Category Archive: Management
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aka The McDonald’s Rule…
Offer your team a Big Mac, and they will immediately make alternate suggestions. This can effectively work for you in managing creativity and projects.
Look into Jon Bell’s clever post on the subject.
I recently read an excerpt from the new book Repeatability: Build Enduring Businesses for a World of Constant Change by Chris Zook and James Allen (Harvard Business Review Press, 2012). Its premise suggests that a business model built on a series of smaller “repeatable” ideas outperforms focusing on finding “that one big idea that will transform the business.”
That got me thinking. Its not a new concept, but applying a similar idea toward customers and clients can lead you to a very successful business comprised of smaller, repeat customers, rather than holding out for that one client that will “take you to a new level.”
We all know the golden rule of sales: “Keeping a customer happy (and buying) is less expensive (and disruptive) than finding a new one.” Both these ideas revolve around the same center; that a strong, repeatable business model focused on active, average-sized customers will feed your revenue stream, rather than drown you in the waterfall from a huge new customer.
Not that — as good business managers — we shouldn’t seek good customers of all sizes to grow our businesses. But variety and range of customer size seems to be a secret that many businesses cannot grasp. They drive their teams toward capturing the big fish, while too often ignoring the schools of smaller fish that drew us to this part of the ocean to begin with.
A personal story. When I first joined our organization, we had a single customer who had grown to become our “golden goose,” providing a healthy flow of revenues, while making constant demands on our margins. I probably don’t need to tell you the rest of the story: Of course we focused on that single customer to the detriment of our smaller clients, and ended up losing many of them along the way. The big customer continued to grow as a percentage of our revenues, so when that customer was acquired and their management changed, so did their initiatives and projects…including ours. Suddenly we found ourselves without our enterprise’s primary source of revenue, and due to our singular focus on that customer, we had not nurtured others underneath it. We survived, but learned a very valuable — and painful — lesson.
The foodservice supply chain has developed into an environment that can easily draw suppliers and sales agencies into focusing on the “big fish”, while paying little attention to the smaller, higher margin customers. Consolidation at the distribution level, regionalization at the agency level, and massive commercial foodservice chains and LLOs can present a daunting vision for a small manufacturer or independent foodservice manufacturer or agency. “If only I could get into that account” they dream.
And in most cases, they should position themselves to achieve that dream…someday. But in the meantime, I would suggest that while your competitors are investing most of their resources on catching that elusive major customer, you can be aggressively offering your best products and service to groups of mid-sized customers, creating an on-going repeatable revenue stream and decent margins. By the time your competition wakes up, your focused product line, exceptional customer service, and social media community will present a barrier that will be difficult for them to breach.
A final note. The authors outlined a few principles that every business should develop to assure their long term success. Provided as a strategic post-script (and printed directly from the excerpt) they are:
- A Well-Differentiated Core — The authors found that 93 percent of the of the top 20 performing companies had strong differentiation in their core, which ranged from low cost to differentiated products or services.
- Clear “Non-Negotiables”— Business models need to be able to be repeated easily by all members of the company. The authors found that “non-negotiables form the ‘commander’s intent’ of business, which acts to reduce the distance between the CEO and the front lines.”
- Closed-Loop Learning— Businesses must also be able “to adapt quickly to changes as they arrive.” The authors said that “business history is littered with great business models — like Kodak, General Motors, Xerox and Sony — that eventually succumbed to their ‘arrested adaptation’ and not being able to change fast enough.”
This is the end of this post…don’t let it be yours.
In addition to my work in the food business, I am also engaged in technology and social media, and their application in the foodservice channel. As such, I keep up with the tech blogs and feeds. This morning I read a blog by Alex Goldfayn writing in Mashable Business, outlining the 7 Marketing Lessons from RIM’s Failures he identified from analyzing the rapid decline of RIM/Blackberry in the smartphone marketplace.
These lessons, however, are not unique to RIM, or to the tech business. I found them to resonate with foodservice channel challenges as well, and decided to reflect on how they might be applied in our industry.
1. Make Great Products
Great products solve so many challenges. Invest in the best food technologists and industry marketing analysts who understand the target segment and its customers. Follow the consumer trends. Understand flavors. Watch leading-edge chefs and their culinary art. Even if you make products for quick service, or the non-commercial markets, there will be ideas that you’ll discover by knowing everything that is happening throughout the channel. Study the supply chain mechanics, looking for opportunities to create competitive advantage thru service or packaging. And peel back the layers of your product category and discover what drives it, then develop innovative products that fulfill those needs…with a difference. Never stop.
2. Build on Strengths Instead of Improving on Weaknesses
Everyone in business in the late 80‘s learned the Japanese word “Kaizen”: The concept of “changing for the better”, or “continuous improvement” as a product or process philosophy. A slightly different angle on that concept is embodied in the idea that a brand can overcome weaknesses by focusing on its strengths: products, services, techniques, process, approaches, relationships, etc. As an organization, if you concentrate on weaknesses, your strengths can wither and die. By relentlessly concentrating on your strengths, weaknesses will be pushed to the background and die, due to lack of nourishment.
In the food industry, continuously examining your products for opportunities to improve them should be routine. Exploring ways to take your best products and identify how to increase sustainable practices, reduce excess packaging, or improve BOH prep process will keep you ahead of your competition. Sit back and “harvest” your sales and you’ll quickly find them gone.
3. Gravity Pushes Backwards
You can count on your competition to aggressively innovate. And they’ll pass you quickly if you stop doing what gave you your original success. A personal episode will illustrate. As a sales executive at Fred’s Frozen Foods in the 80‘s, we had invested, developed and were the leading supplier of mozzarella sticks to the mid-scale segment. We were happily harvesting our profits, without exploring product, service, or packaging improvements. A small company by the name of Anchor Foods had followed us into the market, but we ignored them as upstarts incapable of competing. We were wrong. And by the time we realized it, they had taken not only the lead in volume, but had pushed us out of our primary distribution agreements as well.
Gravity always pushes backwards in business. Consistent and aggressive innovation is required not only to attain success, but to sustain it.
4. Know Precisely Who Your Customer Is
In the food business, no matter what you have convinced yourself, your customer is the consumer. The consumer is the patron at the restaurant, school, hospital, or food-away-from-home location. Distributors and “end-users” are important steps in the supply chain, but they are only the MEANS to reach that consumer. Whatever your segment, know who they ultimately serve, and that will guide you to not only the right product, but will help you uncover how to market your product throughout the stops along the supply chain. Branding, product positioning, messaging, packaging, and final product specifications and flavor will be completely different depending on the consumers you target.
So identify your customers as precisely as possible, and synchronize your marketing efforts throughout the supply chain to reach out to them.
5. Executives Set the Marketing Tone
Ben Franklin (and others) said, “A fish stinks from its head”. The reverse is also true. Leadership begins at the top. The CEO can set the tone, and if the team is properly engaged, they will follow. Watch Steve Jobs introduce the original iPad and listen how everyone who followed him on stage used exactly the same words. Amazon’s Jeff Bezos follows that rule. And I’ve seen examples in new product introductions in the food industry as well.
In our industry, this factor becomes especially important in “prepping” your field sales partners (brokers and distributors) to embrace the concept and language of your product when they sell it in the field. Since they have likely NOT been part of the kick-off, it falls to the field and formal training to make this connection. And of course, a video (or even written) message from the corporate head or CEO can help “fix” the key words and action phrases, and elevate the process. The goal, of course, is to have everyone adopt the “language of the product” as a part of its branding. It protects and defines the brand, and can transcend the product itself over time. The coup will be when you first hear a customer use that language in describing your product.
6. Avoid Unforced Errors
Most marketing problems are self-made and entirely avoidable. I’ll be the first to admit that I have a few of examples of “unforced errors” stuffed away in my career closet. For proof, think of the recent Netflix gaff, the HP announcement that they were getting out of the PC business, and of most of what RIM has done since the introduction of the iPhone. In the food arena, P& G’s struggles to close the deal on the sale of the Pringles brand to Diamond Foods won’t do that brand any long term service.
Never outsmart yourself, and always be acutely aware of the possibility of unforced errors. In fact, keep your eyes open for them so as to identify them quickly. When they happen, address them immediately and there’s a good chance you can make them appear as if they never happened. But ignore or ruminate over them too long, and they will spread like a nasty virus. And you don’t want that.
7. Keep Talking to Your Customers
Number four in this list was “know precisely who your customer is”. If you don’t know, find out. And once you discover who they are, establish platforms and opportunities to have a “conversation” with them. Note I didn’t say “communicate to them”, but “have a conversation with them”. We are in an age of hyper-connection with consumers. Use the terrific tools available in social media to have on-going conversations with your customers. Listen, respond, track, and analyze who they are and what makes them tick. Uncover what they like and don’t like about your brand/product. Focus groups and research can be used to validate what you learn from social media, but don’t use the formalized research methods as your only tool. Sometimes it can send you down the wrong path. Just ask me about “UFOs”…
So if you’re not talking directly to your customers, you’re just guessing from a conference room. And that’s not the way to succeed in the long run.
In summary, I suppose I make these steps appear much easier to initiate and execute than they actually are. Following them takes diligence, focus, and tenacity. Observe and learn from those who have gone before you, and set your course.
Hey, if it was easy, they wouldn’t need you, would they?
Someone said that “…creativity is the stuff you do at the edges.” Intriguing, but here is something to consider: The edges are different for everyone, and the edges change over time.
If you visualize your area of responsibility like an old sweater, you’ll realize that as you wear it over time it stretches out, gets bigger and looser, and the edges move away. Stuff that would have been creative last year isn’t creative at all today, because it’s not near the edges any more.
A perfect example can be found in Mark Zuckerberg’s Facebook. Many clever internet ideas are hatched every day, but Zuckerberg’s brilliance is how he constantly pushed his creativity to the edges, never ceasing to at the same time backfill his platform’s foundation while adding clever capabilities that fit his team’s feedback about what was wanted by its users. With its (soon to be validated) valuation of $100 billion in less than six years, you can’t argue the idea that he always had his eye on the edges. (In fact, in recognition, perhaps it should have been called the “Hoodie Theory”).
So, we are presented with two useful tactics for effective personal (and organizational) evolution:
1. If you want to be creative in your problem-solving, understand that you’ll need to keep moving toward the edges, even if the edges have moved. Being creative means going to the place where the last person left off.
2. If you feel you are not “creative” — or have been convinced that you aren’t — don’t fret. Just keep stretching your sweater as you do your job, while watching the creative things others do with their sweater, and keep a mental library of ideas. Then, once you do YOUR THING out there on the edges, people will recognize it as pretty creative indeed.
Oh…and pay attention to Einstein.
“The secret to creativity is to know how to hide your sources.”
— Albert Einstein
Guest post submitted by Jim Klass, Marketintelligence:
As a follow up to “Pull the Thumb” from Tom I’d like to focus on the need of support and analytics to make field sales more effective.
I would hazard a guess that in many foodservice manufacturers today strategy hasn’t changed from the Go-Go 80s and 90s. I know for a fact that as far as trade spend it is viewed as “table stakes” or a necessary evil and planning is a percentage plus or minus last year. Usually the customer (distributor or operator) who negotiates best receives more.
Even though 20% of a manufacturers revenue* is spent on trade, there is a distinct lack of investment in people processes or technology. So the wheel goes round and round without any substantial progress, margins are compressed and cuts made at the RM level or Brokers’ commissions in an attempt to “solve” the problem.
Industry leaders are following a different path, as their retail counterparts have done for years and are utilizing data they already possess to drive a deeper understanding of what is working and what isn’t for example:
- What programs are driving incremental street growth?
- How can we collaborate with our distributor partners to accomplish mutually agreed upon targets?
- What is the role of distribution in managing our contracted operator programs?
- Can the broker support these efforts through data sharing?
- Can we move away from traditional growth programs that merely cannibalize sales and move to strategic performance targets?
Organizations that understand the power of information can provide the proper insights to help the RM (and broker) make better decisions that will in turn drive greater performance. RMs and brokers are hired to execute don’t ask them to do the analysis as well, that’s the job of the trade organization
Aligning the entire incentive value stream (RM- Broker- Distributor-Operator) toward well-defined strategic plans will insure a product and effective sales organization.
It’s time to rethink trade. What do YOU think?
*2010 Hale MarketIntelligence Survey
Submitted by Jim Klass, MarketIntelligence, email@example.com
As evidenced by a series of conversations I’ve had recently with foodservice manufacturer executives, the problem (and the reasons for it) still exist nearly FOUR YEARS LATER.
The need to have effective field representatives who can supervise, direct, manage, and interact with their sales agency and distribution partners has never been more important. Agency consolidations have changed the landscape and made it even harder for manufacturers to hold the attention (and focus) of their front-line sellers. Yet, frequently I hear foodservice management unfairly maligning their field managers, complaining that their current soft sales numbers are a result of poor execution. It’s true that there are Regional Managers who are ineffective, improperly trained, and are living examples of the Peter Principle (“A person rises to the level of his own incompetence.”). But whose fault is that? Are you, as senior management, ready to continue to “point the finger”? Or are you ready to take responsibility and “pull the thumb”?
Your Regional Managers should be the “glue” that holds your field sales group together, bridging the gap between your top management team, and your sales agencies and/or sales reps. They implement strategy and organizational changes, keeping these second-party sellers engaged and informed during both good and bad economic cycles.
But have you properly prepared them for that responsibility? Have you given them the tools to do a good job? Do you incentivize them properly so they align with the company strategies and priorities? Do they thoroughly understand their role within the organization, or do they think that being an RM is merely a rung on the ladder to somewhere else?
Based on both formal statistics — as well as casual feedback from clients — many companies are seeing significant turnover in their Regional Managers, and turnover creates an obstacle to proper field execution of strategy. Wharton Executive Education Dean Thomas Colligan remarks, “Top management can spend all their time creating strategy, but without someone there to implement it, where are you at the end of the day?”
These observations were never more true than in our current business environment. The “middle manager level” RM is the one who will continue to bear a significant portion of the pain that the current economic conditions bring. In addition, as companies go thru economic cycles like the current one, RM’s also get hit with the elimination of rewards and incentives and — in some cases — layoffs. “In cost-cutting times, knee-jerk reactions happen. There is a paradox where middle managers are essential, but end up sacked when restructuring occurs. It’s a rough situation because the people needed to run the most important projects are in the middle.”
The organizational changes edicted by executive management may occur “above your pay grade,” but as a manager you need to nevertheless translate it to your team and sales partners while making them feel protected and valued. This is a challenging situation for the best of managers. Are yours comfortable that THEIR positions are secure? Have they been properly informed of all the issues surrounding the shift in strategy? Have they truly “bought into” the changes, or are they following orders?
Finally, there is the stereotypical situation in which middle managers have no authority but all of the accountability. Are your field managers “trusted agents” or just viewed as low-level employees? How much do you involve them in planning, and how much authority do you allow them to make decisions in the field?
Given the high cost of turnover and the importance of Regional Managers in implementing strategy and change:
- Individual incentive and development plans that are tied to (and connected with) your organization’s corporate goals and strategies.
- Access to training tools, educational opportunities, and corporate knowledge archives can play a large role in effectiveness as well as retention rates
- Access to coaching and mentoring
- Company social networking sites, discussion boards, wiki’s and blogs will help the RSM voice his opinion, as well as solicit feedback on issues he may be addressing in his region.
- Participation in the corporate planning process, allowing them to participate in a change decision, design, and implementation will lead to buy-in and ownership.
- Communication to engage midlevel managers in understanding a company’s new strategic initiatives…expressed in tangible terms of what is expected of them.
Are YOU doing the “right things” to assure that your RM’s are everything you want them to be…and everything they CAN be? Take responsibility and “Pull the Thumb”…its good exercise.
“They can because they think they can.” — Virgil
You know those wooden maze games we used to have as kids? The ones where a steel ball would roll thru a maze full of holes, and you’d use knobs on the side to avoid having it fall into the holes along the way and ending the game?
I think this children’s game might represent an apt metaphor for business (and government) during our current never-ending recession.
The landscape of everything we deal with seems to be constantly shifting and changing. To avoid falling into the hole on our way forward, we are constantly twisting the knobs to control the little ball on its journey. But often, we over-compensate, and the ball ends up in the hole anyway. We regroup, and head down the maze again, only to make a similar mistake further on and drop into the hole again.
Some businesses are learning along the way. A report today in QSR Magazine states that many restaurant chains have adjusted their operations significantly to deal with current traffic and consumer demands; so much so that they are better prepared to deal with a further downturn if it comes. If it doesn’t, they will reap even better benefits as the economy improves. They have learned to control the ball on its journey.
Part of this reaction is also encapsulated in a Chris Brogan blog earlier this week entitled Salt and Pepper. In it, Brogan posits that sometimes simpler is better. Coming back to basics will produce a better overall result. Companies who understand this have been able to adjust their offerings and internal operations to create their “new normal”, and to survive this downturn.
So what is the message? Wild reactions to crisis will produce equally wild results, but often in the wrong direction. Slow and steady…keep it simple…don’t over-react to outside factors. Be deliberate in keeping the ball on its course and you’ll make it through the maze.
My daughter is spending a week visiting family friends in Southern California before returning to Georgia for her sophomore year of college. As an amateur athlete, one of her favorite occasional activities is surfing the waves off Ventura beach, where she is staying this week.
Back in the day, while living in the same area, I was introduced to a business consultant who referenced the “rules of surfing” to his business philosphy. I was quite taken with this concept, and although I was not a surfer myself, I could relate to the idea. I couldn’t find his book in my collection, but below are some of the ideas that I recall:
- Never surf alone. Find your business community and actively participate in it. Today’s social networking allows that concept to thrive…if you develop it.
- Stay out of unfamiliar waters. Don’t step into markets without doing your homework. Research. Talk to those who have been there. Stick with what you know best.
- Don’t ever turn your back on the ocean. Know your surroundings. Look out toward the horizon, not back to the shore. You can be swept under if you’re not looking.
- Know where you are going. Plan your next few moves.
- Know when to stay on the beach. The largest waves aren’t always the best waves.
- Watch the weather. Always be aware of what is coming, so you can plan your next few moves appropriately.
- Never fight a riptide; roll with it. Adapt to your immediate environment; fighting it will only drag you down.
- Your position on the wave is more important than its size and velocity. The best rides are when you’re in exactly the right place for the conditions.
- Be aggressive, especially when there is a lot of competition. Your intensity should increase when the water is crowded. The same applies to markets.
- Know when to go home. Monitor conditions and your energy; know when they’re exhausted.
The business environment is intense today. The pressures for immediate reaction in the marketplace too often drive your strategy, rather than the other way around. The zen found in surfing just might help you better address your management challenges.
Here come some gnarly waves right now, dudes. Grab your boards and get out there.
In talking about the “Silo Syndrome” (in which employees in different departments, hierarchical levels or functions have little to do with one another), he uses smoking as an example of a method which has proven to break down communication barriers.
Just as smokers congregating in outdoor enclaves strike up work-related conversation and get to know their roles and focal concerns within the company — forming a kind of club of common interests — technological tools can help employees find common ground. Instant messaging, video conferencing, Skype, SalesForce.com Chatter, Google+, and other communication tools bring people together in a quick, casual exchange of information and ideas. Many organizations have even set up internal, secure sites for virtual interaction.
If you are not exploring (and establishing policies and procedures for) employee social networking, IM communications, and the other tools requiring open Internet access, then you are indulging in old-school thinking. The benefits far outweigh the risks, as many successful companies have found.
There are 10 cultural elements that are typically present when collaboration is working in an organization:
• Trust — To exchange ideas and create something with others, we must develop trust. This is a challenge, especially in competitive organizational cultures. Sharing — Sharing what we know improves collective creation by an order of magnitude and therefore makes everybody more valuable.
• Goals — Taking the time to agree on goals at the beginning of a collaborative project pays off exponentially by providing the impetus for shared creation.
• Innovation — The desire to innovate fuels collaboration. In turn, collaboration enhances innovation. After all, why collaborate just to maintain the status quo?
• Environment — The design of both physical space and virtual environments impacts innovation and collaboration.
• Collaborative Chaos — While all people and organizations require some order, effective collaboration requires some degree of chaos. Collaborative chaos allows the unexpected to happen and generates rich returns.
• Constructive Confrontation — Great collaboration requires exchanging viewpoints, and sometimes that means construction confrontation — expressing candor about ideas. Collaborators must confront each other so that they can hash out their differences and make their shared creation better.
• Communication — Collaboration is inextricably linked with communication, both interpersonal and organizational.
• Community — Without a sense of community, we often lack comfort and trust. Therefore, community must be present for effective collaboration to occur.
• Value — The primary reason we collaborate is to create value — reducing cycle or product development time, creating a new market, solving problems faster, designing a more marketable product or service, or increasing sales.
“I phoned my dad to tell him I had stopped smoking. He called me a quitter.” –Steven Pearl, comedian and director
(updated from TRMusings post 5/30/08)