Sales Process Excellence Submitted for Shingo Prize
Submission for Shingo Prize™ Research Award Application
(Sales Process Excellence, by Michael Webb)
My new book has not yet won the Shingo Prize. However, you might like reading the application. I say that because my answers to the questions in the Shingo Prize application do a good job of characterizing operational excellence. It is not about tools, of course, or about doing projects.
Operational excellence improves our ability to think more effectively. Here is the closing paragraph:
“Ultimately the ideas in Sales Process Excellence will make it easier for managers and executives to realize…”
“…that, far from being a set of arcane tools for production departments, the philosophy, principles, values and practices of operational excellence are crucially important for the well being of the individuals within their business, as well as for the productivity of the entire organization.”
Below is the entire application:
1) Describe how the submitted work either contributes new knowledge of operational excellence, or extends existing knowledge of operational excellence:
Sales and Marketing is Operational Excellence’s Missing Link
The Lean philosophy holds that for the enterprise to optimize value, work must flow across the organization, ignoring internal boundaries. Unfortunately, many organizations struggle to achieve this goal. Their operational excellence initiatives often begin with great anticipation, only to experience diminishing returns in a short time.
Why?
One reason is that operational excellence is too often defined in terms of tools and techniques, and this limits the amount of improvement possible within a company. Dr. Shingo recognized that business improvement comes from an understanding of the relationship between principles, systems, tools, and results. The Shingo Model(TM) has been valuable to companies because of its convincing explanation that “… achieving operational excellence requires people to ‘know why’ (i.e., an understanding of underlying principles).” (The Shingo Model, pg. 13.)
However, operational excellence initiatives also stall because they tend to focus mostly on manufacturing functions. With a few exceptions (such as health care) even most discussions of the Shingo Model continue to assume primarily a manufacturing context.
For work to flow across the organization, ignoring internal boundaries, sales and marketing must be involved. Sales and marketing also represents a huge portion of most companies’ operating costs. Yet operational excellence initiatives rarely focus there.
In most organizations, sales and marketing is disconnected from production in wasteful, frustrating ways. Likewise, while sales and marketing productivity and performance goals are often crucial strategic objectives, both cost of sales and return on sales investment (ROSI) remain among the most difficult financial measures to sustainably improve.
Why?
Why are compelling examples of sales and marketing improvement so rare in the literature? Why do so many companies fail to even measure sales and marketing productivity in useful ways?
Essentially, the reason for this dilemma is that principles, methods, tools, and case examples applicable to operational excellence in sales and marketing have been missing or underdeveloped—until now.
The goal of operational excellence in sales and marketing is not to replicate or imitate the tools applied in manufacturing. Rather it is to discover the nature of this unique environment in order to change and improve sales and marketing performance.
This enables people to see operational excellence for what it is: a system of values and principles essential for enabling individuals – and therefore the organizations they work in – to produce more value and less waste for customers, shareholders, and employees alike.
How Operational Excellence Changes and Improves Sales and Marketing Management
In his book, “Sales and Marketing the Six Sigma Way” (Kaplan 2006, 4.5 stars, 22 Amazon reviews), veteran salesperson and sales manager Michael Webb demonstrated that the scientific method could and should be applied to measure and improve sales and marketing work. More than 21,000 copies of the book were purchased, and hundreds of B2B companies have profitably applied its ideas.
After eight years of additional research and client work, Webb has written a new book providing valuable elaboration as well as several missing links. “Sales Process Excellence” is a systematic explanation of how operational excellence changes and improves sales and marketing management.
- Using dozens of case examples, the book demonstrates how value is created and made visible (and measurable) in marketing, selling, and servicing work. These examples illustrate what standard work looks like in sales, marketing, and service. They demonstrate how PDCA and formal problem solving improve upon traditional approaches to sales and marketing management.
- Value and waste are not readily visible in sales and marketing, but they can be made visible. Once they are made visible, experience has shown that marketers, sellers, and servicers more readily grasp and apply the principles of operational excellence in their functional areas.
- “Sales Process Excellence” stands as a unique contribution to the literature not only because it integrates operational excellence with sales and marketing, but also because it presents a robust model for managing change.
- Most importantly, the book makes a convincing and much-needed case to senior executives only that a principled, systemic approach to management and leadership can enable continuous, sustained improvement across the entire organization.
2) Describe the premise for the work being submitted:
Sales and Marketing is Different from Manufacturing
Manufacturing seeks to produce to the specification as efficiently as possible. Knowledge of “what the customer will pay for” is generally a given.
The goal of sales and marketing is fundamentally different. It seeks to get people you may never even meet to give you their attention, and ultimately their money. It often takes place in geographically dispersed customer locations or via some media such as a website. There is a huge variation in perceived value for the same product, in the same market, and marketers and salespeople often do not know what their prospects will pay for. Customer decision-making behavior cannot be controlled in the way machines and materials can be controlled.
In addition, very little useful operational data exists in sales and marketing environments.
Under these circumstances, how can sellers and marketers determine the best methods of doing their work? How can they decide if scarce resources should be spent on tradeshows, websites, brochures, distribution channels, sales training, or something else? Are base-hit product iterations adequate to achieve revenue growth goals? Or is a major change in direction required, and if so, what should it be? If a salesperson calls on a prospect for six months without winning an order, how does the company know if they have generated value or waste?
Clear answers to these questions must be found if operational excellence is to change and improve sales and marketing management.
The Missing Links Are Built on the “System of Profound Knowledge”
In his “System of Profound Knowledge,” Deming explained an organization’s ability improve in terms of the theories of variation, systems thinking, the method for learning, and psychology.
In “Sales Process Excellence,” Webb demonstrates that two of these principles, “Understanding Variation” and “Systems Thinking,” need to be clarified and extended.
Understanding Variation
Although Deming conceived “understanding variation” in terms of applied statistics, Webb points out that operational definitions are a prerequisite for gathering analyzable data. Unfortunately, the culture of sales and marketing has avoided operational definitions.
For example, it is common for various people within a company to apply their own definitions of basic terms such as “sales lead,” “qualified sales opportunity,” or even “customer.” The resulting inconsistency invisibly corrupts the effectiveness of language.
Further, there are variations among potential customers’ needs for a given product or service, and in their ability to understand their problems and influence decisions. Webb points out that these variations, captured by means of operational definitions, are the key to helping them buy, and to whether or not they will buy.
This is a major opportunity because marketers and sellers generally accept the need to qualify their prospects before trying to sell to them. They simply have never been asked or shown how to operationally define these attributes of sales quality. “Sales Process Excellence,” demonstrates that elevating the statistical mean of sales quality data increases productivity, and reducing variations in the data increases predictability.
In other words, operational definitions help marketers and sellers understand variations within their domain in the same statistical ways Deming intended in his concept of “understanding variation.” The resulting insights about customers are prerequisites for creating more value and less waste.
Systems Thinking
Optimizing a production system requires a clear and simple answer to the question, “What value does the system create?” So, consider: “What value does your sales process create?”
Obviously, this is a pregnant question. As it turns out, the answer is deceptively simple. Prospects and customers go through predictable stages in pursuing their goals. When they take an action you want them to take, value is created.
Salespeople have long understood they must gain their prospect’s attention, information, and trust if they are to have a chance of earning their prospect’s money. These actions are how prospects “pay” for your company’s marketing and selling activity. They are the “sales value stream,” also known as the “customer’s journey.” Anything that moves customers along their journey adds value. Anything that does not is waste.
This organizing principle clarifies what previously has been difficult to articulate: Market awareness, page views, leads, sales calls, face time, proposals, demonstrations, sample tests, data, or anything else are “good” only insofar as they can be shown to cause more of the right (operationally defined) prospects to take the steps you want them to take.
Don’t We Know This Already?
These statements may seem like common sense. However, when you realize that most marketing, selling, and servicing functions are not organized or measured this way, the power of doing so becomes apparent.
3) Explain the impact you anticipate this work will have on the body of knowledge of the practice of operational excellence:
“Sales Process Excellence” explains the missing principles that give meaning and value to sales and marketing work. It provides the missing systems for establishing order amid sales and marketing chaos. It demonstrates new tools and techniques that enable the sales production system to accomplish its very human purpose.
Businesses will be able to align their measures and their resources more effectively because the book provides:
- A treasury of selling examples which contrast with manufacturing examples, clarifying the underlying principles, and making them easier to grasp.
- A nuanced, data-driven perspective of what customers want, which is crucial to enabling people to understand why they need to do their work in specific ways.
- A robust model for managing change that is scalable from what happens between a salesperson’s ears all the way up to what happens in the strategic (annual hoshin) plan for the entire organization.
Sales Process Excellence will enhance the long-term survivability of those businesses who adopt it:
- Traditional Lean initiatives are prone to mistaking all or part of the organization’s research, engineering, and product development functions for fat, which can lead to loss of essential resources and, ultimately, to disaster. Sales Process Excellence provides the nuanced customer knowledge required for management to see when these resources are the muscles and bones of the business, instead of fat.
- Organizing customer-facing work around Sales Process Excellence enables the business to learn from every customer interaction, and to gravitate toward ever more genuine, actionable value for their customers.
- Sales Process Excellence improvements are difficult for competitors to copy, because the behaviors driving them come from deep within the minds of the people doing the work and become embedded in the culture of the organization. They cannot be replicated by superficial imitation or command and control edict.
Eventually the ideas in the book will:
- Motivate marketing, selling, and servicing departments to work together in more cross-functional, team-based ways. This will drive changes to job descriptions, performance measures, compensation plans, and the design of CRM software systems, among many other initiatives.
- Enable sales and marketing to readily utilize mathematical principles and applied statistics to reveal powerful forces at work in the market, and useful drivers of sales and marketing success.
- Provide the foundation for a more integrated, consistent body of knowledge, replacing the often vague abstractions that pass for “best practices” in sales and marketing and management education at many of today’s business schools.
Ultimately the ideas in Sales Process Excellence will make it easier for managers and executives to realize that, far from being a set of arcane tools for production departments, the philosophy, principles, values and practices of operational excellence are crucially important for the wellbeing of the individuals within their business, as well as for the productivity of the entire organization.
Executive Summary
This is the blurb on the jacket cover of the book, followed by comments from early readers:
Why are B2B sales and marketing problems so persistent? Why don’t digital and social marketing, lead generation, sales training, CRM systems, and even so-called sales process improve sales productivity and profit?
In Sales Process Excellence, Michael Webb traces sales and marketing problems to their root causes in traditional management methods, such as pushing product, setting quotas, and trying harder while doing the same things over again. He explains why these methods actually create barriers for leaders, and reveals an alternative that avoids them.
What’s the alternative? Sales process excellence. Drawing on years of experience with B2B sales managers, general managers, and process excellence leaders, Webb shows how you can engage your team to:
- Learn what customers want from your salespeople, your channels, and on your website
- Design your process to tell you who will buy, who won’t, and why
- Increase margins and accountability, while earning field salespeople’s cooperation and respect
- Synchronize marketing, sales, and service into a smooth production flow, and then accelerate it
- Use data you didn’t know you had to drive decisions that reliably grow your business
With nearly 40 case examples, Webb illustrates data-driven ways to motivate and guide sales and marketing teams with a precision approaching that of production operations.
In this book, you will learn how:
- A food packager doubled sales productivity, creating a new market where no one else could compete
- A water filter distributor revived its growth by moving salespeople from servicing dealers to selling to new customers through those dealers
- A paint supplier achieved its five year plan in four years by transforming itself from selling commodities to selling high-margin services
- A dozen other companies opened sales bottlenecks, developed new products, reduced waste, and increased deal flow.
Stop relying on wasteful promotions, undependable sales heroes, and management methods pitting people against one another. In this book you will learn proven principles for finding customer value and locking in profit in ways competitors can’t imitate, while increasing predictability and reducing business risks.
Comments from early readers:
“Sales Process Excellence” is the first book I’ve seen that combines deep insight into both sales and marketing AND the Lean management philosophy. Webb treats his topic thoroughly; the approaches he describes are valuable for any business. One of the best business books I have read in a long time.”
— Hank Bonnah, Operations Manager, Tubelite, Inc.
“One of the benefits of “Sales Process Excellence” is that sales teams on different levels and in completely different situations can implement the ideas. It doesn’t matter if it is a large sales force or a small one, a local or regional company compared to a global player, a new company working on establishing their footprint in the market, or an experienced and successful company who that wants to continue to improve process and profitability. There are applications for all included in the book, and opportunity for significant improvement and change. Thank you for continuing and refining the path begun with “Sales and Marketing the Six Sigma Way!”
— Tim Doot, Vice President of Sales and Marketing, Burr Oak Tool
“Although we had a great growth rate, we knew the time was fast approaching when our growth would be less sustainable and certainly less predictable. Mike started us on a sales excellence journey that didn’t change how we sell; but, revolutionized how we manage sales. The day I attended a sales meeting and listened to our professional sales team present data and pipelines and probability metrics, I knew our journey was going to be a success. And, it was!”
— Michael Madsen, President Aquion Corporation, Elk Grove Village, IL
“Thank you for following through with your promise to equip us with methods and models that have enabled us to start and continually improve our sales process improvements. We avoided big mistakes around measuring sales and marketing productivity. Most importantly, we have a method for improving that engages our complex multi-level sales organization. Your ideas and your new book have helped position us for even more success.”
— Randy DeSpain, Director of Quality & Process Excellence for Global Sales and Marketing, Danfoss Power Solutions
