| Title: | The Digital way of working |
| Moderator: | QUARK::LIONEL ON |
| Created: | Fri Feb 14 1986 |
| Last Modified: | Fri Jun 06 1997 |
| Last Successful Update: | Fri Jun 06 1997 |
| Number of topics: | 5321 |
| Total number of notes: | 139771 |
A good article that I read in the paper the other day. Some food for
thought.
Title: Why not sell more rather than cut costs?
Today's business logic goes something like this: Sales are down. Costs
as a percentage of sales have risen. Solution? Cut costs, of course.
No rational observer of the American business scene would deny that
many of our enterprises have become bloated. A good healthy downsizing
may be just what the doctor orders in times like these. Indeed, such
prescriptions have appeared in the form of thousands of pink slips for
people who found themselves on the down side of downsizing. Yes sir,
America is following the cost-cutting script to the letter. The
economic herd instinct is alive and well again.
But what about the other side of profitability-productivity
equation? What about selling?
Costs expressed as a percentage of sales may be a symptom of the
core problem - sales productivity. Chop costs all you want, but a
product or service that costs about the same as a competitior's is no
guarantee of selling it.
Smart business people know they can't cost-cut their way to a
superior organization and they can't cost-cut their way out of a
recession. It is true, and it is sad, but selling seems to have taken a
back seat in our efforts to struggle with the effects of a tough
economy.
Why?
Perhaps it's that the junble drums of the American press have been
pounding relentlessly on our lack of competitiveness and on the cost of
goods sold. Perhaps it's because many of our salespeople have become
better at selling their managers than their customers. Or simply that
general managers believe they have more control over direct costs.
All of these are plausible. But I believe there is a more basic
explanation. American management simply doesn't know much about sales
management.
Have you ever wondered why sales management is the only business
disipline in which one cannot pursue a formal academic degree? Can you
think of one area within a business that has direct salespeople where
relatively small gains in productivity could add more to the bottom
line?
I have suggested that sales management is the last frontier of
American enterprise. While cost-cutting and quality improvement are
certainly responsible practices for any enterprise, our consulting
work with well over 200 organizaitons in a wide variety of industries
has demonstrated that work on sales is often more powerful and
effective, with longer-lasting benefits, than any other touchstone
within a company.
If cost cutting hasn't brought your business out of recession (or
if you would like to continue to avoid it), consider:
(1) Redefining your strategy and the role of direct selling in it.
Clear definition of the role (or roles) of your sales force is
essential if you are going to succesfully unleash sales power. An
absence of such clarity often results in doing a better job every day
of doing precisely the wrong things.
(2) Re-deployment. How many salespeople do you need, considering
the reality of today's lengthening call cycles? What type of
salespeople do you need and for what jobs? What are the alternatives to
the favored territory deployment schemes? Is your deployment scheme
helping or hindering your sales call capacity utilization?
(3) New hiring practices. No amount of planning, consulting or
managerial effort will overcome a bad hire.
(4) Elevating the role of sales management within your
organization. If your sales executive feels as if he/she is operating
outside the "power loop" of your organization, you will not get
meaningful gains in sales productivity. See that sales management gets
high status through position changes, appropriate compensation and
especially additional training and coaching, which all too often is
devoted only to the salespeople themselves.
(5) Avoiding the compensation trap. While effective compensation is
obviously a necessary component of any powerful sales program, it is
far down the list in impact on behavior. Changes can actually cause
disruption, distrust and general lack of positive impact. We have seen
selling organizations literally frozen in inaction for months as they
contended with management over compensation issues. A change in
compensation without other changes may be more destructive than
helpful.
(6) Analyzing your return on sales training. Of course, effective
training is necessary and important in improving sales productivity.
But it ranks rather low in impact on productivity. If you are spending
precious dollars on teaching your salespeople how to "close" and how to
"ask for the order", you might consider how to get them in front of
prospects worthy of those questions in the first place. Most sales-
people can improve their productivity dramatically by getting more
trips to the plate. The role of sales program management should be to
help them do just that.
(7) Exploring alternatives to direct selling. Some companies use
direct selling components to do jobs that can and should be done
through less expensive and much more effective means. What percentage
of your accounts really need or deserve the investment of direct
selling? Which ones even want it?
If cost cutting hasn't yet brought American business to the golden
gates of prosperity, companies should try selling their way there. My
guess is American business executives will find it a lot more
satisfying and sustainable than simply lopping off heads.
| T.R | Title | User | Personal Name | Date | Lines |
|---|---|---|---|---|---|
| 1792.1 | Newspaper name and/or author? | NEWVAX::PAVLICEK | Zot, the Ethical Hacker | Fri Mar 06 1992 12:43 | 3 |
Interesting article. Could you state the source?
-- Russ
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| 1792.2 | Balancing risks | IW::WARING | Simplicity sells | Fri Mar 06 1992 12:54 | 7 |
I think it's really quite simple. It's always assumed that you're maxing out your sales volumes. If you're trying to do that and the sales volumes don't come in, you can risk going for broke or you can cut the cloth to fit the actuals. We've always judged survival as our priority. - Ian W. | |||||
| 1792.3 | Not the same old thing again! | SMOGGY::CAROLLA | B.C. | Fri Mar 06 1992 13:13 | 6 |
RE .3
Don't assume anything.
There is another method besides going for broke or cutting the cloth,
increasing Sales productivity. I think this is what the base note
is trying to point out.
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| 1792.4 | One of the premier stories about Big Blue | BASVAX::GREENLAW | I used to be an ASSET, now I'm a Resource | Fri Mar 06 1992 13:23 | 13 |
Having read Tom Watson Jr.'s book about I*M and his father's business ideas, it struck me that one of Tom Sr's first actions when business was down was to hire more salesmen. His basic philosophy was that to make money you needed to sell more and he was nothing if not a good salesman. Applying the acticle in .0 to Digital, I would say that constant problems and/or changes with car plans, account ownership, TFSOs, etc. does subtract from the time and effort everyone puts into the job of selling. So there are two things to improving sales, more people and less hassles. Good products alone will not turn the situation around all by themselves. IMHO, Lee G. | |||||
| 1792.5 | F18::ROBERT | Fri Mar 06 1992 16:12 | 6 | ||
Article copied from the St. Louis Post-Dispatch
Monday March 2,1992
by Kevin C. Eichner, president of a Clayton-based management consulting
firm.
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| 1792.6 | yes, a classic - but they didn't learn either | NEWPRT::KING_MI | Wed Mar 18 1992 15:27 | 5 | |
re: .4 -
I'd assume there's a lot of grave-rolling considering the 20K+ that
have been given the option of "leaving voluntarily" from Big Blue.
Didn't they learn from their own actions?
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| 1792.7 | saying about the same thing ... | BSS::C_BOUTCHER | Tue Mar 31 1992 15:07 | 108 | |
I sent this into DELTA about a month ago and it was just recently posted in
notesfile. I thought it was along the same line as 1792.0 so I thought I
would add it as a reply to same.
<<< CAPNET::CAPVAX$PAGE:[NOTES$LIBRARY]DELTA_IDEAS.NOTE;1 >>>
-< DELTA_IDEAS >-
================================================================================
Note 820.0 A MIXED MESSAGE RECEIVED - CHR:BOUTCHER 1 reply
CAPNET::DELTA_IDEAS 95 lines 30-MAR-1992 09:05
--------------------------------------------------------------------------------
CHUCK BOUTCHER @CXO
DA5771 - A MIXED MESSAGE RECEIVED
--------------------------------------------------------------------------
A lot of activity is currently being expended in an effort, from
observation, to improve the bottom line profitability of the corporation.
From an internal perspective, there are really only two effective ways to do
that. There are many external factors, but for purposes of this memo
I will deal with the issues which the corporation has direct control
over.
The first way is by increasing income more rapidly than the expenses
of the organization, thus - creating more profit. An effective way that
has been utilized is to improve overall productivity. We can do that by
improving or making better use of technology and by encouraging
employees to perform at increasingly higher levels of performance.
Technology improvements have, over the years, been an effective means
for Digital to improve the bottom line, but it is my opinion that
improving individual performance has a greater impact potential.
Quality circles, self managed teams, flexible work hours, job sharing,
rewards and recognition programs, DELTA, compensation programs
participative management programs, etc. ... these are all tools currently
being utilized within the corporation to foster increased income over
expenses for a greater profit through encouraging employees to perform
better.
The second way is to reduce costs while maintaining current income levels,
also increasing the organizations profit - the bottom line. TSFO,
elimination of redundant jobs, early retirement, cost cutting
measures, etc. ... these are also current examples within the corporation
as well.
Which of these efforts is most effective. From a short term
perspective, I think we can agree that reduction in expenses has the
quickest effect to the bottom line over the short term. For longer
term profitability, I think we can also agree that the programs
intended to increase income have a greater potential for much higher
increases to the bottom line of the corporation. If we can agree on the
above, the next question that I am sure you are asking yourself is,
"So what?". Again, we need to agree on the above for this memo to
have any impact.
The current problems being experienced within Digital, I believe, are
a result of the fact that we are attempting to implement both
strategies at once. A dual approach to improving the bottom line is
why we are in the current market position we are in ... these programs
are causing great confusion within the DEC population because we are
receiving mixed messages from the corporation. These strategies do NOT
complement each other from a strategic standpoint and, in my mind, are
THE major reason we are currently struggling as a corporation.
To better understand my point, you have to examine at the two strategies
in detail to see it from the individual contributors standpoint. To
achieve a higher level of income, we need to improve the performance level
of employees. Being people first, and DEC employees second, they(we)
need to feel rewarded and respected for our contributions to the
corporation. We need to feel secure in our roles and confident that
our company supports our efforts to grow and learn. As a Unit Manager
for Digital for almost nine of the 15 years I have been employed here,
I have learned that, for my unit to "Succeed", I must create an
atmosphere of trust with them, and let them know that their
contribution is valued. I let them know, through what I say and do, that it
is OK to try and fail and learn, that the only real failure would be
not to try at all - just to exist. For me, it has been proven in many
different situations and two different geographies to be successful.
Now we must look at the other strategy being implemented at the same
time. We are eliminating replication in jobs performed, creating more
"busy" work for those that remain and reducing the "creative" time
available. We are removing the feeling of security and value that was
being attempted to be instilled in our employees in the previously
articulated strategy, and what has been a strong point for Digital
ever since is was started. It would be nice to say we are eliminating
those that are not effective in their positions - or eliminating "dead
wood" - but that is just not the case. In many cases I have observed,
personally, we are getting rid of some our most creative and
thoughtful employees in an effort to reduce costs/expenses.
The resultant is a better bottom line, for the short term. For the
next six to twelve months we will see better performance in the bottom
line. But it is my considered opinion that this is were it will end.
Conflict between these two strategies has been unavoidable and is
causing GREAT consternation within the ranks. It has caused the focus
of our attention to move from the success of the corporation and
generation of new revenue sources to one of basic, human instinct -
survival. The organization has become more and more political and
"one-ups-manship" is the name of the game. By reading almost any one
of the notesfiles that exist within the corporation, you can see this
trend becoming more and more prevalent. The feeling that "management"
is out to get us. As one of "management", I resent that implication,
but I really do understand it. I only wish I could do a more effective
job as a manager for Digital and get the corporation to see that this
conflict in strategies will be the undoing of a corporation that has
been in existence for as long as I have been alive (we were both
"born" in 1957) and one that I have been personally proud to have been
associated with since the age of 19.
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