Marketing & Sales impovement - Harvesting the Full Potential of Improvement

Marketing & Sales Improvement

Harvesting the Full Potential of Improvement

Chris ProvinesVP Preferred Practices & Methodologies

Johnson & Johnson 2005. Do Not Copy or Quote without Permission

The Road Ahead

• J&J background and improvement journey

• Challenges / issues using traditional improvement approach (six sigma, lean, etc.) in marketing & sales

• The power of improving marketing & sales

• New approaches


• The Worldwide leader in healthcare- Pharmaceuticals / Biotechnology- Medical devices / Diagnostics- Consumer products

• Solutions to diagnose, treat, improve quality of life, and cure many conditions and diseases (such as):

J&J Is A Diverse Collection of Businesses Focused on Health Care

- Stroke

- Epilepsy

- Pain

- Anemia

- Heart disease

- Diabetes

- Obesity- Degenerative conditions

- Cancer

J&J Has Many Highly Independent Business Units

• Organization- 200 independent operating companies - $47.5B in revenue; 110,000 employees- Three business groups: Medical Devices & Diagnostics; Medicines & Nutritionals; and Consumer

• Culture- Exceptionally strong culture of decentralization and independence- Results driven orientation- Strong value structure (J&J CREDO)

J&J’s Corporate Wide Improvement Approaches Have

Evolved Over Time

Timeline1980 1990 2000 2006 >

CrosbyTQM

Signature of Quality(Baldridge like Assessment)

Process Excellence• Six Sigma• Lean• Design Exc.• Business Assessment

?

Val

ue

Better


Summary of J&J’s Journey and Progress

• Made Great progress in many areas (e.g., supply chain) with Process Excellence

• Great examples of using Process Excellence to improve in other areas of the business (e.g., NPD, Marketing & Sales, etc.)

…But not fully satisfied with our progress using Process Excellence in

Marketing & Sales


Benchmarking Data Shows Others Have Difficulty Deploying in Marketing & Sales

11%

10%

13%

22%

20%

32%

39%

34%

62%

33%

41%

44%

40%

43%

40%

34%

46%

23%

0% 20% 40% 60% 80% 100%

Highly effective Effective

Manufacturing

Supply chainEngineering

Customer svc

NPDIT

SalesMarketing

HR

What is your effectiveness in applying six sigma, lean or other improvement approaches to the following functions?

Source: Best Practices LLC; Global Benchmarking Council Survey

External Benchmark Data

Benchmarks Show Six Sigma, Lean or Other Approaches Have Least benefit

in Marketing & Sales

0% 20% 40% 60% 80% 100%

Operations

Manufacturing

Supply chainEngineering

Customer svc

NPD

IT

SalesMarketing

What percentage of six sigma, lean or other improvement projects benefit the following functions?



Strongly Agree44%

Disagree4%

Agree52%

n=848, MD’s/Presidents & Mgmt Boards

While J&J Hasn’t Made The Progress We Want, Business Leaders See Value in

The Tools…

Improvement projects using PE Tools (Six Sigma, Lean & Design Excellence) add significant value?

J&J Internal Survey Data


“Simplify some methodologies to be implemented in the commercial organization”

“Help us use Process Excellence methodology in a sales environment versus manufacturing.”

“Customize the training to match the application. Training for commercial should not dive too deeply into statistical analysis, etc.…”

“Search for 6 sigma approach for marketing organization… balance the pure statistical approach and the need for business insight .”

…Yet J&J Leaders Want Help Harvesting Value Using Tools in Marketing & Sales…


How could Process Excellence be improved?


The Big Question

How do we make improvement tools & approaches better able to meet the needs of Marketing & Sales Area ?

Issue #1 – Traditional “Tools” Based Approach is Not Aligned with Culture of

Marketing/ Sales

• Focus on powerful tools• Strong statistical bent• Requires learning new “language”• Long time commitment to get “initiated” (training, project, etc.)• Large focus on cost savings

Traditional “tool” based improvement approach…

Marketing & Sales organization…

• Pragmatic, results driven• Orientated towards growth not efficiency• Already working very hard, long days• Speak business language & language of our customers


Improvement Projects with Traditional Approach Generally Have Long Cycle

Times Which of the following best describes the average cycle time of your unit’s six sigma, lean or other improvement projects?


4%

16%

39%

30%

10%

One monthor less

One toThree

Months

Four to SixMonths

Six to NineMonths

TenMonths or

More


% of respondents

No wonder why marketing and sales folks don’t see as much value

Issue #2 Training Could be Improved to Better Meet the Needs of

Marketing/SalesTraditional approachTraining/Certification

• Weeks of in-class training

• Often taught by individuals with no marketing or sales experience

• Few or poor examples of tool use in marketing/sales

• Often teaching people from many different functions at once

• Often rigid certification


How helpful have the PE tools / methods been for your everyday job?

*Differences between groups are statistically significant

We Have Found Training Marketing & Sales Folks Together Increases Value


Separate training for Mktg & Sales

68.75%

31.25%

Open enrollmenttraining

28.57%

71.43%

Very helpful

Somewhat helpful – Not helpful at all

Marketing/Sales Folks Training in These Venues


• Many complex stat tools• Many tools rarely used in marketing / sales• Language often difficult to understand

Six Sigma DMAIIC

Define. Charter. SIPOC

Measure. Sampling. Gage R&R

Analyze. Multivariate . DOE. Hypothesis testing. Regression

Traditional approachContent

Issue #3 Standard Tool Set Not Aligned With Marketing / Sales Needs


Our Analysis Indicates That Many of The Traditional Heavy Stat Tools

Aren’t as RelevantMarketing& Sales

• Market / brand strategy• Product• Price• Channels• Communication

• Advertising• Promotion• Personal Selling• Public Relations• Customer Education

MarketingProcess/ Activity #1...........#80

Six Sigma, Lean & DExTool #1……..Tool #100

√

√

√

√

√

√

√

√

√

√

We broke marketing & sales into 80 processes and mapped PE tool use… Insights…

• Many tools rarely used• Core set of simple, but powerful tools applicable in most circumstances

DEx = Design ExcellenceJohnson & Johnson 2005. Do Not Copy or Quote without Permission

Insights…

• Need a different approach to deploying improvement tools for marketing and sales

• Tools need to be more relevant and oriented towards effectiveness/growth

• Specialized and focused training is necessary


…but is it worth the investment to build better improvement tools / approach for Marketing & Sales?

1% Improvement in:1% Improvement in:

Results in pre-tax improvement of:

Results in pre-tax improvement of:

PRICEPRICE 8.7 % Improvement8.7 % Improvement

4.5 % Improvement4.5 % ImprovementCOGSCOGS

Source: S&P data from Business Week.Com; Internal Analysis; Assumes 50% gross margin and 12.5% pre-tax margin.

SGSG&&AA 2.4 % Improvement2.4 % Improvement

Why focus Improvement on Commercial Areas of the Business?

Typical S&P 500 business…

4.5 % Improvement4.5 % ImprovementVOLUMEVOLUME

Over Time Improvements in Marketing & Sales Effectiveness have Huge Impact

For the Average S&P 500 Company, improving marketing & sales effectiveness has the biggest potential payoff…

$1.2

$0.2

$0.4

$0.6

$0.8

$1.0

Do

llars

in B

illio

ns

1 2 3 4 5 6 7Years

1% SG&A Reduction

1% Volume Increase

1% COGS Decrease

1% Price Improvement

Source: S&P data from Business Week.Com; Internal Analysis; Assumes 50% gross margin and 12.5% pre-tax margin; Average Sales $13.5B.

Marketing& Sales

Effectiveness

Global Executives Believe Growth Not Cost Reductions will Fuel Earnings

Growth

Which of the following will be the most important source of earnings growth in the next 12 months?

Source: Mc Kinsey Quarterly 2005 Number 1; n=16,476 global business executives.

External Survey of Business Executives

New customers in existing markets

% of respondents

66%

63%

46%

19%

New products / services

Entry into new markets

Price increases

The Business Case for GrowthR

ev

enu

e

Gro

wth

Total Return to Shareholders

High

LowLow High

65%58%

10%35%

Bubble Size = % of Companies That Survive and Beat S&P 500 (’94-’03)

Insights…

• Top line growth is key• Simply cutting costs to drive earnings is not sustainable

S&P 100 Companies were segmented based on historical performance prior to 1994. The ability to survive the next decade was then evaluated…

Source: Adaptation from Mc Kinsey Quarterly. 2005 “Do or die struggle for growth”

The Changing Competitive Environment is Going to Require Companies to be

Better

How Do You Expect Competition to Change in Your Industry in the Next Year?

Source: Mc Kinsey Quarterly 2005 Number 1; n=16,476 global business executives.

External Survey of Business Executives

Greatly decrease

Stay the same

Greatly increase

0 1%4%

15%

45%

28%

7%

% of respondents

Insights… • If you’re not focused on improving the marketing & sales processes related to growth you are…

Missing a huge financial opportunity

Likely not fully aligned with needs of business

Forgoing a chance to make a strategic impact on the long-term success of your business


So What Does Success Look Like in Improving Marketing &

Sales… New, relevant toolkit oriented to growth

Tools and approach to address the most important issues

• Acquiring new customers• Growing business with existing customers• Entry into new markets• Developing and launching new products• Pricing

New approaches to training

Better assessment and selection of projects aligned with growth

A New Toolkit is Needed to More Fully Harvest Marketing & Sales

Improvement

• Market / brand strategy

• Product

• Price

• Channel

• Communication MIx

• Advertising

• Promotion

• Personal selling

• PR

• Customer Ed.

Personal selling ”Toolkit”

Deep dive Diagnostic

What should I improve?

Six Sigma, Lean & Other Blended Tools / RoadmapHow do I improve?

Best Practices

What does good look like?

Resources

Where else can I get help?

10 Key Areas


J&J’s Corporate Wide Improvement Will Continue to

Evolve…

Timeline1980 1990 2000 2006 >

CrosbyTQM

Signature of Quality(Baldridge like Assessment)

Process Excellence• Six Sigma• Lean• Design Exc.• Business Assessment

?

Val

ue

Better


Thank You!

[email protected]


Marketing & Sales impovement - Harvesting the Full Potential of Improvement

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