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Customer Manufacturing Update |  |
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Dear Mitchell, Here is your April Customer Manufacturing Update. This month we're taking a look at management dashboards, and specifically marketing dashboards.
If you have friends or colleagues who would
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Management dashboards are not likely the "silver bullet" often hoped for. Marketing dashboards are no different. Too many marketing dashboards are nothing more than graphical depictions of information that was obtainable, rather than a tool to help improve performance. Marketing dashboards, like other management dashboards, can be useful tools to help manage the business process. You just have to start with the right end in mind.
Last year we published a paper in which we discussed the concept of Control Charts, and how they apply to marketing and sales. Control Charts are one of Ishikawa's Seven Tools of Quality. They are quite useful in helping manage results. Some of our readers have asked why you would want an "upper control " limit for something that the more you get the better you like it? For example, why would you want an upper control limit on sales close rate? They understand a lower control limit on sales close rate, but weren't clear on why you would want an upper control limit. In truth, as many experienced sales managers will tell you, if you have too high a sales close rate you are probably not moving enough leads through the pipeline and are scrapping leads too early thus possibly moving viable opportunities out of your pipeline. Other reasons for too high a close rate might be too low of prices. A Control Chart alone cannot diagnose the root cause problem, but it can help you know when you have one. You could make use of Control Charts at other points in the pipeline besides just at close. However, it is possible to have too high of a close rate, so an upper control limit is valid.
Most business processes are people dependent. That is, people are required to make the process work. However, some business processes are person-dependent, and that is limiting. To know if a process is person-dependent you just have to ask yourself what happens if that person, specifically, is not available temporarily, or permanently? Will the process fail? Clearly, some people are better at certain functions than others, but if the process fails without a specific individual available, you have built a flawed process because it is person-dependent. Most of us have worked in companies where this is an issue within our purview. However, when it extends to the most senior levels of the company, it can be limiting if not damaging. General Motors has for MANY years missed major trends in the auto industry. Where they were once a trend setter, they are now a slow follower. The reason is not lack of talent, but rather a business process that required too much time to approve a project. GM's solution to this problem was Bob Lutz. As far as one person goes, he did a GREAT job at moving new product ideas through GM faster than previously. However, Mr. Lutz wanted to retire at the end of last year. He couldn't. Why? Because the processes in place at GM are still "Lutz dependent." If GM does not fix this before Mr. Lutz retires this year, they will not be any more viable than they have been. And this is not unique to GM. Steve Jobs was on leave from Apple for quite a while last year due to illness. Many experts opined that a protracted absence by Mr. Jobs could be an "issue" for the company. If this is true, then as many people believe, Mr. Jobs is a critical, part of the Apple process and without him their performance may suffer greatly. This makes the process person-dependent. As we said earlier, great people make a difference, but if you go from great to a lost cause because of the loss of one person, that is not good business management. When Steve Jobs originally handed the company off to John Sculley, Apple suffered. And no other CEO was able to get them back on track. Similar things can be seen with Howard Schultz at Starbucks, Arthur Blank at Home Depot, Michael Dell at Dell, etc. Walt Disney, Sam Walton and other legendary CEOs built business processes that were not dependent on them personally, so we will not buy the notion that some CEOs are just so good they are irreplaceable. Great people are always valuable, but building robust processes that are not person-dependent allows for a sustainable business.
Over the years we have posed a question to our
audiences and clients that comes in two
forms:
The purpose for these questions is to get people thinking about how competitors might come after them, and more importantly, to determine if their business model is still right for the market. Harvard Business Review published an article, "Reinventing Your Business Model," which talked about ideas around how to think about that subject. The authors noted that 50% of executives surveyed believed that business model innovation was going to be more important than product or service innovation. They cite the success of the Apple iPod as a business model innovation that included iTunes as the reason for its success. (We concur.) The issue is "what is a business model?" And how can you understand how to innovate a business model. Several years ago, during the dotcom bust, we wrote a paper entitled, "Is Your Business Model Right For Tomorrow's Market?" If you are interested in understanding how to think about a business model and the levers to innovating a business model, we commend the latest version of this paper to you as well.
We appreciate any feedback you can provide to help us make sure these Updates give you value each month. Feel free to respond to this e-mail with any comments or suggestions for future topics or ways we can make these Customer Manufacturing Updates more valuable to you.
Thank you for your interest, and if we can provide
any
additional assistance in sales, marketing, strategy, or
innovation to help you increase your sales,
let us know.
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