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The New Normal–Embrace or Combat it?

July 8th, 2009 by Ed Boswell

I recently attended a breakfast hosted by Forum with about a dozen senior sales executives in a boardroom in the Financial District of Boston.  As a group, the executives represented some of the world’s leading brands in insurance, banking, professional services, and so on.  As Forum people shared some insights on successful selling strategies in economic downturns and all of us shared what was going on in our respective worlds, you could tell that the initial reserve of this group of strangers was giving way to a warm sense of camaraderie—the kind that comes from shared pain!

We quickly came to realize that we were all facing very similar challenges, regardless of the industries we represented and the kind of customers we courted.  For example, we talked about customers who do not put much stock in value-added services and long-term relationships anymore, who are unwilling to commit to large deals, who are making smaller commitments instead,  and who are taking longer to make buying decisions (if they make them at all).  Of course, we heard stories about customers asking for unheard-of discounts and demanding that we tear up existing agreements and provide even deeper discounts and better terms.  As we went around the table telling our stories, we found that, despite the vast differences in our products and services, we actually had more in common than we would have ever imagined.

But an even more important insight began to emerge as the breakfast went on; that is, the world has changed forever in the wake of this economic downturn.  Customers’ buying behaviors have changed dramatically and will most likely not return to the “good old days” of 2 or 3 years ago.  We need to look at the current market not as an anomaly or a one-off situation that will go away soon, but as the “new normal.”  Customers and their procurement departments will continue to demand more and more of their so-called partners.

So a question emerged in the group that morning:  Do we figure out ways to combat this trend, or do we decide to embrace our customers (recognizing that their own customers are putting the same pressures on them) and work together to define the new rules of engagement for our mutual benefit?  The answer to this question seemed obvious to us all.

What’s your opinion?

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Posted in Growth & Leadership, Sales Alignment | 6 Comments »

2-6-2 Rule

May 13th, 2009 by Forum Corporation

By André Alphonso, Managing Director, Forum India

During the course of my working life I have been influenced by many mentors. One of these mentors shared with me what he called his “2-6-2 Rule.”  It changed my thinking.  Let me share it with you:

This mentor of mine was a medic in Vietnam.  After a battle he and his team would fly in on helicopter gunships to evacuate the wounded.  These gunships could carry only a few people.  In this dramatic and chaotic environment my mentor had to quickly assess the situation and then place people into three categories:  a) those people who would live without his help; b) those who would die regardless of whether he helped them or not; and c) those who would survive only because of his help.  His focus was then on evacuating the people in the last category first.

My mentor drew a parallel between his experience in Vietnam and what he observed about the way that leaders behave in their work with their people.  His 2-6-2 Rule essentially relates to any group of people in which 20 percent are high performers, 60 percent are performers in the middle, and 20 percent are low/marginal performers.  The top 20 percent of high performers perform well regardless of their manager; the 20 percent of low/marginal performers drag their feet regardless of their manager; the third and biggest group, the 60 percent in the middle, only improve their performance because of the skills and behaviours of their manager.  However, my mentor observed that most managers get it wrong, by putting their focus and energy into the 20 percent at the top and the 20 percent at the bottom.  The people in the biggest group of 60 percent in the middle are largely left to their own devices.  My own observations and experience with leaders over many years bears testament to this.  The real focus should of course be on the largest group:  focus on those individuals who will only improve because of the intervention of their manager.

In the June 2003 Harvard Business Review, Thomas DeLong and Vineeta Vijayaraghavan’s groundbreaking article “Let’s Hear It for B Players” very clearly brought out the importance of focusing on this middle 60 percent.  In July 2008, DeLong and Vijayaraghavan again wrote about the importance of B players in a weak economy:  particularly in difficult times these “supporting actors” supply the stability, knowledge, and ballast that boosts organizational resilience and performance.

If you are a leader, think about the week that just passed and where your focus and energy were directed:  to A, B or C players?  What have you done to support those who will only survive because of your help?

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Posted in Growth & Leadership | No Comments »

What Headlines Will You Write?

April 9th, 2009 by Forum Corporation

By Kerry Johnson, Executive Consultant

Over the past month or so I’ve had the opportunity to talk with many of our customers about the impact of the tough economy on their businesses. The focus of these group talks has been on what leaders can do to make a difference. Forum’s view is that leaders can make all the difference to their company’s success in tough times.

Our view is based on some extensive secondary research on companies that have been successful, and have even thrived, in past recessions. There is a clear and compelling set of actions leaders in those firms focused on that seemed to make the biggest difference. We have also tested our hypotheses with a number of our current customers to make sure that they have strong face validity. You can out learn more about these findings on our website: www.forum.com

The core findings of our research are outlined in the model below. When I’m talking with customers about these strategies I point out that there are no surprises here—none. Everything we’ve learned about good leadership in bad times brings us back to the basics.

The big insight is that in tough times the basics are more important than ever. Failing to apply them can be catastrophic.

Our main message: applying core and critical leadership best practices is not a matter of choice in these tough times, but a matter of necessity.

I start my research conversations out by sharing the day’s headlines. As someone told me recently, “there is nothing like a crisis to focus the mind.” People are sitting up and taking notice, and they are reacting strongly to typical headlines like these:

  • CHINESE GROWTH PLUNGES, WITH GLOBAL AFTERSHOCKS
  • RISING DEBT, FALLING SALES, MEAN ROUGH ROAD FOR FIAT
  • SONY FORECASTS FIRST LOSS IN 14 YEARS
  • MICROSOFT TO ELIMINATE 5000 JOBS
  • HYUNDAI MOTORS PROFIT FALLS 28%
  • IBM EMPLOYEES BUZZ ABOUT LAYOFFS

I then ask people to share with the group a headline they might write for their own company. The gloomy headlines continue for a bit, and then a very interesting thing happens—someone in the group will say something like the following:

  • CEO STEPS UP VISITS TO CUSTOMERS
  • LEADER OF SALES FORCE CONDUCTS WEEKLY TOWN HALL SESSIONS TO BRIEF STAFF ON BUSINESS
  • PEOPLE STARTING TO THINK IN REALLY NEW WAYS ABOUT THEIR BUSINESS
  • THE MAIN THING IS STILL THE MAIN THING

Underlying these “headlines” are some very important and positive themes that point directly to the four main strategies leaders can apply to encourage and focus their teams. These “headlines” are a perfect counterpoint to the negative messages of the real (and accurate) news headlines, because they speak of opportunity and of potential.

Our customers come up with these “headlines” independently, before they see the model, and they launch a very productive conversation.

Let’s think about these headlines:

CEO STEPS UP VISITS TO CUSTOMERS. This reminds us how important it is to consider the customer first and foremost. Companies with the will and the foresight and the discipline to weather tough financial storms, never lose sight of the value proposition they offer to their customers. They also know that in times as turbulent and complex as these that their customers’ expectations are likely to be impacted. How will they change? What is the new value proposition? How will we deliver it? These are the key questions to explore. And, time is of the essence. Your competitors are out there already looking to take market share, or looking simply to position themselves to be the supplier of choice when the economy rebounds.

Anne Mulcahy, CEO of Xerox, provides a great example of the leader who is in touch with her customers. She logs thousands of air miles a year visiting customers to learn and relearn what they expect from her company. Mulcahy is as relentless as she is positive in this quest.

LEADER OF SALES FORCE CONDUCTS WEEKLY TOWN HALL SESSIONS TO BRIEF STAFF ON BUSINESS. A leader also needs to stay as connected with his or her workforce or team as possible. In a vacuum of information we tend to make up our own headlines. Keep your teams, and especially your key talent, informed. Let them know in realistic terms and with as much certainty as is possible what they can expect.

The paradox of tough economic times is that our best employees are now more likely to be stolen away by our competitors than they are in good times. Our customers are telling us that the most important thing their managers can do is to stay connected to them, involve them, and engage them.

PEOPLE STARTING TO THINK IN REALLY NEW WAYS ABOUT THEIR BUSINESS. This customer-generated headline makes a good point: the thinking that got us into this mess is not going to get us out of it. We need to think in new ways about working together, especially across the boundaries we inadvertently build in our organizations. Doing that allows us to leverage the good work done within our teams and elsewhere. We should be learning from one another as much as we can.

It also says that we need to become more adaptable in our thinking and in our working together. “We’ve-always-done-it-that-way” thinking is a formula for disaster. Opportunities are knocking, calling, e-mailing—in fact, they’re shouting. How will we hear them if we’re thinking like we always thought?

Often we’ll learn about opportunities from our own people—if we give them a chance to offer ideas and ask questions. Now, more than ever, they will tend to keep their heads down. The irony is that now is really the time for them to be “heads up.”

THE MAIN THING IS STILL THE MAIN THING. Our customers are quick to tell us that this stuff sounds like the old stuff! What’s new? In fact, nothing is new on the face of it. What’s new is what’s underneath. That is the real insight: The actions and behaviors of great leaders worked because the leaders were diligent in taking and practicing them. Like Woody Allen says, “Eighty percent of success is showing up.” You know what good leadership practices are. You also know that the danger inherent in not using them is far, far greater in tough times than in good times.

The main thing is still the main thing. Financial discipline is still the main thing. So is sound business practice. So is leadership best-practice.

So, now is the time to focus on your customers, on your key talent, on communicating clearly and authentically, and, most of all, on creating a positive, adaptive work climate in which people raise their personal level of responsibility, add more to their team’s success, and, at the same time, feel recognized for their contributions.

What are your headlines? What will they be in a year’s time? How will you get to them?

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