It’s become the fashion to apply lean/agile manufacturing approaches to our selling and GTM strategies. There are some principles we can learn from manufacturing (just as there are some we can learn from design/development, procurement and other sectors). But after spending years working closely with manufacturing executives, going through “Black Belt,” lean, and agile training programs, I have serious reservations about the rigidity with which these principles are being applied.
But there is one aspect critical to lean/agile manufacturing that seems to be absent in every conversation I see about Revenue Architecture and lean manufacturing processes.
Anyone who has spent any time looking at manufacturing lines and processes knows that a fundamental principle is the elimination of waste. In fact, this single issue is what drove much of the thinking in the development of the Toyota Production System (TPS).
Waste anywhere in the process adversely impacted all downstream steps in the process. Waste interrupts the process flow. It profoundly and adversely impacts output/results, as well as the efficiency of each step in the process. And waste throughout the process destroys any predictability in the results/outcomes.
How can we accurately predict outcomes if we can’t eliminate waste.
And then there is the revenue/cost impact. If waste reduces production output, then revenues resulting from that output plummet. And waste/scrap have profound costs, adversely impacting profitability.
Regardless of whether you completely buy into the application of lean/agile manufacturing approaches to selling, waste is a profound problem. It adversely impacts our ability to generate revenue and grow, it adversely impacts our costs. And “scaling” simply amplifies the problem.
What is sales waste?
Consider our outreach. Fractions of a percent of our outreaches to prospects and customers are actually successful. And we are becoming less successful at accelerating rates. Just look at data on numbers of outreaches to generate a response to our prospecting attempts. Or the number of dials it takes to get an answer. Or even, the increasing failures of our social outreaches. What are we doing to understand and reduce this skyrocketing waste?
We seem efforts around sharper targeting, greater personalization to help address this. We see AI sometimes helping, more often not (this is less an AI issue and more how we use AI). We see increased success in changing our messaging in the outreach, but we also see increased failure rates/waste in irrelevant and undifferentiated outreach.
Waste reduction challenge 1: While they weren’t great, look at your opens/responses/etc 5 years ago. What do you have to change about your current engagement strategies to produce the results you produced (on a percentage basis) that you produced 5 years ago? How do you create outreaches that are actually engaging?
Let’s look at win rates. Again, we’ve seen similar results with win rates plummeting over they years. We now accept win rates of 15-20% as acceptable. This means we 80-85% of the opportunities we pursue are wasted. Think of a manufacturing line that has to reject 80-85% of their output and scrap it. In manufacturing, we would expect close to 100% of what started in the line to come out the end, fulfilling customer commitments and producing revenue. Clearly, in sales, we can never get to that rate, but look at organizations that are achieving 60-80% win rates. Even doubling current win rates produces huge impacts on revenue and profitability.
Waste reduction challenge 2: Set a goal to double your win rates within the next 12 months. What are the things you have to change to achieve this? How do you start consistently executing to achieve that goal?
Then there is customer retention/renewal and, perhaps more importantly, growth. I won’t spend much time on this, there’s a lot written. The one area I will address is the challenge of incumbency. Once we become embedded into a customer operation, we create a new status quo. Yet when we reflect on why we won in the first place, it was helping change the customer, helping them think differently. We don’t capitalize on the growth in our customers because, too often, we are focused on protecting the status quo.
Waste reduction challenge 3: Customer satisfaction is no longer sufficient. Think of how you can continue to help your customer innovate, change and grow.
One of the biggest sources of waste in our GTM strategies and operations is attrition! Average tenures, at all levels have plummeted to 11-15 months. Employee engagement continues to decline. The lost opportunity this creates is $100s of billions. The costs we incur in this is equally staggering. Just think about the waste: It takes time to find and recruit the right people. It takes time to onboard them. It takes time to build pipeline and to build their capability in winning, and it takes several cycles to lock this level of performance in. Alternatively, look at management/leadership churn. While we expect those people to be highly knowledgeable, it takes time for them to diagnose the challenges in an organization. It then takes time to implement the change initiatives. And none is ever perfect, so we have to learn and adjust. We have to go through a couple of cycles to lock this in and drive the higher levels of performance we hoped for.
The constant churn in people at all levels prevents us from putting in place strong, sustainable growth programs. Each time someone leaves and a new person comes in, we reset, we go back to zero. In Monopoly, we go back to “Go” and don’t collect $200.
One thing we’ve experienced in consistent high performers is much longer average tenure than their competitors.
Waste reduction challenge 4: Set a goal to double average tenure, at all levels, within the next 12 months (Recognize this is only a start). How do you retain your current people? How do you create cultures where people feel heard, recognized, challenged? How do you create organizations where people can see a future development path? How do you create organizations that people are proud to be a part of?
There are plenty more areas of waste. I wish the conversation around applying lean principles would focus more on the reduction of waste in all our processes. Again, talk to any manufacturing person and that is, perhaps, their top priority.
And remember, each of these is just a start. Another fundamental principle of lean/agile is continuous improvement.
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