18 - AFernandez_23 TOCPA_USA_21-22 March 2016

8/18/2019 18 - AFernandez_23 TOCPA_USA_21-22 March 2016

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23rd International Conference of the

TOC Practitioners Alliance - TOCPA

www.tocpractice.com 21-22 March, 201, Tennessee, !"A

Alejandro Fernandez, Piénsalo Colombia,Colombia March, 2016

Improving Sales Link: from Artisans to High Performance

Teams


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23rd International Conference of the TOC Practitioners Alliance - TOCPAwww.tocpractice.com

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Alejandro Fernandez

Brief bioAlejandro Fernandez has been a TOC educator and practitionersince 1993. He received his initial TOC training as Jonah Jonah, and

Licensee in Operations, MS, CC!M at the "#$. "le%andro hase&tensivel' (or)ed (ith nu*erous production and suppl' chainco*panies in Colo*bia and +cuador supporting the* on their (a' toongoing i*prove*ent.$n --1-1 "le%andro (as a part o/ #oldratt #roup holding theposition o/ #oldratt Schools 0egional irector, Latin "*erica."le%andro is also irector o/ !iensalo Colo*bia.

"s a %oint initiative bet(een !iensalo and #oldratt Schools, "le%androdeveloped a co*prehensive TOC !rogra* "le& 0ogo that has beenconducted in Colo*bia, together (ith 2orth niversit', (ithinvolve*ent o/ international TOC e&perts."le%andro has organi4ed several TOC con/erences and has been apart o/ the teaching tea* in the *a%or TOC progra*s in Colo*biaand $ndia. He also participated in (riting a series o/ #oldratt Schools

boo)s 5 CC!M 6Critical Chain !ro%ect Manage*ent7 6--97, TOC /or!roduction Manage*ent 6-1-7, Leading !eople Through Change6-117.$SC+" certi/ications8 $C!M3 6CC!M7 and M0!.

[email protected]


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Contents

• The Titanic is sinking: All is not well in sales

• Silent Revolutionaries

• Improvements in the internal operation of sales

• Improvements in the relationship between sales and the

rest of the organization

• One wrong assumption and the root conflict

• ach salesperson is a self!contained sales function

• It"s clearl# time for a new assumption


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Your logoThe Titanic is sinking: All is

not well in sales

The sales environment in a t#pical organization$in most ever#organization% in fact$is seriousl# d#sfunctional&

'ut rather than focusing on the obvious d#sfunction% management isbus# with incremental improvement initiatives: sales training% salesforce automation (technolog# of various t#pes)% or bolt!on lead!generation activities (e&g&% outsourced telemarketing% social mediaactivities)&

'ecause none of these initiatives address the root cause of thed#sfunction% the# amount to nothing more than arranging chairs onthe deck of the sinking Titanic&

And make no mistake$the Titanic is sinking* It"s not that sales is

getting worse: The issue is that the rest of the organization isgetting so much better while sales clings to the same structure% thesame management approach% and the same practices that havebeen in place for the last fift# #ears&


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Silent Revolutionaries:

In a small number of companies% across three

continents% a silent revolution is in progress&These companies have challenged the mostfundamental assumption about how the salesfunction should be designed&

+onse,uentl#% the# have built sales environmentsthat barel# resemble those in their competitors"organizations&

And the#"ve seen massive performanceimprovements*


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Your logoImprovements in the internal

operation of sales:

-ield salespeople are spending .// percent of their

time in the field% performing four business!development meetings a da#% five da#s a week&

Skilled inside sales teams are generating high

volumes of sales activit# at shockingl# low costs&

+ustomer commitments are consistentl# met%

administrative work is alwa#s done on time% andsales orders appear more fre,uentl# and more

predictabl#&


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Your logoImprovements in the relationship between

sales and the rest of the organization

0and!off problems between sales and

production have been eliminated&1arketing works closel# with sales to ensure

that salespeople are maintained at full

utilizationAnd marketing has recruited the assistance of

engineering (and senior management) to

ensure that offers are trul# compelling&


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One wrong assumption

These changes are the conse,uence of challenging a singleassumption about the design of the sales function: the

assumption that sales should be the sole responsibility ofautonomous agents.

It"s not hard to validate the claim that sales is t#picall# thesole responsibilit# of autonomous agents&

2hen we emplo# salespeople% we advise them that the# willbe held accountable for outcomes% not activities&

2e pa# them commissions (in part or in full) rather than fi3edsalaries&

And we encourage them% in most cases% to manage theirterritories% their accounts% and their sales opportunities asif the# were% well% their own&


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The main conflict

It"s true that% increasingl#% management is attempting to rein insalespeople"s autonom#&

2e ask salespeople to report their activities in the organization"scustomer relationship management application (+R1)&

2e pa# them a mi3 of salar# and commissions&

And we at least pa# lip service to the notion that these are compan#

accounts&'ut we forget that% where true opposites are concerned% no

compromise is possible&

Salespeople can march either to their own drumbeat or to the beat ofa central drummer&

2hen faced with the demand to do both% the# will alwa#s pick theleast bad option&


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The chronic cloud

A

1anage sales

properl#

'

4enerate sales

results&

5

Salesperson is an

autonomous agent&

+

nsure

collaboration of

all areas to sales

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Salesperson is part of a

team&

1ode of operation:

2hen we emplo# salespeople% we advise them that the# will be held accountable for

outcomes% not activities&

2e pa# them commissions (in part or in full) rather than fi3ed salaries&And we encourage them% in most cases% to manage their territories% their accounts% and

their sales opportunities as if the# were% well% their own&


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Your logoach salesperson is a self!

contained sales function

Salespeople spend so little time selling because the# have soman# responsibilities competing for their limited time&

Salespeople conflict with other functions because% in theirworld!view% the# see onl# their opportunities and theiraccounts&

0owever% other functions (production% engineering% finance)also have limited capacit# and are in receipt of competingdemands from multiple salespeople&

Salespeople conflict with management because there issimpl# no place for management in a t#pical sales function&

If salespeople own their activities and are held accountableonl# for outcomes (as is so often advertised)% there isliterall# nothing for management to do&


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Your logoit"s clearl# time for a new assumption

2e discussed that% relative to other

organizational functions% sales is sinking fast&2hat% then% is causing the rapid ascent ofthese other functions7

In particular% what has caused both theproductivit# and the ,ualit# of manufacturingto increase b# man# orders of magnitude over

the last .// #ears7The answer is the division of labor&


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5irection of the Solution

Sales is the

responsibility of acentrally

coordinated team

A

1anage sales

properl#

'

4enerate sales

results&

+

nsure

collaboration of

all areas to sales


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Your logoThe lessons from manufacturing can be generalized

into four fundamental principles:

.& Scheduling should be centralized&

8& 2orkflows should be standardized&

9& Resources should be specialized&

& 1anagement should be formalized&

-irst% however% we need to be sure we understand the

nature of the problem we are attempting to solve& To

achieve that% we"ll turn our attention to a

boat race&


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The boat race

In the first race% each oarsman commandeers his own

boat& ach is an autonomous agent&2hen the starter"s gun fires% each oarsman must do his

level best to ma3imize the speed of his vessel&

And he does that% not surprisingl#% b# rowing as fast asis humanl# possible&

This race is an allegor# for the craft shop environment

in manufacturing and for the traditional sales model&


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Your logoIn the second race% we

make one subtle change

2e put all the oarsmen in one boat&

The goal is the same: to reach the finish line in the shortest amount of

time&'ut each of the oarsmen must undergo a radical shift in his approach

to the goal& If each oarsman rows as fast as possible% the speed ofthe vessel will definitel# not be ma3imized&

If each oarsman ma3imizes his individual rate of work% theconse,uences will be a lot of noise% clashing of oars% and% possibl#% acapsized boat&

In this second race (an e3ample% of course% of the division of labor)% thespeed of the vessel is determined primaril# b# the synchronization

of the oarsmen$not b# their individual rates of work&


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Your logo;ow% the shift of focus from individual

effort to s#nchronization ma# not seem

significant% but it is


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Your logo=rinciple .: scheduling

should 'e +entralizedIt"s inevitable% then% that the division of labor will result in

s#nchronization problems& The solution is to centralize scheduling&

An# work #ou perform can be broken into two components&The first of these are the critical activities that cause matter (or

information) to change the form% se,uence% and timing of each ofthese activities&

The second component is what I"ll be referring to as scheduling&The ke# to avoiding s#nchronization problems when we appl# thedivision of labor is to first split the responsibilit# for these twocomponents of work&

If we fail to do this% the local efficienc# improvements that result from

workers focusing on a single task will ,uickl# be eaten up b# thegeneral chaos that spreads through the environment$like thoseclashing oars in the rowboat&


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Your logo=rinciple 8: workflows

should 'e standardized

2hen the person who plans the work (thescheduler) is remote from the people who do thework% the standardization of procedures (andworkflows) prevents the comple3it# ofenvironments from multipl#ing to unmanageable

levels&-or sales environment to be manageable and

scalable% all opportunities of the same t#pe (i&e&%the same ob>ective) must be prosecuted usingthe same routing$from the origination of thoseopportunities% through their management&


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Your logo=rinciple 9: Resources

should 'e specialized

Specialization causes a significant increase in

workers" productivit# for two reasons:-irst% when a worker performs activities of >ust one

t#pe% the# become ver# good at performing those

activities&Second% switching between materiall# different

activities imposes a significant overhead on a

worker& The elimination of this switching(multitasking) increases that worker"s effectivecapacit#&


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Your logo2hen it comes to dividing activities% it tends to

make sense to make divisions along three a3es:

1. *ocation. You should split field and inside

activities$meaning that people work insideor outside but never a mi3&

2. +or% t&pe& You should split activities that are

different enough to impose a switching cost &

3. Cadence. You should split long and short lead!

time activities&


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Your logo=rinciple : 1anagement

should 'e formalized

Toda#% it"s more likel# that the manager of a functiondelegates scheduling to a technical specialist andfocuses on the internal performance of theirfunction$as well as its integration with the rest of theorganization&

This broader focus makes sense for two reasons: – The division of labor causes work environments to become

inherentl# fragile% and

–

because the organization consists of a number offunctions$each of which could be characterized as anoarsman in a larger boat$someone must pa# attention tothe s#nchronization of the organization as a whole&


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should 'e formalized

Specialization is a two!edged sword& – It causes a dramatic increase in the productivit# of each

individual% – but it also causes each worker to operate in a vacuum$

intentl# focused on their own work in progress (their tasklist)&

To a great e3tent% the scheduler compensates for thisnarrow focus% but the manager is still re,uired toensure compliance with the schedule% to resolveproblems as the# occur% and to make decisions relatingto the design and resourcing of the overallenvironment&


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Your logo2h# then do we need to formalize

management$as opposed to simpl# adding

a manager7

1ost sales functions have managers$in spite of the

fact that the# are still essentiall# craft shopenvironments&

These managers% however% have no understanding of

scheduling and no e3perience managing the kind ofenvironment that will e3ist after the transition to

divided labor&

Accordingl#% we will definitel# need to convince oursales managers to adopt a more formal approach to

management&


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Your logo=rinciple .: Scheduling should be

centralized

Our first principle dictates that% as we push toward thedivision of labor% our ver# first specialist must be ascheduler&

2e"ll elect to call our scheduler a business-developmentcoordinator ('5+)&

2e"ll also refer to our salesperson as a business-development manager ('51)% to highlight their newfocus&

The '5+ pushes work to the '51&

This means that the '51 must transfer an# and allscheduling responsibilities to the '5+&


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Your logoInitial results of 'usiness 5evelopment

1anager (previousl# a salesperson)

A traditional field salesperson averages two

face!to!face business!development meetingsper week&

If #ou partner that same salesperson with a

capable '5+% their effective capacit# increases

to four meetings per da#% or twent# a week&


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Your logo=rinciple 8: 2orkflows

should be standardizedOur second principle dictates

that we use a standardse,uence of activities to

originate opportunities andto prosecute opportunities

Although these two workflowsare clearl# part of the one

value chain% it makes senseto treat them separatel#%simpl# becauseopportunities can be

originated in batches? butthe# must be carried out% orprosecuted% one at a time&


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Your logo=rinciple 9: Resources

should be specialized2e now have a pro>ect plan (our standard workflow for

originating and prosecuting sales opportunities)% a

pro>ect manager (our '5+)% and a resource poolcontaining a single resource (our '51)&

To e3ploit the benefits of the division of labor% it"s nownecessar# to add some more people to our resource

pool&An obvious starting point is to list the activities

performed b# a t#pical salesperson and to determinewhich are critical for our '51 to perform and whichcan be allocated to other resources&


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Your logoReallocate some of these

activities

.& =romotion (i&e&% the origination of sales

opportunities)%8& Administration (i&e&% critical supporting activities)%

9& Sales (i&e&% meaningful selling conversations)%

& Technical (i&e&% re,uirement discover# and solutiondesign)% and

@& Semitechnical (i&e&% ,uoting% order processing% and

issue management)&


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should be formalized

The downside of the division of labor is that it causes

environments to become fragile&

Although it"s the responsibilit# of the '5+ to s#nchronize the

various team members% management oversight is critical&

A relativel# small disturbance in the operation of the

environment can render them impotent&

The sales function must integrate effectivel# with other

functions&

'ecause the '5+ tends to be relativel# inward looking% it"snecessar# for a more senior person to interface with those other

departments&


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The 5eath of field sales

Of course% I"m not heralding the end of field salespeople&

There is a re,uirement for field salespeople in some (but definitel# not

all) markets now$and there will alwa#s be circumstances in whichface!to!face selling is indispensable&

On their wa# to e3tinction are environments in which sales isessentiall# an outside activit#&

ven in engineer!to!order environments toda#% onl# a tin# percentageof the total volume of activities re,uired to originate and prosecutea sales opportunit# are performed in the field&

And those important field activities would simpl# not occur if it werenot for the volume of work performed inside&

The fact is, sales toda& is an inside endea$or, s#pported, in somecases, with discrete field acti$ities.

It"s rare toda# to find customers who are


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Your logoIt s rare toda# to find customers who are

happ# for salespeople to drop in

unannounced

That"s right% where field salespeople historicall# served toreduce the friction between vendors and their customers%

toda# it"s more likel# that salespeople are contributing tothat friction&

+ertainl# it"s ,uite common to hear customers complainingthat the# can get better information and faster outcomes if

the# sidestep salespeople and communicate directl# withthe customer service teams based in the vendor"s headoffice&

Ask #ourself the following: If you are making a purchase (of an

unspecified nature)% is #our default starting point to look fora person who can come and visit with #ou in the field7

I suspect not*


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The Inside!out approach

The inside!out approach starts with attention to the t#pe oftransactions that make up the lion"s share of a t#pical

organization"s revenue&These are simple$and t#picall# repetitive$transactions&

These transactions are not treated as sales% but the#"recritical nonetheless&

+ustomer service should handle these simple transactions%and should generate ,uotations and handle customerissues&

+ustomer service should have sufficient protective capacit# to

enable the team to handle peak loads and to ensure thatno one else in the organization need ever process an order%generate a ,uote% or handle a customer issue&

O i id l ll


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Your logoOur inside sales team actuall#

consists of two roles

2e have the inside salespeople% who perform nothing otherthan what we call meaningful selling interactions&

These interactions include phone conversations% emailcommunication% and even instant messaging& Of course%inside salespeople do not generate ,uotes or enter orders?these tasks are routed to customer service&

2e also have a campaign coordinator% who is responsible forgenerating all of the outbound sales opportunities thatkeep the inside sales team members so bus#&

The campaign coordinator ensures that inside salespeople

alwa#s have calls to perform and avoids inside salespeople"ssearching for sales opportunities within the customerrelationship management application (+R1)&


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-ield Specialists

A field specialist is a person who supports inside sales

b# performing discrete field activities&These activities are likel# to be technical or

semitechnical in nature&

Their t#pical activities would include on!sitere,uirement discover# and product demonstrations&

The field specialist can also perform field visits that are

re,uested of them b# the customer service team&


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'usiness 5evelopment

it"s now time to consider

traditional fieldsalespeople&

-ield salespeople (business!

development managers)are tenfold moreproductive when wepartner them with

dedicated coordinatorsand pro>ect leaders&

Implementations Results


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Your logoImplementations Results !

http:ballisti3&comresults

B2e doubled our top!line revenue in the #ear

following our implementation of The Machineand are appl#ing these same concepts to an

international compan# we >ust ac,uired and

seeing the same sort of gains in effectiveness&Custin"s book is providing us with an even deeper

understanding of the principles that changed our

compan# and continue to drive our sales&D$Aubre# 1eador% =resident of AR+A

Y l


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BCustin stands on the shoulders of a giant and uses thetools of 5r 4oldratt"s TO+ to focus on the effective

management of what will be the principal constraint ofall businesses sooner or later in the 8.st +entur#& Custininspires the necessar# cultural change withincompanies$not onl# entering into a convincing

discussion of what to change and wh#% but also what tochange to and how& The energ# and stamina re,uiredto make such a change should not be underestimatedbut% provided #ou have the courage% The Machine

provides the direction&D$Andrew Cackson% +hief 3ecutive at Triumph -urniture

Implementations Results

Y l


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18 - AFernandez_23 TOCPA_USA_21-22 March 2016

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