The Workplace Crisis

A pay research company (Incomes Data Services) reports today that the pay for the directors of the UK’s top businesses rose 50% over the past year whilst base salaries rose by just 3.2%. The leaders at the helm of UK plc are (handsomely) patting themselves on the back, whilst ignoring an uncomfortable truth.

That truth is that a crisis exists today in the modern work environment. It is inexorably linked to the economic crises of the last few years and is likely to be compounded by the so-called “austerity measures” being inflicted on economies across the globe.

In a reinforcement loop, whilst it is often difficult to know which came first, the “chicken or the egg”, that debate should not obscure the fact that this workplace crisis is part of a negative reinforcement loop that compounds the economic crisis we currently face.

The symptoms are:

  • Fear and blame,
  • Looking out for No. 1,
  • Repeating the same mistakes,
  • The “blind leading the blind”,
  • Low quality, productivity and morale,
  • A lot of telling and very little listening,
  • Abusive and pejorative communication,
  • Presenteeism,
  • A culture of entitlement,
  • Short termism.

The commercial consequences are:

  • Failure to build knowledge capital – letting the value of ideas and learning in the organisation simply evaporate,
  • “Learned helplessness” – diminishing the potential of people in business to solve problems and innovate value,
  • High employee turnover – creating unnecessary wastage in recruiting and training costs,
  • Employee burn-out – generating avoidable costs associated with short and long term sickness-leave and the personal and state costs of poor health,
  • Dissatisfying Customer Experiences – creating “vengeful” behaviours that diminish margins and lose sales.

The root causes of the workplace crisis are:

  • Lack of individual accountability and responsibility at all levels of the organisation. In short, a lack of autonomy.
  • An inability of individuals to draw a clear “line of sight” between their daily activities and business results arising from a poor fit of people’s skills to the needs of the job and ambiguity of role and goal. In short a lack of connectedness to a common purpose.
  • Lip-service paid to the notion of investing in developing skills in the business of commerce. In short, insufficient effort to achieve mastery.
  • A critical failure of leaders to connect with followers because they never seek to understand what it is that followers value.

With innovation and the ability to grow economically being strangled by “austerity measures” on both sides of the Atlantic, our children are likely to experience a social bleakness not seen since the 1970s, or perhaps even the 1930’s. The public frustration with the first signs of this retrograde step are so far currently being peacefully (in the most) demonstrated in the UK by protests that can be described as representing a “broad church” of views, backgrounds and demands.

We urgently need commercial and political leadership to prevent these protests from evolving into something much more sinister, and more akin to the riots of the summer on a grander scale, by opening their ears and listening.

Today’s news and the recent scandals of MPs being just as culpable in being “entitled to more” – the UK Politicians’ expenses scandal – give little confidence that they are ready to listen.

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Steve Jobs 1955 – 2011

“Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t settle. As with all matters of the heart, you’ll know when you find it. And, like any great relationship, it just gets better and better as the years roll on. So keep looking until you find it. Don’t settle.”

“That’s been one of my mantras — focus and simplicity. Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple. But it’s worth it in the end because once you get there, you can move mountains.”

A Non-Commercial Attitude to Risk

Today’s release of the Institute of Economic Affairs’ report into the government’s planned HS2 high-speed rail project connecting London and Birmingham is a timely piece of analysis of the lack of commercial skills (and therefore painful folly) associated with major Government projects.

The reports concludes with deadpan statements about “The lack of a commercial attitude to cost…” and “The non-commercial attitude to risk…” making the finale of the report a particularly bone-chilling read. The lack of scenario planning, a notably speculative and flawed approach to demand forecasting, a cavalier attitude towards proximity economical, environmental and societal impact of the proposed new line, and a sense that the bureaucrats accept “budget over-runs” as a fact of life, represent a truly monumental ‘train-wreck’ prognosis for the project. The lack of understanding of potential value (or lack of it) that underpins the whole scheme is perhaps the most depressing aspect. Congratulations to the authors for the clarity and precision of their analysis.

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The Inhumanity Of ‘Old School Sales Management’

Today’s big organisations and business education institutions grew up in the age of command and control mechanisation, and their view of people as replaceable parts – carbon-based units of production – flows from there. The function of Human Resources has been yoked to this view, mechanistically controlling labour. One symptom of this prevailing approach to “people management” are the protestations that “people stuff” is the responsibility of HR (department/managers – with all other managers abdicating responsibility) counterbalanced by cries of “why doesn’t HR add value to our business”. The consequences however are realised at the level of personal engagement in the creation of demoralised and demotivated employees, working within a negatively reinforcing cycle of value destruction. An outcome that is bad for customers, bad for markets, bad for supply chains, bad for communities, bad for economies and bad for the individuals involved.

One particular example we frequently encounter is where the organisation’s sales team are are expected to behave as pre-programmed automatons by only “selling” a particular product in a given time period. Sales Performers often take us to one side to share with us the discomfort they experience when finding themselves refusing to discuss other products because that is not what they are being targeted towards; irrespective of potential interest and desire on the part of the customer/prospect to engage on other topics where the company has an offering!

We also find that some Sales Performers ignore the instructions of head office and endeavour to only sell what their customers want to buy. Although if they find themselves on an accompanied visit with their Sales Manager they have to ring their customers in advance to tip-them off to the “game”.

The non-value adding activity of such an approach is clearly astonishing. The negative impact on employee engagement of this style of “Sales Management” is particularly disheartening to observe.

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The 2 Major Flaws of “Needs-Creation Selling”

We are often asked about our views and insights on consultative selling processes and specifically “needs-creation selling”. No one can doubt the effort taken by Neil Rackham and colleagues at Huthwaite to ensure scientific rigour in developing the most esteemed “needs-creation selling” model. However this rational model to understand what a prospect “needs” is, in our view, flawed for 2 principal reasons:

  1. It is open to manipulation by the sales performer. A competent questioner can pose questions to elicit answers that will reach a conclusion that the prospect’s need matches exactly the solution the sales performer walked in the office with. Given the loading on behaviour placed by most organisations to “drive the numbers” through explicit language and of course levers on motivation applied through incentive schemes, it is not difficult to recognise the likelihood that such manipulation will take place.
  2. It sidesteps the question of what is “valued” in the mind of the prospect. This may involve a mix of rational and emotional components that are context specific and influenced by beliefs and standards. A buying decision may in fact be based on criteria more complex, or indeed simple, than Rackham’s model allows for. A sale, contracted without value explicitly understood and traded by both parties, predictably reduces the probability of both parties achieving the value they were looking for, be this value:
  1. Implicit (usually value not wholly recognised or fully defined at the outset but very evident at the end of the transaction), or
  2. Explicitly understood but for whatever reason not shared with the other contracting party.

An Alternative Perspective

We understand that world-class commerce, defined by:

  • High levels of customer satisfaction leading to high propensity of the “buyer” to recommend and refer,
  • Achievement of uncompromised measures of profitability for the “seller”, and
  • High levels of engagement on the part of those connected to winning and delivering the business,

can only be achieved using a sales model, where the possibility of manipulation of the buyer by the seller is completely negated, and that the model remains flexible enough to explore the prospective customer’s perception of value; however complex or simple this may be.

 

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Sales – A Way of Being? Or Hitting the Numbers?

I’ve been lucky enough to work with some visionary CEO’s and Chairman in recent years. One of the shared characteristics that I’ve observed has been their desire for their businesses to be sales-driven and the mantra “everyone is in sales” to be embraced by every individual in the organisation.

I am prompted to think of a parallel in W.E. Deming’s assertion that Quality was not sole province of a Quality Assurance (QA or Quality Control (QC) department, but rather was a way of being for the organisation. Three of his “14 Point’s on Management” address this directly:

  • Cease dependence on inspection to achieve quality. Eliminate the need for inspection on a mass basis by building quality into the product in the first place.
  • Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs.
  • Put everybody in the company to work to accomplish the transformation. The transformation is everybody’s job.

In a sense then, ensuring that customers get something that they value – the role of sales – is also an organisational way of being, not just the responsibility of the Sales Team. (And in High Performing businesses we see the associated beliefs and behaviours of this “way of being”.)

Of course for as long as businesses create and feed a belief that Sales is only about hitting the numbers, and doing so by any means necessary, it is easy to see why so many people in the organisation definitely do NOT see themselves in Sales!

 

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The Basics of Business-to-Business Sales Success

McKinsey posted an interesting article last week on B-2-B sales in which they articulated key findings of a survey they conducted of more than 1,200 purchasing decision makers in small, medium, and large companies throughout the United States and Western Europe who are responsible for buying high-tech products and services. The findings being:

  • Customers want to be contacted just enough, not bombarded.
  • Sales reps should know their products or services intimately and how their offering compares with those of their competitors.
  • Customers need information on exactly how a product or service will make a difference to their businesses.
  • And while they may say price is their biggest concern, a satisfying sales experience is ultimately more important.

The article concludes “The sales experience matters, and a good one starts by getting the basics right. Companies should examine exactly how they are performing by asking the following questions: What are the most influential drivers of the sales experience? What things are your sellers doing that could damage relationships? How does the perception your customers have of your sales force compare to how they view your competitors? It is only by knowing and understanding the answers to these questions that companies can begin to identify and pursue the right fixes.”

We are in complete agreement about getting the basics right, but some critical success factors in relation to sales were left unremarked upon. I posted the following comment which you will find among the 34 comments (as I write!).

Our experience is that businesses that only focus on “driving the number” (be it for the quarter or year) certainly generate a maelstrom of damaging behaviours, including unwanted and aggressive contact and nakedly supplier-centric dialogue—both of which destroy trust rather than build it.

What seems to go unremarked is the extent to which a “driving the number” culture also undermines the confidence of sales performers and actually serves to disengage them from their employers, thereby incrementally reducing the ROI per employee—hardly commercially intelligent behaviour!

The most significant factor we find, however, is the challenge of understanding and articulating value. When sales performers assert that their biggest challenge is price, we can be near certain that they can’t describe what it is about their product and/or service that their clients value.

Product knowledge for most sales performers means feature and advantage and they tend to love overdosing their prospects with this. Getting them to communicate in concise terms the benefit and value of their offering is a different game altogether.

The comments on this article in general make insightful reading but perhaps the most compelling and commercially intelligent one comes from Prem Puri, a Professor and Management Consultant in Paris:

SUMMARY OF MY 35 YEARS EXPERIENCE IN B2B SELLING

  1. Building trust, trust, and more trust, is the number one requirement in face-to-face selling. We are selling to human beings, not to machines.
  2. Brand gives you a head start.
  3. Selling solutions to customer problems, not products.
  4. Telling a customer something he does not know but would like to know in his field. (Being perceived as a consultant.)
  5. Intelligent honesty
  6. Humility

Negatives

  1. Aggressiveness.
  2. I know it all. Let me tell you.
  3. Desperation to meet targets at any cost. Customers see it.
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Lack of Innovation

“My own estimate is that today only two in 100 people in management take joy in their work. The other 98 are under stress, not from work or overwork, but from nonproductive work – churning money, battling for or against takeover and so on. Most of the 98 have their eyes on a good rating and don’t dare contribute innovation to their work.” W.E.Deming

Has anything changed since this was written? Our own experience in triple e is that many people in organisations are still slaves to the “target culture” where exhortations to perform “higher, faster, longer, deeper” still ring loud despite overwhelming evidence to their detrimental effect.

In a country (UK) that is reverberating from the political fall-out of the “credit crunch” and lack of regulation, people seem still too afraid to challenge the obvious failure of the last three decades of “management-thinking” (is this a misnomer?) and point at the elephant in every boardroom – the emphasis on increasing shareholder value.

Roger Martin, nails it in his “Big Idea” article – The Age of Customer Capitalism – in the Jan/Feb 2010 issue of HBR where he states “Modern capitalism can be broken down into two major eras. The first, managerial capitalism, began in 1932 and was defined by the then radical notion that firms ought to have professional management. The second, shareholder value capitalism, began in 1976. Its governing premise is that the purpose of every corporation should be to maximize shareholders’ wealth. If firms pursue this goal, the thinking goes, both shareholders and society will benefit. This is a tragically flawed premise, and it is time we abandoned it and made the shift to a third era: customer-driven capitalism.”

The notion of putting customers come first, employees second and shareholders third is, thankfully, an idea whose time has come.

And the ultimate irony, as I write, is that “the city” – for whom the mantra of shareholder value is gospel – is calling on political leadership in relation to addressing the UK budgetary deficit (to get the nation out of the hole that they helped dig whilst making themselves wealthy in the process)!!

Reversing 30 years of bad habits and poor behaviours is no mean task. But if ever there was a “burning platform” the financial crisis that threatens to engulf not only Greece, but the UK and many other European nations ought to be it. Time to release employees from the tyranny of pointless KPIs and targets, free them to innovate, to think differently, to create value for customers, to be valued and have fun and by building value, build business and a future that our children might actually thank us for.


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Commercial Intelligentsia

I welcome suggestions for candidates to list as “commercial intelligentsia” on the blog. The criteria are that they must have made a significant contribution to understanding, or practice of, entrepreneurial thinking, business strategy, understanding of risk and quality and productivity in business.

Many thanks in anticipation

Jon Wareing

Managing Director

Triple E Learning & Development Ltd

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Kick Off!

The majority of businesses owe their existence to an original and insightful piece of commercial intelligence®. Yet all too frequently, the talents, skills and behaviours that created the original success are overlooked as the commercial imperative shifts to hitting annual targets.

A clear indication of a business that is neglecting commercial intelligence® is where it’s processes, structures and behaviours have become dedicated to “staying in business” and where it’s customers begin to describe it as being:

  • Difficult to do business with,
  • Not sufficiently “business savvy” to deliver competitive advantage/value to its clients/customers,
  • Arrogant/complacent/naïve,
  • Deaf to customer needs and the dynamics of their market.

This web presence is a source of comment, discussion and debate around the topic and will link to the development of a programme for developing Commercial Intelligence® in businesses.

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