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Pipeline Management | Avoid the Matrjoschka Effect!

27/4/2020

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Timing in Sales is difficult to manage, especially when teams are head down closing their deals today. It´s likely they miss to identify and qualify required opportunities to feed them tomorrow.
Personally, it reminds me of the response we get when calling into a teenager bedroom - good intend but no sense of urgency!
The formal concept to manage this challenge in business is called Sales Pipeline Management. It´s bridging today´s deal-by-deal business execution with the projected business attainment on an opportunity-by-opportunity basis. While, it is the shared formal concept for all stakeholders, it allows for different perspectives:​
  • Sellers want to know if the business volume will ultimately make them hit their target.
  • Management probes into deal health, velocity and win-rate to understand the solidity of the managed business.
  • Leaders expect balanced individual- / team-contribution and want to see the pipeline develop towards profitability and along the strategic direction.
While there are plenty of publications on Pipeline Management, I would like to share some perspective, why Quality must beat Quantity!
Ideally, all your opportunities convert to business and contribute to the goal attainment. However, reality is very different. Deals are slipping into future quarters, they close smaller than expected or simply are lost.
Let me introduce some commonly used concepts to address the lack of control on the pipeline:
  • The more the merrier: Trying to compensate the potential losses through incremental opportunity.
  • Inspect what you expect: Working on the Information Inefficiency, believing that more information leads to more insight and more control.
  • Coaching till it hurts: Coaching sellers and teams along the sales process to make better situational decisions and overall benefit deal sizes.
In essence, you can either further mobilize your demand generation engine to put more deals into the pipeline (increase Quantity) or lose less from it (increase WinRate) - either way, you will need to prepare for the unexpected. Important to keep in mind that both approaches are limited by available sales capacity of the organization.
As far as the laws of mathematics refer to reality, they are not certain; and as far as they are certain, they do not refer to reality.
Albert Einstein
The Spreadsheet Acrobats will tell you that the required future Pipeline Threshold to hit your future sales target ("pipeline coverage") will be the future target to go plus an % uplift. The amount of required % uplift is defined by the % amount of historically lost deals. In other words, we set the pipeline coverage goal high enough so, we -hopefully- cater for potential future losses.
The formula is simple and compelling, BUT, it is based on at least three critical assumptions:
1. History Repeating: The pipeline coverage formula uses historic facts to anticipate the need for the future. So, be aware that the rear mirror might give you a wrong impression on the direction of the road ahead - it is very unlikely that moving forward the circumstances for your business will be the same again.
2. Statistic Probability: The pipeline coverage formula uses statistical assumptions in a discrete business. Therefore, it will not work on small number of deals, significantly varying deal sizes or changing likelihood to succeed.
3. Sales Capacity: No matter how many deals you deem appropriate or how much effort you are willing to put into coaching, your cost of sales sets the practical limit.
Pipeline Coverage -
Pipeline Coverage Expectations - The Matrjoschka Effect
The mathematical approach alone is not getting you on the safe side. You end up in an unhealthy race fighting lost opportunities with more demand generation. However, the more pipeline volume we expect, the more difficult it is to find sufficient deals and the harder it gets to reach a similar success rate again. Fighting the tendency of dropping WinRates through incremental volume requirements we can call the Matryoshka Effect in Pipeline Coverage Requirements - the Pipeline Coverage targets keep going up while WinRates are trending downwards.
In reality, many leaders still prefer to drive the hard fact based, quantitative approach over qualitative coaching. The reason is simple: It´s easier to scale pipeline generation within a sales organization (all hands on deck!"), than coaching sellers, partners and marketing for elevated deal quality.
The only way to escape Matryoshka’s appetite for more is by putting focus on the qualitative approach to deals, both on the Demand Generation and on the Deal Management side. Increasing the number of healthy deals (and the healthy meals for Matryoshka) will get your pipeline into a stable, healthy state.
​Give it a serious try, put focus on the organizational capability and you will be surprised, both by the qualitative and the quantitative effects it triggers.

The very practical approach of Coaching for Pipeline Success [Keith Rosen] works well for me but, Training alone doesn't develop champions. Leaders do!
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Old Industry New Tricks | The Intellectual Property Strategy makes the difference

8/2/2019

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Intellectual Property
Source: Shutterstock
Speaking with manufacturing industry customers is more exciting than ever. The Digital Transformation and Industry 4.0 meanwhile have arrived everywhere. However, the approach and progress vary significantly - especially, when it comes to the Intellectual Property Strategy.
While some companies focus on internal digital end-to-end optimization of their product design- and production processes for shorter time to market, individualized product offerings and cost efficiency, others are taking the digital value directly to market - leveraging their enormous industry process know-how, specialized data insight and their ability to predict or optimize their customer´s value creation.
There is a chicken-egg-interdependency of business- and Intellectual Property strategy. This explains, why IP-strategy discussions without a deep understanding of business makes no sense.
Bowman Heiden – Deputy Director, Center for Intellectual Property, University of Gothenburg
Seeking the core of business transformation in digital technology adoption only is not enough. The Intellectual Property Strategy will likely decide who takes control on the whole value chain and the underlying business model - who sits in the front seat and who must find a place on the backbench.
Even though that patents represent a part of innovation only, they still indicate where the energy is in a respective geography, industry, or even company. The annual reports of patent offices provide some interesting perspectives worth exploring.
The factory of the future will have only two employees, a man, and a dog.  The man will be there to feed the dog.  The dog will be there to keep the man from touching the equipment.
Warren G. Bennis
Let´s have a short excurse into research intense industries like bio-tech or pharma. The use of new developed seeding material or next generation drug is primarily not limited by the physical reproduction but by rights the patent holders reserved to protect their IP. Even, if you don´t like gene modified crop, patenting- or trademarking nature, separating the intellectual contribution from its physical representation may imply revolutionary effects to the business establishment in your industry as well. E.g. the agricultural-technology and licensing exports from the Netherlands meanwhile surpassed their traditional food production exports in value.
Decades ago, the Software Industry emancipated form Hardware Industry by introducing the commercial concept of selling usage rights for software independently from hardware - usage gets monetized while the IP remains in hands of the software vendor. This revolutionary approach explains the disruptive potential software has to traditional, hardware centric business models. Again, it´s about who takes control in a digitized industry to come.
World Intellectual Property Organization (WIPO)
European Patent Office [EPO 2017] - Annual Report 2017
World Intellectual Property Organization (WIPO)
Infographics - International patent, trademark and design filings under the PCT, Madrid and Hague systems (2016)
With the separation of Software from Hardware arriving in automotive industry, a whole set of new proprietary software with respective End User Licensing Agreements (EULA) will be coming down the road. It seems we soon have to familiarize ourselves with  the fact that we can´t own a car entirely anymore - primarily not because we all move into the share economy model but driven by the fact that the car manufacturer will no longer own or control the required software IP. Automotive Industry for years pushed towards external innovation and external labor to reduce capital lockup - Software IP will be a game changer for car vendors who want to keep control on their core business.
This idea is intriguing us because manufacturers need to go beyond selling physical car assets and must discover us drivers as customers - welcome to next generation Customer Relationship Management and the essence of customer intimacy for an old economy!
However, transformation in software industry is going deep as well. What has worked in a traditional productized Sell-To model needs to get complemented by Sell-With and Sell-Through approaches to meet the new customer expectations. Software IP gets embedded in products, cloud-based services become essential part of other products or your current customer may want to join forces with you on innovation. Either way, it´s time to revise value propositions, to reskill the salesforce and to tune the commercial backbone towards new ways of monetization. Digital Transformation, Industry 4.0 and a solid IP Strategy belong together and form the common ground for your business in near future, so let´s prepare for it now.
Good news, the cheese may already have moved on but the opportunity maybe bigger than ever and the driver seat is not decided yet!
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The New World of Work | The Cultural Opportunity

6/11/2018

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The New World of Work | The Cultural Opportunity
Source: Shutterstock
It´s 12 years ago that Bill Gates posited the New World of Work, where collaboration, business intelligence and prioritizing scarce time and attention are critical factors for success. It´s time to look into the progress we made on software enabled business productivity because it impacts each and everyone.
The innovation journey continues at amazing speed of technological progress but also adds new complexity for people who already feel the pressure of an "always-on" world and ever-rising expectations for productivity.
The need for change is even more pressing: Neuroscience found evidence why our good old flexible office work environment is not productive.
No matter where you start doing things differently it will be a journey without final state of perfection. My personal experience in software industry started with empowerment, trust, investment and an innovative environment - all invaluable assets to be successful and certainly something to secure to back your own digital transformation!
The New World of Work offers more than saving commute time and a better CO2 footprint for the individual. It´s certainly more than saving office space, reducing travel cost and increasing employer attractiveness scores. Optimizing work and life for more productivity means a  fundamental change of habits - professionally and privately.
The problem is not the problem. The problem is your attitude about the problem - Do you understand me?
Captain Jack Sparrow
Let´s not confuse, the digital transformation of our work- and lifestyle remains a cultural challenge, a social responsibility and it mandates innovation in leadership approaches. What may work on an individual- or team level requires a more systematic effort to organizational structures. Conventional Change Management is not sufficient to address the topic says Barbara Josef, Partner at 5to9. ​It requires general management attention to orchestrate the cultural transformation and realize the productivity potential. All functions from IT, Finance, HR and the Line Organizations need to be onboard and synchronized. Make sure, you keep it simple and rational in your approach to policies.
Transforming the organization means dealing with complexity in:
  • how to articulate business requirements and the definition of success?
  • how to become explicit on expectations?
  • how to renegotiate work contracts and revisit mutual agreements?
  • how to work inside and outside the office?
  • how to prioritize professional and private life?
  • how to individually and collectively organize collaboration?
  • how to interact online, offline and across desks, sites, cities, regions and time zones?
The World Economic Forum has provided a navigation system on the global transformation agenda to become systematic with Workforce and Employment of the future. You may also find some interesting perspectives there.
World Economic Forum - Workforce and Employment
Source: World Economic Forum, "Workforce and Employment"
"Now that it's definitely not cool anymore, it feels safe for me to start tweeting as well ..."
​Posted by my old friend, Prof. Ulle Endriss, 2017 ... or 25 years after we learned about Quantum Computing at University
During my career, I had the pleasure to work in mobile workplaces, use flexible- and drop-in offices, collaborate during intense travel, perform in international roles, manage remote teams, lead business in distributed environments and experience diverse cultures. Still, I keep exploring, learning, optimizing and innovating my environment - always aware that there will be no perfect time to try new things.
The next big transformation in sales is within reach. Therefore, I dive deep into Artificial Intelligence to further benefit Business Insight and, I look into seamless channel integration to imagine teamwork with our future colleagues, the AI Bots. If sales can add value to customers through well articulated procedures, repetitive activities and standardized offerings, than the combination of new technology with experienced sellers will lead to new exciting ways of customer experience.
Finally, I enjoy working in remote teams, managing distributed organizations but, I also learned that even the most sophisticated technology can´t do what a good cup of coffee can do - stimulate the creation of inspiring ideas when sitting together in person.​​
Technology can help you learn and follow-up on things in a structured way but it will not help you in cases where you even don´t know what you don´t know.
Conscious Knowledge
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Renewing Contracts | The Missing Bullet Holes

19/10/2018

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Star Treck - Mrs. Spock
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Imagine, sellers would be rational individuals like Mr. Spock, the fictional character in the Star Trek media franchise - the commander of Starship Enterprise who always followed the rules of logic, never distracted by emotions.
I agree, this is neither realistic nor desirable to move mixed human-vulcans into sales roles. Some sales leaders would not want to lose their financial controllers either.
Experience tells, winning a new customer means 6 times more investment than maintaining an already loyal customer. Isn´t this a really good reason for you as a commander to go deep on what is driving the Enterprise towards customer loyalty?
I don't know anything, but I do know that everything is interesting if you go into it deeply enough.
Richard Feynman, Nobel Prize in Physics 1965
This usually is the point where measuring the world starts and big data is put into action. It begins with identifying statistically significant parameters. Try to understand what sets a successful contract renewal apart from those which did not renew. If you want to go beyond anecdotal evidence, a lot of data points are involved, but the effort is worth it. Aberdeen Group research states that Analytically Grounded Sales Teams average a 2.7 times greater annual increase in customer renewal rates. Meanwhile, such data analysis is well supported by BI tools or even Artificial Intelligence engines and it is backed by external business consultant experience.​
Business Acumen remains key to success in increasing the likelihood to renew a contract. Even though you may find significant correlations, it´s the causation which makes it relevant. The correlation between growth on ice-cream sales and the outbreak of bushfires in southern California maybe a strong correlation but it´s not the cause. Mind the difference between correlation and causation.
Turning good analytical work into concrete action is what makes the difference in business. Overhasty conclusions and bias on this last but most important step may put your whole endeavor at risk. Following historical anecdote shows why.
The United States Statistical Research Group (SRG) once used to be on mission to help win world war II. Sales is not war and trying to find a way to minimize the loss of airplanes through better armor is not business optimization. Surprisingly enough, we still can learn from their work.
YoY Advantages of Analytical Grounded Sales Teams
Source: Aberdeen Group, Sept. 2016 | "YoY Advantages of Analytical Grounded Sales Teams"
When American planes came back from engagements over Europe, they were covered in bullet holes like a Swiss cheese. But the damage wasn’t uniformly distributed across the aircraft. There were more bullet holes in the fuselage, not so many in the engines. So, how can the armor be optimized  on the weakest parts without negatively impacting the overall performance of the aircraft?
Columbia University professor Abraham Wald came up with a surprising answer: The armor, said Wald, doesn’t go where most of the bullet holes are. It goes where the bullet holes aren’t - on the engines!
You’d have planes coming back with bullet holes all over the wings, the fuselage, the nose — but none at all on the engine. Simply because those severely damaged engines did not return from their mission and therefore don´t show up in your analysis. Protecting engines and pilots better, increased the likelihood to return from the battlefield.

Survivorship-bias.png
By McGeddon - Own work, CC BY-SA 4.0, Link

​Taking the recurring business scientifically to the next level implies a lot of work but it is the right choice in the digital era.  Even if you decide to start small, next time you assess the feedback of your customer satisfaction survey with your teams, make sure you especially understand where the bullet holes are missing - it might well be your blind spot hiding the lethal risk to your business mission.
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Account Planning | Busting the Napkin Myth

18/9/2018

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A GOAL WITHOUT A PLAN IS JUST A WISH!
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One myth keeps following me during my two decades in direct sales: Best Account Plans fit on Napkins!
Wow, what a bold statement - it feels equally untrue like: brightest minds fit into double-digit IQs.
Everything should be made as simple as possible, but no simpler.
​Albert Einstein
Despite all standardization efforts, enterprise business environments keep getting more complex. The ability to innovate simple and effective approaches in business practice has become a competitive advantage. Oversimplification, however, is tempting but remains an act of negligence.
Account Planning means planning for results. In a number driven world of sales, the decomposition of an aspired revenue goal is psychologically the first step to accepting the challenge. While SMART goals and respective objectives may well fit on a small napkin, they by no means are the plan. I would even argue that it is the wrong end to start with - relevant account plans are starting with the customer.
In recent years, Business-to-Business sales has evolved in various dimensions, redefining how we engage with customers:
  1. ​Sustainability - With Digital Transformation and the move to the Cloud, customer Business Models have embraced external vendors to become integrated part of the value chain. Continuously earning trust, adhering to ethical and legal standards, and delivering positive customer experience are non-negotiable foundations to sustainable commercial success. Yes, the definition of success is far more than transacting in the short term or "making the number" only.
  2. Customer Alignment - Cutomer Centricity is all about understanding the customers business priorities and translating them into strong and precise value propositions. As much as, I agree no Account Plan should be called complete without customer validation. Aligning with customer key stakeholders on the plan and finally signing off on a joint business roadmap is what makes a good plan a demand generation engine.
  3. Teamwork - Enterprise sales has become a team sport of specialized professionals, all working towards joint goals. It´s the heart of every effective Account Plan to ensure a common understanding and efficient orchestration with all stakeholders - internally (Sales, Marketing, Engineering, Consulting, Support, ...) and externally in the ecosystem (Partners, Advisors, Influencers ...).
Account Planning is a reflection on the evolution in sales but even more, so it is a yardstick on the sophistication of your teams work - what a great coaching opportunity or moment to personally benefit the customer relationship in form of executive sponsorship.
Imagine the business potential of getting the perception right by moving away from a necessary evil and abandoning the disrespect which a napkin implies.
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Business Model Innovation | Put Your Lights On ...

14/7/2017

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Sleepless Nights
Source: Shutterstock
... 'Cause there's a monster living under my bed - Whispering in my ear ...
Carlos Santana - Put Your Lights On
​​A while ago, I had a refreshing and insightful conversation with a customer who happened to be the editor of a major newspaper.
He described how he sees parts of his traditional business erode through digital channels but he also welcomed the efficiencies of digital productivity for his employees. Still, the ambivalent coopetition in today’s business is reality - seizing opportunity jointly with the global digital giants on a worldwide level but also fiercely competing with them on your own home turf.
Surprisingly, there was no sign of fear or worry - where is his confidence coming from?
Probably it is both, the no fear approach rooted in the own strength and the believe, that innovation should be routine - The inventor produces ideas, the entrepreneur “gets things done” [J. Schumpeter, 1947].
... There's an angel, with a hand on my head
She say I've got nothing to fear!
​Carlos Santana - Put Your Lights On
In this context, some good learning is coming from University of St. Gallen (HSG). Their research on Business Model Innovation during the last 50 years, shows that only 10% of the revolutionizing approaches in business depend on completely new invented patterns. All other business innovation sources from existing patterns applied in new context.
Landing change is not easy but it comes down to separating tangible risk form perceived fear. Risk can be managed but fear should not prevent us from starting the innovation journey.
Closing my pleasant conversation with the gentleman, I directly asked him on his personal fear. He responded that in future quality journalism may commercially not find it´s sustainable place. However, messing with the checks and balances in our democratic societies would get him sleepless nights.
Auch der stärkste Mann schaut einmal unters Bett.
Erich Kästner
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Digital Transformation | The Race is On!

11/5/2017

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Speed without Limit
Source: Shutterstock

​In 1965, Gordon E. Moore made a prediction, that the compute power will double every 2 years, while decreasing in relative cost. It is a race at an exponential pace meanwhile lasting for decades fueling economic growth.
Digital Transformation? - No worries, I will not join the battle on the prerogative of interpretation but connect some dots.
The digital innovation meanwhile continues for decades and each phase impacted it´s own aspect of productivity or made new things possible. While the natural resources on earth are trending towards a physical limit, we see the human intellectual capacity and imagination prosper almost infinitely.
​
Looking back, the focus remained on strengthening the status quo of computing capability towards faster, better, cheaper - neglecting the fact that in a current world of predominantly linear computing requirements the availability of resource no longer remains the limit for businesses - instead, time is the ultimate scarce resource.
Moors law keeps democratizing affordable compute resource and turns blessing into obligation. It´s an obligation to make better use of affordable digital resource within shorter innovation cycles. In a cloud based world, which is trending towards zero marginal cost and global reach (as predicted by Jeremy Rifkin) -  the better business model innovator with the fastest implementation wins - The Race is On!
In skating over thin ice our safety is in our speed.
Ralph Waldo Emerson
That doesn't mean that business experts need to become technical experts, but it does mean that business people need to get serious about understanding the core of technologies that they use to run their mission and into the right direction.
How is your own digital fitness level doing and what approach are you taking to lead in the digital era?
When it comes to digital, the only thing worse than standing still is running in the wrong direction.
INSEAD Knowledge  Read more here
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Selling Time | Time is Money?

21/3/2017

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Time is Money?
Source: Shutterstock
Let me today share some thoughts on a recently published article on Harvard Business Review: “It’s 10 AM. Do You Know What Your Sales Reps Are Doing?” [HBR.ORG, 2017].
The title is a wonderful invitation to reflect on the state of your organization, your approach to sales strategy, quantity versus quality and ultimately whether you want to manage activity or result. In any case, business acumen needs to be first!
The article itself is offering it´s own approach to sales management. Of course, sales leaders should rely on supporting data and take fact based decision. It´s also evident that Microsoft provides great products and tools to empower every person and every organization on the planet to achieve more. However, the way how data is used in this article and at which organizational altitude a certain tool like Workplace Analytics is applied remains unconventional.
For example, the authors are not asking why “CRM self-reported data maybe inherently flawed” but propose the approach “to analyze the digital exhaust of calendar and email metadata” instead.
We can be rest assured that it will be 10 AM again and that time will tell how many of their top performing sellers are willing to accept the proposed micro management approach to optimization.
It´s clear that maintaining business data in CRM is not the first thing a seller will fall in love with but why should metadata from calendar, mail or any other app maybe in better shape or even be more insightful than explicit business information?  - Data quality is about discipline but sustainability only can be achieved where relevant business conversation drives respective demand for it.​
Times of the Lone Wolves in sales are over and contemporary solution selling approaches mandate efficient teamwork. The better you coach this in every interaction with your sellers, the more you inherently drive demand for systematic alignment. This will make the case for efficient Time Management and, ultimately it shows the difference between a metering tool and CRM as a sales productivity engine.​
Selling into complex enterprises is a time intense endeavor, so let´s maximize selling time for your teams, e.g. balancing all internal work with the amount of time they need to spend properly serving customers. Time Management also remains a key enabling factor on seller level, requiring to systematically coach and develop every individual – probably starting with yourself!
​If you want to learn more on how to practically approach Time Management, Keith Rosen recently published his new book: “Own Your Day!”. It´s worth reading and opens eyes on why your calendar may yet not be the ideal starting point to conclude optimization from.
Either way, ​Coaching or Inspection - you decide but be aware: ​No one expects the Spanish Inquisition! 😉
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The Balance in Sales Management | Art & Science?

23/2/2017

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Time for Facts
Source: Shutterstock
We have arrived in “post-truth world”, so let´s start with a quote respectively: “So much of what we call management consists of making it difficult for people to work”. Out of context and without supporting facts, it could well be a comment from a subversive employee, but it is an old statement from Peter Drucker.
Whether we like it or not, pluralism is a great achievement of modern civilization and along we carry the obligation to adhere to valid facts [WP: “The Pinocchio Test”]: “Comment is free, but facts are sacred.” — C.P. Scott, editor of the Manchester Guardian, 1921.
​In sales business this is true as well, it comes down to the everlasting question of Art & Science. The fine arts of dealing with people, emotions, expectations and the fact based, systematic, scientific approach. Provocatively speaking, neither wine & dine nor bean counting is the answer. The journey towards the right blend is the master discipline in sales leadership, since it is closely connected to both, organizational culture and customer intimacy.
​Diversity needs room in every healthy organization but it must reside with the people and perspectives. It is not defined by the variety of proprietary spreadsheets in a room. We all have attended far too many meetings which did not follow the courses of action.
Actually, it´s great to rely on intuition and discuss different standpoints but let´s calibrate it with insight, driven by relentless curiosity – trying to avoid justifying ones own personal bias. In memory of  Hans Rosling, the founder of gapminder.org, who recently passed away: “I want to talk about mindset; Does your mindset correspond to my data set? – if not, one or the other needs an upgrade!” [TED 2009].
Keep it simple for all parties: What can you do in your next business meeting to stimulate the customer mindset and concrete plan of action through valid and compelling facts? – Think about it!
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Learning the Scorecard Way | Why he who owns a wheel-barrow sleeps in his own bed!

1/2/2017

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Wheel-Barrow
Source: Shutterstock
Now, that our son is growing up and along his dream vehicles keep growing in number of wheels, I want to share with you how scorecard management can benefit a Growth Mindset.
​When he turned 2 years old, his biggest dream was owning a wheel-barrow. His parents, however, found themselves far away from dreaming during nighttime. The little one arrived in their bed during nights and kept them awake. The situation required true leadership and a professional approach:
​

The “Sleeps in his Own Bed”-Scorecard was born!
The Scorecard got designed and introduced to safe the family and let alone make dreams come true.
It all worked so well – our son scored well, the parents slept well and finally the wheel-barrow arrived at the family home. What a great learning and accomplishment we thought, not knowing the best to come.
​

Weeks later, the Engel-Family was driving through the city when once at a sudden a voice from the back-seat turned up: “Look daddy, he sleeps in his own bed!”.​
Scorecard
Source: Private
Yes, it is magic, we all witnessed a street worker with his own wheel-barrow. Unfortunately, we had to leave the scene without confirming the reverse hypothesis but in good faith that scorecards can make the world a better place - Just espouse a growth mindset, and good things will happen.​
  • When I was a boy of 14, my father was so ignorant, I could hardly stand to have the old man around - But when I got to be 21, I was astonished at how much the old man had learned in seven years.
Mark Twain, Novelist

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Forecast Accuracy | Don´t shoot the frog!

23/1/2017

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Forecast Accuracy
Source: Shutterstock
As kids, we asked the frog to show us the weather forecast. I´m sure the little friend tried hard but no matter how much we wanted him to either be precise or even change the weather, he had to realize that success in show biz can be reached much easier.
According an Accenture study, 75% of leaders come to the conclusion that they need to improve the accuracy of their forecast and 57% say that they have to get better at closing deals in forecast time frames. These are probably numbers close to the satisfaction level reported by frog owners.
How come, we seem to struggle with predicting our potential future business attainment? – We are dealing with a so called “Information Inefficiency”, a risk sourcing from an information deficit. It means we don´t know what will happen until it happened. So, in theory gathering information and managing deals on time will mitigate this risk and our forecast accuracy problem is solved.
However, the subject is far more complex since we are dealing with people, organizations and respective underlying political dynamics. Science refers to this risk category as “Alignment Inefficiency”. It describes the domain of risk sourcing from conflicting interests and -incentives within an organization. This important fact makes Forecast Management an interesting cultural aspect and sets it apart from sheer business discipline efforts – Forecast Management is all about Leadership!
Unarguably, the sales teams play a key role in mastering the forecast accuracy but we should not confuse Deal Management accountability on Seller level or Pipeline Management accountability on Management level with Forecast Management ownership on Leadership suite.
Forecasting is a team sport which, when done properly involves your whole organization to varying degree. Teaming up for success requires your people speaking the same language. Are your teams using the same taxonomy, following the same standards in assessing the business and is the final forecast puzzle seamlessly fitting together as one, ultimately reflecting the organizational commitment?
Sellers know their customers and deals best. The Bottom-Up approach is a good start but how do you assess required information without additionally distracting your motivated sellers from what they like best, doing business? – Seller Readiness and Deal Coaching are the first priorities. Getting this right, in right dose, is your ticket into a predictable deal management and a solid forecast foundation. The Best Way To Predict The Future Is To Create It!
When talking about the next level -the sales management assessment- we are already into the usual conflict of interest – ambition or reality. Clear answer: ambition belongs into the budget, business plan and the actual deal management, while reality is the main ingredient to the forecast. The Risks (Timing- and Alignment-Risk) remain as variables in the decision making. Having variables means options and scenarios to be considered during the forecast assessment.
Will the Risk deal offset another Upside or will the Risks/Upsides add up? … Do I have to adjust my P&L now, based on my Forecast or will the available resource still improve the business outlook in current business period? – It´s not easy but it all requires a deep understanding and clear sight on your business to get it right.
The view from the top in an organization provides us with the 360-degree view on the business to precisely navigate the curvy road ahead. Looking back on historic data and trendlines is tempting but also dangerous in anticipating the future. We easily miss the game changing moment in our market. Mark Twain well framed it: “History doesn't repeat itself, but it does rhyme.” Even more so, it generates a false sense of security which distracts from analyzing current business dynamics or going deep on deal progression.
Strong management commitment, insights on operational risks, specific deal challenges and visibility on the underlying decision making processes should equip us well to take a balanced decision on our forecast and conclude orchestrated corrective action on our business to come.
Finally, measuring Forecast precision is a helpful indication when it comes to supporting a continuous organizational learning process. Using it as an organizational goal, it triggers counterproductive corrective action on the symptoms, not on the cause.
The Forecast ought to be your uncompromised view on the future, it will not change the weather nor your business but it allows us to choose where to go or which action to take – cultivate your Forecast integrity with caution, don´t allow to compromise it with dishonesty nor load it with wrong ambition.
You can shoot the frog for bad news but like it or not, your Forecast accuracy is ultimately reflecting the level of trust within your organization.
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    Andreas Engel

    Andreas Engel

    ​is an experienced business leader working 25+ year in high-tech industry - leading, growing and transforming high-performance sales organizations, balancing short term results with long term strategy to drive new business growth.

    Andreas Engel

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