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Lessons in innovation from a retailer

January 19, 2013 2 comments

Now let me ask you a very important question. Please think well and through before you answer this:

  1. What happens if you are forced to put an expiry date on every product or service that you create?
  2. What if you have to take the product or service off your price list at the end of the expiry date, irrespective of how well the product or service did business for you..

Now, if your business is like any other business that I know of, this is a scary thought.. Scary enough to start thinking about bankruptcy..

However, this is exactly what Zara has been doing for a while now and doing it really well. Designers turn out about 30000 designs that are productized every year. The time they take to introduce a product in the market from design is 3 weeks compared to the industry average of 6 months.

So, how will you change your approach to product or service design if you are mandated that any and all products/services that you create will have a date beyond which it will not be available for sale, which means that in order to stay in business, you need to have the next product or service already available before the existing product or service goes out of business.

This also means that you throw out the notion of “Cash cows” and “rising stars” if you know what I mean.

If I were in such a situation, my approach to running the business would be as below:

  1. Identify a target customer.
  2. Identify a challenge that they face and one that you could solve for them.
  3. Go about your research and find ways to solve it.
  4. Design a product or a service or a combination to solve it.
  5. Define a deadline by which the product or service will remain available for the customer to use.
  6. Handover the product or service to the delivery team who will sell and deliver it.
  7. Deliver the product or service to customers who want to consume this.

Somewhere in during step 3, you start step 1 again. So, that by the time you need a product or service, there is already a pipeline of ideas on what challenges do you want to solve and for which customers.

Everyone (including your customers) in the organization knows their role clearly.

  • The product design team needs to continuously keep looking to create new product opportunities by addressing specific challenges.
  • The marketing team knows exactly what challenge is being solved and for whom, hopefully which results in appropriate messaging.
  • The delivery (& sales) teams know that they have a very specific time window to sell, post which the product will no longer be available.
  • Customers know that if they want to address the challenge, they need to decide fast and adopt. The solution is no longer available for a future purchase, which results in no decision to buy a lot of times.

This could also be compared to the lean start-up methodology propagated by Eric Reis as well. Only difference, this could be adopted by large and small businesses alike.

This is also like heart beats, beating to a rhythm, regularly, one after the other.

Some products or services will work well, some will fail miserably and some will be average. That is not the point. The point is that you will focus on solving more and more challenges than on betting on one big idea, which if fails (and believe me a lot of them will fail) could be devastating to the business.

You just learn from the iteration and move on. Keeping the heart beating is critical.

This process also kicks out a lot of activities and throws them out of the business. Activities like

  • Business plan and approval process to get funding for a new product.
  • Forecasting process for expected sales.
  • Long term business planning at the start of the year (plans that will bite the dust with the first contact with the market).

This will also reduce the risk for your organization..

This enables your organization to outwit your competition to the extent that you will find that the only team that you are competing with is yourself.

Everyone else will try to play catch-up but will never be able to do that. Isn’t that a good position to be in?

Question is not if you think this is doable, question is do you have a choice?

Do let me know your thoughts by commenting below  or tweet your thoughts to me at @rmukeshgupta.

PS:

 

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When someone says “why reinvent the wheel?”

January 17, 2013 Leave a comment

When someone says “Why reinvent the wheel?” , I am tempted to think that the person is trying to maintain the status quo and avoid change, change that is inevitable, change that is better embraced than resisted.

I do agree that there could be times and situations where you really do not need to reinvent the wheel.  However, I believe that if you put your thoughts on a topic, you can always find ways to improve upon your previous attempts.

It is even more important if you are talking about any of the important functions in your organizations like sales, marketing, finance, production, etc.

In today’s hyper-connected, highly competitive and ever changing world, this ability to constantly challenge the status quo could very well be the decisive factor in the success or failure of the organization.

The key is in finding out when and which process do you reinvent every day, week or month and which ones you decide not to.

So, as leaders it is important that we stop, take notice and think whenever someone pops this proverbial question – Why re-invent the wheel..

PS: If someone had decided not to re-invent the wheel, we would not have all of the things that we now take for granted..

Categories: Ideas, Ideas, leadership Tags:

3 things you can do daily to become a highly successful leader

January 17, 2013 2 comments

I have come to believe that the things that matter most in any relationship, this includes your relationship with your direct reports as well, is the small things that you do daily.

Here are 3 things that you can start doing today to improve your relationship with your team:

  1. Talk to everyone in your team at the start of the day. Everyday. This can be for a minute or 5 minutes. But do this as a ritual. You can say hi or ask them how did that meeting go or how was their day yesterday or even inquire about their family if you know them. Talk about anything, but talk to them everyday in the morning.
  2. Coach one person everyday: Identify one person in your team whom you would like to coach. Decide if you would like to reinforce and polish one of their strengths or work upon one of their improvement areas.
    • Give them a hypothetical scenario relevant to what you want to coach about. This could be a customer situation or a inter-personal situation or anything that is relevant.
    • Ask them to think through and provide their response.
    • Ask them why they chose that response and not any other response.
    • Reinforce the response if it was the right response. If not, talk to them about what you think could be improved in their response.
    • Don’t criticize. Just provide your feedback. Talk to them about how you would approach the situation and why. Don’t necessarily force your approach on them, but let them decide for themselves.
    • When such a situation arises, notice how they respond. Provide feedback based on their response.
  3. Catch someone doing something right, everyday: Make it a ritual to do this every single day. It can be about how someone handled a difficult situation or about how someone stood up for the team when it mattered or about how as a team they found a solution for a nagging problem. Find something to praise your team.  It is unbelievable what this one habit alone can do to the morale of your team. This will also reinforce the culture that you want your team to exhibit. You will start getting more of such behaviors that you recognize and praise. Just make sure that the praise is genuine, honest and prompt.

There are a lot that you will still need to do in order to become an effective leader – like being fair to everyone, living the values that you expect your team to live by, be consistent and open to feedback, to state a few.

However, the 3 activities that we have discussed today, will go a long way in creating a foundation of trust on which you can build on.

What other daily rituals you have that result in creating a high trust environment.

Let us know by sharing your thoughts in the comments section below or by tweeting to me at @rmukeshgupta.

PS: A very different take on leadership by Friedman

Categories: leadership Tags: ,

Leading a culture of Innovation

January 15, 2013 3 comments

I came across this great video where Kevin & Jackie Freiberg talk about how to lead with a culture of innovation.

One thought that stands out for me from this video is one question:

What happens if we start a culture of planned obsolescence of all our products?

I think this one question will differentiate between companies that will thrive and those that will lose their way!

First, lets listen to what they have to say..

Now, I have tried to summarize what the Friebergs talk about below:

  • Innovation happens when you learn to “be comfortable being “uncomfortable””. This is the zone where you try to explore & surprise yourselves with what comes out of being in that state.
  • Innovation happens when, as a leader, you decide, commit & involve yourself to solve real world 
  • Deciding ideas to pursue using the following principles:
    • Is it real?
    • Can we win?
    • Is it worth doing?
  • Address the real problem, which means that you need to dig deep to find the real problem and not address the symptoms (greatly explained by the example of the British Railways).
  • The most important thing for innovation is “a culture obsessed with innovation”. Hopefully, you dont have people “who have quit but stayed”!
  • Create an environment where your employees get engaged and connected or “pockets of innovation”
  • Organizations who try to protect their markets typically end-up losing track as they are more interested in protecting their today against betting for tomorrow.
  • As organizations, be ready and willing to disrupt yourself. It is much better than being disrupted by some other organization.
  • Innovators find new opportunities in the confluence of “either” “or” mindset. Instead try using “and”.
  • What happens if we start a culture of “Planned obsolescence” just like in the food industry. Will that make us more innovative? Will that make us more open to ideas that could potentially disrupt your own organization or products.
  • Diversity is key..

What do you think about the concepts being shared by the Friebergs? Do you agree? What other things do you think are necessary in order to lead an organization with a culture of innovation.

Please share your thoughts as comments below or tweet me your thoughts @rmukeshgupta.

How do you innovate “Innovation” ..

January 9, 2013 Leave a comment
A couple of days ago, I submitted my entry for the HBR/McKinsey M-Prize Challenge run by Management Exchange.
This challenge is about “Innovating Innovation” and will be judged by some of the greatest thinkers in innovation.
You can find below my submission for the challenge. If you like my thoughts, request you to vote for my submission here.
SUMMARY

Its not the lack of ideas that stops organizations from being innovative, but the way resources are allocated & employees rewarded that is the key.

We need to change the way we set and manage KPI’s, the way we allocate funds (quarterly budgeting with reduced budget year-on-year for standard activities) and the way we recognize and reward teams (based on IQ – Innovation quotient).

PROBLEM

Currently, organizations are managed as follows:

KPI’s and organizational strategy:

  • The top management decides the strategy and the key initiatives for the organization.
  • These are then cascaded down to the different lines of businesses.
  • Each LoB head then defines the goals for his team based on the organizational goals

Challenges in this process:

  1. This process resembles the election of a Pope. That is, the average employee has little to no understanding of, and input to, the process, and is instead reduced to waiting for the output of the process (“the white smoke up the chimney”).
  2. This tends to dis-empower the employee base, but perhaps most importantly, robs decision-makers of the useful “push back” that the broader organization (particularly those working at the “front line”) can provide.

Budgeting:

  • Each LoB head takes his last year cost, adds a percentage (maybe 5 or 10%) to the cost and submits the same for approval.
  • This is an annual process and gets repeated only next year

Challenges in this process:

  • This is where power turfs are created which lead to a lot of power tussles in the organization which help no one.
  • This process also adds a lot of fat in the organization. If you are continuing to do the same tasks year-on-year, you should be getting better at the task & can find better ways to complete the same, thereby freeing up resources for the more important activities of the organization
  • Increases the cost of doing business as-usual
  • Due to the annual cycle, so many resources are wasted by continuing to pursue ideas or projects that should have been killed. This also means that other ideas/projects have not been allocated those very same resources.
  • There is a separate LoB responsible for product development or R&D or innovation.

Innovation:

  • This team also goes through the same process as all other LoB for KPI definition and budgeting.
  • Makes it difficult to get the right amount of funding for the innovation efforts.

Challenges in this approach:

  1. This puts the imperative of innovation on a small team instead of the fact that everyone one in the organization should have innovation on their agenda.
  2. This also reduces the total resources available for funding new innovations as this team also has to compete with other LoB’s for resources.

Rewards & recognition:

  • Individual employees are then rewarded and recognized based on their performance as measured against the cascaded KPI’s
  • A lot of times these KPI’s do not have any component about innovation as it is considered to be the responsibility of the Innovation department
  • This creates a culture of competition among employees as the rewards and recognitions are limited and all employees (alright, most of them) want a piece of that cake.
  • Most organizations have a bell curve for evaluating and rewarding employees, which means that in every team, they expect a few employees to be below average, a few to be above average and all others average performers. This hurts most when you have a great team with super employees. By definition, you prohibit such teams to form and thrive.

Challenges in this approach:

  1. Innovation is a team activity. Running an organization is also a team activity. So, why rewarding individual performance results in a few lone wolves who might not be great team players getting a lot of .
  2. By following the bell curve, you are naturally encouring average performance from the team and discouraging high performing teams with high performing employees.
  3. Individual top performers who care only about their performances get rewarded, recognized and promoted. These are the kind of people who are most likely to get involved in turf wars and create what we call the mid-management wall or bulge.
SOLUTION

In my opinion the following approach would work much better:

  • KPI’s and organizational strategy:
    • The top management involves the frontline employees (sales, delivery, support, etc) who talk to customers/partners every day in the process of defining organizational strategy and key decision.
    • This process of discussion to also involve in defining the key challenges (with respect to product/service and competition). These challenges then become the areas to innovate.
    • The top management can now come out with the “Commanders Intent” of what they want to achieve and leave the details to the frontline staff to manage themselves, to achieve the intent.  
  • Budgeting:
    • Each LoB gets a cut in budget every year (maybe 5 or 10%) to manage their business as usual activities. The rationale behind this is the fact that if you are doing something regularly, you can always find ways to improve the same on a continuous basis and hence should be able to manage at a lower cost. This is an annual process.
    • There is a second budgeting cycle that is executed quarterly. This is to decide on the funding for various innovation projects in the areas identified as the focus areas during the process of forming the strategy or any other activity that can give competitive advantage to the organization. In any case, these projects could focus on one of the following:
      • New product or service creation
      • New business model creation
      • New market development
      • Process improvements that lead to improved topline or increased bottom-line
    • New projects are pitched and existing projects provide an update on their progress. As this is a quarterly process, the organizations can decide if any of the existing projects require to be killed and if new projects show promise and need to be funded. A panel consisting of senior executives, front-line managers and the relevant functional experts takes decisions on the funding for the various projects.
    • Projects where the team is convinced about the viability but the management is not sure, should have an option to get into the start-up mode with the organization providing the seed funding, provided the team is able to get funding from other VC funds. This with the option that the organization gets the first right of refusal for further funding and buy-out. At a later stage if the employees want to kill the project, they could also be considered for re-hire based on the then open situations.
  • Innovation:
    • A small team of innovation coaches created who can be used by the different teams on their innovation projects. They work as consultants, coaches and bring in the outside-in perspective to the problems and also facilitate the process of innovation.
  • Rewards & recognition:
    • Teams are rewarded and recognized rather than individuals.
    • Better performing teams are rewarded more than average performing teams or low performing teams.
    • Individual performances are still evaluated, recognized and rewarded, but within the framework of the performance of the team. So, if the team did well, your rewards will be better than if the team did not do well. So, in order for you to succeed, your team should also succeed. The individual performance evaluation is done by both managers and the peers.
PRACTICAL IMPACT

The impact of my ideas would be as below:

  • KPI’s and organizational strategy – advantages:
    • This process ensures that the perception of the senior management is put to test and corrected if required, thereby eliminating the risk of creating strategy based on wrong perception.
    • This process also gets the front-line employees to participate in the creation of strategy that they are expected to execute. This increases the chances that the execution of strategy will be much better than otherwise. As many CEO’s will vouch that the difference between great organizations and not so great ones is this ability to execute their strategy well.
    • With the commander’s intent for the organization in place, employees can respond better to any situation they encounter and hence the ability of the organization to respond to change quickly and correctly is greatly enhanced. In times of great uncertainty, this ability to respond fast can be the difference between survival and growth.
  • Advantages of the 2 stage Budgeting process: 
    • This process ensures that there is continuous improvements in the process and does not create a situation where there is more staff than there is work or worse, managers invent additional work for their staff, thereby creating a culture of improvement & innovation.
    • This process frees up a lot of resources that can be used to fund a lot more projects that can address the key challenges identified in the strategy building stage.
    • This also takes care of situations where the project team believes in a project and is willing to take the risk of starting up in order to continue their work. If they succeed, they win big and if they fail, they still have a chance to re-join the organization.
    • Innovation becomes the responsibility of the entire organization and not of one small team in the organization.
  • Advantages of the “Everyone Innovates” process: 
    • Clear identification of the key challenges helps in focusing the efforts of the organization in solving these problems which will have the biggest impact on the organizations success/failure.
    • Creates the opportunity for innovations in areas where they are needed the most as the employees who face challenging situations are also more likely to come up with solutions.
  • Advantages of the new team based Rewards & recognition:
    • This approach ensures that all employees are working together as a team as their individual success rewards and recognition depends on the success of the team.
    • This drastically reduces the chances of someone succeeding (at their KPI’s) at the cost of their colleagues or customers.
    • This also eliminates any bias (perceived or real) that might creep in the performance evaluation by the manager
    • This will create an environment of trust and togetherness, which by itself, leads to a better environment which fosters creativity and high productivity.
CHALLENGES
Challenges that one will face during implementation of the above approach:
  1. This involves complete overhaul of the management processes used in the organizations currently, which means that change management is a big challenge in implementing this idea of management.
  2. There will be resistance from the mid-managers as they will perceive to be stripped of a lot of power that comes with being in the mid-manager layers that they have enjoyed so far. Unless, this is handled well and there is buy-in from them, the entire process can potentially fall apart, which will then make it even more challenging environment for the CEO to start fresh.

This said, the upside of being able to implement this approach to management is very high and is still worth the risk.

FIRST STEPS

The process can be implemented in phases or pilots:

  1. The senior management can initiate the workshop with front-line staff for strategy definition, along with the mid-managers, to identify the key areas where they need innovations or solutions to current challenges that have been identified. This can be done by any management at the start of their strategy cycle.
  2. Create and communicate the “Commanders Intent” to the entire organization. Challenge the entire organization to move towards achieving the “Commanders intent”.
  3. Create a team of experts who will work as coaches to teams that want help in addressing the challenge that they want to solve.
  4. Identify 2 or 3 managers (of high performing teams) who are open to try the new team based performance appraisal system. Help them to get the buy-in from the team members.
  5. Publicly announce the pilot of the appraisal system with the team and congratulate the teams that have taken the first step to adopt the new practices.
  6. Budgeting process will need to be the last process change to be adopted. If the previous steps have yielded good results, the adoption of the budgeting process becomes so much more easier (as the senior management would have already won the trust of the organization).

Do you agree with the approaches that I have suggested above. Do let me know by commenting below or tweet your thoughts to me at @rmukeshgupta.

 

PS: Some interesting videos on Innovation:

 

 

 

 

 

The Challenger Sales model & its relevance in the selling models of the future..

January 3, 2013 1 comment

I recently read the book – The Challenger Sale and would like to share my impressions from the book.

My personal opinion on the relevance of this model:

  1. In order to succeed this model requires a change in the culture of the sales organization (from top to bottom), which we have observed is a very very difficult thing to achieve. Very few organizations have leaders who are capable of driving such a change initiative to success. 
  2. As this book is based on the research on reps that were successful in selling when everyone else was failing, this assumes that what worked in the economic downturn will work always. Though I do agree with some of the components of the model, I do not think that this is a long term solution that will change the way B2B sales organizations will function in the future.
  3. This model is still built around the seller and not around their customers or prospects.
  4. The innovation in sales models for the future is still due.

Some impression from the book:

This book has come from the findings of a long and serious study of sales organizations and their customers feedback over a long time. As with all findings from a survey, I would take the findings with a grain of salt.

The entire set of recommendations flow from the study of the sales reps who were successful when everyone around them failed to hit quota and expands from there.

The key message from the book is the following:

If you want to succeed in B2B selling in the future, you need to be able to incorporate a challenger mindset in your sales teams and back it up with building a corresponding culture & support capabilities in the  sales organizations

So, what constitutes a “Challenger mindset” for a sales rep:

  • Ability to offer customers a unique perspective
  • Strong two-way communication skills
  • Understanding of the individual customer’s value drivers
  • Comfortable discussing money
  • Ability to pressure customer
  • Creates and maintains a creative tension with the customers

What is the Challenger sales model:

A sales model through which you are consistently able to maintain a creative tension with your customers and prospects by:

  1. Teach them for differentiation
  2. Tailoring the message based on the recipeint and his value drivers
  3. Taking control of the sales process (from start to finish and not just during the final negotiation phase)

Let’s consider each of these a bit more elaborately:

Teaching for differentiation: 

The primary argument here is that as a supplier, it is getting increasingly important for you to know more about your customers business and to be able to bring insights to your discussion with them. So much so, that you are able to get your customers to see their business in new lights.

Every interaction with you, would then be something that they will look forward to rather than dread.

The most important aspect of this activity is to ensure that all of these insights lead the customers to a problem that they would like to solve and which could be best solved by the products or solutions that only you can provide.

So, it is about using insights to show your customers challenges or missed opportunities that they currently do not see in their business, leading to your unique strengths as a solution provider to address the very same challenge or opportunities

Also, the capability to develop such insights for each of your customers or prospects is something that the entire organization needs to develop and then equip their sales reps with these insights and enable them to scale to other customers.

Tailoring for resonance: 

B2B selling is getting more and more complex as decision makers in the buyer organizations do not sign the dotted line until there is enough buy-in from with-in their organization for the supplier.

So, it becomes important that the sales executives are able to garner this support even before they approach the decision makers. In order for them to be able to do so, they need to be able to identify the value drivers for each layer of the organization and have insights led conversations with each of them, tailored to their view of world.

Taking control of the sale:

This is the ability of the representative to be able to create momentum in the customer/prospect organization for the selling process. His/her ability to predict/identify roadblocks and being able to move them.

This also means that he or she is able to keep the discussion ahead and also getting more buy-in across the organization.

This is a key skill that the sales rep needs to build. The other two components of this model is more an organizational capability.

Have you read this book as well? Do let me know your thoughts on the book and the model itself? Also, do you know of any other book that you think proposes the sales model of the future.. Do let me know your thoughts by commenting below or tweeting your thoughts to me at @rmukeshgupta.

 

PS: The introduction to the book by CEB is below:

 

 

Another review of the book: