Harvesting the Full Potential of Improvement

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Harvesting the Full Potential of Improvement

  1. 1. Marketing & Sales Improvement Harvesting the Full Potential of Improvement Chris Provines VP Preferred Practices & Methodologies Johnson & Johnson 2005. Do Not Copy or Quote without Permission
  2. 2. The Road Ahead <ul><li>J&J background and improvement journey </li></ul><ul><li>Challenges / issues using traditional </li></ul><ul><li>improvement approach (six sigma, lean, </li></ul><ul><li>etc.) in marketing & sales </li></ul><ul><li>The power of improving marketing & sales </li></ul><ul><li>New approaches </li></ul>Johnson & Johnson 2005. Do Not Copy or Quote without Permission
  3. 3. <ul><li>The Worldwide leader in healthcare </li></ul><ul><ul><li>Pharmaceuticals / Biotechnology </li></ul></ul><ul><ul><li>Medical devices / Diagnostics </li></ul></ul><ul><ul><li>Consumer products </li></ul></ul><ul><li>Solutions to diagnose, treat, improve quality of life, </li></ul><ul><li>and cure many conditions and diseases (such as): </li></ul>J&J Is A Diverse Collection of Businesses Focused on Health Care <ul><ul><li>Stroke </li></ul></ul><ul><ul><li>Epilepsy </li></ul></ul><ul><ul><li>Pain </li></ul></ul><ul><ul><li>Anemia </li></ul></ul><ul><ul><li>Heart disease </li></ul></ul><ul><ul><li>Diabetes </li></ul></ul><ul><ul><li>Obesity </li></ul></ul><ul><ul><li>Degenerative conditions </li></ul></ul><ul><ul><li>Cancer </li></ul></ul>
  4. 4. J&J Has Many Highly Independent Business Units <ul><li>Organization </li></ul><ul><ul><li>200 independent operating companies </li></ul></ul><ul><ul><li>$47.5B in revenue; 110,000 employees </li></ul></ul><ul><ul><li>Three business groups: Medical Devices & </li></ul></ul><ul><ul><li>Diagnostics; Medicines & Nutritionals; and Consumer </li></ul></ul><ul><li>Culture </li></ul><ul><ul><li>Exceptionally strong culture of decentralization and </li></ul></ul><ul><ul><li>independence </li></ul></ul><ul><ul><li>Results driven orientation </li></ul></ul><ul><ul><li>Strong value structure (J&J CREDO) </li></ul></ul>
  5. 5. J&J’s Corporate Wide Improvement Approaches Have Evolved Over Time Timeline 1980 1990 2000 2006 > ? Value Better Johnson & Johnson 2005. Do Not Copy or Quote without Permission Crosby TQM Signature of Quality (Baldridge like Assessment) <ul><li>Process Excellence </li></ul><ul><li>Six Sigma </li></ul><ul><li>Lean </li></ul><ul><li>Design Exc. </li></ul><ul><li>Business </li></ul><ul><li>Assessment </li></ul>
  6. 6. Summary of J&J’s Journey and Progress <ul><li>Made Great progress in many areas (e.g., </li></ul><ul><li>supply chain) with Process Excellence </li></ul><ul><li>Great examples of using Process Excellence to </li></ul><ul><li>improve in other areas of the business (e.g., </li></ul><ul><li>NPD, Marketing & Sales, etc.) </li></ul>… But not fully satisfied with our progress using Process Excellence in Marketing & Sales Johnson & Johnson 2005. Do Not Copy or Quote without Permission
  7. 7. Benchmarking Data Shows Others Have Difficulty Deploying in Marketing & Sales Manufacturing Supply chain Engineering Customer svc NPD IT Sales Marketing 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
  8. 8. Benchmarks Show Six Sigma, Lean or Other Approaches Have Least benefit in Marketing & Sales Operations Manufacturing Supply chain Engineering Customer svc NPD IT Sales Marketing What percentage of six sigma, lean or other improvement projects benefit the following functions? Source: Best Practices LLC; Global Benchmarking Council Survey External Benchmark Data
  9. 9. 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 Johnson & Johnson 2005. Do Not Copy or Quote without Permission
  10. 10. “ 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… J&J Internal Survey Data How could Process Excellence be improved? Johnson & Johnson 2005. Do Not Copy or Quote without Permission
  11. 11. The Big Question How do we make improvement tools & approaches better able to meet the needs of Marketing & Sales Area ?
  12. 12. Issue #1 – Traditional “Tools” Based Approach is Not Aligned with Culture of Marketing/ Sales Johnson & Johnson 2005. Do Not Copy or Quote without Permission <ul><li>Focus on powerful </li></ul><ul><li>tools </li></ul><ul><li>Strong statistical bent </li></ul><ul><li>Requires learning new </li></ul><ul><li>“ language” </li></ul><ul><li>Long time commitment </li></ul><ul><li>to get “initiated” </li></ul><ul><li>(training, project, etc.) </li></ul><ul><li>Large focus on cost </li></ul><ul><li>savings </li></ul>Traditional “tool” based improvement approach… Marketing & Sales organization… <ul><li>Pragmatic, results </li></ul><ul><li>driven </li></ul><ul><li>Orientated towards </li></ul><ul><li>growth not efficiency </li></ul><ul><li>Already working very </li></ul><ul><li>hard, long days </li></ul><ul><li>Speak business </li></ul><ul><li>language & language </li></ul><ul><li>of our customers </li></ul>
  13. 13. 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? Source: Best Practices LLC; Global Benchmarking Council Survey External Benchmark Data % of respondents
  14. 14. Issue #2 Training Could be Improved to Better Meet the Needs of Marketing/Sales No wonder why marketing and sales folks don’t see as much value Traditional approach Training/Certification <ul><li>Weeks of in-class training </li></ul><ul><li>Often taught by individuals </li></ul><ul><li>with no marketing or sales </li></ul><ul><li>experience </li></ul><ul><li>Few or poor examples of </li></ul><ul><li>tool use in marketing/sales </li></ul><ul><li>Often teaching people from </li></ul><ul><li>many different functions at </li></ul><ul><li>once </li></ul><ul><li>Often rigid certification </li></ul>Johnson & Johnson 2005. Do Not Copy or Quote without Permission
  15. 15. We Have Found Training Marketing & Sales Folks Together Increases Value How helpful have the PE tools / methods been for your everyday job? *Differences between groups are statistically significant J&J Internal Survey Data Johnson & Johnson 2005. Do Not Copy or Quote without Permission Separate training for Mktg & Sales 68.75% 31.25% Open enrollment training 28.57% 71.43% Very helpful Somewhat helpful – Not helpful at all Marketing/Sales Folks Training in These Venues
  16. 16. Issue #3 Standard Tool Set Not Aligned With Marketing / Sales Needs <ul><li>Many complex </li></ul><ul><li>stat tools </li></ul><ul><li>Many tools rarely </li></ul><ul><li>used in marketing </li></ul><ul><li>/ sales </li></ul><ul><li>Language often </li></ul><ul><li>difficult to understand </li></ul>Six Sigma DMAIIC Define . Charter . SIPOC Measure . Sampling . Gage R&R Analyze . Multivariate . DOE . Hypothesis testing . Regression Traditional approach Content Johnson & Johnson 2005. Do Not Copy or Quote without Permission
  17. 17. Our Analysis Indicates That Many of The Traditional Heavy Stat Tools Aren’t as Relevant Marketing & Sales DEx = Design Excellence Johnson & Johnson 2005. Do Not Copy or Quote without Permission <ul><li>Market / brand </li></ul><ul><li>strategy </li></ul><ul><li>Product </li></ul><ul><li>Price </li></ul><ul><li>Channels </li></ul><ul><li>Communication </li></ul><ul><ul><li>Advertising </li></ul></ul><ul><ul><li>Promotion </li></ul></ul><ul><ul><li>Personal </li></ul></ul><ul><ul><li>Selling </li></ul></ul><ul><ul><li>Public </li></ul></ul><ul><ul><li>Relations </li></ul></ul><ul><ul><li>Customer </li></ul></ul><ul><ul><li>Education </li></ul></ul>Marketing Process / Activity #1 . . . . . . . . . . . #80 Six Sigma, Lean & DEx Tool #1……..Tool #100 √ √ √ √ √ √ √ √ √ √ We broke marketing & sales into 80 processes and mapped PE tool use… Insights… <ul><li>Many tools </li></ul><ul><li>rarely used </li></ul><ul><li>Core set of </li></ul><ul><li>simple, but </li></ul><ul><li>powerful tools </li></ul><ul><li>applicable in </li></ul><ul><li>most </li></ul><ul><li>circumstances </li></ul>
  18. 18. Insights… <ul><li>Need a different approach to deploying </li></ul><ul><li>improvement tools for marketing and sales </li></ul><ul><li>Tools need to be more relevant and oriented </li></ul><ul><li>towards effectiveness/growth </li></ul><ul><li>Specialized and focused training is necessary </li></ul>Johnson & Johnson 2005. Do Not Copy or Quote without Permission
  19. 19. … but is it worth the investment to build better improvement tools / approach for Marketing & Sales?
  20. 20. 1% Improvement in: Results in pre-tax improvement of: Source: S&P data from Business Week.Com; Internal Analysis; Assumes 50% gross margin and 12.5% pre-tax margin. Why focus Improvement on Commercial Areas of the Business? Typical S&P 500 business… PRICE 8.7 % Improvement 4.5 % Improvement COGS SG & A 2.4 % Improvement 4.5 % Improvement VOLUME
  21. 21. 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 Dollars in Billions 1 2 3 4 5 6 7 Years Source: S&P data from Business Week.Com; Internal Analysis; Assumes 50% gross margin and 12.5% pre-tax margin; Average Sales $13.5B. 1% SG&A Reduction 1% Volume Increase 1% COGS Decrease 1% Price Improvement Marketing & Sales Effectiveness
  22. 22. 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
  23. 23. The Business Case for Growth Revenue Growth Total Return to Shareholders High Low Low High Bubble Size = % of Companies That Survive and Beat S&P 500 (’94-’03) 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” 65% 58% 10% 35% Insights… <ul><li>Top line growth </li></ul><ul><li>is key </li></ul><ul><li>Simply cutting </li></ul><ul><li>costs to drive </li></ul><ul><li>earnings is not </li></ul><ul><li>sustainable </li></ul>
  24. 24. 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
  25. 25. Insights… <ul><li>If you’re not focused on improving the </li></ul><ul><li>marketing & sales processes related to </li></ul><ul><li>growth you are… </li></ul><ul><ul><li>Missing a huge financial opportunity </li></ul></ul><ul><ul><li>Likely not fully aligned with needs of </li></ul></ul><ul><ul><li>business </li></ul></ul><ul><ul><li>Forgoing a chance to make a strategic </li></ul></ul><ul><ul><li>impact on the long-term success of your </li></ul></ul><ul><ul><li>business </li></ul></ul>Johnson & Johnson 2005. Do Not Copy or Quote without Permission
  26. 26. So What Does Success Look Like in Improving Marketing & Sales… <ul><ul><li>New, relevant toolkit oriented to growth </li></ul></ul><ul><ul><li>Tools and approach to address the most </li></ul></ul><ul><ul><li>important issues </li></ul></ul><ul><ul><ul><li>Acquiring new customers </li></ul></ul></ul><ul><ul><ul><li>Growing business with existing customers </li></ul></ul></ul><ul><ul><ul><li>Entry into new markets </li></ul></ul></ul><ul><ul><ul><li>Developing and launching new products </li></ul></ul></ul><ul><ul><ul><li>Pricing </li></ul></ul></ul><ul><ul><li>New approaches to training </li></ul></ul><ul><ul><li>Better assessment and selection of projects </li></ul></ul><ul><ul><li>aligned with growth </li></ul></ul>
  27. 27. A New Toolkit is Needed to More Fully Harvest Marketing & Sales Improvement 10 Key Areas Johnson & Johnson 2005. Do Not Copy or Quote without Permission <ul><li>Market / brand </li></ul><ul><li>strategy </li></ul><ul><li>Product </li></ul><ul><li>Price </li></ul><ul><li>Channel </li></ul><ul><li>Communication </li></ul><ul><li>MIx </li></ul><ul><li>Advertising </li></ul><ul><li>Promotion </li></ul><ul><li>Personal selling </li></ul><ul><li>PR </li></ul><ul><li>Customer Ed. </li></ul>Personal selling ”Toolkit” Deep dive Diagnostic What should I improve? Six Sigma, Lean & Other Blended Tools / Roadmap How do I improve? Best Practices What does good look like? Resources Where else can I get help?
  28. 28. J&J’s Corporate Wide Improvement Will Continue to Evolve… Timeline 1980 1990 2000 2006 > ? Value Better Johnson & Johnson 2005. Do Not Copy or Quote without Permission Crosby TQM Signature of Quality (Baldridge like Assessment) <ul><li>Process Excellence </li></ul><ul><li>Six Sigma </li></ul><ul><li>Lean </li></ul><ul><li>Design Exc. </li></ul><ul><li>Business </li></ul><ul><li>Assessment </li></ul>
  29. 29. Thank You! [email_address] Johnson & Johnson 2005. Do Not Copy or Quote without Permission

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