Shop Talk Podcast #7 - Ford Harding on Rain-making

rain-mak-er n. a person (as a partner in a law firm) who brings in new business.

On this edition, we talk to Ford Harding, author of "Rain Making: Attract New Clients No Matter What Your Field." Ford's book presents very practical and complete advice on selling professional services. He is president of Harding & Co., a consulting firm that helps companies improve their selling performance.

Among Ford's observations in the podcast is that most professional services people are hired for their native intellgence, critical thinking skills, etc., and not for their sales competence. Which results in an often painful transition when these folks are asked to start selling.

It was a fun chat. I hope you enjoy it. Click here to download.

Tags:
sales, sales improvement, business development, professional services, rainmaking

"Big Think Strategy" is a fun, inspiring read on reinventing business

Every CEO these days wants to reinvent her business. One problem is thinking big enough. Being part of an industry, a market, a sector tends to limit a company's peripheral vision. How do companies break out of their comfort zone and find strategies that take advantage of their unique strengths while opening up new markets?

That is the question "Big Think Strategy" by Bernd Schmitt, professor at Columbia Business School, tries to answer. And the book does a good job of showing what is needed to "kill the sacred cows" of a business and imagine and invent a prosperous, growing future. Schmitt's focus is on nurturing creativity in the executive suite and in among the rank and file. And it's written in a fun style that complements the subject matter and inspires the readership to give the ideas a try.

The best parts of the book are around generating new ideas--from staff, customers or seemingly unrelated industries--creating a strategy from those ideas. In Chapter Four, Schmitt describes four "big think strategy" types--opposition, integration, essence and transcendence--and what competitive reaction each type is likely to spur.

Like more and more business books these days, Schmitt lets his personal story seep into the pages, whether it's his love of steak or a nice suit, or the opera. (I have to say my enjoyment of these anecdotes was offset somewhat by twinges of envy--Schmitt's life seems pretty posh for a consultant... perhaps he is hiring?)

"Big Think Strategy" is a companion piece to a couple of other recent books of importance: "The Opposable Mind" and "The Future of Management" (see posts on these books here and here). And it suffers a bit by comparison to each. Due to its brevity and fewer examples, and to some extent its breezy writing style, it feels less substantial than either book. Nonetheless, it's a good book on a crucial subject for today's leaders.

If you can only buy two books on reinventing your business this year, I'm afraid you'll have to skip "Big Think Strategy." Otherwise, it's a worthy addition to your bookshelf.

creativity, strategy, business development, reading list

For consultants, adopting the "Google 20%" is vital

Let me paint you a picture. You're a consultant, and a company makes you an offer: Please work full time on our account. We'll take all the hours you can give us. Imagine, further, that this assignment lasts two or three years. Then, as with all consulting arrangements, it ends.

Now what do you do?

Paradoxically, the assignment has been so good that it has left you unprepared for the next one. And the more of yourself you devoted to that one assignment, the less time you spent keeping your contacts up to date, learning new skills, and marketing to other clients.

No one would trade the two-year client for a six-week client, but the six-week client cannot put your consulting business into the kind of long-term jeopardy the two-year client can.

The answer? Adopt the "Google 20%." Recall that Google asks each of its employees to dedicate one day per week to new projects of her choosing. A consultant who does the same automatically has a bank of time to spend on projects that, while they may not have a near-term payoff, are vital to the long-term health of the business. Examples: reading new literature, writing journal articles, taking on speaking engagements, trying brief assignments that open up new areas of experience, writing a blog, writing a newsletter, serving on an advisory board, developing a product idea.... The list of useful projects is endless, if only you dedicate the time and commit to using it productively.

It's not a strategy that's easy to implement. Convincing the client to take a little less than all of you can be tricky. Fitting in the 20% work around client needs also takes flexibility. And forgoing the immediate income can be very, very difficult.

But the payoff is great. Rather than being at the mercy of your client (no matter how wonderful they are to you), you are in control of your career and destiny. Frankly, continuing to build your skills (even in areas outside your current assignment) is something your clients should demand of you anyway.

(Photo by michelleho via stock.xchng)

sales, consulting, marketing, business development, networking, Google, product development, marketing

More on using the Cynefin framework

If you found value in Dave Snowden's and Mary Boone's recent Harvard Business Review article (discussed in an earlier post), you should read Dave's post on "safe-fail probes"--it's sort of a second chapter to that article focusing on applying the Cynefin framework.

business development, complexity, decisionmaking, leadership, management, organizational behavior, sales process, sales, Harvard Business Review

Authors recommend improving alliances using the soft stuff

Aren't detailed plans, firm contracts and hard metrics the best way to ensure that your alliance performs to expectations?

Maybe not. Jonathan Hughes and Jeff Weiss of Vantage Partners write in the November Harvard Business Review ("Simple Rules For Making Alliances Work" - link $$) that specific goals and contractual commitments are necessary but not sufficient for alliance success. Why? Because alliances are too complicated to manage with contracts and metrics. Write Hughes and Weiss:

Alliances, however, are not just any business arrangement. They demand a high degree of interdependence between companies that may continue to compete against each other in the marketplace. They require the ability to navigate—and often to actively leverage—significant differences between partners’ strengths and operating styles.

Hughes and Weiss go on to set out five principles for better management of alliances:

1. Focus less on the business plan and more on how you'll work together
2. Develop metrics pegged to alliance progress as well as alliance goals
3. Instead of trying to eliminate differences, leverage them to create value
4. Go beyond formal governance structures to encourage collaborative behavior
5. Spend as much time managing internal stakeholders as on managing the relationship with your partner

These sound right to me. When I've seen alliances go south, it's when the human interactions don't live up to the strategies, or when cultural differences promote alliance-damaging behaviors, or when the rest of the business tires of the difficulties of working with an alliance partner.

It also seems that narrative techniques would be very helpful in surfacing and exploring the differences between firms. Collecting and making sense of brief anecdotes that are meaningful to one company can help the other understand the deeper strengths and culture of its partner.

The other benefit I see working with the Hughes & Weiss prescription is the ability to create new value and innovation through the leveraging of differences. Going into an alliance, the joint value proposition is only a paper document--and each party's limited understanding of the other constrains what it can be. Once true collaboration is allowed to happen, the possibilities expand dramatically.

alliances, management, narrative, business development, Harvard Business Review

Toyota manages suppliers for the long run

Among the many accolades that Toyota receives, little mention is made of their supplier management. It's strange, given how frequently the press mentions supplier issues at other auto companies--usually in the context of extracting price concessions.

Toyota is very different. As profiled in a recent paper from the Boston Consulting Group, "Getting to Win-Win," Toyota takes the long view with suppliers. For example:

• It spends 3-5 years evaluating a new supplier before awarding an initial contract.
• It understands its suppliers' costs structures in detail and agrees to prices that allow suppliers to make profit. Price concessions must be accompanied by explanations of related supplier cost improvements.
• While it attempts to have more than one source for components, Toyota is willing to give 100% of its business for a part to one company if only that company can meet Toyota's expectations for quality and delivery.
  
• It carefully tracks supplier issues and gets involved in root-cause analysis and resolution of problems--and expects suppliers to learn from mistakes as eagerly as it does. A Toyota supplier is quoted in the BCG report: "Toyota accepts the fact that mistakes do happen. What we need to show is that we have learned from our mistakes and that we will not make the same mistake a second time. Toyota rewards you for that."
  

One hallmark is openness and transparency. And a willingness to invest in a relationship far in advance of an actual purchase. For example, if a company is not awarded business with Toyota, the company will provide "feedback that highlights the areas the supplier should work on to improve its cost, quality and support of Toyota."

In other words, Toyota provides information to losing bidders so that their future bids can have a greater chance of success. Which should be a lesson to all us who sell--don't be afraid to ask why we lost and what we can do to provide better bids in the future.

If it can help Toyota, and its suppliers, it can help our customers and us, as well.

(Thanks to the Economist for the pointer.)

(Photo: a 1981 Toyota Celica by allenp via stock.xchng)

sales buying criteria Toyota alliances business development

HBR article demonstrates that leaders need to manage complexity

"We need to document our processes!"

I heard this again and again at various companies I worked at over the years. And that's a fine goal, to document processes. But the thinking--that if processes are documented then we will be able to perform high-quality work and be successful--is flat-out wrong in many circumstances.

Why? Because many (and many of the most important) business problems can't be reduced to a repeatable process. This view is described in an article in the November Harvard Business Review, "A Leader's Framework for Decision-Making," by Dave Snowden and Mary Boone (link - $$). (Prior references to Dave Snowden's work can be found here: 1, 2, 3.)

In it, Snowden and Boone describe the Cynefin framework, a model that helps put business situations into a context that guides how they should be addressed. The framework has four primary segments:

Simple - repeatable processes that can be described by best practices (e.g., how to determine whether a mortgage applicant is qualified)

Complicated - "the domain of experts," according to Snowden and Boone; where complete data is available, and issues can be solved with analysis (e.g., finding underground oil deposits)

Complex - where multiple variables interact unpredictably - "the realm of 'unknown unknowns,' ...the domain to which much of contemporary business has shifted."

Chaotic - where no manageable patterns exist, "the realm of unknowables" --e.g., September 11, 2001. In this case, the best response is to do something and assess what happens.

So, back to documenting processes. Simple processes and their best practice should be documented and followed. Complicated processes, too, can benefit from discipline, though there is value in dissent and dialogue. Documenting complex processes doesn't do much of value--repeatability is impossible and in fact counterproductive to attempt.

Here are some business processes that would fall into the complex domain:

• new product development (how people learn about and use products can have a significant effect on how the product evolves)
• entering a new market or geography
• making an organizational change
  
• a B2B sales pursuit

So how to manage these if they can't be boiled down to a cookbook? Boone and Snowden recommend involving more people in decisionmaking (sounds a bit democratic); setting some rules or guidelines to channel behavior (i.e., in a sales pursuit, we will never respond to a tender that we didn't know was coming); encouraging dissent; creating an environment where good things can emerge, and nurturing those things.

In my experience, managers are still trying to shoehorn all their business problems into the simple or complicated domains. The more quickly they accept the complexity of many critical areas, and manage them appropriately, the sooner we'll stop wasting human resources and start achieving better business results.

And that'll be something worth documenting.

(graphic: the Cynefin framework from Cognitive Edge via Wikipedia)

business development, complexity, decisionmaking, leadership, management, organizational behavior, sales process, sales, Harvard Business Review

Tesco CEO on moving into a new territory--the USA

I've had the opportunity to help several companies set up shop in the USA. It's a very challenging process, even for companies that have had success in other foreign markets.

European companies can leverage the EC, the euro and geographical proximity when expanding to other countries in Europe. The USA is a different matter. It's massive in size, covers four timezones, has laws and tax rules that differ state to state, and its customers are used to getting their own way with products. Succeeding, however, can bring the company its largest market. Ask Toyota.

In Thursday's Wall Street Journal, the "Boss Talk" column featured an interview with Terry Leahy, CEO of Tesco, the largest grocer in the UK.

Highly innovative in its home market, Tesco has set its sights on the US--but not with its superstore concept. Instead, Tesco is building smaller, 10,000 square foot neighborhood stores. Leahy describes planning the US launch, doing market research, and competing with Walmart. A sample:

We didn't want to buy an existing business because what's the point of going to America and just doing the same as everybody else? There is already so much retail there. So what we tried to do is turn a weakness we had -- that we had no presence in America -- into an advantage: We can research and design the perfect store for the American consumer in the 21st century.

This interview should be required reading of any CEO who has dreams of conquering America.

(Photo: "Go and Buy" by lusi via stock.xchng)

business development retail strategy Wall Street Journal

Partner up. Go it alone. There's no one ideal way to enter a new market

The benefits and risks of partnership are on display in the dispute between the French company Group Danone and its Chinese partner, Mr. Zong Qinghou, as outlined in a front-page article in today's Wall Street Journal.

The good news? According to the Journal, Danone was able to expand more quickly than it would have otherwise, and at lower capital expenditures, by using joint-venture partners rather than going it alone. For example, partnering with Mr. Zong in 1996 to grow the Wahaha brand in China allowed Danone to command 23% of the Chinese beverage market by 2006--a larger share than Coca-Cola.

The bad news? They weren't able to control their partner. Allowing Mr. Zong an unusual degree of autonomy and flexibility to enter into side agreements, he created twenty other beverage companies that produced and sold products under the Wahaha brand--without having to share the proceeds with Danone.

So, did Danone make a mistake entering into this type of arrangement in the first place? No, they say:

Laurent Sacchi, Danone spokesman, said it needed to use joint ventures because it lacked the management depth and size to grow quickly, particularly in fast-growing emerging markets. "If we now have 30% of our sales in emerging markets and we built this in only 10 years, it's thanks to this specific tactic," he says. "We have problems with Wahaha. But we prefer to have problems with Wahaha now to not having had Wahaha at all for the last 10 years."

Entering a new market alone = costly, slow, lots of control
Doing it with a partner = fast, cheaper, much less control

Pick your poison.

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(Photo: Future Cola by Wahaha)

alliances business development marketing Wall Street Journal

A more realistic way to profit from innovation

Most big companies' innovation processes look like this: sort through a host of new-venture proposals, select the one with the biggest payback and lowest risk, and fund it through launch. Establish ongoing "go/no-go" checkpoints to ensure the venture is meeting its projections and, if it's not, kill it.

While it sounds reasonable, this kind of process contributes to the poor return on innovation investment in many businesses. So say Rita Gunther McGrath of Columbia Business School and Thomas Keil of Helsinki University of Technology in an article in the May Harvard Business Review ("The Value Captor's Process" - link $$).

The key defect in standard innovation processes is a belief that the initial business plan for a venture is unalterable and that the only success is fulfilling the business plan as originally conceived. This leaves no room for the reality of an innovation process--which is that there may be several possible successful outcomes, and achieving any one will add value to the company.

McGrath and Keil suggest several other ways to extract value from new ventures if "Plan A" doesn't come about:

• Recycling. To entrepreneurs, shifting course based on new possibilities or issues discovered during the development process is second nature. To large companies, it's a very difficult task. Of one new-business venture, the authors write, "The applications that turned out to be significant profit generators were not on the original list of possibilities."
  
  
• Spinning off/licensing. If your company can't make a go of it, perhaps an outsider can, with the company potentially retaining some ownership.

• Spinning in. If the venture doesn't stand alone, it may be a useful extension to an existing business unit.
  
  
• Salvaging. At worst, put the learnings and technology gained in the venture to work somewhere in the company.

The authors also focus on an alternate approach to new-venture planning. They write:

An alternative to the go/no-go approach is to make learning a central purpose of the venture plan. In a discovery-driven plan, measuring progress consists of validating assumptions as quickly and cheaply as possible and then revising the plan as necessary at key milestones.

Such planning allowed Texas Instruments to enter the RFID market very early, testing the market and value propositions inexpensively and cautiously, but then being prepared when large-scale markets for the products emerged. "Had TI based its decision to invest in the venture on whether the market size and potential payback were sufficiently large and the level of risk sufficiently low," write McGrath and Keil, "the company probably would not have funded the initial effort."

(Photo by lusi via stock.xchng)

innovation strategy business development alliances Harvard Business Review