How to Do Away with the Dangers of Outsourcing

The Five Most Common Mistakes Distributor Sales People Make and How to Correct Them

by by Dave Kahle l The Kahle Way

http://www.davekahle.com/article/five-mistakes.html

Over the years that I've been involved in distribution, I've worked with tens of thousands of sales people. Certain negative tendencies -- mistakes that distributor sales people make -- keep surfacing. Here's my top five. See to what degree you (or your sales force) may be guilty of them.

Mistake Number One: Ruts! (Addiction to comfort zones.)

It is the unique nature of the distribution business that sales people see the same customers over and over again. Regardless of how many accounts they have, whether 20 or 200, they see their customers much more frequently than almost any other type of sales person. As a result, it's very easy to slide into the routine of seeing the same people at around the same time and talking about the same things. Not only is it easy to get into ruts regarding which customers to see, it is also easy to extend that "stay in your comfort zones" mentality to the other aspects of the job. It becomes easy to stick to selling the same products, visiting the same departments and selling in the same way.

There was a time when the "same time next week" mode was a wise choice. Dependability was a desirable quality for a distributor sales person. But, alas, the market has changed and most customers don't have time for the same conversation about fishing and football they had last month.

But more insidious than this comfortable routine is the addiction to mental and emotional comfort zones. These comfort zones appear when a sales person doesn't present that new product the company has just picked up - because the sales person isn't comfortable with it. Or they evidence themselves when the sales person refuses to learn the new computer system - because he or she isn't comfortable with that. Or when the sales person doesn't call on a new market segment - just not comfortable.

These are all evidences of a sales person that is addicted to mental and emotional comfort zones. The comfortable rut has become an almost insurmountable chasm, hindering the sales person from reaching his/her potential.

The problem is that as long as we remain within our comfort zones, we're destined to dwell in the past. We do what used to work, we sell what we have been comfortable with, we do our jobs the way we are used to doing them. We allow our past to determine our present and limit our future.

This may have been OK in years gone by, but the pace of change today won't reward the sales person who is addicted to comfort zones built in previous days.

Personal and professional growth means continually venturing into unexplored areas, meeting new people, selling new products, and trying new methods, all with a mindset that understands the need for constant growth.

How to overcome this mistake:

If you find yourself guilty of the "comfort zone mindset," consider this simple rule: Extend yourself to an "uncomfortable zone" at least once a week. Do something in your job that you have not done before. Call on a new prospect, go see the manager instead of the purchasing agent, show a new product, ask a new question, etc. Every week, one new thing.

I suspect that before long the possibility of something new will no longer be threatening, hindering your ability to grow. You'll gradually come to see that you are a constantly changing and growing human being, and that you can meet any new challenge that your company, your customers or the economic environment throws your way.

You will have slipped out of your comfort zones, and expanded your confidence and competence at the same time.

Mistake Number Two: Reactive modality

It is so easy for a sales person to allow everyone else to dictate the course of their days. They carve out little empires of importance for themselves so they can constantly react and thereby be busy and feel needed. They train their customers to call them with routine questions when they could just as easily have called customer service. They need to be there to personally write down every order. They jump every time even the smallest customer calls. They must personally supervise every complex order, drop off every sample, and expedite every problem. Why? Because they want to feel important by being in such demand.

They aim to please, and they define that as reacting and responding to whatever comes their way. As a result, they develop for themselves days filled with frenzied activity. They drove this emergency shipment over to this customer, dropped off a sample to that one, checked on a couple of back orders for others, sourced some esoteric product for another. It's all so unnecessary. All this because they allowed and encouraged everyone else to dictate their activities. Where do they go tomorrow? Depends on who calls today. Instead of developing plans and working proactively, they let everyone else determine their days, and work reactively.

The net result? They squander their talents, time, energy and wisdom in a random distribution dictated by everyone else in the world. At the end of the day, they are exhausted. They are crabby to their spouses, irritable with their families, and negative about their companies and their jobs.

How to Overcome this Mistake:

If this one hits home for you, the solution is to focus, focus, focus. You must become proactive, not reactive. You must work your plans, not everyone else's plans. If you are going to work a plan, you must first have a plan. And since a plan is a series of actions designed to accomplish some goal, you can't have a plan until you have some goals.

Where do you start, then? By creating specific goals for your sales results. Create three to five measurable, attainable goals for the most important aspects of your job. How much do you want to sell this year? At what sort of gross profit? How many new customers do you need to acquire? How much of that hot new product do you want to sell? Answer those questions in a detailed, measurable and specific way, and you will have created some goals for yourself.

Once you've developed goals, then you need to develop a plan to reach those goals. Look at each goal, and break it down into monthly pieces. For example, if you want to sell $1,000,000 this year, then maybe you need to sell $83,333 per month for each of the next twelve months ($1,000,000 divided by 12). Then, each month, create a plan for the best way to do that. Where should you go? Who should you see? What products or programs should you present?

Having answered those questions, you will have created the skeleton for a monthly plan. Finally, you need to discipline yourself to follow the plan.

Then, when a small customer calls and asks you to drop everything and bring a case of product that they were too unorganized to order last week when they should have, you can look at your plan, and suggest that they call customer service and arrange to have it shipped, because you have a product demonstration to an A account to make.

You'll be working proactively, not reactively, and working at the highest priority tasks. And that's a route to exceptional success for distributor sales people.

Mistake Number Three: Wasting the sales interaction by not learning more about the customer.

There are some customers who have been called on for years, and yet the sales person doesn't know any more about them today than he/she did after the second sales call. These are accounts where the sales person cannot identify one of the account's customers, explain whether or not they are profitable, or identify one of their strategic goals.

Distributor sales people have this wonderful opportunity to learn about their customers in deeper and more detailed ways, and often squander it by having the same conversations with the same customers over and over. They never dig deeper. They mistake familiarity with knowledge.

What a shame. I am convinced that the ultimate sales skill -- the one portion of the sales process which, more than anything else, determines our success as a sales person -- is the ability to know the customer deeper and in a more detailed way than our competitors know them.

It's our knowledge of the customer that allows us to position ourselves as competent, trustworthy consultants. It's our knowledge of the customer that provides us the information we need to structure programs and proposals that distinguish us from everyone else. It's our knowledge of the customer that allows us to proactively service that customer, to meet their needs even before they have articulated them.

In an economic environment where the distinctions between companies and products are blurring in the eyes of the customer, the successful companies and individuals will be those who outsell the rest. And outselling the rest depends on understanding the customer better than anyone else.

How to Overcome this Mistake:

If this one sounds like you, then force yourself to dig deeper and understand the customers in a more detailed manner. Create an account profile form, and methodically fill it out. (See my website for a free download.) For each major product or program that you want to sell, create an "opportunity profile," listing all the things that would like to know before you presented this product or program.

Armed with these tools, go into your accounts focusing on collecting good information and understanding the customer by gathering the information asked for on the forms.

Develop a matrix with all the key people in an account on it, and methodically meet and form relationships with each one. As you meet and come to know each person on the matrix, check his/her name off the list.

Prepare good questions which probe the account's deeper needs and values. Ask them. Listen carefully. Take detailed notes. Study what you have written down. Think about what you have learned about the customer.

Look at every sales call as an opportunity to learn something more about this particular account, and don't be satisfied until you do.

Mistake Number Four: Poor questioning

This is a variation of the mistake above. I am absolutely astonished at the lack of thoughtfulness that I often see on the part of distributor sales people. Most use questions like sledgehammers, splintering the relationship and bruising the sensibility of their customers by thoughtless questions.

Others don't use them at all, practically ignoring the most important part of a sales call. They labor under the misconception that the more they talk, the better job of selling they do, when the truth lies in exactly the opposite direction.

And others are content to play about the surface of the issue. "How much of this do you use?" "What do you not like about your current supplier?" Their questions are superficial at best, redundant and irritating at worst.

The result? Sales people never really uncover the deeper more intense issues that motivate their customers. Instead, they continually react to the common complaint of customers who have been given no reason to think otherwise: "Your price is too high."

Fewer sales, constant complaints about pricing, frustrated sales people, impatient managers, and unimpressed customers - all of these as a result of the inability to use the sales person's most powerful tool with skill and sensitivity.

How to Overcome this Mistake:

If this one makes you a little uncomfortable, it's time to get some training. Take a class, read a book, attend a seminar to learn the why and how-to of good questioning. (Check our website for several resources.) Use sales meetings as opportunities to work on creating good questions. Take 45 minutes, propose a certain sales call to your colleagues, and brainstorm some questions you can ask in that sales call.

Give yourself a rule about questions, and stick to it. "I will prepare and ask three good questions for every sales call." Then, be sensitive to what happens when you ask questions. Watch the customer's response to your language. Refine your skills as you go.

In my study of sales, I have come to the conclusion that the skill of asking good questions is one of the five most important, most powerful skills an effective sales person has. Dedicate yourself to continuous improvement in this area, and your results will improve dramatically.

Mistake Number Five: No investment in themselves.

Here's an amazing observation. No more than 5% to 10% of active, full time professional distributor sales people ever invest in their own growth. That means that only one of 20 sales people have ever spent $20.00 of their own money on a book on sales, or subscribed to a sales magazine, taken a sales course, or attended a sales seminar of their own choosing and on their own nickel.

Don't believe me? Take a poll. Ask your sales people or your colleagues how many of them have invested more than $20.00 in a book, magazine, tape, etc. in the last 12 months. Ask those who venture a positive answer to substantiate it by naming their investment. Don't be surprised if the answers get vague. You'll quickly find out how many sales people in your organization have invested in themselves.

Distributor sales is the only profession I know of where the overwhelming majority of practitioners are content with their personal status quo.

Why is that? A number of reasons.

Some mistakenly think that their jobs are so unique that they cannot possibly learn anything from anyone else.

Still others think they know it all. They have, therefore, no interest in taking time from some seemingly valuable thing they are doing to attend a seminar or read a book.

Some don't care. Their focus is hanging onto their jobs, not necessarily getting better at them.

But I think the major reason is that the overwhelming majority of distributor sales people do not view themselves as professionals and, therefore, do not have professional expectations for themselves. They worked their way up from the customer service desk or the warehouse, and they view their work as a job to be done, not a profession within which to grow.

They are content to let their companies arrange for their training or development. And between you and me, they would prefer that their companies really didn't do anything that would require them to actually change what they do.

How to Overcome This Mistake:

If you expose yourself to inspiring, motivating and educational material regularly, you'll slowly begin to think of yourself more professionally. You'll gain new skills, develop new attitudes, and become more confident and competent. You'll inevitably rise to the top.

Begin by having some faith in that process, and discipline yourself to follow it.

Dedicate a certain amount of time each week to your personal development. Five percent is the number I advocate. So 5% of a 45 hour work week would be about two hours. What would happen if you would dedicate two hours each week to your own personal growth? What would happen if you spent two hours each week reading sales books, magazines or newsletter? You could even lump those two hour blocks together and every now and then invest eight hours by attending a seminar.

You know and I know that you would find ideas to implement, things to think about, new attitudes that would make a difference in your confidence and competence. And that difference would evidence itself in measurable results.

These are the most common negative tendencies that I see. It may be that you and your colleagues are immune to these dampers on success. Good for you. But if you are not immune, and if you spot some of your own tendencies in this list, then you are not reaching your potential for success. You have tremendous potential for success -- for contentment, confidence and competence - that is being hindered by these negative behaviors. Rid yourself of these negative tendencies, and you'll begin to reach your potential.

A Pragmatic Alternative for Creating a Corporate Social Responsibility Strategy

28 MAY 2012| by Dina Gerdeman l Harvard Business School

http://hbswk.hbs.edu/item/6994.html

Many companies preach and practice corporate social responsibility, but their efforts often lack an overall strategy that dilutes their effectiveness. Professor "Kash" Rangan and colleagues offer a pragmatic solution.

Thousands of large, profitable companies have all the right intentions of giving back to society—and yet a sizable number of them have corporate social responsibility (CSR) programs that provide little benefit to either the community or the company.

"Of all the companies involved in CSR, the majority of them are not doing it effectively," says V. Kasturi "Kash" Rangan, the Malcolm P. McNair Professor of Marketing at Harvard Business School. "If you look at the Fortune 100 companies, you'll find at least half of them could do a much better job than they're doing."

The problem? They lack a cohesive CSR strategy, says Rangan, who recently cowrote the working paper Why Every Company Needs a CSR Strategy and How to Build It with HBS research associate Lisa A. Chase and Sohel Karim (HBS DBA '88), managing director of Socient Associates.

A social responsibility strategy should fulfill two goals: create a positive social impact, and enhance the company's brand, reputation, employee morale, and/or its bottom line, Rangan says. "But it does not have to be totally integrated into the core business strategy of the company as some people believe," he emphasizes.

The fact that such strategies often do not exist or are ineffective is frequently the result of how CSR efforts start. At many companies, these efforts may begin by executive mandate or somewhat organically, through the efforts of employees that then meander in various directions within different departments. For example, human resources might initiate a United Way gift program that involves a company match; operations might work on waste reduction; and marketing might collect an extra dime from employees' paychecks for breast cancer awareness.

"The biggest problem is that companies do CSR in fits and starts," Rangan says. "Programs are fragmented, and so they're not that effective in helping the community or the company."

And then the CEO wakes up one day and realizes that "we're doing $50 million worth of charity work, and we don't seem to be getting credit for any of it."

STARTING THE STRATEGY

The authors argue that every company should have a CSR strategy that unifies the diverse range of its philanthropic giving, supply chain, "cause" marketing, and system-level initiatives all under one umbrella.

However, they advise that companies should not force the disparate CSR programs into their business strategies. Instead, the goal should be to "bring discipline and structure to the many fragmented components. [The] components will in some cases support the core strategy and in many others may appear adjacent," with a potential to influence core assets, such as brand reputation or employee morale.

In the paper CSR initiatives are explored in three "theatres." Theatre 1 includes activities primarily motivated by charitable instincts, even though they may have potential business benefits. Theatre 2 represents activities intended to benefit the company's bottom line, as well as the environmental or social impacts of one or more of its value chain partners. Theatre 3 encompasses programs targeted at fundamentally changing the business's ecosystem. This transformation is intended to enhance the company's long-term business position, but frequently entails short-terms risks in order to create societal value.

"Our analysis suggests that most companies rarely coordinate among the three theatres, let alone recognize the contributions of each to societal well-being," write Rangan, Chase, and Karim.

Every company, large or small, should have a clear idea of why it is involved in CSR and the expected outcomes. They should know whether CSR benefits the brand, boosts the reputation of the business, affects customer retention, reduces waste, or provides a boost to employee morale, retention, or even productivity.

"You have to have a rationale and logic for why you're doing a particular program. Somebody should be able to articulate what the benefits are because if you can't, it may not be worth doing," he says. "You don't have to flaunt what you're doing. Not all companies may want to make a visible statement of their involvement. But every company should know what kind of impact CSR is having."

Rangan adds that it helps if CSR activities are headed by a person who has senior management rank. While executive management may not need to be directly involved in all CSR initiatives, it's important that at least one C-level executive champions the efforts, particularly to make sure the programs receive budgetary approval and continue through other business transitions.

Executives of smaller companies that do not have CSR programs can get started by first talking to employees, customers, and board members to discover issues they may feel passionate about, whether it's the environment, hunger relief, or the arts.

Once the company has a short list of ideas, senior management can decide which ones best fit the current and future business of the company. "It is hard work, but you can usually find opportunities that provide a connection between what a company can do for society, and how it will affect its business," Rangan says.

DOING IT RIGHT

Coca-Cola, for example, contributes $88 million annually to a variety of environmental, educational, and humanitarian organizations. Microsoft donates almost $300 million annually in software products to nongovernmental organizations around the world. There has to be an internal logic for how these efforts help the company, and it does not have to be always related to the bottom line.

Some companies have invested time and energy into their CSR programs only after getting burned by bad publicity. For example, Nike suffered from an onslaught of negative press and large-scale protests from those who claimed its contract employees were paid low wages and toiled away amid dangerous working conditions in overseas factories. So the company launched an initiative to reduce the negative environmental impact of its entire supply chain and established a code of conduct focused on compensating employees fairly and ensuring that they would not be exposed to a dangerous or unhealthy working environment.

Yet it shouldn't take a negative headline to move companies toward CSR. In fact, Rangan says, many owners and executives of large, successful corporations are driven by their conscience to give back.

"Successful entrepreneurs at some point in their life discover that they have made more money than they need, in the process of building their private enterprise," he says. "Maybe they didn't intend to make millions or even billions of dollars. So they start wondering what they can do to put it to good use. They want to be known for doing something for the community."

In fact, some executives have gone to great lengths to throw the company's entire business model behind CSR.

The late Ray Anderson, founder of the global carpet company Interface, said he had an "epiphany" about the environmental damage being done by Interface's material sourcing, production, and shipping systems, and felt driven by a moral obligation to remake every facet of the company's ecosystem. The initiative drastically changed how Interface manufactured, distributed, and sold its carpet--including the production of carpet not as entire floor units, but as modular tiles that could be replaced or repaired when worn. In addition to reducing greenhouse gas emissions by 92 percent and saving about $400 million per year through recycling, the company's sales increased by 65 percent and profits by 200 percent after the changes.

Companies such as Interface that promote the social or environmental value of their efforts can see a big payoff. Consumers have demonstrated willingness to reward such companies by paying 5 to 8 percent more for their products. "For the kind of CSR that Interface practices, it's important for the companies to connect with customers and let them know what they are doing for the environment," Rangan says.

PROFIT DOESN'T ALWAYS FOLLOW

Yet some companies make the mistake of drawing an overzealous connection between social responsibility and business goals, believing that being a good corporate citizen should always lead to increased profits.

"When companies try to find a profit linkage, that's a hard test on CSR," Rangan says. "It might not lead to that."

Instead, executives and shareholders should consider other benefits CSR can provide. For example, Bimbo Bakery not only uses biodegradable packaging, but also focuses much of its CSR efforts on treating its employees well. The company provides staffers with free education services to complete high school and supplementary medical care to cover gaps in government health plans. These efforts have created a loyal and committed workforce: a clear plus for the company.

In an ideal world, Rangan says, executives whose companies extract resources will feel an obligation to return the favor, whether it's a furniture company that plants trees to offset its extraction of lumber or a bottling plant that initiates a water conservation program to make up for the water it takes from the ground.

"If companies only analyze the resources they take, they should try to give a big portion back," says Rangan, who notes that companies may not always operate at a "net positive" to society or the environment, but they should at least strive to offset their negative impact on the world. "It may be a while before companies learn to leave a net positive behind. When that happens, we'll all live in a much more positive world."

Learning Curve: Making the Most of Outsourcing

10 APR 2013| by Paul Guttry l Harvard Business School

http://hbswk.hbs.edu/item/6892.html

Companies that view outsourcing as an easy way to offload commodity work are missing powerful improvements to be gained by working closely with service providers, says Professor Robert S. Huckman.

Companies that outsource merely to shuffle off commodity work to save costs might be missing important opportunities to work with vendors and significantly improve the final product.

"When it comes to the outsourcing of many complex professional services, the world is not as 'flat' as one might think," says Robert S. Huckman, the Albert J. Weatherhead III Professor of Business Administration at Harvard Business School. "In particular, when this type of work is outsourced it should not be viewed as a mere commodity."

Instead, he says, cultivating important person-to-person relationships with the vendor of outsourced services can improve the efficiency and perhaps the quality of services delivered—particularly in health care, where outsourcing is on the rise.

In research recently published in the journal Organization Science, Huckman and colleagues shine a light on how the outsourcing model fits the practice of teleradiology. The article, titled "Learning from Customers: Individual and Organizational Effects in Outsourced Radiological Services," was written by Huckman; Jonathan R. Clark (HBS PhDHP '10), Pennsylvania State University; and Bradley R. Staats (HBS MBA'02, DBA'09), University of North Carolina at Chapel Hill.

Teleradiology is the reading and interpretation of CT, MRI, X-ray, and other diagnostic images. Increasingly, medical institutions outsource this work to licensed experts located across town or around the world.

The research team found that the more an outsourced radiologist works with a particular hospital, the more efficient he or she becomes reading that hospital's scans. In addition, that efficiency is not immediately translatable to other customers.

THE OUTSOURCED RADIOLOGIST

Some parts of the teleradiology model closely resemble outsourcing in industries like electronics, business processes, or software development. The health-care customer—typically a hospital—sees the need for a service that is reasonably well defined, but it can't provide the service at an efficient scale. Service providers see an opportunity to consolidate this volume, achieving the scale required to provide the service efficiently for a wide range of customers.

Here's how it works in teleradiology in the United States. Radiologists at an outsourcing service provider log in either remotely from their homes or at a reading center. As new scans come in, they are randomly assigned to the radiologists, who must be licensed in the state and credentialed at the hospital where the scan was performed. The random assignment of scans to any accredited and available radiologist suggests that the teleradiology industry views its product as a commodity—that is, two qualified radiologists are expected to read the same image in the same way.

That situation provided the research team an opportunity to test three questions about outsourcing that had received little attention before: Does a radiologist increase productivity by focusing on one customer? Does the radiologist's range of experiences with other customers result in better results delivered to that particular customer? Do individual's benefit from others' customer experience; in other words, does the outsourcing organization itself become more productive as its individual employees march down the learning curve?

"Though the increased use of outsourcing has led to a rise in the number of customer-supplier interactions, the learning benefits of customer experience remain largely unexamined," the researchers write in the paper.

THE RESEARCH

The researchers studied data from OutsourceCo (a pseudonym), a major provider of outsourced teleradiology services in the United States, with more than 1,400 client sites, mainly hospitals and radiology group practices. The 97 radiologists in the study were all board certified and licensed to practice radiology in the United States.

The data set included 2.7 million scans read by the radiologists for 1,431 customers over a 30-month period. Nearly 85 percent of the scans were CT; roughly 10 percent were ultrasound; and X-ray, MRI, and nuclear medicine accounted for the remainder.

The scans were analyzed according to the reading radiologist, the customer (hospital or radiology group practice) it came from, the anatomical area depicted, and the length of time it took to read.

THE RESULTS

The results showed that experience between a radiologist and a customer paid off. A radiologist's experience reading scans from the same customer and involving the same anatomical area was found to produce the largest increase in efficiency, with an additional 1,000 cases of cumulative experience increasing a radiologist's subsequent weekly output by 7.4 percent.

Productivity is extremely important in this setting. Many scans are submitted by hospitals in emergency situations, so quicker analyses may lead to faster decision-making and better patient outcomes. The outsourcing firms, of course, also benefit by processing a greater number of scans.

The efficiency benefits of shorter read times did not appear to come at the expense of clinical quality; the rates of "discrepancies" reported by customers was low.

The researchers point to prior research to explain why. Repeated experience helps the service provider learn the customer's standard operating procedures, generally improves communication and coordination, and sets up the possibility of knowledge transfer between them.

The advancements accrued not just to individual radiologists, but to the outsourcing firm as well. Huckman explains what happens as an outsourcing firm gains experience with a customer. Let's say that the firm has 20 radiologists. Dr. A reads the first 200 scans from a particular hospital, developing considerable expertise and efficiency with that customer. Then she and Dr. B each read half of the next 200 scans from the same hospital. Both doctors have now developed individual expertise with the hospital—but so has the outsourced company as a whole. As other radiologists read more cases from the hospital, the difference made by the greater expertise of Dr. A declines.

As Huckman puts it, "Something gets baked into the firm's expertise that essentially substitutes for an individual radiologist having experience with that customer. If you're an outsourcing firm, that has implications for how you think about staffing a new client versus one with whom the firm has a longer history."

Huckman's future research will look at more instances of decentralization, including other types of telemedicine and specialized providers of niche services such as retail clinics, single-specialty hospitals, and disease management companies. The research, he says, reflects the traditional pendulum swing in health care between centralization and fragmentation of services. Some critics complain that health-care delivery is centralized in hospitals that are seen as too big and inefficient. In contrast, others find fault with an overly fragmented system that may result in significant coordination and quality problems.

Huckman says that his current findings speak to one of the key challenges posed by greater decentralization not only in health care but in other settings as well.

"Some services that we have thought of as commodities actually have subtle features that make them differentiated," he says. "Ultimately, the relationship between customers and the individual outsourced employees who work with them has an impact on the efficiency of the services provided."

How to Do Away with the Dangers of Outsourcing

06 JUN 2013| by Ranjay Gulati l Harvard Business School

http://hbswk.hbs.edu/item/7152.html

Дата добавления: 2015-10-29