How to pick a winner?

Google

By Gary Peacock

As the excitement mounts for the Melbourne Cup, the horse race that stops Australia, many people are trying to pick winners. In horse racing you win, not by listening to what the owners say, you win by looking at form: what the horses have done.

“The spirited horse, which will try to win the race of its own accord, will run even faster if encouraged.” Ovid.

In business, with your customers, how do you pick winners? By winners we mean profitable and loyal customers. Similar to horse racing don’t listen to what customers say, you win by watching what customers do. In some markets when a customer says they want to partner with you, what they mean is they just want to reduce your prices to take some of your margin. If they really wanted to partner you would see some specific actions to show they were serious about building a stronger and deeper business relationship. Later we will explain what you should see if your customer is serious about being a partner.

Our first tip about picking winners is a technical one: segment your customers.  By segmenting we don’t mean what the marketing department means— segmenting using customer demographics and customer needs. We mean segment customers by their relationship with you.

We use a simple method: how important is the relationship with you to them; how much value do you deliver to them, as they see it. This gives us four possible segments:

Relationship (to them)	Value (To them)	Segment
Low	Low	Transactional
Low	High	Technical
High	Low	Relationship
High	High	Partner

To pick winners, once you segment your customers you must treat them how they want to be treated. Some people think winners can only come from the Partner segment. In our experience, winners can come from any of the four segments.

For the sake of brevity, we will discuss just two segments. Transactional customers are the toughest. They want your lowest price and fastest delivery. Nothing else. Spending time on relationships or spending time sharing technical information is wasting time and wasting money.

If you want to pick a winner with a Transactional account: make it as easy as possible for the customer to do business with you. Find ways to automate transactions and take all possible costs out of the relationship. Spend less time and money with them. Automate the transactions in ways which build barriers to your Transactional customer swopping to another supplier. Can you create unique connections to their systems and processes?  

Some of your people will resist automating transactions and talk of moving this account to another segment. In our experience, it is tough to move a Transactional account to another segment. If you are going to assign time, money and people to moving an account from one segment to another, then try to move a Technical account to a Partner account. It’s easier and more likely to succeed.

So, how about customers in the Partner segment? Typically, your staff want to put more of your customers in the Partner segment than belong there. The killer question is: how much of their time, money and people are they investing in the relationship, compared to your company? If you have been investing far more in the relationship for more than two years, then this customer does not belong in the Partner segment.

If your customer is serious about being a Partner, then what should you see? Over two years you should see more of their people, more senior of their people attending more meetings to discuss more strategic issues in their business.  If you see this, you have picked a winner.

For more insights into segmenting customers look at: http://www.gordianbusiness.com.au/strategic-account-management/ or contact us on +61 2 9450 1040 or email gary@gordianbusiness.com.au. Please share your comments below and subscribe at the top right of the page.

Don’t waste your 2014 off-site: 3 differences between success and failure

Google

By Peter Browne

With Christmas fast approaching, many companies are planning their New Year Leadership or Sales off-site. Having facilitated numerous company off-sites, and attended many during our corporate careers, we thought it timely to share our thoughts on critical success factors for a successful off-site: an off-site that delivers results.

Few senior leaders would describe their off-sites as complete failures, however rarely do they look back 12 months later and confidently say the event changed the way they do business.

“Would you tell me where to go from here?”

“That depends a good deal on where you want to get to,” said the Cat.

“I don’t much care where-“said Alice

“Then it doesn’t matter which way you go,” said the Cat

Alice in Wonderland

When planning your off-site we have observed that there are 3 things that most companies don’t do. By including these things in your planning you increase the probability the next off-site will deliver lasting outcomes.

1. Have a clear scope: Often companies have an offsite because they have one every year. There isn’t much difference between them. In today’s fast changing environment companies need to take a step back and consider their market and the current issues and opportunities. Is the market changing quickly or is it relatively stable? Is now the time to explore broad strategies, or is it time to hone in on specific urgent priorities for the next 6- 12 months? A clear scope leads to clear objectives and outcomes.
2. Incorporate pre-reading. To get results from your off-site the attendees must turn up ready for the issues to be tackled. Often the first morning of an off-site is wasted as attendees settle in and figure out why they are there. Providing them with relevant pre-reading and issues to consider leading into the off-site means they can hit the ground running. The available time is used more effectively and you’ll make faster progress. However they are time-poor executives, so limit pre-work to the relevant and essential. Be clear that you expect preparation to be completed beforehand.
3. Be ruthless on actions and embed follow up into the program. A long laundry list of “nice to have” actions means no strategic course of action. Have a maximum of 4-10 key initiatives. Plan for follow up within a month of the off-site. This allows time for attendees to better understand what they have committed to and explore the issues with their teams. Importantly it creates a stronger sense of accountability for action.

For more ideas the HBR article “Off-Sites That Work” covers the points we have raised in more detail, and adds a few more for you to consider. http://hbr.org/2006/06/off-sites-that-work/ar/1

A successful off-site can align the senior team, galvanise the group to act and create a sense of purpose. Effective follow up builds organisational self-confidence, momentum and strengthens a company’s competitive position.

So if you are planning your strategy or sales off-site for 2014 and want to make it a success, we hope some of these ideas help. Of course if you need more ideas or help contact us to discuss your business challenges, and how we can help design, facilitate and support the execution of your next offsite. Contact us on +61 (02) 9450 1040 or email peter@gordianbusiness.com.au and look at http://www.gordianbusiness.com.as/customised-strategy-workshop/. We welcome your contribution so please comment below and subscribe to our blog at the top right of the page.

How not to run a two day strategy session [Boring your people to Death by PowerPoint]

Google

By Gary Peacock

An envelope arrives, a letter inviting you to a two-day strategy session for your department.  What’s your reaction? Based on our experience, you will probably groan. One reason you will groan is too many senior managers think a strategy session means locking you in a room for two days and bombarding you with PowerPoint slides.

“I have made this letter longer than usual, only because I have not had the time to make it shorter.”

Blaise Pascal

When we ask senior managers why they do this? They explain it is vital to make sure the managers create strategy that fits the broader company strategy. And of course we cannot disagree with this objective. However, let’s pause for a moment and ask a question…what is one of the biggest challenges in strategy? The biggest problem is implementing strategy.

If you accept that implementing strategy is often a big problem, then let’s consider another question. To implement strategy better, does the audience need more information or does the audience need more motivation?

In our experience, it’s rare an audience needs more information and it’s common an audience needs more motivation. When we say the audience needs more motivation; they are usually interested in the strategy, but if we bombard them continuously with PowerPoint then the audience are not involved.

Let’s assume as a senior manager you bring along the strategy and all you want is to get the group involved in implementing strategy. How can you do that?

First, create a strategy on a page or on a single slide. When we say a strategy on a page, we don’t mean a page of tiny 8 point text that is unreadable, (at least unreadable without binoculars.) We mean a reasonable amount of text in a readable font, ideally no smaller than 14 point. It takes time to get a strategy on a page. But it will save your employees far more time and will increase the chances your strategy will be implemented successfully.

[ASIDE: Of course, some managers will argue they cannot fit their strategy on a page.  May we diplomatically suggest that perhaps this is not a strategy? It might be an action plan or a list of objectives or something else. But it is not a strategy.

A couple of quick elements that should be part of the strategy:

What will the company not do? What will the company do?

Unfortunately, too many strategies do not clearly define what you will not do. So, some company’s strategy is to satisfy as many kinds of customer in as many ways as possible. But this is not a strategy because it does not give direction to employees and it does not help employees set priorities. That’s enough of an aside, back to the process.]

Second, ask the participants: What are the biggest challenges to implementing your strategy? Get the brains in the room to think about the challenges. Give the participants 30 minutes to work as a table and produce a flip chart answering the question.

Third get them to work as a table and create action plans to overcome the challenges.

A good strategy session should be where the participants spend at least 75% of the time discussing and debating between themselves and at the most 25% listening to the senior manager present.

Do this and you will find you have a motivated and energised group who are ready and willing to implement your strategy. Don’t do this and you will finish with sleepy, goggle-eyed participants with no commitment to your strategy. In business and in strategy, you have choices and consequences.  May you make good choices and enjoy good consequences.

“Nobody ever did, or ever will, escape the consequences of his choices.”

Alfred A. Montapert

For help planning and delivering a motivating strategy session take a look at http://gordianbusiness.com.au/persuading-for-results/ or contact us on +61 (02) 9450 1040 or email gary@gordianbusiness.com.au. We welcome your contribution so please comment below and subscribe to our blog at the top right of the page.

Are you fostering the 6 kinds of trust in your strategic relationships?

Google

By Peter Browne

The 1991 movie “Proof” - starring Hugo Weaving and Russell Crowe had a simple message: whether or not you love someone is based not on what you say but on what you do. It’s the same in business relationships. Over time your business partners and customers evaluate you and your company by your actions. 

To create and sustain strategic customer relationships you and your account team must focus on continually learning from relationships, and how to foster all of the six kinds of trust:

Honesty - to be free of deceit; truthful and sincere. If you are found being dishonest with an account the relationship won’t recover. Ever. Be honest even if it may cause short-term issues.

Fairness – treating people equally without favouritism or discrimination. Increasingly companies work with others who share the same values. Make sure you walk the talk.     

Openness – not concealing one’s thoughts or feelings; frank and communicative. You are an important source of knowledge and insights for your strategic accounts. They value what you think, so be proactive and speak up.

Credibility – able to be believed; convincing. People work with you and your company because you are experts. Credibility grows as your knowledge and ideas create better results for your account.

Reliability – consistently good in quality or performance. Do what you say you will do and deliver on your promise. Keep working hard to earn the right to stay a key partner.      

Confidentiality – able to keep a secret. Strategic customers will tell you critical information. Information about their business, the industry and your competitors. Treat such information as it was intended and never take the passing on of confidential information for granted.

Trust is not something you can conjure up – it must be earned. Also trust is like the share market. It increases gradually over a long period. However it only takes one event that creates a loss of confidence for trust to crash. But unlike the share market trust often doesn’t recover. For strategic business relationships this means losing a major contributor to revenue and profit, and your reputation.

To learn how to build trust in your strategic relationships click here: http://www.gordianbusiness.com.au/strategic-account-management/ or contact us on +61 (02) 9450 1040 or email peter@gordianbusiness.com.au. We would love to hear your views so please add your comments below and subscribe to our blog at the top right of the page.

Chaotic changes requires agile responses

Google

by Stephen Kozicki 

The competitive market that we all operate within is changing fast; past successes are not predictors of future success. Your competition is changing and changing fast. The question is are you?

When we work on live negotiations we work hard with our clients to develop a strong value proposition; to know who the key decision makers across the table are and to find the best way to frame the value of the deal. A competitive advantage is now temporary; it is almost deal by deal.

Becoming more complex and chaotic is not just unique to business; it applies to cities and countries. Recently after a long period of economic decline, the city of Detroit filed for bankruptcy protection.  My American friends said that we all knew it was coming, but no one was agile enough or courageous enough to take a tough decision.

http://www.huffingtonpost.com/news/detroit-bankruptcy/

When you read some of the comments from the Huffington Post the changes to the car industry did not happen overnight; the changes occurred over a period of time. Too often in business, we hope that the trends we see are not permanent or will not impact our business. Today they often do impact our business with disastrous results.

The purpose of this blog is not to unpack the demise of Detroit, but to ask you these questions:

• Are you seeing chaotic behaviours in your markets by top accounts or erratic competitors?
• Are you making decisions quickly enough?
• Are you agile like a small mountain goat or rigid as a big rock?

In your new operating environment to gain a new competitive approach you need to use your extensive knowledge of: your key decision makers and how you can frame value for them.

Our experience is that great global negotiators spend more time preparing for the negotiation than the average performer. I would assert that there was enough information 15 years ago to allow Detroit to prepare for the chaos ahead and start negotiating for a different outcome. For a long time competition in the car industry had been chaotic. In Detroit their response to tough global competition was to continually drop the price of the cars produced, which meant value suffered.

Your market and competitors will change quickly and often use price as a weapon. Be agile in your response. Don’t drop your prices to match your competitors, leverage value based on your total solution. To find out how to leverage your value in negotiations click here: http://www.gordianbusiness.com.au/negotiating-with-style/.

For unbiased, practical advice when planning for your next negotiation, contact us on +61 (02) 9450 1040 or Stephen@gordianbusiness.com.au. Please share any comments you have and subscribe to our blog at the top right of the page.