Once again my article review comes from Harvard Business Review, this time from their latest edition which focuses on sales training. This article interests me for two reasons; first because we at MTP are always wanting to increase our selling effectiveness; secondly because a recent project for a major client has involved the work of the joint authors. We were asked to develop case study material to support a sales training programme built around the authors’ recently published book, the Challenger Sale.
This article refers to the content of the book but goes much further, in my view too far. The principles of the Challenger Sale are sound and valuable to any organisation selling business to business. You must know the customer’s business, be able to tailor solutions, be comfortable talking about money, take an assertive role, provide insights about the market that others cannot replicate, act as a support to the purchaser in the buying process. This is all good stuff and it was a rewarding challenge to be able to write case studies/role plays that bring out these principles.
But in this article the authors seem to go much further. They rightly identify the reason why a new approach is required; because purchasing procedures have changed, buyers have become better prepared, have more formal processes and are much more likely to go out to price based tendering. But the authors’ answer to these challenges is much more far reaching than is advocated by the Challenger Model; they suggest that, in addition to providing valuable insights for the customer, those who are successful in the modern business world also do the following:
- Focus their efforts only on organisations who are in a state of flux
- Seek out those in the organisation who are change agents, even if they are sceptical and resistant
- Coach these change agents on how to buy, changing the way they think about their needs
An example of success would be to persuade the customer that the tender they put out should be withdrawn and reassessed, because the needs are different from what was originally believed. This sort of outcome is clearly possible and would be a dream result for those who are selling business to business but it is hard to see this working on a regular basis, even if the three processes mentioned above were successfully carried out. And it does not help that the example of this goal being achieved successfully is an anonymous 'business service company'.
Though there is a lot of good advice in the article, some of the content comes over as idealistic, even arrogant. How far is it possible and advisable to confine your selling efforts to the 'state of flux' segment when there are so many other characteristics to use for segmentation; and how easy is it to define those who are in flux? And isn't it almost arrogant to think that you can coach these change-agents to better understand their own organisations?
The good advice is the emphasis on insights, both as a way to show that you are different from competitors and to help the customer rethink the way they are approaching the problem. The authors' research indicates that new market insights are the biggest driver of customer loyalty. The article is also right to put emphasis on meeting the right people and not just the group which are cleverly defined in the article as 'The Talkers'. We know from our selling activities at MTP – often in hindsight it has to be admitted – that being blocked from meeting the key people is likely to lead to failure, either to get the business or to develop a successful solution.
The authors suggest that rather than spend the easy time with the 'Talkers' who enjoy meeting you but will not close the deal, good sales people will seek out the 'Mobilisers' who will challenge and question you but are much more likely to make the right decision. They may challenge your insights but, if your knowledge and your solution are sound, they will respond to your approach.
There are sub-headings that break down the Talkers and Mobilisers into sub-categories - for instance Mobilisers are split into Go-Getters, Teachers and Sceptics – but I found this unnecessarily complex; I could much more easily identify the two main types. I did however have difficulty in relating the need to find Mobilizers with the suggestion that the sales person needs to 'coach them through a sale'. I can see the need to influence this category in subtle ways but the idea of coaching them better to understand their own buying processes would surely meet with resistance from more self-confident change agents.
This seems to me to be the main weakness of the article; it goes too far in advocating the coaching approach without making any reservations about the type of people and personalities likely to be involved. Insights, yes, understanding their business yes, but coaching all customers in this way? I don’t buy it.
Read the article:
http://hbr.org/2012/07/the-end-of-solution-sales/ar/1
Tuesday 31 July 2012
‘The End of Solution Sales’ by Brent Adamson and Matthew Dixon, Harvard Business Review, July- August 2012
Tuesday 17 July 2012
Managing Risk; a new framework, by Robert S Kaplan and Anette Mikes, Harvard Business Review, June 2012
Reading the June version of Harvard Business Review reminds me of the old parallel with a London bus; you wait for months for a decent article and then lots come along in the same edition. This is the third I have reviewed so far and all three have been practical and interesting.
It is no surprise that this article comes over as a good balance between the conceptual and the practical because one of its authors is that annoying example of academic and publishing success; Harvard Professor Robert Kaplan of Activity Based Costing and Balanced Scorecard fame. Why annoying to me? Mainly because of jealously that such simple but powerful concepts can be put over in such an engaging way, with such a high level of success! Kaplan makes us mortals say – now why couldn’t we have written that article or created that label?
This article does not contain such a major breakthrough in thinking as ABC or BS but it is an interesting take on a topic that most companies struggle to master and that those who teach the subject find hard to conceptualise. The traditional matrix of risk impact and likelihood is widely used by companies but does not provide enough guidance on how risks can be better managed; it is an analytical tool rather than a management blueprint.
The start of the article is brilliantly conceived though perhaps a little unfair to Tony Hayward of BP. It quotes his pre-disaster approach to risk management as writing emails to staff about texting while driving and using lids on coffee cups, while no proper plans were being made for the risks of the Deepwater oil exploration. The authors use this as a lead into one of their main points; that the overemphasis on compliance and box ticking is at the heart or many companies’ risk management problems.
The article’s main theme is that the best framework for effective risk management is to classify risks into three categories:
- Preventable risks, mainly internal
- Strategic risks, those taken consciously and for positive reasons
- External risks, uncontrollable and to some extent unpredictable
The argument is made that these three types of risks are fundamentally different and should be managed in different ways, whereas most companies deal with them through the same processes. In particular they adopt a compliance approach to all three when this is only applicable to the first category.
The authors then move on to link risk management to that other key concept that we are covering in increasing frequency on our courses, that of BIAS. They argue that there is a natural inclination to be over-confident in forecasting, particularly where there is a leader whose style is upbeat and positive. It creates a sort of ‘groupthink’ that suppresses objections and talks about successes but not failures. This encourages risks to be discussed with the different types of bias – anchoring, confirmation and over-confidence – which result in poor evaluation and unrealistic management plans.
The article therefore makes a convincing recommendation that companies with major investments and a high level of strategic and external risks should have independent experts to challenge the internal managers responsible. This is backed up by a number of examples of top companies who are already using these processes. These examples are interesting but it would have been more convincing if more of these companies had been global operators; only VW and JP Morgan fall into that category.
I assume that the article must have been written before the most recent JP Morgan debacle and that it was too late to change the content for, with hindsight, the reference to JP Morgan as a beacon of good risk management practice is laughable. The authors suggest that the Morgan model of risk management and control was a major reason why they fared better during the financial crisis than other banks and have stopped traders ‘going native’. Another comment which seems amusing in hindsight as their CEO fights for his career, is this quotation - 'Preventing traders going native is the responsibility of the company’s senior risk officer - and ultimately the CEO – who sets the tone for a company’s risk culture.'
One particularly thought-provoking point is the authors’ view that companies make their risk management less effective by carrying out analysis on a functional basis – marketing risk, production risk etc. – when they should look at the assessment holistically, linked to the business strategy and using - surprise, surprise – the Balanced Scorecard approach as a framework. I’m less certain about the latter point but the general comment is valid; at MTP we have seen companies’ investment evaluation processes which use a functional framework as a checklist and it has exactly the impact that is described; another example of the compliance, box ticking approach which can get in the way of business judgment.
The article finishes by suggesting the tools and concepts which apply to each of the three categories of risk. The first category of Preventable Risk requires a combination of compliance and internal audit, supported by the company’s statement of values. Strategic Risk requires workshops run by independent facilitators and experts to challenge assumptions, supported by ‘risk scorecards’ linked to the strategic planning process. The uncontrollable External Risks require stress testing, scenario planning and war gaming exercises, also using independent people to facilitate the process. This was all good stuff though, as often happens with content in this area, there should be more on what is done after the analyses have been carried out, rather than seeing the tools as ends in themselves.
My overall assessment is that this is a valuable contribution to a topic that needs some fresh thinking in the light of events like BP’s Gulf Oil spill and numerous disasters in the financial sector during the recession. How many companies carried out evaluations of the impact of a Lehmann type crash and are now doing so for the various scenarios around the Euro? And if they are doing so, are they using the box ticking, compliance based approach that probably dominates the risk assessment methods in their audit and planning processes? Like all good articles in business magazines, this one should make major company CEOs think seriously about their current practices.
Read the article;
http://hbr.org/2012/06/managing-risks-a-new-framework
It is no surprise that this article comes over as a good balance between the conceptual and the practical because one of its authors is that annoying example of academic and publishing success; Harvard Professor Robert Kaplan of Activity Based Costing and Balanced Scorecard fame. Why annoying to me? Mainly because of jealously that such simple but powerful concepts can be put over in such an engaging way, with such a high level of success! Kaplan makes us mortals say – now why couldn’t we have written that article or created that label?
This article does not contain such a major breakthrough in thinking as ABC or BS but it is an interesting take on a topic that most companies struggle to master and that those who teach the subject find hard to conceptualise. The traditional matrix of risk impact and likelihood is widely used by companies but does not provide enough guidance on how risks can be better managed; it is an analytical tool rather than a management blueprint.
The start of the article is brilliantly conceived though perhaps a little unfair to Tony Hayward of BP. It quotes his pre-disaster approach to risk management as writing emails to staff about texting while driving and using lids on coffee cups, while no proper plans were being made for the risks of the Deepwater oil exploration. The authors use this as a lead into one of their main points; that the overemphasis on compliance and box ticking is at the heart or many companies’ risk management problems.
The article’s main theme is that the best framework for effective risk management is to classify risks into three categories:
- Preventable risks, mainly internal
- Strategic risks, those taken consciously and for positive reasons
- External risks, uncontrollable and to some extent unpredictable
The argument is made that these three types of risks are fundamentally different and should be managed in different ways, whereas most companies deal with them through the same processes. In particular they adopt a compliance approach to all three when this is only applicable to the first category.
The authors then move on to link risk management to that other key concept that we are covering in increasing frequency on our courses, that of BIAS. They argue that there is a natural inclination to be over-confident in forecasting, particularly where there is a leader whose style is upbeat and positive. It creates a sort of ‘groupthink’ that suppresses objections and talks about successes but not failures. This encourages risks to be discussed with the different types of bias – anchoring, confirmation and over-confidence – which result in poor evaluation and unrealistic management plans.
The article therefore makes a convincing recommendation that companies with major investments and a high level of strategic and external risks should have independent experts to challenge the internal managers responsible. This is backed up by a number of examples of top companies who are already using these processes. These examples are interesting but it would have been more convincing if more of these companies had been global operators; only VW and JP Morgan fall into that category.
I assume that the article must have been written before the most recent JP Morgan debacle and that it was too late to change the content for, with hindsight, the reference to JP Morgan as a beacon of good risk management practice is laughable. The authors suggest that the Morgan model of risk management and control was a major reason why they fared better during the financial crisis than other banks and have stopped traders ‘going native’. Another comment which seems amusing in hindsight as their CEO fights for his career, is this quotation - 'Preventing traders going native is the responsibility of the company’s senior risk officer - and ultimately the CEO – who sets the tone for a company’s risk culture.'
One particularly thought-provoking point is the authors’ view that companies make their risk management less effective by carrying out analysis on a functional basis – marketing risk, production risk etc. – when they should look at the assessment holistically, linked to the business strategy and using - surprise, surprise – the Balanced Scorecard approach as a framework. I’m less certain about the latter point but the general comment is valid; at MTP we have seen companies’ investment evaluation processes which use a functional framework as a checklist and it has exactly the impact that is described; another example of the compliance, box ticking approach which can get in the way of business judgment.
The article finishes by suggesting the tools and concepts which apply to each of the three categories of risk. The first category of Preventable Risk requires a combination of compliance and internal audit, supported by the company’s statement of values. Strategic Risk requires workshops run by independent facilitators and experts to challenge assumptions, supported by ‘risk scorecards’ linked to the strategic planning process. The uncontrollable External Risks require stress testing, scenario planning and war gaming exercises, also using independent people to facilitate the process. This was all good stuff though, as often happens with content in this area, there should be more on what is done after the analyses have been carried out, rather than seeing the tools as ends in themselves.
My overall assessment is that this is a valuable contribution to a topic that needs some fresh thinking in the light of events like BP’s Gulf Oil spill and numerous disasters in the financial sector during the recession. How many companies carried out evaluations of the impact of a Lehmann type crash and are now doing so for the various scenarios around the Euro? And if they are doing so, are they using the box ticking, compliance based approach that probably dominates the risk assessment methods in their audit and planning processes? Like all good articles in business magazines, this one should make major company CEOs think seriously about their current practices.
Read the article;
http://hbr.org/2012/06/managing-risks-a-new-framework