Rich Piech | The Toyota Factory Floor Sales Secret
When independent consultant Rich Piech starts working with a company that’s struggling to scale up… he often finds that they have a fundamental flaw:
They’ve defined “sales” the wrong way.
This has a domino effect, impacting the whole company.
And, no, the sales department isn’t to blame, stresses Rich.
What is sales… really? And who should take part in figuring it out? Tune in for the answers, as well as…
- The 3 Ps that must work together or revenues stall
- Why you need “hunters” and “farmers” on your team
- How to approach change top-down and bottom-up
- The must-have you need to implement lasting growth
Michael Webb and Rich Piech Interview Transcript:
Automated: You’re listening to the Sales Process Excellence Podcast with Michael Webb.
Michael Webb: Hello. This is Michael Webb with the Sales Process Excellence Podcast. Some people concentrate on sales and marketing. Other people concentrate on data, evidence, and logic. In this podcast, we want to focus on the principles that enable people to pursue both. My guest today is Rich Piech, who’s an independent consultant in Boulder, Colorado. Welcome here, Rich.
Rich Piech: Thank you, Mike.
Michael Webb: Could you tell us a little about your background?
Rich Piech: Sure. I was trained as an electrical engineer, and I joined a company called Applied Materials in 1987, and for 28 years I was very fortunate to do a lot of different roles. Make a lot of mistakes, but at the end of those 28 years I was … had a business degree, worked in quite a few places. But most importantly, I got introduced my last few years to someone who was very well trained in executing Toyota production systems. And a combination of all those things, using Toyota production systems has sort of brought me to where I’m at now, doing my own thing.
Michael Webb: Okay and so a lot of that background, even though you were an engineer, was in sales and marketing, right?
Rich Piech: Huge.’95 I started in sales, so from ’95 until 2016 I … All my roles were customer facing. But from ’95 forward it had to do with sales, marketing, business development. A lot of it was … the majority of it was in that.
Michael Webb: Okay, so can you tell us who this guru was, and what when you first … what was the time when you first started to realize oh, this stuff could really apply and help us in sales?
Rich Piech: Well, it was before I learned about Toyota production systems, that was actually in 1999. I like to digest and read a lot of material and I was leaving the States to go do a three year stint in Singapore and I started reading about this guy Peter Senge and learning organizations. So that’s … ’99 is when I … so from ’87 until ’99 I was learning to make a lot of mistakes. ’99 is when I came across Mr. Peter Senge and learning organizations so that’s … that was my first taste of-
Michael Webb: Okay, and why did it seem so valuable to sales and marketing?
Rich Piech: Oh, what I found is most organizations are siloed when they get big. That was the case with the one that I helped grow and when you become siloed you really don’t understand other divisions perspectives. And are you really learning? So I just closed a 345 million dollar deal. That took me about six months and a lot of hard work and then I had to go execute it. And I was just soft from the company I worked for, how painful it was sometimes to get things done, and a lot of sales challenges or people think are sales problems, have nothing to do with sales and so they’re parts of the organization. So that was my ah-ha because I was living it.
Michael Webb: All right. All right. So, then what happened?
Rich Piech: Well, in Singapore I had to go, I went from closing a deal to becoming a general manager and then I had to go continue to lead sales and marketing for that customer, but I also had to do service and support. We had to process engineering support. So, now it’s, you know, this group of people, I had about 55-60 people, how are we working together and learning what works and what doesn’t work and that’s [inaudible 00:03:59] with the whole Peter Senge thing, sort of put me through three years in Singapore.
Michael Webb: Okay. So, you were just implementing it yourself from the book?
Rich Piech: Yeah, [inaudible 00:04:10] it’s a pretty thick book, but I was trying.
Michael Webb: Okay. So, then, let’s see. We met last year, probably about this time and you had retired from Applied Materials and you were looking for your next career. What is it that attracted you to doing the kind of consulting that you’re doing now?
Rich Piech: I left Applied in 2016 and probably from late 2016 until, let’s just say about a year, I started giving time back to the start-up community in Boulder, in Denver. I was just amazed at looking at all these wonderful ideas and how people are iterating and looking at how they are trying to start a business, but I was blown away on the lack of trying to have a systematic approach to go about their business because a lot of people have never scaled anything. So as I learned a lot about start-ups and all these different techniques of how they take an idea and test it and learn. I started giving inputs on how to scale and when it came to sales and marketing, I just naturally sort of fell into the Senge thing.
There are some simple things you can do because I’ve got gray hair and if I can help you great and after I did that for about a year, I said why don’t I just try to get people to pay me money for it. So, I started a company. There you go.
Michael Webb: All right. So, what are some of the principles, the way you think about it, the principles that are most applicable and can you tell us a story or two about how they created ah-ha’s or great results for the people that you worked with.
Rich Piech: Well, I’ll share my three P’s and my top five. So, my three P’s are when I look at any organization, I don’t care if it’s the Boy Scout’s, a church, a company that is trying to make revenue, or a non-profit. It comes down to three things: the people, the product, and the processes they have. So I’ve learned myself and demonstrated if you focus on process and systems, you can figure out if you’ve got a people or a product problem. That’s sort of my core. Then, based on the things I’ve learned, especially a lot of it from Senge, Deming, Toyota, I call my top five. My top five come down to these. Number one is communication. Number two are things clearly defined. Number three are things extremely visible and measurable. Number fou, all about waste. Are you really doing something that adds value? Number five is Peter Senge’s: How does the organization learn?
Everything I approach, I just look in those five areas. Typically, well not typically, every customer I’ve worked with and the startups that I’ve mentored one to all five of those things are things that they need to improve so they can start to scale.
Michael Webb: So what’s a typical first issue or problem that needs to get identified?
Rich Piech: Just getting people to agree on what the problem is. So what I do, which you are well aware of, you were on one of my five day adventures is I do something that is over the course of five sessions or five days where you get a cross-functional team to start articulating the challenges they have. And just the very first day we get them to articulate items, group them to common areas which are called an affinity map, to a simple little cause and effect diagram. At the end of the day their information, which is on post its, which comes from cross-functional, which is extremely important. Not just sales and marketing, but the executives, sales, marketing, product development, operations, finance, even legal if we want them in the room.
When you look at everybody else’s perspective, especially where someone is making an assumption that someone else didn’t know about. It’s amazing at how people just go “Wow.” So yeah, that’s probably where you should start. Now, it’s not the root cause, it’s just where they should start going deep to look at root cause and seeing what they can fix. So just that one day. I’ve done it with many customers.
Michael Webb: Well, that’s very un-salesperson like behavior, isn’t it?
Rich Piech: It depends on how you define sales. So, for me, it’s a… What would you call it? I’m a systems guy who loves sales because sales is about fixing problems. It’s not about positioning products. So, if you really want to fix a customer’s problem to see if you can sell them something, then you learn how to listen, you learn how to look at different aspects of their business, especially if it’s a complex sale. If you start solving different peoples’ problems in the business, you can go back to the business and say, “Wow, five people are part of this decision and I’m fixing problems for all of you. Maybe I can sell you something.”
So, that’s how I define sales and it’s getting the details from them and what the problem is and the impact.
Michael Webb: Interesting. So, Rich, you mentioned this five days that you work with clients. That’s interesting. Can you tell us how does that lay out? What do you do on each of those days?
Rich Piech: Sure. I can do a one day, two day, or a five day. So let’s assume I do a five day. The first day of the five day is the same as the one day. It’s just getting that cross-functional team together and having them articulate challenges that they have in their business, and a big part of that is acknowledging that they want to be somewhere else in the future, future state. That’s right out of Toyota. And when you get people writing things on post-it’s and not talking about it, but just writing it and putting it on the wall and then they talk about it. It’s amazing how much people discover they didn’t know about their company. And we just group that into affinity maps, do a little cause and effect, but throughout the course of the day it’s getting people to trust each other, to articulate what’s on their mind. Then, by the end of that day, whether it’s the one day or the first day of the five, they have a pretty clear picture where they need to go focus. That’s day one.
If I did a two day, I would do a similar exercise, but instead of having a cross-functional team in one room, I would just go around their organization and do it more one on one with some assessment of the current distance. But if they wanted to do the full five day, basically the first and last day are the same. One is what I told you it would be with the affinity maps. Day five is how do they manage all of this. How do you put this all together and roll it up and manage it? Something very visual. Then days two, three, and four, it’s all about the different stages of a customer’s life cycle. And there’s you’re finding customers, you’re winning customers, and you’re keeping customers. What a lot of companies don’t realize is to manage that life cycle, you typically need to segment the work and segment it between different roles and different departments.
So, typically, the finding, that’s more marketing, talking about your total available market, what is your personas that you’re selling to, the problems that you’re selling, the value you give them. Finding is all about who do we go after. The winning customers, that’s how do you go and close new deals. So, I usually call those from a sales perspective, those are your hunters, ones who like to win and move on. Then the keeping is more around account management. I call those the farmers, who are the people that retain your customers and serve them. Day two, three, and four is all about how do you do it today, where do you see issues in that, and how can you identify areas to improve. That’s the five days.
Michael Webb: Okay.
Rich Piech: And I, you know, it’s just… I’m a firm believer in stealing what I can. So, it’s a great book called Steal like an Artist, I think, by Ryan Holiday. I forgot the book, but, many of the things that I do and other people like yourself are well-documented in many places. It’s taking what works and using it. So, there’s a guy I’m talking to right now, Michael Webb, he’s got a great book and I stole great stuff from him. There’s a guy in Italy that I work with Paolo Bertoni. He had applied, he came from Johnson’s Control. I stole bits and pieces from Toyota Production Systems. If I used Jeff Thull’s Managing Complex Sales, one of the best books on how do you risk manage complex sales. I read a lot. I test things. I just try to apply things in a very pragmatic way. So customers can fire me any day.
So, day one, you don’t get your value, don’t pay me. You like what you had? Okay, let’s go to day two. I’m very, very cut and dry,
Michael Webb: So, I know it’s hard for members of the audience to like think in these process step terms. Can you give us a client example, the pains the client was struggling with and the transformation that they went through.
Rich Piech: I got a customer right now, Grower’s Organic, which is on my website. That was the first customer I did the five day thing with because I was turned around with the idea of-
Michael Webb: Yeah, you had me help you with that one, right?
Rich Piech: And, it was a very interesting there, very typical things, back to communication. Have things clearly defined. Are they visible and measurable? Those top five things I talked about are very common for a business. Most businesses that are below 25 million dollars, they’re running and they’re not sitting back and looking at these things. So, one of the tools I use all the time is called the Value Stream Map and one of the things that came out is they thought they had to get all these new sales, but after that first day [inaudible 00:15:18] we didn’t find anybody in keeping. The second day we went into keeping, we found out their account managers, their farmers were spending a huge amount of time on RMA’s. They weren’t even selling and it was visible.
Michael Webb: RMA? Return Material Authorization, right?
Rich Piech: That’s right. Product is getting returned. And sales as running around trying to deal with that. They weren’t selling to customers. Just changing that and giving it to another department, within 45 days their run rate with up, I think 30 or 45%, within 45 days … generating revenue. Because sales was not doing a sales job, they were getting stuck doing something else.
Michael Webb: A lot of companies they find something they can fix and then they go try and implement that and things go back to the way they were after 45 days. And we didn’t have that at Grower’s Organic because we took this sort of different approach, right? We got the people who were doing the work to participate in identifying the problems and coming up with ways of solving it. And that sort of was … It was new experience for them, wasn’t it?
Rich Piech: Sure, absolutely.
Michael Webb: And so, tell us about that.
Rich Piech: About how we got them to think different?
Michael Webb: Yeah, and what it caused them to do. I mean they changed their job descriptions on their own, they worked together to figure out who is going to do what. And that was something that they had had a lot of difficulty with earlier.
Rich Piech: Yeah. Well, actually when we got done they had four sales people when we started and one left a week later because one of the exercises I do, and I stole this from Gino Wickman’s book called Traction. It’s called an accountability chart. So we made an accountability chart. And we made it very clear who does what. And within a week I had someone resign, and the CEO thanked me because he said that person would have left on their own, but it would have taken a lot longer. So an accountability chart is one of the things we did.
I did a customer qualification metric on how do they define if they even want to call on a customer. We introduced call plans. If you’re going to go talk to a new customer, do something strategic, how do you spend the time to prepare for that. There’s loads of things that we did. They took bits and pieces and started implementing it. But they just did it in a more aligned way. They had a method on how to redefine processes and how to think completely different on what a system is.
Michael Webb: And so what are the behaviors would you say that they’ve incorporated into how they manage themselves that are like hallmarks of the Toyota production system?
Rich Piech: [com bond 00:18:21]. They never saw com bond boarding until I showed up and now everybody in every office has a com bond board.
Michael Webb: And 30 second description of a con bond board.
Rich Piech: Visualization of the work that you want to do. So you’ve got the backlog, you’ve got the work that you’re working on, work in progress, you’ve got pending, and you’ve got things that are complete. And what you do is you spend 15 minutes a day aligned onto who is doing what. And you typically only have people work on up to three things max and finish those before they take something from the backlog and work on it. Or if it goes to pending, they can move it to pending and then pull something else. [crosstalk 00:19:04]
Michael Webb: And where is the magic? What’s the magic?
Rich Piech: There’s three things. Number one is aligning on what has to be done. Number two, aligning on who has to do it. And number three, aligning on the priority. And if you meet every day, you can’t say a week later, “This didn’t get done.” The next day you say, “Well, I’m still working on it.” “Okay. Get it done. What issues are you facing? How can we help you to get that fixed?” It’s really about getting the group to move as a whole at the same pace, not having people sprinting in different directions.
Michael Webb: Well, and it’s about making problems visible, right?, so that they can be dealt with immediately.
Rich Piech: That’s my … I said the thing, number one was communication. Number two was either [00:20:18] clearly defined, and number three was very visible and very measurable. A com bond board is extremely visible. Extremely measurable.
Michael Webb: It seem so obvious when you talk about it, but I have never in my career heard of a sales department that thought anything close to, or did anything close to thinking like that.
Rich Piech: Most of them are taught … I think one of the challenges is the industry. It’s a 20 billion dollars in the United States alone in sales training. And sales training is technically methodology on how do you go and handle a customer. Right? Maybe a little bit of how you prepare, but really how do you deal with customers, which is extremely important. Extremely important. But systems and processes, that’s a whole different ball of wax. So I typically work with people on systems and process first. And then once they’ve got something that’s working they can pick of methodology that they want their people as individuals to learn and to grow and how to deal with the clients.
But systems and processes is boring. It takes time. I could send somebody some training once a year, the box is done. So it’s just habit. It’s easy. It’s big money. It’s 20 billion. It’s not bad.
Michael Webb: Well, and this com bond idea. You’re really helping customers through their customer journeys individual by individual, customer by customer. That’s what the sales people are handling. And increasingly, I think, in today’s world some of that gets handled on the internet. Some of it is handled in software. Not all of it is done by hand, via the sales people, which means other people in the company besides the sales people have to begin thinking like sales people.
Rich Piech: So to your point, one of the best books I’ve seen on this is from Jeanne Bliss. She’s out of Austin, Texas. It’s called Customer Experience Officer 2.0., and she’s all about how do you clearly define the customer journey as a company the way you want it. And you clearly define, and if you look at a customer life cycle, all right, it’s how do they know they have a problem? How do they even become aware that they even have a problem? They become aware of you. How do they analyze their different options? How do they decide [inaudible 00:22:41]? What was it like to be on-boarded?
For her, if you map that out as a company, and you might have different journeys for different products and services, but then you are maniacally focused on that customer journey and you get all those different department to clearly define what they do in each stage, which is exactly what you’re talking about. It could be somebody in marketing that’s doing a digital marketing campaign on HubSpot to get attention, to come to you. So Jeanne Bliss’s book is one of the best I’ve read on getting the company aligned on that. And sales is only one part of it. There’s all these other parts.
And until the customer starts referring you business, that’s when you’ve reached utopia. Because not only they come back, but they bring you more customers.
Michael Webb: Right. So speaking of books, I know that you’re familiar with The Machine by Justin Roff-Marsh. And he has a really nice depiction of the stages of a sales process that he breaks down. And I’m guessing that must be similar to this Customer Experience 2.0?
Rich Piech: Similar. But what’s interesting about Justin … If you ever read the book The Goal, what’s the gentleman’s name that? E.L. something, right?, who wrote The Goal.
Michael Webb: Goldratt.
Rich Piech: Goldratt. E.L. Goldratt.
Michael Webb: So what Justin does, which is great …
Rich Piech: But I think there’s quite a few things that many authors miss. That’s why I read things. He’s all about identifying the bottleneck. And he uses Goldratt’s theory of constraints, which is fantastic. But I don’t see Justin talking about the other parts of the organization. Extremely sales focused. Here’s the numbers. Here’s what we do. Talks a little bit about support. But I think if you read Justin’s book, maybe first read The Goal on theory on constraints, read his book on identifying it, take a look at Jeanne’s book. You could even read Aaron Ross’s book on how you can do Cold Calling 2.0. There’s a lot of bits and pieces. I mentioned earlier Managing the Complex Sale.
To me there’s many layers. That if you start digging deep, what do you take out of the nugget? And for Justin, he hit it spot on for theory of constraints and how do you measure that and quantify it. So I think he’s very good at that.
Michael Webb: And by the same token, I agree with you, there’s some challenges in what he has presented there. Because he doesn’t talk about how to get the organization to comply. It’s sort of like, “Okay, we know what it should be so we’re just going to inject this change and expect people to comply.” He even says in the book that he has trouble, clients have a lot of trouble implementing.
I’ve talked to a bunch of companies where the process excellence departments are really, really good at thinking through and implementing the theory of constraints. And, lo and behold, the process excellence department’s biggest problem is a year after they complete the projects, things have gone back to the way they were before.
Rich Piech: Yeah. So that’s why I’m looking right now at a customer type. And to me one of the best people on change management is Mr. Cotter. And he has an eight step process. And I have it right here on the board for my clients. And number one is establish a sense of urgency. This has to be important. Number two: Create a guiding coalition that is empowered to make change. Number three: Develop a vision and strategy. Number four: Communicating the changed vision. Number five: Empowering broad-based action. Number six: where I think is the most important, is Generating Short Term Win. Everybody needs to see a bunch of little steps. Number seven: Consolidating gains and producing more. Number eight: Anchoring new approaches in the culture. So I think if you were to take a look at Justin’s book and then read Cotter’s, you can see how you can start proposing change in a way that has tops down and bottoms up.
Michael Webb: Yeah. Well, easier said than done. But it’s certainly is interesting and companies – They certainly need it. You know, one of the things that I’ve started to do in my podcast here. Originally it was aimed at management. But I had a fellow from Italy say, “I’m a sales guy. I’ve read your books, Mike. And I’ve used it to help me sell. I might have a story you could benefit from.” And so I decided to open up the people that I interview to include sales people. Because often from their point of view, not only can they see possibilities for applying this logic and this way of thinking about things. But they can also see what’s good about how the organization functions and what’s bad about how the organization functions.
And executives need to hear all that. They need to be able to pick that up. The faint little signals they might hear from some place in their organization, they need to be able to hear it and recognize that changes could come from unexpected individuals.
Rich Piech: Yeah, I call it getting out of your echo chamber. So I find a very similar situation to really big companies and startup companies. And I call it the echo chamber. The echo chamber is very simple. Just imagine if you were in an old well. It’s made of stone and there’s a little bucket with a rope. And for startup teams I say, “Okay, here’s the three founders. They get on this bucket and they go all the way down to the bottom of the well. And what they don’t realize is that they’re in a well. And everything they say they think is a fantastic idea because all they hear is what they’re saying.”
So I use the same analogy for big companies because sometimes the executives on top are buffered from reality. So I just call it the echo chamber. You can get out and listen to reality and different perspectives, or you can just hear what you think sounds good. And a lot of it’s not intentional. It’s amazing as organizations get bigger and systems get more complex, sometimes you’re got to go out of your way to bring back a learning organization to the culture.
Michael Webb: Yeah. Improvement cannot happen without an explicit method of making it happen.
Rich Piech: Yep.
Michael Webb: Super. So we’ve been talking for a long time here. I really appreciate your interest and support here. How can our audience members get a hold of you? And do you have any recommendations for them? How can they contact you?
Rich Piech: Oh, it’s easy. You can go to www.saleschefs.com. You can contact me there. It’s my website.
Michael Webb: S-A-L-E-S-C-H-E-F-S. Is that right?
Rich Piech: Yep. Sales, like a cooking chef. Saleschefs.com. And they could read your book. You’ve got a good book. There’s loads of books to read. I’m just a big believer in trying to read as much as you can, and take one, or two, three things out that you think works and test it. I’ve just been doing it for a while. I was fortunate. I had a lot of different roles in a big company. So I saw what it meant not to have cross-functional team work together. And I just had this guy in Italy, Paolo [inaudible 00:30:41]. Sat up one day and I went, “Wow, that’s sort of cool. Toyota. Production system.” So I steal a lot of things from that.
Michael Webb: Super. All right. So thank you very much. And we’ll have to do this again sometime.
Rich Piech: Thank you.
Automated: This Sales Process Excellence Podcast is sponsored by Sales Performance Consultants. Discover how to improve your B to B sales with systems thinking at salesperformance.com.