Innovation Strategy & Mangement Final Project V1.5

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This was a final project in an Innovation Strategy & Management class in Graduate School at NU. I applied complex design principles to the B2B selling process. In the last 2 years I have successfully applied these principles to my clients businesses to enable growth, new product development and customer acquisition.

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Innovation Strategy & Mangement Final Project V1.5

  1. 1. B2B Sales… Ready for an Innovative Approach? Northwestern University MSC 515 - Innovation Strategy & Management Final Project December 5 th , 2008 Presented by Coley Perry
  2. 2. YOU This is what a B2B sales transaction looks like today! You may get out of the traffic jam, but it is frustrating, complicated, confusing and does not always create the value that buyers and sellers want!
  3. 3. The Good, The Bad and the Ugly
  4. 4. B2B Sales Today… The Seller Organization view <ul><li>Sales is a numbers game… </li></ul><ul><ul><li>The more phone calls you make the more meetings you will have. </li></ul></ul><ul><ul><li>The more meetings you have the more proposals you will hand out. </li></ul></ul><ul><ul><li>The more proposals you hand out the more sales you will make. </li></ul></ul><ul><li>Sales Leadership tells salespeople what to do and asks them for the “numbers” above. They also ask for the ever popular “forecast”. It is almost never accurate… </li></ul><ul><li>Revenue is almost always the ONLY metric for an individual contributor or a sales organization. </li></ul><ul><li>Commission is almost always the top compensation model for members of the seller organization. </li></ul><ul><li>Sales people go out and sell. Marketing makes brochures, websites, white papers, etc... These functions are often in Silos. </li></ul><ul><li>Sales is often not integrated or aligned with any internal function. </li></ul><ul><li>“ Sales is full of Cowboys!” – Quote from anyone in HR, Accounting, Delivery, etc… </li></ul><ul><li>Find anybody that looks and smells like a “customer” and try to sell them your stuff. </li></ul>
  5. 5. B2B Sales Today… The Buyer Organization view <ul><li>The Decision Maker fields literally hundreds of “cold contacts” monthly. (Phone, e-mail, etc…) </li></ul><ul><li>The Decision Maker has less time and more responsibility than ever before. </li></ul><ul><li>The traditional buyer is often reactionary. They only engage in the buyer-seller process when they need something. </li></ul><ul><li>The buyer only buys from someone they TRUST. </li></ul><ul><li>Most often the buyer asks someone they trust for a referral to buy what they need. </li></ul><ul><li>Buyers often buy for personal reasons first, organizational reasons second. </li></ul><ul><li>Buyer organizations make it hard to do business with a new vendor. This limits the buyer’s options. </li></ul><ul><li>The Supply management organization wants to leverage Procurement “Best Practices” on indirect spend categories. i.e. Professional Services, IT Equipment, Corporate Travel, etc… </li></ul><ul><li>Buyers have just as many “buying systems” as salespeople have “selling systems” </li></ul>
  6. 6. Seller vs. Buyer – “Let the Sale Begin!” King John of France surrendering himself at the Battle of Poitiers - 1356 Q: “Why does someone always have to be France in a B2B Sales Transaction?” - Coley Perry A: “Because we always cut the ends off of the ham, that’s just what we do” - Rob Wolcott’s Family
  7. 7. What's wrong? <ul><li>Why does it have to be adversarial? Always selling… and not being sold… </li></ul><ul><li>Participants in the process (buyer, seller, decision makers, influencers, etc.) assume the process based on perception, past experience and the “reputation” of a sales transaction. </li></ul><ul><li>The interaction has become complacent. It is not evolving as fast as it should be based on the advances in technology, information, knowledge, skills of the participants, etc… </li></ul><ul><li>Sales Organizations hire the wrong people for the sales role. </li></ul><ul><li>Sellers continue to focus on themselves. What they can do and what the features and benefits are of their products and services. </li></ul><ul><li>Sellers continue to use strategy that is out of date. </li></ul><ul><ul><li>Example – “The Shotgun Approach” - </li></ul></ul><ul><ul><ul><li>This is what we need to sell more stuff – do more cold calls, get more referrals, spend more on traditional marketing.… </li></ul></ul></ul><ul><li>The buyer often has this in the back of their mind: “You are trying to sell me something… I am NOT going to be sold”. </li></ul><ul><li>Buyer organizations continue to focus on price instead of value . Current procurement methodology often focuses on price first and everything else second. </li></ul>
  8. 8. Trouble is here
  9. 9. So is opportunity
  10. 10. In search of a new world… in B2B Sales With the blessing, support and authority of the leaders in the castles, Columbus sets sail with his three ships, the Nina, the Pinta, and the Santa Maria…
  11. 11. What if we looked at B2B sales a different way?
  12. 12. An Innovation Definition – context for B2B Sales… <ul><li>&quot;The creation of substantial new value for customers and the firm by creatively changing one or more dimensions (aspects) of the business system&quot; </li></ul><ul><li>(Sawhney, Wolcott and Arroniz, 2006) </li></ul>
  13. 13. Source – Mary Corrigan – Tracking the Wisdom – www.trackingthewisdom.com Think of B2B Sales as a C omplex A daptive S ystem…
  14. 14. Complex Adaptive System – A Definition for context… <ul><li>John H. Holland </li></ul><ul><ul><li>A Complex Adaptive System (CAS) is a dynamic network of many agents (which may represent cells, species, individuals, firms, nations) acting in parallel, constantly acting and reacting to what the other agents are doing . The control of a CAS tends to be highly dispersed and decentralized. If there is to be any coherent behavior in the system, it has to arise from competition and cooperation among the agents themselves . The overall behavior of the system is the result of a huge number of decisions made every moment by many individual agents . [1] </li></ul></ul><ul><li>1 - Complexity: The Emerging Science at the Edge of Order and Chaos by M. Mitchell Waldrop. </li></ul>
  15. 15. A CAS view of B2B Sales <ul><li>Many agents in the process – Suspects, Prospects, Buyers, Customers, Sellers, Competitive Seller Firms, etc… </li></ul><ul><li>Individuals in all of the roles at each agent - Salespeople, Decision Makers, Influencers, Supply Chain, Delivery, Consumers of Sellers Product or Service, etc… </li></ul><ul><li>Competitive Marketplace, The Seller Organization’s position in the market place, participation in industry organizations and partnering to provide solutions. </li></ul><ul><li>Buyer organizations search for the best solution, evaluate value, price, capability, cultural fit, etc. </li></ul>
  16. 16. A CAS view of B2B Sales continued… <ul><li>The best buyer organizations collaborate with seller organizations to develop the best solution with the most value. </li></ul><ul><li>The agents, individuals, communication networks and the decision processes are extremely complex. </li></ul><ul><li>When the CAS weakens the best possible value is not achieved. “A bad experience leading to a change in vendor, badmouthing, going out of business, etc…” </li></ul><ul><li>When the CAS adapts, the best solution is chosen, even if there is trouble the buyer and seller iterate to climb the value landscape. (i.e. New Solution, bring in a partner, adapt to achieve the highest level of attainable value, etc.) </li></ul>
  17. 17. Some implications of a CAS approach… <ul><li>A CAS approach will encourage partnering and coopetition among competitive seller organizations and competitive buyer organizations. This guides adaptation. </li></ul><ul><li>A value landscape becomes clear within a specific industry or solution set. </li></ul><ul><li>As the buyer organization adapts to expect and require more, the seller organization must adapt to be able to provide the value. If they do not their solution falls down the landscape. They either adapt again, get acquired or die. </li></ul><ul><li>If the buyer organization does not adapt like the seller it will lose competitive advantage by not seeking the best solution, will fall down its own value landscape and must adapt again or be acquired or die. </li></ul><ul><li>If truly followed it would provide a “survival of the fittest” environment for both buyer and seller organizations. The level of innovation, quality and value of all products and services in the B2B ecosystem would dramatically improve. </li></ul>
  18. 18. Some limitations of a CAS approach… <ul><li>The B2B ecosystem is extremely complex. The size, the number of people and the communication overhead would make this a difficult task. </li></ul><ul><li>The paradigm shift in thinking would be difficult. It is unclear if you just started executing whether others would follow or even understand. </li></ul><ul><li>Competition by nature is a limiting factor for both buyer and seller organizations. There are many conflicts as well as some similarities with a traditional free market system. </li></ul><ul><li>A value landscape definition becomes difficult to manage and understand as there is a complex set of simultaneous value landscapes operating at the same time. This could cause an organization to accept a lower level of overall value because they do not see the highest peak or mistake a lower level landscape as the higher peak. </li></ul><ul><li>The skill sets required of the participants within an organization must change in order to think, execute and be effective in the CAS model. This could take years or forever! </li></ul><ul><li>The overall concept has a Utopian feel that may be rejected. </li></ul>
  19. 19. An Innovation Opportunity for Seller Organizations…
  20. 20. A new horizon for B2B Sales Pipeline Management
  21. 21. Horizon Based Portfolio Management – A B2B Sales Pipeline approach <ul><li>Use a Horizon - Portfolio view of your sales pipeline. </li></ul><ul><ul><li>Horizon 1 – Existing Customers. Order taking and protect current business. Low likelihood of expanding business within these buyer organizations. Could be one-time customers. </li></ul></ul><ul><ul><li>Horizon 2 – Clients with opportunity for additional purchases. May be a fit for additional product or service offerings. Target competitors customers. Leverage effective use of your ecosystem to scale your offering. </li></ul></ul><ul><ul><li>Horizon 3 – Search for customers outside of the “normal” areas. Leverage your ecosystem to tell you what customers “want to buy”. Develop products/services for a “business problem”. Truly innovate the solution within your ecosystem. Some may win and some may lose. The winners may spawn growth opportunities and/or new market opportunity. Customers you never knew you could have! </li></ul></ul>
  22. 22. Horizon PMS implications and limitations… <ul><li>The Horizon Portfolio Management System for managing a pipeline can create a single view of the customer for the seller organization. </li></ul><ul><li>It will create some high level metrics and definitions of customer segments making it easier to quantify hard and soft value. </li></ul><ul><li>When used with the CAS approach it will guide you to the appropriate points in your system where you should deploy resources. </li></ul><ul><li>It will need an executive sponsor to change a core process within an organization. </li></ul><ul><li>Some sellers will not be able to look beyond $$$ as the only metric. </li></ul><ul><li>Incentive may not exist for the salesperson to build the relationships, uncover the information and sustain the effort required to feed information and knowledge to the process. </li></ul>
  23. 23. The Last Word… <ul><li>The B2B Sales Process is a business system ripe for innovation! </li></ul><ul><li>A Complex Adaptive System view of the overall process could help the B2B Sales Business System innovate. It is challenging but the process alone could be very valuable and rewarding. </li></ul><ul><li>Focus on understanding, building and adapting your system. Document it, understand it and create communication plans, metrics for progress and define the &quot;value” possibilities for each participant and agent as a starting point. </li></ul><ul><li>The Horizon Portfolio Management System for managing a pipeline will help prioritize and focus seller organizations’ resources on the right customer segments. </li></ul><ul><li>The Horizon PMS helps the seller organization uncover the areas that are important to focus on in relation to their CAS. Start with the buyer organizations within your horizon’s and map it out from there. This will ensure you are on the right track. </li></ul><ul><li>Have Fun! </li></ul>
  24. 24. Questions-------------------------------?

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