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Feb 8 18

Are You Designing For Performance?

by David Brock

Over the past several weeks, I’ve been writing articles related to designing our organizations for performance.  Whether it’s talent management,rethinking the bell curve, metrics and shifting the numbers in our favor, or rethinking the pareto principle–we can and are obligated to design our organizations for performance.

It’s a simple concept, but too often, it seems we design for mediocrity.  Perhaps not consciously–I don’t think anyone purposefully designs for mediocrity, but we achieve it through lack of attention, acceptance, poor strategy, bad execution, lack of discipline, and making excuses.

We tend to forget, we are in control of our own personal performance, that of our teams, and that of our organization.  We can design everything we do for performance and not accept mediocrity as part of our culture.

We see organizations that are designed for performance every day.  This past weekend, we witnessed (at least in the US) the Superbowl with two great teams (the Eagles and Patriots).  As you look at the journeys of each of the organizations, we see each was built for performance, they did not accept mediocrity in any of the roles on the team, coaching and management staffs.  In the coming weeks, the world will watch the Winter Olympics, elite athletes from around the world.  Teams that are designed for top performance.

We love the story of “Moneyball,” a baseball team designed for performance.  We love stories and speakers from “Special Forces,” talking about teams designed for performance.  In business we see organizations that are consistent top performers.  As we study them, we see what they do is conscious and purposeful.  They design for performance and do not accept mediocrity or poor performance.

I get frustrated reading the data about sales management tenure dropping to 19 months.  Sales people meeting/exceeding quota at less than 50%.  Recently I saw a “market study” that define outstanding performance as “60% of people, or more, achieving quota.”

We get the results we design for and lead to!  Unfortunately, too many seem to have fatalistic or closed mindsets, and are unconsciously designing for mediocrity.

Designing for performance is not that difficult–and it is a whole lot more fun–than designing for mediocrity.

It starts with each of us, caring about our own personal performance, constantly learning, constantly improving.

It moves on to our people, caring about them and their performance, willingness and ability to take responsibility for it, willingness and drive to learn/improve.

We consciously build an organizational culture focused on performance, learning, improvement, and collaboration.

We focus on talent management, not settling for what we get, but focused on understanding the behaviors/attitudes/skills/competencies/experiences critical to achieve the levels of performance we want.  Then we recruit to those profiles relentlessly, refusing to compromise, just to fill a vacant position.

We constantly develop our people, through training and coaching.  We leverage everything we can-systems, processes, tools, programs.

We protect our people, enabling them to perform.  We constantly look to simplifying processes and workflows.  We remove obstacles and barriers that inhibit their ability to perform.  We recognize great performance and constantly strive to develop and improve the performance of every one.

We are constantly involved with our people–not micromanaging, but working with them, learning, helping them develop and improve.

We celebrate our wins, recognizing it takes a team to win.  We learn from our failures, trying to understand them, take corrective action and improve.  We don’t seek to assign blame, but take responsibility to improve.

We are pragmatists and realists.  We don’t look for silver bullets, magical cures, or succumb to wishful thinking or excuses.  We recognize we are in control of our performance, we are responsible and accountable for the results we produce.  We know success comes from doing the work, and not taking short cuts.  We don’t settle, we don’t compromise our standards–ever.  We leverage everything we can, but realize it’s us that creates the success, not the tools or technology.

Ironically, it high performance and mediocrity take the same amount of time.

Using the football analogy, a game is four 15 minute quarters.  Great teams and mediocre teams have to play 60 minutes.  A baseball game is 9 innings, good teams and bad teams have to play 9 innings,  Soccer has two 45 minute haves.  Cricket is……  well it’s cricket 😉

We will all work the same 40-50-60 hours a week.  Mediocre teams will spend the same amount of time at work as high performing teams.  Perhaps the only difference is time seems to fly with high performing teams and time drags in low performing teams.

We get the performance we design for and accept.

Why would anyone ever want to design for mediocrity?

 

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Feb 6 18

The Seduction Of The Pareto Principle

by David Brock

All of us know, often talk about the Pareto Principle.  It’s the 80/20 “rule.” an observation we apply to lots of different things.  For example, 20% of our sales people produce 80% of the results.  Much of the “data” suggests this is conservative, that far few sales people produce a larger percentage of the results.

Often, though, I think we misunderstand this.  We tend to treat the Pareto Principle as a law of nature of physics, thinking it is what it is.  We feel happy, when we beat it by a little, maybe 30% of our people producing 80% of the results.

But we need to approach this differently (whether it’s 80/20 or some other proportion).  We need to carefully examine that 20%.  What is it about them, what are they doing that enable them to deliver the results?

  • Is it something about their skills, competencies, experiences, behaviors, attitudes?
  • Is it something about how they sell or who they sell to?
  • Is it something about how they engage, how they create value, how they differentiate themselves?

Rather than accepting 80/20 as a foregone conclusion, we need to look understand what these top performers are doing and who they are.

Once we understand this, then we have to reproduce it in the remaining 80%.

  • Are we recruiting people that have the same skills, competencies, experiences, behaviors, and attitudes as the “20?”
  • Are we the 80 selling to the same types of customers in ways similar to the 20?
  • Are they engaging, creating value, differentiating themselves in ways similar to the 20?

The more we can replicate what the top performers are doing, the more we can get the rest of our team to perform at the level of the top performers, the more we will drive success and growth.

See the magic is, not shifting the denominator of the 80/20 rule, it’s shifting the numerator!  Do the math.  If 20% of our people are producing 80% of our revenue, and we can get the remaining 80% to be as successful as the 20%, we actually can drive a 400% revenue increase!

That’s the real magic of not accepting your version of the pareto principle.

(If you need help with that math, reach out, I’ll give you the secret decoder ring.  It’s not magic, and too often we miss this real opportunity).

 

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Feb 6 18

Math Works, Always-How Do We Tilt The Numbers In Our Favor

by David Brock

In sales and marketing, we at least claim to be very numbers oriented.  We have metrics around everything:

Click-throughs

Bounces

Open rates

Time spent on a page

MQL, SQL, SAL

Daily/weekly dials

Daily/weekly conversations/meetings

Demos

Pipeline Coverage

Win Rates

Average Deal/Transaction Value

Sales Cycle Time

Lifetime Customer Value

Renewal Rates

….. I could go on.

There seem to be no end to the metrics we can impose on what we do.  There’s a great discussion about whether we are measuring the right things–but that’s the topic of another blog post.

Metrics and the goals we establish are critical.  They give us a scorecard–the things we think are important to achieving our goals.  They enable us to track progress, to understand where we may be going off track so we can take corrective action.

Sometimes metrics make us think we are “in control,”   and sometimes we let the metrics control us.  Metrics may seem to make things more Predictable, but often that may be a false positive, not a meaningful indicator of how we are performing.

For example, if we know the number of phone conversations that convert to sales, a conclusion we might draw is that to double sales, we simply double the number of phone conversations.

And if we know the number of emails outreaches it takes to create a phone conversation, to double sales, we can calculate the number of email outreaches.

It’s all a matter of math.  We know the formula, so all we do is do the math to figure out how to achieve our goals.

The problem is, it doesn’t seem to be working.  50% of sales people aren’t making their goals.  Our marketing programs aren’t producing the results we expect.

Even when things do seem to be working, scaling isn’t necessarily linear, scaling isn’t necessarily achievable (in the time frame we need to scale), and scaling may not be the most effective thing to do if we want to grow.

A simple example:  If I want to double our sales, and I have a reasonable CPOD, I simply double the number of sales people.  Math works.   But here’s where the challenges come in.  For example if I want to move from 100 to 200 sales people, what does it take to find the right 100, how long, what resources do I have to invest in to find them?  What do I have to put in place to onboard them, what resources do I put in place to support them on an ongoing basis, what investment do I have to make in additional marketing to support them…….

All of a sudden we find the model we thought was so simple, isn’t achievable.  Complexity ramps up, costs ramp, performance may ramp, but not at the rate the formula suggested.

While the math is simple, the execution isn’t that simple.  Now all of a sudden, because the execution changes, the formulas change.  Previously, math was our friend, but now it doesn’t work because the formulas have changed–and we don’t know them.

And that’s the issue, we have by blindly applying the formulas and doing the math.  When the formula changes, we no longer produce the results we need.

Here’s where it gets interesting.  A lot of time, we control the formula.  We can change the formula–shifting the numbers in our favor.  Rather than just accepting the formulas, we can actually engineer them to produce better results.

For example, what would we have to change to get better response/open rates?  What would we have to change to improve average transaction value? What would we have to do to improve win rates?

Our customers, unwittingly, are changing the formulas, as well.  Their business needs and priorities are changing, so the things they used to want and need are no longer important.  They have different sources to learn new things.  Their behaviors shift.  So the formulas we used to predict their behaviors  no longer work, or if they do, they aren’t producing the volumes we need.

Of course, we needn’t worry, we have the promise of AI to fix this.  We don’t have to think, we don’t have to do the math anymore, AI does it for us.

But that’s the problem, AI works because we train it to work, we train it to recognize the things we think are important to produce the answers we want.  But if we train it wrong, it produces the wrong results–at a stunning rate.

Even if we train it correctly, it is identifying things that enable us to engage our customers differently, more effectively, we still have to execute.  Yet we don’t seem to have developed the formula for effective execution.

We seem to have ignored what it takes to develop the formulas, to continue to test them, to refine and improve them.  We seem to have abandoned observing, critical thinking, experimentation, changing, adaptation.

Math is powerful.  Math works, always, but are we making it work as we intend it to work.

 

Perhaps, I should move this discussion to include a treatise on imaginary  or irrational numbers……  But I suspect we know enough about this already.  (Pardon the math humor, the geeks in the audience are rolling on the floor, laughing.)

 

 

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Feb 5 18

Should Marketing Be Measured On Revenue?

by David Brock

As a disclaimer, I’m a “sales guy,” and may misunderstand marketing.  But I often see discussions about marketing needs to be measured on revenue.  I think revenue might be a component of a marketing metric, but I wonder as we aren’t focusing too narrowly on a metric. losing sight of the bigger picture.  (Much of what I talk about in this post can equally be applied to sales focusing purely on revenue.)

Every function in the organization is accountable for developing and executing strategies and plans that are consistent with the overall corporation’s strategies, plans, and priorities.  Clearly, revenue and earnings are top priorities for organizations, but they  aren’t the only priorities.

If our primary in sales and marketing, our primary metric of success were revenue, then we would only invest in those big revenue generating opportunities.  We would remain focused on those markets, products, customers that generated the biggest revenue.  We would under invest in developing new markets or in supporting new products–which may become the future platforms for growth.

The business world is littered with carcasses of companies that invested on the “big revenue” generators and under invested in those areas that would have enabled them to grow/survive.  Logos like Kodak, DEC, Wang, Blackberry, and dozens of others are testament to this.  These organizations actually saw the shifts in business and markets.  Kodak, as an example, had some of the leading patents in digital photography, but focused it’s investments in film, riding that to their “grave.”  IBM risked extinction several times (first with mainframes), but shifted it’s investments to developing market opportunities in services, augmented intelligence, and other areas.

While those examples are dramatic examples of misplaced or bad corporate strategies and priorities, we see the same thing in marketing, sales, and other investments.

If we are driven purely by short term revenue, we will always be investing in our current big product, big markets, big customers.  Yet our future, or even our growth opportunity may exist in other areas–new industries, new products, new customers.

Marketing and sales are accountable for executing the corporate strategy in the face of customers.  As a result, they must be measured by their contribution/execution of that corporate strategy.  They have to balance investments and focus across all areas (not necessarily equally)  They assure they have metrics and goals in place that reflect that balanced performance and the support of the corporate priorities and strategies.

 

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