Tomicide Solutions, October 2010
How Deming's 14 Points Apply to IT Business Development Departments Part 1
By Tom "Bald Dog" Varjan
Podcast version: MP3 Version. Right click the link and click "Save As".
In his book, "Out of the Crisis", quality guru, Dr. Edwards Deming shows 14 steps of changing management approaches to achieve significant performance improvements.
It's always hard to initiate improvements in IT companies. There are far too many people with vested interests in the status quo. And when we talk about 14 steps, the initiative can be harder to implement than steering a glacier.
So this change has to be approached with certain radicalism.
Just like the big traffic reorder, called H day (Högertrafikomläggningen means "The right-hand traffic diversion") in Sweden on 3 September 1967, to change to right-hand side driving.
On 3 September, the authorities banned all non-essential traffic from the roads between 1:00 to 6:00am.
At 4:50am all vehicles came to a standstill and changed to the right-hand side of the road and stop again before being allowed to proceed at 05:00am.
And the changeover took place without any serious problem. I could say, it was smooth as a baby's arse.
Yes, the following Monday there were 125 reported accidents, which would send the cynics into rage against the change. But previous Mondays' accident statistics had been between 130 and 198. So there was a small but instant improvement.
So, while the 14 points may look a bit intimidating, it can be done with similar dedication the Swedish authorities had to change the driving side.
So, now let's see how Deming's 14 points apply to business development.
1. Constancy Of Purpose For Improvement
While becoming a market leader can't become a reality for all IT companies, the intention to become one is a rather noble one.
It's like the concept of mastery: We can never achieve it but we keep working towards it.
It's vital to aim at being more than merely competitive, merely average. And there is a chance that you may just be able to pull it off in certain areas.
And now don't think of having the best technology. After all, it's not what you sell that makes the difference but how you sell it. The magic is in the process not in the "thing".
And one part of the overall process is how you attract new clients who are seeking solutions to specific business problems.
And let's stop here for a moment. Don't sell technical solutions because high-level buyers are not looking for them. The managers who are looking for technical solutions are not authorised to buy anything really.
Boardroom-grade decision-makers are grappling with issues that raise their ugly head in the boardroom. They are looking for boardroom-calibre solutions.
Installing a new CRM or a new VPN is not a boardroom-grade solution. They are server room issues.
But the CRM can increase responsiveness to clients' requests, thus reducing client attrition. And "reducing client attrition" is a boardroom issue.
So, link your technology to boardroom issues and stop offering technology naked.
2. Adopt A New Philosophy
The philosophy of 21st century buyers is different from the buyers of yore. In a faddish way some experts call them buyers 2.0.
Anyway...
The philosophy of today's buyers is that they are in control. They don't need salespeople to make decisions. They want to connect subject matter experts to keep themselves informed and educated on the solutions they need to solve their problems.
Look at the elephant hunter. In the old days they were chasing elephants all over hell's half acre.
Well, sometimes the shit hit the fan, the hunters became the hunted, and the elephants were chasing the poor bastards.
But regardless of who was chasing who, the scene played out on a hunting ground.
And what is a hunting ground really?
It's a hectic and frenetic environment where animals are tricked to come to, so they can be killed in large numbers with minimum effort, that is, they can be forced to do something against their wills.
A business hunting ground is the same. Salespeople set appointments with prospects and then manipulate the living daylights out of them in order to make the next quick sale.
The new economy, however, needs a new breed of elephant hunters. Elephant hunters who create watering holes, which elephants visit on their own volition.
In contrast to a hunting ground, a watering hole is nature's sanctuary.
In business, a watering hole is a place where your perfect prospects come in search of relevant information related to their problems, not to sellers' products and services.
If you join the buying process early on, your buyers are still in the research phase. They are googling their problems. They are not searching for "Salesforce CRM" but rather for "high client attrition."
So, start your selling process where your buyers are at that moment.
Imagine the good elephant hunter. He baits the trap and waits. He is not stupid to exhaust himself in pursuing the beasts. He baits and waits. Good business developers have perfect prospects come to them.
Anyone who comes to you has a force of emptiness of a problem, and you have a force of fullness of a solution. Attacking emptiness with fullness is always a great idea.
But when you try to attack your prospects' fullness with your emptiness, saying "we have a CRM system to sell you" (emptiness = need for money), your prospects are likely to say, "We have a pisspot of money here, and we are 100-% happy (fullness) without your CRM system."
Business development management must wake up to the reality that old-fashioned pursuit-driven superstar-based selling is dead.
3. Cease Dependence On Inspection To Achieve Quality
In many IT companies what you find is disempowered business development people who get beaten up on a regular basis for substandard performance.
When they perform well, top management makes very bold financial projections that are borderline impossible to pull off.
And when the business development people really don't pull it off, then management unleashes the wrath of reprimand on them.
Then in the next fiscal quarter management projects similarly bold numbers, tightens the ugly noose of supervision over the business development folks, eliminates professional development and cuts the business development budget to the bone.
Then the best and the mediocre people leave the company, and management is left with some braindead potheads to battle it out with the competition.
Now, if business development is the engine room of the company, it's important that all the business development people are empowered to make certain decisions.
Eliminate the need for constant inspection and policing your people. It's a human thing that people want to do things they can be proud of.
And empowered people are more likely to do great things than disempowered people. This is why communism/fascism has failed. Disempowered people were too busy pushing their own agendas.
If you have a good system for recruiting good quality people and you treat and pay them well, then they want to stay with your company. And they know they can do that only by doing high quality work.
So, they will check each other at a peer level, and don't need some second-guessing from their superiors.
4. End The Practice Of Awarding Business On The Basis Of The Price Tag
Business development is a crucial part of any business.
And while a reasonable number of a random group of people "can do IT", only a very very few can actually market and sell IT.
Maybe this is the reason why there are so many struggling IT companies and so many struggling IT geniuses in the unemployment lines. Those companies offer great products and services, but they don't know how to take them to the market.
People who are good at marketing and selling are pretty expensive.
Yes, many IT companies try to skimp on the investment by skipping marketing and hiring salespeople on straight commission. Managers think because they pay for performance, they get those salespeople for free.
Not exactly. In my experience, the best salespeople don't accept straight commission positions. They want to make sure that their companies have a skin in their own successes.
The other option what I've heard is that salespeople go about their normal businesses, generate sales leads and then go to the open market to see who is willing to pay more than their own companies.
You're exactly right. Salespeople become deal brokers.
The big hairy truth is that companies need good salespeople, but good salespeople don't need companies. They can make a great living through mercenary work by seeking out the highest bidder.
You have to engage your salespeople at a higher level than money alone. Besides, in this new sales environment, money-motivated salespeople are the ones buyers try to avoid.
So, don't hire people because they seem to be cheap to bring on board.
In my experience the best policy is to hire above-average people, treat them above average, including pay, and expect of them above-average performance. Above average people love stepping up to the challenge. And that's your payoff.
It would be rather retarded to buy a cheap, old, limping half-blind carthorse for racing. The initial costs may seem low, but the maintenance costs are high and the results become more and more elusive.
5. Improve Constantly And Forever Every Process For Planning, Production And Service
Many IT companies invest heavily in improving their products and services, but neglect to improve the processes through which they take those products and services to the market.
We know that the sales terrain has changed and, especially with the Internet, buyers have the advantage.
They don't want to meet commission-hungry peddlers. But they are open to receive relevant information from subject matter experts.
And this information is not about the seller company and its products and services. It's about the kind of problems buyers are grappling with and the kind of solutions they are seeking.
Although here we focus on business development, constant process improvement is vital in every area of a business. As I've heard it so many times, it's not WHAT you sell (Content) but HOW you sell it (process) that really matters.
Apple is the one example. The iPod is undoubtedly one of the lowest quality MP3 players on the market.
The sound of the "famous" white headphones resembles the sound of urinating into a metal bucket.
Yet, due to great marketing, the iPod has been selling like hot cakes right from its inception.
The iPhone has reception problems. Yet, people buy them in rather large numbers.
And it's all because Apple has a great process of taking bits and bobs to the market. Oh, and the company has a face: Steve Jobs. Apple doesn't try to play the "big faceless behemoth" game.
The key is that you have to start building value into your marketing and sales processes. The era of "Pay us and you'll get value" is pretty much dead and gone. Sellers have to be able to demonstrate the value they can deliver before getting hired and receiving money.
Now the good news is that this demonstration of value can be nicely automated, so buyers can consume it at their own pace.
That's why attempts to speed up the sales process almost always backfires and scares buyers away.
Design a system which can follow buyers' decision-making processes without exerting pressure on buyers.
In your communication always offer "next steps", but keep those steps fairly small, so they are easy to take.
6. Institute Training On The Job
Although Deming called it training, I rather call it education or skill building. As poet Maya Angelou said many years ago...
"We train animals but should educate people."
The school system does training. Training children to compliance, obedience and conformity.
Don't you find it strange that in a world where more and more employees lose their "steady" jobs, and freelancing is becoming more and more the normal form of employment, apathetic union labourers, the teachers, teach kids "vital" skills, like how to pass exams, how to get jobs with excellent wages, benefits and medical coverage and how to practise their rights if some overzealous managers expect them to work.
In Ayn Rand'd words, we're becoming a socialistic society of looters and moochers... Take it away from those with ability and give it to those with needs.
The other problem is that many companies love using their employees' credentials to prop up the shallow corporate culture.
For instance, Enron was already rotting on the inside when it went on regular hiring binges to scoop up the top MBA students from the top MBA schools.
Then these well-trained people were dropped into the rotten zone of Enron's corporate culture.
Well, we know the rest.
We've discussed it in many places on this website that buyers don't want to meet content-less salespeople (Salespeople without subject matter expertise). Well, hell, they don't want to meet geeks either.
Ideally, buyers want to meet subject matter experts with well-rounded business savvy. People who are conversational both in the server room and the boardroom.
People who can translate server room English into boardroom English.
I also believe that being well wounded both subject matter expertise and business should apply to the receptionist as well. It's vital because from the inbound marketing's standpoint the receptionist is buyers' first contact.
Of course, such receptionists require six-figure compensation, but that shouldn't be a problem when we consider how much business they can land simply by demonstrating their expertise to buyers.
So, with that in mind, every person in the company should have a professional development curriculum that is set and reviewed in every fiscal period.
The curriculum is a mix of subject matter expertise and business savvy.
And the fulfilment of this professional development curriculum should work as a multiplier on the person's compensation for the next fiscal period. If the person fulfils only 50% of her professional development curriculum, she gets paid 50% of her normal compensation.This may sound radical, but the IT industry is changing pretty fast, and I think this is the only way to keep up and remain a premium-calibre company serving premium-calibre clients for premium-calibre fees and prices.
7. Adopt And Institute Leadership
In my experience Peter Drucker was right when he said...
"90% of what we call 'management' consists of making it difficult for people to get things done."
Many managers love the idea of taking the privileges that come with their positions and then just barking at their people demanding results.
What makes leadership a notch higher is that good leaders are role models. They model the kind of behaviours they want to see in their people.
I know some leadership "experts" love playing with the differences between leadership and management.
They paint managers as nasty tyrants who drive their people to the brink of nervous breakdown to get work out of them. By contrast, leaders are the big-thinking visionaries who achieve amazing things.
Just think of Al "Chainsaw" Dunlap, and what he did at Scott paper. Under the aegis of reorganisation, he laid off a truckload of people.
In the eyes of Wall Street, Dunlap was a business turnaround genius, but realistically, most of his practices were fraudulent. He was fired from almost all of his "leadership" positions and we was repeatedly investigated and sued by the Securities and Exchange Commission.
For his behaviour with people he was just a corporate bully and for his practices just a corporate scam artist.
While there must be an organisational hierarchy in every business, everyone should practise leadership.
And what is leadership really?
It's about helping others to bring out the best in themselves.
And we know that threats (one of the most widely used management tools) and bribes (like commission-based positions) never bring out the best in people. But as Dan Pink, author of "Drive: The Surprising Truth About What Motivates Us" is fond of saying...
"There's a mismatch between what science knows and business does."
Leaders create followers by demonstrating a character that is worth following. Followers follow leaders because they aspire to become like their leaders. They aspire to acquire the character traits of their leaders.
It's not about longing for leaders' positions or pay packages, but modelling their characters. This is why I think the best leadership is by being an exemplar.
So, this is all about the first seven of Deming's 14 points and how they apply to business development. And we'll continue to the next 7 points in November.
Come and let's discuss this newsletter issue on my blog...
Attribution: "This article was written by Tom "Bald Dog" Varjan who helps privately held information technology companies to develop high leverage client acquisition systems and business development teams in order to sell their products and services to premium clients at premium fees and prices. Visit Tom's website at http://www.varjan.com.
