Who wouldn’t want to sell more and improve results?
All sales organisations are looking to drive growth and win more business. More often than not sales leaders and executives are working hard to increase sales and want to know how they can improve results quickly.
In this post I am not discussing the quick wins but long term, sustainable performance improvement. We are not here only for the current quarter but for the long run.
Continuous improvement means improving existing processes, practices and performance. The environment around us changes from year to year. Typically this means new competition entering the market, pressure on price, changes in the customers’ behaviour and so on. One has to do continuous improvement to keep up with the market and customers. One has to continuously improve to keep up with the competition. And continuous improvement is critical when looking to get ahead of the competition. Culture of continuous improvement can be powerful asset and competitive advantage that is difficult to copy.
The benefits of the continuous improvement are clear. There are some prerequisites we need to discuss.
Prerequisites to get continuous improvement started
Continuous improvement assumes that there is a standard process or workflow that we are improving. We can, for example, improve sales process, lead generation process or any sub-process within the sales function. Continuous improvement does require, however, that the system we are improving is standard. This means that the process is documented and people actually follow the process. Continuous improvement cannot be applied if the sales approach is based on individuals’ performance and ad hoc decisions across the process. Continuous improvement assumes there is a standard work that we improve.
The first step on the path towards continuous improvement is creation of standard work. In short this mean documenting the process and having people actually follow it.
Continuous improvement enables the whole personnel to participate the design of their work. This happen by systematically improving the standard work, not by making ad hoc decisions on daily basis.
Continuous improvement method actually empowers everyone in the organisation to participate design of the work. This happen by looking at the standard processes and finding improvement opportunities. This typically has positive impact on employee satisfaction as people get more responsibility over their work and how the work gets done in the organisation.
Key Performance Indicators are used to guide the work and effort of the entire team. One should have KPI’s measuring both the outcome but more importantly the process itself. Outcome related KPI’s are important (total contract value, revenue, profitability, customer satisfaction) but they cannot be used for continuous improvement purposes. And I am sure you are already measuring output of the sales process.
One should also have process metrics, KPI’s that measure how the process is working. These are typically related to quality, productivity and value creation.
The purpose for having KPI’s in the first place is to identify what is important and ensure that the whole team is working towards that specific goal.
Systematic approach to continuous improvement
As we are setting on a journey to systematically improve the performance of a system (our sales process), we need to have a method to do this.
Very practical improvement method is as follows:
- Root cause
- Proposed improvement
- Cost of implementation
First, we identify an improvement opportunity or an issue with the standard workflow. This may be a quality issue, need for additional resources, unclear roles and responsibilities, low productivity / throughput or whatever else. Anyone working with the process may come forward with an issue or an opportunity. What people typically see on the surface is a symptom of an underlying root cause.
Secondly, we’ll have a team discussion around what is the root cause causing the symptom. It is critical to separate the symptoms from the root causes. Typically, after discussing the issue, we’ll find out that the root cause is something completely different than what the symptom implies. If we misinterpret the symptom for a root cause we are going to arrive into completely different (and wrong) conclusions. For example, very typical issue is “need for additional resources” in one part of the sales process. Once we’ll dig into this (by asking “why?” multiple times) we could find out that the root cause is actually lacking process description. If the process description is missing, adding resources will not help. It will both increate cost and most likely will leave us with the issue of missing process description. Then later we’d find ourselves with additional symptoms like cost of sales. The root cause can be fixed only by first identifying and agreeing on it. To get from symptom to root cause requires critical thinking and asking “why?” many times until the root cause is revealed.
Once we agree on the root cause (e.g. “missing process description” or “nobody considered this activity important”) we can start to think about potential improvements. At this point we typically identify that there are multiple potential solutions to fixing the root cause. We also realise that many of these are low cost. Instead of buying new software or adding more people (quite typical requirements in sales organisations) we can identify a low cost solution and test it. If the process description is missing, let’s define the standard workflow. If nobody considered this specific activity important, let’s define the value of this activity and see how valuable or important it would be.
Fourthly, assessing the impact of proposed solution. This is difficult (I know, I’ve been there) but the point is this: a) define the impact in monetary terms, i.e. a number. b) roughly right is good enough. Having >100 kUSD, > 1 MUSD or <10 kUSD is enough. Do not get tangled into details.
Fifth item to look at is the cost of implementation. How much does it cost, roughly, to implement the proposed change. Cost should be expressed in monetary terms. Again, do not get in to details but try and get the ball park correctly.
Last two items are deadline and responsibility. If the impact justifies the cost, then we’ll assign a deadline and a responsible for the item and start implementation. If the impact and cost do not justify implementation of proposed improvement, we’ll park this item (or continue to work with it until there is business case that justifies the implementation). The time spend discussing this improvement opportunity is valuable to the team anyway. Now the team has better and shared understanding of this topic and its relevance to the business. This planning and discussion activity alone helps the team to understand different roles in the team better.
Typically organisations are able to identify more than one improvement areas. The impact of each improvement proposal is used to prioritise what gets worked on first. Therefore having it roughly right is more than enough. In the beginning of continuous improvement journey one might feel flooded with the number of improvement opportunities. That is where the monetary impact of each opportunity helps prioritisation.
As an organisation becomes familiar with the process of continuous improvement and has been able to fix quick wins, they might have three to five items on the agenda.
Process maturity model may help to maintain focus:
- Initial (ad hoc and individual efforts) – the starting point for use of a new or undocumented repeat process.
- Repeatable – the process is documented sufficiently such that repeating the same steps may be attempted.
- Defined – the process is defined/confirmed as a standard business process. People follow the process.
- Managed – the process is quantitatively managed in accordance with agreed-upon metrics.
- Optimizing – process management includes process optimisation and continuous improvement.
Continuous improvement is at the heart of Lean thinking. It is about improving your performance as much as you can. Looking at the current state and thinking about how we could do better. Over and over again.
Many organisations have been able to improve productivity by 100 % (!!!) within one year and then again by another 100 % during the next year. The results may be huge.
I urge you to try spending one hour per week on continuous improvement with systematic approach. The outcome may surprise you!