by Cindy Barnes
Simple processes
‘Dunbar’s number’, together with team size, places limits on the size of an effective operating unit. But being a selling organization is not necessarily about being small per se – it can also be about simple, efficient processes.
Mumbai’s dabba (or tiffin) wallas have been the subject of much interest in the world of ‘just in time’ delivery. Their 125-year-old business model, in which lunchboxes are picked up from a worker’s home, delivered to their office and then returned home, still operates with legendary efficiency today. Dabbawallas operate in small teams of up to 25 and have a clearly defined number of lunchboxes to deliver to a very clear and tight timetable. A simple coding system ensures accurate delivery and close customer relationships – dabbawallas are known to their customers personally and cement trust. Despite its reliance on the occasionally erratic Mumbai rail network, the system, which makes 80 million deliveries a year, is so resilient that it has even been claimed to rank as a Six Sigma business. Teamwork and close communication between dabbawallas helps them to make tweaks to deliveries when necessary.
Industrial democracy
Other successful alternative business models have changed the way that decision making happens within organizations. Brazilian manufacturing and services company Semco has been run along unconventional lines by Ricardo Semler since he took it over from his father in the 1980s. Semco operates to three principles: democracy, profit sharing and information. The company uses Dunbar’s number, keeping its business units small, but goes beyond structure and team size to change the way that decisions are made: something Semco calls ‘participatory management’. Workers are closely involved in many decisions from which they would traditionally be excluded, such as the choice of building. They are strongly empowered to make their own decisions, and (like the dabbawallas) they build up strong relations of trust through their organization. They design their own jobs, decide who will be their manager, and set their own pay and holidays. Semco also created a great deal of internal diversity in skills, so that many of its workers are able to do several different jobs, a move that gave the company strong resilience during Brazil’s 1990s downturn.
Like Dee Hock at Visa, Semler aimed to take himself out of the equation – to create an organization that could function without him. This is a radical departure from the cult of the ‘hero CEO’ that has so recently dominated business.
Lean start-up
This methodology, championed by entrepreneur Eric Ries, turns the traditional approach for starting a business on its head. Conventionally, start-ups begin with a product for which they believe there is a demand. A business plan then follows, along with financial projections, and then financing rounds. Lean start-up starts not by asking the question of whether a product can be built, but whether it should be built in the first place: ‘Too many start-ups begin with an idea for a product. They then spend months, years, perfecting that product… When they fail to reach broad uptake, it is often because they never spoke to prospective customers. When customers ultimately communicate, through their indifference, that they don’t care, the start-up fails.’
Notice one of the lines in Ries’s quote? When start-ups fail, it is because they didn’t speak to customers or find out whether or not they wanted the new product. The beginning point of the lean start-up methodology builds on the process we have been outlining in this book. It is a simple premise: don’t do anything until you really, truly understand what your customers (potential or existing) think and want.
What lean start-up thinks you should do next is to develop a ‘build–measure–learn’ feedback loop. Once the start-up has identified the problem to be solved, the next step is to develop a minimum viable product (MVP) so this learning process can begin as quickly as possible. This runs counter to the old-fashioned model where monolithic projects are built from the top down – and it looks more like the ‘biological’ organization depicted in Figure 8.1 than a rigid hierarchy. During the build–measure–learn process, the start-up can tweak the product and be prepared to ‘pivot’ – change direction or business model – if the learning process suggests that it is necessary.
Dropbox – a lean start-up in action
Lean start-up literature cites file-hosting service Dropbox, which was attempting to break in to the very competitive cloud storage market, as an example of the methodology’s success. Dropbox founder Drew Houston’s insight was that while there were indeed many products out there, the people he spoke to didn’t use them. Using the lean start-up methodology, he created a simple three-minute video as his MVP, publishing it on places like Hacker News and Digg to find out what potential users thought.
Houston notes that this got the same feedback that the Dropbox team would have got had they actually gone ahead and built the product. Then, he and colleagues put up a simple landing page – exemplifying the ‘learn early, learn often’ approach – and built up a waiting list of 75,000 customers: all this without any actual product development. As Houston points out: ‘Not launching is painful, but not learning is fatal… the biggest risk is making something no one wants.’ Armed with huge amounts of customer feedback and enthusiasm, Dropbox was able to focus its efforts on ‘making an elegant, simple product that just works and makes users happy’. Dropbox users will testify to the simplicity and ‘just works’ factor that characterizes the product today.
Spotify – new names for new teams
Music streaming service Spotify faces the challenge of many software companies – how to scale and stay agile (in both the traditional and software-development senses of the word) as teams grow internationally. Spotify gets around this problem with an organization comprising squads, tribes, chapters and guilds. A squad is the smallest unit, self-organizing and using lean start-up principles. Tribes are a collection of squads working in a related area – and they also use the Dunbar number to stay at a viable size. Chapters and guilds bind the squads and teams together: chapters comprise people within the same tribe with similar skills, while guilds are broader communities of interest. The company claims that a continuous growth in employee satisfaction has accompanied the introduction of this new system (Kniberg and Ivarsson, 2012).
* * *
CASE STUDY Sonitus Systems – a customer-focused approach to product development
Although it is not a ‘lean start-up’ example, Futurecurve client Sonitus Systems arrived at a similar way of looking at its go-to-market strategy. Sonitus provides user-friendly and reliable noise-monitoring systems for the global environmental measurement and instrumentation market. The company has achieved continuous sales growth over the last five years and expects sales to double over the next two years as it signs new distributors in Ireland, the UK, Scandinavia and the United States.
Sonitus Managing Director Paul McDonald attributes this growth to the Value Proposition Builder™ process that he encountered.
Paul explained that for Sonitus, its focus on technology was limiting the customers it talked to: ‘It is very easy to just talk tech with technical people all day but this means we are often talking to people running very small businesses. They are easy to talk to and to address but they don’t scale.’ The company’s challenge was to find a way to broaden its market into larger and more lucrative organizations.
During a workshop, Paul realized that the Sonitus value proposition was about how its products benefitted customers rather than what the products themselves were capable of: ‘I went along thinking that value proposition was something that we would put on the “About Us” page on the website. That is what I had in mind going into it. What stuck with me from the workshop that I still talk to everyone about is that it covered every single touch point of the business and every single customer interaction. That was the biggest takeaway for me.’ Paul explained how valuable it was to understand that everything starts with the customer: ‘You need to figure out why the customer would buy it from you, not why you think the customer should buy it from you. And
if you don’t work that way, someone else will.’
Using the Value Proposition Builder™, Sonitus started to figure out ‘why someone thinks we’re valuable’. It looked at how it delivered its products, how it talked about them and how it provided after-sales support. Sonitus segmented its existing customers into categories in order to understand in depth what they found valuable about its products – whether it is saving customers time or money, or providing a better service, for example.
Armed with that understanding, the company started to translate this idea of value into everything it does. And once it had packaged its product features in a way that customers found valuable, this gave Sonitus a clear idea of its market position.
There was an immediate impact on one of Sonitus’s most important routes to market, as Paul points out: ‘When we pushed the new message out to distributors, they “got it” straight away. People who had been struggling with the product got to grips with it and sold it more and more because they now understood how it was valuable to customers.’
Another major change was to cut down the sales cycle, which had previously involved a lengthy process of business travel and face-to-face demonstrations. Sonitus upgraded its website so it became a much more powerful sales channel, moving technical detail into manuals, putting the value upfront and making it easy for customers to navigate.
Sonitus saw immediate benefits from this, as Paul explains:
Within a week or two we turned around a sale in 24 hours. The customer had visited the new website, done the demo, I could see the feedback coming from the analytics, he got a quote and he said, ‘Brilliant, that is what I need’, and paid in advance. So we went from very first initial contact to money in the bank in about four days and had a sale agreed in 24 hours.
Overall, Paul describes a ‘massive’ reduction in sales cycles as Sonitus is now much better prepared to respond to requests for quotes quickly.
The other major benefit of the value proposition work for Sonitus was revenue generation. For example, as Paul explains:
We closed a deal with a UK company at the start of the year who would have been a major competitor, but as we have refined our products, they have stopped seeing us as a competitor and taken on distribution for us for the whole of the UK. They have helped us to double our revenue from last year already and they recently closed a huge contract as well. We have signed up a few new key distributors and we recently closed a distribution deal to cover all of Scandinavia. We’re close to doubling our revenue again in two years.
With a clear story, potential partners can see straight away how Sonitus complements their business.
Sonitus expects to sign a US distributor shortly and has expanded into new premises to deal with its growing customer base. And as it introduces new products, Paul explains that the value proposition approach will continue to be embedded in everything it does: ‘We’re doing it all again now as we’ve got a prototype for a new product and we’re at the beginning of that process again. I actually went back and read the handbook from the course to make sure we don’t get carried away with patting ourselves on the back about our clever technology!’
* * *
Clear, open culture
Culture is another route to creating a selling organization, and online shoe retailer Zappos is often held up as an examplar of how company culture drives sales. Now part of Amazon, which bought Zappos in 2009 in a deal reputed to be worth around US $1 billion, Zappos developed 10 core values that it lived by as a company:
Deliver WOW through service.
Embrace and drive change.
Create fun and a little weirdness.
Be adventurous, creative and open-minded.
Pursue growth and learning.
Build open and honest relationships with communication.
Build a positive team and family spirit.
Do more with less.
Be passionate and determined.
Be humble.
Its recruitment process involved testing cultural fit as well as job suitability, and Zappos focused in particular on creating an excellent customer service experience, for which it became renowned. Under investor and then CEO Tony Hsieh, Zappos hit its target of $1 billion in annual sales two years earlier than planned, and at the time entered the Fortune Top 100 Companies to work for rankings at number 23.
Powerful values and purpose
Consider the average corporate statement of purpose or vision. Here are a few examples of what you might see:
To maximize shareholder return by delivering premium products and services.
To be the number one performer in our chosen industries by applying continuous customer focus and process excellence.
To add value to our stakeholders and markets.
To satisfy our customers’ desires for personal entertainment and information through total customer satisfaction.
It is hard to get motivated by statements like this. They are bland and indistinct, and it’s not clear how you as an employee could get personally connected with them. At the time of writing there is great geopolitical upheaval that had at its heart two powerful statements of purpose: ‘Vote leave, take control’ and ‘Make America great again.’ In both cases the opposing sides lacked the clear, single-minded unity of purpose and the emotional connection with the people they needed to target.
In business it’s the same. When employees are clear about why they turn up for work every day, they are motivated to create a selling organization. America’s Southwest Airlines has long been a fixture in the Most Admired and Best to Work For corporate rankings. Its purpose and vision are simple, and powerfully articulated:
Our purpose: connect people to what’s important in their lives through friendly, reliable, low-cost air travel.
Our vision: to become the World’s Most Loved, Most Flown, and Most Profitable Airline.
And the way that Southwest people make this happen is expressed in a set of clear, unique values for employees to live by:
Warrior spirit.
Servant’s heart.
Fun-LUVing attitude.
Work the Southwest way.
Southwest is famed for its singing and rapping flight attendants, humorous safety briefings and countless stories of staff ‘going the extra mile’ for customers. Its values are so effective because they are grounded in a strong, meaningful purpose and vision.
In contrast with many corporate vision and mission statements, Southwest’s are clear and genuinely differentiating. More importantly, they are connected directly to Southwest’s customers and what they want from air travel – which is not necessarily the experience of flying but the value of being ‘connected to what’s important in their lives’. Today, Southwest carries the most domestic passengers of any US airline, employs over 52,000 people and, in 2015, made profits of over $2 billion.
What next?
We have looked at several different ways of creating the ‘selling organization’:
small, semi-autonomous teams;
decentralized organizations;
simple processes;
industrial democracy;
lean start-up;
clear, open culture;
powerful values and purpose.
In all the cases we have reviewed, the organizations in question had clear value propositions and clear ways to translate them into sales propositions. But they have all illustrated that to do this successfully – and to become a genuinely customer-driven organization – the traditional command-and-control hierarchical company structure doesn’t cut it. In the selling organization, everyone’s work is tilted towards the customer.
From Southwest’s cabin attendants to Gore’s Associates to Spotify’s Guilds, people in these successful companies are all, in effect, selling while they work. And like in Giles Hutchins’s visualization of the resilient organizational form, these companies are all better designed to resist the constant change that is an unavoidable feature of the commercial world. In o
rganizations like these, ‘change management’ ought to be a redundant discipline, because they manage change by default – thanks to features like good communication, mutual trust and strong feedback loops.
The type of selling organization you choose to be will depend on many different variables: your prevailing culture, the size and age of the business, the industry you’re in, the technology you use and the people you employ. But the examples we have used show what is possible.
There has been lots to think about and action in this book; however, make sure you follow Law 7.
7th Law of Value Proposition Selling: don’t try to change everything all at once; you will need an evolutionary plan.
For many organizations this process has been the start of a transformation, often a transformation from a product-centric organization to a much more customer-centric one. This has many implications and requires a considered strategy and plan over several years.
10th Law of Value Proposition Selling: this process – the value proposition work and organizational adjustments – never stops.
To keep pace with your customers and market changes, this process needs to be built into an organization’s internal culture and all aspects of regular operation. Many of the organizations we have featured in this book created a value proposition function to ensure this became an ongoing process. The longer-term rewards of this will speak for themselves.