Technology

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Buyers are changing their buying behaviours – are sellers doing likewise ?

May 14, 2011 1 Comment

I’ve not posted in 4 weeks as I have been travelling on a series of client engagements.  These past 4 weeks have seen me involved with buyers, with technology manufacturers and with resellers.  All on different projects, all based on different outcomes.

But one common theme permeated every one of these engagements.  The way buyers buy is radically changing, and many are struggling to keep up and meaningfully add value.

The primary shift as described by one of my clients, which I thought was a very adept description, was the shift from rigidly defined requirements, to “loose problem descriptions”.

In the past buyers would highly define what they wanted then go to market for it.  In very traditional “value chain” or “supply chain” fashion, suppliers would then compete on product and price to win the business.  Who best met the defined needs for the lowest price.

Buyers have wised up though.  With growing complexity and with technology now playing such a significant role in growth, productivity and differentiation initiatives, buyers don’t know what they don’t know.  While they may loosely define their areas of need, they now let the suppliers battle it out on who will provide the MOST functionality, free consulting, value added services etc for the lowest price.  In short buy loosely defining the problem buyers stop suppliers from limiting their offering to just the defined need.  Now suppliers not only provide what is required, they throw in many other “value adds” (in their mind) to sweeten the deal.

Who is the winner here ??

In these (and other) engagements, I ask both the buyers and the sellers was demand created by the seller.  Interestingly buyers almost never say yes.  In fact most buyers believe they identified the need or problem, identified that technology could potentially address the need or problem and they went looking, albeit they may not have known what they were looking for in detail, they went looking.  Sellers on the other hand believe otherwise.  They are quick to point out that they created demand.  Well the most common language is the “influenced” the solution.  Really, influenced. While I don’t disagree that sellers may have influenced the buyer (given the buyer doesn’t know exactly what they want), the difference is that it’s not demand creation, as this is a tactic of the buyer.  By not defining what they want the buyer forces the seller to go above and beyond what they might otherwise do.  All competing sellers try to increase the scope, the offering, the services etc…the buyer simply lets them but remind them they have limited budget.

I’ve also recently heard a couple of terms:

1. Budget Creation

2. Budget Capture

Nice words for the age old activity of demand creation and demand reaction.

I hear people enthusiastically say we need to do more budget capture.  This really disturbs me as it’s going to result in a product and price war that will yield lower margins, and prevent the supplier / seller from genuinely helping a customer achieve their outcomes, as rarely are outcomes achievement “priced” into the offering.

In addition however while buyers are changing their behaviours to extract more (for a lower price) from their sellers, but having them compete for a more fluid, more broad ranging, more loosely defined set of requirements, buyers themselves admit that at this stage they are still not fully aligned to outcomes.  While old technology based ROI business cases no longer fly and will be decline out of hand by most boards, they do agree that highly aligned well structured business outcome based business cases are a new approach that is just starting to evolve.

Outcome based buying is here.  It’s in it’s infancy, and buyer behaviour will continue to evolve in this area.

A shift to outcome based buying will seek to look at initiatives and invest in initiatives, where technology is but a bit player, a supporting cast in a bigger project.

For sellers moving to an outcome based, consultancy-led demand creation sales approach will help to;

1. Help buyers move to an outcome based buying approach – adding significant value to buyers

2. Help price in the relevant services required for buyers to achieve their outcomes, and for sellers to get paid for those services

3. Allow sellers to “charge” for the “influencing” they are doing today as it will be proactive rather than reactive

4. Move from a traditional “value chain” to a genuine partnership of mutual win win

In short are you changing your selling behaviours in line with, as fast as (or faster) than buyers are changing theirs ?

For an interesting perspective on this, join the discussion here

Outcome Based Selling – Next Generation Sales Success

April 13, 2011 4 Comments

“As your customer, your value is not in what you want to sell to me; it is in what you can help me accomplish.”

Jim Hays from the forthcoming book,  BOLD Selling: The Outcome-based Approach to Helping Customers Get What They Want Most (Authored by Jim Hays and Chris Luxford)

Sales training – we’ve all been there.  2-3 days out of the field listening to the wisdom of those that claim to know better.

Many sales trainers haven’t been sales professionals or if they have did it some time ago.  Also a lot of what is taught is common knowledge, and while there are often 3-4 nuggets of wisdom the shelf life of these is often quite short.  Think about a sales training event you attended over 1 year ago.  How much do you remember and how much do you still use in your sales engagements?

A common statement is “those who can’t do …teach”

So why given the often perceived low long term value of sales training, is so much time invested in by many organisation?

In short it’s often a cop out.  David Maister says it best in this article on why (most) training fails.  One point that David raises is that the act of sending a sales professional on training is a way for the manager to feel they have “developed” the sales skills, they’ve done their part. This is not a blight on sales managers, probably one of the most difficult jobs in any organisation caught in the middle of management who want extrapolate growth in performance and the sales team that wants time and resources.

In a previous post we have discussed how sales processes limit sales performance.  Without reflecting in too much detail on that post, the key concept is that one process does NOT fit all.

However in our experience the most successful sales people share a number of common skills, behaviours and methods.  These include;

  • Outcome based approach
  • Engage with many executives and link their offering directly with the executives outcomes (including IT, but not starting with IT)
  • Research – not generic research but really specific
  • Envisioning – help customers see HOW they can do business differently – really see, not just generic demos of functionality
  • Relentless focus on user adoption via process change – how will the customer drive usage and therefore outcome achievement

Likewise the most successful sales managers (actually sales coaches) also share a common set of behaviours, skills and methods, these include;

  • Focus on sales outcomes not sales outputs (in short they don’t ask when the order will come in – but focus on how the sales activity is helping customers achieve their outcome thus driving differentiation)
  • Mentor the research and planning activities, not manage the sales mechanics
  • Challenge sales professionals to define their personal and companies differentiation, not just with a customer’s company but with the individual executives within the customer (as each will be different)
  • Encourage partnering – not just with traditional “fulfilment” channels, but with partners that bring expertise and thought leadership that the customer and supplier cannot
  • Role play’s and debriefs – lots and lots of role plays on executive engagement not to embarrass people but to help them have the best possible engagement success, and debrief the what worked well and what could have been done better
  • A learning culture, but learning through doing, not just through training.  Training provides knowledge, doing builds skills and behaviours

Now it probably comes as no great surprise that many of the above are pretty obvious things to do.

The problem is that many people are looking for the silver bullet, the one thing that will make the customer stop in their tracks and buy from you and no one else.

Those days are long gone.  It’s rare now that product differentiation alone will win a deal.  It really just needs to be good enough.  For every feature you have that your competitor does not, they have one yours doesn’t.  Sure you can influence a customer to “need” your features more than your competitors, but in these days of increased organisation complexity, many products and services are not being considered in isolation, thus their unique feature differentiation is just one of many many buying considerations.

There is no silver bullet…just a lump of sliver that you need to work into a bullet for each unique executive engagement you have with a prospective customer.  Each engagement will be unique with unique points of differentiation.

It is commonly viewed that doing the above as a longer sales cycle.  Evidence from various engagements actually show this approach can be significantly faster in the “buying cycle”.  The reality is most sales start very late in the buying cycle resulting in demand reaction, highly competitive sales.  The most successful sales people rarely compete.

Time tends to be the enemy of the above.  Focus on the weekly, monthly or quarterly financial targets

Lack of time forces behaviours that minimise the effort in these areas, resulting in a non differentiated “generic” sales approach that is product led

Yet how much time is spent chasing opportunities that will be lost, 20%, 50% ?  If the opportunity to PO ratio is less than 50% then 50% of time is spent chasing opportunities that would be lost.

The challenge for most sales professionals and sales managers is to remove those opportunities from the funnel.  No one wants to go in on Mon and say my funnel is now 40% less than it was on Fri as I’ve cleared out all the stuff we know will most likely not be won.  Never a good discussion to have.

But if it were replaced by genuinely differentiated opportunities I do not know a VP of Sales or CEO that wouldn’t be happy to see new differentiated opportunities added to the funnel, as long as these were well qualified, targeted with a reasonable forecast timeline.  This timeline can only be achieved by using the skills and behaviours of successful sales people and sales managers.

Sales success in the future will require a new thought process on selling.  An outcome based approach that is not about what you are selling, but about partnering to help customers achieve their desired outcomes…no matter what or who is needed to do that.

The anatomy of a successful business

April 5, 2011

Success is a nice vague term used to define something good.  Most people when relating success to business will list profitable, shareholder value or balance sheet as success metrics.  Others may look at more idealistic goals such as impact on society, saving lives etc…their dent in the universe.

Whatever the measure of success is there are two common foundations that are present in every single successful organisation:

  • Innovation
  •  

  • Optimisation
  •  

The challenge is that in today’s rapidly moving global economy these are often in direct conflict.

The reason is that historically innovation IN optimisation of the business was a path to success.

Product innovation and speed to market leveraged optimisation as a platform for improved success.

But product innovation and operational optimisation are no longer sources of radical market differentiation.  They are table stakes to remaining competitive.

As a result there is a 3rd element, that has always existed within organisations but never been embraced as the key driver of success.  That is creativity.

In May 2010 IBM released it annual CEO study.  A study resulting from the face to face interviewing of over 1500 CEOs, from 33 industries in 60 countries.  For the prior 9 years the number one challenge nominated by CEO’s as their primary challenge was “Attracting and retaining talent”.  In 2010 that changed for the first time in a decade.  CEO’s admitted their greatest challenge now was complexity, with 79% admitting they were expecting complexity to increase.  The “standouts” as IBM refers to them turn this complexity into competitive advantage through creativity.  Creativity in 3 areas:

  1. Creative leadership
  2. Reinvention of customer relationships
  3. Operational dexterity
  4.  

The significance of this (and other reports) shows that organisations are having to rethink business models.  That the business model that made you successful is not necessarily one that will empower future success.

Creativity is in fact the future success engine.

Both Innovation and Optimisation will continue to be critically important.  However conventional approaches to both will need to be challenged and calculated risks invested to breakaway from the pack.

Creativity applied to both brings it’s own challenges

  • Does the organisation have the culture to embark on radical / creative change
  • Are creative thoughts (especially those from outside the organisation) dispelled as whacky, not possible myths
  • Does the organisation have a method for working through creative ideas (risk / reward)
  • etc etc
  •  

Creativity in many cases is seen as a high cost low return activity.  Organisations become so focused on this month / this quarter that it’s hard to deeply envision a new business model that may take 3-5 years to achieve that will show no returns in the next 6-12 months.  Yet it is through this continuous re-invention that organisations meet their success targets.

Creativity is not just people with great ideas.  Ideas are the basis for innovation.  Creativity is also the ability for ruthless execution, it’s looking at the status quo and challenging the conventional wisdom.

The organisations that will be successful in the coming decades will be those that embrace creativity both in their innovation and optimisation efforts.  It will be those that seek creativity from outside of their organisation, where inside most are focus on operational execution.  It is those that take customer delight to a level unseen before that look to creatively exceed customer expectations.

Success will be driven by the ability to make creativity actionable through a cultural launchpad to radical innovation and optimisation for improved business success – however that is measured.

So who really has the best “Collaboration” Portfolio

April 3, 2011

During the past few weeks I have been doing a lot of research on “collaboration” offerings from various vendors for our clients.  What has struck me is how much things change, they really stay the same.

Over the decades technology buying decisions have gone through the the following cycle:


Our analysis shows that buyers of collaboration offerings today fall into almost all of these buyer types, with larger organisations tending towards the integrated through platform and smaller organisations across all types.

The list of vendor offerings is also massive.

The usual suspects are very prominent in Cisco, Microsoft and IBM who all have extensive collaboration offerings.  But the significant list of more focused niche players is incredibly long.  To give you an example here is but a short snapshot of a list that Gartner include in their magic quadrant for Unified Communications and Social software – which is categorised in 3 categories – we’ve just shown below social software in the workplace (note images sourced directly from Gartner’s website at these links; UC and Social Software)

Gartner Unified Communications Magic Quadrant July 2010

Gartner Social Software Magic Quadrant July 2010

Notably, a number of big players are absent in the second quadrant including Google, Cisco, SAP and Salesforce.com’s Chatter.  hence when thinking about collaboration there are so many ‘buckets” that offerings are lumped into it’s incredibly hard for buyers to wade through what it right.

So coming back to the question posed in the title, who has the best portfolio.  It’s really an irrelevant question as it depends so much on what people want to do, how they want to collaborate and who with.  Do they have a culture of collaboration, can they drive the process changes required to leverage the invested technology.

Many vendors offer value propositions from end to end to niche.

Cisco for example talks about the Cisco Collaboration Framework (here), or Microsoft discussing their UC platform (here).

The challenge for every buyer is what do they have today, will these new technologies work with the old, what are the downstream implications of new collaboration technologies – these are very technical considerations.

What are the best now versus later.  Should we be blogging, IMing, Tweeting, Video calls, team spaces etc etc

Through our work with clients, it may come as no surprise that there is no generic “best” portfolio.  In fact I would go so far as to say that when it comes to collaboration, technology / vendor choice is actually:

1. The easiest of all the investment decisions

2. By far and away the least relevant / impactful in the investment decisions

Organisations that successfully leverage innovative ways of collaborating tend to all have a similar approach in common.  in summary it goes something like this:

  • Taking an “outside-in” (ie using collaboration strategy expertise from outside their organisation) approach build a company and eco-system wide collaboration strategy highly and directly linked to the long term organisational goals and business outcomes
  • Analyse the collaboration culture and process changes required to achieve the above strategy and what it will take to execute those changes (including formal change management to over come the natural resistance to change)
  • Build a genuine and holistic business case inclusive of all change – expecting full well it may be a 1-2 year change journey that has many transitional phases
  • Build a detailed a targeted “business project plan” (ie not a technical deploy and maintain technology project plan) that drives actionable execution of all aspects of the change required (inc the technology aspects which will be the smaller part) to execute the strategy
  • Measure everything – including the measurement of what many companies see as “soft benefits”.  These can be measured if the analysis and planning is done up front

The best portfolio is the one that enables successful achievement of the desired business outcomes through the enablement of the business project plan to be actioned.

The best portfolio may not be from one vendor, but an amalgam of a few, that many consider to be fierce competitors.

The best portfolio is a lagging decision, an “output” of the strategy and business project plan, it is not the leading decision.

Ultimately if the decision on best is resolved on technology foundations (ie legacy investment, integration, cost, vendor payback calculations etc) it will be the wrong one.  There is enough data (empirically and anecdotally – Google “Software adoption rates”) to show that technology alone rarely lives up to business expectations.  Thus the best portfolio should be an output of the work done to define the differentiating collaboration strategy that an organisation requires.

We see and hear about too many companies investing in collaboration technology (as something they buy) rather than investing in collaboration (as something they do), resulting in a negative return on investment.

 

The Path To Benefit Realisation

March 29, 2011

I love working with our clients.

One of my major motiving drivers is working with people to make a difference.  That difference might be small or big, but when a client tells us that we’ve had an impact I couldn’t be happier.

The path to benefit realisation is not a straight road.

In fact it may have many cross roads and forks.

What is apparent though is those companies who do realise the full benefit of their technology investments take a radically different approach than those that don’t.

I have discussed technology adoption, proces innovation and other such topics in other blog posts (for example here and here).  The key theme in today’s post is absolutely in line with those and the commentary contained, but today’s post explores the mindset of those companies that stand out.

Firstly, has any technology sales organisation ever created an ROI calculation for the technology (to a customer) that shows the customer should not buy and would be a bad investment ?  I can’t recall ever seeing one.

It’s not that the technology isn’t great it’s just that the ROI calculation is full of assumptions and looking at only part of the picture.

In addition have companies invested without a business case…of course they have.  So is a detailed documented business case or ROI really necessary ?

Why is it that some customers “get it” and buy on emotion and others need to go through a detailed and lengthy exercise in the buying decisions?  Many a book written on this subject and not one I will delve into here today.

But regardless of how the investment is decided (on gut feel emotion versus detailed business case) those that realise the full benefit all have one thing in common.

A relentless focus on change.

The investment is not approached as a new technology or new set of tools.  IT is not lumbered with the job of buying and implementing.  “The Business” is not thrown a knew set of tools and told to “get to it”.

There is a holistic view (formal or informal) that ensures every part of the organisation understands their role in maximising the return on the investment.  Each group plays a part and only when all parts work together will that be achieved.

While in previous blogs we talked about formal change methods, some of the greatest success stories were achieved with no formal plans.  The organisations culture led them to leverage the investments.

So what is the path to benefit realisation?  How does an organisation get the maximum value from technology investments.

– Organisation wide involvement

– Business project – NOT an IT project

– Focus on change – changing the way people work, not how they work, but the way they work

– Clear linkage of usage of the new tools to corporate goals (direct and measurable)

– and the most important…seeing it through, not switching gears when value isn’t realised or falls short, but looking into why and proactively addressing it

 

I hear so many complaints from “users” about all kinds of technology.

  • It doesn’t work
  • too hard to use
  • can’t access it
  • it’s not available to me
  • slows me down
  • and many many more

These all point to one problem, for the most part technology is implemented and people are given training on the mechanis of the technology.  Rarely are people trained on new ways of working and given the latitude to explore the full deoths of the technology.  Many don’t care about technology they are so busy they just want to be left with their routine to get things done, new technology means learning new things and new ways which generally slows things down at first…adding workload they don’t have time for.

 

The companies that succeed are those that empower people to change the way they work but link it back to the clearly define business outcomes and objectives.  Formal or not, it’s all about change, and change is hard.  It’s why when it does happen clients are delighted.

Changing Nature of Work- Why Innovate?

March 29, 2011

Consultants, academics, CEO’s, HR managers, and sociologists have all begun turn their wheels about what Generation Y will mean to the workforce.

 

There are roughly 83 million people between the ages of 10-34 in the United States; 27% of the population. Also known as “Echo boomers” , generation Y has been on the workforce radar for just under a decade now, and yet, many employers and companies seem to neglect and ignore the vast differences between the way this generation works in comparison to those who have come before them.

 

Generation Y has grown up with technology, adopted social media early in life and can’t imagine, and likely can’t remember the world without high speed internet. In this high-tech, information flooded world, those under 30 approach life and work much differently than did our parents. According to sociologists, generation y is “less likely to respond to traditional command-and control type of management”, the reining structural architecture for almost all of corporate America, and more likely to highly value their talent and importance to a larger team. Epitomizing the behavior of generation Y, Bruce Tulgan, co-author of Managing Generation Y, shares an anecdote of a young woman who just started a job at a cereal company, and showed up the first day with a recipe for a new cereal she’d invented. This is the way our brains think. We see value in our ideas, and expect others to do the same, regardless of traditional company structure.

 

While the under 30’s are certainly a new and important breed of worker, the business world and it’s writers/observers seem to neglect to mention this paradigm shift when talking about the future of business.  Countless papers, studies, blogs and tweets have been dedicated to the shifting nature of business; the need to innovate, collaborate, and develop business models around the needs of the customers rather than the wants of the business, and yet many seem to overlook why it is that old business processes no longer work. Many attribute the need to differentiate to saturated markets and abundance of consumer choice, but hardly any connect the need for differentiation and innovation with the changing demographics and life styles of the new wave of consumers.

 

For the majority of our lives, generation Y men and women have had technology tailored, personalized and customized to our needs and desires. Facebook pages have encouraged us to share our personalities and lives with the world, and Youtube has proven  that we are all one viral video away from fame; anything is possible, and we are special. But while the echo boomers are convinced of our own importance and individuality, we are also hardwired to share and collaborate with our peers. If companies, which generally tend to change and adapt at the speed of glaciers, are able to fundamentally rethink the ways in which they both acquire talent and sell product, and do so in a way which embraces the changing nature of work, to embrace, they will have a golden opportunity to harness an intersection of individuality and collectivism that will significantly differentiate them in the market.

 

But this change in corporate cultural thinking is not an easy one. According to a survey by Delaware management consultancy Booz Allen Hamilton, “of the 2,500 largest publicly traded corporations, CEOs in the United States are entering offices at younger ages”, somewhere around 50 years old, those who earn the corner office are likely to have been with the company for years, with 31% of CEOs having worked with only one other company. This will certainly not be the case with generation Y, as the under 30’s tend to change our place of employment every 2 years.

 

Not only is the ladder to the top historically built for those with company longevity and loyalty, middle management may also find it challenging to work with generation Y, as we tend to disapprove of rigid structure and managerial hierarchy. It is perhaps this frustration with antiquated business models and structures that has led an increasing number of twenty somethings to strike out on their own and start companies where innovation is the name of the game and control lies in their hands.

 

Of course there are still hoards of young college grads who would sell their right arm for an internship and a 60 hour a week work week, but for the most part, generation Y wants to creatively redesign the way they earn a living and the tools by which they do that, and it is in the best interest of business to recognize the ways in which this generation operated and try it’s best to mimic it.

 

 

 

21st Century Management

March 6, 2011

I do not profess to be an expert on business management nor have I spent time at world’s foremost academic institutions and management schools.

However I do spend a lot of time with clients from very small to very very large companies and I read a lot of books and blogs from some innovative management thought leaders.

One common theme that has become a persistent under tone in all my activities is the changing nature of business management.  Interestingly while many many terms have been used to describe it I would say that the commonality by all is that the shift is human.  It’s all about HOW and WHY rather than WHAT and WHEN.

There is only one driver for this.  Differentiation.

Companies that have been hugely successful using traditional optimisation focussed hierarchal management models are changing their models.  Cisco’s John Chambers is an often sighted example making a shift from a “command and control” model to what they term as “boards and councils” (Google for a number of interviews but here is one that provides a good explanation).  Another great example is HCL Technologies “reverse accountability” model (again covered in many articles including HBR but a short synopsis here)

These two, and a number like them, are great examples where innovation in management is well underway.  These, and others, are ground breaking organisational wide transformations that will be watched by CEO’s and Business School professors the world over.  But why are they doing this?

Successful companies who are leaders in their markets, why fix what is not broken?

There are so many cliche’s that I could use here I could take up 5+ pages, but here are two to provide some insight:

– Only the paranoid survive

– It’s harder to stay in the lead than to get to the lead

Quite simply it’s about differentiation.

Now I sighted two massive global organisations, large organisations always get the celebrity status.  But what’s interesting is what smaller organisations around the world are changing as well, sometimes in even more radical ways.

In last week’s blog I talked about The Interaction Age, an age where competitive advantage would come from tapping into people’s creativity and that the way in which these interactions and cognitive thought processes would evolve and be supported would be very different than we have ever seen before.  A shift from systematic processes to creative processes.  This shift requires more of a leadership focus (not with standing as Tom Davenport so eloquently states in this article that we should not throw the baby out with the bath water – we still need management and we still need to manage – but the management style and approach will change).

So where does that leave us…

  • We still need to do all the things we have done (optimise, measure and manage)
  • But we know need to enable creativity and less “control”

In short we need to challenge conventional wisdom but not lose our corporate memory.

One of the more common (and just plain frustrating comments – as it is often mis-used usually by those trying to sell something and has become a buzzword(s)) is “Business transformation”.

Wikipedia defines “Business Transformation” as:

Business transformation is a key executive management initiative that attempts to align an organisation’s initiatives relating to people, process and technology more closely with its business strategy and vision. The initiative aims to support and help innovate new business strategies and to meet long-term objectives.

Business transformation is achieved through efforts from alignment of the areas of people, process and technology towards an outcome-based end-state such as (for example) 50% increased revenue or 25% improved customer satisfaction.

It can be defined as:

changing appearance – by improving services to customers

changing shape – by review and reappraisal of what a business should do, by working with partners and by making better use of all types of resources

changing form – by improving the way the business works, and embracing new organisational structures, skills, processes and technology

Alternatively, organizations can achieve business transformation through new technology, business models and management practices. As of 2010 business transformation is considered an essential part of the competitive business cycle.

The definition is appropriate and is a key focus of CEO’s globally. However what we are seeing is that where organisations traditionally their management efforts on building bigger, better, faster and cheaper products, that no longer provides differentiation.  CEO’s the world over from small to large companies are having to look at creative ways to innovate, gain and retain competitive market advantage.

They are in fact having to “transform” not only the appearance or shape or form of their companies, they are in fact having to transform all THREE, at once.

In their 1979 (yes 1979) paper for MIT Toward a Theory of Organizational Socialization John Van Maanen and Edgar H. Schein state that:

At heart, organizational socialization is a jejune phrase used by social scientists to refer to the process by which one is taught and learns “the ropes” of a particular organizational role. In its most general sense, organizational socialization is then the process by which an individual acquires the social knowledge and skills necessary to assume an organizational role. Across the roles, the process may appear in many forms ranging from a relatively quick, self-guided, trial-and error process to a far more elaborate one requiring a lengthy preparation period of education and training followed by an equally drawn out period of official apprenticeship.

Are we talking about culture here? Of course, but we are also talking about thought leadership.

Breaking the paradigm of “this is the way we have always done things around here”.  How do you change the appearance, shape and form of a company at once, if everyone keeps doing what they have always done?

It requires a whole new way of working, empowering people.

  • Encouraging new ideas, new ways of doing business
  • Open innovation
  • Crowd sourcing
  • Social media

What’s going on it’s management are evolving.

Trust, and therefore decision making, is being freed, but not just internally also externally to customers, suppliers and partners.  Allowing those who do the work, to make the decisions.

What’s holding back this brave new world are two things:

1. Resistance to and fear of letting go control

2. The tools (they exist but are not deployed appropriately to assist this transformation) to support the massive collaborative notion of equality and the ability to leverage organisational and outside creativity and still meet the traditional corporate objectives tied to shareholder value

One theme that the more successful organisations have in common is purpose.  This is not “shareholder value”.  It’s more than the “job” requires, it’s a more noble cause.  Many place their customers goals and outcomes at the center of everything they do.  There is a shared and common focus on the customer’s outcomes (usually not financial).  This does not mean “improving the customer experience” or simply making idle statements about “customer is king”.  It’s examples like we make Hospital Management Systems, but our customers (hospital administrators) save lives, so our cause is to “save lives”.  This approach empowers employees to take the company in directions and effort never before realised when just “cutting code” on a new version of the technology.

I am so excited about this shift in management culture and models the next decade is going to be one of profound change in the way that companies work with their customers (be they businesses or consumers).

 

 

The Interaction Age

March 3, 2011 1 Comment

There is something going on in the world, conventional buyer behavior is changing and conventional business models are being tested.

Andrew J Milne first coined the term “The Interaction Age” in a Jan 2007 paper published on the changing nature of university based education.  While I like the term, a number of other authors have used similar aptly descriptive terms for the same meaning:

–       The Relationship Age Steve Bosserman (see 2006 blog article here)

–       The Age of Customer Capitalism from Roger Martin in Feb 2010 (see HBR article here)

–       The age of Customer Delight (Steve Denning’s Blog here)

While I will stick with The Interaction Age, I firmly and passionately believe that relationships focused on the customer’s outcomes are the key priority and the driving force behind the massive shift in buyer behavior and in business models.

Why I like the term The Interaction Age is that if we think about what is happening and why it’s happening its interesting to note how we as a society have evolved (and the timespans in which we have evolved)

The Agricultural Age – For almost 1000 years our race existed on a “ground to mouth” basis.  We “grew stuff”

The Industrial Age – Innovation accelerated – we “made” stuff.  It was a “sellers” market.

The Information Age – In the early to mid 20th century (yes less than 100 years ago) the appetite for information grew exponentially.  As we learned more and more about our planet, the human body and the universe, knowledge became an ever important competitive differentiator. Customers had choice. A key evolution of the information age was the evolution of markets and management focus and business models.

  • Initially it was local production to local market
  • Then local production to regional market
  • Regional production to national markets
  • Regional production to international market etc etc
  • To currently a massively distributed invent, produce and supply model to global market

It became a “buyers” market.

What’s interesting is the value chain has changed.  Lots of outsourcing, lots of optimization, but in turn customers are no longer constrained by choice, they have more than they could ever want or need.  So how do companies stay relevant and desired by customers ?

So what’s different in The Interaction Age ?

Is this not just an extension of The Information Age ?

As mentioned companies (customers) are no longer constrained by technology (plenty to choose from), they are also not constrained by ideas (there are more ideas about ways in which they could invest, grow, diversify and innovate than they could ever execute).

  • So as companies compete globally against massive global companies to the minute local competitors
  • As they continue to use 20th Century transaction optimisation business models via various machinations of vertically integrated to horizontal focus and all the many and varied supplier relationships and partnerships that requires (across the globe)
  • As they fight to attract and retain the most talented people in their industry
  • One thing remains common…HOW do they remain relevant to and valued by their customers

Just like companies, customers now have the advantage of the information age.  They can buy from anyone, anywhere at prices never seen before.  Products commoditise quickly.  With this shift from sellers market (product led) to a buyers market (consumption led) we saw buyers leverage information on products, service and price to influence their buying decision.

But with so much to choose from, how to companies innovate and customers get value?

Through interaction, relationships and customer delight.

The traditional value chain is dead.

Companies complain about declining margins against ever increasing customer expectations

Customers complain about “value for money” (or perceived lack of) and “cheap and cheerful”

It seems that with all the optimisation, economies of scale and more products / services than we’ll ever use…both sides of the buy/sell relationship are not satisfied.

The fundamental buy/sell relationship is changing forever.

Customers want to be involved from concept to use.  Businesses realize that their products are services require the combination of many constituent partnerships from suppliers, partners and customers to be successful in the market.

Everyone has a ton of information now, but that information must be shared in meaningful ways, through discussions to be used effectively.

The information age was the realm of “explicit” data and information, facts and figures.

The Interaction age is about “tacit” knowledge the interpretation, cognitive and ultimate use of information that is fluid in nature.

To benefit from this organisations must have highly evolved empowering ways to interact and collaborate outside the boundaries of their own organization with a primary focus on delighting customers.

Welcome to The Interaction Age.  It’s not about more information (there is enough out there), it’s about the right information, in the right context from the right people/organisations “pulled” at the right time.

Breaking the (conventional) rules – Delighting Customers

February 20, 2011

Customer centricity

Customer Value

Customer Care

Customer Experience

These, and many others like them, are all great marketing phrases to entice customers into feeling like they are cared for.  But are they really?

 

A couple of great articles that Jim Hays shared with me this week from Steve Denning (“The alternative to Top-down is Outside-in” and here) really drive home this point.  Denning also points to The Age of Customer Capitalism HBR article.  An article that I read last year and is a powerful thought provoking article that I would strong encourage reading. (found here)

This got me thinking, in the technology sales industry how do we really put the customer first?  How do we shift from a “shareholder value” focus (“push” more of our products and services”), to a delighting the customer approach that means customers will seek out our products and services.

Part of the challenge is fear.

History tells us that buyers (IT and Procurement) go to great lengths to keep us (sellers) squarely in our place in the value chain.  They expect us to jump through all the hoops (increasing the cost of sale) in their attempt to de-risk their decision on how they buy from

Note – not WHAT they buy, but WHO they buy from, as in most cases they know what it is they want to buy, they are simply now going through a tried and tested approach of getting the best bang for their buck.  Commoditising our offerings.

So for all of us that sell in the industry, how?  When we do not have the chance to “add value”, when we are treated as “suppliers” in a commodity environment, when our products and services are considered the same as, or near enough the same as, our competitors do we delight the customer…and do all this without eroding margins in an already tightly contested space?

The fear is that if we do something different the result will be worse, and in doing so we will risk our companies and our own personal future. So we keep selling the same way, with lower close rates and lower margins.

But without risk there is no reward.

Conventional management wisdom (as described in the linked articles above) describes management culture focused on shareholder value.  Our customers live this culture.  Their shareholders will benefit if they can sell more of their product while reducing their overall expenses to make, sell and support those products.  Some people in the organisation are focused on the sales side, some of the make side, some on the support side and then more on the admin / overhead side (like IT).  It’s an interesting pyramid that when balanced out there is often more people (as a % of employees) focused on the cost control side of the shareholder value equation.  This is in part as management doctrine says aggressively optimise the business while increasing revenue (innovation falls into that but innovation as a % of revenue generating activity is usually very very small – cash cows get the most resources).

So if the “traditional” (IT) buyers in our customers today are focused on cost control, why aren’t they delighted.  The technology industry has it’s strength and reputation in helping companies to save billions,if not trillions of dollars over the past 20-30 and into the next 20-30 years.  Yet are our customers happy? Are they delighted to a point they see our companies not as suppliers but as genuine trusted partners?

No, optimisation is a given – it’s table stakes.

So how do we truly delight them?  In short the answer is simple.  Help them overcome their frustrations, make their jobs easier, make their contribution to their companies goals more tangible and achievable. But we can’t do this “at any cost”.

Two weeks ago in our blog we introduced BOLD as a model for differentiation, not just in the sales cycle but in genuinely helping customers achieve their desired business outcomes.  It’s this type of bold strategy to go beyond the PO and help customers through supporting adoption of new technology that changes the rules.  Sure adoption is the customers responsibility, not ours, but if they don’t adopt they don’t get value, no value, no repeat sale and we are commodotised.

Breaking the rules means doing things that others aren’t, it’s about moving beyond the short term “close the sale” focus and looking at the longer term customer relationship.  No “wham bam” PO and move on to the next.

Zappos encourages staff to take as long as they need on the phone with a customer.  Their philosophy is that we have 5-10 mins of uninterrupted time with a customer, why “rush them off the phone” in the name of call handling times and cost per call.

Proctor and Gamble tied CEO A.G Lafley’s bonus to the companies performance as much as 10 years post his tenure as CEO, meaning he needed to create long term sustainable growth capability that ensured the company would be successful for up to a decade post him leaving. rather than creating short term immediately rewarded bonuses.

The technology industry needs to break the shackles, pushing our products to IT isn’t going to work anymore. In “the age of customer capitalism” it’s the companies that take delighting customers to another level that will be successful.

 

Extracting the full benefit of your technology investments – Technology Adoption Framework

February 14, 2011 3 Comments

In last weeks blog post (here) I talked about how technology adoption was a significant opportunity for both buyers and sellers to create meaningful differentiation.  This was based on the premise that most technologies are not fully or adequately adopted to leverage the capabilities offered.

But many readers were probably thinking, ho hum, this is not a new problem.  Think about CRM and ERP in the past 10-15 years and Sharepoint more recently.  All 3 have spawned many many a niche company, method or significant thought leadership around “user adoption”.

So what’s different and why now?

In short what drove success in the 20th century (and the early part of this century) simply will not drive success moving forward.  Business as we know it has changed.

There are many many studies (Gartner, CIO Insights etc) that show for the past 5 years the #1 desire of “business people” of IT has to have IT assist in driving meaningful business process improvement.

Technology investments (and adoption) was driven around process change.  This in turn resulted in the Business Process Management industry where many new models (TQM, Six Sigma, Lean, BPMN etc) and tools (type BPMS into Google) were created to help companies map and evolve their business processes.

But technology investments were mainly applied to only 1 type of business process.

Processes have been traditionally described as:

Core – these are the differentiating business process

Enabling – these are the non differentiating

Management theory, academia, text and “on the job” learning for the past century have mainly focused on what can be controlled.  Operational Excellence, better, faster, cheaper, cost management have all been mantra’s of many many highly successful organisations.  This will not change moving forward.  However cutting costs and driving efficiency no longer delivers the breakaway differentiation organisations are seeking, it results is staying competitively commodotised.

In short investing and adopting technology to drive out cost and drive up efficiency by targeting enabling processes doesn’t deliver the desired business outcomes anymore it just keeps you in the race.

There is however a massively growing groundswell of focus on core differentiating processes.  How can these not just be improved but innovated.  In a recent discussion with a client I was asked, how can you help us innovate our innovation process?

The challenge has been that as we moved out of the industrial age and into the information age process were task based.  If this then do that.  They were easily defined, mapped and the actions and tasks well structured and highly disciplined.  But we are no longer in the information age.  We are now in the Interaction age !

Processes as we used to know then have changed.  Process used to be very structured, highly defined, task orientated and actionable.  But as we have moved from industrial to interactions process have become far more cognitive, interpretive, less formal and much more tacit knowledge based.

As a result the traditional adoption methods applying traditional business process mapping (flow charts, Six Sigma, Lean etc) simply are not designed to innovate in the NEW core differentiating process.  These models are absolutely still true and valid for operational enabling processes but not for the new brave world of the “knowledge worker”.

Where in the past a person would know exactly what to do and when with very little thinking, the core job function knowledge was explicit and could be easily trained, measured and managed.

These days people are given increasingly more empowerment to gather information, interpret that information and act in ways they decide “on the fly” with supporting guidance from the corporation.  It’s a bit like the old “Choose your own adventure” books.  A new product innovation may go through a very different path to market than another within the same organization based on the cognitive processes of the team.

Additionally processes used to be strictly internal, whereas now days the lines have blurred between where process start and stop between suppliers, the company and customers.  You can’t map and change other companies processes….can you?

With this evolution to “cognitive processes” new methods are required to address the old problem.  The challenge “the business” is still looking for is business process improvement (or as we like to say process innovation).  But the old approach of process mapping, structured modification and improvement doesn’t work for cognitive processes where the resultant action is one that is as yet undefined and will only be defined by the person executing the process.

New approaches are required.

Cognitive process mapping and tools such as “Adaptive Case Management” tools will play a significant role in driving technology adoption for breakaway innovation and differentiation.

Bringing us back to the adoption framework.  The below diagram is a high level “work in progress” of a new Business Adoption Framework for collaboration in the 21st century.  It is a model that is built on a focus on core differentiating cognitive process innovation.  Would love any thoughts and feedback as we continue to build and evolve this model.  This model doesn’t look at cognitive processes singularly.  What it suggests is that processes both operational and cognitive will need to be mapped.  But to change them the activities to change cognitive processes radically differ from changing operational processes.  It’s much more around buy in and cognitive skills (behavioural) change management / development than it is around directive task based change.