Steve Hollingsworth | The Systems Thinking Approach to Business Problems

 

When things are going wrong in a business, it’s the tendency of many managers and owners to blame employees. But, says Steve Hollingsworth, principal consultant at Ottimizzi, you should focus on the processes and needed changes there, not the people stuck working in those processes.

This is especially true in sales and marketing – the lifeblood of any business.

By collecting the right data, getting feedback from those involved, and making employees part of the solution, you’ll not only improve individual processes but also create a culture of continuous improvement.

Steve and I dive deep into this topic during the interview, covering…

• How to eliminate friction between your company’s departments
• The role of systems thinking in sales and marketing
• Strategies for overcoming “Initiative Fatigue”
• Ways to get buy-in from employees to create momentous change
• And more

Listen now.

Episode Transcript:

Operator: You’re listening to The Sales Process Excellence Podcast with Michael Webb.

Michael: Hello, this is Michael Webb.

Some people talk out selling processes like qualification and selling to senior level decision makers, and other people talk about process tools and systems thinking and data and measurement, but not many people talk about how these things can come together to motivate people and that’s what we want to talk about in this podcast.

My guest is Steve Hollingsworth. Steve, we’ve known each other for about a year now I think, and had a whole bunch of conversations. Please tell my audience a little bit about your background.

Steve: Sure. Hi, Michael, and thanks for having me on your show here. Yeah, we’ve known each other for about a year now. It’s been great collaborating with you. So a little bit about my background is I’m the principal for a consulting company called Ottimizzi and that company focuses on sales and marketing, effectiveness projects for mainly mid-market and some large cap, B2B selling organizations. I’ve been doing that for about 10 years now. Prior to that, I was a sales leader for a couple of B2B selling organizations and kind of used that basket of experience to set upon this career as a consultant.

Michael: Super. Not all sales guys get interested in process thinking. What got you started going in that direction?

Steve: I had a great fortune of working for a gentleman back at America Online named Richard Rasmus and this would have been, oh, in the early 2000s and Richard was a COO by trade, and we found ourselves in the same organization at AOL focused on the Broadband market. And being steeped in continuous improvement, Rich wanted to bring that thinking into the commercial organization there, and put out to the commercial organizations an opportunity to identify a project that could be used for Six Sigma efforts. And my project was selected, and as part of that project I was able to go through the training and get some experience in applying systems thinking to a business problem. Where you a, kind of an unknown root cause and you had to go gather data and experiment and come up with a solution to test the solution. And it was … the project ended up being a terrific success and a great learning experience for me and that kind of got me on this path in terms of applying systems thinking, this continuous approach to the commercial functions in sales and marketing.

Michael: Okay super. For a time as I understand you were also … a part of your consulting practice involved some sales training. Some Miller and Heiman if I’m not mistaken. So how did that process thinking experience that you have, how did that affect your sales training consult?

Steve: Yeah, so the Miller Heiman group as you know, most of your readers and listeners will probably know, has a large basket of really strong intellectual property in the area of sales training, and a lot of methodology that I would consider a great standard work methodology for the different functions within a selling system, creating opportunities, managing opportunities, managing relationships, so as part of applied systems thinking you always want a method, or standard model that you can then compare to help identify those undesirable results you’re getting. So it’s very compatible. I found it very compatible. And you know, with the other principle of, of you know, making the system visible so that you can measure having a standard methodology for the way you do your work in sales gives you, it helps you make the system visible. It give you things that you can then see during the process that could kind of coach or correct. I found it a very good match.

Michael: And so to sales managers and sales people themselves, what do you think are the key ideas or principles from process thinking and Six Sigma and the like that can make your life better, that can really help them?

Steve: Well there’s a couple that I think are just profound and it’s that important but unurgent part of your job.

Michael: Yeah.

Steve: There’s managers and leaders we need to focus on. One is focus on quality over quantity. In lean operations there’s a huge focus on doing it right versus doing it faster and a mistake a lot of sales organizations make is thinking they can work harder and work their way out of a problem. Really it’s the process that needs to be fixed so focusing on quality and not quantity. Also focusing on the processes and not the people who are stuck working in those processes. Often times we reward and punish people for the outcomes of the system that we set up, and it’s really the system that deserves some of that attention, in addition to the people.

Michael: Yeah, I remember having a discussion with a VP of sales of about an 80 million dollar manufacturer of respirators a number of years ago, and he was okay with thinking about processes, but he said to me “We in the sales team, if we improve ourselves only, then it’s not going to come through to the rest of the organization. The rest of the organization has to improve with us.” And that’s what he was most afraid of. That the sales process would hold him accountable and the rest of the organization wouldn’t move along with him and make compatible changes. Have you seen that before, too?

Steve: I think there’s always this friction between the siloed departments in an organization, sales and operation, sales and marketing, and those reservations are normal and we all have them when we’re sitting in those seats. I find that having good process and having good data take some of the emotion out of some of those conversations, some of those interactions. It gives you the ability to be a little bit more pragmatic in a discussion and so I haven’t encountered a fear of being accountable while others aren’t, as much as just a desire to be on the same team, eliminate some of the friction between work and between departments.

Michael: Right. I mean that’s the point of a lot of process improvement is to identify that friction, because friction is waste. Right?

Steve: Yes.

Michael: Find a way to eliminate it and it’s remarkably difficult to do. Unless you have some of these frameworks, these sort of like you said, profound ideas like systems thinking, like root cause analysis. What are some of the other ones that you think are key to helping that communication take place across departments so the friction can be reduced?

Steve: Great question. I’m not sure if this is center of what you’re asking but the other principles that I think are important to the work is will it make the system visible and the value stream mapping piece of it.

Michael: Right.

Steve: Right. That helps to get to you know, that common understanding that’s, that leaves the emotion at the side.

Michael: So let me ask you this question because I know in talking, having been in the sales training industry for a number of years myself, I got a little frustrated because in the sales training industry they have a tendency to think about a process as a sequence. It’s merely a sequence. Do the work in this particular way, you know, with excellence, and follow this set of steps and everything will be better. But a process has feedback and depending on that feedback you will have to respond and do things differently, the organization, not just the salesperson may need to respond and do things differently. I don’t know what your experience was in the sales training industry, but for me that was something that they didn’t … that was like above the pay grade. That’s not what we do. We teach salespeople how to use these skills and be the best that they can be and that’s it. Did you have a similar experience?

Steve: Well I can tell you that a lot of the philosophy behind the Heiman methodologies is, isn’t that, of that mindset. It isn’t hey we’re going to follow these 17 steps and we’re going to have success or these 12 closing techniques. So I’ve always had an aversion to that. In, you know, there’s this great cartoon that I used to put in the front of some of our playbook design sessions and it was a salesman standing over top of the purchasing manager’s desk, and the purchasing manager was trying to hand him a PO and the salesperson says “No I’m sorry Mr. Purchasing Manager. I cannot accept your PO. I’m only on step 12 of my 17 step [inaudible 00:10:59]

Michael: [crosstalk 00:10:59] Yeah. Right, exactly.

Steve: And so yeah, that’s the thing we want to avoid. What I find really helpful is understanding that there’s actually two processes happening at the same time. There’s a selling process and there’s a buying process. Both are happening at the same time and they’re not always in alignment, and what’s going on in both of those processes isn’t necessarily linear. But the more we can you know, understand that buyer’s journey, and then try to align our selling process to that buyer’s journey, the easier it’s going to be. And to me it’s all around making it really, making it really easy for the buying, the buying influences that the client, and these complex B2B sales there’s often multiple buying influences, just making this decision as easy as possible for them. And the way you do that is really understanding that buyer’s journey, that process.

Michael: Mm-hmm (affirmative). And it’s more than just the salesperson that has to understand and respond to that buyer’s journey. Would you agree?

Steve: Yes, yeah the salesperson is the tip of the spear that’s often in front of the buyer. But the entire organization needs to be tuned into the buying process and aligning to it, so our engineering resources, our S&OP process, our supply chain …

Michael: [crosstalk 00:12:38] Yeah S&OP. Could you speak about what S&OP is?

Steve: Yeah, I’m sorry. It’s sales and operational planning process. It’s how we get together and provide a forecast to the manufacturing side of our house so that the demand planning can happen.

Michael: Yeah, okay. Not to mention marketing, right? Product development.

Steve: Yeah, marketing has multiple roles. You know, the modern marketing organization really a huge role to play in the buying process because with the availability of information today, the modern buyer does a lot of the discovering and learning parts of their buying journey without the aid of a salesperson, and without inviting that salesperson in. So marketing really is in the lead chair of the early stages of the buying process and they need to provide content, they gotta be measuring the engagement of those buying influences. They have to have really tight processes with sales in terms of lead qualification, lead handoff, the feedback loop from sales in terms of the quality of leads, and the ultimate return on investment for that demand creation work.

Michael: And as, I mean you recently were involved in engagement. I know because we worked on it together, where you had to take a team including the president of a company, and get them all sort of on the same wavelength with this whole concept, right? Can you tell us what was, what was kind of the state of that business before this engagement? And then we’ll talk about you know, what the challenges were in getting them to the, to where we wanted them to go.

Steve: Yeah, for sure. So the client you’re referring to is a large manufacturer in the Midwest. A really fantastic company with a fantastic culture and they have, for 10 years been building a really strong competency in lean manufacturing, lean operations. And they internally call it their transformation organization. And they’ve embedded transformation into their business units. And as part of that process they use you know, value stream analysis as part of their annual strategic planning process, and they had ambitions to do it at the business unit level, so not just for the plants and the operations, but for the commercial functions. To do that we really had to get a lot of folks in the sales and marketing organization that were not used to thinking about their functions in a systems way, engaged in that systems thinking.

So you know, Michael this is where your work was just invaluable help to us to get this started. We looked at some of the tools that you have and that you talk about in your books and we took everybody through an immersion of events where we were able to apply that, we were really able to apply that systems thinking and talk about that in whatever detail you like but that was really impactful for the group. It really primed them for the work in front of them around you know, really, really, having the data, drive where we put our effort versus our gut feel.

Michael: Give us some examples of how some of these people felt before going into that two day workshop. I mean, what were their assumptions and maybe some of their frustrations, because it wasn’t, not all of them were excited to be there as I recall.

Steve: No, no and there was, there was a lot of the normal frustration you’ll see in any sales organization around. Priority of role and purpose around, the frustration around not making numbers, and there was a lot of activity or action that had been done by leadership in the last couple of years that really didn’t have much of an impact. So there’s a little bit of initiative fatigue if you will and we tried a new comp plan, we rolled out a new system, and we’re still getting the same results. What’s wrong? Do we have the wrong people? Right?

Michael: Right.

Steve: And being able to unwind that and show through a brilliant way of making that point through the intellectual property you brought in …

Michael: [crosstalk 00:17:43] You talked about the sales process improvement game.

Steve: Yeah, the sales process improvement game is a way of just demonstrating that the traditional kind of gut feel changes, the risk in using that as your strategy versus really focusing on the feedback from the system, what the system is telling you. And that sales process improvement game is part of our immersion event. It really primed people for the work that was in front of us, and it set the stage for the data that, the data collection that needed to happen in order for us to make informed decisions around what we do.

Michael: Right.

Steve: It was hugely impactful.

Michael: Well, and so before we started you had put, others on your team had put a lot of energy into an agenda that was going to kind of introduce some of these process concepts and I kind of talked you into you know, wait a second here, let’s try this game because we don’t have to teach them anything. They can teach themselves. We give them a simulation environment where they actually have to sell something and then take data from that environment to figure out why can’t we sell. How do we improve it? And so the end result of that was the team was able to then, after that exercise, they were able to use the things that they learned to more clearly define the problems they were trying to solve. Right? We had walls filled with sticky notes, and did cause and effect diagrams. Can you describe what some of the people said as they were going through that, or what some of the realizations were?

Steve: Yeah, yeah one of the big lessons for this client and for me too in applying this, and collaborating with you on this project was we had the opportunity to work with several business units at this client but the first time we did it, one of the things we did I think that was suboptimal is I set about a huge data collection process where I was collecting the data and working directly with the owners of the data across the organization and when we got together for the event, the first time we tired this we presented the data to the folks in the business unit and it was our consulting view of the situation that then they could react to. And as you can imagine you know, someone coming in and telling you about your data, there’s always the opportunity to argue the fine points, to not be bought in to what the data is telling you. There was no ownership of it.

Michael: Right.

Steve: The second we did this we used the game as a way of explaining or showing the power in data and then we went to the model. We built a model sales and marketing factory, Value Stream. And we walked through that model, each step in the process, we said okay so what kind of data at this stage in our process would be most helpful. And then do you have it or should we get it. And then how are we going to get it. So we trained you a second time through. After the game we transferred ownership of the data needed or the data collection to the members of the team. When we got back together to view the Value Stream analysis work, they owned the data, they presented the data, they came in with ideas of what the undesired results were, what the theory of causes might be. And it made those collaborative sessions in the room where we affinitized and we developed theory, you know, cost theories, developed potential countermeasures, it made those sessions so much more rich because they owned the data.

Michael: Wow.

Steve: It was really terrific.

Michael: Well done. Well done. That, that, when I hear people say well you know, the problem with our sales force is that they’re just not disciplined. They just won’t follow the process we give them. I know right away that well, there’s a management that doesn’t understand how to work with processes because if you impose it on those people, they’re going to resist. If you give them the problem to solve and help them solve it then they come up with the process and that’s the right way to do it. That’s using their energy for your purposes and that’s a much healthier way to run a company.

Steve: Yeah, yeah it was a real moment for me that you struck for me on that for these type of value stream analysis projects. You know, there are lots of other projects that Ottimizzi has done and of course a big part of it is the design session work where we enroll the participants and they get to you know, own the output. And I don’t know why but it was just a miss for me to think about approaching this project in that way. And you helped us, helped me of course correct that. I wish I had engaged you sooner so we could have maybe done it right the first time but we definitely, from you help, was able to kind of iterate it and I mean now we’ve done this I think, three business units now, we have two more scheduled and really getting some momentum with this approach.

Michael: Fantastic. So what are some of the improvements that these teams came up with. I mean, you know, if you’re hard boiled president of this division and you’ve got aggressive numbers that your organization has to hit and your team has gone through this and they came up with improvements, tell us some of the things that they’ve been able to accomplish.

Steve: Yeah, yeah, so, so part, one of the improvement initiatives was really around market coverage. And as we did time studies for the inside sales team and the outside sales team and we looked at data around how, where orders were coming from, what size customer, what region. What popped out from the data was that the organization was really asking its field territory managers to play three full time jobs. They were, they had to demand creation, they need to play the role of marketing, and do demand creation in their territories. They had to do channel management because they were given a basket of distribution partners as well as direct accounts. And they had to play the role of customer escalation point or order issues. And so one of the things after that was visible. What made it visible through looking at a RACI in terms of who was responsible for what. Looking at the territory through the lens of sales and market opportunity. And then looking at the time study and how inside and outside reps spending their time. What … From all that it became apparent that we needed to reorganize, we needed to clearly define the roles of the field sales rep.

Pull out the distribution management function. Pull out the small account coverage. Pull out the order management piece so that then the tms could be, their scope of work would be around capturing the demand in their territory that we were after.

Michael: Big changes.

Steve: Their big changes. And they wouldn’t have been palatable had not the data been so compelling.

Michael: Wow.

So have they completed the reorg?

Steve: No it’s still a work in progress. This project has been going on now for about six months. There’s been some hiring done. There’s been some systems worked on. There’s a reorganization that’s happening. There’s been a couple of key hires made and a couple of reallocations are resourced but I anticipate it will be another six months’ worth of work before the new organization, and this one doesn’t seem to be as kind of in their future state that we’re going for.

Michael: Okay. And that makes perfect sense but I bet there’s some people in our audience who are going oh no. That Six Sigma process, stop, it always takes so long. We need to get results in the short term. What would you have to say to people like that?

Steve: Yeah, I’ve had conversations a lot with this particular client. This client has a promise to the shareholders to double their profit ability every five years. It’s a promise they take seriously. And if you look at that on a compound annual growth rate well you know, you’ve got to grow 15, 16 percent a year across the portfolio.

Michael: Mm-hmm (affirmative)

Steve: And some of their larger business units where they had a lot of market share and a lot of revenue and operating income being generated, were growing at four or five percent. And they were laser focused on putting a believable plan forward for the upcoming year. And they were really good at it. And what this work has been able to do is to say okay let’s extend the horizon of our planning. We know what we need to do for the next fiscal year because we’re already really good at forecasting the next fiscal year based on what we know, but if we’re going to change our trajectory from growing four, five, six percent a year, to growing 15, 20 percent a year, how are we going to do that? What’s that business vision? With that end in mind, with that three year or five year horizon in mind, now let’s go back and think about what are the things that we can’t do in a year. What are the things that are going to take a long time, and are absolutely necessary that we get started now in order to change the growth rate from six, seven, eight percent to 15, 16, 20 percent over the next few years.

And with that mindset change, it made the work more urgent.

Michael: Yeah.

Steve: Because even though we had a long term payoff it made it more urgent that we get started right now.

Michael: Yeah. I think a lot of people, especially in large companies, they underestimate the complexity of what’s really happening. And a lot of that complexity is between the ears of the people who are involved. And some people can’t see, no one can see how the whole system works without an explicit means of doing so. And so while it can feel like gee we’re working on this for so long, we’re not getting results yet. But you really are getting results because you are getting the consensus and the commitment and the energy of a variety of people pulling in the same direction. And you can see that. And you can even measure it in what they will say about their work life. You know, this is going better. I feel good about this. I mean, there are ways that can measure it. It’s not just fuzzy soft stuff. But you have to go look for those measurements to see that those things are in place. When you make a change like a systems change, or a training change, if you decide what’s the problem we’re trying to solve and how will we know if we solved it, it’s a little part of a big picture, right.

And then did we actually achieve those things when we did it. And you did. It may not change the margin number yet but it does a problem that the people were trying to work on and it’s from those baby steps that big changes happen.

Steve: Yeah, I totally agree and you know one of the things that Rich had helped me with way back when too was, I called it kind of being able to measure progress in millimeters. But really it was more around just being attuned to what progress looks like in the early phases of the change.

Michael: Right.

Steve: A momentous change or shifting the business. The early indicators of success, you have to make visible. And they don’t show up in the lagging indicators of the revenue and margin improvements that we’re going for. By the time we see those it’s too late. We just have to start recognizing what progress looks like in the near term. What are those leading indicators that show that we’re doing the right things and we’re going the right directions?

Michael: Yeah. So what are some of the other problems and challenges? And then we’ll wrap up. This last question … The problems and challenges that you see organizations having as they try to apply these principles and how they get around them.

Steve: Yeah one big problem is … I see it often is that if the maturity of our just daily business processes in the sales and marketing functions aren’t there. If they’re very random or informal processes in terms of the way we run these factories today, it’s very hard to collect meaningful data. And often the first projects that need to be done are let’s just get some standard work, and some standard measurements in place. That’s foundational. And then the next time we go through this not only will we have better outcomes from that more mature process approach, we’re going to have a really rich data set that points out some very, some things we could do that we really could predict change if we were able to impact them.

Michael: That’s management’s job in my book. I think you’d agree that to give the people doing the work are the one who own the problem. And management has to help them develop a shared understanding of the causes and the effects that they’re enduring really. Right? And so in that way these tools of systems thinking and data, they can help those people solve the problem. And that’s how they motivate people. When it’s their problem and you’re giving them a tool to help them you know, you know, dig their way out of a hole or to accomplish something that they’ve always wanted to accomplish, and so it’s sort of the Jiu Jitsu thing. You’re reversing the energy from the way typical managers approach it, and enabling people to accomplish what’s in their ambition.

Go ahead.

Steve: You just reminded me of something else. And I’m by no means am an expert in the SHINGO model. I’ve had just a little cursory exposure to it, but what I see a lot and with the model, kind of, you know, was an ah ha moment for me is that managers, I see managers and senior managers in sales and marketing spending the majority of their time firefighting. Right?

Michael: Right.

Steve: And they just can’t … you know, they’re co-combatants with their team to put out the fire. Nobody’s focused on their systems or their processes and then from a leadership perspective you know, they’re also in the fire fight. They’re not focused on the behavior and the culture. So it’s that simple concept of for the people in the field, let’s make sure we’re giving them really good tools. And giving them ability to fight their own fires. And for the managers, focus their time and thinking on the systems and processes. Make sure your people are in a good system. And for the leaders just make sure you’re rewarding the right behaviors. And while we’re always going to reward business success, revenue and margin, are we rewarding transparency? Are we rewarding problem solving thinking, problem solving mindset? Are we rewarding the transparency in the way we approach our work and our act based decision making? So focusing leaders on those things. Just that simple, and I’m sure imperfect understanding of the SHINGO model has been really helpful in the communication across the sales organization around who should be focused on what.

Michael: Excellent. Excellent. This is great. Can you provide us with any recommendations you would have for the audience or if you would have … like how can they get ahold of you if they would like to?

Steve: Yeah, yeah, and certainly I’m a huge fan of your Michael and I absolutely endorse your body of work. Through reading your book and through our early conversations is what got me to want to bring you into this client engagement. And a lot of success we’ve had here has been

Michael: [crosstalk 00:36:49] Thank you.

Steve: from your contribution. And I thank you for that. People can reach me either with my email address which is Steve@ottimizzi.com and I’m also available on LinkedIn if you search for Steve Hollingsworth with Ottimizzi you should see me pop up. And my mobile, you’re welcome to call as well. It’s 301-501-6663.

Michael: Super. Well include these details in the announcement that goes out on the podcast. And Steve, I thank you very much. And we’ll have to do this again sometime.

Steve: Thanks Michael. I look forward to working with you again soon.

Operator: The Sales Process Excellence Podcast is sponsored by Sales Performance Consultants. Discover how to improve your B2B sales with systems thinking at salesperformance.com.