Value Stream Mapping :: Lean Sales and Marketing thru Service Design Thinking

Archive for Value Stream Mapping

Sep

Will Lean always internalize the customer?

Posted by: business901 | Comments (0)

I was in a recent LinkedIn discussion that referred to Sales and Marketing customer as being the internal organization and their role was to optimize the throughput of the observation. The sales and marketing role was further explained in the terms of takt time based on optimal production of the organization. The goal of sales is to keep the factory optimized?

I respectfully disagreed based on this reasoning.

You can (maybe) do that if you have excess demand. You can then try to improve efficiencies. However, most of us live in a world that supply exceeds demand. It is not about getting rid of waste. We have excess capacity. Tell me a company that won’t accept more prospects into their sales funnel or are refusing orders. In sales and marketing you have to drive revenue. I believe that the role of continuous improvement and Lean lies in this area versus the area of waste.

I have a problem understanding applying takt time in relation to sales and marketing. Theoretically, it sounds great but in actuality how does it apply with Takt Time= Net Available Time per Day / Customer Demand per Day. Who determines the acceptable and projected Takt Time for sales and marketing? Is customer demand determined by the capacity of the operations? Or is it by market share?

How can you have takt time without customer demand? Can an internal measurement be relevant to sales? If it is the measurement that we force sales to use, it is not a Lean process. We are pushing in lieu of pulling. Pull comes from the marketplace and is one of the principles of Lean. Holding sales and marketing to an internal measurement that has little if any meaning to the marketplace or the customer confuses me. The fundamental question could be what the marketplace demand is and what our percentage of that market is. That leads into the questions of retention and acquisition. Setting targets in those areas would drive the process of sales and marketing, innovation and hold operations accountable to a realistic level.

The metrics we have been traditional using are based on an economy with excess demand. Since we live an economy that has excess supply, fundamental beliefs must change. Sales and Marketing does need a process for improvement but it is one that must be created from the marketplace and I actually believe the principles of Lean are best suited for that journey.

Another wayward thought or the truth about Process Improvement in Marketing?

I came across a blog post by Brad Powers (a recent podcast guest) on the Harvard Business Review, How Marketing Can Lead Process Improvement. In reading the post the communication with customers seems to be orchestrated. As a result, the examples discussed seem archaic and more an extension of a command and control function than one of empowerment. It left me wondering if there are examples of sales and marketing teams that are being empowered.

Just calling something continuous improvement does not mean that it is. Continuous improvement is not a series of pilot tests and deployment. Rather it is empowering your workforce to practice it every day. In modern organizations it is the practice and the power of continuous improvement that is driving results. Factory workers, Software Programmers and Health Care professionals, to name just a few are being empowered as problem solvers and knowledge workers. I would think that the sales and marketing structure should be leading the way versus being the laggards.

There is not a more important function in sales and marketing than the ability to share and create knowledge with your customer. In the 3 examples given in Brad’s post, I see the key terms optimize, experiments, research versus words like cooperation, co-create, community and surprisingly “value”. I see that heads of marketing need to spend time with employees rather that interact with customers. What’s wrong with spending time directly with customers?

There are companies doing this. A good example is many of the gaming companies that interact regularly with their players. They are highly influenced by the top players and not only seek their opinions but join in and play with them. The players I have discussed this with are amazed at the access they have to top management. Other examples include SalesForce, BMW, Lego, Kraft and P & G.

A customer does not realize any value from your product/service till he uses it. When you view your product/service as an enabler of value creation versus the center of value than you can see how increasing knowledge flows between you and your customer is at the center of sales and marketing. Value is an input to your company not an output. There is only one person that determines the value of your organization and that is the customer. I think many continuous improvement methodologies have hijacked the term customer. It is not an internal person. The customer is the person that purchases and uses the product.

When viewing Lean and PDCA as a knowledge creation vehicle versus a waste reduction tool, Lean becomes applicable to sales and marketing. Without this understanding, I see little hope for Lean in the sales and marketing process.

Lean Sales and Marketing, the Value Stream Manager

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Overview: The Value Stream Manager is responsible for maximizing return on investment (ROI) through his particular value stream of customer identification, customer value, customer acquisition, customer retention and customer monitoring (Value Stream Mapping Customer Value). He translates this value stream and assigns it in conjunction with the team coordinator to particular teams similar to how a typical sales manager would to his salespeople. The VSM and the team coordinator will routinely evaluate the outcomes to determine best fit. The VSM may work with multiple teams for his value stream. The VSM has profit and loss responsibility for the product/service. The VSM represents the Voice of the Market, which may be thousands of individual clients, distributors, brokers and agents. As with Scrum’s product owner, the VSM has the final authority.

Again building on familiar ground you may want to equate this position to the Product Owner in Scrum, the Champion in a Six Sigma Project, Product Manager in Marketing or the Value Stream Manager in Lean. The short summary of their responsibilities: They assume the business interest of the product, service or value stream. They are the product/service owners and are held accountable for the commercial success of the product/service.

In Lean Sales and Marketing, the Value Stream Manager is held accountable for their Value Stream that is described in the 5Cs of Driving Market Share; Customer Identification, Customer Value, Customer Acquisition, Customer Retention and Customer Monitoring. In addition, the VSM has profit and loss responsibility for the product. Different than a Product Owner in Scrum, the VSM does represent the needs of the client in a project but is typically in contact with the client through the project team. The lean sales team actually performs the activities with the customer.

The VSM interacts with the team offering the priorities and reviewing the results with the Team Coordinator at each control point. It is important to note that as in Scrum there are two important principles. During iterations, the sales team has complete autonomy and should only be interacted with through the team coordinator. The other similarity is that the VSM is the one and only one person who has the final authority.

The VSM will prioritize the backlog or the iterations in the marketing value stream. These needs are best expressed or written in the form of User Stories. Depending on the size and complexity of the organization, the Sales Team, the Team Coordinator and the Value Stream Manager may meet to discuss an iteration or an entire marketing cycle. During the meeting the user stories are prioritized and discussed by all involved in the process. The sales team then takes these stories and breaks them down into activities and create single, multiple iterations that may be completed in a linear or parallel fashion. When these stories are completed, a control gate review occurs where the results are accepted or rejected by the Value Stream Manager. The VSM, the Team and the Team Coordinator discuss improvements, the next stage or coordinate a handoff to another Team. This process should have a very strong focus on where the customer is in their decision making process and what the best way is to support them at this time.

Whereas the team concerns itself around the Voice of the Customer (VOC), the VSM must look at both VOC and Voice of Market (VOM). Following the 5Cs of Driving Market Share outline, the VSM must:

Identify specific products/markets that offer organization best options for growth.
Create a value model for each of targeted product or market.
Clearly state the organization’s competitive value proposition.
Identify the direction needed to enhance that value proposition.
Monitor competitive value proposition.

The Value Stream Manager can be one person or an entire department. However, for the VSM to be effective, they have to have control over setting the priorities not only for the sales and marketing teams but many times for product development. Their decisions should be visible to the entire organization. As I like to put it, they hold the gold within the company: knowledge of both VOC and VOM. This visibility makes the role of VSM both demanding and a very rewarding one.

Improve your Sales Cycle, Work on your Feedback Loops

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When I start talking about speeding up the sales cycle the initial reaction is that the sales cycle is controlled by the customer and there is just not much we can do about that. I usually counter with, most companies understand that there is an average sales cycle time and if we just agree that there is than there is room for improvement.

My next discussion point is asking, can you describe the typical sales cycle based on the decision making criteria of your customer. At this point, I am again met with resistance saying that they are all different. I once again counter with let’s just take empirical view of a well-known market segment or even if we have to a well-known customer who we would consider “typical.” I do not do this too intentionally classify a customer as average or typical but to establish a base line on how we respond to our customers’ needs.

With that being said, I next ask what the average deviation from the sales cycle is there and if there are common decision making steps that get added or subtracted when this happens. That highlights the variability and creates awareness on how little active management of the process is going on. Further discussion generates reasons for excessive wait times by both parties and considerable rework that we call “fine tuning”.

Why change this? In my experience, the longer the process the more likely the criteria will change as a result of other influences rather than the actual need changing. The length of time does not necessarily equate to a better choice. The choice is based on the conditions, the influencers, the knowledge and if the problem increases substantially. The objective is not to have the customer buy your product.

The objective is for the customer to make the best informed and knowledgeable decision possible. The fundamental goals of your sales cycle should be one of discovery, learning and adaptability with a shared responsibility for a successful outcome. Your ability to generate the required knowledge effectively and efficiently in your customer decision making process will ultimately make you the preferred supplier. The question of course is how do you do that?

In most cases, unless you have already mapped your process (Value Stream Mapping), you will have cycle times that are highly variable and more than likely long. Developing a more consistent pattern with less variability will allow sales teams and customers to develop a higher degree of trust in each other.

One way of reducing cycle time is to create faster feedback loops. First, take one of the stages of the customer decision making process and break it down into multiple loops or cycles. Prioritize the loops and define the work that needs to be done within the first cycle through the use of a user story. The result of this is that you generate fast feedback by offering the customer smaller parcels of information to see if you are on the correct path or gain buy-in of a smaller step of the process.

Early customer feedback results in a better focus on the problem. As a result less work is done on superfluous tasks and more work is done on the required objectives. Little waste is generated because the feedback is so quick that obvious deviations are discarded.

Faster feedback can result in increased quality. There are number of reasons for this. Shorter cycles result in better fit since the feedback can be gathered and applied frequently. Also, faster feedback means that the team can minimize the work required to meet the objectives. Less rework is required (you are constantly tweaking) and this is very advantageous when compared to large time consuming proposals that are many times generated.

Another advantage of this process is that you only do the iterations that are you are comfortable doing. You don’t have to start every task in order. The flexibility of being able to put off some decisions to the last possible moment does not distract from the overall objective. By doing other cycles first, you will have increased knowledge of the cycle that will add better definition to the most difficult tasks.

Putting order into your sales cycle you will find that most of the time spent before is waiting on decisions or task that others are doing. Wait time is significantly reduced because of the smaller cycles are much easier to complete and easier handoffs are created which may simplify the task of others.

Working on the basics, makes a difference. To improve your football team, you need to work on blocking and tackling. To improve your sales cycle, you need to work on your feedback loops.