Advisory #17 - Sales vs Strategy - The Missed Opportunity

Are you a small to medium-sized business relying on sales tactics for growth because you haven't been able to put together a strategic plan?

Thought so.

But it's likely that this focus on short-term sales means you're missing out on the opportunity to grow your business significantly and sustainably for the long term.

Don't worry.

You're not alone.

80% of all the meetings we conducted in 2015 were with clients who did not have a clear strategy on how to grow their business.  More generally, of those that have a plan, according to Harvard Business Review, 86% fail to implement it effectively.

Let's be clear, when we talk about your strategic plan, we're not talking about a multi-page spreadsheet filled with comprehensive analytics and the ROI on market entry, nor are we talking about the extensive corporate presentation designed to appease the board and shareholders ... you know, the one that you work on for days, trying to work out what they want to hear and then never refer to it again after the presentation.

It doesn't have to be so hard to reach the next stage of your growth vision.

When we talk about strategy we are talking about an understanding of what your business stands for today, what you want it to achieve in the long-term and building a series of clear practical steps towards achieving that vision within your own capabilities.

Simple.

Our clients have no shortage of vision, there is always a clear idea of what success represents:

• to become market leader
• to expand into new markets
• to double the size of the business
• to take advantage of market conditions by developing new products & services
• to become leaner and more profitable

But, in most cases,  there is no straightforward step by step strategic plan to achieve that vision.

Our experience has revealed a consistent issue especially with our clients in creative services and broadcast media; that they have a tendency to adopt a short term focus on tactics to achieve revenue with little strategic or operational plan to support their long term business goals.

This is fine for us as it represents the starting point in assisting our clients to grow.  We help them understand their potential, assess any limitations or blockages to growth and provide practical steps to take their business forward to new levels of success.

In all cases, we assist our clients to develop a strategic approach that still delivers on their short term needs but introduces a framework that allows them to develop their potential for the long-term.

Here's an example:

We met a client that was seeking to enter a $30M per annum market with a disruptive product.  By looking at their business, we could see that they were fully equipped to successfully address this market immediately with their existing product set.  There was very little risk.  However, they had not fully understood the size of the opportunity in front of them and did not want to invest in additional resource.  So instead, they set their focus on a "safe and easy" $200k per annum subset of that market.   To address this, they took a tactical approach aiming to win a series of accounts through the networking skills of their existing sales team.

They will be successful in this but look at the missed opportunity; a lack of strategy and planning is sacrificing the multi-million dollar opportunity in favour of a best attempt at a share of $200k.

Which would you rather have?

Vision without strategy is just fantasy.  Your business vision can't be achieved solely by a tactical sales approach.

Of course, it's easy to be distracted by the day-to-day demands of our operations and lose focus on the long term strategy of the business.  This is exactly where it's possible to develop a 'blind spot' that limits the ability to see the opportunities in front of us.

So, where do you start to shift the focus from tactical to strategic without it all being too hard?

Answer this ...

• What is the true state of the growth opportunities in front of your business?
• What is the current operational health of your business? 
• What level of profitability do you need to maintain?
• What adjustments need to be made to your operations to support your growth plans?
• How will you bridge the gap between the capabilities of your business and the unique needs of your clients?

Once you can answer these questions, you are immediately focused on the long term health of your organisation and your short term goals will take care of themselves, packaged neatly within a sustainable strategic framework.

So, just as you don't become famous by making more friends, you don't make your business grow exponentially by focusing solely on short-term account wins.

We help our clients build a strategy for continents not just countries and provide practical steps towards long-term strategic growth so that success for you is not just about struggling to reach a quarterly budget.

Don't sell yourself short.

Once you can support your business vision with the substance of a strategic plan and know the steps you need to take to achieve it, you are no longer short sighted... the result is scalable, sustainable growth, achieved faster.

The Advisory Partnership assists its broadcast and creative services clients with operational strategy, delivering outputs that are scalable to meet the challenges of technological change and international growth.

Post by James Douglas

www.theadvisorypartnership.com

Other Posts by 
The Advisory Partnership

Sales vs Ops - Whatever happened to the operational review?
International Growth Cheatsheet
Case Notes: APAC Centre of Excellence

Advisory #16 - Sales vs Ops - Whatever happened to the operational review?

Bring in the sales and the business will look after itself. 

Because it's all about the top line. Right?

But ... are you properly equipped to grow in line with your business plan? 

Are you confident you're creating the best operational environment to retain the business you've already won?  

Certainly in a fixed cost business, once your overheads are covered, then a sales focus will ensure that the bulk of revenue moves straight to the bottom line.  

But that's only half the story.  

Are your costs really fixed?  Can your operation be structured differently, delivering a better overall result?

Most managers, whatever their role, spend countless hours in sales meetings.  The year is punctuated with sales budgets, forecasts, re-forecasts and customer trends analyses. 

Every week there is a forensic review of sales performance.  

But the actions from these meetings are often tactical and rarely address the fact that the business is an ecosystem that needs its operation to function effectively to realise these sales targets.

We find our clients spend significantly less time spent on operational strategy than they spend reviewing sales results but it's vital to remember that any growth is dependent on a functional and effective operation to support it.

We believe that fine-tuning your operation will often be the smartest contribution you can make towards your overall business performance.  There is little point in winning business if you can't retain it through a stable and sustainable service operation.

So, below are the areas we believe you should review regularly to ensure that you create the optimum environment to support continued sales success.

Strategy vs Operations

Are you regularly testing your strategy against the practical realities of the market place to ensure that your focus is in the right place?

Do your projects and revenue initiatives align with your long term strategy or have you developed them organically?

We often see businesses polarised by those who have developed the strategy and don't know how to implement it and those who have an intimate understanding of the operation but aren't briefed on the company vision.  

The result is inconsistency on where to apply the most effort and a disparity across the business on what can be achieved and how.  

The solution is working with both sides to illuminate each of the contrasting viewpoints. 

Realigning the focus here can be liberating.  The solution is often to remove time-consuming projects that are proving difficult to implement which, in turn, frees up resource to concentrate on projects that will align with the strategy and deliver a greater benefit for the business as a whole.

Reporting

How do you measure your operational efficiency and effectiveness? 

Is your reporting relevant to what you want to achieve and are you sure that it is accurate?  

Reports can be interesting but not relevant.  They can be creative but not instructive.  

We once attended a 'party' that celebrated significant sales growth but their reporting had neglected to account for an earlier price rise.  In reality, their market share was falling, their drop in volume was hidden. They would only have discovered this once they'd had the full year effect of the price rise.  Perhaps too late.

If your business development plans include interstate and international markets, beware of transferring reporting data from one operational model to the next.  Even within the same industry, operational requirements are likely to be different from market to market and it may take more resources and costs to handle the same type of customer.

We always recommend a dynamic reporting model that takes into account any variables that may impact the performance of the business and the operational support it will require.   These reports both support and substantiate the ability to be nimble when changing market conditions require fast action and they make the best job of creating an environment where there are no surprises.

Structure

Is your structure working for you?  Have you ever completed an assessment of your departments to determine their effectiveness? Are you wasting money on staff that are no longer required?  Importantly, are you undermining your strategic goals with a lack of staff in critical operational roles?

A successful business can outgrow its structure at least every six months and a successful structure can expire and become limiting for a business very quickly.  

No one needs frequent upheaval but fine tuning of your structure is necessary on a regular basis.  

The team and structure that got you where you are today, is unlikely to get you through to the next ten market share points.  You need to be careful that your structure can scale to match your ambitions and doesn't simply meet this year's budget.  

A regular structural review, if handled well, will future-proof your business in the face of rapid market change, motivate your team and give you good news stories to communicate to the market.

Resellers & Partners

You may have a network of resellers to represent your brand in regional or international markets but are they representing your brand appropriately and most effectively?  

They may be meeting your minimum budget expectations but can they do better? 

We find that the remoteness of some resellers can lead to our clients underestimating the full opportunity that they represent. 

Most businesses do not visit their partners regularly enough to test their performance and ensure that they are taking full advantage of every opportunity.  

It's vital to check regularly that the deal that you originally struck is still valid. Perhaps market conditions have changed and you need to reassess the best partner for your business in remote markets.  Furthermore, it's in your own interest to monitor your partners, ensuring that they adopt approaches that are consistent with your own operational best practice. 

Products and Services

Do you consult regularly with your customers to find out what they think about your products and services?  Do you do this formally and independently ... or anecdotally? 

If you invite feedback, how do you retain this information and process it into your operational plans and product development strategies?

Never be complacent that your products and services are still relevant to the market requirements today however unique they were when you launched.   Wherever you are on your growth curve, you need to continually build on that success and ensure that you remain relevant.  

We find that uncovering small pieces of customer feedback and implementing practical remedies can remove some of the limitations a business is experiencing in performance and can often deliver significant change for the business on the revenue side.  

Sometimes the solution is as simple as ensuring that the delivery matches the 'pitch' and that everyone in the organisation is aware of the business strategy and that the whole organisation is communicating consistently with the market.

Competitive Review

A confident business will have a clear strategy that is focused on the future development of the business. You lose focus if you spend too much time looking over your shoulder at the competition but remember your competition exists because it's doing something interesting in the market place; things that may challenge you in time. 

You need to be aware of the strengths and weaknesses of your competition and compare it honestly against your own business to be able to compete effectively. 

This means at least an annual review of your competitors is essential.  The review requires you to to be brutally honest with yourself, developing an external perspective on your business and focusing on what's genuinely good about your competition.  Why do their clients buy from them in preference to you?  It's not always about price.  Often an independent review will help you develop these insights with most clarity.

Conclusion

In an established operation, it's important to challenge thoroughly all your existing operational processes to ensure you remain competitive and relevant.  It's equally necessary during periods of change that you continually fine-tune your operation to ensure that it will fully support your organisation as it develops. 

Operations should never be defined as separate from sales, it is simply the other side of the same coin. Your business is a single ecosystem.

So whilst it's right to be focused on revenue, it's vital to understand that it's only through a well managed and effective operation that you can hope to achieve sustainable sales growth.

The Advisory Partnership assists its broadcast and creative services clients with operational strategy and review, delivering outputs that are sustainable and scalable to meet the challenges of technological change and international growth.

Post by James Douglas

www.theadvisorypartnership.com

More from us:

International Growth Cheat-sheet
Over Promise, Under Deliver
Partner Smarter, Grow Faster
International Strategy - How to Get an A in Geography

Advisory No 15 - Partner Smarter Grow Faster

A growing international business needs new staff and lots of them.  

It needs to have tried-and-tested suppliers to provide the products and services that it can’t deliver itself and it needs them fast.  

And it needs strategic partners to help extend its geographic reach and to build a network of customers that will deliver on the business plan.

What these three categories have in common is that every growing business is reliant on people and partners to deliver its strategic growth plans.
  

For start-ups and developing businesses, having the right team around us is critical to our growth success and it’s definitely not the time to cut corners.

As managers it is likely that we are busier than our peers of 10 or 20 years ago and the speed at which we are required to make important business decisions is accelerating. When we are working in start-ups, this pressure can be ten-fold.

It's time to call in the experts to support us.

However busy we are, we must appoint any new relationships with care, whether they are our staff, suppliers or strategic partners.  This is because our own success is ultimately reliant on the partners that we choose to represent us. 

Our partners success is our success and their failure is ours to own.

It’s tempting, but we should never make our decisions based solely on the candidate that we know best or is closest to hand.  In the rush to start-up and grow our businesses we often quickly grab our former colleagues and partners as a short cut to establishing a new team.  We have to be careful here.

We don't achieve something different for our business, simply by replicating an old model so it’s important that our partnership appointments are regularly given due-diligence and tested against alternatives in the market.

No decision is a valid decision until it can be compared against alternatives. A choice of one is not a choice at all.

It's always wise to properly review alternatives as the 'sanity test' to your preferred partnership choice and it's is time worth investing as it provides clarity, validates your decision and defends your position in the event of any conflict.  Most importantly, you develop a balanced approach as you are forced to consider the negatives as well as the positives of your preferred partnership choice.

When we take the time to fully review and make informed decisions on our business partners there’s every chance that growth will come stronger and faster than if we select solely from our inner circle.

Once established, it's also critical to review our partnership arrangements regularly to ensure that they remain effective.  

We regularly work with businesses who have set up partnerships to manage their interstate and international operations.  On closer review, we discover that they are not always delivering the maximum contribution to our client's business.  We recommend an annual review and health check for all partnership arrangements to ensure that they are performing to expectation.  There's always room for improvement.

The pressures of establishing, growing and maintaining your business are tremendous but be careful to take the time to establish the right partnership network as part of your business development strategy.

Be open minded to change. 

The Advisory Partnership assists its clients with business development and operational strategy, delivering outputs that are scalable to meet the challenges of technological change and International growth.

Post by James Douglas

www.theadvisorypartnership.com

More from us...

Over Promise, Under Deliver
Partner Smarter, Grow Faster
International Strategy - How to Get an A in Geography

TAP Case Notes 4 - Latin America Operational Review

Client               A Global Advertising Technology Business
Service            Operational Review & Remediation
Result              300% Revenue Growth

Background

The client was a technology business that supports the advertising industry with distribution and asset management services.  The centre of their Latin American operations was in Miami with sales driven from their satellite offices in São Paulo, Brazil and Buenos Aires, Argentina.   

The Miami regional office had been a successful start-up, managing international TV delivery throughout Latin America and servicing the Hispanic market in the USA.  

Our client's strategy had been to roll out local distribution operations progressively to each of the countries in South America each of which were emerging markets for their services.  However, after a strong start, the business had faltered and lacked sustained growth and profitability.

Challenge

The client's head office in London sought our advice on their geographic expansion and our recommendations into why performance had slowed.  They wanted to know whether the business should be expanded, maintained or wound down. 

The Miami office had not delivered on its target of 25% year-on-year growth. The P&L was showing a loss of $200k per month and operationally the office was failing in its service commitments.  The business needed a plan to secure continued geographic expansion whilst containing the costs of any new operations.  

Approach

Our approach was to place ourselves on site to develop insights into the day-to-day operations in Miami and how it was serving the existing satellite offices in Brazil and Argentina.  We exposed ourselves to every aspect of the sales, customer service and support processes and analysed team productivity.  

We discovered that the problem was partly the operational structure and partly that the business was still effectively operating in start-up mode and had not been equipped to service the business it had delivered.  

Our solution was to review and revise the processes and operational structure with only a moderate increase in investment.  Our recommendation was to fully equip the business for the next stage in its growth and indeed to expand it as a regional 'Centre of Excellence' for the Americas.

Result

Our review of the P&L solved a discrepancy where the costs associated with the South American sales offices were being applied to Miami but the revenue was reported locally.  This resolved the reporting discrepancy proving that the business was much healthier than the client had assumed.

We uncovered 10% in annual revenue leakage which we solved by developing new processes to ensure that all services and products were billed accurately. Our implementation of these processes revealed that Miami could operate at 20% EBITDA. 

Our strategic review revealed that the client had failed to tailor an implementation strategy for the individual markets within South America.  

We outlined cultural and operational differences across the region and built a roll out plan that prioritised each market by value.  This provided our client with a framework to invest in their South American business development appropriately and to minimize risk by linking new expenses with secured sales. This 'secure' revenue would be sourced from pan-regional clients already held by the business.

Our structural review revealed a need to revise the operational structure.  The business was still being managed as a start-up and needed the processes of a more mature business. We proposed a new structure within an expanded business that would act as a regional 'centre of excellence' for the Americas. This met the client's growth objectives while negating the need to set up costly operations in each country state.

The Miami office now operates as our client's model for their regional operations globally.  Miami now services all their requirements within the USA, Canada and Latin America.  It has doubled its staff and tripled its revenue with planned growth to support an ambitious new USA business case of $30M per annum by 2016.

Post by James Douglas

www.theadvisorypartnership.com

What we have learned developing global operations in India, SE Asia and Europe are captured in more detail the following articles:

Upscale your International Growth
Over Promise, Under Deliver
Partner Smarter, Grow Faster
International Strategy - How to Get an A in Geography