by Linda Thompson, Principal

 

Many organizations exhibit: 

 

A broad-based, defocused sales and marketing effort that never says "no" to a prospective deal, and

A development effort that continually whipsaws from one “top” priority to another, with resources spread across numerous unrelated efforts and subject to constant reallocation based on the top sales opportunity du jour.

Management may defend the fecklessness, believing that breadth will grow revenues. But the resulting confusion and inefficiency in the development effort destroys any hope of profit or of building long-term differentiation. Counter-intuitively, failing to achieve a sharp focus actually impedes sales and marketing, making it hard to

Create a brand identity and perception of leadership, or

Field an informed sales team that can clearly articulate the organization's value proposition and differentiation for any one segment.

 

Although I have seen some quite profitable ventures mired in this practice of chasing every deal that moves, I have come to think of it as a corporate form of hand-to-mouth behavior—a scramble for revenue irrespective of cost. Tight times may exacerbate this tendency in the name of survival.

 

Happily, there is hope for organizations suffering from this "hand-to-mouth disease." The behavior can be overcome through disciplined planning and execution processes. Such processes may seem like a luxury in tough times. In fact ruthless focus on the most strategic market opportunities is even more crucial when times are tight and resources scarce. This is no time to neglect the advice of Jim Collins in his business blockbuster Good to Great, which advocates that every "to-do list" must be accompanied by a "stop-doing list," and that the "stop-doing list" is in fact the more critical of the two.

"Zero Baseline Budgeting" (ZBB) is a practice many companies use to ensure they have the resources necessary to fully execute their plans. The methodology is simple, although it is by no means easy. The management team creates a list of all proposed programs in one column, and a tally of the resources required to successfully execute the programs in another column. The programs are ranked by priority. That’s the hard part, as it requires all disciplines to develop alignment around the organization's longer-term objectives. Programs that fall "below the line" where the resources run out must be discontinued. The list is revisited whenever market conditions change significantly (but not every time a new deal is encountered!). It is also important to note that the objective is NOT to decide how the resources can be spread like peanut butter across every known opportunity, so that an illusion of progress on every front is maintained, but rather to make tough-minded decisions as to which activities will be fully funded to ensure success. And which will be pruned out entirely to make room for them.

If you are responsible for the development effort and your company does not practice disciplined planning processes, you may feel very alone. Sales, marketing, and possibly even top management seem to demand each and every product and/or service possible in an effort to increase the top line. If that is your situation, there are steps you can take to help. Ask the following questions, and demand well researched answers:

       Which of the products we are working on are more profitable for us, and why?

       What are our investment priorities for the future, and why?

       Which of the customers we are supporting are more profitable for us, and why?

       Synergies will improve across the development and support teams, resulting in increased effectiveness.

       The entire organization will come to understand the customer better, resulting in a crisp definition of key problems those customers experience and ultimately, more compelling solutions.

       Salespeople will have the ammunition and confidence to engage with higher level buyers, which in turn will result in shorter sales cycles and larger deals.

       And finally, more focused sales and marketing activities will build stronger momentum at lower cost than is possible with broad-based "shotgun" approaches.

 

 

So here’s the bottom line: many organizations suffer from "hand-to-mouth disease." The affliction need not be fatal. The cure will require making tough-minded priority calls and sticking to them, but the results will more than justify the effort.