Extending Lean into the Enterprise

Hello,

If you’ve been in sales for any length of time, you may have the sense that “there must be a better way.”

I know I did when I first became a salesperson (the business forms industry back in the late 1970s).

We were taught the mantra of “the numbers game” … that the more activity we could produce (e.g., sales presentations), the more successful we would be.

Every order had dozens of custom details and a deadline. The plant made mistakes, we made mistakes, rework and concessions (price reductions) were rampant. Sales quotas were relentless. Our job was to make our quota regardless of the obstacles.

If you complained about the obstacles, of course, you were a whiner. What was really weird was that going “outside the lines” of your job to change or avoid those obstacles was also against the rules!

The culture did not understand processes, much less process improvement.

Years later, seeing the accomplishments of the quality movement, the Theory of Constraints, Six Sigma, Lean, etc., I recognized that these ideas could be applied outside the plant floor. I just needed to figure out how.

In the beginning, I instinctively knew there was something wrong with “the numbers game.” Now, thirty years later, the realization that Lean and process thinking can and do apply outside the plant floor is just starting to become mainstream. A quote comes to mind: “Logic may be slow yeast but it works incessantly” (Vermont Royster).

The cover story in Managing Automation Magazine this month is entitled “Extending Lean to the Enterprise.” In the article, Managing Editor Jeffry Moad describes Lean’s influence on the supply chain, on new product development, and, yes, on sales and marketing. He interviewed my client, David DeSantis, President of Maquet Inc., for that part of the story.

In every one of these places, a critical ingredient of success is in gaining the cooperation of the people involved … “changing the culture.”  And, in every case, progress is being made.

The entire article is well worth the read. For this week’s newsletter, I have excerpted the last third of the piece, which tells the sales and marketing story.

I hope you enjoy it.

Until next week.

Michael Webb
February 12, 2008
www.salesperformance.com

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The excerpt below has been reprinted with permission from Managing Automation Magazine.

Extending Lean into the Enterprise

By Jeffry Moad, Managing Editor, Managing Automation Magazine

The excerpt below is reprinted with permission. It is only the portion dealing with applying Lean thinking to sales and marketing. You can read the entire article by visiting http://tinyurl.com/2lmrmd.

Sold on Lean
… the idea of applying lean to sales and marketing might appear at first glance to be a complete non sequitur. Not only are sales processes discontinuous and difficult to visualize, but also, at many companies, they are largely undocumented. In fact, experts say, many sales professionals believe they are not accountable for the process, only the results.

Still, some experts suggest lean can help to remove waste from selling and marketing processes and to gain better visibility into the sales pipeline. And that can give lean plants a much better understanding of demand.

To be sure, the cultural challenges involved in introducing concepts such as standard work and process metrics into a sales organization can be great. But, says Michael Webb, president of Sales Performance Consultants Inc., the potential benefits are significant. “The potential in applying lean to sales and marketing is greater than in manufacturing,” says Webb, who has written about the application of continuous improvement methods to sales and marketing processes. “If you use lean to improve plant floor efficiency by 30%, you’ve reduced a portion of your operating costs. But if you can use it to increase sales by 30%, that benefit goes right to the bottom line.”

First, however, manufacturers attempting to apply lean to sales and marketing need to think differently about it, Webb says. On the plant floor, lean is about removing waste from processes involved in transforming materials into finished products. In sales, he says, it’s about getting more efficient at moving customers or potential customers through a process that ideally ends up in a sale. Though most sales organizations focus on the end results—generating the sale—lean practitioners should focus on understanding and improving the process.

In other words, lean organizations should map the sales process to understand the stages that customers pass through on their way to signing a purchase order. Sales leads then can be viewed as the sales organization’s inventory. With a clear understanding of all the steps in the customer’s buying journey and where each lead is on that journey, Webb says, organizations can measure and continuously improve their performance.

“Most companies have no ability to measure or track the conversion of inventory—leads—into sales,” Webb says. “They have no operating definition for what a lead is and no clear way to qualify or assess leads. For them, a lead is anybody who might buy something. You should be able to measure and improve the close ratio of properly qualified lead opportunities.”

Two years ago, David DeSantis, president of Maquet Inc., decided to give Webb’s ideas about applying lean to sales and marketing a try. Although Maquet, the sales, service, and marketing unit of medical equipment manufacturer Maquet GmbH & Co., was growing at a healthy clip of more than 20% per year, DeSantis wanted to improve sales efficiency. “We didn’t want to go down the road of adding people in a linear fashion to enable growth,” he says. “So we decided to change the business.”

With Webb’s help, Maquet mapped the typical customer’s buying journey, identifying key steps along the way. Maquet also identified the key triggers or conditions that moved leads from stage to stage. With those characteristics of the selling process nailed down, Maquet could assess the quality of each lead in terms of how far along the buying journey it was and how likely it was to go further. Maquet created a standard questionnaire for salespeople to use to assess, qualify, and score all leads.

“We were then able to see how the scores added up, and do things like regression analysis based on the number of deals won and lost,” DeSantis says. “We were able to further identify those questions that were most likely to give us insight into whether a deal would be likely to close.”

Not surprisingly, not all Maquet salespeople bought into the new methodology. DeSantis tried to head off resistance by not calling the improvement program a lean initiative. “That had connotations of cost-cutting,” he says. Instead, he called the program “evidence-based selling.” Ultimately, however, some sales managers and reps continued to feel threatened by the program; they believed the information they were asked to document was theirs and that sharing it made them more expendable. While most have accepted the program, some who didn’t were replaced, DeSantis says.

Through its transition to lean selling, Maquet has continued to enjoy 20%-plus growth. It’s difficult to say whether that can be attributed to the lean approach to selling or to continued strength in the company’s markets, DeSantis says. But he is sure that Maquet and its parent company now have clearer visibility into the quality of the sales pipeline. “Right now we are reducing variation,” he says. “We still haven’t determined if the mean has moved because of the new things we are doing.”

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How to Turn Your Sales and Marketing
Into a Lean Six Sigma Production Machine
That Runs Like Clockwork
(And Do It in a Way
Your Salespeople Will Love!)
https://salesperformance.com/ExecBriefing.aspx
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